The Inflation Reduction Act implemented a regulation allowing price negotiation in the Medicare program to lower the cost of prescription drugs and to increase transparency. Section 1195 of the Inflation Reduction Act “penalizes any manufacturer of a selected drug that has entered into an agreement under §1193, with respect to a year during the price applicability period with respect to such drug, that does not provide access to a price that is equal to or less than the maximum fair price for such drug for such year.” With no prior federal regulation in place to deter price gouging, the new regulation establishes a pathway for negotiating lower prescription drugs supplied in the Medicare program, increasing access to care. Recently, the Centers for Medicare Services identified the first 10 drugs supplied through the Medicare program selected for initial price applicability in 2026. These drugs are common drugs you would see listed on the Medicare Part D drug list ranging from insulin to drugs to treat heart failure. CMS selected these drugs based on some of the following criteria (1) drugs for which there is no generic offered after 11 years of FDA approval and (2) drugs with the highest total gross covered prescription costs. In response to this new legislation, there are pending lawsuits filed by pharmaceutical companies claiming constitutional protection and perceived harm to consumers for creating an anti-competitive market. The challenges will be difficult to defend in light of public opinion because the new regulation is an improvement to the Part D drug program offering seniors lower drug prices.
PERSPECTIVE: IMPLICATIONS FOR PROTECTING ONE’S ACCESS TO FEDERAL HEALTH CARE COVERAGE
In Health and Hospital Corporation of Marion County, Indiana v. Talevski, the issue presented was whether a third party to a contract pursuant to the Spending Clause has a privately enforceable right. Congress limits how a state may spend federal money by imposing regulations and conditions on funding. The appellant, in this case, argues he has a privately enforceable right because he is a third party to the funds supplied through the Medicaid program regulated by the Spending Clause. The Federal Nursing Home Amendments Act regulates whether nursing facilities receive Medicaid funding based on how their facility is managed. The claim filed states that as a private citizen who is a third party to the benefit of federal funds received through the Medicaid program, the appellant had the right to enforce the Spending Clause as a privately enforceable right. The court agreed. The United States Court of Appeals reversed that decision and recognized a viable claim pursuant to the Federal Nursing Home Amendments Act (FNHRA) of 1987 protected by 42 U.S.C. § 1983 in spite of how the nursing facility is being regulated by the Spending Clause. The right to enforce federal spending in a private cause of action is implied in the Supreme Court case Wilder v. Virginia Hospital Association, where the Court determined there was a substantive federal right and it was not Congress’ intent to prevent redress of this privately enforceable right. The Supreme Court held that the “FNHRA provisions at issue unambiguously create §1983-enforceable rights, and the Court discerns no incompatibility between private enforcement under §1983 and the remedial scheme that Congress devised.” Health care coverage is not a right supported by the Constitution; it is an auxiliary benefit created by Congress. The overarching health care debate has been whether health care coverage in this country should be financed by public funds. The implications of this court decision could have a long-standing impact on how health care coverage evolves and whether precedent could be established or policies implemented to support a recognizable right to health care coverage in the United States.
PERSPECTIVE: INCREASING ACCESS TO CARE WITH LOWER PRESCRIPTION DRUG PRICES
The pricing of prescription drugs has come under scrutiny recently by consumers who believe manufacturers set an extremely high price for highly sought-after prescription drugs for consumer use. More than 5 million Medicare beneficiaries struggle to afford prescription drugs[1]. Prescription drug prices are set by each manufacturer known as the list price. The Inflation Reduction Act was implemented in August to help with the cost of prescription drugs in the Medicare program. The new regulation allows the federal government to negotiate lower drug prices supplied through the program, increasing access to care. With no prior federal regulation in place to deter price gouging, §1191 of the Inflation Reduction Act establishes a pathway for negotiating lower prescription drugs supplied in the Medicare program. With this new regulation, drug companies will be fined for price gouging of prescription drugs supplied through the Medicare program. Section 1195 of the Inflation Reduction Act “penalizes any manufacturer of a selected drug that has entered into an agreement under §1193, with respect to a year during the price applicability period with respect to such drug, that does not provide access to a price that is equal to or less than the maximum fair price for such drug for such year.” Recently, a list of prescription drugs supplied through the Medicare program whose list prices increased higher than the rate of inflation was released. The companies that manufactured these drugs will face a penalty in the form of a rebate.
Consumers who rely on insulin have been very vocal about the burdens of gaining access to affordable insulin. An estimated 1.4 million new cases of diabetes were diagnosed among people ages 18 and older in 2019 [2]. The prevalence of diabetes in the United States is estimated to be 11% with 23% undiagnosed and 76% diagnosed with the condition [3]. Diabetics have higher comorbidities rates compared to other chronic conditions because of overlapping risk factors. People with diabetes account for $1 of every $4 spent on health care, paying more than twice as much a year for health care than a person who does not have the disease [4]. Most people who can’t afford this medication either skip doses or stop taking the medication which can result in hospitalization for care, thus placing a burden on the health care system by rendering care that could have been easily prevented. The cost of insulin for consumers rises annually. Depending on your health care coverage, the cost of insulin can vary between $25 to $300 per vial[5] . As highlighted by the Senate Finance Committee’s report on insulin list prices, the amount of revenue retained by drug manufacturers has risen simultaneously with the out-of-pocket cost of insulin for their consumers.
Recently, Eli Lily and Company and Novo Nordisk, PLLC announced they will reduce the cost of insulin drugs manufactured at their companies. Eli Lily reduced the cost of insulin by % 70, placing a cap of $35 on monthly out-of-pocket costs for people who are not covered by Medicare’s prescription drug program. The drug company also announced that their generic version of insulin would be capped at $25 a vial starting in May. The drug company Novo Nordisk will reduce branded insulin prices by 75% starting in January 2024 as well as lower the prices of generic insulin prices. These initiatives taken by Eli Lilly and Novo Nordisk set a standard for other drug companies to follow.
[1] Office of the Assistant Secretary for Planning and Evaluation, U.S. Department of Health & Human, Services. Secretary of Health and Human Services’ Report on Prescription Drug Affordability among Medicare Beneficiaries. 2022. Prescription Drug Affordability among Medicare Beneficiaries (hhs.gov).
[2] Centers for Disease Control and Prevention. (2022). National diabetes statistics report: Estimates of diabetes and its burden in the United States. https://nationaldppcsc.cdc.gov/s/article/CDC-2022-National-Diabetes-Statistics-Report1.
[3] Centers for Disease Control and Prevention. National Diabetes Statistics Report website. https://www.cdc.gov/diabetes/data/statistics-report/index.html.
[4] American Diabetes Association. (n.d.). Insulin and Drug Affordability. https://www.diabetes.org/advocacy/insulin-and-drug-affordability..
[5] Cohen, J. (2021, January 5). Insulin’s Out-Of-Pocket Cost Burden To Diabetic Patients Continues To Rise Despite Reduced Net Costs To PBMs. Forbes. https://www.forbes.com/sites/joshuacohen/2021/01/05/insulins-out-of-pocket-cost-burden-to-diabetic-patients-continues-to-rise-despite-reduced-net-costs-to-pbms/.
PERSPECTIVE: ENFORCING FEDERAL HEALTH CARE SPENDING AS A PROTECTED RIGHT
Section 1983 of 42 U.S.C. affords every citizen redress for deprivation of any rights, privileges, or immunities in an action of law. Private citizens may enforce rights protected by federal law in federal court. Federal jurisdiction is obtained when a claim arises under federal law. In Health and Hospital Corporation of Marion County, Indiana v. Talevski, the issue presented was whether a third party to a contract pursuant to the Spending Clause has a privately enforceable right. Congress limits how a state may spend federal money by imposing regulations and conditions on funding. The appellant, in this case, argues he has a privately enforceable right because he is a third party to the funds supplied through the Medicaid program regulated by the Spending Clause.
The appellant was placed in a long-term care facility and transferred to a different facility because of his behavior. The family members of the appellant disagreed with the transfer and filed a claim pursuant to the Federal Nursing Home Amendments Act (FNHRA) of 1987. The FNHRA regulates whether nursing facilities receive Medicaid funding based on how their facility is managed. The claim filed states that as a private citizen who is a third party to the benefit of federal funds received through the Medicaid program, the appellant had the right to enforce the Spending Clause based on his how he was treated at the nursing facility.
The lower court dismissed the plaintiff’s complaint for failure to state a redressable claim. The United States Court of Appeals reversed that decision and recognized a viable claim pursuant to the Federal Nursing Home Amendments Act (FNHRA) of 1987 protected by 42 U.S.C. § 1983 in spite of how the nursing facility is being regulated by the Spending Clause. The petitioner, Health and Hospital Corporation of Marion County, Indiana, filed a writ of certiorari that was granted for review by the Supreme Court. The right to enforce federal spending in a private cause of action is implied in the Supreme Court case Wilder v. Virginia Hospital Association, where the Court determined there was a substantive federal right and it was not Congress’ intent to prevent redress of this privately enforceable right. This case will undoubtedly be crucial in deciding the question presented in Health and Hospital Corporation of Marion County, Indiana v. Talevski of whether the Spending Clause gives an enforceable right as a private party protected by 42 U.S.C. § 1983.
PERSPECTIVE: HOW THE MEDICARE PROGRAM BENEFITS FROM THE INFLATION REDUCTION ACT
The pricing of prescription drugs has come under scrutiny recently by consumers who believe manufacturers set an extremely high price for highly sought-after prescription drugs for consumer use. More than 5 million Medicare beneficiaries struggle to afford prescription drugs [1]. Medicare is a federally funded program initially designed to provide health insurance coverage for citizens 65 and over and retirees. With no prior federal regulation in place to deter price gouging of prescription drugs, §1191 of the Inflation Reduction Act establishes a pathway for negotiating prescription drugs in the Medicare program as well as extending premium subsidies for policies obtained through the Affordable Care Act. Under this provision, Secretary shall establish a Drug Price Negotiation Program that:
(1) Publishes a list of selected drugs under §1192;
(2) Enter into agreements with manufacturers of selected drugs concerning such period, per §1193;
(3) Negotiate and, if applicable, renegotiate maximum fair prices for such selected drugs, per §1194;
(4) Carry out the publication and administrative duties and compliance monitoring per §1195 and §1196[2].
The Inflation Reduction Act also includes a maximum monthly cap on cost-sharing and no deductible for covered insulin products. The applicable copayment amount would be either $35, an amount equal to 25 percent of the maximum fair price established, or an amount equal to 25 percent of the negotiated price of the covered insulin product under the prescription drug plan [3]. The implementation of these provisions will sustain lowering drug costs in the Medicare program by offering an alternative to paying increasing drug prices thus improving access to care.
[1] Office of the Assistant Secretary for Planning and Evaluation, U.S. Department of Health & Human, Services. Secretary of Health and Human Services’ Report on Prescription Drug Affordability among Medicare Beneficiaries. 2022. Prescription Drug Affordability among Medicare Beneficiaries (hhs.gov).
[2] Pub.L. 117-169.
[3] Pub.L. 117-169.