The pharmaceutical sector has gone on to face pressure as well as uncertainty in 2023, and that is in all likelihood going to continue in 2024, partially due to the execution as well as evolution of the Inflation Reduction Act- IRA. Meanwhile, states happen to be anticipating continuing their growingly aggressive endeavors so as to regulate the pricing of drugs.
The sector has gone on to respond with more willingness to challenge the overreach in court. Pharma manufacturers will go on to face even greater scrutiny due to the 2024 campaign season.
The Centers for Medicare & Medicaid Services went ahead and implemented the health-care law’s Medicare price control program last year with the pickup of the first drugs subject to a negotiation that was forced.
CMS will be publishing the so-called maximum fair prices for such drugs by September 2024. Its 2023 execution guidance revealed an agency majorly asserting the powers it had received under the health-care law. It will be indeed instructive to witness if that approach goes through in the published prices.
Pharma stock trends in 2023 suggest the market may as well not yet have fully taken up the law’s possible effect, which can very well go on to change in 2024. Numerous pharma manufacturers have already challenged the health-care law in court in 2023, primarily due to constitutional grounds.
Apparently, these suits will go on to continue right across 2024, and it is likely the constitutional claims will get supplemented with as-applied challenges since as and when the law begins to have the real-world effects.
The law’s Part D redesign as well as the new manufacturer discounting program will majorly take effect in 2025; however, it will be significant to monitor how the Part D plans begin to tackle the changes that affect them and how the plans’ reactions would flow through to the pharma industry.
CMS’ new authority under the law happens to be limited to the Medicare program, but the agency went on to take a similarly bold approach when it had gone on to propose a Medicaid regulation in 2023 that, along with other things, would enable the CMS to publish what amounts to a shame list when it comes to the most expensive drugs in Medicaid.
The regulation has now been listed on the Office of Management and Budget website with an actionable date scheduled for June 2024, but the election will most likely be going to be a factor in CMS’ decision if and when to publish this regulation in its final form.
States Embrace Requirements
Uncertainty looks to be on the rise when it comes to the 340B program, under which participating producers go on to sell drugs to enrolled providers at an immensely discounted price. Notably, a district court invalidated the program’s longstanding definition of a patient, and the numerous manufacturer challenges of the 340B contract pharmacy policy will go on into 2024.
The agency looking into the 340B program, the Health Resources and Services Administration, has for a long time sought greater authority in order to administer the program, but it is not clear if the Congress will go on to act on 340B in an election year.
States have gone on to become more interested in the 340B program. Arkansas, for instance, has embraced a state law that mandates 340B contract pharmacy. This as well as similar laws have been challenged on pre-emption as well as other constitutional grounds, and such lawsuits will keep continuing.
It is well to be noted that the states happen to be pursuing their own initiatives that are aimed at the pharma industry. Post establishing the so-called drug pricing transparency laws in the years that have gone by, states are growing from disclosure requirements to potential price cappings, like Colorado with its Prescription Drug Affordability Review Board. Although focused when it comes to the state level, certain initiatives like these could indirectly affect federal programs, and legal challenges are likely.
Election Season
Drug prices across the US have predominantly been set in the free market, and federal health-care programs have gone on to link reimbursement rates to market prices by way of the mechanism of manufacturer price reporting. In contrast to this, the Biden campaign happens to be touting the government-imposed drug pricing model, which is embodied by the Inflation Reduction Act- IRA.
The fact is that the outcome of the 2024 election may go on to gauge whether the US goes ahead with supporting aggressive drug pricing policies and also moves further in the path of a European-style redistribution model with price controls. The Biden administration has gone on to take another step on this path with the proposal to aggressively make use of the march-in rights so as to override pharmaceutical patents.
Importantly, there may even be bipartisan support when it comes to some measures, like setting reimbursement levels in terms of a therapeutic class rather than for a specific drug, and coming up with an international reference pricing mechanism.
Outlook
A major industry challenge for 2024 is going to be responding to newly applicable legal needs while monitoring and responding to the developments in Congress as well as at the state level.
However, the challenges can go on to bring opportunities. A well-rounded team comprising business leaders as well as other internal and external experts can enable the formulation of a commercial strategy that stretches patient access while at the same time helping therapeutic innovation, which has been a prominent imprint of the US pharmaceutical industry.
