Newly hired federal employees are currently embarking on a monumentally important task, one with profound consequences for tens of millions of Medicare enrollees.
These new hires are choosing dozens of prescription drugs — which treat everything from cancer to autoimmune diseases — for inclusion in the government price-setting regime authorized by last year's Inflation Reduction Act. They've already selected the first ten that will be subject to price controls beginning in 2026, and plan on picking 60 more over the next four years.
Their decisions will inevitably impact which treatments are available to seniors. They will also determine the financial fate of companies throughout the healthcare sector, from biotech firms and hospitals to insurers and pharmacy benefit managers.
Right now, there are few safeguards in place to ensure these new hires are free from conflicts of interest. And with tens of billions of dollars in Medicare spending on the line, the temptation to select certain drugs based on personal financial considerations, rather than objective, transparent criteria, could prove overwhelming.
It's critical that the government implement such safeguards. The employees tasked with hugely consequential responsibilities must be beyond reproach.
Unfortunately, the program is off to an inauspicious start. The Biden administration has put Kristi Martin, a senior adviser at the Centers for Medicare & Medicaid Services (CMS), in charge of staffing decisions for the new drug pricing unit.
Martin has had an impressive career, but hardly one that could be described as nonpartisan or nonideological. For example, she spent three years at Waxman Strategies, a firm known to lobby on behalf of major hospital groups.
Martin also helped lead Arnold Ventures, a group which advocates for policy reforms. What is their impact on intellectual property rights and cutting edge medications for seniors?
It doesn't end there. Rena Conti, a drug price control advocate and Boston University professor, is one of Martin's top advisers. Conti has long supported imposing strict price caps on life-saving medicines and has received research funding from Arnold Ventures.
This background raises several questions. Does Martin still hold any financial interest in Waxman Strategies or its clients? Does she plan to hire from her network of former colleagues and customers in the future?
Is Conti calling on her former benefactors at Arnold Ventures as she weighs critical decisions? After years of promoting price controls, can Martin and Conti really play fair with all sides in a complicated, sometimes zero-sum industry?
None of these questions have been publicly answered.
To be sure, the new price-control program is hardly the first time federal employees have wrestled with conflicts of interest.
Late last year, The Wall Street Journal uncovered a slew of such cases.
In one example, an official at the U.S. Export-Import Bank helped her husband, a lobbyist for the cruise industry, get a White House meeting that helped delay a policy change impacting the industry. In another, a senior official at the Federal Communications Commission — who owns more than $250,000 worth of stock in Google parent Alphabet — was involved in multiple deals that benefited Google by expanding broadband use.
Finally, the Federal Deposit Insurance Corporation chose Microsoft as its cloud-computing provider, even as three senior staff members involved in the decision had conflicts of interest related to owning Microsoft stock.
Though federal officials are barred by law from working "personally and substantially" on issues in which they have a financial stake, prosecutors rarely pursue such violations, leaving it up to the agencies themselves to enforce the rules.
CMS officials have also offered less-than-reassuring answers on how employees are selecting drugs for the price-control program, and whether the process is strictly nonideological.
Quality-adjusted life year (QALY) analyses, which assess the worth of a human life, shouldn't influence the staffers' decisions. But while the agency has ruled out using QALYs directly in its price-setting decisions, it still plans on using data or other information from outside research that employs them. The agency is also utilizing comparative-effectiveness research — which ignores critical differences between individual patients.
Concerningly, CMS hasn't confirmed that it won't "outsource" its price-setting work to advocacy groups like the Institute for Clinical and Economic Review, as some activists are pushing the agency to do. ICER has been criticized for using QALY metrics when assessing drugs' therapeutic value.
If CMS officials do decide to rely on ICER's analyses, it isn't clear how the agency will use the $3 billion Congress appropriated for implementing the IRA's drug price controls, or whether any of these funds could go to ICER.
These worrying possibilities make it all the more important for watchdogs in Congress to make sure CMS doesn't stray from, or expand, its mission.
As CMS works to implement the drug pricing provisions of the IRA, it's essential that policy decisions are based on what's best for patients, not staffers' political views and personal finances. Our health is at stake.
Drew Johnson is a government watchdog who serves as a budget, tech and energy policy expert at several free market think tanks. Read Drew Johnson's Reports — More Here.
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