Senate, House Republicans Challenge Biden Admin to Reveal Funding Plan for $3 Billion Drug Rx Price-Fixing Effort

Rep. Jason Smith (R-Mo.) at a Make America Great Again rally in Springfield, Mo., Sept. 21, 2018. (Charlotte Cuthbertson/The Epoch Times)

Two GOP House committee chairmen and the top Senate Finance Committee Republican are challenging President Joe Biden to make public the spending plan for an obscure $3 billion prescription drug price-fixing fund established by the Inflation Reduction Act of 2022.

“Unfortunately, the so-called Inflation Reduction Act enacted last year has doubled down on the recent trend of federal expansion and excessive expenditures. The partisan law, for instance, directs a baffling $3 billion to the implementation of misguided price controls that pose serious risks for current and future patients, as well as for our international leadership in medical innovation,” the trio of congressional Republican leaders said in a Feb. 23 letter.

The three lawmakers are House Ways and Means Committee Chairman Jason Smith (R-Mo.) and House Energy and Commerce Committee Chairman Cathy McMorris Rodgers, as well as Sen. Mike Crapo (R-Idaho), the Ranking Member of the Senate Finance Committee.

Their letter was addressed to Department of Health and Human Services (HHS) Secretary Xavier Becerra and Centers for Medicare and Medicaid Services Administrator Chiquita Brooks-LaSure.

“We write to request information and regular updates on how the Biden Administration plans to allocate, apply, and monitor this staggering sum moving forward. By sidestepping regular order and bypassing the standard appropriations process, proponents of the IRA set aside billions in taxpayer dollars with no reporting requirements or tools to prevent waste, fraud, and abuse,” the GOP trio continued.

“Particularly given the prevalence of improper payments within the Medicare program, the absence of safeguards or oversight regarding this new $3 billion fund raises major concerns. Moreover, a number of experts and analysts have questioned the need for such inordinate administrative spending, given the lack of any apparent rational basis for the funding level,” the letter said.

The $3 billion fund was included in the legislation signed into law by Biden in August 2022 as part of a complex new federal healthcare price-fixing process known as the “Drug Price Negotiation Program (DPNP).” The DPNP is initially expected to enable HHS to enforce lower prescription prices on up to 50 drugs presently covered under Medicare Part B and Part D.

“Under the new Drug Price Negotiation Program, the number of drugs subject to price negotiation will be 10 Part D drugs for 2026, another 15 Part D drugs for 2027, another 15 Part D and Part B drugs for 2028, and another 20 Part D and Part B drugs for 2029 and later years,” according to the Kaiser Family Foundation (KFF).

“These drugs will be selected from among the 50 drugs with the highest total Medicare Part D spending and the 50 drugs with the highest total Medicare Part B spending. The number of drugs with negotiated prices available will accumulate over time,” KFF said. The KFF is related to the Kaiser Permanente healthcare organization.

Unlike virtually all other federal programs that require funding via the congressional appropriation process, the DPNP is to be funded through assessment of an excise tax on drug manufacturers. The excise tax is set at 65 percent of a product’s U.S. sales and increases by 10 percent annually thereafter to a maximum of 95 percent.

“As an alternative to paying the tax, manufacturers can choose to withdraw all of their drugs from coverage under Medicare and Medicaid,” according to KFF.

A spokesman for HHS did not respond to The Epoch Times request for comment.

President Joe Biden and officials in his administration have not hesitated to claim credit for seeking to lower prescription drug prices, but they have been notably unwilling to disclose the kind of details requested by Crapo, McMorris Rodgers and Smith.

In a Sept. 14, 2022, letter to Becerra and Brooks-LaSure, Crapo and 24 other Republican senators cited a Congressional Budget Office (CBO) analysis that they said confirmed “the government price controls codified under the recently enacted reconciliation legislation have the potential to increase launch prices for new medications, as well as to trigger fewer new drug approvals in the coming years.

“Scores of life-threatening conditions, from cancer to Alzheimer’s and sickle cell disease, could see a substantial decline in possible treatment options on the horizon. Moreover, based on CBO’s analysis, some manufacturers may choose to terminate participation in Medicare and Medicaid altogether as a result of the compulsory new price-setting program, jeopardizing access to a range of therapies and cures for the most vulnerable Americans.”

The letter from Crapo and his Senate GOP colleagues further pointed out that, “Other independent analyses have projected even more catastrophic consequences, from hundreds of thousands of domestic job losses to hundreds of billions in forgone research and development dollars. The innovation ecosystem that has made the United States the world’s unquestioned life sciences leader, bolstered by thousands of startups and small businesses, may wither under this partisan legislation, particularly in the absence of careful, deliberative implementation and assertive, consumer-oriented oversight.”

Neither Becerra nor Brooks-LaSure responded to the GOP senators’ letter, according to a congressional source.