The Trump administration’s plan to lower US drug costs through two new pricing models is prompting legal concerns from the pharmaceutical industry over the government’s authority to implement programs that favor foreign drug prices. In its proposals, the CMS said it will exercise its authority under Section 1115A of the Social Security Act, which allows it to test new payment and service delivery models aimed at reducing costs and improving quality of care. “One could argue it violates the concept of nondelegation,” said Heath Ingram, a partner at Goodwin’s Life Sciences group. “Congress doesn’t delegate to CMS unlimited authority to rewrite law. They’re creating a new requirement to pay incremental rebates on top of the Part D or Part B inflation rebates,” Ingram added. “It’s almost like CMMI is rewriting those inflation rebate statutes to make it fit this new MFN concept.” Companies could bring these arguments before the models are implemented, Ingram said, but it’s likely that drugmakers would first raise Administrative Procedure Act violation claims that allege the programs exceed the agency’s authority.
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