Pharma and Biotech Drug Pricing Policy Outlook

and analysts with Bloomberg Intelligence covering pharma patent litigation. Today, I'll be joined by my colleagues Duane Wright, a senior policy analyst covering healthcare policy, and ode Gerspatcher, who leads the Global Healthcare team and also covers patent and healthcare litigation. They're going to be doing the heavy lifting today as we discuss key policy, regulatory, and litigation issues that impact

the therapeutic sector. This includes the Inflation Reduction Act, drug pricing implementation and the legal challenges there too, the three forty B drug discount program and related litigations, as well as Medicare coverage outlook for some newer therapeutics. Let's dive right into it. We're going to start with the Inflation Reduction Act, or the IRA. Dwayne, My first question is going to be for you. So we've been talking about the IRA, it seems like for almost two years now.

So where does implementation stand today for the drug pricing provisions of the law and what do you think we should expect over the coming months.

companies have countered. So the initial offer was provided by CMS February first, and while will not surprised that pharma kept them secret, we did hear from one CEO that the offer at least wasn't outrageous and so this will all culminate in a final take or leave it offer on July fifteenth and end negotiations around August first. The key here, which is what we've talked about a lot at PI, is that will know the maximum fair price

by September first. And as a reminder, the law sets in place a maximum fair price for these drugs, which is based on the amount of time it's been on the market or FDA approved a higher ceiling for those that have been on the market for a shorter amount of time and a much lower ceiling price for those products that have been on longer. We'll see an explanation for those maximum fair prices in March of twenty twenty five.

And keep in mind the factor for setting the maximum fare price include R and D cost, production costs, market data in the US, and other factors. One thing I'm looking for to is how medicare pricing could affect pricing for other payers. I don't think there's a lot of consensus on the issue. There's some concern by employers that are worried about potentially higher costs to make up for

Medicare losses. Some would say that if that was the case, we'd already see higher prices, But it could also be the case that just because Medicare gets a specific price employers those in the commercial market might not be able to demand that same price. So time will tell as

to what the spillover effects will have. But we're looking forward to the next couple of months playing out where there are counter offers and potentially meetings between CMS and the drug makers over what that maximum fair price should be.

these pieces might be. One area is in the space of orphan drugs, and we need to keep in mind what the law does. The IRA exempts from negotiation those orphan drugs designating for only one rare disease or condition where the approved indication is for the disease or conditions.

So drugs with multiple designations for multiple rare diseases or conditions aren't exempts, even if the additional indications haven't been approved by the FDA, And as a reminder, orphan drugs are used to treat rare diseases or conditions that affect

fewer than two hundred thousand people in the US. It's an open question as to how many of these orphan drugs would be affected under the law, because you have to keep in mind there is a spending threshold two hundred million dollars per year in medicare spending to qualify

as a drug negotiation eligible drug. And so we've written about how some studies have shown orphan drugs are approved just for one rare disease, there's a small number approved for multiple rare disease, multiple rare diseases, and then a slightly larger portion that are proved for a rare and common disease. So what this, what a proposal would do, is exempt from negotiation drugs that have orphan designations for one or more rare diseases or conditions. I'll get into

the outlook in a second. There's a separate bill that is another pharma priority, which would create parity between how small and large molecules are treated under negotiation. As a reminder, small molecules become heligible for the program after seven years of that the approval the large molecules are eleven, with

the prices implemented after nine to thirteen years. And the concern from not just pharma but also other stakeholders is the potential for distincentivizing R and D development into these smaller molecules and a shift towards these large molecule drugs. And so what a proposal would do is allow for parody between small and large molecule drugs by making them the negotiation eligible at the same time after eleven years,

as opposed to the split. Now, we took a look at what that might mean if that bill were to become less year or that provision was in the IRA. The interesting thing is when you think about next year's list, which we'll go into a bit later, drugs like a zembic and drugs like standy would not be subject to negotiation until much further out later into this decade. But it also means that there are other drugs that would

take its place on the list. So as we think about the outlook, one, Democrats aren't really chumping at the bit to make any changes to the law. While the bills do have democratic support, it's not overwhelming, and it's unclear if it I don't say it's unclear. I highly doubt that Republicans would bring up a bill to modify the law as opposed to just repeal it outright, So I think the again, the outlook on any kind of

movement for these bills is very low. And this is great bodder for members of Congress to talk about how the law is imperfect and how it could impactation access. But it's really just a talking point that sets up a conversation for twenty twenty five in the next Congress.

B drugs, some part drugs to what's paid overseas. But he did during his four years in office back away from negotiation that said, what can he do keeping in mind that the underlying loss sets a sealing price for these drugs, these negotiation eligible drugs, but CMS can negotiate prices below that. You could see one of two things happened. One Trump could say could do nothing and just do the bare minimum, and his HHS basically does what the laws says is the maximum or the minimum that they

can do in terms of price cuts. He could say he's the master negotiator and go for much deeper discounts than you might see under a Biden administration. So that's one potential way he could go about implementing this law. There are other avenues, such as some of the definitional pieces that were clarified as part of guidance last year.

So as an example, we have terms like single source drug and which is in the in the statute, but you also have terms like bonified generic marketing and competition, which is basically a regulatory interpretation. Bonifide's not statute, and it's a determination that is at least CMS said will be made on a case by case basis as to whether or not a drug as a bonafied generic competitor for purpose of purposes of being selected or getting off

the list. And what CMS has said is that it will weigh factors like generic utilization of a drug, a generic and prescription drug event data to determine if there's a bonafide marketing. Now that's the bonafide side. On the single source side, the agency defined it as based on the active ingredient, which enables it to group multiple therapies

with different either NDAs or blas. And we could see a Trump administration narrow the interpretation of what it means to be a single source drug, which would potentially limit some of these limit the number of drugs or type of drugs that are subject to negotiation. You know, I want to go back to the bonafide piece and why that's important I mentioned it earlier. It determines whether a

drug gets on the list or gets off. If there's a bond phi generic before the end of the negotiation process, then the drug won't see price cuts for the first applicable year. If we see or CMS determines that there's a bonophi generic after the negotiation process, but before April of the applicable price year, the price cuts to the brand drug going to effect for that year, but they

will not be effective the year after. And then if it's after the April of the first year, then those price cuts as negotiated will be in effect for two years. So that timing is pretty critical, and that's important because when you think about some of the negotiated prices, they could be much lower than what we would see from

generic typical generic entry. So looking at some data provided by FDA, we did see that in some cases, if it's an extended monopoly or a long monopoly drug, the price would be pretty much lower than what we see from typical first to market generics. So that could have an impact on generic manufacturers, and obviously it could have

an impact on brand manufacturers as well. So a lot of these interpretations could have a pretty significant impact on how the law impacts a lot of these companies moving forward.

to people, know, you don't deserve those lower prices. The program doesn't deserve those lower prices. So I think there might be a bit of an optics challenge for trying to repeal it now. I think all of that depends on what happens with the election, But even if there is a sweep on the Republican side, I'm still skeptical at this point that we could see some kind of legislative action that repeals the law.

agencies can regulate. And so we think that if there's any chance of this these litigations to be successful to you know, negate this law, it would be a constitutional challenge, although it isn't argue that this is going to happen. But I will tell you about the four main arguments under the first, fifth, and eighth Amendments. The first is the first Amendment and that they under the compelled speech doctrine, which borrows the government from compelling people and then companies

to say anything they don't want to say. The argument here is that the IRA compels drug companies to speak by mandating that they enter it and be signatories to certain negotiating agreements that essentially, they say, you know, makes them endorse the medicare prices as the maximum fair price. And there are two arguments under the Fifth Amendment. One is due process. We can talk a little bit about that.

We talked about the March seventh hearing that we just attended, But that is the provision that prohibits the government from depriving a person of property without due process. So I mean that there must be an opportunity to prevent any deprivation of property i e. These pharmaceutical companies drugs. And then under the Fifth Amendment there is also taking this clause, and that taking as clause requires the government to pay

just compensation when it takes private property. So here the argument is made that the IRA requires drug makers to enter to force sales at price discounts, and they say it's under the threat of corrosion because there are penalties attached to it. And they are not compensated for the price difference that they would get on the private markets.

Then there's the Eighth Amendment of the US Constitution has a theory of excessive fines, and that just prohibits the government from imposing signs that are that exceed the punishment for a certain offense. And then of course the statutory challenges, you know, those are more sort of in the weeds. They have to do with guidance that CMS has issues or about issued or about certain definitions or lack thereof in the statute, et cetera. And so these we don't

think would kill the law. We just think it would modify some behavior, probably by CMS. So so far we've seen ten lawsuits. One was dismissed very early on, two have been rolled on. One was in Texas and it

was essentially dismissed for lack of standing in jurisdiction. And then a more recent one was the Astrodeneka case, which was also dismissed, and that was for lack of jurisdiction, but it also did address one constitutional challenge, which was the due process clause of the Fifth Amendment, and essentially the judge there said that he had no jurisdiction, but that because medicare participations in voluntary, there is no issue

because the parties can just exit. The other seven cases which are still pending are actually all stimilarly situated where there have been motions and cross motions on summary judgment, each side asking the court to essentially throughout the case, and we are waiting on all those decisions. We just had a hearing in the New Jersey court and that was for for the cases that are in front of

the same judge. But other than that, we have a case in the seven District of Ohio, one in Connecticut, and one in DC, and all of those are essentially waiting for the judge to decide. We haven't seen oral arguments in any other case. Besides the New Jersey ones are still pending. We haven't seen any requests for it. It's possible that that might come, or the judges could just decide to roll off of the papers that have been submitted.

the goal. So I'll start with actually the Fifth Amendment taking class, which was I think maybe surprising to both of us tis but definitely to me how much time the parties spent on it. They spent the hearing went full day, They spent pretty much half of their time talking about this particular issue. So, you know, it's my assumption that these pharmachool companies thought that this was probably

their best argument. Like I said earlier, you know, this argument just really revolves around the fact that the drug makers say that they are you know, sort of forced to sell their products at a significant discount under this threat of coersion, which is also the topic of the Eighth Amendment. Right, these are the excessive fines that they

talk about and with no compensation. So you know, the plaintiffs definitely argued at each turn that the IRA just specifically requires h HS to impose drug prices that fall well below what the companies would normally get on the private market, and so that difference is a is a big deal to them in the billions of dollars that they are fighting for. Like I said, they double down on this. We spent a lot of time on it.

I think it's fair to say that there were a lot of questions, including from the judge, and we certainly had a lot of questions. But you know, essentially the plaintiffs, you know, for this issue, you know, argued to the judge that unlike you know, what I mentioned with the Astrozenica case, where the government had a defense of the participation of medicare being voluntary, the plaintiff's here just after

judge and not consider that at all. Right, it's their position that the determination of whether there is a taking on their Fifth Amendment should be decided regardless of whether it's voluntary or not, if you're in the program, is

it a taking or is it not a taking? And so that was a key question for the judge, you know, because I think that he in the very beginning, I actually couldn't read what he thought after they had argued all morning, but you know, he definitely thought the special issue was whether the statute of requiring whether the Medicare participation being voluntary was actually just the only issue that

to decide. But the companies argue that the special issue is actually whether the statute which require the access to the maximum fair price is the physical taking of property. So they seem to argue that the ability to withdraw on this program doesn't have any bearing on this assessment. And so whether the judge bought that or not, I think will be key to you know, how he approaches

this question, you know. And so and this is, like I said, very much entwined with Eighth Amendment, because the excise tax is coercive according to the companies, and so if the companies are quote unquote made to agree because of this, then they consider that a taking of their physical property. The judge did ask all the parties. You know, he kind of honed it on the idea of, like,

has anyone withdrawn from this program? The government confirmed that no one had even tried, But that is something that he kept coming back to, and so I think that that's something in his mind that's probably pretty important. But again, I really and tissues jump in if you had a different impression, but I really didn't get the depression of like whether he agreed with the plaintiffs as to this defense of it being voluntary should be disregarded or not.

The judge also honed in several times during this hearing on the economic issue. This was brought up by the pharma school companies they would be losing large amounts of money.

He several times alluded to the large profits that these farm school companies are making and said that if an economic argument was being made, he'd have to have much more information on that, and he'd want to know where all the money he's going, where all these going, is it R and D is it executive compensations, buybacks, et cetera. So he was definitely sensitive to that as well as

part of their argument. You know, the government essentially just rested their entire defense on the fact that the part that the program is voluntary, and so again I think that's going to be a really important fact. They did also argue that in the alternative that this did not actually even fall under the Fifth Amendment, that this was authority that they had under the spending clause, and you know,

someone like government contractors. There were a lot of parallels drawn during this hearing, so that it's not even a regulation issue at all. This was a spending one, and it just takes it completely out of the Fifth Amendment. You know, again, this was long. We didn't really get the impression that the judge was convinced, but you know, he was actually a pretty great judge. He was very respectful,

he listened, he asked a lot of questions. So it's a little hard to see like how he fell, which thought he saw on this one after the whole morning.

You know, I did mention the Fifth Amendment you process earlier as having been an issue that was raised in the Astrosenica case, but it really wasn't addressed at all during this hearing, even though it was pretty extensively address during the briefing, and so you know, I think that probably they just chose not the plaintiffs chose not to spend a lot of time on that because the judge in Delaware ruled on it, which is in the same appeal circuit as New Jersey, and so probably they chose

to spend their time on new arguments to get all that on the record during this particular hearing. And an interesting argument. I think you and I both thought it.

This was interesting, Tish is the was the first Amendment and the plaintiffs essentially argued that by signing this template agreement that CMS has created and requires the companies to execute, right, so it's not like they have a choice, you know, they're compelled to agree to the negotiated price or the maximum fare price, as Dwayne talked about quite a bit, which is in the statute, and that is really you know, insinuating that previous higher prices and maybe higher prices that

would be paid for on the private market are in fact not fair. So you know this according to the FARMAC companies in these lawsuits, just you know, they consider that to be sort of an obligation to speak or corursive action to speak through disagreement. The companies had argued that it makes them essentially have a value judgment on what they're charging, and that this is politically motivated and

it will just make them look bad. And because of the excise tax again, which is part of the arguments and the Eighth Amendment. You know, they the plaintiffs argued pretty much over and over again, this is just a false choice. There's not there's no choice here. They are compelled to do all of this and it is tarnishing

to them. So, you know, the government. The government argued that this is actually not about the document that CMS is drafted, that a compelled speech argument really goes outside of the four corners of that document, and that the companies are not required to agree publicly on any of it, and you know they can they can have amount of campaign against CMS if they want to, that is totally fine, and that any compelled speech argument would fall outside of that.

You know, I think that we both thought this was a decent argument for plaintiffs. But in thinking about it afterwards, you know, if the crux of this argument rests on the CMS template, then this particular constitutional challenge is unlikely to result in the statute falling apart, because in essence, the court can just ask CMS to change their template to something that's satisfactory to all parties, and then that

problem sort of goes away. And then the last one I'll touch on is the Eighth Amendment, and that the farmers companies essentially argued there that they are imposes remarkably high penalties to millions of dollars per day in this

exercise tax for refusing to participate in these negotiations. And you know, we saw this over and over in the hearing that each side had vastly different maths calculating what those penalties would be pharmacy companies so that it could be up to one nine hundred percent of total Dailly revenue, while the government, you know, made the point that it would never be more than ninety five percent. And so we tend to argue, we tend to agree actually with

the government when we looked at the math. But I think it's just you know, how you look at it. So the judge did ask quite a bit about that and wanted some clarification there. So I imagine that he and his clerks will definitely be digging into that a little bit more, because that is somewhat the cross over the issue. Is it excessive? Are these fines excessive and if so, they violate the Eighth Amendment. If not, then

CMS can impose them according to the statute. As I said, are other challenges that under the APA, and several other like separation of powers and and things like that that are sort of one off in these lawsuits. We do actually think that some of the statutory challenges may have more teeth, but like I said, these won't result in the law falling apart.

or maybe maybe the judge didn't either. I don't know of a clear picture of Okay, this is the argument, but I think that the judge asked the questions he needed to ask, was definitely respectful, listen to both sides, and there was really a lot to digest, and so I think, you know, it'll be interesting to see how he ultimately rules on these issues. But that was obviously just one small piece of all this litigation. As we see up on the side here, and as you've talked about,

we have a lot of cases going on. We have a lot of cases going on at different locations. So does location matter here for these various for all these various cases, I mean, are there venues that might be more amenable to some of Pharma's claims here than others or does it not even matter?

So when you think about how the courts work, you know, like I mentioned it earlier that the case the astrodonicy case, which is will likely get appealed, but is in the same appealette circuit as New Jersey. This isn't going to create a split. And a lot of times we think about circuit splits and how that sort of pushes the Supreme Court to take up a case. And so you know, we've all assumed that the pharmaceutical industry has filed in these different places so that they can create more incentive

for this issue to eventually get decided Supreme Court. So I think the text there was a tech a case in Texas I mentioned that would have been a pretty conservative court probably that would get tinned against, you know, something like New Jersey or DC. But right now, so we're really just watching that Ohio case to see. But you know, as long as the courts are in different circuits,

they'll get appealed, they'll get two appolled decisions. And when there's a split in these decisions, and that's like a real recipe for Supreme Court taking up that challenge. But it doesn't it does matter, But so far we haven't, we haven't seen anything sort of stand. So we'll have to watch for all these decisions, which we have quite a few comings. So it should be interesting.

non constitutional. I think that will become a little more to the forefront, because we've really just been concentrating on knocking out this log constitutional.

January one, twenty twenty six, assuming no further hiccups. Now, while this is happening, we do have CMS beginning or collecting price data for that next set of drugs that will be subject to negotiation, and that's fifteen party drugs, which based on what we talked about earlier, how drug has been defined as it's weighty or ingredient. It could actually be more than that, but it is a twelve month period that ends no later than October thirty first

of this year. So we're under the assumption that that data collection process started to November first, based on expenditures starting November one, twenty twenty three, and similar to this current process, we'll see the lists come out, we'll see negotiations, and then those prices will be implemented January one, twenty twenty seven. Now the big question is who's going to be on the list, And we just went back and looked at what we have from one month of spending,

and we don't think there's a ton of variation. But you can see here the top fifteen to twenty drugs that might be selected. Keeping in mind of zembic and rebelsis would be under one drug because they share the same ingredients, and then you'd have a whole host of other drugs as well. So again, as we're watching one process play out, we are we are seeing CMS look at what the data says in terms of what's next for those drugs that will be selected and subject to negotiation.

So we could see more litigation on the process. Moving forward.

forty B program. It also impacts pharmacies PBMs, and we can get into that in a second, but I think

it's worth providing some definitional issues first. The entities that participate in a three forty B program, referred to as covered entities, are those hospitals that I care for a disproportionate share of low income or uninsured patients, Medicaid patients, some other hospitals like federally qualified health centers, and these covered entities can only provide these three forty B drugs to quote unquote eligible patients, and that's defined as any individual that as a or a patient that has a

established relationship with the covered entity and has received healthcare services from that entity. And so the key with all of this is participation in the three forty B program generates revenues for these entities, these hospitals or facilities where the insurance reimbursement exceeds the acquisition cost or the three

forty B acquisition costs. While the law doesn't say how providers should use the proceeds, in theory, it's supposed to go back into the community that they're serving or provide assistance to the patients that they're serving. And we can go into some of the challenges, but that's kind of the three forty B program in a nutshell, And like.

of contract pharmacies. At the program's inception, self administered drugs could only be dispensed through an in house pharmacy, but very few of these covered entities had an in house pharmacy, so they couldn't use the discount program for the self

administered drugs. That was changed in nineteen ninety six where the program was allowed to allowed covered entities to use an external pharmacy if they didn't have an in house pharmacy, and that was further expanded under the ACA where these covered entities could contract with an unlimited number of pharmacies to provide through forty B discounted drugs. So we then saw the number of these contract pharmacies increased to about thirty three thousand last year from thirteen hundred and twenty

ten based on one estimate. And those big players we're talking about CBS, we're talking about Walgreens, We're talking about Walmart, and when you think about Signa and United Health, because they're so vertically integrated, they are also players. Duplicate discounts is also an issue where drugs prescribed to Medicaid patients are there's a bit of double billing. There's also there's the three for to B discount and then the Medicaid rebates,

and then transparency and accountability, where's the money going? I mentioned the discounts and what the intent was, but there isn't any documentation as to where the discounts are are going. Is it to the patient or is it the community where the covered entity is located or somewhere else if that hospital is part of a broader or change.

from not having to provide those discounts. Pharmacies like CVS and Walgreens are impacted differently because as they do a couple of things, they administer their claims, they get dispensing fees, and so when they have less volume to these restrictions, it impacts their revenue and they've you know, one company in particular, CBS, has mentioned in their earnings calls about how this has affected their outlook, which they now say

is pretty much annualized. In other words, they have you know, they've seen the initial hits the first quarters first year in which these restrictions were in place, and they don't see an end to that. So we're seeing these companies basically say a lot of these changes, unless there's something to reverse, it has had an impact on their overall top line and Ode.

at the Fifth Amendment. And so we've seen one decision in a third circuit and I was in favor of the pharmaceutical companies. We have two others that were waiting on and when I was speaking about the circuit split earlier on the IRA case, we'll probably see that and then this will ultimately probably also go to the Supreme Court. There are two case us right now, one brought by Nevades one by Eli Lilly in two different circuits, in

the Seventh Circuit and in the DC Circuit. And we had arguments in both of these cases on appeal over a year ago, so October twenty twenty two, and we've seen nothing since. So we're hoping that we'll get a decision on both of these and then probably likely once we do well, poly see appetitions to Supreme Court based on those. I mean, we think that ultimately the Thumbs companies prevail on this in the end, but you know, just still waiting. So this is definitely not a fast

moving litigation. We've seen much more action in the IRA litigations is of late Dwayne.

at the expense of another. So, as I mentioned earlier, this along with patients in the middle, you have pharmacies, PBMs, you know, hospitals, you have drugmakers all over are impacted.

So that effort led to an initial draft legislative proposal that was released earlier in twenty twenty four, and it's trying to clarify the role of contract pharmacies, what pharma can and cannot do in terms of imposing restrictions on three point forty B drug discounts, as well as increasing data and transparency around what patients are being served and

where this money's going. Now, I say it's a draft, which means we have not seen a an introduced bill on this, and given that a selection year, we're not going to see much in terms of movements. But I will say there's enough interrance where this is being teed

up for further action in twenty twenty five. I'll note that Senator Cassidy Louisiana Republican from Louisiana is ranking member on the Health Committee, and he has been sending out letters to hospitals and pharmacies about the drug discount program and how it is and might not be working. I can see that turning into some kind of legislative package in the next session. Now, I mentioned center Cassidy because

he's ranking member. If Republicans get the Senate, he'll be chairman, and he'll pretty much guide part of the healthcare agenda in a Republican led Senate. So something to keep in mind as that process unfolds, as well as this other effort by a bipartisan group of members who are trying to address the program, but again were in early innings, so I don't expect the status quo to change much in terms of who's getting impacted by or who's benefiting from limiting these discounts in the program.

we'll start with obesity. So Duayane, we've heard a lot about some positive data for anti obesity drugs and the news lately, you know what changes to Medicare are being proposed to expand access.

time we didn't have a GOVI on the market. Obesity was viewed as a cosmetic issue that could just be addressed through lifestyle changes, and this was around the time that some drugs had been pulled from the market due to safety concerns. And so fast forward, there's been legislation introduced on the Hill to remove that prohibition. It's been introduced during the last five congresses of about ten years now. Over ten years now that gets more attention because of

the change and focus of over what obesity is. It's not just a lifestyle issue, is not a cosmetic issue. And you have these products on the market that are showing pretty good effectiveness data. And so with two drug now approved by the FA, there's some independent analysis suggesting it could produce some overall health health benefits, not just lower weights but also other addressing other conditions like diabetes and hypertension. But there are some roadblocks that that is

slowing down these this bill or this effort. One is the cost. Keep in mind, these are chronic drugs. You don't just take him for a couple of weeks and then you go off. The Congressional Budget Office is another roadblock. The CBO provides budgetary analysis of potential legislative changes. They haven't provided a detailed fiscal analysis of the proposal yet, but they have signal that they're looking at what it means to expand coverage to or remove the prohibition so

that more patients can have access to these drugs. And CBO hasn't given a recent signal that it's any closer to providing a cost projection for doing so. It's it's worth noting, and we did some we did some number crunching to see what it might mean for the Medicare

beneficiaries that have an obese diagnosis. What would happen if if they had access to these drugs and if we just say a small fraction of the thirty percent or so that are diagnosed as obest we could see just based on waygov and even with the discounts fifteen billion in new Medicare spending, which is based on a again a fifty percent discount to Novo's with Goovy, but also time limited which again they might not be time limited

because they're chronic disease drugs. For context, at fifteen billion, that's about thirteen percent of projected Part D spending in twenty twenty four. Higher uptake would affect a number, but also there could be offsets if it reduces spending in other areas. But I will point out, and this is kind of recent news with way GOVI getting FT approval for cardio cardiovascular disease treatment, it could end up lowering

the cost of expanding Medicare to cover OBCA drugs. I say that because CBO recently indicated that it expects Medicare is going to cover drugs for the treatment of cardiovascular conditions for people with obesity, and if so, that means covering it for the indication of obesity would be lower because some of that new spending for cardiovascular treatment would already be baked into the baseline. In terms of what

is medicare spending or projected Medicare spending. Now, it doesn't mean it automatically goes to zero or closer to zero, but it is less and it does mitigate the cost of expansion. It just doesn't mean we'll see anything. I think this year. I would say, as we look at a new Congress and a potential big bill in twenty twenty five on Trump's tax cuts on ACA funding, maybe this could get wrapped up into that proposal. And best case scenario is we could see medicare covers in twenty

twenty seven, twenty twenty eight. But you have to overcome a lot of skepticism on the hill that paying for an expensive drug that is going to be needed on a regular basis, that that can be overcome regardless of who's in charge. So it's worth looking into.

next round of negotiations. And so you could see a scenario where even after discounts, we know that we goby as a certain cost element, it could be lower if Medicare is able to negotiate include agob as part of the program. So you know what that might mean, is it be a lower price potentially or lower spending it would be new spending, so it's still a new cost for the part DEEP program, it just might not be

as much. So it's something that is an interesting fact the way CMS has interpreted single source drug and how it could play out for high RA implementation.

them more accessible. And we saw the administration previous administration create a new code for CART therapy within the inpatient hospital payment system we're seeing this administration look at sealinging therapies through a Medicaid model where it negotiates on behalf of all states for these new sickle cell drugs in theory creating a lower price, but also trying to implement this outcome space pricing where you pay when it works. Essentially,

it's just starting. We're seeing the application process rollout, and we could see that program begin in twenty twenty five with expansion after that, so stay tuned for that. And we're also paying attention to what might happen within the Medicare program. As I mentioned, CARTE did get its own DRG beginning in twenty twenty. CMS had indicated it was looking at a separate DRG for seal enging therapies and

future rulemaking. So one potential avenue is one code to cover patient costs, one to cover product costs across therapeutic product categories. That wascal, you're twenty twenty two. Could we see something in the upcoming rulemaking or draft proposal for impatient payments for hospitals. It's possible, especially in light of the FDA approval of these new sickle cell therapy, so

stay tuned. It's possible. Now to your last question on Alzheimer's therapies, so newer therapies and there's a lot of controversy, especially around one of them, Aji Home, which has since been pulled for the market, but it's set the stage for the current national covere determination where medicare covers Alzheimer's drugs that receive traditional left the approval when a beneficiary is diagnosed with Alzheimer's disease, dementia and as a physician

participating in a registry, and some of the other aspects that go along with that. Now there's a concern and have been concerns that person's location may not have the number and type of specialists required for ced or covers with every evidence development participation, leaving them unable to access the drug, and also concerns that the national coverage determination might not be reviewed in a timely fashion, even though CMS has stated that any future EFTY label updates may

lead to a reevaluation of the coverage policy. The trick here is that any redetermination follows the typical determination process or coverage determination process, So it could be that one CMS would have to accept the reconsideration requests and two it takes about six to nine months for that to be completed, so we're probably not going to see any changes anytime soon, largely because CMS took a lot of heat when I propose this pathway and they still finalized

that NCD. I don't see unless we see some significant evidence in the next couple of years. I don't see that changing. Congress has introduced a number of bills not necessarily targeted at Alzheimer's therapy, but the NCD process to make it faster in terms of changing course, but that's unlikely to change anytime soon. So this is an area where a lot of the evidence generation will be key in terms of how CMS changes its outlook on Alzheimer's coverage.