Dr. Oz’s Pharma, Medicare Views to Influence US Drug Price Talks

Mehmet Oz, both a big pharma critic and investor, will get to put his mark on the Biden administration’s signature drug price negotiation program if confirmed to lead the Centers for Medicare & Medicaid Services under President-elect Donald Trump.

Trump’s selection of Oz to lead the Medicare agency would allow the surgeon-turned-TV personality to oversee the Inflation Reduction Act’s Medicare Drug Price Negotiation Program.

President Joe Biden‘s key legislative achievement, passed in 2022, gives the US powerful authority to negotiate with the pharmaceutical industry over the costs for some of the most widely used and expensive medicines covered by Medicare.

Oz in the past has signaled his support for Medicare and has criticized the drug industry over high prices, but those comments also came amid investments in pharmaceutical giants. Drug pricing experts say his various positions paint an uneven picture of how he’ll manage the negotiation program as it continues to roll out over the next four years.

“He is somebody for whom drug pricing has been on the radar, somebody who will come in with a lot of focus on Medicare,” said Carmel Shachar, an assistant clinical professor at Harvard Law School. “How much focus and oomph behind the drug negotiations is hard to say, but those negotiations have been a little bit of a black box anyways.”

Trump’s pick came days after he selected vaccine skeptic Robert F. Kennedy Jr. to lead the US Department of Health and Human Services, which oversees the CMS. Kennedy hasn’t taken a clear position with drug pricing issues, but he’s been a critic of the pharmaceutical industry on X, formerly known as Twitter. He’s called out companies for raising drug prices, quashing inexpensive therapies, and even claimed the industry is “poisoning us.”

While Oz and Kennedy would work together on the drug price negotiations, the CMS is particularly responsible for implementing the program.

‘Big Pharma’ Stance

The former surgeon in recent years, including during his 2022 campaign for US senator in Pennsylvania, criticized the industry for high insulin prices, which he said were “soaring and causing desperate families to buy the life-saving drug from strangers.” He also said he’s taken on “Big Pharma” and “cannot be bought.”

However, a 2022 financial disclosure report during his Senate race revealed investments in major drug companies including $15,000 for Bristol Myers Squibb Co., and Johnson & Johnson, and $50,000 for AbbVie Inc.

Separately, Pfizer Inc.’s CEO Albert Bourla donated to Oz’s senate campaign.

It remains to be seen how his relationships with the industry will translate into implementing the program, said Andrew Twinamatsiko, director of the Health Policy and the Law Initiative at Georgetown University’s O’Neill Institute.

“If I’m pharma and have friendly forces within HHS, there’s a possibility they might not be as aggressive in pursuing the maximum fair price,” Twinamatsiko said, referring to the negotiated drug prices.

“This is because at least for the first three years, this is just a conversation between HHS and the pharmaceutical manufacturers. There’s not a whole lot that the public knows about what transpires behind closed doors.”

Oz’s nomination is also seen “as an opportunity to hit a complete reset,” for the drug price negotiation plan, said John Stanford, executive director of Incubate Coalition, an organization representing venture capital firms.

The government program has spurred resistance and legal battles from the industry, as drugmakers worry it will harm innovation and return on investments.

Stanford said Oz’s experience may result in more program transparency, along with potential changes regarding the orphan drug exemption and the small molecule penalty. Under the IRA, small molecule, or chemically synthesized, drugs are eligible for negotiations seven years after FDA approval, whereas biologics are eligible for selection 11 years after licensure.

“He believes in medicine and believes that medicine works,” Stanford said. “We’re looking forward to the opportunity to have someone who will hear us out, and we’re not sure we were given that opportunity in the last administration.”

Up Next for Program

While major components of the negotiation plan already set forth in statute would restrict Oz from tossing out the program altogether, he could take steps to delay or modify the plan’s implementation.

“Some of the guidance issued by CMS under this program was issued as recently as last month and full implementation as planned will take years,” Melissa Wong, a health-care attorney and partner for Holland & Knight LLP, said in an email.

“That leaves Dr. Oz and the Trump Administration plenty of time to put their own stamp on the program, if it even survives all the lawsuits working their way through the courts and a possible repeal by Congress.”

If his nomination is confirmed, Oz will be at the center of engaging with manufacturers and releasing the next list of drugs selected for negotiations.

The first round included 10 Part D prescription drugs used to treat heart failure, diabetes, and other conditions. Those prices will go into effect in January 2026.

For the second round, the agency will select 15 Part D drugs. The CMS will announce the list of drugs no later than Feb. 1, 2025. Those negotiated prices will go into effect in 2027.

In addition to the price negotiations, Oz would also work with other Medicare drug pricing plans such as the annual $2,000 cap on out-of-pocket spending plan and the prescription payment plan. Those are slated to roll out in January 2025.