AS PART OF THE “BUILD BACK BETTER” LEGISLATION, Congressional Democrats are including a set of reforms that would repeal the Medicare prescription drug program’s long-standing “non-interference” clause and require CMS to directly “negotiate” the pricing of medicines purchased under the program. The word “negotiate” is in quotation marks because the government would, essentially, have the power to unilaterally set pricing, given the 95% tax on drug sales that is the bill’s “hammer” for company non-compliance. However, due to concerns about the potential impact on future investment in drug development, the bill was scaled back to permit government pricing only after expiration of the medicine’s FDA exclusivity period. While this is an important compromise, the precedent the bill would create for expanding the government’s role into drug pricing and value assessment is potentially troubling as we look ahead to the future of biopharmaceutical innovation.
TOM DILENGE is senior partner for global public policy, regulatory and governmental strategy at Flagship Pioneering.