CMS overreach will impede innovation

In implementing the Inflation Reduction Act (IRA), the Centers for Medicare and Medicaid Services (CMS) has made efforts to unnecessarily broaden the law with an expansive view of certain terms.

Why it’s problematic

One of the issues with CMS’ stance is the treatment of “qualifying single-source drugs,” the language in the law that defines which medicines can be subject to price controls. Avalere has detailed some of the complications:

• CMS has argued that it can treat multiple different medicines as the same drug – even if the dosing is different, the indications are separate, and the patient populations are distinct – as long as all of those products share the same chemical compound.
• This flies in the face of how other regulators think about different drugs. The Food and Drug Administration (FDA), for instance, requires different trials and entirely separate regulatory processes when drugmakers wish to use an existing compound for a new use and a new group of patients.

A chilling impact on innovation

CMS’ overbroad definition risks disincentivizing certain kinds of research that would otherwise deliver benefits to patients and society:

• Medicines may be exposed to price controls after only a few years on the market if they share an ingredient with a drug that was approved earlier. This will discourage companies from testing medicines for new uses, given that the government will work to prematurely strip away pricing protections.
• The impact, Avalere said, is likely to be greatest for diseases treating chronic disease, opening the possibility that a particularly important avenue of innovation will be most affected by the policy.

BIO’s view

For generations, the biopharmaceutical ecosystem has been kept in balance by a simple understanding. New medicines are protected from competition and government price-setting for a period of time, after which generic competition can be unleashed. But CMS’ approach to the IRA undermines this balance by setting up rules where even medicines that have recently secured FDA approval may be targeted for price controls.