I was bribed this week; all it took was a slice of pizza. I was on the fence about going to a show at the Atlantis in DC and my husband promised me Andy’s pizza and, really, how could I say no? Turns out it was amazing (pizza + concert). The show was just joyful. An hour of a performer that just danced and played and had so much fun. It was a reminder that joy can sometimes be a choice and one that doesn’t get decided on a slice of burrata margherita.

If It Were Easy. Senate Finance Democrats released a sprawling RFI this week on lowering drug costs. Comments are due August 17.

But let’s be honest about what this document actually is. It’s a messaging document for whenever Democrats next hold the gavel, not a bill working its way through markup. The 70-plus listening sessions and the careful sourcing make it a serious piece of policy thinking. They do not make it law.

Looks like healthcare stakeholders all have homework this summer: figure out which of these ideas survive contact with an actual legislative session, and which ones quietly become 2027 talking points instead.

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Win Some, Lose Some. Illinois wrapped up its spring session by passing two 340B bills that only make sense together. House Bill 2371 bars drug companies from blocking covered entities’ use of contract pharmacies to dispense 340B drugs, and limits what cost or income data those entities must disclose beyond what state or federal law already requires. That’s a win for community health centers and hospitals, who rely on contract pharmacy access to deliver the discount to patients (or, depending on who you ask, to themselves).

House Bill 4327 is the cost of that win. It orders the Illinois Department of Insurance to audit the program, requiring drugmakers to report their aggregate 340B discounts going back to 2020, and forcing some transparency on how much revenue covered entities and hospitals are generating off those discounts and where it goes.

The huge growth in 340B, with little visibility into where the margin actually lands, is exactly why states keep trying to legislate around a program that’s fundamentally a federal one. Illinois can audit covered entities all it wants. It can’t touch HRSA’s enforcement posture, can’t change the 340B ceiling price calculation, and can’t resolve the underlying fight over whether the discount is reaching patients or just padding margin somewhere in the supply chain.

Call this a transparency win wrapped around an access win, with the actual accountability question punted to whatever the audit finds.

If at First You Don’t Succeed. Colorado got Food and Drug Administration (FDA) approval to import prescription drugs from Canada, becoming only the second state ever to clear that hurdle, two years after Florida got the same approval (and still hasn’t actually imported a single pill.)

I mean it’s worth asking why the second state to clear this hurdle should expect a different outcome than the first. So, Colorado partnered with a wholesaler, Adira Medica, which will coordinate with Canadian manufacturers, ship drugs to a Pennsylvania subsidiary for testing, get FDA sign-off on the test results, relabel everything, and then send it on to participating pharmacies. The state’s initial wishlist covers 20 brand-name drugs treating things like blood clots, cystic fibrosis, and cancer, though the actual list depends entirely on which Canadian manufacturers agree to sell into the program, and that’s where this tends to fall apart.

Canada’s drug supply is sized for Canada. Manufacturers that distribute there have no obligation to sell extra volume into an American import scheme, and several have said as much. A federal judge already tossed one industry lawsuit against this framework in 2023, so the legal path is technically open. The commercial path is a different story.

Florida proved that getting the FDA’s signature is the easy part. Getting a willing Canadian seller, at scale, without straining Canada’s own market, is the part nobody’s solved yet. Colorado’s now free to try. My hunch is “free to try” and “actually does it” stay two different things for a while.

Ich Gebe Auf. On Monday, a German government source told Reuters that they are scrapping their plan for variable drug discounts, the kind that would have moved up or down depending on the country’s total drug spending and how much revenue the health system was pulling in. In its place: a fixed discount level, size still unannounced, so companies can plan ahead.

That’s the polite version. The real one is that Germany floated this self-adjusting rebate formula back in April as part of a plan to close a €20 billion funding gap and avoid hiking mandatory health insurance premiums, and industry didn’t just object, it threatened money. Eli Lilly’s CEO said the company would halve its planned €2.3 billion German investment. VFA, the German innovative pharma trade group, was more diplomatic, saying only that it had pushed for “a thorough impact assessment.” Lilly’s number is the one that moved this, not the diplomacy.

“Fixed” doesn’t necessarily mean “smaller.” The government hasn’t said what the new discount level will be, and the €20 billion hole still exists. What manufacturers won here is a number they can build a forecast around.

For anyone tracking the international reference basket feeding Most Favored Nation-style benchmarking, a flat discount is a far cleaner input than a formula tied to shifting national drug spend and health system revenue.

And, a side point, it is nice to see that other countries haven’t figured out healthcare spending either.

This Time, For Real. On June 15, the Health Resources and Services Administration (HRSA) published a Federal Register notice seeking comment on the data-submission burden for a revised 340B rebate pilot. It’s a clear signal -- the agency has not given up on the rebate model after the mess that was last winter.

Quick reminder for anyone not tracking this closely: HRSA stood up the original rebate pilot in 2025, limited to Inflation Reduction Act (IRA)-negotiated drugs. Covered entities sued. In December, a federal court in Maine granted a preliminary injunction, calling the agency’s administrative record “anemic” and finding that HRSA had not adequately considered covered entity interests, including the operational and cash-flow consequences of moving from upfront discounts to after-the-fact rebates. The First Circuit declined to stay the injunction. The government dropped the appeal in January, and by February HRSA was back at the drawing board with an RFI asking how a rebate model should be built. Comments closed April 20.

This new notice is HRSA doing its homework and asking about the burden associated with manufacturer pilot plans, manufacturer purchase reports, and covered entity claims-data submissions. That matters because the first version failed, at least in part, because HRSA had not built a record showing it had seriously weighed the burden on covered entities before changing how 340B discounts would flow.

For manufacturers, the upside has not changed. A rebate model tied to specific claims gives them more visibility into which covered entity is claiming which dispense, and whether the same unit may be showing up in more than one place. Which makes sense.

For covered entities, a discount after the fact is not the same as a discount at the point of purchase. And I know I should be more sympathetic, but the big entities put themselves in this situation by being difficult about the claims data for years.

This is HRSA rebuilding the administrative record before taking another run at the same policy fight. Whether that is enough to survive the next lawsuit is a separate question. But the agency clearly heard the court’s message: if you are going to change the mechanics of 340B, you need more than a policy preference. You need a record and here it is.

All in the Family. This week, the Centers for Medicare & Medicaid Services (CMS) released a Request for Information (RFI) asking the industry to help define three words that are about to carry real legal weight: “PBM,” “affiliate,” and “bona fide service fee.” Starting in 2028, PBMs and their affiliates can’t charge fees tied to drug price, rebate amounts, or formulary placement for Part D services. The fee must be flat, tied to something the entity would have done anyway, and can’t get passed through to the client.

It only works if “affiliate” means something. The RFI asks whether specialty pharmacy, mail-order, wholesalers, rebate aggregators, and data vendors count. And those are the exact subsidiaries the three largest PBMs already own. If they count, the fee restriction follows the money. If they don’t, there is a legal pass-through, the same basic mechanism that let CVS allegedly route 340B spread through Wellpartner and a chain of sister companies the covered entity never saw.

For manufacturers, this RFI is the actual groundwork for whether 2028’s rebate ban has teeth or becomes the next workaround. Expect PCMA to be all in.

Carved in Reg

On Tuesday, CMS published a proposed rule on the Medicare Drug Price Negotiation Program. While comments are due August 17 and a final rule is expected this fall, the deeper story is why this rulemaking is happening now and the structural collision it creates for the pharmaceutical industry.

From “Guidance” to Permanent Regulation

The Inflation Reduction Act (IRA) gave CMS temporary authority to run the first three negotiation cycles (IPAY 2026, 2027, and 2028) through program instruction rather than formal notice-and-comment rulemaking.

That administrative shortcut is expiring. Starting with IPAY 2029, CMS must do this the hard way: through the Administrative Procedure Act (APA). This requires public comment, a defensive administrative record, and a final rule that cannot be quietly revised via a memo.

Substantively, much of the proposal codifies the last three years of guidance: restating selection criteria, negotiation factors, and the bona fide marketing test into formal regulatory language. It is the same substance, but it is becoming harder for a future administration to walk back.

Closing the Subcutaneous Loophole

However, CMS is also using this transition to plug what it sees as a gap. The agency calls it “closing a fixed combination drug loophole.” The industry has another word for it: evergreening.

Under current policy, a fixed combination drug with two or more active ingredients counts as a single drug for negotiation eligibility. To bypass this, manufacturers could launch a new formulation of a qualifying drug by adding an ingredient that enables a different route of administration (e.g., swapping an IV infusion for an under-the-skin shot). Under the old guidance, that new formulation escaped being aggregated with the original drug, effectively resetting the negotiation clock.

While CMS’s example in the proposal is anonymized (active ingredient X + hyaluronidase), the target is obvious. This architecture sits under some of the most recognizable, high-revenue names in oncology and immunology.

If a fixed combination drug shares active ingredients with another product from the same NDA or BLA holder, and the primary difference is an added ingredient enabling a new route of administration, CMS will treat them as a single drug. The agency will aggregate first and ask formulation questions later.

The Looming Policy Collision: IRA meets GUARD

Because this is 2026, this rule does not exist in a vacuum. The same week CMS proposed making the negotiation program permanent, a revised version of GUARD, the proposed Part D MFN pilot, went to the Office of Management and Budget for final review.

GUARD is designed to cover 25% of Part D beneficiaries, forcing manufacturers of sole-source drugs in designated classes to pay rebates when U.S. prices exceed international benchmarks. It is slated to launch January 1, 2027. And cost beneficiaries billions, but whatever, amIright?

These two programs are on a direct collision course:

1. A product selected for IRA negotiation gets a Maximum Fair Price (MFP) applied nationally.

2. If that same product is a sole-source drug in a GUARD pilot region, it faces a second, separate international-reference rebate.

The administration has not explained how to reconcile an already-negotiated MFP with a GUARD rebate. We have already seen a microcosm of this chaos: semaglutide’s negotiated MFP came in at $274, while a separate voluntary MFN deal set a Medicare price of $245. Same molecule, two competing federal numbers. GUARD threatens to turn that one-off anomaly into a permanent structural feature.

The Bottom Line

For manufacturers, codification cuts both ways. It buys predictability, but it also means a future, industry-friendly administration cannot simply soften enforcement with a memo; they would have to endure the same grueling rulemaking process CMS is undergoing now.

With the anti-evergreening fix narrowing reformulation strategies, and the small biotech temporary floor being resurrected for 2029 and 2030, the stakes are incredibly high. Comments close August 17. Nobody’s summer is getting easier.

The song “These are Days” is the ear worm that felt like it lives in every moment this week. On Tuesday there was a high school graduation, Thursday brought a wedding reception at the Richmond Flying Squirrels game. What hopeful moments in a lifetime. June is just that kind of month.

So much news out there, here’s what caught my eye this week.

Another Two Bite the 340B Dust. Last week, two more states added to the manufacturer loss column in the 340B contract pharmacy fight, and they didn’t do it the same way.

In Mississippi, the U.S. District Court for the Southern District denied AbbVie’s motion for summary judgment and granted Mississippi Attorney General Lynn Fitch’s cross-motion for summary judgment, dismissing AbbVie’s complaint with prejudice. AbbVie had thrown preemption, takings, due process, and the Commerce Clause at the wall. None of it stuck. This follows the Fifth Circuit’s earlier denial of a preliminary injunction and its ruling in the Louisiana case that an essentially identical statute regulates delivery, not price. AbbVie has now lost at every stage in Mississippi, on top of losses in Tennessee, Louisiana, Arkansas, Hawaii, Maine, Colorado, Nebraska, and South Dakota.

In Washington, a U.S. District Court Judge rejected a preliminary injunction challenge from AbbVie, Novartis, and PhRMA against Senate Bill 5981, a state 340B law signed by Governor Ferguson in March and effective immediately. The law prohibits manufacturers from restricting contract pharmacy arrangements and bars data demands as a condition of 340B pricing access. Novartis, AbbVie, and PhRMA immediately appealed. AstraZeneca is also named but did not seek the preliminary block.

The legal theory is the same one that’s been relitigated across more than a dozen courts now: federal preemption. Courts keep reading federal silence on 340B drug distribution as permissive rather than exclusive. Nothing in the statute reserved this territory for Congress. The ruling is consistent with that body of case law.

There is one complication. A North Dakota federal judge ruled the opposite way in April, blocking a similar 2025 state law as interference with federal programs. Two federal judges, same statutory question, different answers. That circuit split is where this fight is heading.

Washington’s law also adds a data twist. Rather than manufacturers demanding claims data from covered entities directly, both sides submit data to the state. The attorney general can enforce violations. Covered entities can bring their own suits. UW Medicine expects $85 million in savings under the law.

Manufacturers have the executive branch on their side through the DOJ brief in the Colorado appeal. The judiciary, at least at the district and circuit level, keeps going the other direction. Whether the path forward runs through Congress, HRSA rulemaking, or the next Supreme Court term is the more interesting question right now.

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Your Honor, This Pricing Chain Is Weird. Last Thursday, the U.S. District Court in Denver heard arguments in Amgen’s challenge to Colorado’s Prescription Drug Affordability Board’s (PDAB) upper payment limit (UPL) on Enbrel. Amgen is asking for a preliminary injunction blocking the cap, which is set to take effect next year. The judge said he would issue a written ruling soon.

The core of Amgen’s argument is that Colorado’s PDAB targeted Enbrel precisely because it’s still under patent, and that capping the price of a patent-protected drug interferes with federal patent law’s design: grant exclusivity, let the company price, accordingly, fund R&D.

The state’s response is that the UPL technically caps what the end purchaser, a patient or insurer, pays, not what Amgen charges. There are wholesalers and pharmacy benefit managers (PBM) in between, and who absorbs the loss is genuinely unclear. (hahahahahaha, it won’t be wholesalers or PBMs.)

The state’s own attorney acknowledged the pharmaceutical pricing chain is counterintuitive enough that she couldn’t say for certain where the hit lands. To which the judge, who spent part of the hearing getting a crash course in WACs (wholesale acquisition cost) and chargebacks and rebates, replied deadpan: “Well, I am.”

That exchange is the most useful thing to come out of the hearing for this audience. The patent preemption theory is untested. If the judge issues an injunction and the case proceeds, this becomes the first serious judicial test of whether state UPLs on patent-protected drugs survive a federal IP challenge. Colorado is where the PDAB model gets stress-tested for real.

Priority Boarding, No Flight Plan. On June 4, STAT reported that the Food and Drug Administration (FDA) held a public listening session on the Commissioner’s National Priority Voucher (CNPV) program. Seventeen speakers showed up, representing pharma companies, patient advocates, and academic organizations. Most of them asked the agency to pause the program and restart it through formal notice-and-comment rulemaking.

Quick background for those who haven’t been tracking this: former Commissioner Marty Makary launched the CNPV program a year ago, offering one-to-two-month review timelines for drugs deemed to align with “national priorities.” The criteria were vague enough that the White House used the program to reward companies participating in GLP-1 price programs, Joe Rogan successfully lobbied for psychedelic drug vouchers, and at least one voucher was awarded over the objections of career FDA scientists. Makary resigned in May. The program’s future has been uncertain since.

The concerns from the session were predictable (and, IMO, totally valid): criteria too vague to be legally defensible, political interference baked into the design, and the non-transferable nature of these vouchers creates confusion with the FDA’s existing tradeable voucher programs. Sanofi pulled a diabetes drug out of the program after the review was interfered with by a senior official.

The positive feedback came mostly from companies whose drugs already cleared the pathway. Johnson & Johnson said its rare blood cancer therapy was nominated proactively by the FDA in December and approved in March.

It isn’t that a priority pathway is bad, but this one seems a little sus. If the program gets formalized with real criteria and process protections, it’s worth watching. One-to-two-month reviews are genuinely meaningful competitive advantages. The question is whether the FDA can design guardrails that hold.

Prick from the Thicket. Last week, a House Judiciary panel held a hearing on how brand-name manufacturers use the patent system to extend exclusivity and block generic and biosimilar entry. (Pro tip, start a little late and watch it at 1.5x. Even smarter? Wait for someone else to report on it.)

Two bills are moving through the conversation: a skinny labeling protection bill and the Eliminating Thickets to Increase Competition (ETHIC) Act, which would limit the number of patents brand-name manufacturers can assert in litigation against generic and biosimilar competitors.

The term “patent thicket” refers to a dense web of overlapping patents surrounding a single product. Even after a drug’s original patent expires, a manufacturer may hold dozens of secondary patents covering formulations, dosing, delivery mechanisms, or manufacturing processes. Generic and biosimilar competitors have to challenge each one or design around them, which is expensive and slow. Humira had over 130 patents. Keytruda’s thicket is building.

The ETHIC Act attempts to limit how many of those patents can be asserted in a single litigation. The hearing also surfaced the limits of the Supreme Court’s recent skinny labeling decision, with experts noting that brand manufacturers could return to litigation on grounds the Court didn’t address and that biosimilars face a distinct legal context the ruling didn’t touch.

Both bills have bipartisan support. Insurers and generic manufacturers are backing them. Brand manufacturers are pushing back hard. If you’ve been reading my stuff for a while, you know that I would have favored patent reform over Medicare negotiation, but no one asked me.

Whether either bill moves is genuinely uncertain. Patent legislation is technically complex, politically contested, and typically slow. But the conversation is getting more concrete, and for manufacturers with significant late-lifecycle branded products, the direction of travel here is worth watching.

The FDA Tries Bedside Manner. Last week Reuters reported that acting FDA Commissioner Kyle Diamantas met with rare disease advocacy groups, including Friends of Cancer Research and the Foundation for Angelman Syndrome Therapeutics. The meeting was framed as fence-mending after Commissioner Marty Makary’s tenure, which ended with his resignation last month following a clash with the White House over vaping products.

Under Makary, the FDA declined to approve Biohaven’s experimental treatment for a brain disorder, slapped a serious safety warning on a Sarepta gene therapy, and a top agency official publicly called UniQure’s Huntington’s therapy a “failed product.” Rare disease groups had grown frustrated, and a coalition pressed Trump and the Health and Human Services (HHS) leadership in April for greater regulatory clarity.

Diamantas, who came up through the agency’s food side rather than drug review, is being described as a steady hand. He’s reportedly under consideration for the permanent role. The groups said no promises were made but that officials listened to their case for novel clinical trial approaches, engagement with the broader public, and predictability from FDA.

It’s a start. From what I’ve heard, HHS has been dismissive of patient groups and turned down meeting after meeting. Or said things like “it’s fixed” to problems that are clearly not fixed. Tone matters, and listening is not nothing after a period when rare disease sponsors felt like they were being graded on a curve they didn’t know existed.

The real test is what comes out of these conversations. Consistency and predictability in rare disease review aren’t delivered by a single meeting. They’re delivered by guidance, by staffing, and by an agency that has the expertise to make good decisions.

Cure Now, Pay Later. On Monday, STAT published an opinion piece from William Padula at the USC Schaeffer Center arguing that gene therapies, many priced at $2 million or more per patient, represent a financing problem more than a pricing problem. The piece is timely, and the argument is a good reminder because we will keep having the discussion until we find a path forward.

Padula’s core point is that payers operating on annual budgets can’t absorb a $2 million upfront cost, even when the therapy genuinely delivers decades of value. CMS’s Cell and Gene Therapy Access Model for sickle cell in Medicaid is attempting to address this through outcomes-based contracts, but those models still don’t solve the fundamental budget cycle mismatch. His proposed solution is a financing intermediary that funds treatment upfront and recovers costs over time, structured like amortizing a mortgage.

You’ve heard this before; annuity payment structures, outcomes-based agreements, and reinsurance concepts have been circulating since Luxturna. The reason none of them has become the market standard is coordination. You need payers, manufacturers, providers, and sometimes states agreeing on what success looks like across a system where patients change plans, outcomes take years to materialize, and the regulatory environment around best price makes outcomes-based deals structurally risky for manufacturers.

Padula is right that this is a financing problem, not a science problem. The FDA recently issued draft guidance to accelerate cell and gene therapy development, which means the pipeline is moving faster than the payment infrastructure around it. If we want the innovation to continue, we need to fix that gap soon. There are other places for people to invest their money that look more promising.

Cliff Notes: The Ripple Effect. Late last week, Washington Post Intelligence published early data from Ensemble Health Partners, which handles patient registration and revenue functions for more than 1,800 physician practices, 300 hospitals, and 35 health systems across 41 states. The finding: uninsured patients are up 25% year over year. The nation’s largest for-profit hospital chains confirmed the same pattern in their Q1 filings. HCA reported nearly a 19% increase in estimated uncompensated care costs compared to Q1 2025. Universal Health Services saw discounts for uninsured patients jump roughly 41%.

The Commonwealth Fund just published new state-level data on 2026 Affordable Care Act (ACA) marketplace enrollment. Open enrollment dropped 1.2 million people, a 5% decline and the largest single-year drop since the marketplaces opened. But the enrollment number understates what’s happening. Plan cancellations between January and March rose 24% over last year. An estimated 14% of people who signed up for a 2026 plan never paid their January premium. State data through April shows post-enrollment drop-offs of 13% to 16% in Arkansas and Colorado, compared to 3% to 8% in those same states last year. Maryland went from a 3% drop-off to 13% in a single year.

Remember the government shutdown last year? This was what it was hoping to avoid. Enhanced premium tax credits expired at the end of 2025. Middle-income consumers faced unprecedented net premium increases. The share of enrollees in bronze-tier plans increased from 30% to 40%. Average annual deductibles rose by $1,000, to nearly $3,800. Analysts are now projecting 2026 marketplace enrollment will decline 17% to 26% from last year. Roughly 5 million people. This my subjective aside… is there fraud in the program? No doubt, where there is an opportunity, there is fraud. But are normal people – our family, friends and neighbors caught in this decline – absolutely.

Medicaid enrollment declined by about 3.8 million people between February 2025 and February 2026. Work requirements take effect January 1, 2027. KFF projects ACA enrollment may fall from over 22 million in 2025 to between 16.5 million and 17.5 million by end of 2026.

It’s not the future; it is today. It is already in Q1 filings. For manufacturers, more uninsured patients mean more demand for free goods, bridge programs, and patient assistance, and the disruption isn’t temporary if coverage doesn’t recover. There’s no current policy mechanism pointed at recovery. And 2027 likely will get worse unless something is done.

Deep Dive – Circular Logic: MFN Updates

This week, STAT News reported that Europe is fracturing along two different lines when it comes to drug pricing. The U.K. raised its NICE cost-effectiveness thresholds, increased drug spending commitments, and secured a tariff carveout. Germany, facing budget deficits and a health system under pressure, is heading the other direction: increasing clawback taxes, adding volume-based discount requirements, and watching Eli Lilly and Boehringer Ingelheim announce they’re pulling back billions in planned investment. Same continent, opposite strategies, same pressure point. And that pressure point is Most Favored Nation.

MFN pricing, in any of its forms (GLOBE for Part B, GUARD for Part D, GENEROUS for Medicaid, the bilateral voluntary agreements), depends entirely on a reference basket. The U.S. price gets benchmarked to what other wealthy countries pay. The policy only saves money if that basket is real, representative, and stable. And right now, the basket is being hollowed out by the policy itself.

The Asahi Shimbun reported this week that Eli Lilly’s breast cancer drug Imlunestrant, approved in the U.S. in December 2025, still has no price set in Japan because no one can figure out what that price would do to U.S. MFN calculations. Japan historically prices new drugs at about 40% of U.S. levels. Of 460 drugs sold in Western markets between 2014 and 2023, 245 never launched in Japan at all. The concern isn’t new, but it is accelerating. Companies are now delaying Japanese launches specifically to avoid creating a reference price that feeds back into the U.S. market.

Insmed said last month it won’t launch its lung disease drug in Europe for now, citing MFN uncertainty. Amgen pulled Repatha from Denmark’s market earlier this year. As Nathan Jibat and Jeromie Ballreich at Johns Hopkins wrote in Health Affairs, Amgen made a rational commercial decision: sacrificing roughly $16 million in Danish revenue to protect a Medicare market running $1.75 billion. The math is straightforward. And it tells you exactly what every company’s internal pricing team is running right now.

Now layer in the Germany situation. POLITICO reported that U.S. officials are holding talks with German Health Minister and Economic Affairs Minister. The goal is to persuade Germany to follow the U.K.’s lead and pay more for drugs. Meanwhile, Germany’s domestic proposal moving through Parliament would require volume-based discounts and increase clawback rebates year over year, precisely the kind of structural cost reduction the U.S. is trying to reverse.

This is the rub. The U.S. needs European prices to rise so that MFN benchmarks move up. European governments, facing aging populations, defense spending pressure, and squeezed health budgets, need prices to fall. Those two things cannot both happen. And the leverage the U.S. has over individual EU countries is structurally weaker than what it had with the U.K. Because trade policy is an EU competence, Germany can’t offer the same kind of tariff-relief package the U.K. could. The administration is essentially asking sovereign finance ministries to absorb higher pharmaceutical costs as a favor to American trade policy. That is a hard sell in an election year anywhere.

The STAT piece includes a line worth flagging. Cytokinetics recently launched its heart disease drug Myqorzo in Germany, with a U.S. list price of $108,400 against a German list price of about $20,240. That’s roughly an 80% gap. That gap is what MFN is designed to close by pulling the U.S. price down. If that German price becomes reportable in a GUARD or GLOBE calculation, the pressure on the U.S. price is real. And if Cytokinetics or any company in the same position eventually decides, as Amgen and Insmed have, that protecting the U.S. price is worth more than the European market, the German price disappears from the basket entirely.

The policy’s internal logic is circular. To work as designed, MFN needs a populated basket of real international prices. But the policy is creating rational commercial incentives to depopulate that basket, market by market, drug by drug, until the benchmark is either unrepresentative or simply unavailable. At that point, either the framework collapses on its own or Congress has to mandate something much more coercive to keep it alive.

For manufacturers, there are two distinct strategic questions here.

The first is the pricing question: do you launch in reference countries, knowing you may be anchoring a future U.S. calculation?

The second is a market access question most people are underweighting: patients in Japan, Germany, France, and Denmark are not abstract trade policy variables. They’re patients. When Inluriyo doesn’t get a Japanese price, Japanese women with advanced breast cancer don’t get Inluriyo. When Repatha exits Denmark, 2,000 Danish patients lose access to a cholesterol drug. The U.S. administration is treating those access gaps as acceptable collateral in a pricing negotiation. Whether they remain acceptable is a different question.

The reference basket theory of MFN assumes the world cooperates. The world is currently demonstrating that it won’t.

Summer bucket list has started. Got ice cream from the neighborhood truck and the local shop. Went to a wooden bat baseball game. Had a potluck/last minute dinner at the pool with friends.

One thing I’m learning is if you don’t make time, it just passes you by. Only took a few decades.

Bridge Over Troubled Coverage. On Wednesday, CMS released the first operational materials for the Medicare GLP-1 Bridge program, including prescriber and pharmacy fact sheets and a prior authorization form outlining clinical eligibility criteria. The program launches July 1 and runs through December 31, 2027. Medicare beneficiaries who don’t currently have access to GLP-1s through their Part D benefit will be able to get Wegovy or Zepbound for a $50 monthly copay.

The fact that CMS is releasing prescriber guidance and a prior authorization form three weeks before launch tells you something about where implementation stands.

CMS is standing this up under CMMI demonstration authority, the same authority used for the Part D Premium Stabilization Demonstration that cost $9.8 billion across 2025 and 2026. Programs created under that authority are supposed to be budget-neutral. This one is structured outside Part D entirely, which means the $50 copay doesn’t count toward beneficiaries’ annual out-of-pocket limits, and Low-Income Subsidy protections don’t apply.

The original plan was to run this through Medicare Advantage and Part D plans. Insurers passed. Too much cost uncertainty, too little time to price it into bids. So it lands as a direct federal obligation instead.

How large that obligation is remains, remarkably, undisclosed. STAT’s Bob Herman reported this week that CMS has declined to share its cost projections despite multiple requests over three weeks. CBO estimated 13 million Medicare enrollees would newly qualify based on obesity alone. At $195 per member per month after the copay, full enrollment in that population would run over $30 billion annually. Even 10% uptake is $3 billion a year. Eighteen months of exposure.

CMS is actively promoting the program to prescribers and pharmacies, which suggests they expect meaningful uptake. They’re just not saying what they think that means in dollars.

When the Bridge expires at the end of 2027, there will be enormous pressure to extend or replace it. The health benefits of GLP-1s require continuous use. Stopping therapy has real clinical consequences. The administration has created a patient population with an ongoing therapeutic need and no statutory coverage pathway and no public accounting of what it will cost to maintain.

For manufacturers, the immediate question is operational. Getting on the prior authorization form matters. Understanding the clinical eligibility criteria matters. The longer-term question is what this patient population looks like when the Bridge ends and whether coverage continuity exists to keep them on therapy.

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Bring Receipts. On Monday, STAT reported that Eli Lilly sent letters to roughly 50 hospitals giving them five days (until June 8) to submit comprehensive claims data or lose their 340B pricing. The policy has been in place since February 1, and while more than 2,300 hospitals have complied, up to 1,000 have not, including some of the largest, best-resourced systems in the country.

Lilly’s letter to the Health Resources and Services Administration (HRSA) was not subtle. The company said those non-compliant hospitals made between $8 million and $16 million in 340B profits in the 90-plus days since the policy took effect, while simultaneously submitting claims to Medicare, Medicaid, and commercial insurers to get paid. The argument is hard to dismiss. Covered entities can generate the data when payment is on the line.

The hospital side is framing this as an administrative burden and a legal overreach. The American Hospital Association proposed a neutral third-party clearinghouse instead. Lilly called that a transparency dodge.

We were probably always headed in this direction because of the growing size of the 340B program, but the Inflation Reduction Act (IRA) made this fight unavoidable. Once a Maximum Fair Price (MFP) exists on a drug, and manufacturers must offer either the MFP or the 340B price (whichever is lower) and pay inflation rebates only on non-340B drugs, the absence of claims data is a financial problem.

Manufacturers can’t tell which discount is which, which transactions trigger rebate obligations, or whether duplicate discounts are being captured. HRSA has no mechanism to detect this. The courts have twice affirmed manufacturers’ right to request the data. I want to note that the Centers for Medicare & Medicaid Services (CMS) could have made this so much easier with a clearinghouse but chose not to.

All Work, Harder Exemptions. On Monday, CMS published a nearly 400-page interim final rule laying out the nationwide framework for Medicaid work requirements, with a January 1, 2027 deadline.

The basics: non-pregnant adults ages 19 to 64 who are not on Medicare must demonstrate 80 hours per month of qualifying activity to enroll in or keep Medicaid coverage. Work, education, job training, community service, or a combination all count.

There are exemptions like pregnant and postpartum individuals, people who are medically frail or disabled, American Indian and Alaska Native enrollees, parents or caretakers of children under 14 and family caregivers for people with disabilities. States can also create short-term hardship exceptions for things like inpatient care, natural disasters, high-unemployment counties, and travel for complex medical care.

The exemption list sounds comprehensive. The medical frailty definition is where it gets complicated.

States had been waiting for clarification on who qualifies as medically frail.

CMS tied medical frailty specifically to an individual’s ability to comply with the work requirement itself, not to diagnosis or condition category. The rule provides no list of diagnoses, severity criteria, or functional assessment standards. A state cannot simply say all enrollees with cancer, HIV, Parkinson’s, or multiple sclerosis are exempt. Each case requires individual review.

That’s a significant operational lift for states that had been building systems assuming a less restrictive approach. And the timeline here is brutal. States must begin outreach to affected enrollees between June 30 and August 31.

The rule does allow self-attestation temporarily through 2027, but starting January 2028 documentation is required, and medical frailty self-declaration is allowed only once per enrollment period.

CBO estimates 5.2 million fewer Medicaid renewals under the requirements. For manufacturers with patient populations concentrated in Medicaid, the disruption to patient services programs is coming, and the frailty definition problem makes the scale of that disruption hard to predict.

The End is Not Near. Last week, KFF published an analysis of Medicare Advantage (MA) out-of-pocket (OOP) limits in 2026, and the numbers are worth sitting with, because the MA OOP cap is one of the most frequently cited advantages of MA over traditional Medicare. Here’s the fine print.

The statutory maximum for in-network services in 2026 is $9,250. The average is $5,421 for in-network services. About 4.1 million enrollees (roughly 19%) are in plans with limits above $7,000, and 1.8 million are at the full $9,250 maximum. One in five MA enrollees is in a plan where hitting the cap would mean spending more than most people have in emergency savings.

The PPO versus HMO split matters here. HMOs average $4,636 for in-network services. PPOs average $6,592. And PPO enrollees in rural areas face caps about $800 higher than urban enrollees. Rural patients often have fewer plan choices, which means less ability to shop down to a lower cap.

For manufacturers with specialty products in MA, this analysis matters. Patients who face higher OOP exposure before hitting their cap are patients with more friction when faced with the need for in-office treatment.

The Need for Speed. Last week, BioPharma Dive published a piece on instability at the Food and Drug Administration (FDA) and whether the agency can still deliver on faster drug development, drawing on an interview with Tala Fakhouri, former FDA AI policy official and now chief AI and regulatory strategy officer at Parexel.

TL;DR: the intent is there, the execution is uncertain.

Fakhouri’s read is that White House and the Department of Health and Human Services (HHS) priorities around accelerated clinical trials and domestic manufacturing are real and won’t change with leadership turnover. What’s less clear is whether the FDA has the operational capacity to implement them. Staff layoffs, leadership exits (including Commissioner Makary), and acting appointments across CDER and CBER have created a bandwidth problem. Real-time clinical trial monitoring requires staff to check signals more frequently. Onshoring early trials requires subject matter experts and training. You don’t build that capacity overnight when the historical knowledge has left the building.

The other issue is process. Several of the FDA’s recent acceleration initiatives, including the Commissioner’s National Priority Voucher program and the “plausible mechanism” single-trial pathway, were announced via journal publications and press conferences rather than through the traditional notice-and-comment guidance process. (Which I have feelings about.)

For large companies with regulatory teams, that’s manageable. They can work with their government affairs and outside consultants to figure out what’s real. For smaller biotechs without infrastructure to interpret informal signals, it can be a problem. They need formal guidance to anchor their development programs, not a paper in JAMA.

On the positive side, Fakhouri noted that Mike Davis, now acting director of CDER, has deep FDA reviewer experience and strong internal credibility. That matters.

For manufacturers, the underlying uncertainty about what the FDA will require, and from whom, is its own cost.

Faster Reviews Need Reviewers. Last week, the American Action Forum published a summary of where PDUFA VIII negotiations stand, following the May 15 meeting confirming that technical discussions between FDA and industry have wrapped. What comes next is agency ratification, HHS and OMB clearance, public comment, and transmittal to Congress. The agreement covers fiscal years 2028 through 2032.

The package looks evolutionary, not transformational. Structured sponsor communications, priority feedback on pivotal protocols, cross-divisional meetings, and the transition of the Rare Disease Endpoint Advancement pilot into a permanent program. On manufacturing, a new program would create pre-submission and post-inspection meetings to address facility issues before they become multi-cycle review delays. These are real friction points.

The “America First” provisions are where it gets more complicated. FDA proposed a 50% application fee reduction for sponsors that start Phase 1 trials in the United States, and industry tried to pair that with IND review streamlining. FDA declined. The result is a domestic development incentive that signals a political preference without directly addressing the time and cost drivers that push early trials abroad in the first place.

And then there’s the execution question, which may be the most important one. To hold up its end of this negotiation, FDA requires experienced reviewers, statisticians, inspectors, and project managers. Recent staffing turnover and resource constraints are real. The agreement includes enhanced hiring transparency and quarterly public updates on CDER and CBER staffing. It’s promising but one of those “time will tell” realities.

Reimbursement Fundamentals: HTA and MFN and IRA: The Floor is Lava

Three pieces landed this week that, read separately, look like three different policy conversations. A Health Affairs Forefront piece on how the Manufacturer Discount Program and the Medicare Drug Price Negotiation Program interact inside the IRA. A USC Schaeffer perspective on health technology assessment (HTA) threshold drift and what it does to MFN’s international reference prices. An Avalere analysis (funded by Johnson & Johnson) on whether cost-effectiveness thresholds are even structurally suited to the U.S. market. Read together, they describe the same problem from three different vantage points: the U.S. is building a drug pricing architecture on a foundation that isn’t stable, and the instability runs deeper than anyone in the policy conversation is currently acknowledging.

Start with the IRA collision, because it’s the most concrete.

When Congress designed the IRA’s Part D reforms, it created two separate mechanisms for reducing drug spending. The Manufacturer Discount Program requires manufacturers to pay a 10% discount in the initial coverage phase and 20% in the catastrophic phase, with no ceiling as total spending grows. The Medicare Drug Price Negotiation Program sets a MFP for selected drugs. The assumption baked into the design was that negotiation would always outperform what the MDP would have generated. Congress therefore exempted negotiated drugs from MDP obligations while the MFP is in effect.

That assumption doesn’t hold for every drug. The Health Affairs piece models it using Imbruvica, AbbVie’s oncology drug negotiated for IPAY 2026. At the MFP, estimated net spending on Imbruvica in 2026 is $665 million, roughly a 39% reduction from a no-negotiation counterfactual. That sounds like a win. But if MDP had applied instead of negotiation, the authors estimate net spending would have been $263 million. The reason is structural. Imbruvica’s average gross cost per beneficiary is projected at $184,000 in 2026, and 96% of that spending occurs in the catastrophic phase. Under MDP, uncapped discounts compound with spending. Negotiation sets a ceiling instead of a floor.

Negotiation did deliver benefits. Cost sharing is now anchored to the MFP at the pharmacy counter rather than the list price, which is better for beneficiaries than retrospective rebates flowing to plans. But the aggregate Medicare savings picture is more complicated. And the interaction between MDP and negotiation is going to matter more as the selected drug list grows, particularly in IPAY 2027 and 2028, where 18 of the 30 selected drugs are specialty drugs with high per-beneficiary costs.

Now layer in MFN.

GLOBE, GUARD, and GENEROUS would all benchmark U.S. drug prices against what peer countries pay. The logic is simple: U.S. prices run roughly 250% of OECD levels, so import the lower foreign prices and close the gap. What the USC Schaeffer piece flags is that those foreign prices are themselves moving. HTA bodies across Europe are quietly expanding what they’re willing to pay for innovative therapies, particularly in rare and severe disease.

Cost-effectiveness thresholds long anchored around $100,000 to $150,000 per Quality Adjusted Life Year (QALY) are creeping toward $500,000 in some cases, through exceptions, severity modifiers, and case-by-case adjustments that don’t show up in the stated threshold but do show up in reimbursement decisions.

Here’s the connection I was talking about. MFN ties U.S. prices to international benchmarks. Those benchmarks reflect HTA decisions. When HTA thresholds drift upward, the international prices they produce drift upward too. The downward pressure MFN is designed to import gets partially offset before it arrives. The bad analogy is building a plane while flying it and not making opportunities to fix it after it has landed cause you think it is perfect.

Manufacturers are also responding to MFN by delaying launches in reference countries, shifting to confidential discounts to obscure net prices, and in some cases exiting markets entirely to eliminate the benchmark. Amgen pulled Repatha from Denmark rather than let its deeply discounted Danish tender price become reportable under GENEROUS, sacrificing roughly $16 million in Danish revenue to protect a U.S. Medicaid market running $241 million and a Part D market running $1.75 billion. Rational. The benchmark pool gets thinner and less representative exactly when MFN policy needs it to be robust.

Now add the third layer.

The Avalere analysis asks whether cost-effectiveness frameworks are even suited to serve as the methodological foundation for any of this. The answer is careful but directional: probably not, and the problems go deeper than the well-documented QALY debate. CE thresholds assume a centralized decision-maker, a fixed budget, and a uniform population. None of those exist in the U.S. The system is multi-payer, decentralized, and organized around individual plan populations with different risk profiles, budget realities, and benefit designs. Even in countries that use thresholds formally, Avalere’s expert interviews found substantial variation in how they’re applied in practice, with exceptions and bypass mechanisms introduced because a single rigid threshold doesn’t accommodate real-world population needs.

The practical implication is that MFN is benchmarking U.S. prices against international prices that are themselves products of a methodological framework that, as Avalere documents, doesn’t transfer cleanly to the U.S. market, and that is already under internal pressure from the same pipeline of high-cost innovative therapies MFN is trying to constrain.

Put all three together and here’s what you have. Inside the IRA, the two domestic discount mechanisms Congress created are already producing unintended interactions that leave savings unrealized for certain high-cost drugs. The international reference prices those mechanisms increasingly depend on are drifting upward as HTA bodies quietly adjust their willingness to pay without formalizing the change. And the methodological framework underpinning those international prices was never designed for a fragmented, multi-payer system in the first place.

For manufacturers, the strategic question isn’t just what your MFP will be or which GLOBE benchmark will apply to your launch price. It’s whether the architecture being built around all of this is stable enough to plan against. Right now, the answer is no. The pricing framework being constructed for the next decade is being built on reference points that are moving, methodologies that don’t transfer, and domestic mechanisms that interact in ways Congress didn’t fully model. That’s not a reason to disengage from the process. It’s a reason to be very careful about what you assume is settled. Nothing is settled.

I keep being asked what I think about the introduction of 600+ new generics into TrumpRx and Mark Cuban standing next to President Trump. Here is my answer … I don’t think about it?

One day TrumpRx may be a good place for people who are uninsured or underinsured to go and look up cash prices for their drugs. Adding generics makes that one day a little closer. I can’t imagine this is a huge business win because that would require people to use TrumpRx; this was about patient access. And honestly, why not play nice when you have something on which you can agree? Just because I have no poker face doesn’t mean others don’t.

The site isn’t bad for people with insurance to do research, but these purchases won’t count toward deductibles or out-of-pocket maximums. Depending on who you are, that might be fine.

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Competition, Pending Approval. Last week, JAMA Health Forum published a piece arguing that the path to drug affordability runs through competition, not price controls. The authors’ argument is sharper than the usual free-market talking points.

The first two are about removing friction from markets that already exist. Create a formal Food and Drug Administration (FDA) pathway for behind-the-counter drugs -- modeled on what Australia, Canada, and the UK already do -- so the community retail pharmacists can dispense short courses of medications without a full prescription. And streamline biosimilar market entry by transforming the approval into something closer to the abbreviated process used for generics.

Total prescription drug expenditures hit $806 billion in 2024. Biologics are nearly half of that. But only twelve biosimilars are in development for the 118 reference biologics expected to lose patent protection over the next decade.

The third proposal is an expanded priority review voucher (PRV) program targeting generic drug markets with limited competition. Helping the math, well, math. The authors would require manufacturers to produce and sell the product for at least three years as a condition of earning one.

The competition argument is more palatable than price controls and, if it works, better for the industry and patients. But the biosimilar pipeline math already wasn’t great before the Inflation Reduction Act (IRA) added price negotiation to the mix. If manufacturers are weighing an 8-year, $300 million investment against a market where the reference product may already be heading toward a Maximum Fair Price, the competitive entry calculus gets harder, not easier.

Tarheeled by the Beautiful Bill. Last week, KFF Health News published a piece on Martin County, North Carolina that is the clearest illustration I’ve seen of the gap between what the One Big Beautiful Bill’s (OBBB) rural health fund promises and what it can deliver.

Some background first. The OBBB Act includes roughly $900 billion in Medicaid cuts over a decade; work requirements, more frequent eligibility redeterminations, per capita caps, and reductions to provider taxes that many states use to draw down federal matching funds. Rural hospitals run on thin margins and Medicaid is often their largest payer. When Medicaid reimbursement shrinks, rural hospitals don’t have a commercial payer mix to absorb it. They close.

Congress knew this was a problem. The $50 billion Rural Health Transformation Program was added during final vote negotiations as the offset. The “here’s a dedicated fund to strengthen rural health infrastructure” that was supposed to make it less bad.

Martin County is where that framing meets reality. Martin General Hospital closed in August 2023 when Quorum Health filed for bankruptcy. The county has been paying about $2.9 million a year in maintenance and utilities since, trying to keep the building viable while it figures out how to reopen. North Carolina received $213 million in the first year Rural Health Transformation payout. ECU Health’s affiliate, Access East, won a portion of that allocation.

None of it can reopen Martin General. The fund flows to existing health and social service organizations. Federal rules cap how much can go to construction and renovation. A county without a hospital gets infrastructure money that can’t build infrastructure. That is not a loophole; it’s how the program was designed.

Rural health executives are on record saying the $50 billion won’t come close to offsetting the Medicaid losses. ECU Health, which has become a de facto 29-county safety net since Martin General closed, reported a 132% increase in daily ER visits. Its Greenville hospital’s median patient wait and treatment time is nearly 4.5 hours, longer than 96% of hospitals nationally. That’s what absorbing a closed rural hospital looks like.

For manufacturers with products that depend on rural patient access and emergency-initiated therapy, this is a distribution problem. If the facility that initiates therapy doesn’t exist, the patient journey never starts.

Hey, Wha’ Happened? Last week the House Budget Committee, Ways and Means Committee, and Energy and Commerce Committee sent a letter to the Congressional Budget Office (CBO) asking about the agency’s projections for Medicare Part D spending.

There was a $600 billion upward revision to projected Part D outlays in the February 2026 budget baseline, part of a larger $1 trillion increase in total Medicare projections compared to a year ago. Plan bids anticipated a 35% increase in per-enrollee costs in 2026. CBO expected something closer to 5%. Part D spending per beneficiary in 2035 is now projected above $4,000, up from under $3,000 in the prior baseline.

CBO originally scored the IRA’s three primary Medicare drug pricing provisions to reduce deficits by $129 billion. That hasn’t happened. The Part D redesign, originally projected to cost $25 billion, may cost hundreds of billions more. Per-enrollee cost growth came in at 20% in 2024, 42% in 2025, and 35% in 2026. CBO expected 5% annually.

The letter asks CBO to explain how actual per-enrollee cost growth differed so dramatically from projections, what the IRA’s negotiation savings look like against original estimates, and how behavioral assumptions have been revised. The $9.8 billion the GAO confirmed was spent on the Biden administration’s premium stabilization demonstration is part of this whole picture.

This is a politically charged inquiry AND the underlying question is legitimate. I’ve talked about it a lot, but Part D is a great program. The out-of-pocket cap was a win for beneficiaries but, overall the redesign has accelerated issues in the program that will need to be dealt with.

Big Sky to See All that Paperwork With. On Wednesday, KFF Health News wrote a piece on Montana jumping into the work requirements fray.

Montana is trying to launch work requirements while managing a $183 million budget shortfall, an unresolved Medicaid application backlog, and a health department that has filled only thirty-nine of the fifty-nine new positions needed for intensified eligibility checks. The state also wants to withhold a previously approved 3% Medicaid provider rate increase, which providers say will make staffing shortages worse.

That matters because coverage loss under work requirements is rarely about whether people are working. Arkansas tried this before courts stopped the policy, and the data showed many people who lost coverage were already working or exempt. They just couldn’t get through the paperwork.

Montana may tell the same story. Long hold times, low renewal rates, unclear medical exemptions, and still-pending federal guidance on hardship documentation are not small implementation details.

For manufacturers, the pressure point is patient support. More uninsured patients can mean more demand for assistance, free goods, and bridge programs. That is manageable if the disruption is temporary. It is much harder if it becomes the new normal.

The bigger concern is who does not show up at all. Coverage loss does not just change how people pay for care. It changes whether they seek it. Delayed diagnosis, deferred treatment, and manageable conditions becoming acute.

Was the Receipt Too Long to Print? Last week, Fierce Healthcare reported that several academic and nonprofit health systems filed lawsuits against CVS Health and its subsidiaries, alleging the company pocketed roughly $250 million in 340B savings between 2020 and 2025. Plaintiffs include member hospitals of Mount Sinai, the University of Kansas Health System, and University of Michigan Health. Suits landed in federal courts in New York, Kansas, and Michigan.

The complaints say Wellpartner would flag 340B-eligible claims after the point of sale and route them to sister companies -- CaremarkPCS, Caremark LLC, and CVS Specialty -- which would then negotiate lower reimbursement rates among themselves and keep the spread rather than passing it back to the hospitals. In a normal 340B transaction, the covered entity captures the difference between the discounted acquisition cost and what the insurer pays. Here, the allegation is that CVS entities were capturing that spread instead, using internal transactions that the covered entity couldn’t see.

The scheme, as alleged, requires three things working together: a PBM willing to cut reimbursement rates after the sale, a contract pharmacy willing to accept the reduced rate, and a TPA willing to hide the transaction from the covered entity. In a fragmented market, those three parties would be independent and harder to coordinate. Vertical integration puts them all under the same roof -- and according to these complaints, pointed in the same direction.

The hospitals estimate they lost about 56% of their total 340B savings over the period. They say CVS refused audit requests despite contractual provisions allowing them. CVS declined to comment.

The allegation that TPAs are being used to route value away from covered entities isn’t new in the 340B world. This one comes with specific dollar figures, named subsidiaries, and three simultaneous federal filings.

Reimbursement Fundamentals – China, Tariffs and Most Favored Nation

Brian Reid over at Cost Curve flagged something this week that I keep turning over in my head. He was writing about the China biotech debate, and he made a point that doesn’t get enough attention: if Most Favored Nation (MFN) takes hold and European countries are asked to pay U.S. prices for drugs that launch here, Europe has an escape route. They can just buy Chinese versions instead. Cheaper, available, and increasingly competitive on efficacy. European governments, facing their own budget pressures, would find that hard to pass up.

And yet most of the policy conversation about Chinese biotech is framed as an innovation competition. Will Chinese companies out-innovate U.S. companies? Will they steal IP? Will the FDA accept their clinical trial data? Those are real questions. And I worry about all of it. Look where the world’s top universities are, look where they are investing in innovation. But this was an angle that hadn’t spooked me enough until Brian’s newsletter. The bigger story may not be about who invents the drug, it is about what happens to the drug once it exists.

RA Capital’s Peter Kolchinsky and Tess Cameron published a detailed piece this month laying out what they call “Eurowashing.” The scenario: Congress bans the FDA from accepting Chinese clinical trial data and blocks U.S. companies from licensing Chinese programs. A Chinese biotech runs its proof-of-concept work, licenses the asset to a European sponsor, that sponsor runs a global Phase 3 that meets FDA requirements, and the drug gets approved in the U.S. with no Chinese data in the package. The FDA sees a European drug. The profits go to Europe. American companies get nada.

But what happens to access?

You could end up in a world where the same molecule might exist in two versions. A U.S.-approved product, developed through Western clinical infrastructure, priced for the U.S. market. And a Chinese-origin version, marketed in Europe and other countries at prices European governments are willing to pay. They’re not identical regulatory packages and may not have the same label but they treat the same disease.

Now layer in MFN. Under most of the models being discussed, U.S. prices get pegged to some index of international prices. If the international comparator is a Chinese-origin product sold in Germany at 40% of the U.S. price, what does that do to the MFN calculation? Does the benchmark move? Does it matter that the European version went through a different development pathway? No one knows. (I was going to hedge but really, there are no answers to this one. I mean new tariffs are 2 months away and we have no real rules there yet.)

Now add a third layer.

Anne Pritchett wrote an op-ed this week laying out what proposed pharmaceutical tariffs do to domestic manufacturing. The administration plans 100% tariffs on imported medicines and Active Pharmaceutical Ingredients (API), on top of the 10% to 15% rates already hitting allied countries later this year. Nearly 95% of biotechs anticipate higher manufacturing costs. Experts have estimated that 15% tariffs on EU pharmaceutical products alone could raise industry costs by up to $19 billion. And here’s the part worth sitting with: 29% of the active pharmaceutical ingredients in brand-name drugs consumed in the U.S. come from EU countries.

The environment right now is doing three things simultaneously. It’s trying to wall off Chinese R&D collaboration to force domestic innovation. It’s capping U.S. prices through MFN to force affordability. And it’s taxing the European inputs that go into the domestic manufacturing it says it wants. Those three things are working against each other.

The friend-shoring manufacturing argument that Kolchinsky and Cameron make, meaning require FDA-approved drugs to be manufactured outside China, is worth doing. China runs approximately 80% of global API supply and that vulnerability is real. (And in the “stuff that keeps me up at night” category, but I’m weird.)

But “make it here” requires inputs from Europe, and we’re taxing those inputs. Manufacturers are being asked to manufacture more expensively, sell at a lower price, and compete against Chinese-origin products in Europe that face none of those constraints. The $150 billion in U.S. manufacturing investments the industry has announced could get undermined before the first facility breaks ground.

The U.S. still represents over 70% of global pharmaceutical profits, which means there is a strong incentive for Chinese companies to partner with Western sponsors rather than go it alone. And the tariff carveout for some European manufacturers who’ve entered agreements with the administration will help at the margins.

Taxing European APIs while banning Chinese trial data while capping U.S. prices isn’t a strategy. It’s three separate political instincts that happen to be moving at the same time.

Memorial Day weekend is such a change in vibe. It means it’s acceptable to read (or chat with friends) by the pool for hours because you did something. It’s summer Friday afternoons that are magically slower. And, my favorite, the changing traffic patterns that make every outing easier. The weather might not yell summer yet, but the attitude already can.

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Ex-U.S. Marks the Spot. Last week, Reuters reported that some U.S. biotech companies are considering moving early-stage trials outside the U.S. as mass layoffs, leadership exits and restructuring at the Food and Drug Administration (FDA) under the Trump administration prompt concerns about regulatory review delays.

The FDA is the global gold standard for drug regulation. Companies typically seek American approval first because it provides access to a $635 billion annual market. But Reuters spoke to seven biotech executives, investors, and consultants who said staff departures and policy changes at the FDA had prompted some firms to consider launching trials in the EU and Australia instead.

One biotech CEO told Reuters their company plans to run early-stage oncology trials in three European countries in addition to its U.S. trial. Cost: $1 million in additional filings and several million more to run the trials.

Big pharma companies said they haven’t seen changes in FDA interactions. But for smaller biotechs, even a two-month delay could be existential.

For manufacturers, this is the downstream effect of regulatory uncertainty. If early-stage work moves offshore and the U.S. becomes the final approval step rather than the starting point, that’s a fundamental shift in how drug development works. Which, of course, has to be balanced with the Most Favored Nation (MFN) policies, but every launch counts towards viability.

The Deductible Ate My Coverage. Last Friday, the Centers for Medicare & Medicaid Services (CMS) finalized a rule expanding access to catastrophic health plans on the Affordable Care Act (ACA) exchanges, effective 2027. Catastrophic plans now allow enrollment periods up to 10 years and let people who lose subsidy eligibility due to income changes sign up mid-year. The rule also kills standardized plan designs, removes caps on non-standard plan offerings, and allows insurers to sell plans without provider networks for the first time.

Catastrophic plans come with $10,000+ deductibles. They were envisioned to be for healthy 25-year-olds who never go to the doctor or people in genuine hardship situations. The expanded access follows the lapse of enhanced premium tax credits at the end of 2025, which triggered an enrollment drop and pushed hundreds of thousands into high-deductible plans to avoid premium shock.

The Trump administration calls this consumer choice. That’s generous. Catastrophic plans expose people to massive out-of-pocket costs, which means care avoidance or medical debt. Non-network plans are worse. No contracted provider rates means the plan sets reimbursement amounts and members eat the difference. Whether that design even meets the ACA’s network adequacy standard is unclear, but CMS is moving forward anyway.

(I’d like to inject an aside -- 37% of Americans would have difficulty with a $400 unexpected expense. How many would have trouble with deductibles in the thousands?)

Catastrophic enrollees skip prescriptions because of cost-sharing. The rule also tightens eligibility verification for low-income subsidies and eliminates special enrollment periods for certain populations, which could shrink the insured base even more. CMS is solving affordability by expanding access to coverage that makes care less affordable.

Board to Be Wild. On Friday, Maryland’s Prescription Drug Affordability Board (PDAB) capped Ozempic at $274 for a 30-day supply starting January 2027, benchmarked to Medicare’s Maximum Fair Price. Projected state savings: $5.8 million annually. This is Maryland’s second upper payment limit in a month; they capped Jardiance in April and have more drugs under review.

Maryland isn’t building independent drug-by-drug cases like other state affordability boards. They’re taking whatever Medicare negotiates under IRA and applying it as the state upper payment limit. Starting in 2028, those limits extend to commercial coverage statewide.

On Monday, Virginia Governor Abigail Spanberger vetoed legislation that would have created a PDAB using Medicare’s negotiated prices as the benchmark for state-regulated commercial insurers. Projected savings: $95 million annually. Spanberger’s reason: affordability boards in other states haven’t lowered costs, they’re expensive to run, and some are reconsidering them. She offered amendments to study reference-based pricing and expand authority to address anticompetitive behavior. The legislature rejected the amendments because they would have blocked the board from using Medicare prices as the ceiling.

Spanberger ran on drug affordability. But her read on other state boards isn’t wrong; they are slow, and measurable impact is hard to find. The Virginia bill would have bypassed that by adopting Medicare’s work product directly, exactly what Maryland is doing.

For manufacturers, Maryland just turned IRA negotiation into a price control mechanism that applies to every covered life in the state without the volume guarantee Medicare provides. Upper payment limits won’t necessarily lower patient out-of-pocket costs and will likely create formulary restrictions and prior authorization barriers.

The Virginia veto bought twelve months. Maryland proved the copy-paste model works legislatively. If other states follow, negotiated prices become national ceilings across all payers.

Bronze Is the New Broke. On Monday, KFF published data showing ACA Marketplace enrollment dropped at least 17% in 2026 after enhanced premium tax credits expired. Average effectuated enrollment is projected to fall to 17.5 million, down from 22.3 million in 2025. That’s 4.8 million people gone.

Premium payments jumped 58%, from $113 to $178 per month on average. The share of enrollees receiving tax credits fell from 92% to 87%, the first decline since 2020. Average deductibles surged 37%, from $2,759 to $3,786. That’s the steepest increase since the Marketplaces launched. It’s driven by people fleeing silver plans for bronze. Bronze enrollment went from 30% to 40% of plan selections. Silver dropped from 57% to 43%, the first time fewer than half of enrollees chose silver.

The income distribution tells the whole story. People just above 400% FPL, who lost subsidy eligibility entirely, were 3% of 2025 sign-ups but 27% of the drop. Sign-ups in that group fell 44%. Lower-income consumers stayed at higher rates but downgraded coverage to avoid premium increases. They’re choosing bronze plans to avoid premium increases, which means huge deductibles when they need care.

For manufacturers, this is worse than straight coverage loss. The people who stayed bought coverage that likely renders them under-insured if not basically uninsured -- $3,786 average deductible before anything’s covered means prescription abandonment, adherence tanks, access craters. Bronze plans don’t have the cost-sharing reductions that made silver plans work for lower-income patients.

You Betcha, 340B Bill Dies Quietly. Minnesota hospitals pushed lawmakers this session to strengthen and extend the state’s 340B provision, which sunsets next year. The bill would have given the Attorney General authority to sue drug companies that hospitals claim are not following program requirements. It died without a vote.

Reimbursement Fundamentals – 340B Has Boundary Issues

On May 13, Paragon Health Institute published a piece calling for Congress to eliminate 340B’s spread-based pricing and replace it with a charity-care formula. On Monday, JAMA published a story tracking Health Resources and Services Administration’s (HRSA’s) paused 340B rebate pilot. Both are great educational pieces on how the program works. Both propose restructuring how the money moves. I’m not sure either gets to the root of the problem.

Here’s how the spread works. Covered entities buy drugs at 22.5% to 50% off average sales price (sometimes up to 100%, though statute requires they pay at least a penny). They bill payers at standard reimbursement rates. The gap is revenue.

The spread creates backwards incentives. Hospitals chase higher-cost drugs (bigger spread), expand into commercially insured areas (better reimbursement), and consolidate to capture more child sites. IQVIA pegged 340B at $6.6 billion in cost increases for employer coverage and $1 billion for state and local governments in 2023. A 2022 JAMA study found contract pharmacies clustering in wealthy, predominantly White neighborhoods while pulling out of poorer, predominantly Black and Hispanic areas.

Paragon’s proposal: replace the spread with a user fee redirected to hospitals based on charity care as a share of revenue. That would disconnect 340B from volume, killing the consolidation incentive. Whether Congress can actually pass it is the completely different conversation.

Now layer in what HRSA tried. The rebate pilot would have changed how 340B works on the front end. Right now, covered entities buy drugs at the discounted 340B price upfront. Say a drug has a $1,000 list price and an $850 wholesale acquisition cost. The 340B price might be $550. Covered entity pays $550, bills the payer at the higher rate, keeps the spread. Under the rebate pilot, covered entities would have paid $850 upfront and received a $300 rebate later, after dispensing the drug and submitting a claim to the manufacturer. It applied to 10 drugs. All covered entities buying those drugs had to participate.

HRSA proposed the pilot in July 2025 for a January 2026 start. Hospitals sued in December. Federal courts blocked it. HRSA withdrew it in February and issued a Request for Information asking whether to try again.

The courts blocked it on procedure; HRSA hadn’t built an adequate record and had said in 2024 that a rebate model would disrupt operations. The Trump administration had also tried to run a transparency pilot requiring covered entities to verify drugs weren’t getting duplicate discounts through Medicare’s Maximum Fair Price or another 340B rebate. Hospitals sued, won, and that pilot got shelved for violating the Administrative Procedure Act.

The RFI tells you HRSA still wants to restructure the program. But the rebate doesn’t address consolidation, child site growth, or contract pharmacy proliferation. Paragon’s user fee model at least changes the incentive structure but doesn’t answer the foundational questions.

What 340B needs is clarity on who qualifies, how revenue gets used, and what counts as serving the safety net. Which covered entities are using 340B dollars to expand access for vulnerable patients? Which ones use it to subsidize expansion into commercially insured suburban markets? The program doesn’t track that and HRSA doesn’t require it.

For manufacturers, this is moving payment timing around without fixing program boundaries. What replaces the spread matters -- whether it’s a rebate, a fee, or something else. But the bigger question is whether any restructuring can happen without finally defining what 340B is supposed to do and who it’s supposed to serve.

I have had two friends in the last week tell me stories about their health insurance experiences that make me angry about our healthcare system. As I write this, I’m sitting in a Senate building waiting to do a briefing for staff and I want to go office to office and ask – what are you doing about it? But that would be naïve… I’m just in a MOOD.

A Tier-able Situation. On Tuesday, Health Affairs published a Forefront article from the National Pharmaceutical Council that makes the point that benefit design is having a moment because the old pharmacy benefit manager model (PBM) model is looking a little tired.

Employers and patients are paying more. And PBMs are under growing scrutiny for formularies shaped more by rebate math than clinical value. That matters because PBMs decide which drugs are covered, what utilization management applies, and how much patients pay at the pharmacy counter. If rebates are tied to list prices, the system rewards higher-priced drugs with bigger rebates, even when lower-cost or clinically comparable options exist.

That’s where value-based insurance design (VBID) comes in. Long story short, high-value medicines and services should be easy to access with low or no cost sharing; lower-value care faces more scrutiny. The article points to examples like zero-dollar copays for diabetes medicines, preventive service coverage, and Medicare Advantage demonstrations.

The timing matters. In October 2025, Cigna’s Evernorth announced a rebate-free model that would pass drug discounts directly to patients at the pharmacy counter. This would potentially reduce brand drug costs by 30% for people in high-deductible plans. Federal reforms taking effect by 2029 will require PBMs to pass through rebates and prohibit cost-based compensation. That means there’s this moment in time to rethink how we do things.

Here’s the catch: employers have become reliant on rebate revenue to offset other health care costs. The model only works if employers are willing to trade rebate revenue for pricing transparency.

For manufacturers, the shift would mean arguments about access need to be tied to value, not just coverage. Fee-based PBMs and VBID principles make the negotiation cleaner, although not necessarily cheaper.

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Way Plaque When. On Monday, STAT reported that Medicare spending on Leqembi and Kisunla is running at about 20% of what Centers for Medicare & Medicaid (CMS) actuaries projected. In 2024, Medicare spent $90 million on Leqembi and $5 million on Kisunla across roughly 9,200 patients. Through the first three quarters of 2025, total spending hit $213 million across 19,000 patients. Annualized, that’s about $280 million.

CMS originally projected Medicare would spend $3.5 billion on Leqembi alone in 2025. Even if you double the reported figures to account for Medicare Advantage, actual spending is still under 20% of forecast.

These drugs (Leqembi from Eisai and Biogen, Kisunla from Lilly) are complicated to use. IV infusions every few weeks, PET scans to confirm early-stage disease, serial MRIs to monitor for brain swelling or bleeding. Patients on blood thinners don’t qualify. The eligible population is narrow. And the clinical benefit is modest: the drugs slow cognitive decline but don’t halt progression or produce noticeable improvements clinicians can reliably observe at the individual level.

CMS now says spending is incorporated into standard baseline projections with no separate line item, signaling the agency no longer views these drugs as a budget risk.

For manufacturers, this is the operational reality of launching a drug with a strong mechanistic hypothesis (clear amyloid plaques equals treat Alzheimer’s) but weak real-world evidence of benefit. Surveillance requirements, administration burden, unclear benefit at the individual level, eligibility restrictions that keep the addressable population small.

Two things can be true: these drugs represent scientific progress in a devastating disease, and they’re not going to be blockbusters under current use paradigms. And they become case studies in how expensive innovation gets when clinical friction is high.

340B Spread Sheet. Last week, MinnPost published a deep dive on Minnesota’s 340B debate, centered on a state bill that would give hospitals enforcement power against manufacturers restricting contract pharmacy arrangements. The Minnesota Senate passed it in April with bipartisan support. It’s stalled in the House.

In 2024, Minnesota hospitals generated $1.3 billion in 340B revenue. Five hospitals captured over half of this revenue. M Health Fairview University of Minnesota Medical Center alone pulled in $335 million (26% of the state total) while providing less than $8 million in charity care (2% of its 340B haul). Hennepin County Medical Center, by contrast, provided $90 million in uncompensated care against roughly $100 million in 340B revenue.

Remember, hospitals buy drugs at 20% to 50%+ discounts but charge full price. The spread is revenue. Some hospitals maximize that spread with dozens of contract pharmacy arrangements, including pharmacies in wealthy suburbs. Small rural clinics like Scenic Rivers Health generate $200,000 to $300,000 annually from 340B. Fairview generates $335 million.

Since 2020, manufacturers have restricted contract pharmacy arrangements, arguing the spread has turned 340B into a profit center. The 8th Circuit ruled for Arkansas in 2024, holding federal 340B law doesn’t preempt state enforcement. But then a North Dakota federal judge struck down a similar law one day before Minnesota House Republicans met to discuss priorities, writing that hospitals and contract pharmacies are in coordinated collusion.

The takeaway? 340B is now a state-by-state enforcement fight. Manufacturers can restrict contract pharmacies in states without enforceable laws, but face penalties in states that pass Arkansas-style statutes. The strategic question is whether state-by-state restriction is sustainable or whether federal legislative reform becomes the better long-term play.

Near Zero is Hard to Discount. Late last week, KFF published an analysis of CMS’s new GENEROUS model, the voluntary Medicaid supplemental rebate program tied to international reference pricing. The White House projects $64.3 billion in Medicaid savings over ten years.

I’m not convinced.

In the model, CMS negotiates Most Favored Nation (MFN)-based supplemental rebates for participating manufacturers, calculated as the second-lowest net price across eight countries. States can opt in, select which drugs to cover, and adopt uniform coverage criteria negotiated by CMS. Seventeen manufacturers have signed MFN agreements to avoid tariffs.

Here’s the problem: Medicaid already gets massive rebates. Statutory rebates average 53% across all drugs, 62% for brands. Some brand drugs hit 77% due to Medicaid’s best price provision and inflation penalty. Drugs with rapid price growth can hit 100% or more. Medicaid already pays near-zero.

KFF ran the math. If US gross prices are 4.22 times international prices, an MFN approach delivers a 76% rebate. That’s higher than Medicaid’s current 62% average for brands, but not by much. And for drugs already carrying 77% or 100% rebates, MFN adds nothing. The model only generates savings on drugs where existing Medicaid rebates are small relative to the gap between US and international net prices.

Translation: GENEROUS will save money on newer drugs with limited competition and small rebates. It will save little or nothing on older drugs in crowded classes.

Also unknown: which drugs are in the model. If manufacturers can exclude high-rebate drugs and only include low-rebate drugs, the model saves very little.

GENEROUS is a margin management problem disguised as a transparency initiative. For drugs where Medicaid already pays near-zero, MFN pricing doesn’t move the revenue needle. For drugs with smaller rebates, MFN pricing could cut net Medicaid revenue. I remain skeptical this delivers $6.4 billion in annual savings.

Decoupled, not Defanged. On Tuesday, Healthcare Dive reported that Optum Rx is shifting to a fee-based PBM model, decoupling its revenue from drug list prices and prescription volume. Clients will pay monthly per-member fees instead of spread-based or rebate-linked compensation. The company says margins stay the same (3% to 5%) and the change isn’t mandatory for clients right away.

This follows similar moves by CVS Caremark and Express Scripts, which reached an FTC settlement earlier this year after being sued for allegedly steering patients toward higher-cost insulin to maximize rebate revenue. It also follows February legislation that prohibited PBMs from linking compensation to manufacturers’ list prices in Medicare Part D.

Optum is highlighting transparent flat fees, elimination of spread pricing, 100% rebate pass-through to clients by 2028. Here’s what Optum isn’t highlighting: how formulary decisions get made when the PBM’s fee isn’t tied to rebate size.

If Optum Rx gets paid the same per member regardless of which drugs are on formulary, what determines formulary placement?

Two possibilities. One: it becomes a pure cost-to-plan-sponsor negotiation. The rebate still matters but goes to the client rather than the PBM. Manufacturers still compete on net costs. Two: it becomes a utilization management negotiation, where manufacturers compete on how much prior auth and step therapy they’re willing to accept in exchange for formulary access.

If rebate competition continues but flows to plan sponsors, manufacturers face the same margin pressure as before. If the game shifts toward utilization management, manufacturers face a different tradeoff: access versus rebate.

For manufacturers, the shift removes one political argument: PBMs can no longer be accused of inflating list prices to maximize rebate-linked revenue. But it doesn’t remove the underlying tension. Fee-based PBMs make the negotiation cleaner. They don’t make it cheaper.

Reimbursement Fundamentals – Part D OOP Cap Works. Other Changes May Be Needed.

I made a mistake. I worked on a paper, it was released, and I forgot to talk about it. That’s how fast things are moving. But let’s get into it because the paper is great and the executive summary is chef’s kiss.

In mid-March, the MAPRx Coalition published a white paper arguing that the Inflation Reduction Act’s (IRA’s) Part D redesign is undermining affordability and access even as it delivers an annual out-of-pocket (OOP) cap. MAPRx supported the IRA reforms. They still do. The $2,000 annual OOP cap (increasing to $2,100 in 2026) is a huge deal for beneficiaries with high drug spending who previously faced unlimited exposure. The Department of Health and Human Services projected the cap would benefit 6.1 million beneficiaries in 2025, up from 1.5 million who reached catastrophic coverage in 2022. That’s meaningful financial protection.

Patient advocates understood achieving this would involve tradeoffs, including higher premiums. The Congressional Budget Office initially projected a 5% increase in per-enrollee costs. That seemed acceptable in exchange for removing unlimited OOP liability.

But the IRA didn’t just cap beneficiary costs. It fundamentally redesigned the benefit’s financial structure. Plans now bear 60% of drug costs in the catastrophic phase, compared to just 15% before the redesign. This altered incentives across plan bidding, benefit design, formulary construction, and utilization management. Plans have strong incentives to control drug spending before beneficiaries reach the annual OOP cap, when plan liability increases most sharply.

MAPRx’s argument: those incentives are reshaping plan behavior in ways that erode the OOP cap’s affordability gains. Early evidence shows higher premiums, narrower formularies, increased utilization management, fewer plan choices especially in standalone PDPs, and a shift from fixed copays to coinsurance that makes OOP costs less predictable earlier in the year. These effects hit beneficiaries who never reach the annual OOP cap, meaning savings at the catastrophic level coexist with increased burden elsewhere in the benefit.

The data tells the story. Between 2022 and 2026, standalone prescription drug plans (PDPs) reduced average branded drug coverage by 6%, from 658 drugs to 614. Medicare Advantage Prescription Drug (MA-PD) plans reduced coverage by 5%, from 743 to 705. While year-over-year formulary changes are expected due to patent expirations and new drug launches, the overall trend across both plan types is toward fewer branded products covered.

Nearly half of branded products covered by standalone PDPs and MA-PD plans in 2026 are subject to prior authorization. These requirements have increased steadily since 2020. For beneficiaries, the impact shows up as barriers to care. Prior authorization delays treatment initiation or continuation while documentation is reviewed. Quantity limits require repeated physician intervention to maintain therapy. Step therapy forces beneficiaries to cycle through plan-preferred treatments before accessing the medication originally prescribed.

And then there’s this: the standalone PDP market is contracting sharply. The number of PDPs offered nationally declined approximately 22% in 2026 compared to 2025. That’s an almost 50% decrease over two years. For millions of beneficiaries with Original Medicare and Medigap, this poses an acute access problem. Medigap policies don’t include prescription drug coverage, so standalone PDPs are their only pathway to Part D. MA-PD plans aren’t always realistic substitutes, particularly in rural regions where plan availability is limited or where longstanding clinicians may not be part of MA networks.

The declining availability of standalone PDPs also hits the program’s most vulnerable enrollees: LIS beneficiaries. LIS enrollees receive additional federal assistance to reduce premiums and cost-sharing and often enroll in benchmark PDPs, plans priced below a regional subsidy threshold, to receive premium-free coverage. As plan participation contracts, the number of benchmark options has collapsed. In 2026, some states like Florida and Texas have only one premium-free benchmark plan available. Fewer benchmark choices mean more beneficiaries are automatically enrolled in other plans by CMS because their prior plan is no longer premium-free. Fewer options means higher risk of medication disruption and less ability for beneficiaries to select plans that align with their drug needs.

Premiums are rising despite temporary protections. The IRA capped growth in the Part D base beneficiary premium at 6% annually through 2030. CMS launched the Part D Premium Stabilization Demonstration beginning in 2025 as a voluntary, temporary set of parameters to moderate beneficiary premium disruption while plans adjusted to the redesigned benefit. These steps have tamed the immediate impact, but are temporary stabilizers rather than structural solutions.

The shift from copays to coinsurance is also troubling. Historically, plans met actuarial equivalence requirements primarily through fixed-dollar copays for many drugs, particularly non-specialty branded products. Fixed copays provided beneficiaries with predictable costs at the pharmacy counter. Coinsurance requires beneficiaries to pay a percentage of a drug’s cost and was traditionally concentrated in specialty tiers. In recent years, plans have increasingly applied coinsurance across a broader range of drug tiers, including preferred and nonpreferred brand drugs that were previously subject to fixed copays. Under coinsurance, beneficiary cost-sharing rises in direct proportion to a drug’s price, increasing both the amount paid per fill and the variability of OOP costs over time.

Plans now have stronger incentives to manage when and how beneficiary spending accumulates over the course of the year. Shifting from fixed copays to coinsurance allows plans to shift a greater share of costs to beneficiaries earlier in the benefit year before the cap is reached and plan responsibility rises most sharply. Some non-LIS beneficiaries with high drug spending will benefit substantially from the annual OOP cap and experience lower total costs over the course of the year. Beneficiaries with moderate prescription drug spending may face higher and less predictable OOP costs without ever reaching the cap.

For manufacturers, the IRA redesign creates dual pressure: pricing pressure through negotiation, rebates, and potential MFN proposals, and access pressure through formulary exclusions, tier placement, and utilization management. Plans managing 60% catastrophic liability means they control utilization aggressively before beneficiaries reach the cap. That shows up as tighter formulary reviews, more aggressive prior authorization and step therapy even for protected class drugs that must be covered, tier placement pressure to shift brands to higher cost-sharing tiers, and reduced formulary stability as plans become more willing to drop drugs mid-contract or move them to non-preferred status.

Manufacturers can’t just manage rebates anymore. They must manage access. And access is harder to compete on when plans have structural incentives to restrict utilization.

MAPRx is clear about the core tension. The introduction of an annual OOP cap and the Medicare Prescription Payment Plan represents a meaningful advance in protecting Part D beneficiaries from catastrophic prescription drug costs. For years, millions of beneficiaries, particularly those with complex or chronic conditions, faced unlimited OOP exposure that could lead to financial hardship and nonadherence to essential therapies. Establishing a fixed annual cap provides an important and predictable financial safeguard.

At the same time, achieving this core affordability goal can’t come at the expense of access. Rising deductibles, greater reliance on coinsurance, narrower formularies, and expanded utilization management increase upfront and administrative barriers for beneficiaries who may never reach the annual cap. For these beneficiaries, affordability challenges shift rather than disappear.

The question is whether Congress intended this tradeoff or whether the benefit design didn’t account for how plans would behave when their financial exposure increased. If it’s the former, the tradeoff was explicit: catastrophic protection in exchange for tighter access controls earlier in the benefit. If it’s the latter, the policy design didn’t account for operational reality.

Either way, the OOP cap is real. The access barriers are also real.

The manufacturer response depends on whether you’re inside or outside the negotiation window, inside or outside protected classes, and whether your drugs are in therapeutic areas where plans have formulary flexibility. The IRA fixed catastrophic costs by shifting liability to plans. Plans are responding rationally by controlling utilization before beneficiaries hit the cap.

That’s not a bug, it is the design of the program.

I try and embrace the small stuff. First sip of coffee in the morning, a funny text from a friend, and peony season. Peonies are my absolute favorite, and they bloom for a few days a year and then nothing for another 360 days. This week I’m literally stopping to smell the flowers and hope you get a chance to. Unless you’re allergic, then, well, then don’t do that.

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Feels Like a TPS Report. On May 1, the Centers for Medicare & Medicaid Services (CMS) issued a clarification memo to all Part D sponsors reminding them, somewhat pointedly, that 340B claim identification in Prescription Drug Event (PDE) reporting has been required since contract year 2025.

Quick reminder for those who do not live in PDE land: the Inflation Reduction Act’s (IRA’s) drug negotiation program gave CMS a reason to know which Part D claims involve 340B-acquired drugs. That matters because the Maximum Fair Price does not fit neatly on top of 340B. If the same claim gets both discounts and nobody catches it, the manufacturer may be left eating both.

CMS updated the PDE layout back in 2023, expanding the Submission Clarification Code field to capture the “20” code for 340B. Two-plus years later, they are sending a memo. The memo tells you sponsors are not universally passing through those values correctly. CMS is now clarifying that if a dispenser supplies the 340B code and it is not on the PDE, the sponsor needs to submit an adjustment. That is not a small ask depending on volume.

Last month, ADVI Health published an analysis of 340B modifier usage in Medicare Part D claims for IPAY 2026 and 2027 selected drugs, including Eliquis, Entresto, Ozempic, Ibrance, and Xtandi. In the first two months of 2026, just 0.5% of IPAY 2026 drug claims and 0.4% of IPAY 2027 drug claims carried a 340B modifier. Prior research estimates 9% to 12% of Part D claims are likely eligible for 340B pricing.

The gap between those numbers is the problem. Voluntary modifier usage is not working as a deduplication mechanism, the HRSA rebate pilot that was supposed to help got blocked in litigation in December 2025, and CMS has declined to take on the deduplication role directly.

For manufacturers with negotiated drugs, this is not an abstract data infrastructure problem. When 340B and MFP stack on the same claim and nobody catches it, the manufacturer eats both discounts. That is the actual stakes of a technical memo that most people would understandably skip.

Election Season Preview. On Wednesday, KFF dropped their latest Health Tracking Poll, and the headline is not surprising: 64% of adults are worried about affording health care costs, tied with gasoline and transportation as the top financial concern.

When insured adults were asked what change to their health insurance would be most important, 46% said paying less out-of-pocket. Only 22% said eliminating prior authorization, which prior KFF polls have consistently flagged as the biggest access pain point other than costs. So even among people who experience prior auth frustration directly, reducing their dollar exposure matters more.

And here is the political angle that is interesting for manufacturers watching Most Favored Nation (MFN) and IRA implementation: voters approve of the Trump administration’s handling of prescription drug costs at 41%, notably higher than their approval on health care costs overall at 33%.

Democrats lead Republicans on trust for addressing drug costs 33% to 26%, but roughly a third of voters do not trust either party. Among independents, half trust nobody on this.

That is the danger zone for industry: not voters who have a coherent drug pricing ideology, but voters who are frustrated enough to support almost anything that sounds like it will lower their costs.

All Work, No Guidance. On Wednesday, KFF released survey results from state Medicaid officials on how states are preparing for the work requirements that take effect January 1, 2027. These are mandatory for Affordable Care Act expansion adults in 43 states under the 2025 reconciliation law.

States are all over the map in terms of progress, federal guidance is late, and the implementation timeline is genuinely tight. Four states—Arkansas, Idaho, Indiana, and New Hampshire—are planning more restrictive verification than the law requires, including longer look-back periods. Iowa, Montana, and Nebraska plan to implement early. Only Iowa and Indiana have declined to adopt any hardship exceptions.

The piece that does not get enough attention in the work requirements debate: the “medically frail” exemption. States want to use Medicaid claims data and allow self-attestation to identify who qualifies. They cannot finalize their systems until CMS defines “medically frail,” and that guidance has not come. Six states are already using AI to assist with implementation. Most others are still figuring it out.

For manufacturers with patient populations concentrated in Medicaid, the coverage disruption risk here is real. Work requirements have a consistent track record of reducing enrollment without meaningfully increasing employment. The administrative churn is where patients lose coverage. And coverage loss is an access problem that shows up in your patient services programs.

Losing More than Weight. Deloitte released the 16th edition of their Measuring the Return from Pharmaceutical Innovation report, and the headline is that pharma R&D returns have improved for the third consecutive year. This sounds like good news until you look at the distribution.

Strip out GLP-1 and GIP assets, and the underlying industry IRR drops to 2.9%, down from 3.8% in 2024. The median barely changed while the mean got pulled way up by a handful of companies with major obesity assets in late-stage development.

For the first time in 16 years of this analysis, obesity has displaced oncology as the largest contributor to pipeline value at roughly 25% of total late-stage forecast sales. Obesity contributed 1% in 2022. The average cost to develop a drug from discovery to launch hit $2,671 million in 2025, up from $2,229 million the year before.

For manufacturers who are not in the GLP-1 race, the bar is higher and the portfolio pressure is real. About 53% of pipeline asset-indications have a forecast peak sales potential below $250 million. At $2.7 billion to develop, the math on that long tail gets uncomfortable fast. The industry is not broadly healthy right now. It is very healthy in one place, and that place is Wegovy-adjacent.

Clip and Save. Cencora dropped their updated U.S. Biosimilar Landscape report this month, and the tl;dr is: the market keeps growing.

As of May 1, 2026, there have been 84 Food and Drug Administration (FDA) approvals and 66 launches. The pipeline is active; Keytruda biosimilars alone have seven in Phase 3, with a first estimated launch in 2028.

For manufacturers on the reference product side, the competitive pressure is real and getting more layered. It is not just about launch timing anymore, it is interchangeability designations, unbranded versions, which payers are driving substitution, and what contracting structures look like in a crowded therapeutic class. Adalimumab is the case study here: nine biosimilars launched in 2023 alone.

Reimbursement Fundamentals — You Know What They Say About Assumptions

On May 7, the White House Council of Economic Advisers released a report projecting that Most Favored Nation (MFN) drug pricing will generate $529 billion in savings over 10 years across all U.S. markets. The voluntary framework requires manufacturers to launch future drugs at prices comparable to what other high-income countries pay, benchmarked to the second-lowest net price among G-7 nations (excluding the U.S.), Denmark, and Switzerland. For existing drugs, manufacturers agreed to offer Medicaid programs MFN pricing, projected to save $64.3 billion over 10 years. The TrumpRx.gov direct-to-consumer channel is already delivering discounted cash prices on GLP-1s and fertility drugs. The math is real. The modeling is detailed. The savings projections are genuinely significant.

The problem is the assumptions.

The entire framework depends on reference country prices rising to meet U.S. prices halfway. The report explicitly states this: prospective MFN will lower U.S. prices and “put upward pressure on prices paid in other wealthy nations.” The policy is designed to work “in tandem with U.S. trade policy efforts” to force foreign governments to pay their fair share. The December 2025 UK pharmaceutical trade deal, which raised NICE’s cost-effectiveness thresholds from £20,000 to £30,000 to £25,000 to £35,000 per QALY and reduced clawback rates, is cited as proof the strategy works.

But one deal with the UK is not a global pricing realignment. France, Germany, Italy, and Canada are not going to raise drug prices just because the U.S. wants them to. They have their own voters, their own budget constraints, and their own incentives to preserve existing price controls. The UK agreed because it needed a trade deal. The rest of Europe does not.

The volume of MFN analysis landing all at once tells you something: the policy is no longer being debated in the abstract. People are starting to model how it actually behaves. There are now three parallel MFN models in motion: GLOBE for Medicare Part B, proposed but not finalized, with a targeted start in October 2026; GUARD for Medicare Part D; and GENEROUS for Medicaid, which is voluntary, open for enrollment, and had its deadlines extended April 29. All three benchmark U.S. drug prices against what peer countries pay. The core logic is simple: U.S. drug prices are over 250% of OECD levels. Import the lower foreign prices. Close the gap.

The savings math, on paper, is genuinely significant. On Thursday, JAMA Health Forum published an analysis from Hwang et al. looking at 76 brand-name cancer drugs that together cost Medicare $49.6 billion in 2024. Applying average international MFN pricing to all of them would have reduced that spend by $27.1 to $35.4 billion. Even for just the nine drugs already in IRA negotiation cycles, MFN would have delivered an additional $3.2 to $4.7 billion beyond what negotiation alone achieved. Cancer drugs are especially exposed because they carry very low average rebates and because international prices run 65% to 81% below U.S. prices, a bigger gap than most other therapeutic areas.

Those estimates assume manufacturers sit still. They will not.

A Health Affairs Forefront piece published this week from Barros, Righetti, and Sá is the clearest articulation I have seen of why MFN pricing is anchoring to a moving target, and it goes beyond the standard gaming argument. Yes, manufacturers will delay market entry in reference countries, shift to confidential discounts to obscure net prices, and in some cases exit markets entirely to eliminate the benchmark. We saw that in real time in February when Amgen pulled Repatha from Denmark rather than let its deeply discounted Danish tender price become reportable under GENEROUS. Amgen’s math: sacrifice roughly $16 million in Danish revenue to protect against exposure in a Medicaid program running roughly $241 million and a Medicare Part D market running roughly $1.75 billion. Rational. Disruptive to 2,000 patients. An early signal of a pattern that will repeat.

The Barros piece adds a second channel that gets underspecified in most of the debate: reference country payers may accommodate U.S. MFN pressure by voluntarily adjusting their own pricing rules upward. The modeling on this is striking. Without accommodation, MFN reduces prices for future drugs launched in the U.S. by about 47.4% versus independent pricing, and global manufacturer revenues fall roughly 17.8%. With accommodation, that price reduction shrinks to 38.0%, and manufacturer revenues actually rise 5.2%, because the reference country’s health system absorbs most of the burden through substantially higher pharmaceutical expenditures. Accommodation is good for manufacturers and bad for UK and German taxpayers. The U.S. savings are smaller than advertised either way.

And then there’s the operational mess. The framework depends on net international prices, not list prices, because list prices don’t reflect what countries actually pay after rebates, clawbacks, and confidential concessions. Manufacturers will voluntarily report net pricing data to CMS following methodological guidance modeled on Germany’s Arbitration Board process. The report says this repeatedly: “voluntarily reported.” There is no global dataset of net prices. The IQVIA MIDAS data used to model the savings estimates explicitly does not include rebates or net pricing. The footnotes say so on page 7. The entire $529 billion projection rests on manufacturers self-reporting the very data that would trigger higher MFN benchmarks and lower their revenues.

For manufacturers, the strategic question is simple: do you believe Europe will actually pay more, or do you plan for a world where they don’t? If the answer is “they don’t,” then MFN is not a rebalancing mechanism. It’s an import of European pricing constraints into the U.S. market with a 10-year hope that trade policy fixes the imbalance later. The report frames this as inevitable: “Failure to fully rebalance the global innovation ecosystem represents an existential risk to the pharmaceutical industry.” That’s true. But the existential risk cuts both ways. Manufacturers can either accept MFN pricing and hope for rebalancing, or they can adjust their portfolios and pipelines to reflect the revenue structure they’re actually going to face.

The baseline assumption, that sovereign health systems will voluntarily raise drug prices to accommodate U.S. trade policy, is the part I can’t get past. Countries that have spent decades building political consensus around price controls are not going to abandon them because the U.S. tied its own prices to theirs. They’re going to delay access, narrow formularies, and find new ways to preserve budget control. And when that happens, the MFN benchmark drifts down, not up.

I remain skeptical.

Lessons Learned at Asembia's AXS26 Summit:

1) The cheapest Asembia gets is early registration, so if you think you're going, just book it.
2) Book the hotel block at the Wynn immediately. It sells out.
3) If that's too much, try the Palazzo, or honestly, Treasure Island isn't bad. It's still on the bridges so you're not crossing real streets.
4) Wear comfortable shoes. If you can find something that looks nice and handles 10k steps, great. If not, appropriate sneakers (not running shoes) work for everyone. Guys were in cool Nikes, women in Sambas.
5) Plan 15 minutes to walk anywhere, plus a 10-minute buffer because you will run into people you know.
6) I call the stretch between Tower Bar and Cafe Teatro "The Gauntlet." You will see someone you know. I've learned not to be on the phone walking that section because I end up stopping every 30 seconds.
7) The sessions are good, not great. Everyone sticks to their scripts, which is sort of reassuring in a weird way. It's also, understandably, very sponsor-heavy.
8) Book restaurants as soon as you can, especially if you want to eat at the Wynn or Encore. I tried in February and it was slim pickings.
9) If you're coming from the East Coast, I love arriving Sunday and just wandering. My non-negotiable: In-N-Out in the Promenade near the Flamingo. $13 for a cheeseburger, fries, and a milkshake.
10) Cafe Urth is great and complete chaos. We really could use another spot like it.
11) The lunches in the exhibit hall and the cocktail reception are genuinely good for mingling
12) GoodRx and their dogs are, personally, the best part of the exhibit hall. The idea is genius. I seek them out every year. You are all great, but the dogs? On another level.
13) The juggle is real. 6am work calls, 7am breakfasts, back-to-back meetings with calls mixed in. Block your calendar as much as you can and let it ride. Plan for the unexpected. It's the best part

.

In Las Vegas this week, I kept pulling out my notebook and jotting down ideas for client work and projects. Having meetings, listening in on panels, joining fantastic dinner conversations – it was all so inspiring. Good to be away, good to be home.

Feather in the Cap. On Monday, a new study in JAMA Internal Medicine asked a straightforward question: did the 2024 Inflation Reduction Act (IRA) benefit changes improve medication adherence for Medicare Part D beneficiaries?

In 2024, we had an out-of-pocket cap of roughly $3,300, an expanded Low-Income Subsidy, and the elimination of the coverage gap. (It wasn’t until 2025 that we got the $2k OOP cap.)

Spoiler. It made a difference. Compared with people who had private insurance, Medicare Part D beneficiaries had a 4.9 percentage point decline in cost-related nonadherence after the changes took effect. Among people managing two or more chronic conditions, the effect was even larger: a 7.8 percentage point decline in skipping or cutting back on medications because of cost.

This also matters for manufacturers. As IRA implementation continues, the policy debate will keep focusing on Maximum Fair Price levels, manufacturer participation, and downstream effects on the pipeline. While those debates are real, patient adherence data is now part of the record too.

Brand or Bust. Late last week, a research letter in JAMA Health Forum tracked what happened to coverage of multiple sclerosis products when the IRA benefit redesign shifted more financial exposure to manufacturers and reduced plan liability in the catastrophic phase. The rebate calculus has shifted too.

By 2025, brand disease-modifying therapy coverage in Part D had fallen to nearly zero. Generic disease-modifying therapies achieved near-universal coverage depending on the agent. Here is the problem: not every multiple sclerosis disease-modifying therapy has a generic. For branded drugs with no generic equivalent, coverage also dropped sharply.

That is a direct manufacturer impact: brand products that once had rebate-supported access are losing formulary position. But it is also a patient access issue. When a brand drug has a generic alternative, exclusion may shift utilization. When it does not, exclusion can mean appeals, switching, delays, or no good option.

We do not yet have good data on how multiple sclerosis patients on brand-only agents are navigating this, but the gap between what the policy intended and what these patients may experience is real.

The Copy-Paste Problem. I interrupt this normal format to say how excited I was to see this story. It is by Allison Colbert; Reggie Williams wrote the blog post. Former Avalere flockers – we fly far and wide. Gosh those were fun years.

On Thursday, the Commonwealth Fund published an issue brief examining how six countries -- Australia, Canada, England, France, Germany, and Sweden -- manage pricing and access for high-cost medicines.

It is useful reading not because any of it can be directly copied into the United States, but because the comparison makes clear what is missing here.

These systems use formal health technology assessment frameworks to evaluate clinical value before negotiating price. They negotiate collaboratively, sometimes across countries. They look to do mostly financial risk-sharing, not outcomes-based contracts. They have invested in data infrastructure to support those agreements. And they have explicit equity protections to prevent geographic or socioeconomic access gaps.

The United States… does not. We have fragmented payers, antitrust constraints that limit multi-payer collaboration, no national health technology assessment body, and an evidence infrastructure that is underpowered for what policymakers are now asking it to do.

That gap matters for manufacturers because evidence expectations are rising faster than the infrastructure needed to support them. Comparative effectiveness, real-world evidence, budget impact, subgroup value, equity -- all of it is becoming part of the pricing conversation. But the rules are still being built while the pressure to have the Most Favored Nation pricing is already happening.

The Commonwealth Fund points to potential actionable steps like multi-payer collaboratives, which already exist in some state markets, and greater investment in comparative effectiveness research and evidence generation. None of which are quick fixes during a time when political talking points are the win.

Tax-ing Problem. Late last week, a Health Affairs Forefront piece added another label to the 340B program: tax expenditure.

The logic runs like this: manufacturers are required by statute to provide steep discounts to covered entities. Those discounts reduce manufacturer profits. Lower profits mean lower federal corporate tax receipts. That forgone revenue is effectively a government expenditure; it just runs through a regulatory channel instead of the tax code.

The numbers are not small. Former Congressional Budget Office Director Dan Crippen estimated $200 billion in reduced federal tax revenue over ten years attributable to 340B. For context, 340B drug purchases hit $150 billion in 2024, up 21 percent from the prior year.

The manufacturer impact is obvious: 340B discounts continue to grow. But the patient impact is harder to figure out. Policymakers still do not have a clear, consistent way to see whether 340B savings are reaching patients in the form of lower costs, expanded services, or improved access. Or, honestly, at all for some covered entities.

Classification would not change the 340B program itself. It would force a more honest accounting of what the federal government is spending through it. If the implied tax expenditure were on the ledger, that question would be harder to ignore and could drive the reform debate.

Is Everyone or No One to Blame? Last week Larry Levitt at KFF published a piece in JAMA Health Forum that tries to separate what is true from what is politically useful on the newest bipartisan target -– health insurers.

The seven largest health insurers posted $71 billion in profits in 2024. Per-enrollee overhead and profit runs from $846 to $1,655, depending on the insurer. Medicare Advantage carries 10% overhead and profit compared with traditional Medicare’s 1.3% administrative costs. Prior authorization is also a genuine burden: 47% of KFF survey respondents reported a denial or significant delay in care.

The article makes the point that hospital prices account for roughly one-third of all health spending, and private insurers pay hospitals approximately twice what Medicare pays for the same services. That differential, not profits, is the mechanism behind premium growth.

Removing insurers entirely, as in a Medicare for All scenario, does not eliminate that gap. Fee-for-service still rewards volume over value. Hospital consolidation still drives prices. New drugs still cost what they cost.

The question Levitt leaves readers with is, if not insurers, who should make coverage decisions? It is a good question and one of the hardest problems in any reform conversation.

It isn’t that health insurers are to blame, or hospitals or providers or pharmacy benefit managers or pharmaceutical manufacturers – everyone is operating in the system legally (let’s assume). It is that the system allows things to be the way they are. We chip away here and there, but Reform (with a capital R) will take wholesale change and we aren’t there.

Bridge to Nowhere. Last week the Centers for Medicare & Medicaid Services (CMS) announced a delay to the BALANCE model until 2027 and that they were going to run the Bridge program starting this June and running until then. The American Action Forum has a nice piece that explains why, and the reasons go beyond this model.

First, the timeline was never workable. CMS was asking payers to project utilization, set premiums, and commit to coverage arrangements for drugs where reliable claims data barely existed. Plans cannot bid what they cannot estimate.

Second, the indication landscape was moving faster than the model could track. Wegovy earned a Food and Drug Administration cardiovascular risk reduction indication. Zepbound gained a sleep apnea indication. Ozempic is primarily indicated for diabetes. The same molecule, depending on the specific indication, could fall inside or outside Part D coverage.

Third: the IRA. Ozempic, Wegovy, and Rybelsus all have Maximum Fair Prices (MFPs) taking effect in January 2027. Building a payment model on top of MFP implementation created conflicts that had not been resolved.

The patient impact is straightforward: coverage remains uneven. The Bridge program operates outside Part D which means that claims do not count toward true out-of-pocket costs and the $50 copay does not generate Low-Income Subsidy subsidies.

A Factory Without a Floorplan. On Tuesday, American Action Forum’s Jack Leimann walked through the four stages of pharmaceutical manufacturing — drug discovery, formulation development, clinical trials, and commercial manufacturing — and noted that there is no consistent policy definition of which stage, or stages, must occur in the United States to satisfy the new tariff requirements.

Companies have been asked to file onshoring plans by July and September 2026. One foundational problem: no one has defined what “onshoring” means. So, yeah…how do you know you’ve hit a target when nothing is marked?

Let’s be practical. Building a new pharmaceutical manufacturing facility can take close to a decade and up to $2 billion in capital investment. There were already 495,000 unfilled U.S. manufacturing jobs as of January 2026. Environmental Protection Agency regulations effectively ended domestic production of some key starting materials years ago. China and India maintain a 50% to 65% cost advantage over U.S. production. India is the primary source of active pharmaceutical ingredients (API) while China is the sole key starting material supplier for 37% of those APIs. And let’s be honest, we don’t want to produce those here.

The manufacturer impact is immediate: companies are being asked to submit plans without knowing what standard they will be judged against. The answer changes the cost, timeline, and feasibility of every plan.

The patient impact is downstream, but real. Tariffs could worsen affordability or supply reliability.

Tariffs that penalize overseas manufacturing without addressing the domestic capacity, workforce, and regulatory constraints that drove production offshore in the first place do not strengthen supply chains.

I agree that the underlying goal is legitimate. Pharmaceutical supply chain resilience is a real national security concern and one that worries me, but there is a gap between intent and execution.

Hold, Please. CMS extended the GENEROUS Model application deadline from April 30 to June 11, citing “overwhelming interest.” State application deadlines moved to September 10.

GENEROUS is the model that would allow state Medicaid programs to purchase drugs at internationally benchmarked prices.

The state interest is not surprising, but for manufacturers? Hmmm…

Reimbursement Fundamentals -- The Table Everyone Wants

This week I was in Las Vegas for Asembia and I made it to three panels between meetings: cell and gene therapy market access, PBM reform and value-based contracting, and the One Big Beautiful Bill’s downstream impact on patients and specialty pharmacy. Different rooms, different topics.

Same conversation.

At one point I stopped taking notes and wrote down the one phrase that kept surfacing, from actuaries and manufacturers and patient advocates and PBM executives alike: we need to sit at the same table and agree on what we’re solving for.

So, why haven’t we?

1) Everybody’s Carrying Risk They Weren’t Built For

Payers are pricing a $400 billion pipeline 18 to 24 months out, blind to final indications and real-world utilization. Manufacturers are watching value-based contracts fall apart under best price exposure. If an outcomes deal goes sideways, the rebate implication cascades across a huge chunk of their book. Providers at specialty centers are reviewing individual multi-million dollar claims at the board level. Talking about solvency. Employers are watching drug trend blow through their pharmacy budgets with no good way to respond mid-year.

2) One Transaction to Rule Them All

Of all the transactions flowing through the supply chain, the only one anyone focuses on is the rebate. The rebate drives formulary positioning, shapes prior auth criteria and creates the incentive to prefer higher-list-price drugs with bigger spread. Clean up the rebate and you solve one problem while creating three others, including a whole new set of bona fide service fee questions that nobody has clear regulatory guidance on yet.

PBM reform implementation is coming. PBMs have roughly a year to figure out what they charge for their services, stripped of the rebate revenue that’s been subsidizing everything else. Manufacturers who’ve structured their gross-to-net math around that rebate flow have some strategic work to do.

3) Right Idea, Wrong Rules

How many times have we talked about the potential of outcomes-based agreements? The problem is that best price makes the downside risk for manufacturers existential, administrative burden makes the upside economics marginal for everyone else, and no one has cracked the data-sharing problem that would make measurement work. Rebates are just easier.

Cell and gene therapy might be where this finally gets real. The outcomes are often binary, the price tags are large enough to motivate everyone, and CMS is actively trying to create supporting structures. For the rest of the portfolio? Still window dressing, and I think most of the people saying otherwise know that too.

So What Do We Actually Do

A few things kept rising to the top.

Data sharing must come first. Payers pricing blind, manufacturers without post-approval utilization insight, advocates without visibility into coverage decisions. Everyone is making expensive guesses. The technology exists to make this better, but data sharing is just not there.

We need to give outcomes-based contracting a chance. The regulatory environment around outcomes-based contracting needs to move.

And manufacturers need to build market access strategy before launch, not after. The ecosystem not being ready to receive a drug is now as much of a launch risk as the drug itself. Getting the environment ready for a drug shouldn’t be a Q1 post-launch discussion, it’s a Phase III conversation at the very least. I walk through what this looks like on LinkedIn.

Someone at one of the panels used the phrase “magical table” to describe what they wished existed. A place where manufacturers, payers, and providers sit down with a shared goal of getting patients affordable, sustainable access.

The system will not optimize itself. It will keep redistributing the cost of its own dysfunction onto whoever is least able to push back. Right now, that’s patients.

Stick a fork in me, I am done with this week. It was a busy week and then you add in a chief of staff (Eddie, the dog) that would whine every 2 hours at night to go outside to deal with a stomach issue and I’m toast. On one hand, #grateful, but ready for this to pass. Literally.

Having One’s Cake and Hiding It Too. On April 20, STAT’s Bob Herman published a breakdown of the 500+ comment letters filed on the Department of Labor’s (DOL’s) proposed pharmacy benefit manager (PBM) transparency rule. The January proposal would require PBMs to disclose rebates, affiliated group purchasing organization (GPO) fees, and other revenue streams to employers under ERISA, with an audit mechanism built in.

The PBM industry (PCMA, CVS, Cigna, UnitedHealthcare, AHIP, BCBSA) spent half their comment letters arguing the rule is illegal. PCMA’s Tim Dube invoked the 2024 Supreme Court ruling that weakened agency rulemaking authority, claiming DOL can’t use ERISA to regulate “aspects of the pharmaceutical marketplace that exist outside the ERISA plan relationship.” Translation: we’ll take the employer’s money, but you can’t make us tell them how we spend it.

The timing problem is real. Congress passed a PBM reform law in February (signed by Trump) that requires similar disclosures but doesn’t take effect until August 2028. DOL’s rule would go live this July. The industry argument is basically: you’re creating a parallel track before the law you already passed kicks in, so withdraw the rule and wait two years. Which preserves opacity for another 28 months.

PhRMA, AbbVie and AstraZeneca all asked DOL to keep net drug prices confidential and used solely for fiduciary oversight purposes. Bristol Myers Squibb’s went further asking to make it aggregate-level only, not per-drug.

The Purchaser Business Group on Health reached out to 47 insurers and third-party administrators on behalf of five large employers and most said they wouldn’t disclose compensation or conflicts until legally required.

DOL’s final rule is expected this summer. Litigation will follow.

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Four Caps and a Deselection. On Tuesday, the National Pharmaceutical Council published a fact sheet analyzing how four state prescription drug affordability boards (PDABs) with authority to set upper payment limits might affect patient access. The boards -- Colorado, Maryland, Minnesota, and Washington -- can cap what insurers reimburse for selected drugs.

The findings aren’t encouraging. Compared to non-PDAB states, patients in these four jurisdictions often face more restrictive formulary coverage, less favorable cost-sharing tiers, and higher prior authorization (PA) rates for the same medications. Colorado and Maryland members have more favorable cost-sharing for some drugs than those in non-PDAB states, but less generous formulary coverage and more common PA. Minnesota patients face better formulary coverage but less favorable tiering, more PA, and higher cost-sharing. Washington’s story: implementation “may prompt payers to use any of the identified levers” to offset losses, meaning formulary exclusion, adverse tiering, or PA to recoup upper-payment-limit-related revenue hits.

Translation: when states cap reimbursement, payers won’t absorb the difference quietly. They will shift costs to patients or restrict access through utilization management.

License to Refill. In January, Utah launched a 12-month pilot allowing an artificial intelligence (AI) system to autonomously renew certain prescriptions for chronic conditions. After a physician reviews the first 250 renewals, the algorithm operates without human oversight.

The regulatory innovation: Utah’s 2024 AI Policy Act created a “learning laboratory” that temporarily waives state-law requirements for selected participants. The AI handles 192 commonly prescribed drugs -- lisinopril, levothyroxine, sertraline, metformin.

But there’s a federal law problem.

The Food, Drug, and Cosmetic Act requires prescription dispensing to occur “upon a written prescription of a practitioner licensed by law to administer such drug.” The Doctronic system reportedly hasn’t been reviewed by the Food and Drug Administration (FDA), raising two questions: Does “practitioner” apply to algorithms? And if Utah “licensed” the AI under state law, does that satisfy federal requirements?

Most legal experts read “practitioner” as meaning a person, not software. Even if pending federal legislation (the Healthy Technology Act of 2025) expands the definition to include AI, Doctronic would still need FDA clearance as a medical device, which apparently hasn’t happened.

The clinical case is equally uncertain. Automated refills can improve adherence, which matters for chronic disease control. But some medications on Utah’s list require careful dose adjustments and monitoring for toxicity or disease progression.

If the FDA doesn’t intervene, the pilot runs through January 2027. Then we’ll know if autonomous prescription renewal worked.

Side Effects May Include Litigation. The FDA asked Congress this month for new authority to crack down on prescription drug ads that lack “fair balance” between benefits and risks. In its fiscal year 2027 budget request, the agency said direct-to-consumer (DTC) pharmaceutical advertising is “frequently misleading and confusing.”

The U.S. and New Zealand are the only two countries that allow DTC drug ads. The industry spent more than $10 billion on them last year.

The FDA is already moving without waiting for Congress. The agency has sent thousands of warnings to manufacturers over misleading ads and closed a loophole allowing certain side effects to be listed on linked websites instead of in the ad itself. Late last month, Sens. Roger Marshall (R-Kan.) and Dick Durbin (D-Ill.) urged the agency to require pre-clearance reviews for certain drug ads before they air.

The crackdown has unusual crossover appeal. Health Secretary Robert F. Kennedy Jr.’s “Make America Healthy Again” base and progressives both believe drugmakers are getting away with deceptive marketing. Bernie Sanders (I-Vt.) has proposed banning drug ads altogether. Sens. Josh Hawley (R-Mo.) and Jeanne Shaheen (D-N.H.) introduced a bill preventing manufacturers from claiming business deductions on DTC advertising.

But there’s a First Amendment problem. Some legal experts say last month’s Supreme Court decision protecting therapist-patient conversations as constitutionally protected speech could be a signal on what the courts might rule. Tighter FDA regulation increases the likelihood of a constitutional challenge.

No One Price Shops a Cure. Last week, the American Journal of Managed Care published a provocative argument: patient cost-sharing for curative cell and gene therapies is policy theater that creates access barriers without serving any legitimate function.

The piece, co-authored by former Humana exec William Shrank and University of Michigan’s Mark Fendrick, makes a straightforward case. These therapies now routinely cost more than $3 million. They’re delivered at a handful of specialized centers to patients meeting strict clinical criteria. There’s no risk of overuse or discretionary consumption. Yet commercially insured and Medicare beneficiaries can still face thousands in out-of-pocket costs through deductibles and coinsurance, often hitting annual maximums while managing chronic illness, disability, and lost income.

LOVED this piece. A few years ago, Express Scripts was quoted in one of the industry journals saying this exact thing … essentially, why bother charging patients for these? The traditional justification for copays collapses here. Cost-sharing is meant to discourage low-value utilization and encourage price sensitivity.

In a category where eligibility is narrow, clinical oversight is intense, and inappropriate use is basically impossible, financial barriers undermine access for the populations who need these therapies most.

The authors propose a better accountability mechanism: require long-term patient participation in outcomes registries as a condition of coverage with zero cost-sharing.

Two important caveats. First, therapies with limited or uncertain effectiveness may warrant different treatment. Coverage with evidence development has precedent when clinical benefit is modest or still evolving. Second, conditions with existing effective chronic therapies (like type 1 diabetes) present a different calculus when curative options arrive at multimillion-dollar price tags.

But for therapies offering durable remission or cure with no alternative, the conclusion is hard to argue with: access should be guided by probability of clinical benefit, not ability to pay. As the pipeline grows, establishing that norm now matters more than the dollar amount patients contribute today.

Resources to Love. Vertical integration chart. Thank you Drug Channels.

Reimbursement Fundamentals – What Metrics Miss

Pharmaceutical policy runs on measurements that look one layer too shallow. We count manufacturers and declare supply chains diversified. We average program results and declare models successful or failed. We track approval rates and declare utilization management working. And then we’re surprised when the system breaks in ways the data said it shouldn’t.

This week’s release of the U.S. Pharmacopeia’s 2025 Vulnerable Medicine List demonstrates the problem in concrete terms. Of the 100 essential drugs identified as structurally at risk, 48 have at least one key starting material (KSM) manufactured in only one country. Many of these drugs weren’t on last year’s list. They weren’t flagged as vulnerable because, at the finished-dosage level, they looked fine: multiple manufacturers, broad geographic distribution, low shortage risk scores. The redundancy was real at the tier we were measuring. It just wasn’t real where it mattered.

A drug might have five API manufacturers across three continents and a dozen finished-dosage facilities worldwide. That looks like resilience. But if every one of those manufacturers sources the same KSM from a single facility in a single country, the perceived redundancy is an illusion. The chokepoint was always there.

This isn’t unique to supply chains. The same structural flaw shows up across pharmaceutical policy when we measure at the wrong level of aggregation.

Take the Oncology Care Model evaluation published in JAMA last month. The headline: net loss to Medicare, $639 million more in program payments than spending reductions over six years. That framing shaped policy. The Enhancing Oncology Model, OCM’s successor, launched in 2023 with slashed payments, mandatory two-sided risk from day one, and narrower eligibility. It has 41 participating practices compared to OCM’s 202.

But the aggregate result masked the underlying story. Eighty practices exited OCM before completion, many leaving precisely when CMS began requiring two-sided risk for practices that hadn’t earned performance-based payments. The reported savings averaged data from practices that collected enhanced payments for years without meaningful transformation alongside 24 practices in two-sided risk that generated substantial, sustained spending reductions. A separate evaluation found most OCM savings came from just those 24 practices, representing 34% of episode volume.

The question the evaluation couldn’t answer: did OCM’s model design fail, or did aggregate results get diluted? More importantly, the data that would have clarified that question arrived in 2024, after EOM had already launched based on incomplete interim results. Policy moved faster than evidence because we measured at the wrong tier and didn’t wait for visibility at the right one.

Prior authorization follows the same pattern. Last week’s JAMA Health Forum study tracked branded prescriptions initially rejected by PA. Fifty-four percent were eventually approved. That sounds like the system working: more approvals than denials. But the approval rate is the wrong measurement.

Dig one layer deeper and the picture changes. Thirty-five percent were processed on the same-day, but 44% were approved after a median six-day delay, and 46% were ultimately denied after the full PA review process. Patients with multiple chronic conditions faced 5% lower approval rates. Medicaid enrollees faced 8% lower approval rates than Medicare or commercial. Prescriptions requiring multiple rounds of PA review had 37% lower probability of same-day processing.

The binary outcome of approved or denied obscures what’s actually happening: a multi-day administrative process that delays treatment for two-thirds of initially rejected prescriptions, eventually denies nearly half, and produces systematically worse outcomes for patients with complex conditions and fewer resources. Measuring approval rates makes PA look functional. Measuring time to treatment and patient-level disparities reveals it’s functioning more as friction than clinical gatekeeping.

The pattern repeats because we default to measuring what’s easiest to see. Those metrics are available, standardized, and comparable across time. But they’re also surface-level.

The policy cost is tangible. Enhancing Oncology Model now struggles with participation one-fifth the size of its predecessor. Supply chain investments get allocated based on finished-dosage vulnerabilities while upstream KSM concentration creates invisible single points of failure. Prior authorization gets defended as clinically appropriate because approval rates look reasonable, while patients with complex conditions wait six days and face higher denial rates.

The fix isn’t more data. The fix is looking at the right tier before making policy decisions. That means practice-level results before designing successor payment models. Upstream KSM sourcing before declaring supply chains resilient. Patient-level outcomes, not just claim-level approval rates, before defending utilization management as working.

And critically, it means waiting for visibility at the right level before locking in policy responses. OCM’s final evaluation showed savings quadrupling by year six, the signal EOM needed but didn’t have when it launched. The vulnerable medicines list now includes KSM data that reveals risks invisible in 2024. The prior authorization study quantifies delays and disparities that binary approval rates conceal.

You can’t build supply chain resilience if you don’t know where the chokepoint is. You can’t design a successor model if you don’t know which practices succeeded. You can’t fix prior authorization if you’re measuring the wrong outcome.

Redundancy is only real if it exists at the tier that matters. The rest is illusion.

My webinar on Most Favored Nation (link) is next Thursday. Anyone want to place a bet on big news coming out on Wednesday afternoon? If it does, I’ll be ready for it, but if you want to throw out some hope, vibes, etc. my way, I wouldn’t mind.

Ghosted at the Bill. This week the Wall Street Journal reported that 1 in 7 people who signed up for Affordable Care Act marketplace plans failed to pay January premiums. In some states it was more like 1 in 4. I expect we’ll see these numbers rise and disenrollments hitting soon. Add in the upcoming Medicaid rollbacks and it will likely set up healthcare as a big 2028 election talking point.

More uninsured or churned patients means more demand for free drug, bridge support, and charity pathways. It also raises bad debt and coverage instability across provider systems, which can disrupt adherence and restart patterns.

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So Much Board, So Little Savings. On Monday, the Maryland Prescription Drug Affordability Board (PDAB) voted to move forward with an upper payment limit (UPL) on Jardiance, setting a cap of $204 for a 30-day supply ($6.80 a pill) for state and local government health plans starting January 2027. The estimated savings: $320,000 a year. The board also reviewed Farxiga but passed, citing imminent generic availability.

This is the second time a state PDAB has set an actual upper payment limit, and Maryland’s mandate expands to commercial health plans after two drugs clear the UPL process. The board is now eyeing Ozempic, Trulicity, Dupixent, and Skyrizi.

A few things worth noting. The cap is benchmarked to Medicare’s maximum fair price, adjusted for inflation. As you may know from my work with the Rare Access Action Project, a UPL could trigger formulary restrictions, prior auth, and difficulty getting the drug. That’s not a threat; that’s just how the system works. A lower payment does not mean easier access for the patient.

Not Without Consequences. On Tuesday, Rep. Greg Murphy (R-NC) introduced Every Dollar Counts Act, a bill that would require insurers to count drug purchases made through direct-to-consumer (DTC) platforms, like TrumpRx, toward patients’ deductibles and out-of-pocket maximums. Currently, most health plans don’t count those purchases.

DTC platforms sometimes offer cash prices well below what patients would pay through insurance for branded drugs. The argument for counting them is patient equity. But here’s the tension: if DTC purchases count toward deductibles, plans have more reason to tighten formulary management on those same drugs. The incentive to restrict formal coverage doesn’t go away; it may increase if patients are satisfying cost-sharing outside the plan’s benefit structure.

For manufacturers with TrumpRx deals, this is worth tracking. If plans respond to expanded cost-sharing credit by restricting coverage of the same drugs, the net access picture gets complicated fast.

Actuarial Angst. Late last month, Milliman released its Q4 2025 Part D trend analysis, and the numbers are striking. Total gross cost per member per month (PMPM) for non-low income (NLI) beneficiaries increased 33% between 2024 and 2025, compared to 10% for low-income members. NLI specialty drug costs more than doubled over two years, from $84 PMPM in Q4 2023 to $190 in Q4 2025. GLP-1s alone hit $66.13 PMPM in Q4 2025, up 92% from Q1 2024.

Why? The new-to-2025 out-of-pocket cap of $2,000 was the primary driver. It changed utilization behavior for NLI members who now fill more specialty drugs because their exposure is capped. That’s the policy working as intended. The complication is that plans must now price 2027 bids against this elevated base, and they’re going to have to make some choices about where the pressure goes.

Specialty utilization growth of 90% for NLI members since Q1 2024 is real volume growth. Lower out-of-pocket exposure is helping people use medicines they previously may have skipped. Watch whether plans absorb that or push back through premium increases, tighter formularies, or both.

Denied and Confused. On April 14, IQVIA issued a blog on commercial payer formulary restrictions. The headline number: 70% of commercial attempts to fill a new branded medicine were initially denied coverage in 2025, up from 57% in 2021. That’s a 13-percentage-point increase in four years. And 24% of new-to-brand attempts in 2024 were never approved within a full year.

Nearly one in four patients who tried to start a new branded drug through commercial insurance never got it approved within 12 months.

The average time to gain approval after an initial rejection grew from 12 days in 2021 to 16 days in 2024. These numbers are claim-level and patient-level, and because most patients attempt only one new branded medicine per year, the two rates are nearly identical.

For patient services teams: 44% of patients who eventually got approved were approved the same day, which suggests many denials are administrative, not clinical. That’s where hub operations live.

See Change. On Tuesday, the New York Times published (gift link) a long-form opinion essay by Julia Belluz on GLP-1 off-label experimentation. I appreciated this as a cultural snapshot.

The piece documents patients using Zepbound and Wegovy for concussions, long Covid, IBS, addiction, and a range of other conditions outside approved indications. A Morning Consult survey of over 2,000 GLP-1 users found that 63% would keep taking the drug even if it failed to treat the condition for which it was originally prescribed. An estimated one in eight Americans have now taken a GLP-1.

Coverage decisions are still being made based on approved indications. Patient use is running far ahead of the evidence base. Novo Nordisk’s GLP-1 studies for early Alzheimer’s failed in November 2025. Parkinson’s and depression trials have also fallen short. But the off-label experimentation continues outside clinical trials and largely outside the health system.

Patient demand is moving faster than the evidence base and faster than payer coverage policy. That creates a market-definition problem for companies with these assets, especially when real-world use stretches far beyond labeled indications.

Reimbursement Fundamentals: Define the Word (340B) Patient.

This week, Berkeley Research Group published an analysis that puts some data behind a 340B program integrity question that has been building for the past decade. The short version: under a patient definition that courts have suggested is legally defensible, more than 20% of brand drug Part D prescription transactions could be claimed by more than one covered entity simultaneously, with manufacturers effectively providing two 340B discounts on a single dispense.

For those of you new to 340B, here’s some background. The 340B Drug Pricing Program requires manufacturers to sell outpatient drugs to certain safety-net hospitals and clinics, called covered entities, at deeply discounted prices. The discount is substantial, typically 25% to 50%+ off the average manufacturer price for brand drugs. In exchange, covered entities are supposed to use the savings to stretch their resources and serve more low-income patients.

The program runs on a concept that sounds simple: a covered entity can only access 340B pricing for drugs dispensed to its patients. That word, “patients,” turns out to be doing a lot of work.

The Patient Definition Problem

HRSA, the agency that oversees 340B, has never formally defined “patient” in regulation. For years, covered entities operated under a 1996 guidance document that described a patient as someone who had received a healthcare service from the covered entity for which a provider at that entity was responsible. Narrow enough, in theory.

Then came contract pharmacies. Starting in 2010, HRSA allowed covered entities to use external retail pharmacies as distribution points for 340B drugs. A covered entity would identify eligible prescriptions at those pharmacies and replenish its drug inventory at the 340B price. The program expanded dramatically. Today contract pharmacy arrangements number in the hundreds of thousands, a far cry from the 50 covered entities the program started with in 1992.

As contract pharmacies proliferated, the patient definition question became more consequential. If a patient filled a prescription at a Walgreens that had arrangements with three different covered entities, which entity’s “patient” were they? Who owns the patient?

What the Court Said

In November 2023, the U.S. District Court for the District of South Carolina ruled in Genesis v. Becerra that the 340B statute does not require prescriptions to originate in 340B-eligible locations, as long as the prescription is for a covered entity’s patient. And in discussing what “patient” might mean, the court cited an American Medical Association definition: an established patient is someone who has received care within the past three years.

This is a meaningful expansion. Under the prior informal understanding, a patient relationship required something more proximate, a recent visit, a care episode tied to the prescription. Under a three-year window, a patient who visited a federally qualified health center once for a blood pressure check in 2022 could potentially be claimed as that FQHC’s patient for any prescription they fill through 2025, for any condition, written by any provider.

The Duplicate Replenishment Problem

Here is where it gets operationally complicated. BRG’s analysis used Medicare Part D Prescription Drug Event data to model what happens if covered entities broadly adopt the three-year patient definition, and the findings are striking.

If all covered entities used the three-year test, 28% of brand drug Part D PDEs could be replenished by at least one covered entity. More than 20% of PDEs replenished at least once are at risk of replenishment by more than one covered entity simultaneously. A small number could be claimed by five or more covered entities at the same time.

Put it this way: a patient visits covered entity A in January, covered entity B in April, then sees an unrelated specialist in July who writes a prescription filled at a contract pharmacy that has arrangements with both A and B. Each entity’s third-party administrator, reviewing pharmacy claims on behalf of that entity, independently identifies the prescription as eligible and places a replenishment order. The manufacturer gets two requests for 340B pricing on a single dispense. Only one is legitimate. HRSA says covered entities must resolve this in good faith, but HRSA has no mechanism to monitor whether it’s happening.

Apexus, the 340B prime vendor, has published guidance stating that only one covered entity may replenish a given patient transaction. The guidance exists in a FAQ. BUT THERE IS NO CLAIMS SYSTEM TO PREVENT THIS. There is no data system that would allow an auditor reviewing covered entity A to know that covered entity B already replenished the same dispense.

Why This Matters for Manufacturers

The 340B program is a manufacturer-funded discount. Manufacturers do not receive payment from covered entities; they provide drugs at reduced prices, and the covered entity captures the spread between the 340B price and what they bill the payer. When duplicate replenishment occurs, the manufacturer is effectively providing two 340B discounts on a single transaction. One is required by statute. The second is not.

The scale of potential duplicate replenishment is not trivial. BRG’s analysis found 4% of 340B PDEs could be replenished by both a hospital and an FQHC simultaneously, representing 36% of all PDEs that could be replenished by an FQHC. For manufacturers with significant brand drug exposure in 340B-eligible channels, this is a compliance and financial integrity issue that the current system cannot detect, let alone correct.

The Rebate Model Connection

This is why the debate over the 340B rebate pilot keeps coming back to transparency. Under the current upfront discount model, the transaction is invisible after the point of sale. The covered entity replenishes at the 340B price, the manufacturer fulfills the order, and no one has a complete view of whether a given patient was claimed by one covered entity or five.

A rebate model would change the structure. Instead of an upfront discount, manufacturers would pay rebates after receiving claims data documenting the specific dispense. Each rebate request would be tied to a specific claim. Duplicate replenishment would become visible, because two rebate requests for the same claim would surface in the same dataset.

The rebate model has been through a full litigation cycle in the past year. HRSA launched a pilot last July, limited to IRA-negotiated drugs. Covered entities sued in December. A federal court in Maine issued a preliminary injunction in late December, describing the administrative record as “anemic” and finding the agency had failed to consider covered entity interests. The First Circuit denied the government’s request to stay the injunction. In January, the government voluntarily withdrew the pilot entirely.

HRSA issued a Request for Information in February asking how a rebate model should be structured. Comments are due April 20th.

Covered entities oppose the rebate model, largely on cash flow and administrative burden grounds. Their litigation position has been, and will likely continue to be, that HRSA failed to follow proper process in launching the pilot. The current RFI is HRSA’s attempt to build the administrative record it didn’t have the first time.

HRSA cannot enforce its own guidance on duplicate replenishment without the data to see it. The rebate model, if it survives the next round of litigation, would finally give them that visibility. Whether that happens depends on what HRSA does with the RFI responses, and whether the next version of the pilot is procedurally defensible enough to survive a challenge from the covered entity side.

More to come.

Dam. What a few weeks. I Whistlered while I worked, but the avalanche of news has been hard to keep up with. (I mean, I found it funny.)

If you’re interested, I’m hosting a free webinar on April 23 at 12 EDT on Most Favored Nation. Quick 30-minute dive. Link to register is here: https://us06web.zoom.us/webinar/register/WN_iPlbMuS5RmeGSbcB8RSi-g

Loose Scripts Sink Ships. This week, AbbVie sued the Health Resources and Services Administration (HRSA), asking a federal court to answer a basic question that has been left hanging for three decades: who counts as a “patient” under 340B?

That is not rhetorical. The 72-page complaint, filed in the U.S. District Court for the District of Columbia, is a statutory interpretation fight over HRSA’s 1996 patient definition guidance, which the agency has never meaningfully updated. AbbVie argues that the guidance is so loose that it no longer reflects the best reading of the statute, and the examples in the complaint are designed to make that point impossible to ignore.

According to AbbVie, one nurse practitioner at a small San Antonio federally qualified health center wrote 225 prescriptions for Skyrizi in a single quarter, putting that prescriber above more than 99 percent of prescribers nationwide. The complaint also says that three quarters of that health center’s 340B purchases were dispensed through pharmacies outside Texas. And it isn’t like San Antonio is close to other states. In another example, three separate Mount Sinai hospitals allegedly claimed 340B discounts on the same prescription, on the same date of service, for the same National Drug Code.

AbbVie is not asking HRSA to rewrite its guidance. It is asking the court to say that HRSA’s 1996 definition is not the best reading of the law, and that manufacturers should be allowed to rely on a narrower standard when they audit covered entities. HRSA’s current position is effectively the opposite: manufacturers may conduct audits, but the agency will not enforce findings that apply a stricter patient definition than the one in the 1996 guidance.

AbbVie says the proper standard should require four things: a direct connection between the prescription and the covered entity’s care, a substantive medical encounter rather than a perfunctory one, a 12-month time limit, and direct provider oversight of the condition being treated.

None of that is radical, but it would narrow a great deal of current 340B volume. That is exactly why this case matters, not just for AbbVie, but for manufacturers across the program.

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PIVOT. This week, Axios reported that states are already absorbing the impact of last year’s federal Medicaid cuts, well ahead of the biggest changes taking effect in 2027.

The numbers are stark. State budgets are due to shrink by $664 billion over the next decade. Idaho legislators approved $22 million in cuts to Medicaid disability services. Iowa passed a new tax on certain health insurers to cover an existing shortfall. Colorado is debating benefit cuts, lower provider payments, and a proposed employer tax on companies with part-time Medicaid enrollees. Similar bills are being floated in Washington state and New Jersey. As one Colorado legislator told Axios: “everyone is pissed and everyone is stressed.”

Also this week, a study out of Beth Israel Deaconess Medical Center found that among 16.5 million Medicaid beneficiaries ages 19 to 64, 50.4% -- or 8.3 million people -- would be at risk of disenrollment once work requirements are fully implemented. That’s how work requirements work when a significant share of enrollees work non-traditional hours, are caregivers, or face barriers to documentation.

And KFF Health News reported that states are paying Deloitte, Accenture, and Optum millions to build improved eligibility technology systems to implement those work requirements. The administrative cost of cutting Medicaid is itself a significant budget line.

As the National Conference of State Legislatures put it: Medicaid programs are like massive ocean liners. They’re already in the process of pivoting. The question isn’t whether cuts are coming. It’s who absorbs the shock first.

Weighing the Math. This week, a research letter published in JAMA Internal Medicine found that the administration’s projected savings from the BALANCE Model would cover costs for an estimated 4.4% of newly eligible Medicare patients in year one.

The administration’s pitch for the BALANCE Model has been that lower negotiated prices offset the cost of expanding GLP-1 coverage to millions of newly eligible Medicare patients. No net cost to taxpayers. Win-win.

The JAMA analysis puts a number on the gap. Savings in year one (~$900 million) would cover costs for that 4.4% of patients. Not the other 95.6%.

4.4%.

The April 20 deadline for insurers to decide whether to join the optional program is days away. The administration has said it won’t proceed unless insurers covering 80% of the Medicare population sign on. That threshold hasn’t been confirmed as met. The JAMA numbers don’t make the pitch easier. And honestly, I’m not entirely sure plans are up for it.

I do believe GLP-1s are magic -- and there are reasonable arguments that year-one costs don’t capture the long-run picture. If GLP-1s reduce hospitalizations, cardiovascular events, and downstream spending, the math changes. But that’s a different argument than the one being made.

What I’m curious about is that the Bridge program runs no matter what – so beneficiaries will have coverage from July to the end of the year and then what?

It Must Be True. This week, Aetna released a provider survey finding that 65% of providers agree prior authorization has a legitimate role in the health system. Interesting framing from a payer, because it validates the tool while suggesting the 35% who disagree are the outliers. Meanwhile, less than half of those same providers (44%) said their current payers prioritize patient well-being and clear information. Only 36% believe insurers follow through on their commitments.

So providers accept that PA exists. They just don’t trust the people running it.

Show Me the Coupon. This week, a research letter published in JAMA found that manufacturer coupon use among commercially-insured patients dropped from 18% in 2017 to 13.9% in 2024, based on analysis of more than 55 million pharmacy claims.

Two things underneath that number are more interesting. First, per-claim coupon amounts went up: median $60 in 2017 to $90 in 2024. Manufacturers are spending more per coupon while reaching fewer patients. That reflects higher underlying cost-sharing requirements that coupons need to offset, and copay accumulator programs squeezing coupon effectiveness.

Second, the GLP-1 story. Coupon use for obesity drugs collapsed from 54.6% in 2017 to 2.5% in 2024. As coverage expanded (unevenly), manufacturers pulled back cash-pay coupon programs. By contrast, coupon use for immunomodulators shot up from 4.2% to 23.8% over the same period.

The immunomodulator increase is worth watching. Formulary exclusions and step therapy are getting more aggressive in that class. When coupons are the affordability bridge and payers are restricting the formulary lane, patients end up in the middle. That’s not a drug pricing solution. It’s a different kind of access problem.

If I had a Trillion Dollars. At the end of March, David Cutler and Lev Klarnet released a Brookings Papers on Economic Activity conference draft asking whether the U.S. has bent the health care cost curve. Their answer is yes, and the numbers are striking. Medical spending in 2024 was $977 billion below what CMS actuaries projected back in 2010. Cumulative gap since 2010: $6.7 trillion. Health spending came in at 18% of GDP versus a projected 21.2%.

They attribute the slowdown to five things: technology maturation, patent expirations, site-of-care shifts (major surgery moving from inpatient to outpatient), demand-side changes (prior auth, high-deductible plans, ACOs), and slower price growth. Prescription drugs account for 26% of the spending gap, driven largely by loss of exclusivity and slower branded drug growth.

The caveat: spending growth picked back up in 2023-24. And they’re clear the curve hasn’t bent enough. Higher cost-sharing and insurer restrictions that drove some of the slowdown have also created access problems.

I mention this paper now because almost every mechanism they identify as having bent the curve is currently under pressure. Tariffs threaten supply chain economics. Medicaid cuts change the demand-side picture. IRA litigation creates uncertainty around price negotiation. GLP-1 coverage expansion could reverse some of the pharmaceutical spending slowdown. The curve bent for reasons. The question is whether those reasons survive what’s coming.

Reimbursement Fundamentals: Tariff-ied and Confused

Last week, the Trump administration announced 100% tariffs on imported patented brand-name drugs and APIs under a Section 232 national security proclamation. The tariff applies to products, specific HTS codes listed in Annex I, not to companies or deals. What a signed agreement changes is the rate you pay on those products. Sign both an MFN pricing deal with the Department of Health and Human Services (HHS) and an onshoring plan with Commerce, and your rate drops to 0% through January 20, 2029. Sign just an onshoring plan, and you’re at 20%, rising to 100% by 2030. Sign nothing, and you’re at 100% starting July 31 if you’re on the Annex III large-company list, or September 29 if you’re not. The tariff is the floor. The negotiation determines how far above it you sit.

But honestly, this week’s announcement is less a starting gun than a deadline. The real story started in July 2025, when the administration sent demand letters to 17 large pharmaceutical manufacturers. By early February 2026, 16 of those 17 had agreed to bilateral MFN pricing agreements. They’re the early movers. Annex II of the proclamation lists 13 companies that formalized agreements between December 2025 and March 2026, so even the “signed” group has layers depending on which moment in time you’re counting.

And now we have a proclamation structured to pull the rest of the industry into the tent. For the largest manufacturers in Annex III, the 100% rate hits July 31. For everyone else, September 29. There’s another angle that needs to be figured out: companies with approved domestic onshoring plans that haven’t signed MFN pricing agreements can access a 20% rate instead of 100%, but that rate climbs back to 100% by April 2030. It’s not binary. It’s a sliding scale with a clock.

Now. What do you actually get if you sign? And remember – tariffs are on a product, not company basis so deals already signed will likely only provide relief for the drugs specifically included in them.

The obvious answer is tariff relief, a 0% rate through January 20, 2029, if you execute both an MFN pricing deal and a Commerce-approved onshoring plan. But the less-discussed piece is the FDA angle. Participating manufacturers were offered FDA Commissioner National Priority Vouchers (CNPVs) that can reportedly reduce drug or biologic application review times from the standard 10 to 12 months down to 1 to 2 months. I want to be careful here because I haven’t seen full public documentation on this, so flag it as unconfirmed, but if accurate it’s a significant competitive advantage for getting pipeline assets to market ahead of non-participating competitors. That’s a carrot that has nothing to do with pricing and everything to do with market timing.

The investment commitments are also worth naming. Companies collectively pledged somewhere between $150 billion and $400 billion (the range is wide, which tells you something about the precision of these agreements) in U.S. manufacturing infrastructure, R&D, and capital expenditures. They also agreed to donate active pharmaceutical ingredients to a Strategic API Reserve. The manufacturing pledge piece connects back to the onshoring carveout, though the criteria for what counts as a sufficient onshoring plan haven’t been published in the Federal Register yet. Finished dose manufacturing and API manufacturing are different things, and that distinction matters enormously for what companies can actually deliver.

The bilateral deal structure is the clearest window into where this goes internationally. The U.K. deal was formalized alongside the April proclamation and is the template. The U.K. secured tariff-free access to the U.S. market for British-made medicines for at least three years. In exchange, they accepted higher prices for U.S. drugs and agreed to shift NICE’s appraisal framework. For the first time since 1999, the QALY threshold will rise to £25,000–£35,000, which effectively allows the NHS to pay up to 25% more for innovative treatments. The U.K. agreed in principle to a framework shift without specifying what it means in practice. The vagueness is telling.

Switzerland is in conversations. Australia is holding, for now. (CSL, Australia’s largest pharmaceutical exporter, just completed a $1.5 billion manufacturing expansion in Illinois. The timing is not subtle.)

The trade is pretty clean from the U.S. perspective. Trading partners preserve pharmaceutical export access to the U.S. market. In return, they pay more for U.S. drugs, which makes their prices less useful as downward anchors in MFN reference calculations. And HTA methodology shifts open reimbursement lanes for U.S. products that might not have cleared previous cost-effectiveness thresholds. I mean, if you’re trying to build an MFN framework that benchmarks U.S. prices to international ones, and you can simultaneously raise international prices through bilateral deals, the reference basket moves in your favor over time. Whether that’s the explicit design or a convenient side effect is a good question.

Meanwhile, at the end of March, Reuters reported that manufacturers are quietly pausing European launches to avoid creating reference prices that feed back into U.S. MFN calculations. European patients wait longer. The reference basket gets thinner exactly as the policy depends on it being representative. And yet that’s the system we’re building.

Here’s where it gets operationally complicated for companies that have signed or are considering signing.

The IRA collision is live and specific. The negotiated Maximum Fair Price for Novo Nordisk’s semaglutide products under the IRA was set at $274. The voluntary MFN agreement set a Medicare price of $245. Same molecule, two different federal pricing mandates, no clear legal resolution. This isn’t a hypothetical future conflict. It’s happening now.

There’s also an international data-sharing problem that’s getting almost no attention. To comply with MFN benchmarking, manufacturers may have to share detailed international net pricing data with the U.S. government, including confidential rebates in foreign markets. That data-sharing may violate confidentiality obligations with foreign jurisdictions or international distribution partners. If your international contracts have confidentiality clauses covering net pricing, and most do, you have a conflict that needs legal review before you sign anything.

And the commercially reasonable efforts (CRE) problem. Most licensing and commercialization agreements contain CRE clauses requiring manufacturers to maximize a product’s profitability in specific international markets. Once you’ve signed a U.S. MFN agreement, your international pricing is tethered to your U.S. price. Drop a price in Germany, and you may trigger a rebate obligation back in the U.S. That puts you in direct tension with your international partners and potentially in breach of existing contracts. It’s not insurmountable but it requires active management, and the companies I’d worry about most are mid-size manufacturers with complex international licensing arrangements who didn’t have legal teams deeply involved in the deal-making process.

Overwhelmed yet?

The codification piece is where this all converges. The GLOBE and GUARD models, CMS’s mandatory rebate proposals for Part B and Part D drugs benchmarked to international prices, are pending finalization (maybe). Congress is being pushed by the administration to codify the bilateral deals into permanent law, though there’s apparently significant frustration on the Hill about the confidentiality of the deal terms. (Which, fair.) If GLOBE and GUARD finalize, MFN stops being a political deal and becomes a structural feature of Medicare reimbursement. No carveout, no negotiation.

And here’s the thing: a manufacturer that signed a voluntary TrumpRx agreement, accepted the press hit, and agreed to a cash-pay price may find that voluntary price becomes the floor for mandatory rebate calculations under GLOBE. The voluntary becomes the norm. The norm gets codified. The codified price becomes the ceiling for what’s negotiable in the next round. It’s not a conspiracy. It’s just how these things work.

The July 31 and September 29 deadlines are real. The window for favorable terms, with onshoring plan criteria still undefined and bilateral deal structures still forming, is probably better than what’s available after GLOBE finalizes. But signing without legal review of your international contracts, your IRA obligations, and your CRE clauses is how you create problems that are worse than the tariff rate you’re trying to avoid.

Or maybe this a scary TACO waiting to be punted.

I’m supposed to be getting ready to take a few days off but I’m having trouble detaching. I’m so in the zone (and happy with it all) that the idea of stopping seems scary? Which absolutely means that I need to take a break, right?... No issue next week unless something big happens.

Say Yes Under Duress. Late last week, CMS Deputy Administrator Chris Klomp told attendees at STAT News’ Breakthrough Summit that the administration has started consulting pharmaceutical companies on legislative language to codify its most-favored-nation (MFN) drug pricing deals into law.

It’s the first time an administration official has said publicly that the MFN strategy needs to move from executive action to statute; it’s a significant tell about the program’s underlying fragility.

Here’s why: the voluntary MFN agreements that 16 major manufacturers struck with the Trump administration came with a sweetener -- a three-year exemption from potential Section 232 pharmaceutical tariffs. That clock is running. When those tariff exemptions expire, manufacturers face a straightforward recalculation.

Without a statutory backstop, the White House loses its main piece of leverage, and the deals unravel. Klomp knows this. Reading companies into legislative language before going to Congress is the pre-work you do when you need industry not just to tolerate a bill but to actively support it. Which seems kind of cute to me. Like pat-a-kid-on-the-head cute. I mean, these deals were signed so that this is exactly what didn’t happen.

Ultimately, what makes this complicated is that codifying MFN doesn’t happen in a vacuum. The Inflation Reduction Act already created a Medicare drug price negotiation program covering dozens of the same drugs targeted by MFN. Both programs aim to bring U.S. prices closer to international benchmarks, but through completely different mechanisms; one through direct government negotiation of maximum fair prices, the other through voluntary deals tied to tariff relief.

That resolution mechanism doesn’t exist yet. The legislative consultation Klomp described is how it starts getting built or doesn’t. It seems unlikely to move in the short term but, long term, the idea is out there.

Cash Me if You Can. On March 20, the White House added three Boehringer Ingelheim drugs to TrumpRx, including two diabetes therapies priced around $55 (down from roughly $525) and a COPD inhaler at about $35 (down from $276). Boehringer becomes the ninth manufacturer on the platform.

The discounts are real. But the positioning is shifting. CMS Deputy Administrator Chris Klomp said TrumpRx was “never meant” for people with insurance. He framed it as a limited cash-pay tool, not a systemwide solution to drug pricing.

That’s a pretty meaningful reframing from where this started.

TrumpRx launched in January with the promise of delivering MFN-level prices to American patients. In practice, it works best for people paying cash. The discounts don’t stack with insurance and don’t count toward deductibles, which makes it largely irrelevant for insured patients navigating formularies, prior authorization, and cost-sharing accumulation.

The story underneath the story starts to come into focus. It’s a side channel. And it’s a side channel that happens to align with a growing population. Medicaid cuts tied to the reconciliation bill are expected to increase the number of uninsured individuals. So TrumpRx may expand not because it’s solving systemwide affordability, but because more patients are pushed into the segment it serves.

This creates an odd dynamic. A platform positioned as a pricing solution ends up functioning more like a backstop for coverage erosion. For manufacturers, this clarifies where TrumpRx sits. It’s not a replacement for formulary access or payer strategy. It’s a separate pathway with different economics, different patients, and limited interaction with the insured market. That means decisions about participation aren’t just about price. They’re about channel strategy, patient mix, and how much of the business is expected to flow outside traditional coverage altogether.

Different Wrapper, Still a Price Control. This week, the Rare Access Action Project published a paper making a pretty direct argument: importing MFN pricing into state policy sounds intuitive, but it doesn’t actually translate. Major disclaimer... I wrote this paper.

Here is the main thesis: MFN only works at the federal level because of leverage. Medicare can set terms because participation in the program is effectively non-negotiable for manufacturers. That leverage is what makes the price “stick.” It’s not just the reference to international benchmarks; it’s the enforcement mechanism behind it.

States don’t have that.

And that’s where a lot of the current policy conversation starts to drift. State proposals often treat MFN as a pricing methodology that can be lifted and applied anywhere. But without the same scale, statutory authority, and program integration that exists at the federal level, it doesn’t work.

The paper walks through how this shows up in practice. Upper payment limit (UPL) models or MFN-style caps at the state level risk setting prices without the ability to ensure supply, negotiate across a national footprint, or account for how manufacturers actually make portfolio decisions. That creates a real possibility of access tradeoffs, especially in smaller or more complex patient populations.

For manufacturers and patient groups, this is where the translation matters. MFN is not a plug-and-play pricing tool. It’s a federal construct that depends on leverage states simply don’t have. And when that gets lost, the policy conversation moves faster than the mechanics that determine whether patients get access.

Denied, Delayed, Delivered (Eventually) Last week IQVIA released new data showing that nearly half of Medicare Part D patients hit a denial when trying to start a branded drug.

In 2025, 47% of new-to-brand prescriptions in Part D were initially denied, up from 37% in 2021. Most patients eventually get through. About half of those denials are resolved within 30 days, and 60% of approvals happen the same day as the initial rejection. The average time to approval has held steady at around 11 days.

This isn’t about outright exclusion. It’s about friction. One in ten patients wait more than a month to start therapy. Fourteen percent of new-to-brand attempts never get approved within a year. At the patient level, nearly half of Medicare beneficiaries experienced at least one denial in 2024, and 30% of those patients never got approved for any attempt.

And yes, all of this happened for a reason. The $2,100 out-of-pocket cap, increased plan liability in catastrophic, and required coverage of negotiated drugs all compress margins. When margins compress, utilization management tightens. Prior authorization, step therapy, and administrative edits start doing more of the work.

That’s what this data is picking up. And it reframes how to think about the IRA’s coverage wins. Guaranteed formulary placement doesn’t remove access barriers. It relocates them.

For manufacturers, that shifts where the work is. Coverage strategy alone isn’t enough. The operational side of access, prior authorization support, speed to appeal, provider education, starts to matter just as much as formulary position heading into 2026.

Next. On March 19, Senate Finance Committee Democrats, led by Ron Wyden, put out a “Dear Colleague” letter outlining plans for a future health insurance reform agenda. This isn’t legislation. It’s positioning. But it’s pretty clear positioning.

The letter opens with a familiar story. Premiums rising faster than wages. Half of insured people insured are unhappy with their coverage. One-third delaying care because of cost. And, on the other side of the ledger, $71 billion in insurer profits and nine-figure CEO compensation.

The agenda has three pillars. Reverse recent coverage losses, simplify insurance design, and take on what they frame as corporate profiteering. That includes medical loss ratio practices, PBMs, and executive pay. There’s also a re-emphasis on standardizing plans and prior authorization, which is another way of saying less variation and fewer workarounds inside benefit design.

In context? This is a minority caucus mapping out what they would do if they had power again. And they’re being more explicit than they have been in a while.

The line to pay attention to is the reference to “Medicare-type choices for all Americans.” That’s not a throwaway. It keeps the public option concept alive, but in a way that leans on familiarity rather than wholesale system replacement. Pair that with the push to eliminate “junk plans,” and you start to see the contours of a more standardized, more regulated commercial market.

For manufacturers, this is less about what happens next year and more about where the pressure is building. Standardization sounds like simplification, but it also compresses design flexibility. Fewer benefit variations. More uniform utilization management. And potentially less room to differentiate access pathways across plans.

The takeaway isn’t that this passes anytime soon. It’s that the policy direction is getting clearer. And when the window opens, the proposals are already written.

When Reimbursement Risks Future Innovation: A Cell and Gene Love Story

Late last week, the USC Schaeffer Center put out a white paper on cell and gene therapy financing. The paper argues that the U.S. payment system is not built for one-time therapies with massive upfront costs and benefits that play out over years. True. But we have been circling this problem for a while now.

Think back to hepatitis C. When Sovaldi and Harvoni hit the market, the issue was never whether the drugs worked. They did. The issue was that curing a lot of people quickly costs a lot of money quickly. The system did what it tends to do under pressure. It slowed access down. Medicaid programs restricted coverage. Plans put up barriers. Everyone pretended this was a utilization management conversation when it was really a budget problem. Over time, the pressure eased. Some of that was additional competition, some of it was discounting, and some of it was simply that the initial wave of demand got worked through.

Then came the first gene therapy wave. Luxturna. Zolgensma. CAR-T. And with them came a burst of policy creativity. Outcomes-based contracts. Annuity payments. Reinsurance ideas. Stop-loss. Lots of smart people are trying to solve a real problem. But nothing really became the model. It all stayed kind of pilot-y. Interesting enough to get conference panels and white papers, not sturdy enough to become the way the market works.

That is not because the ideas were dumb. It is because they all run into the same wall. They require a level of coordination our system does not naturally provide. You need to track outcomes over time. You need to know who owns the financial risk if the patient changes plans. You need providers to be willing and able to carry inventory and administration costs. You need payers, manufacturers, and sometimes states all agreeing on what “success” looks like. That is a lot to ask from a system that struggles to share basic information cleanly and where patient churn is just part of the landscape.

We treated these therapies as exceptions. That worked, or at least sort of worked, because there were only a few of them and they were concentrated in very small patient populations. The system did not solve the financing problem, it contained it.

But now… the pipeline is getting bigger, and it is moving beyond the ultra-rare. CAR-T is being studied in autoimmune diseases. Gene therapies are being developed for broader populations. CMS itself has already had to step in with the Cell and Gene Therapy Access Model for sickle cell disease in Medicaid, which tells you the problem has moved beyond theory and into actual operational policy. Once the federal government starts building demonstration models around how to pay for something, that is usually a sign that the private market did not quite have this handled.

And this is where I think the conversation needs to go a step further. The risk here is not just that patients face delays or that plans put up guardrails or that providers worry about cash flow. All of that is true. But the bigger risk is what happens to innovation if we do not figure this out.

Because companies do not make investment decisions based only on whether the science works. They make them based on whether the science can become a viable product in the actual market we have. If you are looking at a one-time, high-cost therapy that may transform lives but enters a payment system that cannot reliably absorb it, that uncertainty matters. It may not kill investment on day one. But it starts to shape which programs get prioritized, which get delayed, and which never quite make it to the top of the list.

That is how innovation changes. Not usually through one dramatic announcement. More often through a series of quieter choices. A company decides the risk-adjusted return looks better in a chronic therapy than a one-time cure. Investors lean toward platforms that fit existing reimbursement better. Launch planning starts to look less about clinical promise and more about whether anyone can actually carry the product through the system. And then, a few years later, everyone wonders why the pipeline looks the way it does.

The Schaeffer paper lays out a stepwise set of options, starting with private-market intermediaries, then moving toward a public-private hybrid, and finally direct public financing if all else fails. That all makes sense. But the harder truth is that we have been talking around versions of these solutions for years. The challenge is not coming up with a clever financing mechanism. The challenge is getting one to stick in a system that defaults to delay, restriction, and cost shifting when something does not fit neatly.

For pharma, especially in rare disease and other high-cost spaces, financing can no longer sit off to the side as an implementation detail. It is becoming part of the product strategy itself. The evidence package matters. The durability story matters. Provider economics matter. The payer churn problem matters. The reimbursement pathway is not the cleanup step after approval. It is increasingly part of the bet.

Innovation is moving faster than the payment model. That is exciting until it is not. Because at some point, if the system cannot support these therapies in a predictable way, the market will send that message back to developers. And when it does, it will not just affect access to the next generation of cures. It will affect whether some of them get built at all.

What.a.week. The whirlwind of the Access conference, tons of pharmaceutical health policy news – and apparently a whole lot of new subscribers. Hi, welcome. Quick intro: I’m Jennifer Snow, I run Apteka Policy, 25 years in pharmaceutical health policy. I take the dense policy stuff – IRA negotiations, 340B fights, PBM reform – and tell you what it means for coverage, access, and your strategy. You have enough information, what you’re missing is the interpretation. That’s what I do. Glad you’re here.

Hyperbole vs. Reality. The New York Times published a cross-country drug price comparison this week that, I mean, should put the “lowest prices in the world” claim to rest for anyone who was still taking it literally. They looked at eight countries, compared what patients pay for a set of drugs against TrumpRx’s U.S. list prices, and also checked a subset against what Germany’s public system pays. The pattern isn’t ambiguous.

Germany comes in lower than TrumpRx in more than half the cases they could match – and that’s before accounting for confidential rebates that would push German net prices further down. For patent-protected drugs, the gaps are meaningful. Ngenla is roughly $2,700 more per month here. Ozempic and Xeljanz are both cheaper abroad by non-trivial amounts.

There is a version of this story where TrumpRx still “wins.” It’s just a narrower version than rhetoric suggests. For certain GLP-1s, TrumpRx looks competitive relative to some European markets. But Japan undercuts both, with Wegovy and Zepbound priced at roughly half of what TrumpRx lists. (So, not the lowest in the world, then.)

The administration’s response has been that comparisons need to adjust for differences in national income and purchasing power. That may be a valid methodological point in theory. But perception is reality and patients aren’t feeling the savings.

What TrumpRx is: a meaningful discount off U.S. list prices for a subset of drugs. For cash-pay patients in categories like GLP-1s and fertility treatments, that matters. But it’s not delivering the lowest prices in the world. And that gap between the claim and the reality is likely to define the next phase of this conversation, because it reframes TrumpRx from a solution to a partial step in a system that still prices above its peers.

But we’re early days. TrumpsRx has potential to be ground-breaking for consumers, but the environment around it has to shift first. Real insurance integration is the unlock.

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Process Matters (and a win for Science). A federal district court in Massachusetts issued a preliminary injunction this week blocking both the January 2026 revision to the CDC childhood immunization schedule and the appointments of new ACIP members.

The ruling turns on process rather than substance. And I mean that literally – that distinction is the whole point.

The court found that the revised immunization schedule was issued without consultation with ACIP, despite multiple federal programs – including those under the Affordable Care Act, Medicaid, and the Vaccines for Children program – being directly tied to ACIP recommendations. You can’t sidestep the advisory process and then have the outputs of that process apply to programs that depend on it.

The court also raised concerns about the reconstituted ACIP’s composition. Following the removal of the prior committee, new members were appointed on an expedited basis. The judge found that several appointees appeared to lack relevant expertise, raising questions under the Federal Advisory Committee Act, which requires that advisory bodies be fairly balanced in terms of knowledge and experience.

The immediate effect: the revised schedule is stayed and the reconstituted ACIP can’t operate – including any votes it may already have taken.

More broadly, this reinforces something that keeps coming up in health policy right now. Even where there’s authority to make substantive changes, the processes by which those changes are developed and implemented are often embedded in statute. Deviating from those processes creates legal vulnerability, regardless of the policy objective. This doesn’t resolve the underlying debate about vaccine recommendations. It resets the conditions under which that debate will proceed.

Here’s the rub. It takes resources to fight to find the way back to process. Smashing norms might yield quick policy headlines but it takes time and money to fight the

Money Talks. A JAMA study published something that gets assumed but rarely quantified: it measures the role of provider economics in biosimilar adoption.

The study examined oncology biosimilars across more than 1,500 hospitals between 2020 and 2024 and compared acquisition prices – what hospitals paid manufacturers – to reimbursement rates from insurers. Over that period, acquisition costs for biosimilars dropped sharply, in some cases by more than 60%. Reimbursement rates also declined, but at a slower pace. That created a widening gap between what hospitals paid and what they got paid back.

That gap matters because it creates a direct financial incentive to adopt biosimilars. And that is exactly what happened. Biosimilar market share increased rapidly, reaching more than 80% in several categories by 2024.

What I found interesting is that adoption wasn’t primarily driven by payer mandates or utilization management. It was driven by margin.

This raises a question about where the benefits of biosimilar competition go. The expectation is that lower prices will translate into savings for payers and patients. In practice, at least in this phase, a portion of those savings is being retained at the provider level. That doesn’t undermine the value of biosimilars. (But it does mean competition alone doesn’t determine where savings accrue – that’s shaped by reimbursement policy, contracting dynamics, and how quickly different parts of the system adjust.

The key variable going forward is how quickly payers recalibrate reimbursement as biosimilar prices fall. If that adjustment accelerates, the margin incentive that drove early adoption narrows. And with it, potentially, the pace of uptake.

Consider the Questions Asked. KFF’s March tracking poll are interesting – the more you sit with it – the more it feels like something has actually shifted.

Fifty-nine percent of adults say they’re worried about affording prescription drugs for themselves or their families. That was 45% in 2020. That’s a meaningful change in a relatively short period, moving in the wrong direction.

Over the past year, 27% of adults report not filling a prescription because of cost. Nineteen percent cut pills or skipped doses. Thirty-one percent substituted an over-the-counter drug instead. Forty-three percent did at least one of those things. Two years ago, that number was 31%.

That’s a broad base of the population making real tradeoffs. Not a niche group. And it is important to think about and consider. Consider, not panic. You would need to dive further into what the actual impact to patient access is. Polling is only as good as the questions and the instrument being used.

The trust numbers are where this turns data into politics. And this is where I said the words “meh” out loud. Roughly seven in ten adults continue to say there isn’t enough government regulation on drug prices – a number that’s held steady across administrations and policy changes.

Back to the perception is reality from above BUT, it’s a poll of people who don’t necessarily follow what the government is doing about drug pricing. It’s like if you wanted to ask me about foreign policy, I would answer your questions, but my opinion really shouldn’t matter much. It’s not my lane.

What I take away from this work is that people are feeling the affordability gap. That is connected to drug pricing but more closely connected with benefit design and a host of other issues. I also get this (potential) march toward bigger healthcare reform. Not anytime soon – we aren’t broken enough yet – but a few years out? Maybe.

Hell No (But Make It Voluntary). More than two months after major insurers pledged to reduce prior authorization requirements, the early feedback from physicians is not complicated.

One interventional radiologist’s summary: “hell no.”

The Washington Post reporting this week captures a pattern that’ll feel familiar to anyone who’s watched these kinds of commitments before. The insurers point to changes that have been made, and in some cases those changes are real. But they tend to be concentrated in areas that don’t meaningfully reduce day-to-day burden.

Lower-volume services get easier to approve. But for high-volume, clinically routine treatments – particularly in oncology – physicians report that the underlying process looks largely the same.

That disconnect reflects something structural. Prior authorization is managing utilization and, by extension, financial risk. If that remains, adjustments to the process tend to shift how prior authorization is experienced, not whether it exists.

There’s a forward-looking argument about electronic prior auth – more automated systems providing near real-time responses. That may change the operational experience. It doesn’t change the incentive to review.

Which is why voluntary is not going to work. Without changing the financial incentives that drive utilization management, improvements tend to be incremental and uneven. Until legislation moves that imposes concrete guardrails, the gap between commitment and experience is likely to persist. And right now, legislation isn’t exactly moving quickly.

Reimbursement Fundamentals: Predictable Consequences

Last January I got yelled at on a ski lift by one of my best friends. I was trying to explain why she couldn’t access Flovent. Apparently, I was not the only one she yelled at. There is a pharmacist in Boulder, CO who probably still remembers her rant.

I thought about her this week when Senator Hassan released her investigation report, because the numbers in it are not easy to look at. A 20% decline in inhaled corticosteroid use among asthmatic children. A 17.5% increase in asthma-related hospitalizations.

Flovent didn’t go away because demand disappeared or because something clinically better suddenly replaced it. It went away because the way it was priced stopped working inside the system we’ve built over the last couple of decades. And that system, whether anyone likes it or not, has been built on a very specific set of financial flows.

For a long time, products like Flovent operated inside a rebate-driven model. High list price paired with significant rebates, with the difference between the two doing a lot of work across the system. Plans relied on that rebate revenue to offset premiums. Pharmacy benefit managers (PBMs) used it as the backbone of formulary negotiations. Pharmacies had reimbursement and margin tied – directly or indirectly – to those higher benchmark prices. 340B entities relied on the spread between acquisition cost and reimbursement to fund programs. And manufacturers used that same structure to manage best price exposure and maintain flexibility across payers.

It’s not a clean system, and no one really defends it on aesthetics. (hahahahaha.) People understand how to operate inside it. The incentives, while messy, are at least legible.

What changed for Flovent wasn’t a vague shift in the policy environment. There was a specific trigger. The American Rescue Plan, passed in 2021, eliminated the cap on Medicaid drug rebates. Previously, no matter how much a manufacturer had raised its price over the years, rebates were capped at 100% of average manufacturer price. Once that cap was gone, drugs that had accumulated years of above-inflation price increases were suddenly facing rebate obligations that could exceed what the drug itself cost.

Let me repeat that a different way – every time the drug would be used, the company would lose money. They would owe money for utilization. GSK was looking at an estimated $367.6 million per year in Medicaid rebate penalties.

The decision to pull Flovent on January 1, 2024 – exactly the day those new obligations kicked in – was about resetting the rebate baseline entirely. GSK discontinued the branded product and launched an authorized generic through Prasco. Under Medicaid rules, an authorized generic is treated as a new product with no pricing history. Rebate slate: cleared.

Here’s where it gets a little maddening. The authorized generic did have a lower list price than Flovent’s peak – and that’s the number that made headlines. But list price and net price are not the same thing. (I know. I know. Bear with me.) List price is what’s printed on the label. Net price is what’s actually paid after rebates and discounts move through the system. Johns Hopkins estimated the net price of the authorized generic ended up around four times what Flovent’s net price had actually been.

Hassan’s report has put real numbers to the disruption: the hospitalization increase, the drop in ICS use, the families who lost access to a drug their kids had been stable on for years. That is a serious finding and it deserves to be treated seriously. Especially with an angry mom on a ski lift.

But here’s where I want to push back on how this is being framed. When you remove the rebate cap on a product that’s been priced above inflation for a decade, you’ve created a situation where the manufacturer loses money every time the drug is dispensed. That’s not a minor inconvenience – that’s an existential math problem. The authorized generic structure was the exit the rules left open, and GSK used it. I think the timing and the execution deserves scrutiny, and Hassan’s report makes a credible case that patients paid the price. But if we spend all our energy on GSK’s decision and none of it why, we are doomed to repeat history. Policy changes have consequences and this one was pretty damn predictable. Companies may be willing to make less but they don’t want to lose money on every script fill.

I also want to note that PCMA published a piece this week titled “How a Big Drugmaker’s Games Inflated Costs and Hurt Access to Life-Saving Medication for Kids; and How PBMs Stepped in to Fill the Void.” I mean. The PBM industry trade group positioning PBMs as the heroes of the Flovent story is a choice. The same PBMs who used Flovent’s rebate structure as the backbone of their formulary negotiations for years. We can talk about GSK’s role here without pretending the rest of the system was a passive bystander.

There is some genuinely good news in all of this. On March 4, the FDA approved the first true generic fluticasone propionate inhaler, with Glenmark planning distribution starting this month. That is how the system is supposed to work. Competition enters, prices come down, access improves. Hassan’s report and the pressure that followed appear to have contributed to moving that process along.

This isn’t really a story about a single inhaler. It’s about what happens when you remove one lever without thinking about the broader environment, the if/thens.

I get to go to Philadelphia next week for Access and I’m excited. I love my usual routine but shaking it up and seeing people in person is really nice. Looking forward to all the patient access policy talk.

The Bigger They Are, the Faster They Grow. A new white paper from Health Capital Group, sponsored by Johnson & Johnson, analyzed HRSA’s OPAIS database from 2017 through 2023 and found something many observers of the 340B program have suspected for years; size is the dominant variable.

Hospitals in the top quartile by bed size represent about 33% of all 340B hospital participants but captured 81% of the growth in child sites and 60% of the growth in contract pharmacy relationships over that period.

Academic medical centers push the gap even further. Major teaching hospitals now operate nearly twice as many child sites and contract pharmacy relationships as similarly large non-teaching hospitals. And the difference is growing. Teaching hospitals had 66% more child sites than non-teaching hospitals in 2017. By 2023 that gap had widened to 95%.

As you may know, child sites are how hospitals extend their 340B footprint. Prior research has shown that many of these child sites cluster in higher income areas with commercially insured patients rather than underserved communities. Contract pharmacy relationships allow hospitals to dispense 340B drugs through outside pharmacies while capturing the difference between acquisition cost and reimbursement.

For manufacturers, this concentration helps explain why the contract pharmacy fight has escalated. When a relatively small group of very large systems captures most program growth, the financial stakes rise quickly. What began as a program meant to help safety net providers stretch limited resources increasingly looks like a story about scale, spread revenue, and who ultimately captures the benefit.

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Do Less, Prove the Same. On March 9, the Food and Drug Administration (FDA) released draft guidance that would eliminate the requirement for three-way pharmacokinetic studies in biosimilar development when sponsors can demonstrate the comparison is scientifically unnecessary. The move builds on October guidance that removed the requirement for comparative efficacy studies, a change estimated to save sponsors about $24 million and one to three years per application.

The agency’s logic is straightforward. If a sponsor has already demonstrated biosimilarity through molecular characterization and two-way pharmacokinetic comparisons, requiring a third arm simply to confirm the same conclusion adds cost without adding meaningful scientific insight.

The FDA estimates eliminating the requirement could cut up to half of pharmacokinetic development costs, which often run around $20 million per application.

There are now 82 FDA-approved biosimilars. And reducing unnecessary development costs changes the economics of entry, but the marketplace is still a work in progress. With Medicare negotiated prices adding instability to a market that is already wobbly with the reliance on private-label biosimilars, it is uncertain what the future of biosimilars will be in the United States. If the goal is more competitive biologics markets, lowering the cost of getting to the market isn’t a bad thing, but it isn’t the only thing.

Show Me the Outcomes. On March 7, the Center for Medicare and Medicaid Innovation staff published a perspective in the New England Journal of Medicine outlining where the agency plans to take the Cell and Gene Therapy (CGT) Access Model.

The model launched in 2025 across 32 states, Washington DC, and Puerto Rico, initially focused on gene therapies for sickle cell disease. It is outcomes-based contracting at scale. If a Medicaid patient does not benefit from a covered therapy, the state receives a rebate from the manufacturer.

The design addresses a real barrier; state Medicaid programs are understandably cautious about paying $1 million to $4 million upfront for a therapy when long-term durability is still being evaluated. The CGT model attempts to shift part of that uncertainty back to manufacturers while giving states a predictable framework for coverage.

The article outlines three priorities for the next phase of the model: prioritize therapies with enough Medicaid patients to allow meaningful evaluation, encourage competition rather than single product arrangements where only one therapy is available, and address provider-level barriers.

Hospitals and infusion centers can be reluctant to administer therapies that cost several million dollars when reimbursement does not reliably cover acquisition costs. Most providers cannot easily float that kind of exposure while waiting for payment.

The stakes are growing quickly. Analysts project that 85 gene therapy indications could reach the market by 2033, with annual U.S. spending potentially reaching $21 billion by 2034. The CGT model represents an attempt to build payment infrastructure before that wave arrives.

Trust (Maybe) But Verify. On March 3, seven Democratic senators led by Senate Finance Committee Ranking Member Ron Wyden sent a letter to GSK CEO Luke Miels asking a specific question: are the prices offered through the company’s GENEROUS model actually lower than what Medicaid already pays?

That question goes to the heart of the model’s public messaging. Medicaid already pays extremely low net prices because of statutory rebates. A Congressional Budget Office analysis found that average net prices for top selling brand drugs were about $118 in Medicaid compared with $343 in Medicare Part D.

The senators also noted that the arrangement appears to include potential advantages for the manufacturer, including tariff relief and the possibility of FDA priority review.

There is also a transparency issue built into the model. The request for applications notes that terms may differ from what the Centers for Medicare & Medicaid Services (CMS) publicly released, which means there is no clear external benchmark for evaluating the final deals.

The senators asked GSK to provide drug-by-drug pricing details by March 23. Whether that response materializes, and what it shows, will determine whether the model represents meaningful savings or primarily a new narrative.

Now Is Always the Right Time to Do the Right Thing. On March 10, Representative Jake Auchincloss of Massachusetts published a Substack outlining a bipartisan framework for Alzheimer’s policy developed with a Republican colleague from Arizona.

By 2050 as many as 15 million Americans could be living with Alzheimer’s disease, requiring an estimated 60 million caregivers and generating annual costs approaching $1 trillion. Those numbers are not ideological; they describe a looming fiscal and human burden.

The proposal has three components: push funding through expanded federal research investment, pull through Medicare reimbursement policies that encourage development, and partner through a national clinical trial network.

The proposal also suggests expanding Medicare coverage beginning at age 50 for diagnosis and preventive interventions, not simply treatment after symptoms appear. (Which would be so cool. Medicare is going to have to absorb those costs eventually anyway, so why not intervene before they compound. We should be doing this for more chronic conditions.)

Auchincloss also highlights a structural issue with the Inflation Reduction Act’s (IRA’s) drug negotiation framework. Small molecules face negotiation timelines earlier than biologics. In Alzheimer’s disease that distinction matters because many large molecules struggle to cross the blood-brain barrier.

If the pipeline for brain diseases relies heavily on small molecule therapies, earlier price pressure could discourage investment. That argument is beginning to surface across several disease areas, but Alzheimer’s makes the stakes visible.

It Worked, It Really Worked. A new study published in JAMA Internal Medicine finds that the IRA provisions eliminating the 5% catastrophic coinsurance requirement and expanding low-income subsidies measurably improved medication adherence among Medicare beneficiaries.

Researchers compared 1,454 Medicare beneficiaries with 3,797 privately insured individuals. Cost-related medication nonadherence among Medicare beneficiaries fell by about 4.9 percentage points. Among patients managing multiple chronic conditions, the reduction reached 7.8 percentage points.

None of that is surprising in direction. Lower out-of-pocket (OOP) costs generally improve adherence. What makes the study meaningful is the magnitude of the effect.

The OOP cap is amazing, but it gave me pause because the researchers did not find broad improvements in overall financial strain among beneficiaries. People were more likely to take their medications, but the underlying affordability pressures did not disappear.

More research needs to be done. Especially as we see the OOP cap go up year over year.

Is He Disappointed? CMS Administrator Dr. Oz has suggested publicly that Affordable Care Act marketplace enrollment is artificially inflated. He has argued that the current figure of roughly 23 million enrollees could fall to about 19 million once improper enrollments are removed.

The estimate he cites comes from the Paragon Health Institute, which argues that 4 to 5 million people may be enrolled improperly. Other analysts strongly dispute that scale. KFF’s Cynthia Cox says fraud and enrollment errors do occur but are likely to affect hundreds of thousands of people, not millions. Brookings scholar Richard Frank described the higher estimate as implausible.

At the same time CMS is proposing to expand eligibility for catastrophic marketplace plans beyond the current under-age-30 thresholds. These plans typically carry deductibles of around $10,600 for individuals and $21,200 for families.

The policy argument is that younger and healthier consumers are increasingly priced out of traditional marketplace plans and catastrophic coverage offers at least some form of insurance.

But a plan with a $10,600 deductible raises an obvious question -- for people who cannot realistically absorb that level of cost exposure, how different is that from having no insurance at all. You could maybe tie it with a GoFundMe if a catastrophic event occurred which, to be fair, is a real American healthcare strategy at this point -- just not a good one.

If enrollment levels fall and the remaining coverage options shift toward high-deductible catastrophic plans, the debate may become less about how many people are covered and more about what that coverage delivers.

Reimbursement Fundamentals -- BALANCE of Power: CMS Tests a Narrow Path to GLP-1 Coverage

CMS announced details of the BALANCE Model this week. The headline version is that Medicare is testing coverage of GLP-1s for weight management. The fine print version is more interesting and more honest about what CMS is and isn’t willing to do here.

Here’s the statutory problem they’re working around: The Social Security Act prohibits Medicare Part D plans from covering drugs “used for anorexia, weight loss, or weight gain.” That exclusion is why Wegovy isn’t covered when prescribed for obesity, even though the same molecule (semaglutide) is covered when prescribed for type 2 diabetes. BALANCE doesn’t repeal that exclusion; what it does is test whether CMS can thread the needle: cover drugs widely known as obesity medications by framing eligibility around cardiometabolic disease.

Most beneficiaries entering the model won’t qualify because they’re obese. They’ll qualify because they have type 2 diabetes, or MASH with moderate to advanced fibrosis, obstructive sleep apnea, or heart failure with preserved ejection fraction, or chronic kidney disease stage 3 or higher with obesity as a co-condition. The closest thing to pure obesity treatment in the model is the BMI ≥35 pathway, which requires active lifestyle modification participation. Even there, obesity is being treated as a risk factor managed through behavioral intervention, not a standalone disease.

That’s a deliberate design choice.

The cardiometabolic framing does a few things at once. Clinically, it targets the populations where the evidence for GLP-1 benefit is strongest and where downstream cost savings because of reduced hospitalizations and fewer cardiovascular events are most plausible. Politically, it potentially keeps the model from blowing up the Medicare budget. Broad coverage for obesity alone could add tens of billions annually to federal spending. Narrow comorbidity criteria make the eligible population manageable. And legally, it keeps CMS on the right side of the statute by treating these drugs as treatments for recognized disease states rather than weight loss per se.

The structure also mirrors what commercial insurers already do; use prior authorization tied to cardiovascular risk or metabolic disease. BALANCE embeds those conditions directly into eligibility rather than layering them on top as administrative gatekeeping.

If the data show improved outcomes and manageable spending among these high-risk populations, that’s the argument for broadening coverage. If costs climb without clear offsets, it reinforces the case for keeping the exclusion in place. CMS has structured the experiment to give themselves the best shot at a positive result by including high-risk patients, strong clinical rationale, tight eligibility. That’s smart design, but it also means the results won’t generalize cleanly to broader obesity coverage.

And the patients who are obese but don’t clear the comorbidity thresholds? They’re not in this model. They’re still on the other side of a statutory exclusion that BALANCE doesn’t touch.

That’s the thing to hold onto. This isn’t Medicare covering obesity drugs. It’s Medicare testing whether cardiometabolic disease can be treated with drugs that also produce weight loss. Those are related but not the same policy and conflating them will cause problems down the road.

The model creates a structured federal test of whether these therapies fit into Medicare. But the design tells you exactly how much political and legal weight CMS thinks it can carry right now. More to come when we see who enrolls and at what cost.

TGIF.

340B’s Split Screen. February 26 brought two developments in the 340B contract pharmacy fight. They pointed in opposite directions.

First, a judge in the Middle District of Tennessee dismissed AbbVie’s challenge to the Tennessee Hospital Protection Act. The law prohibits manufacturers from restricting 340B contract pharmacy access or requiring hospitals to submit claims data as a condition of participation.

That decision adds to a growing list of losses for manufacturers. At least thirteen district courts have now ruled against them, with three circuit courts affirming. AbbVie has now lost both at the preliminary injunction stage and on the merits in Tennessee, on top of earlier losses in Mississippi, Louisiana, Arkansas, Hawaii, Maine, Colorado, Nebraska, and South Dakota.

Manufacturers argue they need utilization data from hospitals to monitor diversion and duplicate discounts. The Tennessee court said nope. Federal 340B law never required covered entities to submit claims data to manufacturers. If the statute never required it, the court reasoned, states are not interfering with federal law by blocking the practice.

Then, later that same day, the Justice Department (DOJ) stepped in on the other side of the fight.

DOJ filed a brief in AbbVie’s appeal of Colorado’s 340B law and sided with the company. The department argued the state law interferes with the federal 340B program. Manufacturers have been making that federal preemption argument for years with little success in court. Hearing it from DOJ carries a different kind of weight.

Maybe there is finally light at the end of the tunnel for manufacturers? HRSA recently extended the comment deadline on its proposed 340B rebate model after the previous version was blocked in court. Eli Lilly is also moving forward with a policy that requires hospitals to submit detailed utilization data to access 340B pricing. Either way, the next phase of the fight will play out in the courts.

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Gophers Digging into 340B. On February 27, the Minnesota Department of Health released its second annual report on the 340B program. It offers the clearest picture yet of how much revenue the program generates inside a single state.

I was going to say dam, but that’s beavers, not gophers. Either way, damn. Covered entities in Minnesota reported at least $1.34 billion in net 340B revenue for 2024 and the state says that figure likely understates the total. Some covered entities struggled to fully capture infusion drug data.

Nationally 340B drug purchases reached about $81 billion in 2024, up from $66 billion the previous year. The program requires manufacturers to sell drugs at discounted prices to eligible safety net providers, but federal law does not require providers to report how they use the resulting revenue.

Minnesota’s transparency effort starts to change the policy conversation. Legislators, payers, and manufacturers now have something that rarely exists in the 340B debate. A number. And a state-based number feels way more real. It feels like something policymakers should be able to dig into and ask: where did the money go and what did we get for it?

No Pill for That. On February 26, GAO released a report examining the Center for Medicare & Medicaid Services’(CMS) Part D Premium Stabilization Demonstration. In July 2024, CMS launched the demonstration under its Section 402 authority. The program allowed the agency to reduce premiums by up to $15 per month and limit annual increases to $35.

The Inflation Reduction Act shifted more catastrophic drug spending onto plan sponsors and away from the federal government. That redesign changed the risk profile for insurers almost overnight. When plans submitted bids for 2025, the variation in expected spending translated directly into premium volatility.

GAO estimates that without intervention, premiums for standalone prescription drug plans would have nearly doubled on average. About 37% of beneficiaries would have faced monthly increases above $40. Total cost: $9.8 billion across 2025 and 2026. On paper, the intervention worked. Average standalone Part D premiums increased only slightly, from $42 to $43, and enrollment grew.

Multiple policy changes hit the Part D market at the same time, making it difficult to isolate how much stability came from the demonstration itself. An ongoing evaluation is expected to sort that out. The demonstration begins winding down in 2026, with smaller subsidies and more premium flexibility for plans.

CMS spent $9.8 billion buying time. The next few bid cycles will show whether the Part D redesign can stand on its own. I remain doubtful.

One Big Beautiful Something. On February 26, RAND released a state by state analysis of the Medicaid provisions in the One Big Beautiful Bill Act, signed last summer. The topline number is large. RAND estimates the law will reduce state Medicaid spending by about $665 billion between 2025 and 2034. Federal savings reach about $714 billion.

RAND projects there will be 7.6 million fewer Medicaid enrollees nationwide by 2034. But the distribution of those cuts is far from uniform. States that rely heavily on provider taxes and state directed payments to finance Medicaid are expected to take the largest hits. Arizona, Iowa, and Nevada face projected reductions exceeding 15% of their Medicaid budgets. California and New York face the largest absolute reductions, at roughly $112 billion and $63 billion respectively.

Florida, which relies less on those financing tools, sees minimal impact in RAND’s modeling. Some expansion states that also avoided heavy reliance on those mechanisms, such as North Dakota and Nebraska, see smaller net effects because a rural health provision offsets some losses.

The political story around this law often frames the fight as red states versus blue states. RAND’s analysis suggests a different dividing line.

For manufacturers, the implication is straightforward: prepare for a growing number of uninsured patients, on top of those already losing Exchange coverage.

Go Ahead and Work It. Speaking of Medicaid changes…States are beginning to estimate what it will cost to implement Medicaid work requirements under the One Big Beautiful Bill Act. And, as you might imagine, the numbers add up quickly.

An Associated Press analysis of state projections suggests implementation will exceed $1 billion before the policy generates any federal savings. The law requires most adults ages 19 through 64 in the Medicaid expansion population to complete 80 hours per month of work, education, or community service. States must implement the requirement by January 1, 2027.

Congress provided $200 million in federal funding to help states build the necessary systems. State projections suggest the gap between federal funding and actual costs will be significant.

· Maryland estimates about $32 million.

· Kentucky estimates $46 million.

· Colorado projects $51 million.

· Arizona estimates $65 million and expects to hire about 150 additional staff.

Medicaid eligibility systems in many states are decades old. They were not designed to verify monthly work activity, track exemptions, or manage compliance periods. Arkansas offers a recent example of how tricky all of this can be. In the first seven months of implementation of their changes, about 18,000 people lost coverage before a federal court halted the policy. Evidence later suggested many of those individuals remained eligible but struggled with the reporting process. Another thing for patient support programs to prepare for. Add it to the list.

Reimbursement Fundamentals: A Look Under the Hood at Hospital Drug Prices

On Thursday, 3 Axis Advisors and Patient Rights Advocate released what is probably the most comprehensive look at hospital drug pricing under the federal transparency rules to date. They pulled chargemaster files from more than 1,300 hospitals, focused on high-expenditure drugs used in cancer and MS treatment, and ran the numbers. Woof.

Here’s the short version: posting a file and providing useful information are not the same thing. 93% of downloaded files met CMS formatting requirements. Only 62% contained usable pricing for the drugs the researchers were looking for.

The pricing data that does exist is jarring. For six drugs -- Keytruda, Darzalex, Faspro, Opdivo, Ocrevus, and Tysabri -- the researchers looked at what hospitals are charging commercial insurers relative to Medicare’s Average Sales Price (ASP) + 6% benchmark. That benchmark is a reasonable stand-in for what it costs a hospital to acquire the drug. The results: negotiated commercial rates averaged somewhere between 136% and 209% of Medicare reimbursement depending on the drug, with third-quartile rates reaching 363% to 422% of Medicare. For Ocrevus, the average cash price was 1,300% of Medicare. The gross charge, that is the number that is the basis for patient billing for the uninsured, was as high as 2,271% of Medicare for Tysabri. Read that again. 2,271%.

That is before you factor in 340B. Over half of outpatient drug sales run through hospitals participating in the 340B program, where MedPAC says acquisition costs average about 22.5% below ASP. If the benchmark used to calculate those eye-popping markups already overestimates what 340B hospitals actually pay, the real margins are higher. The report flags this explicitly: the analysis likely underestimates hospital markups.

The within-hospital variation is what I can’t get over. For a given drug at a given hospital, negotiated rates can differ by a factor of ten or more depending on which payer contract you’re looking at. The average max-to-min ratio of negotiated prices across the dataset was 2,347x. The median was about 79x. When one insurer pays $1 and another pays $2,347 for the same drug at the same hospital on the same day, there is no real price. There is a number that appears on a document, and it means whatever the contract says it means that day.

For uninsured patients, the numbers are ugly. About one in four times, cash prices offer no discount at all off the inflated gross charge. Half the time, the cash discount is 30% or less. Commercial insurers, by contrast, average around 40% off gross charges, meaning an uninsured patient walking in off the street often gets a worse deal than someone with coverage. But the data cuts both ways. In some cases, the uninsured cash price actually beats the insurer-negotiated rate entirely, the opposite of what most people would expect insurance to be doing.

The margin sitting between acquisition cost and commercial reimbursement is real, large, and almost entirely invisible in a policy debate that has spent a decade focused on manufacturer list prices.

The rebate system compounds this. High WAC means high rebates flowing back to PBMs and payers, calculated off list prices, giving PBMs and plans a structural incentive to keep list prices elevated even as they negotiate them down on the back end. The hospital markup story and the manufacturer rebate story aren’t competing explanations. They’re the same system extracting margin from different pressure points, with patients and employers paying for all of it.

Affordability has more address points than the public debate acknowledges, and hospital margin on drugs has been hiding in plain sight behind data nobody could previously read.

That’s what makes this report worth paying attention to. The tool 3 Axis built at hospitaldrugprices.org is a genuine contribution, but also a demonstration of how much technical work it takes to make publicly mandated disclosures usable. You cannot build a functioning market on prices only experts can interpret.

Next week I’m joining Cencora for a webinar (sign up), followed by presenting at Access USA in Philadelphia and then, off to Vegas in April, for Asembia.

If you’ll be in Philly or Vegas, I’d welcome a conversation about what’s truly consequential right now and what isn’t. Coffee or Paper Planes (IYKYK) optional.

Quieter week around here for news so let’s keep this quick…

I’d Prefer Not. On Wednesday, Drug Channels published new analysis using enrollment data to map what Part D pharmacy networks actually look like heading into 2026.

Eighty-three percent of seniors are still in standalone Part D plans with preferred pharmacy networks, basically flat from 2025 but well down from the 2023 peak. Albertsons and Publix show up as preferred across every major plan. Walgreens is holding. Walmart, which invented the preferred-network model in Part D, is now in the middle of the pack. And independents, through their pharmacy services administrative organizations (PSAOs), are largely walking away from preferred status because, well, economics.

Now layer in what Congress just passed. The Consolidated Appropriations Act of 2026, signed February 3rd, requires that any pharmacy willing to meet plan terms must be allowed into Part D networks. CMS must define what “reasonable and relevant” contract terms mean, and pharmacies get a formal appeals process if they think they’re being excluded unfairly. That’s an (eventual) constraint on how aggressively plans can engineer preferred tier access going forward.

For manufacturers, this is a fill behavior story. Low Income Subsidy (LIS) enrollment is growing, and LIS beneficiaries can use any network pharmacy without the preferred cost differential, which means preferred status is already mattering less for a bigger slice of your patients. Add any-willing-pharmacy rules on top, and the whole architecture of preferred-network influence is under pressure. As we look ahead, map where scripts are actually landing now, and plan accordingly

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Why Would Anyone Be Anxious? The proportion of American adults taking anxiety medication jumped from 11.7% in 2019 to 14.3% in 2024, that’s 8 million more people, now totaling 38 million, with sharp increases among young adults, college graduates, and LGBTQ+ adults.

Short and Sweet. The National Pharmaceutical Council has some great fact sheets out including one on the Inflation Reduction Act and orphan drug designations.

The Fundamentals – Medicare Advantage, Market Economics

The Medicare Advantage market didn’t collapse in 2026, but it sure as heck got reorganized. Total enrollment still grew by about 1.1 million people to roughly 35 million beneficiaries. The story is what happened to get there.

One in ten MA enrollees got kicked off their plan heading into 2026 because their insurer exited the market. That’s about 2.9 million people who had to scramble during open enrollment. The forced disenrollment rate hit 10% this year, up from 6.9% in 2025 and a tenfold jump from the historical average of about 1% between 2018 and 2024.

This is what market correction looks like when it happens fast. After nearly two decades of aggressive growth, MA plans hit the brakes. MA plans work by taking capitated payments based on expected risk and then trying to manage care to come in under that number. When medical costs run hotter than expected and payment updates don’t keep pace, margins compress. Plans respond by exiting unprofitable counties, cutting benefits, raising cost sharing, or all three.

In late January, CMS proposed a net 0.09% payment increase for 2027. That headline number isn’t the same as the effective growth rate, which came in at 4.97% and that’s the number that actually drives benchmark trends underlying plan bids. A flat headline rate on top of a medical cost trend that isn’t cooperating means plans are essentially being asked to absorb the gap. Insurers argue the overall package still understates real utilization pressure, especially post-pandemic.

The industry response has been loud. Insurers warn of higher out-of-pocket maximums, benefit cuts, and further market exits. The timing isn’t subtle either: plans are setting their 2027 benefit packages right as the next open enrollment season approaches, in a political year where MA disruption becomes campaign material. CMS counters that the market remains stable, premiums are down on average, and nearly all beneficiaries still have access to at least one plan.

Both things can be true. Enrollment grew, but growth slowed to the 3% range versus the historic 7% to 10% clip. Premiums fell on average, but plenty of plans trimmed supplemental benefits or shifted cost sharing in ways that are very real to beneficiaries.

And then there’s this … special needs plans added nearly 900,000 enrollees and now represent about 23% of total MA enrollment, up from 21% a year ago. SNPs can target dual eligibles and people with chronic conditions, which supports tighter care management, higher risk scores, and more predictable utilization. When general enrollment plans are shedding members, SNPs are growing. That’s where plans are signaling they can still make the math work.

The forced disenrollment patterns aren’t random either. Beneficiaries in PPOs, non-SNP plans, plans from smaller carriers, and lower-rated plans bore the brunt of exits. Rural counties got hit about twice as hard. Those are signals about which business models and geographies can’t sustain current payment levels.

When MA plans can’t make the math work, they either exit or shift costs. Beneficiaries see higher cost sharing. Providers face narrower networks. And manufacturers deal with tighter management and more restrictive access policies. The 2027 payment update won’t be finalized until April, which gives plans time to push for revisions.

Even if CMS tweaks the final rate or phases in risk model changes, the underlying tension is still here: MA saturated faster than expected, medical costs are climbing, and policymakers want to slow spending growth. Double-digit growth masked the sustainability question for years. Now it’s front and center, and 2.9 million beneficiaries just felt the pain of it.

We have some new folks around these parts so quick intro. I’m Jennifer Snow. I’ve spent 25 years inside the U.S. pharmaceutical policy world, not watching it from the outside, but sitting in the meetings, reading the rules, and translating what they actually mean for the people whose drugs are on the line.

I’m not a lobbyist. I’m not going to give you a neutral take on something that isn’t neutral.

IRA negotiations, 340B fights, PBM reform. I take that dense, politically charged stuff and tell you what it means for coverage, access, and your commercial strategy. Not someday. Now.

For most clients, that starts with a monthly Policy Intelligence Briefing: a dedicated session where I translate what’s happening in the policy landscape into what your organization actually needs to do about it. 45 minutes, no shiny objects. Some want that in a shared format; others need it fully customized to their portfolio. I also get brought it as a deeper strategic partner or a one-time white paper or board briefing.

AMP is WAC is my way of cutting through the noise. You’ve got better things to do.

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QALY-fied to Decide? Late last week, an article in AJMC makes an argument that sounds simple but has real policy weight right now: when the U.S. uses foreign health technology assessment (HTA) frameworks to set drug prices, it’s not just borrowing a methodology. It’s importing a set of values that don’t match what American patients actually say they want.

The piece is authored by researchers affiliated with the National Pharmaceutical Council, so yes, there’s an industry viewpoint here. But the argument is worth taking seriously on its merits. Foreign HTA bodies, the UK’s NICE, France’s HAS, Canada’s CADTH, are funded by governments with fixed health budgets. Their job is to allocate within a cap. That structurally forces them to measure value in narrow terms: average clinical benefit, cost per quality-adjusted life-year, net cost to the national system. The QALY, in fact, is a metric that Congress has already prohibited Medicare from using in a way that discriminates against elderly or disabled patients.

When you ask American patients, they point to a much wider set of priorities: treatment autonomy, caregiver burden, the “value of hope” in severe disease, the option value of staying alive long enough to access the next therapy. The research backs this up. Across cancer, rare disease, and chronic conditions, patients consistently rank these priorities well above what HTA bodies typically capture.

Most Favored Nation (MFN) pricing models like GLOBE, GUARD, and GENEROUS, are explicitly designed to tie U.S. prices to what foreign governments pay. The price isn’t the only thing being imported, the value framework (and its priorities) comes with it.

If I had a Billion Dollars…We’ve known for a while that 340B creates winners and losers. Employers lose rebates when drugs are dispensed through 340B channels. State Medicaid programs often can’t capture their share of the discount. Now there’s a number for one more victim category: state employee health plans.

A new IQVIA analysis puts the figure at $1 billion in additional spending attributable to 340B overcharges across state employee health plans. That’s the aggregate, but the more useful part of the analysis is the state-by-state breakdown, which is exactly the kind of data that makes a state budget director anxious. When you can tell a state comptroller what 340B is costing their plan specifically, you’re having a different conversation than when you’re talking in national averages.

Covered entities, hospitals and health systems eligible for 340B discounts, acquire drugs at sharply reduced prices. When those drugs are dispensed to patients covered by state employee plans, the entities often bill at rates tied to list price or commercial benchmarks. The plan pays close to full price. The covered entity keeps the spread. The state employee health plan subsidizes the covered entity’s margin.

The question policymakers haven’t answered is what to do about it, because covered entities argue, often accurately, that they use those margins to cross-subsidize uncompensated care. The data doesn’t resolve that tension; it just makes the cost of ignoring a lot harder.

Show Me the Money. On Sunday, Senate Health, Education, Labor, and Pensions (HELP) Committee Chair Bill Cassidy (R-LA) sent a letter to Apexus, the Health Resources and Services Administration’s (HRSA) contractor running the 340B Prime Vendor Program, asking questions that go straight to the program’s operations: who gets paid, how, and with what guardrails.

The letter’s focus is incentive alignment and transparency. Cassidy asks Apexus to produce organizational charts, describe internal “firewalls,” and explain how data and decision-making are segregated from Vizient (Apexus’s parent). The document drills into conflicts-of-interest controls required under the Prime Vendor Agreement, including whether any 340B purchasing data is shared in ways that could advantage affiliated entities. It also requests information on administrative fees charged to covered entities, manufacturers, or distributors and asks for documentation on “share back” amounts moving through Vizient’s ownership structure.

This is oversight of a part of 340B that typically operates in the background: the entity that sits at the center of contracts, distribution solutions, and operational guidance. Cassidy’s framing is blunt: 340B has grown dramatically, and the public record on how core contractors profit, firewall data, and influence program behavior is thin. The letter itself won’t rewrite statute. But it does create some public accountability which has been missing.

Halfsies. On Tuesday, Axios reported that telehealth company eMed is partnering with CVS Caremark to offer employers a middle-ground option. Workers at participating employers can buy GLP-1s through eMed’s platform at what the company calls the most cost-effective prices currently available, outside of the employer’s main health plan. They get clinical support, side-effect management, weekly check-ins, and biannual blood testing. The employer doesn’t carry the full coverage cost. The employee gets access and wraparound services.

Axios notes the baseline constraint: fewer than 20% of employers covered GLP-1s for weight loss last year, citing the Kaiser Family Foundation (KFF), and some who tried it later backed away under cost pressure.

The policy-interesting question is the channel economics. GLP-1 volume is the kind of spend that shapes pharmacy benefit manager (PBM) leverage, rebate strategies, and formulary positioning. A carve-out approach pulls volume away from the traditional benefit, weakening the rebate-driven bargaining unit that PBMs use to negotiate. CVS Caremark’s involvement reads like a hedge: stay attached to the transaction even if the transaction migrates. If these “controlled leakage” models scale, the benefit channel doesn’t just manage GLP-1 costs, it slowly loses ownership of them.

Regret, I’ve had a Few. On Tuesday, Senate HELP Committee Chair Bill Cassidy released a report laying out more than a dozen legislative and regulatory recommendations for modernizing the Food and Drug Administration. Nearly 20 pages. Bipartisan framing. Almost no chance of passing intact in this Congress.

The headline theme is predictability: reduce the “black box” feel of review, speed access, and tighten the signal to innovators about what evidence will meet the bar. The document explicitly describes inconsistent processes as a tax, especially on small and mid-sized companies that can’t afford regulatory ambiguity.

Substantively, the report pulls in several pharma-relevant levers; biosimilars and generics get a full section, including FDA’s October 2025 biosimilar guidance and the continuing debate over whether “interchangeability” should remain a separate designation.

Politically, the package is less a near-term legislative vehicle than a menu for future attachments. Comprehensive FDA reform rarely moves as one bill; pieces get stapled onto user-fee reauthorizations or narrower must-pass items. The report’s real function is agenda-setting: it formalizes priorities, gives staff language to work with, and signals that FDA process, not just drug pricing, is back on the HELP Committee’s menu.

Good Cop, Bad Cop? PhRMA’s annual forum this week produced a split screen that tells you a lot about where the industry’s real anxieties are right now. CMS Administrator Mehmet Oz showed up warm, collegial, and open to closed-door meetings. FDA Commissioner Marty Makary showed up.

Makary got pressed on several fronts. His agency hasn’t reviewed Moderna’s new flu shot application, with his deputy Vinay Prasad apparently declining to engage with it. He defended narrower childhood vaccine schedules. And he reiterated his push to move drugs over-the-counter unless they’re unsafe or addictive, pointing specifically to nausea medications and vaginal estrogen as candidates currently in regulatory process.

The OTC push has real commercial stakes for manufacturers, not just ideological ones. When a drug goes OTC, the manufacturer loses the prescription channel, and with it, the ability to price to insurance, collect rebates, and maintain formulary positioning. Plus patients can lose insurance access and be forced to pay cash, which may be more than their current out of pocket. PhRMA filed formal comments opposing OTC transitions without manufacturer consultation.

Oz, by contrast, is playing a longer game with pharma. He signals accessibility and partnership. Is it true? Maybe, but he is playing nice. Makary is signaling disruption in ways that heighten uncertainty. That’s not great for manufacturers or, quite frankly, patients.

If it Was Easy. Illinois advocates and AARP held a press conference this week urging passage of HB 1443 or SB 66, which would establish a Prescription Drug Affordability Board (PDAB) in the state. The pitch centers heavily on Colorado’s experience, specifically, the $32 million in savings the Colorado PDAB says they will generate by setting an upper payment limit for a single drug, Enbrel, based on the IRA’s Maximum Fair Price.

It’s worth pausing on what that evidence actually shows. Enbrel is a biologic facing heavy biosimilar competition, well past patent life, already losing market share on price. It tells you almost nothing about what a PDAB with broader authority would do to a novel therapy still in its commercial launch window, where pricing flexibility is what enables manufacturers to recoup the R&D investment and fund the next one.

Manufacturers facing price caps in commercial channels have options: they can restrict distribution, delay launch, or deprioritize markets where the return on investment doesn’t pencil out. That’s not a hypothetical, it’s what happens in countries with government price controls, and it’s why American patients currently get access to new drugs faster than patients in most of the countries whose pricing models MFN proposals want to import.

Federal Medicaid cuts under discussion in Congress are creating real urgency for states to find fiscal headroom on drug costs. That political pressure is real. But the Colorado PDAB’s potential $32 million on a single off-patent biologic is a thin foundation for extending price-setting authority into the commercial market of the country’s fifth-largest state.

Reimbursement Fundamentals: Call it what you’d like, it’s still a UPL

This week a paper I wrote with the Rare Access Action Project is out, and I want to walk you through it, because the issue it addresses is coming up a lot right now.

Truth -- States are under real pressure to act on prescription drug costs. And as they look around for tools, Medicare’s Maximum Fair Price (MFP) keeps surfacing as an attractive model for prescription drug affordability boards (PDABs). It’s visible. It’s branded as “negotiation.” It has the political credibility of the Inflation Reduction Act behind it. It makes sense that state legislators and their staffs are asking: why can’t we just do that here?

My paper argues that they can’t.

Medicare’s MFP is not a pricing benchmark you can lift and drop into a different system. It works because of where it sits. CMS negotiates as the single largest purchaser of prescription drugs in the country. Manufacturers aren’t just choosing whether to accept a lower price in one corner of the market. They’re deciding whether to participate in Medicare at all. If they don’t play ball, all their drugs lose Medicare coverage and they face severe financial penalties. That’s real leverage. States don’t have anything like it.

ERISA alone removes huge chunks of the commercial market from state authority. Even for fully insured plans, state reach is fragmented across payers, benefit designs, and employer arrangements. A manufacturer facing a state-imposed pricing limit doesn’t face the same binary choice they face at the federal level. They can decline and still sell to most of their patients in the state.

There’s also a more structural problem that doesn’t get enough attention. Medicare’s MFP operates as an acquisition price. It changes what pharmacies and wholesalers actually pay for the drug. That’s what CMS negotiates. PDABs, by contrast, can only set upper payment limits (UPLs), which cap what plans may reimburse. They cannot require manufacturers to sell at a given price to distributors. When a state sets an MFP-benchmarked UPL, the supply chain still has to acquire the drug at whatever price it’s selling for. If reimbursement doesn’t reliably cover acquisition costs and overhead, providers start making decisions about whether to stock, schedule, or offer certain therapies at all. Patients feel that as delays, referrals, and gaps in local access.

None of this means states are stuck. States can target patient out-of-pocket costs directly, using benefit design tools like cost-sharing caps and smoothing mechanisms that address affordability where people feel it, without imposing upstream price controls that create access risk downstream. They can push for PBM transparency and pass-through requirements that make sure negotiated savings flow to patients instead of sitting elsewhere in the system. For high-cost, low-volume therapies, risk pooling and reinsurance treat budget volatility as a financing problem rather than a reimbursement-cap problem. These approaches are genuinely different from what state PDABs have been pursuing, but they’re more likely to work without the access consequences that come with reimbursement ceilings that don’t match acquisition economics.

The thing I keep coming back to is this: MFP’s appeal to state policymakers is understandable precisely because it looks like something already proven. But it’s proven inside a closed federal system with national scope, statutory enforcement, and the ability to redesign coverage and payment rules around the negotiated price. Outside that system, it’s just a number. And in state markets, applying that number as a reimbursement ceiling produces the same problems any UPL produces: financial pressure moves downstream, providers absorb the gap or don’t, and patients end up in a system that’s managing affordability by shifting risk and friction onto them rather than resolving cost at the source.

That’s not a drug pricing solution. It’s a different kind of access problem.

I chuckled during the E&C hearing when members were questioning the panelists about the pharmaceutical deals with the Administration. As if these are the people they should be asking. Make a left, make right, go down about a mile – there’s a big white house. Maybe they can help you there.

Parallels Between 340B and Zombies. On February 5, the Department of Health and Human Services (HHS) told a federal court it would scrap the 340B Rebate Model Pilot. On February 6, it filed a prerule notice signaling a new effort around “340B Drug Pricing Program Manufacturer Rebate Models.” The rebate pilot may be dead but alive.

The original pilot would have shifted 340B from upfront point-of-sale discounts to retrospective rebates, moving significant cash-flow risk onto covered entities. The American Hospital Association, the Maine Hospital Association, and several safety-net systems sued. A federal judge in Maine blocked the model days before its January 1 start date, and the First Circuit upheld that ruling. HHS may have walked away from the pilot but not the idea.

The need is still there, and HHS has never built a system or rules that address the concern. Manufacturers want claims-level data and duplicate-discount guardrails. Hospitals argue that rebate mechanics destabilize safety-net liquidity and create operational chaos. The court said the rollout was rushed and legally flawed.

Hospitals won this round. But the prerule notice makes clear HHS isn’t done—they’re planning “models” (plural) through full notice-and-comment rulemaking. The rebate pilot may be dead, but the idea isn’t.it

In other 340B news, on Monday, the Fifth Circuit rejected arguments from AbbVie and AstraZeneca that federal law preempts the state’s 340B contract pharmacy protections.

The statute prohibits manufacturers from denying or restricting delivery of 340B-discounted drugs to contract pharmacies operating under state law. Manufacturers have argued that expanded contract pharmacy arrangements increase program costs and fraud risk. States have increasingly treated contract pharmacy access as a matter of state pharmacy regulation. The Fifth Circuit sided with the state.

This matters beyond Louisiana because contract pharmacy state laws are spreading. If they survive judicial scrutiny, manufacturers lose the ability to treat 340B as purely federal turf.

Two Ways Off the Negotiation List. On Wednesday, AbbVie sued HHS and the Centers for Medicare & Medicaid Services (CMS), arguing Botox should never have been selected for the Medicare Drug Price Negotiation Program list for prices that take effect in 2028. AbbVie says Botox contains human serum albumin sourced from blood plasma and therefore falls under the Inflation Reduction Act’s exclusion for “plasma-derived products.”

CMS also selected Genentech’s Xolair but a lower-cost biosimilar is expected to launch before the negotiation period is over. Under the law, a drug is disqualified if a biosimilar is both licensed and marketed. If a biosimilar enters after selection, CMS has to decide whether it is a real competitor. If yes, CMS has to pull the reference product from negotiation.

Manufacturers are watching both cases closely. Can you litigate your way off the list by challenging CMS’s interpretation of exclusions? Can you count on a biosimilar to trigger disqualification? These eligibility fights determine who negotiates and who doesn’t, which reshapes launch timing, patent strategy, and how manufacturers approach the selection criteria in future rounds.

Cheaper Premiums, Costlier Care. On Monday, CMS released the proposed 2027 Notice of Benefit and Payment Parameters. And politics clearly played a role; the rule is trying to make marketplace plans look cheaper month to month, even if that shifts more cost to patients at the point of care. That is if they bother to get it.

CMS proposes to repeal standardized plan options and the cap on no standard plan designs, which were intended to make comparison shopping easier. CMS also proposes expanding catastrophic coverage, including multi-year catastrophic plan terms up to ten years and broader hardship pathways for people over 30. It proposes allowing non-network plans to qualify as certified marketplace plans if they can demonstrate “sufficient provider choice.”

It’s important to note that CMS does not propose a federal requirement that copay assistance count toward out-of-pocket limits, leaving accumulators to continue to fester.

If premiums are the benchmark of success, this works. But if access matters, 2027 marketplace design is a story of underinsurance by design.

A Room of Their Own. Love the story in Stat News about a new trade-group – the Midsize Biotech Alliance of America. Looking forward to hearing more.

Everything You Wanted To Know. Nice explainer on pharmacy benefit managers (PBMs) from Paragon Health Institute.

Reimbursement Fundamentals: Celebrating a Patient Win

On Tuesday, KFF published new data showing the Inflation Reduction Act’s (IRA) drug negotiation program is doing something nobody’s talking about: it’s forcing Medicare Part D plans to cover drugs they used to skip.

Thus far there has been a lot of focus on the negotiated prices themselves. Januvia dropped 79%, Eliquis dropped 56%, and CMS estimates $6 billion in savings if 2026 prices had applied in 2023. But buried in the IRA is a coverage mandate that might matter just as much: when CMS selects a drug for negotiation and the negotiated price kicks in, every Part D plan has to cover that drug. All dosages, all forms, no exceptions.

Here’s what that delivered in year one. Fiasp, one of the first 10 drugs negotiated, had coverage for 24% of Part D enrollees in 2025. In 2026, when the negotiated price took effect, coverage jumped to 100%. NovoLog went from 32% to universal. Two dosages of Imbruvica went from about 50% to everyone covered. Nine of the first 10 selected drugs saw coverage improvements for at least some dosages or forms.

This matters because formulary coverage has always been the one of the gatekeeping mechanisms in Part D. Plans can technically “cover” a therapeutic class while excluding specific drugs, dosages, or formulations. They do this all the time to extract rebates from manufacturers and steer patients toward preferred products.

The leverage shift here is significant. Right now, manufacturers negotiate rebates with plans partly to avoid getting excluded from formularies or pushed to non-preferred tiers. Plans can credibly threaten to drop the drug. That threat disappears for selected drugs. Once selected and the negotiated price kicks in, plans can’t exclude the drug or tier it unfavorably.

Manufacturers lose the ability to set their price but gain access to every Medicare Part D patient. That matters when formulary exclusions have become a real threat in Part D.

Look at what’s coming in 2027. Wegovy is the fascinating case study. Right now, less than 1% of Part D enrollees have coverage for it because Medicare Part D can only cover Wegovy for cardiovascular disease risk reduction, not for obesity. When the 2027 negotiated price takes effect, every plan has to cover Wegovy for Medicare-approved uses. Six other drugs in round two also see gaps close -- Austedo XR goes from 51% coverage to 100%, Otezla from 68%, Breo Ellipta from 74%.

The Wegovy situation points to something important about how the coverage mandate interacts with other Medicare rules. The mandate requires plans to cover selected drugs for Medicare-approved uses. It doesn’t override statutory exclusions like the weight loss drug ban. So Wegovy gets mandatory coverage for cardiovascular disease risk reduction, but the obesity indication stays excluded unless the BALANCE demo and/or legislation move forward.

For patients, the coverage mandate is probably the most tangible near-term benefit. Negotiated prices matter, but they’re theoretical if your plan doesn’t cover the drug or makes you jump through prior authorization to get it. The mandate ensures both price and access happen together.

The coverage mandate also changes the math for plans. They lose the ability to use formulary exclusions as leverage against manufacturers of selected drugs. That’s a revenue hit because rebates negotiated under the threat of exclusion tend to be larger. Whether that trade works out favorably depends on how much rebate revenue they’re giving up versus how much they save from lower negotiated prices.

What KFF’s data makes clear is that the IRA’s negotiation program is doing two things at once: lowering prices and expanding access. The price reductions get all the attention, but the coverage mandate is delivering real access improvements for drugs that weren’t universally covered before.

No, I do not think that a groundhog is a meteorologist. But, one year I am determined to make it to see Punxsutawney Phil. I expect it to be silly and cold and over quickly. I will likely have to go solo because my family thinks getting a bus from a Wal-mart parking lot in the middle of the night to see a rodent predict anything is dumb. But the heart wants what the heart wants.

Prior Auth is a PITA. On Monday, KFF published polling showing prior authorization is the single biggest burden people cite in getting health care beyond cost. One-third of insured adults (34%) picked prior authorization over scheduling, billing confusion, or finding in-network providers. Among insured adults with chronic conditions requiring ongoing treatment, it was even higher (39%).

Prior authorization is the operational expression of payer skepticism. The system uses it to control utilization and manage spend. That creates predictable friction for neurology, rare disease, and any therapy where timing matters or clinical nuance does not fit into a template.

For manufacturers, this isn’t a communications problem -- it’s an incentive problem. Plans use prior authorization because it works as a gate, and because alternatives are increasingly easy to present, including in the provider office as the script is being written. That makes policy momentum around “fixing prior auth” both real and complicated: reforms tend to target speed, standardization, and transparency, not the underlying rationing logic.

The business implication is that evidence generation, coverage criteria engagement, and patient support infrastructure become inseparable. Patient groups also get a cleaner hook here, because the public is telling policymakers the burden is visible and personal.

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Well Yeah. On Saturday, the New England Journal of Medicine published a Perspective on what happens when health insurance becomes fully corporatized and financially engineered. The policy debate has been trapped in a false binary: insurers as necessary administrators versus insurers as villains. This piece argues the more useful frame is incentives—specifically, what happens when corporate structure rewards margin management and financial performance above coverage.

The mechanism is straightforward: administrative complexity becomes a profit center. Prior authorization doesn’t just control utilization; it generates delay that shows up as medical cost savings. Specialty pharmacy steering captures dispensing margins. Accumulator programs protect plan revenue while shifting costs to patients. None of this requires denying coverage outright. It just makes access slow, expensive, or exhausting enough that utilization drops.

If policymakers decide corporatization is the problem, they could tackle it through stricter medical loss ratios or scrutiny of vertically integrated business practices.

For manufacturers launching complex therapies, this pushes toward earlier and more explicit evidence strategy, not just for efficacy, but for coverage criteria and outcomes guarantees. The default will increasingly be utilization controls that protect enterprise economics. Patient groups also get a cleaner story: access barriers aren’t just paperwork, they’re margin protection.

More than the Sum of Its Parts. On Monday, FAIR Health published a white paper using commercial claims to map prevalence and cost patterns across 44 chronic conditions in 2024. The top-line finding is straightforward: the majority of commercially insured patients had at least one chronic condition (57.5%), and multi-morbidity is common.

But what caught my eye -- average allowed amounts rose with each additional condition, from $1,590 for patients with none to $21,730 for patients with ten or more. The report also puts specificity on what “common” looks like, with hyperlipidemia the most prevalent (21.2%).

For pharma teams, this is why utilization management will not ease up in commercial. When employers and plans look at claims, they see compounding chronic burden, not individual illnesses. That makes “cost offsets” harder to prove inside one drug class.

Jump to Conclusions (Mat.) On Tuesday, The New England Journal of Medicine ran a Perspective making the case that Medicare drug-price negotiation is already a win. The argument is basically: big discounts, smart targeting, no chaos.

Hahahahahaha.

First, the early “success” is partly a function of which drugs were picked. These are older, high-spend products with long utilization histories and fewer surprises left in the market.

Second, the piece talks about savings like they drop straight into patients’ laps. But this is Medicare Part D. Everything runs through plans. The first cycle not producing visible access drama doesn’t mean the machinery is neutral. We are 30 days in. Talk to pharmacies on how they are doing. And where are all the stories on how much patients are saving? Right.

The real story here is not the discount number. It’s that negotiation is starting to look normal. Once something feels normal, it potentially expands. It gets tweaked. The guardrails get tested. The exception list gets shorter. Policymakers stop asking whether the program should exist and start asking how much more it can do. And I’m not sure we’re there yet.

Charting Hearts, Adding Emojis. Last month, JAMA Network Open published a research letter on emoji use in the electronic health records.. The dataset was enormous: 218.1 million notes from 1.6 million patients at Michigan Medicine (2020 through September 2025). Emoji use was rare, but it rose sharply in 2025, and the dominant setting was clinician-to-patient communication, especially portal messages and telephone encounters.

Here’s the problem -- interpretation varies by age and context, and the study flags the obvious risk: miscommunication in clinical documentation and patient-directed instructions. And then there’s the quiet operational detail that is the tell: their Epic portal restricted patients from using emojis, so the emoji “voice” was mostly clinicians talking to patients, not a two-way cultural artifact.

Beyond just being a little huh, the story is a reminder that the patient experience is increasingly mediated through digital micro-interactions.

Whole in Three: PBM Updates

On Tuesday, Congress tucked pharmacy benefit manager (PBM) reforms into the must-pass appropriations package that was signed into law. (It only took a decade.) In the same week, the Federal Trade Commission (FTC) locked in a settlement with Express Scripts, and the Department of Labor proposed an Employee Retirement Income Security Act (ERISA) rule aimed at PBM compensation disclosure for employer plans. Three different levers, aimed at the same basic complaint: PBM economics are causing harm.

Quick reminder for those of you that don’t deal with this on the regular: PBMs negotiate rebates and discounts with manufacturers, decide which drugs get preferred formulary placement for health plans, and set pharmacy reimbursement. Over time, those functions became tightly bundled. Critics argue that when PBM revenue scales with drug price or rebate size, it can reward high list prices and rebate-heavy contracting, even if net prices fall. And because rebate contracts, affiliate relationships, and spread pricing are difficult for plan sponsors to audit, it has been hard to answer a basic question: who is getting paid, by whom, and for what value.

The new law is meaningful but limited. Mechanically, Congress does a few specific things in Medicare Part D. It bars PBMs and their affiliates from earning compensation tied to a drug’s price, pushing the model toward flat, bona fide service fees. It requires 100% pass-through of manufacturer rebates and related price concessions to the plan sponsor, with new enforcement authority for the Centers for Medicare and Medicaid Services (CMS). And it directs CMS to define and police “reasonable and relevant” pharmacy contract terms, including reimbursement and dispensing fees, while making PBMs financially accountable when violations trace back to delegated functions.

This narrows how much of the system can run on rebate opacity, but it does not make rebates disappear overnight, and it does not guarantee patients see savings at the pharmacy counter. Most of these standards do not fully apply until plan years beginning in 2028, which leaves plenty of room for the market to adapt and for old behaviors to resurface in cleaner packaging. Which most of you know, has already been happening.

The FTC settlement with Express Scripts is directionally important but narrow. It targets a specific set of behaviors where the agency believes the harm was clearest: preferring higher-cost drugs over identical lower-cost options, calculating patient cost sharing off list price rather than post-discount price, and reimbursing pharmacies in ways that obscure acquisition cost and fees. Right instinct. The open question is whether this scales across the market or a one-off compliance exercise.

And then there is regulation. The Department of Labor’s proposed ERISA rule pulls PBM compensation into the employer’s fiduciary line of sight. Framing PBM revenue as a reasonableness question under ERISA raises the stakes for plan sponsors and consultants. But disclosure alone does not resolve the harder issues. Timing, cash flow, and confidentiality still matter. So do benefit design choices that determine whether any of these changes show up at the point of sale or stay buried in back-end economics.

Read together, this is not disruption. It is constraint. Congress is setting boundaries around how PBMs can get paid in Medicare. The FTC is testing real-time behavioral enforcement. ERISA rules are nudging employers to look harder at what they are buying. PBMs are not going away. Formularies and utilization management are not going away. The incremental win here is that opacity is no longer the default. The next set of fights will be about whether savings move forward to patients, whether pharmacies are forced to finance the system through cash-flow risk, and whether employers actually change benefit design rather than renewing the same contracts with better disclosures.