Drugmakers are suing the federal government over a new CMS rule that requires them to include the discounts they offer to patients when calculating the "best price" for drugs under Medicaid's drug rebate program, according to a lawsuit filed in the U.S. District Court for the District of Columbia on Friday.
The Pharmaceutical Research and Manufacturers of America said in its complaint that CMS didn't have the power to issue the rule and seemingly reversed course on the agency's longstanding interpretation of the law.
"Patients have never been included on the list of best-price-eligible purchasers, presumably because Congress did not want to discourage manufacturers from offering discounts or other assistance to patients," the complaint said. "The statutory text remains unchanged."
The Trump administration approved the new rule in December, hoping that it would make it easier for private insurers, state Medicaid programs and prescription drug manufacturers to create value-based payment arrangements tied to clinical outcomes.
The agency overhauled regulations that get in the way of those arrangements, intending to expand access to new, high-cost drugs, including gene therapies.
The rule allows private insurers to create value-based arrangements with pharmaceutical companies and drugmakers to report multiple best prices for specific value-based arrangements. In addition, insurers and drugmakers can create bundled contracts, among other changes.
At the time, CMS said the changes would make drugmakers more willing to negotiate with payers, including Medicaid.
But hospitals, insurers, drug companies, medical schools and Medicaid directors argued last summer that CMS rushed the rule. They warned they needed more time to understand it since the agency didn't look into how it would affect states and the healthcare industry or say how it would ensure the rule would work as intended.
Drugmakers were concerned the regulation could lower the price they are allowed to charge hospitals in the 340B drug discount program. And others worried it would create administrative problems and costs for providers, states and insurers.
The Biden administration is reviewing the Trump-era rule, which is set to take effect next year.
In their complaint, drugmakers blamed commercial health plans and pharmacy benefit managers for increasing consumers' out-of-pocket drug costs through so-called "accumulator adjustment programs."
"Through these programs, health plans and PBMs unfairly siphon the benefits of manufacturer assistance from the patients for whom it is intended," the complaint said.
Accumulator adjustment programs allow health plans to exclude manufacturer discounts when determining patient deductibles or out-of-pocket limits.
Some experts argue that coupons encourage providers and patients to use brand-name drugs instead of their generic equivalents, which could increase drug spending. But drugmakers, patient advocates and many providers claim it doesn't work in practice and forces patients to spend more on the drugs they need.
