CAGW Submits Comments to CMS Against the Proposed Medicare Drug Price Negotiation Program Guidance | Citizens Against Government Waste

CAGW Submits Comments to CMS Against the Proposed Medicare Drug Price Negotiation Program Guidance

Agency Comments

April 14, 2023

Administrator Chiquita Brooks-LaSure
Centers for Medicare & Medicaid Services
Department of Health and Human Services
500 Security Boulevard
Baltimore, MD 21244

Re: “Medicare Drug Price Negotiation Program Guidance.”

Dear Administrator Brooks-LaSure,

On behalf of the more than one million members and supporters of Citizens Against Government Waste (CAGW), I respectfully submit these comments to the Centers for Medicare & Medicaid Services (CMS) in response to its March 23, 2023, solicitation for comments regarding its “initial guidance for implementation of the Negotiation Program for initial price applicability year 2026.”

The CMS guidance is being provided following the enactment of Inflation Reduction Act (IRA), which was signed into law on August 16, 2022.  As CAGW wrote, the Medicare drug negotiation provisions create price controls that will dramatically undermine drug research and development and leave “an invisible graveyard of patients.” Government price-setting will neither improve access to care nor lower patient costs.  And giving the secretary of Health and Human Services (HHS) the authority to set prices at the maximum fair price (MFP) is not a negotiation, it is a mandate. 

In their April 13, 2023, letter to you and HHS Secretary Xaiver Becerra, Senate Finance Committee Ranking Member Mike Crapo (R-Idaho), House Energy and Commerce Chair Cathy McMorris-Rodgers (R-Wash.), and House Ways and Means Committee Chairman Jason Smith (R-Ark.) wrote that the initial guidance should be reconsidered because it would impede innovation, weaken intellectual property (IP) protection, and hurt research into new uses for a drug.  They also expressed the concerns that the guidance would be a “backdoor mechanism” to implement march-in rights in violation of the Bayh-Dole Act, which was enacted at a time when few inventions or discoveries funded by government grants were being commercialized.  The act allowed patents owned by government-funded research entities to be transferred to private companies, which would spend money at their own risk to commercialize the discoveries.  “March-in rights” were only permitted if the private sector collaborator failed to commercialize the invention.  Undermining Bayh-Dole would further erode IP protection.  We agree with these concerns about the initial guidance.

With respect to the time allowed to respond to the initial guidance, most federal agencies provide a 60-day comment period with a 30-day period for reply comments, which has not been afforded in this proceeding.  The impact of the guidance on research and development, intellectual property, drug pricing, government control of the pharmaceutical industry, and the  live and death of current and future patients certainly requires more time than CMS has permitted for comments.   

The proposed guidance threatens future innovation by setting rules and regulations that further devalue existing patents and IP rights for specific drugs.  Research and development after Food and Drug Administration (FDA) approval is necessary to develop future cures.  The proposed CMS guidance will disincentivize research and development post-approval and drug manufacturers could potentially be penalized with a lower MFP.

Another objectionable aspect of the proposed guidance is the “gag” rule that would require a drug manufacturer to hide and destroy information related to each individual decision on drug pricing.  The proposed restrictions would be contrary to Freedom of Information Act (FOIA) and document retention standards.  Hiding the underlying basis for a decision on drug pricing subverts accountability and transparency.  It could also be considered as a prior governmental restraint on speech in violation of the First Amendment.

If CMS proceeds with implementation of the proposed guidance, there will be a significant negative impact on drug manufacturers and their ability to develop safe and effective drugs, as well as devastating consequences for patients now and well into the future.  CAGW urges CMS to implement a longer comment period and eliminate provisions in the proposed guidance that would have negative implications on research and development, transparency in government, and freedom of speech.


Tom Schatz
President, CAGW