Commentary & Opinion

Analyzing The Inflation Reduction Act Of 2022

A discriminatory price-setting structure under the guise of direct negotiation?

The Alliance for Aging Research addresses the shortcomings of the Inflation Reduction Act of 2022. Access more information here.

The Alliance for Aging Research’s (Alliance) President and CEO Susan Peschin, MHS, released the following statement on the Inflation Reduction Act of 2022:

The Inflation Reduction Act of 2022 has several provisions[1] that the Alliance for Aging Research has long supported and should become law—expansion of the low-income subsidy program; reducing beneficiary costs for vaccination; an inflationary cap; and most notably, the Medicare Part D provisions restructuring the benefit and adding a much-needed annual cap on out-of-pocket costs. For that reason, it is profoundly disappointing that we must oppose the current version of the bill, because it allows for an across-the-board, discriminatory government price-setting structure under the guise of direct negotiation.

As currently drafted, this legislation permits use of methodologies that discriminate against older adults and people with disabilities that could severely limit patient access to current and future breakthrough treatments. Since 2019, the Alliance has consistently urged federal policymakers to reject any prescription drug price-setting proposal—including international reference pricing, Most Favored Nation, and direct negotiation—that would authorize Medicare program use of discriminatory cost-effectiveness standards to ration care.

Where The Inflation Reduction Act of 2022 Falls Short

The Inflation Reduction Act of 2022 fails to incorporate the repeated recommendations of the National Council on Disability (NCD), an independent federal agency. Since 2019, the NCD has cautioned against permitting use of discriminatory price-setting methodologies, such as the quality-adjusted life year (QALY) because it would undermine the Affordable Care Act (ACA) and major U.S. disability and civil rights laws.

In February of this year, the NCD’s 2022 Health Equity Framework for People with Disabilities[2] specifically proposed a “blanket [legislative] prohibition” on the use of QALYs by “any federal agency” and last November recommended language to unambiguously bar QALYs in the reconciliation bill. Also last fall, more than 130 organizations called on Congress to reject drug proposals that use the QALY methodology or similar value assessment frameworks, stating, “As Medicare is the primary source of health insurance for older adults and people with disabilities, utilizing QALYs or similar metrics in pricing would be particularly harmful to the very groups the program is intended to serve.”

Drug Negotiation Processes

Worse still, the legislation prohibits public comment or input on drug negotiation processes, including the criteria used to set prices. Congress prohibiting input would create an exception to the standard practice by federal agencies of soliciting public comment. Further, in a Morning Consult poll the Alliance commissioned last September, only 16% viewed “direct negotiation” as the government setting prices for prescription drugs and refusing to cover them if the company does not agree—yet that is exactly what the Inflation Reduction Act of 2022 would do.

Older adults expect and deserve their members of Congress to support proposals that address growing prescription drug out-of-pocket costs without requiring restricted access to care as a tradeoff. For these reasons, we urge the Senate to revise this latest proposal to not only address seniors’ health and economic well-being, but to ensure all Medicare beneficiaries are treated equitably.

 

 

 

[1] https://www.agingresearch.org/wp-content/uploads/2022/08/AAR-website-reconciliation-recommendations-FINAL-1.pdf
[2] https://ncd.gov/sites/default/files/NCD_Health_Equity_Framework.pdf

 

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