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July 14, 2023
At Astellas, we work every day to develop and provide access to innovative medicines that address the unmet medical needs of patients. We recognize the crucial need to holistically improve affordability and access for patients, but in doing so, it is essential to preserve an environment that enables biopharmaceutical companies like Astellas to continue investing in the research and development necessary to bring pioneering treatments to patients.
The Inflation Reduction Act (IRA) creates price-setting policies under the Centers for Medicare and Medicaid Services’ (CMS) Drug Price Negotiation Program (Program) that will disrupt the competitive marketplace for prescription drugs in the United States. Despite its claim to promote “negotiation,” the IRA imposes government-set pricing on prescription drugs available under Medicare that will discourage private-sector investment in the discovery and development of new medicines. As a result, the Program will disincentivize critical R&D efforts to tackle hard-to-treat diseases and diminish the availability of new medicines for patients.
While we need to address misaligned incentives in the drug supply chain, the market-based system in the U.S. has struck an important balance of innovation and access. This balance is now threatened by the Program’s price-setting policies.
The Program is not only bad policy, it is unconstitutional. That is why Astellas Pharma US filed a lawsuit in federal court, challenging the constitutionality of certain provisions of the Program. Under the Program, manufacturers providing critical treatments to Medicare patients will be compelled to accept prices unilaterally determined by CMS as the “maximum fair price,” or either face crippling financial penalties or withdraw all of their products from one of the largest healthcare markets in the world. In its current form, the Program violates the Takings Clause, the Due Process Clause, and the First Amendment of the United States Constitution.
First, the Program amounts to the physical taking of property by forcing pharmaceutical manufacturers to provide Medicare beneficiaries with “access” to their intellectual property-protected medicines at government-dictated prices. These mandated prices deny pharmaceutical manufacturers the adequate, market-driven compensations that they are constitutionally entitled to receive.
Second, the Program infringes upon protections secured under the Due Process Clause by depriving manufacturers of a fair opportunity to present their case before an impartial decisionmaker. CMS officials tasked with setting the unreviewable “maximum fair price” for prescription drugs are bound by a statutory directive to achieve the lowest possible price. This framework, in which CMS is an interested party that lacks impartiality and sets prices without the possibility of genuine negotiation, is unconstitutional.
Third, the Program violates the First Amendment by compelling manufacturers to endorse false claims that they have reached an “agreement” with the government on a “fair” price through “negotiation.” In truth, the IRA grants CMS authority to unilaterally determine the price of prescription drugs reimbursed under Medicare and forces manufacturers to “agree” that the unilaterally-set price is the “maximum fair” price.
Given the impact this Program will have on our ability to supply critical treatments to patients through Medicare, we are pursuing legal action to ensure we can continue to deliver healthcare solutions that improve patient outcomes and solve unmet medical needs for those living with conditions that have limited or no other treatment options.
We have long supported some policies in the IRA, including the annual out-of-pocket cap in Medicare Part D and the ability for enrollees to smooth their costs throughout the year. However, the price-setting policies established by the Program are unconstitutional and will significantly hinder our ability to deliver value for patients.
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