This week I’ve repeatedly spoken to groups about the President’s Executive Order (EO) on Most Favored Nation (MFN) pricing and I feel a little vulnerable. I am often “authentic” in my explanations. I recognize that to many people I seem biased on a lot of issues but, in my defense, I find most politics maddening whether it is from a Republican or Democrat. I am a bipartisan eye roller.
Is there anything to see here? I wrote about the Most Favored Nation EO earlier this week and I’m sticking with my initial take.
In my consulting I talk a lot about “shiny objects”, those stories that distract you from focusing on what matters. I counsel my clients on the impact of what matters and acknowledge the distractions so that they can be ignored until they matter. Given the Medicaid cuts in the congressional budgeting process, I kind of wonder if the EO was a diversion. Maybe the appearance of doing something is more important than the action of doing it.
What I do know is that in 30 days we should hear about drug pricing from other countries that should be used here, and we’ll all be following what happens after that. So yes, maybe a shiny object, but one that everyone should be prepared to dance around like a disco ball.
(Sometimes) IPAY Attention. On Monday afternoon, the Centers for Medicare & Medicaid Services (CMS) released a fact sheet and draft guidance on the Initial Price Applicability Year (IPAY) 2028 and Manufacturer Effectuation of the Maximum Fair Price in 2026, 2027, and 2028. These materials came out a few hours after the EO and it didn’t have anything about international pricing in it. My guess is because it had been in the works for months compared to the MFN EO which *might* have been a more recent undertaking.
I tried reading all 231 pages, but it really is dull. The document could use a good editor. There’s talk about more transparency, data to determine bona fide marketing and how to think about combination drugs. If you don’t want to read it, stick to the summary in Health Affairs Forefront.
Doing the Math. This week we saw numbers from the Congressional Budget Office on the cost of continuing the enhanced Affordable Care Act subsidies ($358B) and the human toll of not doing it (4 million uninsured.) The subsidies are set to expire at the end of the year although some Republicans appear to be coming around to the idea of extending them.
The future is CMMI(ghty). This week the Centers for Medicare and Medicaid Innovation (CMMI) released their strategic plan. The three pillars are promoting evidence-based prevention, empowering people to achieve their health goals and driving choice and competition for people. I will pause here and say that the goal of CMMI is to improve outcomes/quality and reduce costs. I love the focus on prevention, but it doesn’t reduce costs in the short term and neither does managing chronic disease. Worthwhile? Absolutely, but CMMI has been judged on short term wins so far. Although maybe that gets balanced out with the focus on getting stakeholders to take on downside risk and engage in more value-based payment.
Knock my Socks Off. U.S. Pharmacopeia has a report out that says that the average duration is 4.2 years and that last year there were almost 100 drug shortages. That being said, at the end of the year, nine of the shortages were less than a year old.
Drugs in shortage tend to cost less than those not in shortage, which makes sense in a lot of cases – low cost translates to lower revenue until it no longer makes sense to produce the product. Not in all situations but certainly a factor.
If you think producing drugs in the U.S. will fix shortage problems, take a look at Figures 11 and 12. Last year the U.S. produced 22% of all oral solid drugs and 66% of those in shortage. On the injectable side, the U.S. produced 45% of all injectables and 58% of those in shortage. There are still reasons to push manufacturing to the U.S., but it won’t solve all our supply problems.
340B Gain, Employer Pain. The National Pharmaceutical Council has a paper out that shows that growth in 340B was associated with $415 in additional premiums for family coverage.
