AMP is WAC -- 06/25/26
Twas the night before vacation...
Over the last week I’ve had 3 client presentations and written 3 comment letters and finished 2 issue briefs. It has been so much fun; I love being able to make health policy accessible to people. I kept hearing clients say some version of “Oh I missed that!”
Right now, the plan is to not publish AMP is WAC next Friday but, given the fondness for summer holiday CMS policy releases, it might end up being a special edition. Plus side maybe I could expense an Erewhon smoothie if I use it to fuel my writing?
Fill ‘er Up. Late last week, JAMA Health Forum published what is probably the most rigorous look yet at how the IRA’s Medicare Part D out-of-pocket (OOP) caps changed prescription drug use. The short version: they worked, and the effect was biggest for the most expensive drugs.
Researchers at Brigham and Women’s Hospital used Symphony Health Metys, an all-payer retail pharmacy database, to track fill rates for 3,053 medications across Medicare and commercial insurance from Q1 2022 through Q4 2025. That’s 92.9% of gross Medicare Part D spending in 2023. Medications were sorted by monthly cost: low (under $100), medium ($100-$829), high ($830-$6,999), and very high ($7,000 and above).
The results mirrored costs. No statistically significant change for low- or medium-cost drugs. For the very-high-cost group, Medicare fills increased 22.7% compared to commercial insurance across 2024-2025. By Q4 2025, the high-cost group ($830-$6,999) showed a 23.1% statistically significant increase. The OOP cap removed catastrophic exposure. Patients who previously couldn’t absorb that 5% coinsurance every month had a cap.
I covered the Marinacci et al. adherence study in May, which used survey data through 2024 and found meaningful declines in cost-related nonadherence among Medicare beneficiaries. This study uses actual claims-adjacent fill data through Q4 2025, a different instrument and a longer window. The signals are consistent, but now they are bigger.
For manufacturers with high-cost specialty products, this is useful evidence. I read it with mixed feelings. The OOP cap was a genuine win for beneficiaries. But it came tied to a restructuring of plan financial liability that gave plans both the incentive and the cover to tighten formularies and expand utilization management. Patients got a spending ceiling. They also got a lot more prior auth. The study measures the first part. The second part is still playing out and we could use more transparency about how formularies are reviewed.
Sticky Side of 340B. ADAP Advocacy released a white paper framing the 340B Drug Pricing Program as the glue that should hold the American healthcare system together. The title is aspirational. The data inside is something else entirely.
The paper’s case: manufacturers are required to discount deeply, covered entities capture the spread, and patients don’t see it. The CBO found the program’s explosive growth has been driven by profit-motivated hospital decisions, not drug pricing trends. More than two-thirds of 340B hospitals provide charity care below the national average. When covered entities do expand, new child sites tend to land in ZIP codes 28% wealthier than the neighborhoods the primary entity nominally serves, drawing better-insured patients who generate higher reimbursement on the same discounted drugs. The paper documents hospitals deploying 340B revenues on lobby waterfalls and football coach salaries.
Worth noting who’s making this argument. ADAP Advocacy’s core constituency, Ryan White HIV/AIDS clinics, depends on 340B rebates for more than half their operating budgets. They’re not trying to tear the program down. They’re saying large hospital systems are exploiting a mechanism that legitimate safety-net providers genuinely need, and that a program generating $147 billion in annual drug purchases leaves a $68 billion gross-to-net gap with no requirement on any covered entity to explain where it went.
The paper calls for a rebate model, mandatory reporting requirements, a clearer federal definition of eligible patients, and enforcement with actual teeth. HRSA is already piloting the rebate piece. It won’t close the accountability gap on its own, but it would at least create a paper trail. My hunch is that the hospitals fighting hardest against it know exactly where the money has been going.
Half Staff. Last week, Scott Gottlieb published a JAMA Health Forum perspective arguing that the Food and Drug Administration (FDA) is fixable but hasn’t been fixed. The departure of FDA Commissioner Marty Makary in May and a succession of Health and Human Services (HHS) leadership changes have created what Gottlieb calls an opening. His prescription for what to do with it: put career scientists back in charge of the medical product review centers and stop installing political appointees there.
The data point that made me pause: the Oncology Center of Excellence has seen about half of its clinical review staff leave since January 2025. Starting strength was around 100 people. That group evaluates new cancer therapies. Gottlieb puts the loss at nearly two decades of accumulated expertise. The agency has struggled with basic functions, from inspection logistics to product review.
Gottlieb’s core argument is structural. Political appointees belong above the review centers, setting policy. When those lines collapse, regulatory decisions read as political ones, and political decisions get challenged in ways that regulatory ones don’t.
There’s also an international credibility layer. The FDA’s standing could slip enough that foreign regulators stop deferring to U.S. approvals. Gottlieb raises China’s ambitions specifically.
It’s been an interesting month for the FDA. Back on June 4, the Commissioner’s National Priority Voucher (CNPV) program held a public listening session. The program has awarded 18 vouchers and produced four approvals, including two oncology reviews completed in 44 and 55 days. Stakeholders, including pharma companies and patient advocates, urged the FDA to pause it and restart through formal notice-and-comment rulemaking.
The criticism centered on political opacity and lack of formal governance. That’s Gottlieb’s structural argument playing out in real time. The program’s future is genuinely uncertain, and with no permanent commissioner nominee yet, that uncertainty isn’t resolving soon. But things feel a little more solid, at least for now.
A Euro Saved Is a Launch Delayed. There’s a version of the MFN argument that sounds intuitive: Americans pay more for drugs than Europeans do, therefore Americans are getting ripped off, therefore we should pay what Europe pays. It’s clean. It’s also missing most of the story.
EFPIA and the WifOR Institute published a report that fills in some of what’s missing. Across 29 European countries between 2014 and 2022, every additional euro spent on innovative medicines generated €5.67 in measurable socioeconomic benefit - through avoided deaths, fewer hospital days, and recovered productivity. The return on oncology drugs alone was 6.8x. Hospitalization savings alone offset roughly 80 cents of every euro invested, before counting a single productivity gain.
So European drug pricing is generating enormous value. And yet. Europe’s share of global pharmaceutical R&D investment fell from 41% in 2001 to 31% by the mid-2020s. The absolute R&D spending gap between the US and Europe grew from €2 billion to €25 billion over the same period. The median wait from EU market authorization to patient availability is 532 days. Some treatments available in the US never reach certain European markets at all.
This is what European-style pricing actually produces: real savings on the medicines budget, paid for in access delays, missing treatments, and an innovation pipeline that increasingly gets built somewhere else. The US isn’t overpaying for drugs. It’s paying for the R&D, the launch sequencing, and the access that Europe’s pricing model structurally cannot support.
MFN would import the price without importing that context. And if you believe this report’s findings about what slower drug uptake costs in mortality and hospitalization, the math on what America would actually be saving gets a lot less flattering.
Factory Reset. On Tuesday, the Groundwork Collaborative and Vanderbilt Policy Accelerator released a paper, “AmericaRx,” calling for a federally-backed network of publicly-owned manufacturing facilities to produce essential medicines. The pitch: discipline brand drug monopolies, stabilize generic supply, and ensure continued production of low-margin drugs private capital won’t sustain.
The framing is exactly what you’d expect from a progressive think tank co-authored by former Biden White House National Economic Council staff. Pharma is extractive. Big Three PBMs are predatory. Government is the solution. Which isn’t my take, but I agree that the drug shortage argument underneath it is real.
If you’ve been around these parts, you know how it haunts me that China produces an estimated 80% of global API supply. A single plant disruption in 2023 forced hospitals to ration cisplatin and carboplatin. Those facts don’t belong to any one political argument.
The proposal points to real precedents: MassBiologics (founded 1894, still operating), the DoD’s Walter Reed Pilot Bioproduction Facility, CalRx’s insulin partnership with Civica Rx. Some of this already exists and works at the margins.
The problem is the scale gap. The proposal estimates $6 to $10 billion in startup capital for 10 facilities, a multi-year FDA approval process, and an undefined pathway to competitive operation. For drugs in active shortage today, that timeline solves nothing in this decade. But better to start now than never.
The political appetite for structural alternatives to the private market is larger than it was five years ago. For manufacturers, the practical implication is that public manufacturing capacity, even at the margins, gives elected officials a more credible threat posture in drug pricing negotiations than they currently have. But threat isn’t action, and the ability to stabilize generic supply and/or low-margin drugs is pretty cool.
Reimbursement Fundamentals – Medicaid Work Requirements and Medically Frail
On June 1, the Centers for Medicare & Medicaid Services (CMS) released its long-awaited Interim Final Rule (CMS-2454-IFC) implementing the Medicaid community engagement requirement from H.R. 1. The rule takes effect July 31, 2026 (the same day the public comment period closes, telling you how much they want comments.) States are required to implement by January 1, 2027.
A note on why this one is different from every prior work requirement fight. Previous attempts ran through Section 1115 waivers, and the courts blocked every one of them. That legal theory is largely unavailable now. This lives in statute, for the first time in Medicaid’s 60-year history. Planning for this to go away is not a strategy.
Before getting into the mechanics, let me give you the frame that changes how you read all of it. The debate around Medicaid work requirements has always been posed as: should Medicaid enrollees be required to work? I know this will sound like I’m playing the politics card, but this is the wrong question. Seriously.*
The data from every real-world implementation we have, Arkansas in 2018 and Georgia starting in 2023, say the same thing: 92 to 93% of non-elderly Medicaid adults already work or qualify for an exemption. The coverage losses this policy produces are not from people who refuse to work, they come from people who can’t navigate the paperwork. Keep that in mind for everything that follows.
The basics: non-pregnant adults ages 19 through 64 enrolled through the Affordable Care Act (ACA) Medicaid expansion are now required to complete 80 hours of community engagement per month, defined as work, education, or community service. Fail to report compliance, and you get a notice of noncompliance. Fail to respond within 30 days, and you’re disenrolled.
There’s a “medical frailty” exemption.
Under H.R. 1, medical frailty includes five subcategories: SSI/SSDI-level blindness or disability, substance use disorders, disabling mental disorders, physical or developmental disabilities that significantly impair ability to perform activities of daily living, and a “serious or complex medical condition.” Four of those subcategories explicitly tie to disability or functional impairment. The fifth one, “serious or complex,” does not. Congress left that category without a functional limitation test.
And CMS’s IFR ignored that distinction entirely. The rule applies an inability-to-perform-community-engagement gloss over all five subcategories, including the “serious or complex” one. To qualify for any health-related exemption, patients must now prove their condition “significantly impairs the individual’s ability to comply with the community engagement requirement.” Having a serious illness is no longer enough. You must prove the illness stops you from working 80 hours a month. Judgments are made on an individual basis.
And then CMS went further. The rule’s specific definition of “serious or complex” reads like nothing that exists elsewhere in statute or regulation. It requires conditions that are life-threatening, seriously disabling, causing significant pain that creates serious interruptions to life activities, requiring major caregiver time commitments, requiring frequent monitoring... the list goes on. Health Affairs published a piece by Rosenbaum and colleagues on June 12 arguing this definition may exceed even the SSDI/SSI disability test.
Here’s where it gets a little maddening for me personally.
CMS has created a two-sided trap for clinicians. Patients whose conditions aren’t well-controlled will have an easier time qualifying for an exemption, because their clinical picture obviously impairs community engagement. But patients who are stable, because they have Medicaid coverage and access to primary care and medication, may not qualify, because their conditions are “well-managed.” So, you treat your cancer patient well enough that she’s stable and functional, and the rule says she can go work 80 hours a month and maybe doesn’t need the insurance that kept her stable in the first place.
And then layer in who’s being asked to make these determinations. For the first year, patients can self-attest to medical frailty. Starting in 2028, physician documentation is required. The Rosenbaum piece spoke with clinicians at safety-net providers, federally qualified health centers, and community health centers who are already worried about that cliff. They will be asked to make a disability determination and they’re not disability determination agencies.
Neither are Medicaid agencies. They’re insurers.
CMS’s rule doesn’t address how this evaluation infrastructure gets built, who pays for it, or whether it’s even a permissible state expenditure. States are supposed to have this operational by January 1, 2027. And this isn’t a one-time administrative hurdle: the rule requires reverification of medical frailty status at least every 12 months.
For manufacturers, the coverage loss projections are where this must show up inside commercial planning. Between 1.4 million and 5.2 million adults are projected to lose Medicaid coverage, mostly from administrative churn and documentation complexity rather than people refusing to work. That’s a payer mix disruption of real scale.
The specific sting for specialty manufacturers: patients on HIV/AIDS regimens, cancer maintenance therapies, or MS disease-modifying drugs who are responding to treatment may have their medical frailty exemptions challenged precisely because their conditions, now well-controlled, no longer “significantly impair” community engagement. Treatment efficacy could literally cost someone their coverage.
There’s a structural coverage gap underneath those projections that I don’t think is getting enough attention. If a patient loses Medicaid specifically for work-requirement noncompliance, they’re treated as having access to minimum essential coverage. That classification bars them from marketplace premium tax credits. So they can’t get Medicaid, and they can’t get subsidized exchange coverage either. For a low-income patient on a specialty drug, that can mean no viable coverage path at all. This didn’t exist under the old waiver framework, and it is not a gap that patient assistance programs are designed to fill at scale.
One more thing. ASPE released a brief on June 1 projecting that Medicaid work requirements could lift 1.6 to 2.9 million people out of poverty. In the model’s “conservative” scenario, 80 percent of currently non-compliant adults successfully obtain sufficient work to comply. Richard Frank and Sherry Glied took that apart in Health Affairs on June 12. Arkansas’s actual experience with work requirements showed widespread coverage loss and essentially no measurable employment increase. The ASPE projections are not commercial forecasting inputs.
Nebraska is already live, and the early data are not subtle. Federally qualified health centers there are reporting near-zero new Medicaid enrollments in the first month, compared to a typical 15 per month. That’s one state, early. But it’s a real-world signal of what January 2027 looks like nationally, scaled across 43 states.
What is real: the coverage losses, the documentation burden, the clinical evaluation problem, the coverage dead zone, and the January 2027 deadline.
*I know I am a bit Pollyanna-ish. Of course, there are people who might take advantage of the system. That’s human nature. But I feel for those who are going to be put through hardship to find those who maybe shouldn’t be part of the program. It’s like when you were in 4th grade and some kid acted up in class and you all lost recess.