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In June, the U.S. Supreme Court overturned the Chevron decision, which had given government agencies the final say on how to interpret vague federal laws, handing that power back to the courts.
This landmark decision could have far-reaching effects on the pharmaceutical industry by stripping some of its authority from both the FDA and CMS, and it also opens the door for pharmaceutical companies to legally challenge policies and regulations, such as the Inflation Control Act and recent regulations. Laboratory-developed testing rules.
Jesse Mendelson, senior vice president at revenue management firm Model N, said shortly after the decision that the change brings additional uncertainty to an already tough regulatory environment, which may be causing the pharmaceutical industry to take a “wait-and-see” stance on the impact.
Entering an era of regulatory uncertainty
This decision could potentially expose even routine FDA decisions to legal challenges. Patent issues, regulatory efforts, and R&D focus are areas where the industry will have to rethink its strategic position. Report From the law firm Buchanan, Ingersoll & Rooney.
“While companies may have more success in litigating against the FDA, a period of uncertainty will inevitably follow as the FDA, regulated industries, and courts seek next steps in a post-Chevron legal world,” Buchanan’s experts wrote in the report.
Mendelson said that if pharmaceutical companies challenge the FDA’s authority, it could further disrupt the drug development process.
“I think there’s a general wait-and-see attitude not just on manufacturing IRAs but on guidance in general.”
Jesse Mendelsohn
Senior Vice President of Model N
But the industry may not want to rock the established drug development and approval process. Already, the path from research to approval for a drug is 10 to 15 yearsAccording to the National Institutes of Health, the cost of developing new drugs has risen in recent years. $1 billion to $2 billionThe Congressional Budget Office estimates that the FDA is on track to approve $120 million through 2020. Legal challenges to the process or how the FDA makes its decisions could hinder the process, extending the timeline and increasing costs, Mendelson said.
“Drug manufacturers are concerned about CMS and the FDA putting up roadblocks and guardrails around drug approval, safety and pricing, but at the end of the day, all of those guardrails and checkpoints point to a path,” Mendelson said. “It may be circuitous, it may be difficult to follow, but it points to a path to both market and patient access. When one particular guardrail is removed and another is added, that path becomes cloudy.”
The IRA in crisis
The Chevron decision comes as CMS is grappling with issues surrounding Medicare drug prices. Negotiations with pharmaceutical companies As part of the IRA, CMS and pharmaceutical companies Final Negotiation Price It was published this month.
Pharmaceutical companies have voiced opposition to the IRA provisions, and some of the affected pharmaceutical companies Lawsuit filed The decision comes as the company seeks to halt the negotiations program. So far, drugmakers have lost in court, but the Chevron ruling adds further uncertainty to the process.
“There have already been numerous lawsuits filed attempting to attack the IRA on constitutional and other grounds, but from the manufacturer’s perspective, most of them have been unsuccessful,” Mendelson said. “I think there is a general wait-and-see attitude, not just on the IRA for manufacturers, but on the guidelines in general.”
Several top pharmaceutical executives have criticized the IRA’s impact on the industry, with Bristol-Myers Squibb CEO Christopher Boehner calling the negotiating program “a scam.”Arbitrary pricing “Government,” CMS said in the company’s latest earnings call. The negotiations were “good faith” and “thoughtful.” “The Medicare Part D price negotiation process is a complex one, and we need to be very careful about what we do to protect our patients and their families,” said Mendelson, who is also the director of Medicare’s Medicare program.
“Negotiating prices and rebates is second nature to pharmaceutical companies, and they do it all day with payers and providers,” Mendelson said. “This interpretation strikes me as more like coercion than negotiation. Now that Chevron is no longer the controlling player, this interpretation is subject to judicial review.”
In these uncertain times, Congress may pass further legislation to clarify IRA provisions, as it has done in the past with other major health care reforms, such as Obamacare.
“Congress still has the power at this point when it comes to the gray areas and challenges of the IRA by passing another bill to clarify those,” Mendelson said. “You’re going to see a lot more lobbying for congressional clarification.”
But with just a few months to go until the presidential election, Deadlocked Congressit’s unlikely anything will happen anytime soon.
