AMP is WAC -- 05/29/26

Let it Slide

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.

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.