Trump administration delays effort to address Medicare drug price negotiation loophole

By John Wilkerson – The Trump administration is delaying a proposal to crack down on a loophole that allows drugmakers to avoid Medicare price negotiation on some of their products by making minor tweaks. While President Trump pressures drugmakers to charge Americans prices on par with other rich countries, he rarely mentions that Medicare already has started negotiating drug prices. The negotiation program was created by former President Biden’s Inflation Reduction Act, which Democrats passed without a single Republican vote. Read Full Article... ^{_{(Subscription required)}}

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1. Trump Administration's Mixed Approach to Drug Pricing: While some analysts claim the Trump administration’s Medicare officials have been more aggressive than the Biden administration in negotiating drug prices, critics point to several actions—such as exemptions for orphan drugs and delays in implementation—as signs of leniency toward pharmaceutical companies. The 2017 tax bill, for example, excluded certain orphan drugs from negotiation and delayed price controls for drugs that later gained broader approval. These exceptions have sparked debate about whether the administration’s policies favor innovation or protect industry profits. The overall impact of these mixed signals on drug pricing reform remains contested among policymakers and healthcare analysts.

2. Loophole on Combination Drugs Delayed: Medicare initially proposed addressing a loophole where drugmakers combine active and inactive ingredients to avoid price negotiation, but the final guidance delayed any policy change until at least 2026, raising concerns about continued exploitation by manufacturers. Critics argue this delay provides drugmakers a strategic opening to manipulate formulations and extend market exclusivity. By deferring enforcement, the Centers for Medicare & Medicaid Services (CMS) may unintentionally incentivize companies to preemptively redesign products to sidestep future regulations. The delay casts uncertainty over how many drugs might escape negotiation and how it could affect drug costs in the interim.

3. Concerns Over “Hyaluronidase Hopping” and Delayed Competition: Reformulating biologics with hyaluronidase, which enables easier subcutaneous injection but doesn’t improve effectiveness, may delay the entry of biosimilars and price negotiation. While this delivery method offers convenience and may enhance patient access, researchers caution that it should not be used to justify prolonged monopoly pricing. The Harvard study notes that at least nine biologics have been reformulated this way, resulting in over $10 billion in Medicare spending. Advocacy groups warn that unless this trend is curtailed, it could undermine the goals of Medicare’s price negotiation program and perpetuate high drug costs.

Providers win 85% of No Surprises Act disputes

By Alan Goforth – Health care providers have submitted far more independent dispute resolution (IDR) challenges under the federal No Surprises Act than anticipated – and they have won the vast majority. In fact, providers won 85% of the line-item claims decided in 2024, up from 81% in 2023. “When providers win, they typically receive fees that are 3 to 4 times the typical in-network rate, as reflected by the qualifying payment amount,” according to the Center for Health Insurance Reforms at Georgetown University. Read Full Article... ^{_{(Subscription required)}}

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1. High Volume of Disputes Exceeds Expectations: The independent dispute resolution (IDR) process under the No Surprises Act has seen a volume of disputes far exceeding initial federal estimates. While regulators expected about 17,300 disputes annually, nearly 190,000 disputes were filed within the first nine months after IDR began in 2022. This surge has created a backlog of nearly 500,000 disputes as of May 2025, indicating sustained high usage of the process by providers.

2. Providers Win Majority of Disputes with High Payment Rates: Providers have won 85% of the line-item claims decided in 2024, an increase from 81% in 2023. When providers win, they typically receive fees that are three to four times higher than the typical in-network rates, based on the qualifying payment amount. This outcome has contributed to increased costs within the health care system, affecting overall spending and potentially consumer premiums.

3. Significant Costs and Policy Concerns: The IDR process has generated at least $5 billion in total costs through the end of 2024, including $218 million in administrative fees and additional payments for services. These costs are driven by the high volume of disputes and frequent use of IDR by private equity-backed provider groups. The report suggests that while the No Surprises Act protects consumers from unexpected bills, without policy adjustments to reduce IDR use and award sizes, these costs may increase overall health system expenses and ultimately be borne by consumers.

What a government shutdown means for healthcare

By Caroline Catherman – As of 12:01 Wednesday morning, the US government has shut down. The shutdown, the first since 2018, came about because congressional Democrats and Republicans cannot agree on a spending bill. A key line in the sand: Democratic leaders want to expand 2021 enhanced Affordable Care Act (ACA) premium subsidies while Republican leaders want to allow them to expire at the end of the year. If they expire, premiums are expected to spike for the 24+ million people enrolled in the ACA marketplace, according to a KFF report, and providers are expected to lose billions in revenue, per a recent report from nonprofit Robert Wood Johnson Foundation. Read Full Article...

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1. Impact on Hospital-at-Home Programs: The government shutdown has caused the expiration of a 2020 Medicare waiver that allowed hospitals to provide inpatient care at patients' homes. As of July 2025, 400 hospitals across 142 systems and 39 states were approved for this program, but CMS has ordered hospitals to discharge or return these patients to the hospital. This pause could hinder the long-term progress of hospital-at-home initiatives, which had been expanding during the pandemic.

2. Changes to Telehealth Reimbursement: Medicare flexibilities that reimbursed telehealth care regardless of patient location expired with the shutdown. Now, many Medicare patients must take telehealth appointments from specific locations such as provider offices or designated rural areas. Exceptions exist for behavioral health and certain medical conditions, but some providers have started blocking telehealth visits for patients outside these criteria, creating access challenges for seniors and others reliant on telehealth services.

3. Reduction in Federal Healthcare Services and Delays: The Department of Health and Human Services plans to furlough 41% of its staff during the shutdown, affecting activities like survey work, contract oversight, and beneficiary casework. While Medicare and Medicaid payments will continue, the FDA will not accept new drug applications, delaying approvals and impacting pharmaceutical innovation. These service reductions reflect the broader operational disruptions caused by the funding lapse.

Insurers Are Squeezing Doctors and Their Patients

By Wendell Potter – As health insurers have consolidated and tightened their grip on the U.S. health care system – and in particular on physician practices – doctors increasingly have to spend their days battling red tape, fighting with insurers, and watching their reimbursements shrink while their operating expenses increase every year. Doctors who are determined to resist being bought by an insurer or large hospital system are finding it harder and harder to do so without outside investment. Read Full Article...

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1. Insurance Company Consolidation Limits Competition and Patient Choice: Major insurance conglomerates—including UnitedHealth, Cigna, CVS/Aetna, and Elevance—have grown into vertically integrated giants, controlling not only insurance but also pharmacy benefit managers, clinics, and physician networks. This level of consolidation is far beyond what independent physician groups can achieve and has led to reduced competition in the marketplace. As a result, premiums have risen, and patients increasingly face limited choices due to narrow networks and dropped providers, undermining continuity of care and access.

2. Physicians Are Burdened by Insurer-Controlled Bureaucracy, Not Private Capital: The article emphasizes that the primary source of strain on physicians is not private equity investment, but the administrative and bureaucratic demands imposed by insurers. These include time-consuming prior authorizations, frequent claim denials, opaque appeals processes, and low reimbursement rates. Such pressures contribute to physician burnout, early retirement, and declining interest in the profession—factors that threaten the sustainability of the health care workforce. In contrast, the article notes that physician-aligned private capital can help preserve independence and support high-quality patient care.

3. Policy Reform Should Target Insurer Practices, Not Physician Autonomy: To meaningfully address the dysfunction in the U.S. health care system, the article argues that attention must shift toward the unchecked power of large insurance companies. It calls for the enforcement of antitrust laws to dismantle vertical monopolies, regulatory oversight to prevent misuse of legislation like the No Surprises Act, and streamlining of prior authorization processes. The author contends that policies should aim to protect physician decision-making authority and patient choice, asserting that responsible investment models can serve as a counterbalance to insurer overreach and restore fairness in care delivery.

FDA avoids the worst amid government shutdown, but new applications put on hold

By Fraiser Kansteiner – With a government shutdown now in effect, the U.S. FDA—already shaken up by head count reductions earlier this year—has sought to keep many of its functions running for the foreseeable future. But the shutdown, which at least one former senator predicts could drag on for a month or more, will still have very real consequences for biopharma companies that don’t yet have an application in with the regulator, experts warned. Read Full Article...

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1. FDA Staffing and Operations During Shutdown: The FDA has committed to retaining 86% of its staff during the government shutdown, with 66% of workers immune from furloughs due to pre-existing funding or exemptions. An additional 19% are classified as excepted workers whose roles are critical to agency operations. This staffing plan allows the FDA to continue many of its essential functions despite the budget impasse in Congress.

2. Impact on New Drug and Device Applications: The FDA will not accept new applications for drugs, generics, biologics, biosimilars, or medical devices that require payment of a user fee while the shutdown persists. Companies that have not yet filed for product review will face delays until Congress resolves the funding issues. Although the FDA can continue reviewing applications using leftover user fees, it lacks the legal authority to accept new fees for the 2026 fiscal year until appropriations are approved.

3. Limited but Ongoing Regulatory Activities: Despite the shutdown, the FDA will continue to issue certain guidance documents, manage recalls, mitigate drug shortages, and conduct some surveillance inspections of regulated facilities. However, activities related to unapproved drugs and safeguarding patients from unsafe compounded drugs will be limited. Experts note that while the FDA is less affected than many other federal agencies, the shutdown may still cause delays in review processes and approvals, potentially lasting a month or more.

ACA health subsidy cut could add 3.2M lives to employer plans

By Allison Bell – If Congress really lets the current high federal individual health insurance premium subsidies expire, that could increase employer health plan enrollment by 3.2 million in 2026, to 150 million. That would amount to a 2.2% increase in employer plan enrollment. Enrollment in "noncompliant nongroup" plans — plans such as farm bureau plans, mini medical plans, plans based on use of short-term health insurance policies and other arrangements that fall outside the reach of the Affordable Care Act major medical insurance requirements — could climb by 119,000, or 5.2%, to 2.3 million. Read Full Article... ^{_{(Subscription required)}}

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1. Impact of ACA Premium Subsidy Expiration: If the current high federal individual health insurance premium subsidies expire, employer health plan enrollment could increase by 3.2 million people in 2026, representing a 2.2% rise. Meanwhile, enrollment in noncompliant nongroup plans could also increase by 5.2%, while individual major medical coverage could decline significantly by 7.7 million people, or 29%. This shift reflects a substantial change in how Americans might obtain health insurance coverage if subsidy rules revert to pre-pandemic levels.

2. Changes in Subsidy Rules and Their Effects: The Affordable Care Act initially limited premium tax credits to individuals with household incomes under 400% of the federal poverty level, with subsidies based on income thresholds. However, pandemic-related changes expanded subsidies to all income levels if coverage costs exceeded 8.5% of income. The potential expiration of these enhanced subsidies could push many individuals off ACA exchange plans and into employer-sponsored plans, affecting the overall insurance market dynamics and coverage distribution.

3. Health Risk and Claims Implications for Employers: The individuals moving from ACA exchange plans to employer plans might include those who have delayed seeking medical care due to out-of-pocket costs, potentially leading to higher claims for employers. While some new enrollees could be healthy individuals with low claims, others may have unmet health needs, which could increase the financial risk and cost burden on employer health plans. This highlights the complexity employers face in managing plan costs amid changing subsidy policies.

Biosimilars and transparency can tame employers' $80,000-per-year drug bills

By Sharon Faust – The U.S. health care system has a remarkable track record of creating breakthrough medicines and treatments. But that same innovation has fueled unsustainable costs, including for specialty biologics like Humira and Stelara, which can cost up to $80,000 annually. Rising drug prices have prompted health plans and employer-sponsored benefit programs to look at pharmacy benefit manager practices more closely. Read Full Article... ^{_{(Subscription required)}}

HVBA Article Summary

1. Rising Health Care Costs Driven by High-Cost Drugs: U.S. health care costs are projected to rise by 8% in 2025 and another 9% in 2026, driven in large part by the growing use of high-cost specialty medications. These include GLP-1 therapies—still under patent protection—and biologic drugs used to treat chronic and complex conditions. While these treatments offer clinical benefits, their costs remain a major burden. However, many biologics now have FDA-approved biosimilar alternatives that offer similar effectiveness at significantly lower prices, potentially easing financial strain on health plans and employers.

2. Biosimilars Offer Cost Savings but Face Adoption Challenges: Biosimilars present a substantial opportunity to reduce health care spending, with some priced up to four times lower than their biologic counterparts. Despite FDA approvals for multiple biosimilars to treat conditions like rheumatoid arthritis and Crohn’s disease, adoption has been limited. Barriers include patent disputes, evolving interchangeability standards that restrict pharmacist substitution, and traditional PBM models that financially incentivize the use of expensive brand-name drugs due to rebate structures—often at the employer’s expense. Educating providers and patients remains key to overcoming these obstacles.

3. Transparency and New Models Are Shifting the Landscape: A shift toward greater pricing transparency and alternative pharmacy benefit models is underway, aiming to improve affordability and access. Examples include cost-plus pricing strategies, nonprofit generic manufacturers, and direct-to-consumer platforms offering upfront pricing. Some organizations have already demonstrated success—such as switching formularies from Humira to biosimilars, which led to 97% of claims transitioning and a 60% reduction in net cost per claim, resulting in hundreds of millions in savings. Sustained progress will require system-wide alignment among PBMs, providers, and employers to promote biosimilar use and ensure savings reach both patients and plan sponsors.

CMS Finalizes Third Cycle of Medicare Drug Price Negotiations

By Pietje Kobus – On Tuesday, September 30, the Centers for Medicare & Medicaid Services (CMS) issued final guidance for the third cycle of negotiations under the Medicare Drug Price Negotiation Program (Negotiation Program). According to the news release, the guidance includes significant policy updates based on public feedback, with a particular focus on increasing transparency, and enacts expanded protections for orphan drugs introduced in the Working Families Tax Cuts Act. Read Full Article...

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1. Expanded Orphan Drug Protections: CMS has broadened the exclusions from negotiation for orphan drugs, which are designated by the FDA as treatments for rare diseases or conditions. This change aims to protect the availability and development of treatments for rare diseases by limiting the negotiation scope for these drugs. The update reflects CMS's responsiveness to stakeholder feedback and legislative changes under the Working Families Tax Cuts Act.

2. Integration of Medicare Advantage Data: The new guidance incorporates Medicare Advantage encounter data alongside traditional Fee-for-Service claims data into the calculation of total expenditures under Part B. This integration is intended to provide a more comprehensive and accurate basis for drug price negotiations. By including both data sources, CMS aims to improve the fairness and effectiveness of the negotiation process.

3. Future Negotiation Timeline and Scope: The third cycle of drug price negotiations is scheduled for 2026, with maximum fair prices becoming effective on January 1, 2028. CMS plans to announce up to 15 additional drugs for potential negotiation by February 1, 2026, expanding the program's reach. These steps demonstrate CMS's commitment to ongoing efforts to lower prescription drug costs for Medicare beneficiaries while maintaining transparency and market responsiveness.