Introduction

The Drug Pricing Clinic is your home for all of AAF’s most relevant work on prescription drug policy, proposals, and programs. Policymakers from across the political spectrum are offering proposals for lowering the costs of prescription drugs, but the market is tremendously complicated — and any policy intervention promises to have numerous effects across the various health care markets and for hundreds of millions of patients, both in the United States and around the world. AAF’s team of experts provide up-to-date analysis of the latest policy proposals and their effect on the U.S. health care system.

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340B Drug Pricing Program

Weekly Checkup

Verdict: Congress Must Act

A district court in South Carolina recently ruled on the Health Resources and Services Administration’s (HRSA) ability to define a qualifying patient for the 340B Drug Pricing Program. Luckily, American Action Forum’s Director of Health Care Policy Laura Hobbs recently published an overview of…

Insight

340B Drug Pricing Program: Litigation Supplants Congressional Intent

Executive Summary   A recent South Carolina district court ruling opens the door for the 340B Drug Pricing Program to become the largest federal prescription drug program, surpassing Medicare Part D.  The court ruled that any patient treated by a covered…

Weekly Checkup

Medicare Final Rule-ah Palooza

Late last week, the Centers for Medicare and Medicaid Services (CMS) dropped three annual final rules: the 2024 Medicare Outpatient Prospective Payment System and Ambulatory Surgical Center Payment System (OPPS/ASC) final rule, the Remedy for the 340B-Acquired Drug Payment Policy…

Insight

CMS’ New Rules on Outpatient Reimbursement

Executive Summary The Centers for Medicare and Medicaid Services (CMS) released its Calendar Year 2024 Medicare Outpatient Prospective Payment System and Ambulatory Surgical Center Payment System final rule, containing a variety of payment and policy updates for Medicare Part B…

Weekly Checkup

The 340B Program Is Increasing Medicare Part B Costs

Last week, the Centers for Medicare & Medicaid Services (CMS) released the rates Medicare beneficiaries will pay in 2024 for Parts A (hospital care) and B (physician services, outpatient care, and certain home health services and durable medical equipment), including…

Weekly Checkup

Better 340B-elieve It

The 340B Drug Pricing Program is always of interest, and this week a new report emerged about the program’s growth in 2022. Adam Fein of Drug Channels Institute has obtained records from the Health Resources and Services Administration (HRSA) on…

Weekly Checkup

An Open Letter to the Senate 340B Working Group

A few weeks ago, a bipartisan 340B Drug Pricing Program working group of six senators released a request for information (RFI) on the program, asking for ways it can be reformed. The deadline for submission is July 28, and while…

Weekly Checkup

340Blues

Last Friday, the Centers for Medicare and Medicaid Services (CMS) announced that it would be repaying $9 billion to hospitals participating in the 340B Program as compensation for reduced payments from 2018–2022, paid for by annual cuts to Medicare Part…

Insight

The 340B Drug Discount Program: Confusion Driving Reform and Litigation

Executive Summary The 340B drug discount program has long suffered from a lack of congressional clarity on the intent of the ever-expanding program. In the absence of such clarity, frequent litigation and state policy actions will continue to disrupt the…

Insight

Does the 340B Drug Pricing Program Encourage High-cost Prescriptions? A Case Study of Preventative HIV Treatments

Executive Summary The 340B Drug Pricing Program (340B Program) may incentivize hospitals and other covered entities to purchase higher-cost drugs rather than lower-cost generic medicines when competition is fierce; this incentive likely applies to the purchase of preexposure prophylaxis (PrEP)…

Research

PRIMER: The 340B Drug Pricing Program – Challenges and Solutions

Executive Summary The 340B Drug Pricing Program has grown dramatically since its inception in 1992, and especially in the years following the passage of the Affordable Care Act. While the program has increased hospital profits, it has arguably failed to…

Insight

PRIMER: The 340B Drug Pricing Program

Executive Summary The 340B Drug Pricing Program (340B) requires prescription drug manufacturers participating in Medicaid to provide outpatient drugs at a reduced cost to covered entities; these entities may then resell the drugs to patients and payers at higher rates,…

Weekly Checkup

340B and the Biden Administration

It’s been a busy week in health care policy, as congressional leaders inch toward a COVID-19 relief package and key lawmakers announced a deal to end surprise medical bills (read my analysis of that agreement here). Less noticed this week,…

Insight

CMS Moves Toward Much-Needed 340B Reforms

In order for a manufacturer’s drugs to be covered by the Medicaid program, the manufacturer must agree to participate in the 340B Drug Pricing Program (340B). Under the 340B program, manufacturers must provide discounts to eligible health care providers for…

Insight

Assessing the Administration’s Proposal for Reducing Insulin and Epinephrine Costs

The Trump Administration recently proposed requiring certain health centers to make insulin and epinephrine available to specific individuals at the heavily discounted price offered under the 340B Drug Pricing Program.

Research

Market Distortions Caused by the 340B Prescription Drug Program

While the 340B Program is rooted in good intentions, it suffers from a lack of much-needed oversight, resulting in several problems.

Weekly Checkup

It’s Back! The International Price Index Rears Its Ugly Head

Back in February, as part of his State of the Union address, President Trump was expected to announce policies aimed at reducing insulin prices and even moving forward with the long-touted International Price Index (IPI) proposal. The president was silent…

Weekly Checkup

“Let 340B” Jumps the Shark

It’s not uncommon in heated public-policy debates for opposing sides to make ridiculous, over-the-top claims about each other’s positions. In health policy, such rhetoric often devolves to accusing the other side of causing people to die. Take, for example, former…

Insight

Reforming 340B

The 340B drug pricing program requires pharmaceutical manufacturers to provide outpatient medications at steeply discounted prices to certain types of hospitals and health clinics. Intended to provide critical cost savings for hospitals and other entities that provide charitable care for patients without health coverage, eligibility for the largest proportion of entities participating in the program is based on a funding formula that relies on the proportion of Medicare and Medicaid inpatients served by a given hospital. As 340B enters its third decade as part of the federal health funding structure, now is a good time to reevaluate and make sure it is working as intended. This short paper argues that a fundamental change in the formula would better reflect the program’s stated priority.

Research

Primer: Understanding the 340B Drug Pricing Program

The 340B program was originally intended to correct an imbalance created by the passage of the Medicaid Drug Rebate statute.  It was meant to play only a small role in the health insurance market. However, as with most interferences in the free-market, the 340B rule has “expanded beyond its bounds”, in the words of outgoing Secretary of HHS Kathleen Sebelius.  As the program has expanded the market inefficiencies it created have been magnified.

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Rebates and Formularies

Weekly Checkup

The Price Is Right

Yesterday, the Senate Health, Education, Labor, and Pensions (HELP) Committee hosted a hearing entitled “Why Does the United States Pay, by Far, the Highest Prices in the World for Prescription Drugs?” The title gives away the hearing’s apparent purpose: to…

Weekly Checkup

A Better Pill: An Outlook for Drug Pricing in 2024​

In 2023, Washington remained hyper-focused on reducing the cost of prescription drugs, as the Biden Administration issued a variety of pharmaceutical reforms, including those mandated by the Inflation Reduction Act, while numerous committees in Congress held hearings on pharmacy benefit managers (PBMs). Yet neither…

Insight

March-In Rights: A Hostile Regulatory Environment

Executive Summary As part of its initiative on march-in rights – the practice of relicensing patents that received federal funding – to make products more affordable to the public, the Biden Administration released an interagency draft framework under the Bayh-Dole…

Weekly Checkup

Delinking Deduction

Pharmacy benefit managers (PBMs) are all the rage – often literally – on Capitol Hill these days, and they’ve been targeted with a variety of legislative proposals in the past several months. On Tuesday, Dr. Casey Mulligan, a PhD economist…

Weekly Checkup

If You Want Something Done, Do It Yourself?

While many in Congress are focused on lowering prescription drug prices for consumers, there is little attention paid to the type of insurance coverage customers actually use, as well as the role insurance plays in determining the price of a…

Weekly Checkup

Prescription Drug Price Caps: Colorado Case Study

Last Friday, Colorado’s prescription drug affordability board (PDAB) met to discuss which prescription medications should be considered for a price cap. Indeed, Colorado and several other states are attempting to determine the cost-effectiveness of prescription drugs through arbitrary – and…

Weekly Checkup

You’re Not on the List: PBM Drug Exclusions

The Senate Finance Committee released bipartisan legislation that would prohibit pharmacy benefit managers (PBMs) from making profits on the price of a drug as connected to discounts, rebates, or other fees. Instead, PBMs would be required to charge plan sponsors…

Weekly Checkup

A Warning From Across the Pond

The implementation of the Inflation Reduction Act (IRA) is rolling steadily along, despite warnings from many (including us at the American Action Forum) about the consequences of the legislation. In that vein, AAF’s Director of Health Care Policy Laura Hobbs…

Weekly Checkup

Whose Benefit?

Pharmacy benefit managers (PBMs) are a hot topic right now, with several hearings and even a few legislative markups in the past few weeks in the House and Senate taking aim at their business practices. To explain what’s going on, my…

Insight

Pharmacy Benefit Managers: Transparency Measures Aren’t a Silver Bullet

Executive Summary In response to rising prescription drug costs the Senate Finance Committee released a bipartisan transparency framework, alongside the Senate Committee on Heath, Education, Labor and Pensions transparency bill language, to require pharmacy benefit managers (PBMs) to provide comprehensive…

Weekly Checkup

Insulin, Threats, and the Sweet, Sweet Free Market

In a move that came as a surprise to many, pharmaceutical titan Eli Lilly announced yesterday that it will drastically cut prices on insulin and limit out-of-pocket (OOP) costs for patients. In a move that came as a surprise to…
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Medicare Part B

Weekly Checkup

Medicare Final Rule-ah Palooza

Late last week, the Centers for Medicare and Medicaid Services (CMS) dropped three annual final rules: the 2024 Medicare Outpatient Prospective Payment System and Ambulatory Surgical Center Payment System (OPPS/ASC) final rule, the Remedy for the 340B-Acquired Drug Payment Policy…

Insight

CMS’ New Rules on Physician Reimbursement

Executive Summary The Centers for Medicare and Medicaid Services (CMS) released its Calendar Year 2024 Medicare Physician Fee Schedule final rule, containing a variety of payment and policy updates for physician services, which will result payment rate decreases of 1.25…

Insight

CMS’ New Rules on Outpatient Reimbursement

Executive Summary The Centers for Medicare and Medicaid Services (CMS) released its Calendar Year 2024 Medicare Outpatient Prospective Payment System and Ambulatory Surgical Center Payment System final rule, containing a variety of payment and policy updates for Medicare Part B…

Weekly Checkup

The 340B Program Is Increasing Medicare Part B Costs

Last week, the Centers for Medicare & Medicaid Services (CMS) released the rates Medicare beneficiaries will pay in 2024 for Parts A (hospital care) and B (physician services, outpatient care, and certain home health services and durable medical equipment), including…

Weekly Checkup

Doc Ideas for Doc Payments

Yesterday, the GOP Doctors Caucus published a new policy proposal that seeks to reform how Medicare pays doctors. With another likely “doc fix” on the horizon, the proposal is well-timed. Let’s dive into the what and the why of the…

Insight

The 2024 Outlook for CMS’ Durable Medical Equipment Competitive Bidding Program

Executive Summary Started in 2011, Medicare Part B’s Durable Medical Equipment (DME), Prosthetics, Orthotics, and Supplies Competitive Bidding Program has saved $3.1 billion from 2010 to 2015 by making vendors compete on specific products to supply Medicare beneficiaries. After a…

Weekly Checkup

Oh Me, Oh MI(PS)

Before the July 4th break, the House Energy and Commerce Committee held a hearing on the Medicare Access and Chip Reauthorization Act (MACRA) of 2015 to review the program’s effectiveness and identify areas for potential reform—specifically around the merit-based incentive…

Weekly Checkup

Site-neutrality and the Medicare O(o)PPS

This past week, the House Energy and Commerce Subcommittee on Health held a hearing on policies to lower costs in the U.S. health care system. Of the numerous propositions discussed, site-neutral payments in Medicare received a heap of attention. A…

Insight

The Impact of a Most Favored Nation Drug Price Rulemaking on Innovation

Executive Summary The Department of Health and Human Services is expected to soon release an interim final rule implementing President Trump’s most favored nation (MFN) price proposal, which would require Medicare to pay no more for physician administered, outpatient drugs…

Weekly Checkup

It’s Back! The International Price Index Rears Its Ugly Head

Back in February, as part of his State of the Union address, President Trump was expected to announce policies aimed at reducing insulin prices and even moving forward with the long-touted International Price Index (IPI) proposal. The president was silent…

Weekly Checkup

Inconsistency and Hypocrisy on an International Price Index

Next week is shaping up to be a big one in American politics: impeachment fallout, the Iowa caucuses, and the State of the Union address. We don’t know what the president will say when he stands in the same chamber…

Comments for the Record

Comments To CMS On Proposed International Pricing Index for Medicare Part B Drugs

The solution that has been proposed here is not likely to achieve its objective, and in fact, could result in significant undesirable repercussions.

Weekly Checkup

Importing Drug Price Controls

This week, Senate Finance Committee Chairman Chuck Grassley made news when he publicly opposed a Trump Administration proposal to tie Medicare payments for drugs to the prices paid by other countries. Senator Grassley’s opposition is not surprising, for several reasons.…

Insight

Comparing the Recent Drug-Pricing Reform Proposals

This analysis compares recent legislative proposals to lower drug costs.
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Medicare Part D

Insight

Examining the Inflation Reduction Act’s Medicare Part D Inflationary Rebate Guidance

Executive Summary  Much attention has been paid to the Inflation Reduction Act’s (IRA) Medicare drug pricing “negotiation” provisions, but the IRA contains another set of provisions that will have significant consequences for both drugmakers and seniors: mandates for inflationary rebates…

Weekly Checkup

Squeezing Bitter Juice

The ill effects of the Inflation Reduction Act (IRA) will be with us for quite some time, but they are also being matched by newer pricing and regulatory schemes abroad, as American Action Forum Director of Health Care Policy Laura…

Insight

Drug Pricing Regulation in the U.S., UK, and EU: Assessing Trade-offs

Executive Summary In an effort to lower drug costs, the Inflation Reduction Act requires the Centers for Medicare & Medicaid Services to negotiate directly with drug manufacturers on specific products to reduce Medicare Part D reimbursement; a recent study found…

Weekly Checkup

Misreading the Drivers of Medicare Prescription Drug Costs

Last week, the Senate Finance Committee held an open executive session to mark up yet another variation of a pharmacy benefit managers (PBMs) transparency bill. PBMs have been at the heart of numerous bipartisan congressional hearings and markups in 2023,…

Infographic

Timeline: IRA’s Drug Pricing and Medicare Part D Changes

Testimony

Lower Drug Costs Now: Expanding Access to Affordable Health Care

U.S. House of Representatives Committee on Education and Labor Subcommittee on Health, Employment, Labor, and Pensions *The views expressed here are my own and do not represent the position of the American Action Forum. I am indebted to my colleagues…

Weekly Checkup

An Opportunity for Bipartisan Drug-Pricing Reform

A few weeks back, when the Biden Administration outlined its much-anticipated American Families Plan, it was notable that the president did not include pharmaceutical price reforms in the proposal. At the time, I argued that even though House Democrats would…

Insight

The Drug Rebate Rule: What’s the Budget Impact?

There are a broad range of estimates for how this proposed rebate rule would impact drugs’ list prices and what the government and patients ultimately pay for those drugs and the insurance coverage for them.

Research

Redesigning Medicare Part D to Realign Incentives

Restructuring the Medicare Part D program’s benefit design in a way that realigns incentives away from high-cost, high-rebate drugs may be the best way to reduce overall program costs as well as drug prices in other parts of the market.

Insight

UPDATE: The Many Competing Proposals to Reform Medicare Part D

Congress has put forward several proposals to reform Medicare Part D.

Insight

Analysis of the Competing Proposals to Reform Medicare Part D

Reforming the Medicare Part D benefit structure in a way that realigns the financial incentives of both the insurers and drug manufacturers may help put downward pressure on drug prices.

Insight

Comparing the Recent Drug-Pricing Reform Proposals

This analysis compares recent legislative proposals to lower drug costs.

Insight

The Impact of Shifting Rebates to Catastrophic Coverage in Medicare Part D

This reform would result in the mandatory rebate amount increasing with the drug’s price, which would provide an incentive against price inflation—an incentive the current system lacks.

Weekly Checkup

Where Does It Go From Here? Drug Pricing Policy After the Rebate Rule Reversal

Late Wednesday, news broke that the Trump Administration was withdrawing a controversial proposed rule that would have altered how drugs are paid for in the Medicare Part D program. There is much to say about the potential merits and challenges…

Insight

What Congress Needs to Consider When Reforming Medicare Part D

AF’s proposal to reform the Medicare Part D program has gained attention recently, but with this attention have come both questions and suggestions for how the proposal could be modified. This paper discusses some of those ideas and provides further analysis to better inform the conversation.

Multimedia

The AAF Exchange — Ep. 09: Drug Pricing Reform

Deputy Director of Health Care Policy Tara O'Neill Hayes walks listeners through the latest reform efforts in drug pricing.

Senate Finance Proposes Reforms to Medicare and Medicaid Drug Policy 

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Medicare Advantage

Weekly Checkup

Medicare Advantage – What’s in Store?

Medicare Advantage (MA) is exceedingly and increasingly popular. What started as the experimental Medicare+Choice in 1999 today provides health care coverage for 48 percent of Medicare beneficiaries. So, what’s in store for this program in 2023, both in Congress and…

Comments for the Record

Comment to CMS on Request for Information for Medicare Advantage

Dear Administrator Brooks-LaSure, I thank you for the opportunity to comment on the August 1, 2022, Request for Information (CMS-4203-NC) seeking information on various aspects of the Medicare Advantage (MA) program. Concerns have been raised that changes to the MA…

Drug Shortages

Weekly Checkup

Medicine Deficit Disorder

Right before the holiday break, the Biden Administration attempted to relieve what it called a nationwide drug shortage through a raft of executive orders that was mostly paperwork and monitoring requirements. Most of the administration’s actions are aimed at “essential…

Insight

Addressing U.S. Drug Shortages and Drug Recalls

Executive Summary Even as the COVID-19 pandemic winds down, drug shortages persist for generic drugs with low-profit margins and significant manufacturing complexity. The Food and Drug Administration (FDA) receives relevant information on the global drug supply chain and active pharmaceutical…

Medicaid

Weekly Checkup

Medicaid’s Worst Price

The Centers for Medicare and Medicaid Services (CMS) is expected to release a final rule on the Medicaid Drug Rebate Program (MDRP). Fortunately for those of us who aren’t big on reading hundreds of pages of federal regulations, American Action…

Insight

Medicaid’s Best Price: A Bad Calculation

Executive Summary In an effort to reduce costs to Medicaid, the Centers for Medicare and Medicaid Services is expected to soon release its wide-ranging final rule on the Medicaid Drug Rebate Program; the rule will change how drug manufacturers calculate Medicaid’s…

Research

Primer: The Medicaid Drug Rebate Program

The Medicaid Drug Rebate Program, which Congress created nearly 30 years ago, requires drug manufacturers to pay a rebate for all drugs dispensed to Medicaid beneficiaries, with brand-name drugs requiring the greatest rebate and generic drugs the lowest.

Weekly Checkup

Laboratories of Drug Pricing Policy

In the ongoing policy debate about the relative value and cost associated with prescription pharmaceuticals, states are emerging as some of the most daring (and possibly reckless) policymakers. Yesterday, Axios’ Caitlin Owens wrote about one state-driven initiative to tamp down…

Insight

Comparing the Recent Drug-Pricing Reform Proposals

This analysis compares recent legislative proposals to lower drug costs.
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Background Research

Multimedia

The Effect of H.R. 3 on Drug Prices and Innovation

AAF’s Director of Health Care Policy Christopher Holt explains why Democrats’ proposed drug-pricing legislation, H.R. 3, will restrict drug availability and innovation.

Multimedia

Prescription Drug Prices

AAF’s Director of Health Care Policy Christopher Holt explains why the state-level efforts to import foreign price-control regimes are not the solution to high prescription drug prices.

Insight

Obstacles to Success of the Drug Importation Plan

The Trump Administration released a proposal to establish protocols for the importation of prescription drugs from Canada, but this proposal is unlikely to have any meaningful impact on Americans’ prescription drug costs.

Insight

The Challenges Facing the Trump Administration’s Drug Importation Plan

The Trump Administration recently finalized a rule to allow for the importation of certain prescription drugs from Canada.

Weekly Checkup

The Problems with Trump’s Expected Drug-Policy Rules

Later today the Trump Administration is expected to announce several regulatory actions on drug prices, in a move somewhat akin to trying to write a 40-page term paper the night before it’s due. Among the anticipated items are the rebate rule—aimed…

Weekly Checkup

Drug-Pricing Reform and the CARES Act

Last week, President Trump signed the Coronavirus Aid, Relief, and Economic Security (CARES) Act, aimed at mitigating the economic and public health fallout of the coronavirus pandemic. Also included were some provisions you might have missed if you weren’t looking…

Research

Understanding Pharmaceutical Drug Costs

This paper examines the various factors that influence how drugs are priced--including regulatory burdens and health care payment models--in order to provide an understanding of these prices in the larger picture of American health care.

Insight

Understanding the Policies that Influence the Cost of Drugs

The ACA included many provisions that either directly or indirectly impacted the cost of medicines, costing the industry more than $100 billion over the past eight years.

Insight

Baseball, Arbitration, and Drug Prices

The potential application of arbitration to drug pricing raises a host of questions about how such a program would be implemented; for example, who would select the arbitrator, and what standards would govern the assessment of a reasonable price?

Testimony

Testimony Before the Senate Committee on Finance on Drug Pricing

Testimony before the U.S. Senate Committee on Finance Tuesday, January 29th, 2019 *The views expressed here are my own and not those of the American Action Forum. I thank Christopher Holt and Tara O’Neill Hayes for their assistance. Read a…

Weekly Checkup

The Importance of Investment Incentives in Drug Pricing Policies

Recently, Bloomberg Businessweek covered the story of Achaogen Inc., a biopharmaceutical company specializing in antibiotics. In the span of less than a year, Achaogen launched its first product, a rare new antibiotic to fight otherwise antibiotic-resistant infections, and then filed…

Weekly Checkup

Importing Canadian Drugs is Not the Solution to High Drug Prices

Amid the national conversation around drug prices, the idea of importing cheaper drugs from Canada is gaining renewed attention. Politicians from President Trump and Senate Finance Chairman Chuck Grassley to President Obama and Senator Bernie Sanders have championed the idea.…

Multimedia

The AAF Exchange — Ep. 04: Drug Pricing in the U.S.

AAF’s Director of Health Care Policy Chris Holt discusses the issue of high drug prices as well as several proposed solutions for it.

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Experts