Sally Pipes: "CMS Officials Are Undermining Trump’s Push For Affordable Drugs"
The success of biosimilar developers' investments now hinges almost entirely on the decisions of unelected government bureaucrats.
The following is an excerpt from an article by Sally Pipes, Founder & Chair of the Benjamin Rush Institute, published in Forbes. Click here to read the full article in your browser.
Officials at the Centers for Medicare and Medicaid Services just undermined President Trump’s efforts to make prescription drugs more affordable.
Earlier this week, CMS announced the next 15 medicines that will face price caps under Medicare’s Drug Price “Negotiation” Program, a core component of the Inflation Reduction Act signed into law by President Biden in 2022.
The IRA legally obligates the Trump administration to select 15 medicines for price controls by February 1. But the law gives CMS officials leeway over which medicines to pick.
Unfortunately, those officials selected several brand-name “biologic” drugs that will soon face competition from cheaper, copycat biosimilars. In so doing, CMS essentially upended the market landscape for those biosimilars—and made it far less likely that their developers will earn a return on their investments.
Other biosimilar developers will doubtless take note of CMS’s short-sighted decisions. They may reconsider plans to invest hundreds of millions of dollars and years of time developing copycat versions of other biologics that might be selected for price controls by Medicare in the future.
As these manufacturers halt their research and development investments and bring fewer biosimilars to market, American patients—and taxpayers—will miss out on tens of billions of dollars in savings in the years ahead.
That’s because biosimilars can save the healthcare system much more than price controls can over the long term.
Developing a biosimilar—an almost, but not-quite, identical version of a brand-name biologic drug—can take up to eight years and cost as much as $250 million. That investment only makes sense if manufacturers can price their biosimilars low enough to win significant market share away from more expensive reference biologics after their patents expire.
Under normal circumstances, that’s possible. Biosimilar developers typically sell their products for far less than what biologic manufacturers charge. As more biosimilars arrive on the market, fierce competition for market share leads to massive discounting, with prices falling by up to 77%.
This is capitalism in action. American patients, employers, and taxpayers reap the rewards. In 2024 alone, biosimilars saved the U.S. healthcare system an estimated $20 billion.
Government price controls impede these market forces. The CMS “negotiation” process is two years of kabuki theatre. Government officials gather evidence, talk with doctors and patients, consider a variety of other factors, and then haggle with the medicine’s developer over a “maximum fair price.”
Of course, the IRA essentially grants the government the power to dictate the price it will pay. Drug manufacturers have no real ability to refuse whatever the government offers.
That has massive implications for biosimilar developers. Consider two of the biologic drugs that CMS just selected for price controls: Orencia and Xolair. Both treat severe autoimmune diseases. And both are expected to face competition from biosimilars within a few years.
Depending on what prices CMS sets—and the agency won’t even announce those prices until later this year—it may be impossible for biosimilar manufacturers to sell at a price low enough to convince patients, doctors, insurers, and pharmacy benefit managers to opt for their biosimilars rather than the more established, newly price-controlled biologics.
In other words, biosimilar developers may have already spent years—and perhaps hundreds of millions of dollars—working to create competing products. But their future market share, and thus the success of their investments, now hinges almost entirely on unelected government bureaucrats’ decisions.
This sort of uncertainty will spook investors from funding future biosimilar development—and thus result in fewer biosimilars reaching the market.
And that would mean less savings for Americans. Researchers have modeled the impact of imposing price controls on biologics with imminent biosimilar competition—and found that it results in higher long-term spending.
CMS’s decisions directly contradict the president’s goal—expressed in both off-the-cuff remarks and an April 2025 executive order—of accelerating the approval of biosimilars to boost competition and drive down costs for patients.
CMS does not have to select biologics that are on the cusp of facing biosimilar competition for price controls. If the Trump White House is serious about its push to make medicines more affordable, it should ensure CMS officials exercise that authority—and never make this mistake again.