Public Comment: Share savings from Medicare price setting with patients not plans

July 2, 2024 — No Patient Left Behind (NPLB) wrote to the Centers for Medicare & Medicaid Services (CMS) asking the agency to adopt rules that ensure that patients—not health plans or PBMs—see savings from the implementation of Medicare price setting.

---

Dear Administrator Brooks-LaSure:

Thank you for the opportunity to comment on the Centers for Medicare and Medicaid Services’ (CMS) “Medicare Drug Price Negotiation Program: Draft Guidance, Implementation of Sections 1191 – 1198 of the Social Security Act for Initial Price Applicability Year 2027 and Manufacturer Effectuation of the Maximum Fair Price (MFP) in 2026 and 2027.”

I am writing on behalf of No Patient Left Behind (NPLB), a non-profit organization comprising biotech investors, innovators, researchers, physicians, and patient advocates working together to support solutions that lower out-of-pocket costs for patients and preserve incentives for affordable innovation.

KEY ISSUES

NPLB views CMS’s draft guidance from two key perspectives:

1. Will the draft guidance improve access to essential medicines for patients in need of care?

2. Will more and better medicines be developed as a result of the guidance?

In order to answer “yes” to these two critical questions, we urge CMS to incorporate NPLB’s recommended improvements to its draft guidance as outlined below.

BACKGROUND

NPLB supports the IRA’s $2,000 out-of-pocket cap and the Administration’s efforts to expand insurance reforms beyond Medicare to commercial market segments. However, we remain concerned that the Inflation Reduction Act (IRA) will significantly reduce new small molecule R&D. NPLB would have supported the IRA altogether had it treated small and large molecules equally and imposed government negotiated price controls 13 years after FDA approval. Examples of NPLB’s views on IRA’s impact on beneficiary access and new R&D include:

• A response to the Congressional Budget Office’s (CBO) request for information on IRA’s impact on new drug development that was signed by more than 350 biotech investors, executives, and economists representing more than $320B in assets under management and 665 drug candidates in development;

• An explainer of “How the IRA makes new small molecule R&D uninvestable for diseases of the aging”; and

• A letter from more than 1,200 patients, patient advocates, researchers, biotech innovators, and investors in support of IRA’s passage if Congress lowered the proposed out-of-pocket cap to $1200/year and Medicare negotiations treated small and large molecules the same.

  Additional examples of NPLB’s research and education resources can be found on our Fundamentals page.

NPLB IRA GUIDANCE RECOMMENDATIONS

1. CMS should guarantee patient access to government negotiated price-set drugs on the lowest Medicare Advantage Prescription Drug (MAPD) MAPD and Prescription Drug Plan (PDP) out-of- pocket cost formulary tiers.

   The IRA negotiation makes government price-set drugs effectively generic prior to patent expiry. Beneficiaries, not health plans, should see the benefit of savings from government-set prices. We urge CMS to require that MAPD and PDP plans put government price-set drugs on the lowest cost formulary tier to ensure affordable Medicare beneficiary access and adherence to prescribed treatments. Furthermore, the guidance should prevent MAPD and PDP plans from putting in place overly aggressive utilization management restrictions, financial barriers, or taxing administrative burdens that needlessly deny, delay, or discourage beneficiary access.

2. CMS must not rely on faulty and outdated cost-effectiveness analysis (CEA) to set drug prices or limit beneficiary access to prescribed treatments.

   The draft guidance seeks to allow CMS to rely on faulty and outdated conventional CEA calculations that ex-US governments use to delay, deny, or discourage patient access to prescribed innovative treatments. NPLB would recommend CMS not to rely on conventional CEAs at all to set prices. We are concerned that CMS’s draft guidance seeks to circumvent Federal patient protections. We also are concerned that use of CEA leads to a precedent for setting price controls at launch versus market- based competition and choice during an innovation’s time-limited, patent-protected period of market exclusivity to achieve the balance between affordability and sustainable innovation. If CMS seeks to apply CEA in approximating the societal value of an innovative medicine for any reason, particularly in IRA’s price-setting process, it should instead use Generalized Cost Effectiveness Analysis (GCEA) that more comprehensively incorporates quantifiable value elements that are important to patients, caregivers, and family members that conventional CEAs omit.

   Conventional CEAs used by national or regional health technology assessment (HTA) entities in the ex- US countries like the United Kingdom’s National Institute for Health and Care Excellence (NICE) and the Canadian Agency for Drugs and Technologies in Health (CADTH) and also used by the privately funded U.S.-based research organization Institute for Clinical and Economic Review (ICER) face increasing scrutiny from health economists, innovators, and patient advocates for relying on biased and incomplete math that ignores real-world, quantifiable value elements.1

   For example, NPLB released a report last year that illustrates how conventional CEAs featured in the assessments by ICER can underestimate the true societal value of innovative medicines and result in healthcare decisions that will hurt patient welfare. The researchers first replicated the conventional CEA models, and then developed GCEA models that accounted for dynamic pricing (e.g., market competition, loss of market exclusivity) and accounted for diminishing returns to health improvement (due to disease severity and patient risk aversion). Under ICER’s biased approach, only eight of the 20 medications in the study were deemed by them at or before launch to have sufficient value to patients to justify their prices — a finding that insurance companies use to deny coverage. However, when the math is updated to model just some of the additional GCEA elements of value that medicines offer to society, the study found that at least 17 of the drugs provided good value for money.2 This resource page and animation help explain these and other values that conventional CEAs choose to omit from their economic analysis.

   Rather than embrace conventional CEAs, CMS should proactively recognize growing concerns by health economists about the quantifiable values to patients and society that proponents of conventional CEAs omit. Using conventional CEA’s faulty framework to discourage patient access to biotech innovations is likely to result in the need for more acute health services – which do not go generic – to compensate for the loss in pharmaceutical innovations. In the long run, this will increase total healthcare spending. If CMS uses this outdated math in its decision-making, the Agency will be prioritizing short-term savings over long-term savings and patient and societal benefits.

3. CMS should not worsen IRA’s harmful innovation impact.

   The guidance seeks to allow CMS to peg the government-set prices to therapeutic alternatives. Specifically, CMS’s interpretation of the law’s requirement to aggregate forms (such as a combination of active ingredients) to define a qualifying single source drug ends up sweeping in newly approved drugs. Doing so will further erode innovation that the IRA already harms by further disincentivizing research that meaningfully improves and expands existing treatment options.

4. Guidance should not make plans and hospitals better off from government price setting than patients.

   We are deeply concerned that the guidance makes no effort for plans, hospitals, and health systems to stop well-documented abuses of the 340B program.3 Abuse of the 340B program burdens drug list prices that plans charge patients with hospital expenses, giving the public the impression that drugs are more expensive than their actual net prices. CMS should use its guidance to stop 340B program diversion, or at least ensure drugs acquired using government-set pricing are not marked up for eligible and non-eligible patients.

Thank you for taking into account NPLB’s comments as you revise the proposed guidance. Sincerely,

Peter Rubin

Executive Director, No Patient Left Behind

REFERENCES

1 https://www.statnews.com/2024/05/06/united-states-value-based-drug-pricing/

2 https://nopatientleftbehind.docsend.com/view/889u6zs74tra9x4a

3 https://www.wsj.com/articles/340b-drug-discounts-hospitals-low-income-federal-program-11671553899

---