It Still Isn’t – SMART
I’ve written about this piece of proposed legislation earlier in a somewhat, OK real, derogatory way, but Strengthening Medicare and Reducing Taxpayer Prices Act – or SMART Prices Act - continues to raise its ugly head. I thought that maybe it had died a quiet death, but it was reintroduced in the Senate on May 21st. You can read about it in more detail in my earlier blog, but, in a nutshell, this is what it does. It was introduced originally just after the Inflation Reduction Act (IRA) was passed and it doubled down on the prescription drug price fixing part of the IRA. The SMART Prices Act increases the number of drugs eligible for negotiation from 10 to 20 in 2026, and from 15–20 to 40 in 2027. It also shortens exclusivity periods, reducing the time before drugs become eligible for negotiation from 7 or 11 years down to 3 years, depending on the drug type. These huge changes were proposed back then without a thought of waiting to see what the impact of the initial price fixing would be. You would think that the dire impact on innovation that has already occurred in the almost 3 years since the law was implemented would be enough to scare lawmakers, but that didn’t faze them at all, and I think now it could be even more damaging.
I continue to hope that the administration will be open to talking with the stakeholders in creating, providing, and administrating prescription drugs while giving top priority to listening to and understanding the most important voice – the patient. That would mean talking with the pharmaceutical manufacturers, the insurance companies, the doctors, the hospitals, and the patients. While there certainly hasn’t been a big sit-down let’s talk meeting, I think there has been some progress. I know you might be skeptical but hear me out.
If you’ve read even a few of my blogs over the years you know that I hate Executive Orders (EOs). I think they by-pass important checks and balances, but I think President Trump is using them like he is using tariffs, to get the countries, and in the case of particular EOs, drug manufacturers, to the bargaining table. While this whole process is disruptive it certainly has worked or is working with tariffs. Unfortunately, the President’s EO concerning Most Favored Nation (MFN) pricing is the wrong starting point. MFN pricing wasn’t the right answer when it was first discussed in President Trump’s first term and it still isn’t the right answer . . . there has got to be a way to get foreign countries to pay their fair share but MFN pricing isn’t it. There’s also got to be a way to streamline the drug distribution business process and there’s got to be ways to improve drug prices in ways that we haven’t even thought about. Getting people to talk is a good way to start things moving. It’s certainly better than excluding the stake holders from the discussion and then passing some sledgehammer legislation that is fraught with perverted incentives and unintended consequences.
Here are two examples of discussion starters that are already happening.
· Some pharmaceutical manufacturers are implementing direct to consumer pricing. I don’t know enough about this new approach to understand where it fits into the whole business process, but I do know it’s something new and it might help.
· Some manufacturers are responding to the call to move manufacturing back to the U.S. This movement toward one of the President’s goals should be the basis for sparking other discussions on access and ways the government can encourage innovation rather than to stifle it.
There is one thing you can count on these days; chaos is the norm. I think that I said it during Trump’s first term, opportunities that you never thought were possible can be in play when everything is up for grabs. The current state of play is certainly a double-edged sword, changes could be good or bad. Which brings me back to my comment earlier that the resubmittal of the SMART Prices Act may do even more harm this time around. There just doesn’t seem to be any reason why this bludgeon of a bill was resubmitted. It just further muddies the water and polarizes the discussion when there might be room for productive talks. I really don’t know how these tariffs and EOs and new ways of doing business will all impact you and me. The dust needs to clear a little, but I know that I will do my best to keep you informed.
Best, Thair