Hello, and welcome to the Votes in Burdocks podcast, hosted by the policy and litigation team at Bloomberg Intelligence, the investment research platform at Bloomberg LP. This podcast a series examines the intersection of business policy and law. I'm doing Right, an analysts with Bloomberg Intelligence covering government healthcare policy, and.
I'm Tishwalker, an analyst with Bloomberg Intelligence covering patent litigation in the pharma and biotech space.
So our topic for today is the Inflation Reduction Act, specifically the drug pricing provisions included in the new law. And if you've been around DC long enough, you know that Medicare negotiation of drug prices has long been a policy dream for Democrats, which became a reality in twenty
twenty two. Now, while the law did not go as far as many Democrats would like, it still does have implications for drug manufacturers as they now face government mandated discounts of at least twenty five percent for some of their drugs, but also as implications for future research and
development and patient access to innovative new therapies. We're lucky to have Margot Hall, a partner of the Healthcare Regulatory Group at Ropes and Gray based out of Washington, d C. A graduate of Harvard Law School, Margot has a deep background in drug pricing and market access and will walk us through some of the business and policy questions relating to the Inflation Reduction Act. So with all that, Margo, welcome to the Votes and Verdicts podcasts.
Thanks very much for having me, and I look forward to discussing this topic. It's certainly one that's top of mind for many of us.
So let's take a step back for a second. Ropes and Gray. For people who aren't familiar, give us a bit of a background on your firm.
Sure, So, we are a global law firm. We practice and have attorneys fifteen hundred or so that practice and
multiple continents, multiple legal jurisdictions. As you mentioned, I'm based in the heart of where these regulatory changes unfold, in Washington, d C. In the firm's Washington, d C. Office, and so, by virtue of my location in DC, and by virtue of working in this space, I spend a lot of time looking at legislative developments and also interfacing with regulatory agencies, certain of which are under enormous stress seemingly now to implement the IRA, and.
So prior to passage of the IRA, what were some of the thematic overall conversations you had with industry about some of the key policy issues in DC.
So, you know, to say the least, drug pricing has been a hot topic for many years now, preceding the IRA's enactment. For several years prior to passage of the IRA, we had seen proposals legislative and regulatory for forms of government manded negotiation of drug prices and the Medicare program, and we had seen them under prior administrations. We'd actually
seen them advanced on a bipartisan basis. Slight differentiation in terms of the proposals that were on the table, also differences in terms of how folks thought it would be
appropriate to benchmark pricing for the Medicare program. I think one of the themes in years pre dating passage of the IRA was, you know, should we be looking outside the United States at drug prices and other jurisdictions, which, you know, fortunately, from my perspective, was not a feature that we saw ultimately in the passage of the IRA, But we had really seen whispers or perhaps even stronger than whispers of many of the concepts that ended up
being memorialized in the Inflation Reduction Act as they pertain to drug pricing. So for several years there'd been discussion about having some form of a rebate back to the Medicare program if drug prices increase faster than the rate of inflation. And also patients, patient advocates and many others for years had been very concerned about the structure of the Medicare partsy benefit with patients having no cap on coverage.
And so really what we ended up with in the IRA is some new, some old and repurposed and really a mixed bag from my perspective when it comes to questions of patients and accessibility and what that might look
like in future years under the Medicare program. But also, you know, I think we'll probably talk here today in the commercial market segments as well, because it's very difficult to contain any the impact of any legislation of this scope in nature to simply one program like the Medicare program. And I think we're already reading the tea leaves on that.
Well, thanks, that really helps set the stage for how we got to where we are today. So what are the key changes you think for life sciences companies under the IRA as it's been enacted today.
So you know, from a drug pricing perspective, there are three statutory provisions that are of import and you know, I'll walk through all of them. I think the most attention has been given to the drug price Negotiation program, but the other components are really important as well because they have interconnectedness and they all have push and pull factors depending upon different stakeholders in their perspectives. So you know,
first you have inflation based rebates. These are rebates that are paid back to the Medicare program if net prices increase faster than the rate of inflation. And actually those
inflation based rebates are already in effect. They went into effect October of last year for Part D drugs, which are self administered drugs, the types that you would get from a local retail community pharmacy, for instance, and they went into effect January first of twenty twenty three for Part B drugs, which generally are the physician administer drugs. Notwithstanding the fact that they've gone into effect, they have
not been invoiced yet. CMS has discretion to delay invoicing of those initial rebates until towards the end of twenty twenty five, so their in effect is a legal matter, but perhaps you know the market hasn't fully adjusted to them yet because folks aren't actually getting the invoices and seeing. You know how the manner in which these rebates might
impact manufacturers and their pricing plans. I mean, one thing of note about those rebates is they are while they are assessed on Medicare owned only utilization, by virtue of how they are calculated, they're based on commercial pricing, and so they are likely to have an impact of depressing net price increases in general, even in the commercial market. Then second, you have this fundamental redesign and overhaul of the entire party benefit beginning in twenty twenty four and
twenty twenty five. So for the first time we have a patient out of pocket cap on Medicare party drug spend at two thousand dollars. That is welcome relief to a lot of patients in the Medicare program, especially those who have had higher and limitless drug spend historically. And you have a complete restructuring of the different phases of the Part D benefit, with the coverage gap phase being eliminated, leaving a benefit that will have an initial coverage phase
after the deductible's net, and then a catastrophic phase. And then in thinking through the stakeholders, you know there are four key categories of stakeholders who pay for prescription drug costs under the party program. You have patients, you have
the government, plans, and pharmaceutical manufacturers. And while the split will differ for any given patient depending upon his or her drug spend on the whole, the general financial obligations for pharmaceutical manufacturers and party sponsors are likely to be increasing under this party redesign, so patients from the government on the whole should see some relief, but interesting consequences in thinking through the fact that plans and manufacturers are
likely to incur more proportionally of the costs of sort
of overall party drug spend. And then, last, but not least, I think we'll probably spend perhaps the most time talking about this today or the very controversial Medicare price and agiations, where for the very first time there will be a government determined so called maximum fare price and that will go into effect first in twenty twenty six for ten drugs in the Medicare Part D program and then starting in twenty twenty eight for Part B drugs as well.
And it's really, you know, a negotiation program unlike anything we have seen before in the Medicare program in that even though it's referred to as really a you know, back and forth negotiation, what has become clear as we have more guidance that CMS has now released, is that it's it's really far from sort of an even handed negotiation as we might envision it generally unfolding in the
commercial market. This is a form of a government mandated price control on drugs that are identified as contributing sort of as top spenders in the Medicare program. And even that selection and identification process is already very very contras So, you know, those are the three key components from a drug pricing perspective. The IRA itself, a very lengthy statute, has much much more in it pertaining to all other
sorts of different industry sectors. But you know, that's that in a nutshell, those are the three key provisions that I would say are keeping me very busy and are of tremendous import for life sciences companies.
And so as we think about it. It's interesting that in one sense, the cloud has been lifted in terms of the uncertainty of what kind of policy would be enacted from a drug pricing standpoint, but we don't know from an implementation standpoint how this could play out for the impacted industries. And I wanted to talk a bit about I think a side or an angle that doesn't get talked about that often or that much. It's on
the generic side. And we can come back to the brand sign in a second, but you're looking at some of the data we've seen, and the FDA has has a study as well. First the market, generics can enter at a price point that's roughly a third of the brand drug. But we know that the negotiation process is going to lead to cuts for high expenditure drugs of at least twenty five percent, and there's a ceiling in the law, but there's no floor in terms of the
potential pricing points pretense pricing points. So in what way does the ir RA alter some of the incentives for generics and biosimilar manufacturers when they're thinking about coming onto the market in a handful of years.
Yeah, it's a really interesting question, and I think It's an example of the manner in which the statute has pushed and pull factors where it's you know, hard to predict a single clear impact on a segment of industry.
You know.
On the one hand, I know, there has been certain speculation that the government Medicare negotiation program could drive down prices generally on branded products right through the lower government negotiated so called maximum fair price. And I've seen related speculation that, you know, perhaps this will shrink the margin for some products, especially products with higher utilization or less
utilization but higher cost on the whole. Right, greater spended Medicare might actually shrink that margin between brands and generics at the same time. So maybe maybe you know, that might be a disincentive for some companies that are thinking, well, I might want to enter the market because I expect that the key product to which I would be a therapeutic equivalent in FDA parlance, right, is going to be selected for negotiation. Now, however, there are also vectors that
cut directly in the opposite direction. So under the program, in order to be selected for negotiation, you need to not only be a certain number of years post FDA approval. It's seven years for small molecule products when selected, and
eleven years post BLA approval for biologics when selected. However, you also need to be a single source product, meaning that there is no generic or biosimilar on the market, and I think that may lead to earlier generic entries in the market, earlier biosimilar entries, even for those products that have residual tails on their IP exclusivity windows if they have higher utilization. I mean, I think there could be this implicit incentive within the statute to forego certain
years of exclusivity. If you know, I think I'm going to be up for negotiation, and by virtue of relinquishing some of my remaining exclusivity period and getting out of the single source drug rubric, I will be able to avoid negotiation entirely. And so it's you know, interesting dynamics. I don't know from my perspective that they clearly point
in one direction. And some of this also might be very therapy specific, just depending upon the nature of particular therapeutic areas, and you know, the complexity for instance and actually having biosimilars and getting you know, the requisite approvals or or whatnot.
But when you think about generic entry or biosimilarity. It seems like there's some key there's a timing issue involved here where you could have a drug on the list, you could have a generic that's marketed, but then you'd also have the brand drug still have some pretty steep discounts, So you have both these drugs on the market. Is that a scenario that could play out, or like, how do you see this potentially impacting the market?
Well, so, first, an authorized generic does not count as a generic or biosimilar on the market. So authorized generics have their own interesting nuances in this landscape. But if we think about true generics or biosimilars, once they enter into the market, if a product has not yet been eligible for selection for negotiation, it can lead to that product's lack of eligibility to be selected. Let's say a product's already subject to the maximum fair price, though, and
then a generic comes online. Then under the statute, if a product's already subject to that maximum fair price, if the Secretary determines there's a generic or biosimilar that's being marketed, the drug is no longer going to be subject to that maximum fair price at the start of a year. That's at least nine months after that determination, right, So there's some tail, there's some lag in this determination. So I think it leads to the question of, Okay, the
government has determined a maximum fair price. Let's say a product has been on the market, and let's assume that there may be some level of commercial market convergence towards that price. Notwithstanding the fact that the government determined price doesn't directly apply to the commercial market. It's published, it will be publicly known at that point if a generic comes online, Right, I'm assuming this will be a financial
and broader business calculus. Right, do you anticipate that the branded price is going to go back up even if that product is no longer subject to the government negotiation period? You know, kind of how do those different pricing factors play out as you plan for a market access and
competitive strategy. And I'm sure there are teams of individuals with lots of expertise beyond mine and kind of modeling that and looking at it and again probably therapy by therapy and figuring out like, is there still a viable market for both the brand and the generic in this particular place. If you've lived in a world in which IRA negotiation applied for at least some period of time.
You know, I think that's really interesting, and I think sort of adding on to that, you know, one concern I know that I've heard, but I guess time will tell if this will be realized, is are we somehow disincentivizing generics to even come to the market, and what are the impacts of that in terms of you know, brand manufacturers, you know, having to continue to manufacture their
drug with no generics. So I think you bring up some really interesting points and I think it'll be interesting to see, you know, how this plays out in terms of the impact on generics. But moving to regulatory strategy and life cycle considerations. So you know, as you said with you have small molecules now that are going to be eligible for the negotiated pricing after they've been on the market nine years. That price negotiation is you know,
starts thirteen years after our biologics on the market. So in terms of our you know, regulatory strategy, do you anticipate seeing some sort of fundamental shift in drug development strategies that would push away from small molecules in favor of large molecules.
Well, we certainly have seen some public announcements from companies in that regard right, that the IRA has slashed the value of small molecules. We've seen in public filings from certain companies them saying that there is less desire to invest in small molecule innovation. And I think we have to counterbalance that with some of the realities of the enormous complexity in bringing any products successfully to market and the fact that you know many companies that perhaps we're
not backing the passage of the IRA. I mean, I confess I myself was not expecting it.
Right.
For years, we had seen Congress in DC not be able to get anything done and have requisite bipartisan consensus, have been largely blindsided right by the IRA, and might have already had products well into development that may be seriously impacted by this negotiation program. And so the horse might have already left the barn in those instances. And then I think you have to layer on the additional complexity that comes with receiving licensure of a biologic as
compared to a small molecule. Biologics just historically have been much more difficult to develop, and so on the whole. I guess if you were starting with a clean slate, and you had both options on the table, and the expected expense of pursuing either small molecule or biologic was
otherwise equal. The IRA certainly puts a thumb on the scale of biologics because of that additional for your window before a negotiated price would apply if you think you would be in a therapeutic area where you'd be subject to selection. But of course, you know, the devil's in the details with all of this, and for some therapeutic areas, the advances and write the scientific know how at this point is really in the small molecule space, and so you know, I don't know how easy it will be
to pivot to biologics for some therapeutic areas. Will we potentially see the abandonment of research into additional indications on small molecule products or on biologic products. I anticipate that we will.
You know, that's interesting because in some ways then you're almost missing, maybe an unintended consequence of the IRA becomes somehow missing the full potential of a therapeutic because of the way the negotiated pricing works, and so even picking up on some of the regulatory challenges and looking at the CMS guidance and you sort of hit on this before when you were talking about impact on generics, But were you surprised that CMS chose to define as a
one sort of single source drug or biologic that it would include all the dosage forms and strengths with the same active moiety and ingredient if they were held by the same NDA or BLA holder, which would be then inclusive of products that could have been marketed under a different NDA or BLA. Maybe just some thoughts and comments on that guidance.
Yes, I was very surprised. So that was CMS guidance that came out mid March of this past year as part of ninety one pages of subregulatory guidance, and actually certain portions of that guidance were open to public comments on a voluntary basis, and certain were not. And this happened to be one that was not open to public comment.
And I was really surprised when I read that, because historically it's been very clear in the Medicare program when it comes to drugs, if you get a distinct FDA approval through an NDA or a BLA, you get your own HICCKPIX code. If you're a medicare part be physician administer drug You therefore get your own reimbursement and pricing profile.
And I would say, broadly speaking, in general, HHS has deferred to FDA to make determinations regarding when a product really qualifies as being distinct and therefore having a distinctive approval. What CMS put forth, as you said in the March guidance, was that it would aggregate all products that have the same active moiety or active ingredient, even if those are subject to distinct FDA approvals, aggregate them for purposes of
selecting drugs for the program. So let's say you are a company in the oncology space where this is it's fairly common for companies to actually launch first with like a smaller scale indication while they pursue additional research into potentially a broader line indication. And then let's say years later, you successfully are able to establish safety and efficacy through FDA standards for another product, even a product with a
separate NDA for a broad scale indication. It would appear under the statute that what CMS is saying is you started the clock with your tiny, small, small scale indication, but we're going to aggregate all utilization if it's the same active ingredient or active moiety, such that hypothetically you might have no period of shelter from the negotiation program by the time you've launched the sort of larger broad
scale indication. And I know, in my view that's not only out of line with the statute and the way I read the statute, I think it has really important and potentially harmful concept sequences for the future of clinical development and therapeutic areas and the sets of incentives around development and research, including some development and research that has been well underway for quite a few years that's potentially
showing promising results. And who knows if companies might actually decide to abandon certain clinical research pursuits that could be a creative to our healthcare ecosystem based on that type of an interpretation from from CMS of the statute. So yes, I was surprised and incredibly you know, concerned when I read that in the guidance.
Yeah, you know, it's interesting because I think, you know, life cycle management to me often becomes a faux pas of a word nowadays, and it's equated with from a patent perspective, sort of evergreening. But I do think part of life cycle management is looking at additional therapeutic indications
and maximizing the full potential of a therapeutic. So I think you really hit on some interesting points about how maybe there could be some negative consequences here in terms of, you know, companies abandoning research that could be really helpful to patients because there's just no incentive right now for them to continue to do that. So I think with that, I'm going to pass it to Dwayne to talk a little more about commercial and patient access implications under the IRA.
So as we think about and I think you mentioned this earlier about some of the broader than medicare implications for what the government's doing with truck pricing, how do you see this playing out in some of the non medicare markets, Because when these prices are negotiated, and you can't see air quotes on a podcast, but I am using air quotes around negotiation, everybody's going to know what
that price is, including the commercial sector. So do you anticipate any bleedover or how do you anticipate the commercial market, the non minicure market looking at the published negotiated price and then what that means moving forward.
Sure, you know, I too use negotiation and air quotes. I also might use fair in terms of maximum fair price that that word in air quotes, so obviously revealing some of my perspectives on some components of this legislation. But yes, I do anticipate real bleedover to the commercial market here, although much of the extent and sort of
speed of bleedover is really speculative at this point. You know, in the first few weeks after the IRA was enacted last year, I received primarily questions relating to particular products that were anticipated to be selected for negotiation, but several in and for all times since, many of the questions that I'm receiving relate to the complexity and the commercial
market dynamics and the broader market dynamics. And here too, there are many of these push and pull levers, and given the complexity of the pharmaceutical supply chain, a lot to unpack in terms of different stakeholders, how they might react, what are their sets of incentives, And so I'll give
a couple examples. In the case of Part D selected drugs, one of the silver linings of being subject to government negotiation is that you will be included on Medicare part formularies on a nationwide basis, and party plant sponsors currently are required to include at least two products per therapeutic class on a formulary, with the exception of the so called protected classes. So let's assume we're in a non protected class space, and so the rubric here for party
plant sponsors is minimum of two per therapeutic class. Some may cover more, but right, that's the role at least too. If one formulary space is locked, so to speak, what does that mean if you have a product that's not
selected that's also in that therapeutic space. And what are the incentives for party plan sponsors, for pharmacy benefit managers that construct that formulary when they look at how to fill out that particular therapeutic class, Assuming clinically speaking that there are several alternatives that they might include on the formulary, I think we're going to see a lot of interesting incentives and dynamics that influence formulary design in ways that
I assume Congress didn't necessarily intend when it drafted the IRA, which could have serious impacts on other products that are not selected. Early in the Medicare Part B program. So, in the case here of physician and minister drugs, when a product's selected foreign subject to the maximum fair price, healthcare professionals are reimbursed based on one hundred and six percent of that maximum fair price rather than currently one
hundred and six percent of average sales price. And without going into tons of detail on the price reporting mechanics underlying those figures, now, I'm assuming here that the maximum fair price is likely to be lower than the current average sales price. In other words, providers will be reimbursed less. Well, what does that mean if you're a healthcare professional, especially let's say one that has a community based clinic. Could they potentially be underwater when it comes to drugs that
are selected for negotiation? And if so, assuming that they are indifferent from a clinical perspective between a product that's on the negotiation list and one that's off the negotiation list, you know, how will that impact the market and their decisions when it comes to prescribing particular products. And then finally, last, but not least, and you know, Duane, you alluded to this before. The maximum fair price is going to be published, and it will be published over one year before it
actually goes into effect for the medicare market. And I'm seeing a lot of questions around you know, what signaling effect is that going to have for the non medicare market. Will we see a convergence towards this rate that the government has endorsed in its view as being the maximum fair price, and if so, what will be the pace
of convergence? And certainly seeing a lot of questions in that regard from a you know, a deal making perspective as well, where you know, happy, happy to kind of share share more about how that's already playing out, even though this program is not yet in effect until twenty twenty six. Just want to reinforce these problems, these market dynamics are already unfolding.
Now, Can you share some thoughts there on the deal making market when you're talking about royalty arrangements and other aspects.
Sure, so this was, you know, just a couple of weeks after enactment of the IRA, I had a counterparty and a licensing arrangement propose a fixed rate royalty reduction
if a product was actually subject to IRA negotiation. So the market moved fast, right, And what we are seeing is a large number of traditionally larger pharmaceutical companies that are insisting on IRA royalty reduction language advancing the rationale that the irays effect on pricing and therefore the gross margin is very uncertain, so it can't be priced in from the outset, and they need some sort of relief valve. And you know, there are a few different flavors of
what I've seen in those licensing and royalty arrangements. The perspective in terms of which type of ultimate deal is most appropriate differs depending on upon whether you're the licensee versus the license sore. But you know, there are a couple key questions that come up, as you know, I've looked at quite a few of these. Now A when should the royalty adjustment be triggered? Is it when a
products selected for negotiation? Is it when the government's published that maximum fair price even before it's gone into effect, or is it when it goes into effect? Relatedly, what's the universe of sales to which you would apply a reduction? Technically, the IRA only applies the reduction to the medicare market, But again here you have the surfacing question of commercial market and how will commercial market respond and then last
but not least, you know what's the amount. You know, the fifty percent proposal that I saw, there's no magic in the statute around fifty percent. In fact, we don't know where the government might land because to your earlier point, we have a statutory ceiling, but with rare, rare exception, no statutory floor. And also in the latest CMS guidance there was some very interesting sign posting regarding the broad range of subjective factors that CMS may consider and actually
reaching that maximum fair price. So how do you even know what the rate will ultimately converge upon for purposes of these royalty arrangements. So you know, that's one way where I'm seeing this have major deal making significance. I'm also seeing in general deals perhaps being more or less
attractive depending upon therapeutic areas. For instance, if you happen to be the very rare company that qualifies for a small biotech exception under the statute, that would seem to be a disincentive to M and A during that period of statutory relief, because if you're getting relief now and then your acquired chances are the acquirer if they're pricing that in so the value of the deal is not going to get the benefit of that relief because they'll
likely no longer qualify for the exception. So lots of really interesting deal making dynamics that are already unfolding in real time.
Right, I mean, especially because these deals sometimes take place well before a candidate's even known if it's going to make it into the clinic. So we wanted to go back to negotiation a little bit and talk more about the CMS guidance. I know we touched on it, but can you tell us a little bit about the CMS guidance on negotiation because we're getting sort of very close to the date where this list is going to come mount for those first set of drugs to be negotiated.
What can we get from the guidance in terms of how CMS anticipates running the first year of the negotiations.
So thus far, when it comes to CMS, we're seeing a form of what I would describe as agency triage, with an intensive focus on the first year of the negotiation program and those first ten party drugs that are up to selection, and many components of the program later years otherwise are seemingly being deferred. Even though twenty twenty
six is a few years away. The entire negotiation has to take place before then, starting with the publication of the drugs that will be subject to negotiation as a will buy September first of this year, and so there are many facets of the program to iron out in the interim period. But we do have, you know, these ninety one pages of guidance that are focused on the first year of the negotiation program. We touched before on some of the interesting substantive components of the guidance, and
you know, talked about some of those. We actually have a lengthy client alert on the Ropes and Grade website of folks want to know more about the guidance, you know, please feel free to go to our landing page and you can read all many other points on the guidance. But you know, one thing that really stuck out to me, apart from some of the substantive provisions or really important procedural points, here, first, any comments that were solicited on
facets of the first year of the program. We're solicited quote voluntarily, so you know, in other words, the agency is not following the typical process under the Administrative Procedure Act of Notice and Comment rolemaking and instead use comment solicitation as not legally compelled but rather a voluntary endeavor. And second, on certain foundational topics, namely everything that has
to do with the identification and selection of drugs. The guidance was issued as final without a comment solicitation in order to quote facilitate timely implementation. You know, from my perspective there are very important implications of this. First, the opportunities for engagement are being delineated by the agency, not
typical notice and comment procedure. If you were looking, for instance, for a centralized repository of the comments that were submitted on that guidance, I have not found one as of yet.
Some organizations are publishing theirs online. But if you wanted to get the perspective, which I generally do, especially for any any legislative regulatory program of this nature, I'll pull down the comments from like the patient trade associations and you know, the hospital Trade Association, because I want to understand where different stakeholders are coming out on it and
think through different angles and impacts. I have not found a centralized repository for that, but more fundation mentally, you know, the processes that have been made available, which include some things like you know, monthly manufacture calls where you need
a certain code to be able to participate. You know, those processes raise important questions from my perspective in terms of transparency, opportunities to engage many different voices, not just pharmaceutical industry, but patients, caregivers, providers and others to meaningfully inform the implementation of a program that will undoubtedly have a profound impact on access to existing and pipeline therapeutics.
And so if this implementation isn't running per the usual course that you would expect to see with this type of a new legislation, you know, and we've seen, as you mentioned, industry has raised some concern, you know, that the guidance hasn't provided adequate opportunities for input. Do you think we might see some litigation on this legislation?
Well, I think certainly we've seen that wherever there have been proposals along the lines of government negotiation right most notably in recent years, under the midnight hours of the Trump administration, there was a Most Favored Nation Interim Final rule that would have also, in its own way, established new government negotiated pricing for the Medicare part fee program.
There was a spate of litigation from a variety of stakeholders, providers, patients, pharmaceutical manufacturers, filed in short order in courts across the country, really scrutinizing what the legal authority was for that proposal
and what the potential impact is. So, you know, when I look at the IRA, and again this is where it would be helpful to see additional comments, I see a variety of stakeholders that might have sincere concerns about the manner in which this negotiation program may impact them. And I suspect that all of those stakeholders are likely to review the legislation and then any agency action and
consider the legality. And you know, consider with regard to agency action, has the agency exceeded it's it's legal authority under the statute. So you know, at a minimum, I suspect that many different stakeholders are going to be looking very very closely at IRA implementation as it unfolds.
And so anytime I'll bill like this becomes law, the post action item is okay, how do we either repeal it or how do we fix it? I think it's fair to say that with Biden as president for the next year and a half at least appeals off the table. And I would even say that there are fixes that probably aren't on the table right now. Can you give us a sense of what you think. I think the appetite is by Congress to look at some of these
items more closely now that it's been passed. You know, I go to this disparity between small molecules and biologics, for example, Is that an area that could be ripe for fixes or what's your general crystal ball outlook of Okay, is this an area where Congress is going to step back in again?
And this is an area where I've been humbled by past experience and trying to guess anything that might happen in DC on the hill. I mean, I agree with you that I think repeal seems virtually impossible under the Biden administration. And Biden said that right President Biden in a State of the Union address that he would be
to any attempt to repeal. In fact, in his budget proposal from earlier this year, he proposed accelerating the program and expanding it, which that too, I don't think we have requisite bipartisan consense under this Congress to probably do either.
And I say this again humbled by past experience in that I was one of the cynics in thinking that these types of drug pricing provisions in the IRA would ultimately be enacted, And so you know, I've been humbled by some past experience with regard to amendments over time, I mean, I would hope that as we continue to see the real impacts on scientific innovation and the ecosystem for exploring new therapeutics, and as folks begin to perhaps read the legislation more closely if they voted for it
and didn't really understand all of the facets and how those are interconnected with other important business decisions, and here from different diverse stakeholders, including those that may have their ear and be more sympathetic in their view than you know, some other categories of stakeholders, that folks will read that there are some provisions at a minimum under the statute that don't make sense from an equity perspective, or you know, there's some areas where it's clear that CMS is going
to need much more clear instruction on what Congress had in mind and what are sort of permissible ways to establish pricing for instance, we have a maximum fair price. Perhaps we should have a floor within the statute so that we're ensuring that we're not gutting virtually all incentives
for innovation. So, you know, I am hopeful that there will be sufficient bipartisan consensus to take a closer look at the statute as we're learning more and more about the potential shortfalls, and revisited, at a minimum, to shore up some of the provisions where I think we're staring down some real potential patient harms.
I'm going to show my age here. I was on the hill when MMA passed, and I saw how that implementation went and some of the fixes that went into that, obviously around for the ACA getting signed into law, how that was implemented, and some of the next steps Congress took to try and address some of the issues there. And most recently we've seen how Congress beefed up some of the subsidies. You know, that's obviously a democratic initiative,
but we've seen some of those steps taken. I am curious to see how this will play out now that, to your point, it has become law. Some members may be reading it for the first time, or at least they're understanding what the potential impacts are on industry and patients as well, and so I think we're all very interested in seeing how it's played out. And I can't think Margo enough for joining us on this episode of
Folks and Verdicts. I've learned a lot in the past half hour, and I think this is an issue where we could probably have a podcast a week for the next several years, and I think we can all learn from that. So thank you, Margo, Thank you to the listener for taking the time to join us. As a reminder, you can read all of our Bloomberg Intelligence research on the Bloomberg terminal at EI GO. Thank you again and have a great day.