In the Inflation Reduction Act of 2022 (“IRA”)1, Congress made some of the most significant changes to the Medicare program since Congress first passed a prescription drug benefit in 2003. Successfully implementing these recent changes will require the Centers for Medicare & Medicaid Services (“CMS” or “the agency”) to understand and balance competing stakeholder concerns. Federal agencies often do so by engaging in rigorous notice-and-comment processes. However, citing provisions in the IRA authorizing implementation by “program instruction or other forms of program guidance,” CMS recently moved to implement core provisions of the IRA’s Drug Price Negotiation Program (“Negotiation Program”) without notice and comment.2 These actions are dubious as a matter of law and troubling as a matter of public policy.
The Negotiation Program is one of the IRA’s most consequential changes to the Medicare Program, and it authorizes CMS (through a delegation from the Secretary of the Department of Health and Human Services (“HHS”)) to negotiate prices for select Medicare Part B and Part D drugs on an annual basis.3 By September 1, 2023, CMS will select ten Part D drugs and establish through negotiations with their manufacturers a “maximum fair price,” effective in 2026.4 The section of the IRA setting forth this program states that the Secretary of HHS “shall implement this section . . . for 2026, 2027, and 2028 by program instruction or other forms of program guidance.”5 Other provisions of the IRA include similar language.6
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