Future of Medicare drug price negotiations murky under Trump

Lia DeGroot and Jessie Hellmann | (TNS) CQ-Roll Call

WASHINGTON — The future of one of President Joe Biden’s key domestic policy achievements –– getting Medicare to negotiate drug prices –– could either become part of the Biden administration’s legacy, get rolled back by the incoming Congress or be weakened by President-elect Donald Trump’s administration.

Trump has remained relatively mum about the drug pricing provisions of the 2022 reconciliation bill and its future appears even murkier now that Republicans will control both the House and Senate.

“The Trump campaign articulated no position on drug price negotiation specifically, but congressional Republicans are not fans of this program and introduced legislation to repeal the IRA in its entirety,” said Juliette Cubanski, deputy director of the program on Medicare policy at KFF, a health research organization, referring to the law by its nickname, an abbreviation for the Inflation Reduction Act.

Trump will find himself responsible for administering the program after the Jan. 20 inauguration. While he supported Medicare price negotiation in the past, it’s unclear where he stands on the issue now. His campaign backed off a similar proposal that would tie drug prices paid in the U.S. to prices paid by other countries.

Medicare drug price negotiation passed as part of the 2022 reconciliation bill, allowing the administration to negotiate with drug companies on the prices of 10 high-priced drugs beginning last year. The Biden administration said those negotiated prices, which take effect Jan. 1, 2026, would have saved Medicare $6 billion if they were in effect last year.

More than a dozen lawsuits targeting the program are also still playing out in the courts and the Trump administration’s Department of Justice must decide if it will continue defending it. Were it to decide not to do so, the strategy would echo the Trump administration’s decision in 2018 not to defend the 2010 health care law in a lawsuit filed by Republican attorneys general.

Trump has also shown a willingness to deprioritize the policy achievements of his predecessors, including his management of the 2010 health care law in his first term that saw declines in enrollment compared to that of the Obama administration.

“It’s really unclear at this point where the incoming Trump administration will take the Medicare price negotiation program,” Cubanski said.

The Trump transition team did not return a request for comment.

Congressional reaction

While it’s unclear how Trump feels about Medicare price negotiation, congressional Republicans loathe it, likening it to “government price controls” that reduces drug companies’ research and development of new drugs.

Some have vowed to repeal it, but Senate Republicans, who will control the chamber beginning next year, don’t have a majority that can clear the 60-vote threshold.

But they could likely use reconciliation — a budget maneuver to evade the 60-vote requirement which was used by Democrats to pass the law initially.

But it could be difficult to repeal the drug pricing provisions because it’s a money saver — the Congressional Budget Office estimated that the negotiation provisions alone would reduce the deficit by $25 billion in 2031.

Rep. Earl L. “Buddy” Carter, R-Ga., who serves on the House Energy and Commerce Committee, said in an interview that he’d like to see the committee work to undo the drug price negotiations provisions in the next Congress.

“My hope is that it will be eliminated,” he said. “In 10 years in the state legislature and 10 years in Congress, this is the worst legislation I’ve ever seen.”

But Democrats have championed the program. Senate Health, Education, Labor and Pensions Chairman Bernie Sanders, I-Vt. has appeared alongside Biden to tout the achievement.

Were the drug pricing provisions to be rolled out, said Sen. Tina Smith, D-Minn., “it would be a huge gift to Big Pharma.”

Cubanski cautioned that the Trump administration might not have much flexibility in how the provisions are implemented.

“There is a lot of detail in statute about how the program shall be implemented that in many ways does not give the administration a lot of leeway,” Cubanski said.

Enforcing the law

Still, the administration will have the ability to issue guidance over how negotiations will work, including how many meetings will take place between the government and drug manufacturers.

The Trump administration will run up against some key deadlines just shortly after the Jan. 20 inauguration.

By Feb.1, the administration must select up to 15 drugs that Medicare will negotiate prices on. It’s possible the Biden administration will select those drugs before Trump takes office, but the new administration would likely want to review that, said Jeffrey Davis, health policy director at McDermott +, a health lobbying, advocacy and policy strategy organization. “That’s a pretty quick deadline,” he said.

“Legally, they’re required to implement the Inflation Reduction Act,” he said. “But even if they’re required to do so, they could delay implementation or say they need more time.”

He added that the Trump administration could decide to deprioritize the program by moving staff and resources away from it toward other priorities, just as he similarly deprioritized the administration of the 2010 health care law.

He unilaterally canceled payments to insurers intended as reimbursements for reducing cost sharing for patients. Insurers sued and won. But it’s not clear who would have standing to sue over the drug negotiation program.

Project 2025 — the blueprint for a second Trump term which was denounced by the campaign but was written by many of his former and current advisers — calls for repealing the program.

“Until the IRA is repealed, an administration that is required to implement it must do so in a way that is prudent with its authority, minimizing the harmful effects of the law’s policies and avoiding even worse unintended consequences,” the plan states.

While negotiation is popular in polls, it is still not widely understood among the general public, and Republicans could claim the election results as their broad mandate to repeal it.

“An effort to lower drug prices is incredibly popular, so I think there would be a lot of thought to go into whether or not they would try to pull back measures that would net results with higher drug prices,” Eugenia Pierson, chair of the Legislative and Public Policy practice group at the law firm Arnold & Porter, said in an interview with CQ Roll Call.

Part D pilot program

Trump will also have to make decisions about a demonstration program launched by the Biden administration this year aimed at preventing premium increases in Medicare Part D that were triggered by the law shifting more drug costs to insurers as it capped out-of-pocket costs for beneficiaries.

The stabilization program will cost $5 billion and entails a $15-per-member per-month subsidy to plans and a year-over-year premium increase cap of $35 on a plan’s total Part D premium.

Republicans have called the $5 billion pilot an “unchecked taxpayer-funded bailout to paper over the flaws of the Inflation Reduction Act.”

“Without those additional subsidies [to plans] one could imagine a scenario where those premiums do increase substantially over current levels,” Cubanski said.

Pierson pointed out that there are drug pricing provisions of the law that will more immediately lead to lower costs, pointing to the provision that caps out-of-pocket costs at $2,000 beginning Jan. 1.

Pierson said that if Vice President Kamala Harris had won the election, the central question would be whether to push CMS to be more aggressive in the drug price negotiations.

“That changes now … that we’re anticipating a Trump administration,” she said.

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