As I was 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, 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?
- 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.
- 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.
- 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.
