AMP is WAC -- 06/05/26

Sun's Out

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.

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.