IRA—All the Things Beyond Price Negotiations That Will Impact Your Business

Medicine

Breakout session summarizes key areas that will affect all aspects of the industry.

On Day 1 of the Trade & Channel Strategies conference in Philadelphia, it’s strong start continued with a presentation on multiple factors of the Inflation Reduction Act (IRA) that will affect businesses throughout the US. The presentation featured Douglas Bock, Partner, Archbow Consulting. Bock’s video interview with Pharma Commerce, conducted on site, can be found here.

Bock kicked things off by stressing the need to get past the pricing points of the IRA while acknowledging the difficulty of getting to other areas without mentioning price. Some of the areas that he spoke about included Buy and Bill expectations for the future, PAP business rules and authorization, 501(c)3 donations, and some updates on lawsuits by Merck, BMS, and PhRMA that challenge the provisions of the IRA.

“We think of it as the government trying to control price,” Bock stated. “But really, it’s about boosting clean energy credits. The second big thing of the IRA is increasing the enforcement of taxes and tax collection. There’s a big appropriation towards the IRS. Really, the third thing is the healthcare component.”

Bock then directed the discussion towards the Medicare Part D redesign. Crediting the IRA as the government’s efforts to shorten patent designs, he explained that the tail end of the allotted patent time will consist of attempted price negotiations while scraping off the end of the package.

“The problem with the IRA from the industry perspective is that if you shorten that investment payoff period, it makes it hard to make investment decisions, and companies saying they’re not going to invest in small molecules,” he said. “There are a lot of downstream implications of this. It’s a mechanism to shorten the patent.”

There have been a number of lawsuits by pharmaceutical companies as a result of the IRA. Companies such as Merck and BMS have cited the act as unconstitutional and disruptive. However, there currently isn’t much information that’s available to the public on the pending suits. Bock stated that the multiple lawsuits could end of putting and end to it but that the general public will have to wait and see.

“What I do suspect is that the law and the rules will shift a bit from what we have today, because there are so many uncertainties,” he explained.

Additionally, Bock brought up the emergence of alternative funding programs (AFPs), and their potential negative impact on the pharmaceutical industry. He attributed them to carving out high-cost products leading to concerns about cost shifting and a potential negative impact on innovation.

“A plan contracts PDM towards the SP, and the prescription of the claim moves back and forth. But then the AFP model sort of carves out the high costs with generous PAP models that manufacturers offer,” Bock explained. “What they do is say, hey, we’re going to carve out these products, they have their own formulary, and now that the product is carved out, we’re going to say that the patient is uninsured because they’d like coverage for a specific product that’s on their formulary, then all sudden, they’re eligible for the manufacturer protection system.”

In the coming years, Bock is calling for vigilance, considering the evolving landscape, legal challenges, and potential shifts in the pharmaceutical industry.

Reference

IRA—All the Things Beyond Price Negotiations That Will Impact Your Business. December 11, 2023. Trade & Channel Strategies, Philadelphia.

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