Medicare will allow pharmaceutical companies to publicly discuss drug price negotiations

Medicare on Friday said it will allow pharmaceutical companies to publicly discuss the program’s historic drug price negotiations, dropping a confidentiality requirement that the industry argued violated the First Amendment in lawsuits filed this month.

In initial guidance released in March, Medicare had forbidden the industry from publicly disclosing information on the lower price initially offered by the federal government for drugs targeted under the program, as well as the government’s reasons for selecting that price point.

Medicare had also forbidden companies from disclosing any verbal conversations during the negotiation period. It also required companies to destroy any information within 30 days if the drug is no longer selected for negotiations.

In revised guidance released Friday, Medicare said a company “may choose to publicly disclose information regarding ongoing negotiations at its discretion.”

The Inflation Reduction Act, passed last year, empowered Medicare to directly negotiate with pharmaceutical companies over prices for the first time. The program is the central pillar of the Biden administration’s efforts to control rising drug prices in the U.S.

Merck, the U.S. Chamber of Commerce, Bristol Myers Squibb and the industry lobbying group Pharmaceutical Research and Manufacturers of America asked federal courts this month to declare the drug price negotiations unconstitutional.

Merck, the chamber and Bristol Myers Squibb argued in their lawsuits that Medicare had imposed a gag order that effectively banned the companies from publicly disagreeing with the federal government’s position in violation of the First Amendment.

The industry’s lawsuits, however, are also focused on broader claims that the program violates due process and the seizure of private property without just compensation under the Fifth Amendment of the U.S. Constitution.

Health and Human Services Secretary Xavier Becerra on Friday vowed to press ahead with the negotiations despite pharmaceutical industry’s lawsuits.

“Pharmaceutical companies have made record profits for decades,” Becerra said in a statement. “Now they’re lining up to block this Administration’s work to negotiate for better drug prices for our families.

“We won’t be deterred,” Becerra said

HHS will release a list of 10 high-cost drugs selected for negotiation by September. The companies have to decide whether to participate in the negotiations the following month.

Drugmakers that choose not to participate face severe financial penalties. They can avoid these penalties by terminating their participation in Medicare and Medicaid drug rebate programs.

The companies have argued that withdrawing from the rebate programs is not a feasible alternative because the programs represent nearly half of the nation’s annual spending on prescription drugs.