Response to Centers for Medicare & Medicaid Services Request for Comments Regarding the Medicare Drug Price Negotiation Program Draft Guidance

This comment focuses on Section 50.1, provisions 1 & 3 of the draft guidance regarding the negotiation of a “maximum fair price” under the Inflation Reduction Act (IRA), research and development (R&D) costs of the primary manufacturer, and prior federal financial support for novel therapeutic discovery and development. Specifically, we argue that a negotiated, “maximum fair price” must consider both public sector (federal) and private sector (manufacturer) investments and provide returns to both commensurate with the scale and risk of their investments. This comment addresses three issues and makes specific recommendations regarding each:1. In negotiating a “maximum fair price,” both parties may be expected to consider their investment and returns.2. Prior federal financial support for R&D may be estimated from the NIH investment in basic and applied research related to each product.3. The return on federal investment in discovery and development should be estimated as a social return on investment (SROI) based on elements of social value created by new drugs.These comments are based on research conducted at the Center for Integration of Science and Industry characterizing the federal investment in the discovery and development of the ten drugs selected for price negotiation in the first year of the IRA as well as the health benefit accruing to the public from the Medicare Part D spending on these drugs