By Tomas J. Philipson
Section 11004 of The Inflation Reduction Act allocates $3 billion to the Centers for Medicare & Medicaid Services over the next decade to execute the legislation’s drug-price negotiations. That’s an excessively large amount of funding, far beyond any reasonable costs the agency could possibly incur.
For the 100 drugs to be negotiated the coming decade, the spending amounts to an astonishing $30 million per negotiated drug. Compare this to the Institute for Clinical and Economic Review (ICER), a private organization also in the business of so called “evaluating” drug prices, innovation be damned. It operates under a fraction of the cost, its website’s publicly available 2021 IRS records show it has spent $650,000 per report produced, representing about 2 percent respectively of the new CMS center’s budgeted costs.
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