Will Medicare End the Pill Penalty and Increase Drug Pricing Transparency? | Asembia's AXS25 Summit

The Inflation Reduction Act (IRA) has introduced a number of changes to how drug prices are negotiated under Medicare.

A key issue that’s been in discussion lately is the “pill penalty,” a policy that makes small-molecule drugs, typically in pill form, eligible for Medicare price negotiations four years sooner than biologic drugs, such as injectables.

This issue made its way to the doors of the annual Asembia Specialty Pharmacy Summit in Las Vegas, where Managed Healthcare Executive spoke with John Beardsley, senior vice president of corporate business development at CoverMyMeds, and Fauzea Husain, vice president of public policy at McKesson.

While it’s still uncertain whether the policy will change, both Beardsley and Husain pointed to signs of momentum.

“There are a number of groups that have been providing feedback about the difference between pill form and injectable form since the early negotiations of the IRA,” said Beardsley.

There has been recent interest in revisiting the policy as the those in the industry are eager for change, he added.

Although the outcome is still unknown, he believes the Biden administration's move to study the issue is “an important action.”

Husain highlighted the political landscape surrounding the pill penalty.

She noted that active legislation in Congress aims to level the negotiation timeline between drug types.

“When you have the administration supporting it, and you also have bipartisan Congress support, it seems like there could be an opportunity,” she said.

Another recent development the conversation carried to is the April 15 executive order that directs the HHS to release guidance by June 14 to improve transparency in Medicare drug pricing.

According to the pair, stakeholders are hoping for more clarity in how drugs are selected for negotiation and what criteria are used.

Beardsley pointed out that one focus of this guidance may be “just how are the drugs selected, and what are the criteria by which those drugs are selected?”

Husain agreed on the importance of transparency but said the specifics remain unclear. She also shared that she values any effort that allows advocates to better understand and influence the process.

While the healthcare industry stands by for the new guidance and legislative shifts, the future of Medicare drug pricing, and whether the pill penalty will end, remains a key issue to watch.