MFP Effectuation Competitor Negotiation Direct Negotiation Part D Redesign Inflation Penalties NIH/FDA Cuts Strategic Planning Investment Decision Reconciliation Impacts on Environment 340B Reform PBM Reform DTC Access Strategy MFN Price Setting PDABs

Ripple Impacts of Policies Disrupting Traditional Environmental Considerations

Tap a row below for more information

MFN & Price Regulation

Fiduciary Pressures

IRA

DTC Access Strategy

MFN Price Setting

PDABs

Investment Decision

Strategic Planning

Reconciliation Impacts on Enrollment

340B Reform

PBM Reform

NIH/FDA Cuts

MFP Evaluation

Competitor Negotiation

Direct negotiation

Part D Redesign

Inflation Penalties

ACIP: Advisory Committee on Immunization Practices; AMP: Average Manufacturer Price; DTC: Direct-to-Consumer; FDA: Food and Drug Administration; FFS: Fee-for-Service; HHS: US Department of Health and Human Services; ICR: Information Collection Request; MFP: Maximum Fair Price; NIH: National Institutes of Health; PBM: Pharmacy Benefit Manager; PDAB: Prescription Drug Affordability Board; R&D: Research & Development; ROA: Route of Administration; RWD&E: Real-World Data and Evidence; UPL: Upper Price Limit

The post IRA, MFN, and Ongoing Fiduciary Pressures Creates Ripple Effect Across the Healthcare Ecosystem appeared first on Avalere Health Advisory.

In the ruling, the Supreme Court states “The Executive Branch under both President Trump and President Biden has argued that the Preventive Services Task Force members are inferior officers and therefore may be appointed by the Secretary of HHS. We agree. The Task Force members are removable at will by the Secretary of HHS, and their recommendations are reviewable by the Secretary before they take effect.” 

Background on USPSTF 

USPSTF is an independent panel of 16 experts appointed by the HHS Secretary that voluntarily provide recommendations on preventive services for adults and children provided in or referred from the primary care setting. According to the USPSTF procedure manual, the Task Force evaluates specific interventions and issues recommendation with a letter grade (A, B, C, D, or Insufficient [I] statement) based on the strength of existing evidence and the net benefits of a preventive service. Under the Affordable Care Act (ACA), services that receive a USPSTF Grade A or Grade B must be covered by Medicare and third-party insurance carriers without member cost sharing. 

Legal Challenges to Preventive Services Coverage Mandate 

In September 2022, the US District Court for the Northern District of Texas issued a ruling in Braidwood Management Inc. vs. Becerra, a case which challenged the legality of the ACA’s preventive services coverage mandate under the US Constitution and the Religious Freedom Restoration Act. The court ruled that health plans are not required to cover services recommended by the USPSTF because its panel members are not properly appointed under the Constitution’s Appointments Clause. Following the decision, the Biden administration appealed the court’s ruling to the US Court of Appeals for the Fifth Circuit, 

In June 2024, the court of appeals issued a decision reversing the lower court’s decision to vacate all agency actions to enforce preventive care coverage mandates. However, the appellate ruling agreed with the lower court’s ruling that the USPSTF panel had not been validly appointed under the Appointments Clause.  

The case was appealed to the Supreme Court and on April 21, 2025, justices heard oral arguments in Kennedy vs. Braidwood Management Inc.  

Why the Ruling Matters 

The ruling preserves the ACA requirement that commercial and employer health plans cover USPSTF Grade A or Grade B recommendations without cost-sharing. The decision averts an immediate disruption to no-cost coverage for over fifty types of screenings, prevention medication, and counseling recommendations. This ruling maintains frictionless access to preventive screening without introducing additional cost sharing for patients. Importantly, the Supreme Court’s reasoning also reinforces the legal foundation for other HHS-appointed expert bodies like the Advisory Committee on Immunization Practices, which similarly issue coverage-influencing recommendations without Senate confirmation—an increasingly important precedent as public attention grows around new member appointments, transparency, and the scope of advisory authority.  

Next Steps 

Avalere Health’s cross functional team is uniquely capable of supporting stakeholders navigating the evolving landscape of USPSTF recommendations and submission processes. Understanding the access landscape for screening requires a partner with strategic foresight and deep expertise in evidence, policy, and quality frameworks. Leveraging expertise in evidence generation and planning, market strategy, and policy shaping, Avalere Health can provide strategic recommendations that meet individual client needs. To learn more about how Avalere Health can assist you connect with us. 

The post Supreme Court Upholds Zero-Cost Preventive-Care Rule appeared first on Avalere Health Advisory.

Current guidance stipulates that CMS uses FDA-approved labels, clinical guidelines, medical literature, and drug compendia, among other factors, to identify appropriate therapeutic alternatives for each indication for every negotiated drug. The agency also reviews input from manufacturers, patients, and providers. However, it is unclear what factors are prioritized in such decisions and to what extent this input influences the outcome.  

Under the current administration, there has been renewed focus on Most-Favored Nation (MFN) pricing as a strategy to control drug costs by aligning US prices more closely with those paid in other high-income countries. Any such policy shift would also indirectly import ex-US HTA decisions and priorities into the U.S. system—even though they reflect different clinical practices, cost structures, and policy goals that may not align with U.S. healthcare needs. 

Avalere Health analyzed the extent to which comparator selection varies between peer health systems with standing HTA procedures to offer context for stakeholders preparing to engage with CMS on Medicare Negotiations or understand the potential impact of ex-US technology assessments MFN-influenced decisions.  

Analysis Approach 

Avalere Health assessed the comparators used across four countries and their corresponding HTA bodies for the same set of drugs. We evaluated Canada’s Agency for Drugs and Technologies in Health (CADTH), United Kingdom’s National Institute for Health and Care Excellence (NICE), France’s Haute Autorité de Santé (HAS), and Germany’s Gemeinsamer Bundesausschuss (G-BA). The drugs for this analysis have been selected for Medicare negotiation and cover a variety of therapeutic areas (oncology, hematology, diabetes, and respiratory). In total, the analysis assessed five products with six indications across four therapeutic areas.  

Key Findings 

First, Avalere Health compared the approved US indications for the analyzed products to those reviewed by each HTA. The results show that of the six total indications that were considered in the analysis, only one had the same set of indications reviewed across all HTA bodies, suggesting that the reimbursed price in those markets for a given product may not reflect the totality of all licensed indications in some markets (Figure 1).   

Figure 1. Selection of Product Indications for HTA Review 

COPD: Chronic obstructive pulmonary disease; FVC: Forced vital capacity 

Note. The red x indicates that the indication for the product was not considered, and therefore the HTA’s value assessment did not consider the indication. The text “No Formal Review” indicates that the HTA did not conduct a value assessment on the product. 

Then, Avalere Health compared the therapeutic alternatives that each HTA used as comparators in the evaluations. The results show that the selection of comparators varies widely across different countries’ assessments. Of the five medicines assessed across four disease areas, different comparators were used across all HTAs, in each scenario resulting in different prices. This is particularly complicated in cancer technology assessments, where indications are highly nuanced and approvals are focused on specific patient subgroups, tumor histology, biomarkers or line of therapy.  

For the oncology drug that Avalere Health reviewed in this analysis, HTAs across countries assessed chose highly variable comparators (Figure 2). 

Figure 2. Comparators Used Across HTAs For Commonly Used Oncolytic

Note. Green checkmark indicates that the class or treatment was included in the country’s HTA review. Red x indicates that the class or product was not included in the country’s HTA review. Classes with both indicate that while the class overall was not included as a comparator, products within the class were included. 

Conclusion

Comparator selection is a key driver of value assessment outcomes impacting coverage, price point, level of unmet need and other key patient access criteria. The choice of comparators fundamentally shapes how the clinical benefit of the assessed intervention is perceived, and an inappropriate or outdated comparator can misrepresent a product’s real-world value, thereby skewing value assessment results and impacting coverage and reimbursement decisions. This is especially important for complicated therapeutic areas like oncology as comparators can directly impact the evidence gathered and recommendations made to cover a product.

As CMS and manufacturers enter the third year of the Medicare Drug Price Negotiation program–which will include physician-administered drugs with complex and idiosyncratic clinical pathways–stakeholders must carefully consider how therapeutic alternatives are being selected and the impact of that decision on negotiation outcomes. Notably, CMS’s guidance for negotiations grants CMS the latitude to decide on therapeutic alternatives for use in the comparative effectiveness review, which can have a direct and meaningful impact on the initial offer in the price negotiation. Stakeholders should consider how different scenarios for comparators could change negotiations for products in the absence of more robust guidance, and identify opportunities to ensure that clinically appropriate comparators are used to optimize assessment credibility.

The Medicare Drug Price Negotiation program will continue to have wide-reaching impacts on drug manufacturers. Connect with us to learn more about how Avalere’s multidisciplinary team can help manufacturers understand CMS’s process for identifying therapeutic alternatives for negotiated drugs.

The post Variability of Comparator Drugs in Ex-US HTAs Offers Lessons for the IRA appeared first on Avalere Health Advisory.

CMMI and MAHA Strategy

In May, the Center for Medicare and Medicaid Innovation (CMMI) announced a strategic shift in line with the Make America Healthy Again (MAHA) initiative that would shift the center’s emphasis away from behavioral health integration, favoring cost control and deregulation over value-based mental health models.

At the same time, the MAHA Commission, which was established through an Executive Order in February 2025, is highlighting  Attention Deficit Hyperactivity Disorder (ADHD), citing concerns around overdiagnosis and overmedication. The Commission’s May 2025 report calls for tighter oversight of prescribing practices, signaling potential scrutiny for manufacturers and clinicians in the ADHD space.

Mental Health Services Parity

The Trump administration is reconsidering how the Mental Health Parity and Addiction Equity Act is enforced, signaling a potential shift in regulatory posture. While no formal rollback has been announced, this potential shift could result in reduced access to mental health services, as insurers may no longer be required to provide coverage on par with physical health services. Stakeholders are closely monitoring these developments, given the significant implications for mental health care accessibility and equity.

Proposed Budget Cuts in Mental Health and Medicaid Funding

The Trump administration’s fiscal year (FY) 2026 budget proposal includes significant funding reductions that could impact core behavioral health infrastructure. The proposal impacts SAMHSA with a $1.1 billion funding reduction, with additional proposals to dissolve the agency entirely.

The CDC is also targeted for budget cuts, which could impact overdose prevention and mental health surveillance efforts. These cuts come amid rising demand for behavioral health support and ongoing opioid-related challenges.

A bipartisan group of senators has objected to these changes, citing risks to federal leadership and service continuity. Mental health advocates and professional societies have echoed these concerns, urging Congress to preserve core services and reject cuts during a continued national mental health crisis.

The president’s budget also proposed Medicaid reductions, which could limit access to mental health and substance use care for low-income populations. The Centers for Medicare and Medicaid Services has encouraged states to pursue Medicaid waivers and demonstration projects that reward integrated, outcomes-based care. Longstanding programs such as Health Homes and Section 1115 waivers offer funding flexibility and incentives to restructure care delivery for behavioral health populations.

Future Opportunities

To navigate the evolving behavioral health policy landscape, stakeholders should prepare more scrutiny of ADHD prescribing and parity enforcement by strengthening compliance and clinical justification. Stakeholders should also consider funding volatility by diversifying engagement in Medicaid waivers, state pilots, and alternative payment models that support integrated care.

Avalere Health is monitoring these developments in behavioral health policy and access, applying our cross-functional expertise in policy, reimbursement, data, and quality to support stakeholders stay ahead of change.  To learn more regarding the evolving behavioral health space and how Avalere can help your business get ahead of these barriers in this uncertain time, connect with us.

The post What the Latest Federal Shifts Mean for Mental and Behavioral Health appeared first on Avalere Health Advisory.

Key Changes for IPAY 2028

• Drug Selection and Eligibility: 
  • Part B Drug Inclusion: For the first time, Part B drugs will be eligible for selection. CMS will identify the top-50 Part B and Part D drugs separately before aggregating the lists and spending to identify the 15 drugs for IPAY 2028 negotiation. 
  • Small Biotech Exclusion (SBE): Manufacturers can apply for SBE under Part B and/or Part D tracks, with an exception granted if either track is met. The SBE application is drug-specific and, if granted, will make a drug ineligible for selection in IPAY 2028, the last year for SBE applications. 
  • Combination Drugs: CMS is seeking comments on how to treat drugs with additional active ingredients that affect bioavailability but are not biologically active against the disease. 
• Changes to the Negotiation Process: 
  • Ceiling Calculation: CMS proposed a methodology to incorporate Part B prices and utilization into ceiling calculations and estimate the 30-day equivalent supply for Part B drugs that differs from the current Part D methodology. 
  • Single Maximum Fair Price (MFP) across Part B and Part D: For drugs covered under Part B and Part D, CMS clarified that it will calculate a single MFP to use across formulations and benefit type. 
  • Therapeutic Alternative (TA) Considerations: CMS is seeking comments on proposed alternative methods for consideration of TAs when developing the initial offer starting point, including the evidence it will consider. In addition, CMS is seeking comment on whether and how to consider non-drug healthcare services when evaluating TAs.  
  • Data Collection: CMS seeks comment on the collection of additional market data that is “forward-looking” and overlaps with the period between selection and start of the IPAY. CMS provided two examples of the type of data that might be included and noted that these data are consistent with section 1194(e)(1)(E) language of “market data and revenue and sales volume data for the drug in the United States.” 
• Part B MFP Effectuation: CMS did not propose a standard default refund amount approach for Part B effectuation, leaving room for stakeholder input. However, CMS did note that it intends to align the process as closely as possible to Part D processes. Additionally, CMS did not describe the role of the Medicare Transaction Facilitator in Part B, but noted that Part B has different supply chain considerations that its effectuation processes. 
• Part D Formulary Management: CMS clarified that Part D sponsors may remove a selected drug if substituted with a generic or interchangeable biological product, subject to specific requirements. 
• Renegotiation Criteria: CMS clarified conditions for drug renegotiation, including changes in monopoly status or significant market changes that may result in a greater than 15% change in MFP.

Implications for Stakeholders 

Stakeholders have an important opportunity to engage CMS during this process to provide insight into the operationalization of guidance policies and access implications. Below are several stakeholder-specific business questions that are likely to shape response and comment strategy. 

• Manufacturers 
  • How will potential changes to the CMS definition of a combination product directly and indirectly impact the expected negotiation selection timing? What are the possible implications for the competitive market, pipeline planning, and forecasting? 
  • To what extent may CMS’s proposed 30-day price for Part B alternatives lower the expected starting point for selected drugs with Part B therapeutic alternatives? 
  • How can manufacturers shape the MFP effectuation process in Part B to minimize access disruptions?  
  • How could the Part B standard default refund amount (SDRA) impact manufacturer gross to net provider economics, and supply chain dynamics? Should manufacturers adjust volume-based rebates to account for Medicare beneficiaries eligible for MFP? 
• Payers 
  • To what extent may updated formulary management guidance shift management of negotiated products? 
  • How does introducing MFPs into the market impact non-Medicare plans based on current or future contract language, relative to the reimbursement mechanism? 
  • To what extent may plans align their preferred drugs across books of business (e.g., Medicare, commercial, etc.)?  
• Dispensing Entities and Part B Providers 
  • How will Part D effectuation impact the ability to stock and dispense negotiated drugs, given the lag in MFP-based reimbursement and the SDRA true-up? 
  • How will Part B effectuation impact Part B provider economics? How might this impact the ability to carry and supply negotiated products? 
  • Is there a preferred alternative SDRA method that mitigates the risk to provider economics? 
  • How might Group Purchasing Organization and distributor contracts change after part B effectuation? 
• Patients 
  • How will the Inflation Reduction Act (IRA) impact shared decision making and access to treatments? Will this change prompt patients to change drugs and/or how they receive them?  
  • What is the impact of MFP on out-of-pocket (OOP) cost? Is there a meaningful difference between the Part D OOP cap and the Medicare Prescription Payment Plan? How much will OOP cost change for negotiated drugs if patients use supplemental insurance to help pay for Part B drugs?  
  • What patient advocacy organizations are involved in IRA negotiation discussions? How can patients join these groups and participate in patient roundtable opportunities? 

Next Steps 
CMS invites public comment through June 26, 2025, to inform the final guidance. Several proposed changes, including the collection of forward-looking financial information and potential changes to factor weighting, indicate potential for additional downward pressure on MFPs. Manufacturer stakeholders should analyze the potential impact of these changes on their portfolios and consider submitting comments to shape policy and mitigate risks. Provider and patient stakeholders should consider how the unintended consequences of the IRA may impact access to care and their ability to continue to treat patients.  

Previous Avalere Health analyses have assessed the impact of MFP on provider reimbursement and potential spillover effects that can shed light on some unintended consequences of Part B negotiations. Connect with us to learn more about how Avalere Health supports client’s policy, access, pricing, contracting and channel strategy related to Part B negotiations. 

The post Stakeholder Considerations for IPAY 2028 Guidance appeared first on Avalere Health Advisory.

Since the Centers for Medicare & Medicaid Services (CMS) codified the use of step therapy (ST) for Medicare Part B drugs in 2019, this and other forms of utilization management have been increasingly used by health plans, including Medicare Advantage (MA) plans. The stated intent of ST is to guide prescribing decisions toward cost-effective, evidence-based therapies. Avalere Health recently surveyed 300 healthcare providers to better understand their real-world experiences with ST protocols, particularly as they apply to physician-administered therapies.

We found that ST is widely used by MA plans, although many providers reported administrative demands and challenges in aligning utilization management decisions with clinical judgment. Respondents identified delays in patient access and adjustments to practice operations as recurring issues. These findings indicate an opportunity for further refinement of ST policy implementation to balance cost containment, clinical efficacy, and patient-centered care.

Key Findings

Trends in Part B Step Therapy Utilization: Among providers that had experience managing Part B ST protocols, the vast majority indicated that they felt use of ST is increasing: 84% reported that Part B ST use has risen over the past five years. Nearly 40% said that more than half of their MA patients are subject to ST for one or more Part B therapy.

Clinical Considerations and Alignment: A recurring theme in survey responses was the degree to which Part B ST protocols align—or misalign— with clinical practice:

• 94% of respondents said that ST limits access to their preferred Part B treatments.
• 53% reported this interference occurred frequently (“often” or “always”).
• 74% believed that ST protocols for Part B products were not consistently based on established clinical guidelines.

Patient Experience and Treatment Access: Providers shared that ST requirements can have direct impacts on patient care:

• Over 60% of providers described the burden on their patients of ST for Part B drugs as “high” or “extremely high.”
• 60% said that patients often wait weeks to receive their original prescribed therapy.

Providers noted that while many patients ultimately gain access through exceptions or appeals, delays may contribute to anxiety or exacerbation of symptoms. These impacts are particularly concerning for patients with conditions that require early or aggressive intervention.

Download the free white paper for additional findings and policy considerations.

 Funding for this research was provided by ASP Coalition. Avalere Health retained full editorial control.

The post White Paper: Provider Survey on Part B Step Therapy in Medicare Advantage appeared first on Avalere Health Advisory.

Today, generics like donepezil and memantine are used to manage cognitive symptoms of AD. To assess potential Part D plan liability exposure for future AD treatments, Avalere Health analyzed average Part D plan liability for beneficiaries taking donepezil or memantine. Based on 2019 Prescription Drug Event (PDE) data, seven out of the top 10 plan sponsors by total Part D enrollment had Part D liability ratios greater than 1.0 for beneficiaries taking donepezil or memantine. This means that the average Part D plan liability for enrollees taking these medications was higher than the plans’ financial liability for the average enrollee.  

All Part D plan segments—except Medicare Advantage Prescription Drug Plan (MA-PD) Special Needs Plans (SNPs)—had higher average Part D financial liability for beneficiaries taking donepezil or memantine compared to that of all enrollees in 2019 (Figure 1). Compared to other plan segments, enhanced standalone Prescription Drug Plans (PDPs) had the highest Part D liability for enrollees taking donepezil or memantine. While MA-PD SNPs had the highest average per beneficiary Part D liability for enrollees taking these AD medications ($4,193), average Part D liability for these beneficiaries was lower than average per beneficiary liability across all other enrollees ($4,476).  

Figure 1. Average Plan Liability Per Beneficiary for All Enrollees vs. for Enrollees Taking Donepezil or Memantine, by Plan Segment, 2019

*Liability ratio is equal to the average plan liability per beneficiary for enrollees taking donepezil or memantine divided by the average plan liability per beneficiary across all enrollees in the plan segment. 

EGWP: Employer Group Waiver Plan; LIS: Low-Income Subsidy  

As pharmacy benefit AD treatments continue to be developed, manufacturers will need to consider the potential utilization and cost impacts of these treatment options as part of their plan contracting strategies. With increased plan liability under the Inflation Reduction Act’s Part D benefit redesign, plans are implementing various coverage, cost-sharing, and utilization management strategies to control drug costs. As enrollment in MA-PDs continues to grow, plan sponsors may be more likely to consider the total liability impact for these therapies across Part B and Part D benefits, including ancillary treatment costs and potential cost offsets. Other factors, such as clinical classification and Part D risk adjusted payments are also likely to factor into plan and manufacturer contracting strategies.   

Methodology 

Avalere Health analyzed 2019 PDE data, access by Avalere Health via a research-focused Data Use Agreement DUA with the Centers for Medicare & Medicaid Services. Avalere Health identified beneficiaries taking donepezil or memantime in 2019. Drug spend and liability were then analyzed to better understand net plan liability by segment for AD patients relative to overall enrollment. Plan segment was defined at the beneficiary level representing the plan segment in which the beneficiary was enrolled for the plurality of enrolled months by year. In cases where beneficiaries had the same number of enrollment months in multiple segments, the latest plan segment in 2019 was chosen. 

The post Part D Cost Pressures May Shape Future Alzheimer’s Drug Management appeared first on Avalere Health Advisory.

“This announcement makes it clear that MFN pricing is back on the table, and organizations should act now to model policy scenarios, assess exposure, and think through palatable alternatives to mitigate potential disruption across pricing, access and channel strategies,” said Milena Sullivan, Avalere Health’s Policy Practice Director. “Policy, market access, legal, and commercial teams will need to collaborate to effectively navigate the complexities of an MFN threat” she added. 

Background 

The first Trump administration undertook efforts to tie US drug prices to those in economically comparable countries, with proposed rulemaking for the International Pricing Index model in 2018 and the Most-Favored Nation model in 2020. These demonstrations aimed to limit overall Medicare spending by aligning provider payment for Part B drugs with that of equivalent countries. At the time, stakeholders expressed concern that these models would limit or restrict access to newer drugs, and the Centers for Medicare and Medicaid Services did not proceed with either model. Now, the second Trump administration has decided to revisit its focus on MFN pricing with a range of administrative actions.  

The most recent MFN EO released by the White House was followed shortly by an announcement from the US Department of Health and Human Services (HHS) that it is taking immediate steps to implement the order. The HHS press release also stated that the administration would focus on MFN targets based on the lowest price in an OECD country with a per capita gross domestic product of at least 60% that of the United States. Based on 2023 data, the countries that fit within that threshold include Luxembourg, Ireland, Norway, Switzerland, Netherlands, Iceland, Denmark, Australia, Austria, Germany, Belgium, Canada, Finland, France, UK, Italy, Israel, Slovenia, New Zealand, Spain, Czech Republic, Korea, Lithuania, and Japan.  

What Is Unique About the MFN EO?  

The EO outlines a series of near-term steps the federal government may take to lower drug prices. It differs from prior approaches in several ways:  

• Phase-In Strategy: The EO introduces a two-phase strategy—voluntary compliance first, then escalation to regulation or enforcement. 

• DTC Purchasing: The order directs HHS to explore a voluntary DTC purchasing pathway where manufacturers can offer MFN-aligned prices directly to patients, which could have a significant impact on payers, pharmacy benefit managers (PBMs), pharmacies, providers, wholesalers and distributors. 

• Broad Reach: Unlike prior proposals focused on MFN pricing for Part B drugs, the EO leaves the door open for wider application across a wide range of drugs or therapeutic areas and potentially extending into the commercial market through voluntary tools. 

• Multiagency Implementation: The EO calls for explicit coordination across multiple federal agencies, with a whole-of-government approach to implementation that also integrates trade policy, importation authority, and antitrust enforcement.  

• Geopolitical Framing: The policy approach relies on a broader use of executive and trade powers, with language addressing “global freeloading” with a more overt geopolitical framing of drug pricing, aligning it with broader economic and national security concerns. 

Market Access and Channel Implications 

The novel DTC approach has potential implications for the drug value chain and for distribution models. It remains unclear whether this approach would solely impact pricing at the point of care or involve alternative purchasing and channel impacts. In either case, it is important to consider how potential growth of the DTC approach could interact with insurance design, formularies, existing contracting, and patient assistance. 

As Omar Hafez, US Market Access Practice Director explained, “Leadership teams should view this as a pivotal signal: pricing decisions, launch sequencing, and contracting approaches may all need to evolve to remain competitive under an MFN-influenced environment.”  

This shift presents both a threat and an opportunity. “While MFN pricing may compress margins in traditional models, it could also open the door to new contracting, DTC, or value-based arrangements that reach more patients, increasing the demand side of the equation,” noted Mina Allo, Managing Director, US Market Access, “In response to this new policy, organizations need to robustly analyze the total impact, assess opportunities to mitigate and explore innovative solutions.” 

US Market Access Principal Jessica Cortez explained, “The EO’s push for MFN-aligned pricing could prompt a reevaluation of patient access and affordability strategies, especially if lower voluntary prices reduce the perceived need for copay support.” She added “This shift should be navigated in a way that does not risk leaving some patients without the safety nets they currently rely on.” 

MFN could create disruption across the prescriber, payer, pharmacy continuum. Mark Newsom, Managing Director, Policy, highlighted that, “If the administration proceeds with an MFN model or otherwise facilitates an MFN DTC approach, plans and PBMs need to carefully consider the impacts on their bidding behavior, plan payment including risk adjustment, and network contracting with pharmacies and Part B providers.”  

Pricing Considerations 

Stakeholders should consider how MFN pricing benchmarks may be determined and how the interplay between MFN pricing and other pricing metrics may play out. “Manufacturers and payers alike should view this as a clear signal to re-evaluate pricing strategies and prepare for a potential paradigm shift for the supply and value chain dynamics in the US market.” said Mike Ciarametaro, Managing Director, Policy. This paradigm shift will also have significant ramifications for pipeline assets.  

Tim Wright, President of Global Market Access, emphasized that, “Global pricing strategy can no longer be siloed—US policy is signaling that international prices may soon carry direct implications for access, revenue, and market entry strategies.”  

Further, the introduction of MFN-aligned DTC pricing raises complex questions about how these price points may interact with existing government pricing metrics. “Manufacturers will need to carefully evaluate how voluntary discounts offered under this model could create ripple effects across Medicaid, 340B, and federal supply schedules, potentially triggering broader financial and compliance implications.” explained Margaret Scott, Principal, Policy. 

Direct-to-Consumer Trends 

Independent of the MFN EO, some drug manufacturers have been pursuing direct-to-consumer  channels as a new strategy to reach patients. This shift is driven by a mix of market dynamics, consumer behavior changes, and structural inefficiencies in the traditional pharmaceutical supply chain. “While not an option for every therapeutic area or drug type, DTC approaches are viewed by some manufacturers as a way to bypass intermediaries, set transparent prices, and potentially offer lower out-of-pocket costs to consumers while preserving margins,” said Mark Gooding, Managing Director, US Market Access. 

Patients are also increasingly demanding more convenience, which has given rise to a range of digital health platforms, telemedicine, and online pharmacies in response to consumer expectations for on-demand healthcare. According to Roshan Rahnama, Executive Vice President and head of Access Marketing, “In cases where traditional access channels are heavily restricted by formulary exclusions, prior authorizations, or rebate-driven incentives, President Trump’s call to HHS to facilitate a DTC model may give some manufacturers an option to gain control over pricing, improve patient access and adherence, respond to market restrictions, and better compete in a digital-first healthcare landscape.” 

Federal and State Policy 

Manufacturers, health plans, patient advocacy groups and other stakeholders are expected to engage with policymakers to provide input on the EO’s implementation. Issues such as access to medications, the impact on innovation, and the practicality of DTC models will likely be central to these discussions.  

“While Most-Favored Nation pricing would introduce new cost pressures, some manufacturers may be able to blunt part of the impact through innovative access strategies and differentiated launch planning. But these innovative strategies in turn raise a range of policy, regulatory, and legal questions that stakeholders will need to shape,” said Kolton Gustafson, Principal, Policy Practice.  

With the administration showing a willingness to move beyond voluntary reforms, “Stakeholders should also be preparing for a regulatory pathway that could rapidly accelerate implementation of MFN pricing mechanisms.” says Megan West, Managing Director, Policy. “It is also critical to evaluate the downstream implications of a voluntary MFN approach on Medicare drug negotiations under the Inflation Reduction Act” she added. 

The federal push toward MFN pricing could also create new pressure points or conflicts for states pursuing their own drug pricing transparency laws, affordability boards, or reference pricing frameworks. Emily Donaldson, Principal, Policy, recommends that, “As federal and state policies increasingly overlap, stakeholders should anticipate greater complexity in compliance, reporting, and price governance across jurisdictions.”  

Next Steps 

Biopharmaceutical companies and payers face key decisions in the upcoming months, including deciding whether to participate in a voluntary MFN model, developing and executing policy strategy to shape these changes, and evolving their business and portfolio strategies to reflect new market realities.  

Avalere Health’s seasoned experts in market access, US and global pricing strategy, and federal and state policy support organizations with a range of tailored activities, including: 

• Analysis of the feasibility of participating in a voluntary MFN program
• MFN implementation scenarios and implications for both policy and business strategy 
• DTC strategies landscape, benchmarking assessment and program design  
• Portfolio impact and risk assessments 
• Assessment of the implications of MFN program participation on IRA Medicare negotiation  
• Stakeholder mapping and engagement planning 
• Support for public comments and federal engagement 
• Product level access and pricing strategy, both US and global 

With robust access to domestic and international pricing data, latest Medicare utilization data, and in-country experts across several key markets, we are well-positioned to support you across a number of areas. Connect with us to learn more. 

The post Avalere Health Experts React to the Most-Favored Nation Executive Order appeared first on Avalere Health Advisory.

Under the Medicare Drug Price Negotiation Program, the Centers for Medicare & Medicaid Services (CMS) negotiates a maximum fair price (MFP) for a set number of drugs each year. To date, 10 Part D drugs have been negotiated for the Initial Price Applicability Year (IPAY) 2026 and 15 additional Part D drugs are currently being negotiated for IPAY 2027. Beginning in IPAY 2028, Part B drugs will also be eligible for selection.

After CMS negotiates MFPs, manufacturers must provide access to the MFP to Medicare beneficiaries and to pharmacies and providers dispensing negotiated drugs. CMS is working with external contractors, collectively known as the Medicare Transaction Facilitator (MTF) to help effectuate access to the MFP.

In October 2024, CMS provided guidance on how manufacturers could effectuate Part D MFPs prospectively or retrospectively, but the agency did not set a standard method. In a prospective model, an inventory of drugs would be acquired at a price at or close to the MFP, likely necessitating the need to maintain an MFP-based inventory separate from drugs to be reimbursed at other prices. In a retrospective model, pharmacies could acquire all drug inventory at a contracted price and receive a reconciliation payment from manufacturers for verified Medicare doses.

Stakeholders are weighing the administrative and financial burdens of the MFP effectuation options proposed by CMS and increasingly looking ahead to understand how CMS may choose to approach the process in Part B. Under Part B, reimbursement for negotiated drugs will shift from the current 106% of average sales price (ASP) to the lower 106% of MFP, increasing financial pressure for providers.

Potential Pathways to Effectuate MFP in Part B

CMS is poised to release the draft negotiation guidance for IPAY 2028 in the coming weeks, potentially outlining initial parameters for Part B effectuation. The potential pathways for operationalizing the MFPs for physician-administered drugs will differ from Part D drugs and may impact buy-and-bill dynamics, contracting and distribution strategies, prescribing incentives, and site of care for negotiated drugs, especially in key affected therapeutic areas like oncology and immunology.

For Part B drugs, distributors acquire drugs from the manufacturers at wholesale acquisition cost (WAC) prices. The manufacturers often have contract prices with providers through group purchasing organization contracts, which enable the providers to acquire the drugs from the distributors at these lower contracted prices. The distributor then sends a chargeback to the manufacturer for the difference between WAC and the contract price so that they are kept whole.

If CMS allows both retrospective and prospective options in Part B, these pathways could involve using the existing chargeback model, the MTF, or both (Figure 1).

Figure 1. Potential Effectuation Pathways

Each model has variable considerations across stakeholder types.

A prospective model could build on the existing chargeback model and add a new contract price that is based on MFP, so payment reconciliation could be handled between manufacturers and wholesalers. A key challenge in this model would be to ensure that products purchased at MFP are only administered to Medicare patients. If and how the MTF bridges the data gap to verify eligibility will impact feasibility.

In a retrospective model, the provider would purchase a negotiated Part B drug at a contracted price (which varies by provider and drug), file a claim, and receive a reconciliation payment from manufacturers for any difference between Medicare reimbursement and acquisition cost. A challenge in this model is how manufacturers will calculate the refund amount owed to the provider, how payment should be handled, how providers will be affected by the time lag in recouping their full acquisition price, and whether the refund will be sufficient to cover their costs.

While in Part D, MFP effectuation in Medicare Advantage (MA) and fee-for-service (FFS) Medicare would rely on the same real-time Prescription Drug Events (PDE) data; for Part B drugs, the flows of data and payment differ between MA and FFS. This adds significant uncertainties and potential new administrative challenges.

Finally, how Part B MFPs are effectuated in the market will likely impact ASP calculations, as well as contracting and reimbursement outside of Medicare. Under MA, verifying and excluding 340B volume could also be more complex, raising the risk of duplicate discounts.

Looking Forward

As CMS prepares to release the IPAY 2028 guidance and Congress continues to focus on physician payment reform, there will be opportunities for stakeholders such as provider groups, manufacturers, payers, and patients to provide insight to help shape the process. A recent Executive Order on drug pricing directs CMS to propose and seek comments on negotiation guidance for IPAY 2028 by mid-June 2025. At the same time, some members of Congress have floated a proposal to reset reimbursement for Part B negotiated drugs back to 106% ASP and handle the MFP discounts directly between manufacturers and the government.

Previous Avalere Health analyses have assessed the impact of MFP on provider reimbursement and potential spillover effects that can shed light on some unintended consequences of Part B negotiations.

Connect with us to learn more about how Avalere Health supports client’s policy, access, pricing, contracting and channel strategy related to Part B negotiations.

The post Stakeholder Considerations for MFP Effectuation in Part B appeared first on Avalere Health Advisory.

Guidance from the Centers for Medicare & Medicaid Services (CMS) on MPPP implementation sets guidelines for plan outreach and education to beneficiaries. In addition to including MPPP information in standard plan materials, plans must conduct targeted outreach to enrollees who incurred $2,000 or more in OOP costs in the first three quarters of 2024. Plans were required to send the CMS-developed “Likely to Benefit” notice to the beneficiaries who met this threshold by December 7, 2024. This notice provides information on the MPPP and informs beneficiaries that they may benefit from enrolling in the program. However, enrollment in the MPPP is not automatic, and beneficiaries must take action to opt in through their plan.

Beneficiaries Identified as Likely to Benefit from the MPPP

Avalere Health’s analysis of Part D claims data finds that over 1.2 million beneficiaries met the $2,000 OOP spending threshold in the first three quarters of 2024 and should have received the MPPP “Likely to Benefit” notice. Of the 1.2 million beneficiaries meeting this threshold, approximately 440,000 (35%) were enrolled in Medicare Advantage Prescription Drug Plans (MA-PDs) and over 800,000 (65%) were in standalone Prescription Drug Plans (PDPs).

Early Enrollment in the MPPP and Opportunities for Stakeholders

Early data for 2025 indicates that a small portion (15%) of the beneficiaries who were flagged as likely to benefit from the MPPP have enrolled in the program. As of the end of February 2025, Part D Drug Event (PDE) data shows that only about 190,000 beneficiaries who filled a script in January or February 2025 were enrolled in the MPPP, including about 70,000 PDP and 120,000 MA-PD beneficiaries (Figure 1).

While MA-PD enrollees accounted for just over one-third (35%) of enrollees identified as likely to benefit from the MPPP based on 2024 OOP spending, they represent two-thirds of MPPP enrollees in early 2025. Of the PDP and MA-PD enrollees who were identified as likely to benefit based on 2024 OOP spending and who filled a script in January or February 2025, only 9% of PDP beneficiaries are enrolled in the MPPP compared to 27% of MA-PD beneficiaries (Figure 1).

Figure 1. Number of PDP and MA-PD Beneficiaries Enrolled in MPPP vs. Identified as Likely to Benefit and Not Enrolled

Note: Enrollment in the MPPP in 2025 reflects only beneficiaries who had a PDE claim in January or February.

While these data only provide initial indicators of uptake in the program, they highlight strategic opportunities for stakeholders. For manufacturers, education for beneficiaries and other stakeholders, along with other changes to support tools and eligibility criteria as part of manufacturer patient assistance programs, can help drive sustained uptake of the MPPP. Other stakeholders, such as patient groups, plans, and pharmacies should consider strategies to support enrollment in the MPPP.

Avalere Health’s experts are working closely with stakeholders to understand the complexities of the MPPP and Part D redesign, as well as develop strategies to support patient access and affordability in this market. To learn more connect with us.

Methodology

This analysis utilized Medicare data through an agreement with CMS, wherein Avalere Health has access to CMS’s Chronic Condition Warehouse Virtual Research Data Center (“VRDC Data”). The analysis includes all Part D beneficiaries, including low-income subsidy (LIS), non-LIS, and Employer Group Waiver Plan enrollees, with a script filled in 2024 or in January or February of 2025. Beneficiaries were identified as enrolled in the MPPP if they had a script in the Part D PDE where MPPP enrollment was indicated. Avalere also analyzed beneficiaries who were either diagnosed with COVID-19 or filled a prescription for a COVID-19 medication, finding that over 110,000 beneficiaries met the $2,000 OOP spending threshold in the first three quarters of 2024. Of these, 10% of beneficiaries had enrolled in the MPPP as observed in the January and February 2025 Part D PDE data.

The post Early Enrollment Data Indicates More Beneficiaries Could Benefit from MPPP appeared first on Avalere Health Advisory.

Work requirements condition Medicaid eligibility on the completion and reporting of a minimum number of hours (typically 20–80 hours/month) spent working or in other approved activities. During President Trump’s first term, 13 states received federal approval to establish work requirements within their Medicaid programs (see Figure 1). Of those states, just two (AR and GA) undertook implementation. Arkansas’s requirements were subsequently halted by a federal court in 2019, after less than a year in effect. Georgia’s implementation was allowed to proceed by a different court’s ruling, and its work requirements remain in effect.

 Figure 1. Historical and Current Status of Work Requirement Waiver Requests

As Congress looks to advance a budget reconciliation vehicle this year focused on tax cuts, defense, and border security, it will need to identify significant cost offsets. The Medicaid program is likely to be a potential target for savings, with a variety of Medicaid policies under consideration, ranging from changes to the federal matching rate, reforms to program financing like a per capita cap, or changes to eligibility through work requirements. Establishing work requirements in Medicaid, potentially on a mandatory basis across states, has the potential to gain momentum. Accordingly, as policymakers and stakeholders assess these options it is important to understand state experiences that may inform the policy design and broader debate.

Population Subject to Requirements: The criteria for defining what populations will be subject to work requirements influence how impactful the policies  may be. Some past waivers focused work requirements on non-disabled, non-pregnant, working-age adults earning up to 100% of the federal poverty level (FPL), while others applied to the entire Medicaid expansion population (earning up to 138% of FPL). While most approved waivers were in states that had already expanded Medicaid following the ACA, GA included work requirements in its Medicaid partial expansion proposal. All approved waivers exempted specific sub-populations, with variation in populations across states.

Exceptions and Work Alternatives: Previous state approaches have allowed individuals to request an exception to work requirements, which can provide some flexibility and mitigate against unintended eligibility loss. CMS guidance in 2018 required states to exempt medically frail individuals and individuals with acute medical conditions from work requirements and to consider other factors (i.e., high unemployment, caregiving responsibilities) in designing work requirements. States also frequently recognize other activities, like volunteering, education, or job training, in lieu of work.

Implementation and Reporting: States adopted varied approaches for individuals to demonstrate compliance with requirements, which have direct implications for program enrollment. Some states required monthly reports while others proposed to verify compliance annually. Some allowed reports by phone or in person, in addition to an online portal. Arkansas, for example, phase -in its program by age group (first ages 30–49 then 19–29). Indiana gradually increased its hourly requirements from zero to 20 hours per week over 18 months.

Consequences for Non-Compliance: Individuals who do not comply with work requirements would lose Medicaid eligibility under most proposals. Some states allowed a grace period before initiating disenrollment. States may have included lockouts as well, which prevent disenrolled individuals from reenrolling within a certain period.

Outcomes and Implications

Medicaid enrollment was impacted in both states that implemented work requirements. Over 18,000 individuals were disenrolled in less than a year in AR, while GA’s Medicaid expansion had enrolled roughly 6,900 adults through the end of February 2025 out of the hundreds of thousands estimated to potentially be eligible. The Congressional Budget Office (CBO) projected that a federal work requirement would decrease Medicaid enrollment, estimating that the Limit, Save, Grow Act of 2023 (H.R. 2811) would result in 1.5 million adults losing Medicaid coverage.

Current policy discussions are focused on the federal savings associated with work requirements that can help support other priorities through a budget reconciliation package. The CBO estimates savings of more than $100 billion under a nationwide (federal) work requirement. Experience in AR and GA highlights potential fiscal impacts for states (i.e., new implementation and oversight costs). Losses of Medicaid enrollment may have implications for other state and federal government programs, along with stakeholders throughout

The post Revisiting Medicaid Work Requirements appeared first on Avalere Health Advisory.

Congress has considered a variety of policy proposals to address the rising cost of prescription drugs in recent years. Several focus on pharmacy benefit managers (PBMs), who administer drug benefits on behalf of health plans and employers in both the commercial market and public programs like Medicare and Medicaid. Health plans and employers contract with PBMs to administer their pharmacy benefits, negotiate with pharmaceutical manufacturers to secure discounts and rebates, negotiate with network pharmacies to establish reimbursement rates, design prescription drug formularies, and implement a range of medication management and safety programs.  

Several legislative proposals focused on PBM practices have been under discussion in Congress in previous sessions and could be reconsidered this year.  

What is “Delinking?”

Delinking bills aim to restructure PBM contracting by prohibiting compensation arrangements “linked” to (1) prescription drug prices or (2) remuneration such as discounts and rebates (which may be volume-based). Instead, under the provisions in proposed bills, any PBM compensation would need to be in the form of flat, “bona fide” service fees that reflect the fair market value of services provided.  

Today, PBMs and their clients can choose from a variety of contracting models to suit their needs. One model aims to incentivize PBMs to negotiate deeper discounts by basing PBM compensation in part on the amount of discounts and rebates they negotiate on behalf of the plan or employer. This form of compensation would be prohibited by delinking bills, which allow only flat fees for specific services provided.   

Congress has considered delinking proposals in the context of Medicare Part D and the commercial market. For example, H.R. 2880 would have prohibited compensation to PBMs in Part D from being based or contingent, directly or indirectly, upon (1) the price of any covered part D drug or (2) discounts, rebates, fees, or other remuneration with respect to a covered drug. Similarly, H.R. 6283 would have prohibited compensation in the commercial market that is not a flat dollar amount.  

Considerations for Policymakers

If delinking legislation is considered this year in Congress, policymakers and stakeholders should examine how the bills could impact choices, incentives, PBM services, and prescription drug spending for health plans and employers.  

PBMs compete for the business of health plans and employer clients by offering a variety of services and compensation arrangements. Those supporting delinking bills assert that arrangements linking PBM compensation to drug prices could encourage PBMs to favor higher list price drugs with larger rebates rather than lower list price drugs, and that this hurts enrollees because cost sharing is generally based on the list price of a drug. Others note that PBMs compete for the business of employers and plans based on their ability to bring down the net cost of prescription drugs and that there is no correlation between rebates and prices of drugs. They also point out that enrollee cost sharing is a matter of plan design, and that plans and employers have the flexibility to allocate enrollee costs between premiums and cost sharing. 

In a contracting system of flat fee compensation arrangements, it may become challenging to differentiate between PBMs or their services as compared to others in the marketplace. Current innovative contracting models, such as pay-for-performance, risk-based contracting for gene therapies, and other value-based arrangements could become more complex to implement since these arrangements are often connected to drug costs, volume, or savings. In addition, since delinking bills would require the flat fee payments to PBMs to be based on “fair market value,” which generally requires a comparison to other similar arrangements, this too could inhibit innovative arrangements since, by definition, there likely would not be “comparable” pricing arrangements by which to determine fair market value.   

Implications of Delinking on Premiums, Cost-sharing, and Drug Expenditures

For more than a decade, the level of rebates negotiated by PBMs have been a factor in constraining overall spending on prescription drugs. While rebates do not lower drug list prices themselves, as the list price is set by a drug manufacturer, rebates and discounts negotiated by PBMs can reduce drug expenditures and net costs of medicine to payers. Policies that affect incentives and market dynamics related to rebates impact payer decisions about formulary and benefit designs. They could also affect net drug costs for payers which could translate into premium and cost sharing impacts for individuals and costs for the federal government (in the case of Part D).  Given the wide-ranging impact delinking policies could have on an array of contracting arrangements between PBMs, health plans, employers, and manufacturers, it is challenging to predict what the net effect will be on both Part D and commercial drug expenditures.  

From a federal budget perspective, the Congressional Budget Office (CBO) has not issued an analysis of delinking reforms in isolation, although it has been looked at within larger legislative packages that include transparency and other policies. It is unclear whether CBO’s analyses have considered downstream impacts to the broader healthcare market, which could affect federal spending and costs for plan sponsors, employers, or enrollees. For example, if delinking reduces the value of the rebates and discounts delivered by PBMs, resulting in drugs with higher net prices, Medicare and commercial costs for medicines could increase. Further, if employer plan premiums increase following delinking (i.e., due to lost rebates, higher administrative costs, uncertainty, or other factors), the policy could have revenue impacts due to the tax deductibility of employer-sponsored insurance.  

What’s Next

As Congress continues to debate legislative efforts like Budget Reconciliation, stakeholders should continue to monitor what policies are included and how it will impact entities across the healthcare system, including health plans, employers, PBMs healthcare providers and manufacturers. 

Funding for this research was provided by CVS Health, Inc. Avalere Health retained full editorial control. 

The post PBM Delinking: Policy Considerations appeared first on Avalere Health Advisory.

Provisions that were deferred or implemented in a more limited fashion may signal areas the Trump administration could revisit in future policymaking. Several key areas to watch for Part D include: 

Coverage of Anti-Obesity Medications (AOMs): In the CY 2026 final rule, CMS did not finalize the proposed coverage of AOMs for treatment of obesity under Medicare Part D or Medicaid. Like other policies that were not finalized in the rules, CMS did not provide additional details on stakeholder feedback or the rationale for this decision. However, given the Make America Healthy Again initiative, the Trump administration may still focus on obesity prevention and treatment, potentially through a Center for Medicare and Medicaid Innovation demonstration or other regulatory action. Future efforts could target broader obesity prevention and treatment interventions in addition to AOMs. 

Standalone Prescription Drug Plan (PDP) Premium Stabilization Demonstration: In the Rate Announcement, CMS stated that it would evaluate CY 2026 bid submissions to “assess the need for, or effectiveness of, the elements of the [PDP premium stabilization] demonstration.” With 2026 bids due by June 2, plans will have less than six months of experience with the new 2025 benefit design to inform their bids. Plans will face additional uncertainty about the future of the demonstration. As noted in the Rate Announcement, CMS may rely on its ability to negotiate proposed bids with plan sponsors to address any significant changes in premiums. All of these factors are likely to impact plan offerings and premiums for 2026. 

Medicare Prescription Payment Plan: The rule finalized automatic re-enrollment into the Medicare Prescription Payment Plan for 2026 and makes some adjustments to beneficiary notification requirements. However, policies for 2026 remain largely unchanged from 2025. As plans, pharmacies, and beneficiaries gain experience with the program, CMS may continue to explore future policy changes, such as revisiting point-of-sale enrollment.  

Successor Regulation for Selected Drugs under the Medicare Negotiation Program: CMS finalized the more limited proposal allowing immediate formulary substitutions of selected drugs with generics and interchangeable biologics only. CMS declined to adopt policies for biosimilar substitutions or allow for broader substitutions via formulary maintenance changes. However, CMS noted that it may identify other successor regulations in the future.  

Pharmacy Protections: CMS did not address proposed policies to strengthen pharmacy protections related to plan sponsor pharmacy networks or contract negotiations. However, with the Trump administration’s ongoing interest in transparency and other pharmacy benefit manager practices, CMS could address these issues as part of broader actions on these topics.  

Future decisions in these policy areas could have wide-reaching effects on Part D plan offerings, benefit designs, patient access, and broader market strategies in the coming years. As such, these open policy areas present significant opportunities for stakeholders to engage with CMS and shape future action.  

To learn how Part D policy changes may impact your organization, connect with us. 

The post Recent Part D Final Policies Leave Open Areas for Future Action appeared first on Avalere Health Advisory.

Key Findings

Respondents anticipate that UPLs will impact formulary design, cost sharing, rebating, and pharmacy and provider reimbursement, all of which can impact patients’ access to medications. Respondents highlighted potential costs to plans stemming from UPL implementation, which could put pressure on premiums and contractual arrangements with pharmacies and providers.

Background

As of March 2025, PDABs have been established in eight states (CO, MD, ME, MN, NH, NJ, OR, and WA) with the stated goal of reducing drug spending and patient out-of-pocket (OOP) costs. Of these eight PDABs, four have UPL-setting authority (CO, MD, MN, and WA),¹ and one (OR) has drafted a UPL report on potential effectuation mechanisms despite not having UPL authority. Some stakeholders have raised concerns that UPLs could increase supply chain costs, exacerbate shortages, or cause new patient access issues.

Health plans have a unique perspective regarding possible implications of UPLs on insurance coverage and other changes that may impact patient access. To gather these perspectives Avalere sought out plan perceptions on the impacts of UPLs and their preparedness for UPLs. Avalere updated and built on previous payer interviews (conducted in 2023 and released in 2024) with interviews and a survey of health plans.

Results

Increased Cost Sharing and Disruptions to Benefit Design Are Key Patient Access Considerations

When asked which types of stakeholders may be most impacted by UPL effectuation, 80% of respondents selected patients—the highest out of all stakeholders listed (Figure 1).

Figure 1. Stakeholders That May Be Impacted by UPL Effectuation

Respondents also answered questions about the potential patient impacts of UPLs on premiums, benefit design, and formularies. Overall, 60% of respondents expected changes to OOP costs and 50% expected increased copays or coinsurance on a UPL drug (Figure 2).

While just 50% of respondents expect that premiums would be disrupted by UPLs (Figure 2), 57% anticipate that premiums would increase if a UPL is implemented and 10% would expect lower premiums (Figure 3). Some interviewees noted the projected costs associated with implementation as a reason for higher premiums. A large minority (40%) of survey respondents expect that UPL implementation would result in higher administrative burden on plans, providers, pharmacies, or patients.

With respect to formularies and benefit design, payers expect the impact would vary based on which drugs are selected for a UPL. Most surveyed payers (83%) anticipate moderate or major disruption to formulary design.

Figure 2: Disruption Resulting From a UPL

Figure 3. Changing Premiums as a Result of UPL Implementation

Respondents also considered whether payers would adjust tiering and formulary design in response to UPLs. Most (57%) survey respondents anticipate that both the UPL drug and its therapeutic alternatives would be implicated in formulary changes. When asked about other changes to benefit design, 50% of respondents said they foresee increased utilization management on UPL drugs.

Stocking Issues at Pharmacies and Gaps in Provider Reimbursement

Payers noted that setting UPLs could lead to changes for pharmacies, potentially impacting access for patients. Most (70%) respondents said that pharmacy reimbursement could decrease due to the implementation of UPLs. Moreover, 60% of respondents said those negative impacts on pharmacy reimbursement would decrease the likelihood of a pharmacy stocking a product with a UPL. Nearly three-fourths (73%) of payers surveyed agreed that this could lead to a shortage of the drug in the state with a UPL.

The survey also asked specifically about UPLs for physician-administered drugs and the impact on providers. Over half (57%) of respondents agreed that if a UPL were implemented, a provider would receive a UPL-based reimbursement that would likely be less than what the provider would otherwise be paid for that product. Nearly half (47%) of respondents indicated that patients could be responsible for making up the difference between acquisition cost and drug reimbursement, and 6% noted that providers may be at risk of not being able to make up that difference.

Diminished Rebates Could Contribute to Increased Premiums

Payers asserted that UPLs could impact manufacturer rebates for the UPL drugs and their therapeutic alternatives, with potential for discretionary rebates on these drugs to be reduced or eliminated.

For UPL drugs, 74% of respondents indicated that manufacturer rebates would either decrease or stay the same; 23% of respondents thought manufacturer rebates would increase.

For therapeutic alternatives to UPL drugs, 70% of respondents indicated that manufacturer rebates would either decrease or stay the same; 30% of respondents thought manufacturer rebates would increase.

Plans can use rebate dollars to reduce their premiums, so plans contemplating a reduction in those rebates—plus additional administrative costs noted above—could factor into their predictions of premium impact.

Conclusion

This research indicates that payers have concerns with the potential impact of UPLs on patients, pharmacists, providers, and their own financial positions. New issues have arisen since Avalere’s 2024 findings, including the potential for diminished access to UPL medicines, the need to update provider and pharmacy contracts, and formulary changes for UPL medicines and their therapeutic alternatives. Payers noted that these changes increase administrative burden, which could increase their costs.

As states continue to advance PDABs and UPLs, stakeholders should consider potential impacts on patient access, patient costs, provider reimbursement, plan impacts and benefit design, and manufacturer contracting.

Research Methodology

Avalere conducted interviews and a survey between January and February 2025.  Both were double-blinded, with distinct respondent groups. Neither included individuals who were interviewed for Avalere’s similar work in 2023. Interviewees and survey participants included current and recent senior-level representatives of national and regional payers that had direct experience in prescription drug benefit design and had an ability to speak to an organization’s perception of UPLs and preparedness for implementation.

Avalere conducted six 30-45-minute interviews; interviewees represented 115.2 million total covered lives. The survey included 30 respondents, representing 476.3 million enrollees.²

The chart pack for this research can be found here.

Funding for this research was provided by the Partnership to Fight Chronic Disease. Avalere retained full editorial control.

¹ For this analysis, Avalere only included states that have passed legislation that establish PDABs that are required to conduct affordability reviews. For example, VTs Green Mountain Care Board has the option to conduct an affordability review of a set selection of drugs, but it is not a requirement.

² Surveyed payers did not identify their organization, thus there may be overlap of covered lives.

The post Update: Health Plans’ Perceptions of PDABs and UPLs appeared first on Avalere Health Advisory.

During the Medicare Open Enrollment Period, which runs from October 15 to December 7, Medicare beneficiaries can choose their Part D or Medicare Advantage (MA) plans. Medicare beneficiaries decide whether to enroll in fee-for-service (FFS) with a standalone Prescription Drug Plan (PDP) or in an MA plan. Enrollment decisions take effect at the start of the plan year on January 1.  

There are several types of PDP and MA plan options. Although some MA plans only cover Part A and B benefits, most MA plans include drug coverage. These plans are known as Medicare Advantage Prescription Drug Plans (MA-PDs). While many plans allow general enrollment by all Medicare beneficiaries, some limit coverage to specific types of beneficiaries. For example, MA-PD Special Needs Plans (SNPs) limit enrollment to beneficiaries with certain chronic conditions (C-SNPs), those who are dually eligible for both Medicare and Medicaid (D-SNPs), or beneficiaries who need long-term or other institutional care (I-SNPs). Other PDP and MA plans, known as Employer Group Waiver Plans (EGWPs), are offered to retirees by certain employers or associations.    

In late February, the Centers for Medicare and Medicaid Services (CMS) released the February 2025 MA and Part D Enrollment data. These data provide insight into enrollment decisions by beneficiaries in 2025 and indicate how MA and Part D enrollment is shifting in the first year of Part D benefit redesign implementation under the Inflation Reduction Act (IRA). 

Part D Enrollment by Plan Type 

The share of enrollees in both PDPs and MA-PDs has remained relatively stable from 2024 (Figure 1).  

Figure 1. Part D Enrollment by Plan Type, in Millions, 2021–2025 

From 2024 to 2025, enrollment in PDPs grew by 1.5% and enrollment in MA-PDs grew by about 4% (Figure 2). While PDP enrollment continues to reflect a trend of slower growth in recent years, the MA-PD enrollment growth in 2025 was more moderate compared to previous years (7% from 2023 to 2024 and over 9% from 2021 to 2022 and 2022 to 2023).  

Total enrollment in Medicare, encompassing both FFS and MA, has been steadily increasing at roughly 2% annually since 2020 according to the 2024 Medicare Trustees’ Report. While MA-PD enrollment slowed considerably in 2025, MA-PD enrollment continues to outpace the growth in overall Medicare enrollment.  

Figure 2. Annual Change in MA-PD and PDP Enrollment, 2022–2025 

Enrollment in PDPs varies by geography (Figure 3). Rural states continue to have a higher proportion of enrollment in PDPs, potentially due to provider networking constraints that impact MA-PD availability. PDPs are also more prevalent in areas where there is a significant population of retirees who receive medical coverage through programs such as Federal Employee Health Benefits. 

Figure 3. Proportion PDP Enrollment by State, as a Percentage of Total Part D Enrollment, 2025 

Part D Enrollment by Plan Sponsor 

Part D enrollment continues to be concentrated among national health plans. In 2025, 73% of Part D enrollment is in one of the five largest Part D plans. Among these plans, Centene had the largest increase in enrollment, growing by 19% across both PDP and MA-PD, while CVS had the largest decrease in enrollment, declining by 9% across both PDP and MA-PD. 

Medicare Advantage Enrollment by Plan Type 

In 2025, 62% of MA enrollees are in a general enrollment MA plan, 21% are in a SNP, and 17% are in an EGWP. While enrollment in general and employer MA plans grew modestly from 2024 to 2025 (by 1% and 3%, respectively), enrollment in SNPs continues to grow by double digits, fueled primarily by growth in C-SNP enrollment. Enrollment in C-SNPs grew by 67% from 2024 to 2025. C-SNPs now comprise 15% of all SNP enrollees, a five percentage point increase from 2024 (Figure 4). C-SNP offerings increased by 22% from 2024 to 2025. This broader availability of C-SNPs offerings may have influenced enrollment.  

Figure 4. Enrollment by SNP Type, 2021-2025 

Medicare Advantage Enrollment by Parent Organization 

Enrollment in MA is concentrated among several national health plans. In 2025, 70% of MA enrollment is in one of the five largest MA plans. Among these plans, Elevance had the largest increase in enrollment, growing by 14% across all MA plan types (including MA-PDs), while Humana had the largest decrease in enrollment, declining by 4% across all MA plan types. 

Enrollment Shifts Under the IRA 

In the first year of IRA implementation, enrollment shifts from PDPs into MA-PDs were moderate, despite a 26% reduction in the number of PDPs offered in 2025 relative to 2024. While many factors influence beneficiary enrollment decisions, the Part D premium stabilization demonstration, which limited enrollee PDP monthly premium increases to no more than $35, may have contributed to more moderate enrollment shifts into MA-PDs. 

To learn more about how MA and Part D enrollment shifts under the IRA may impact your organization, connect with us.  

Methodology 

Avalere used MA and Part D enrollment data released in February 2025 by CMS to conduct this analysis. The analysis includes territories and employer plans.  

The post MA and Part D Enrollment Growth Slows in 2025 appeared first on Avalere Health Advisory.

The 340B Drug Pricing Program was established to help certain safety-net providers, known as covered entities, purchase covered outpatient drugs at substantial discounts (i.e., 340B ceiling price).

With the change of administration and a new Congress, there continues to be a great deal of stakeholder interest in the 340B program and potential reforms to it. Stakeholders are also considering reforms to mitigate anticipated challenges as they prepare for effectuation of the new Medicare maximum fair prices (MFPs) set to take effect in 2026, and are taking steps to avoid duplicate discounts with the 340B program.

In recent months, several manufacturers have proposed rebate models to avoid potential duplicate discount risk, but have placed them on hold following communications from the  Health Resources and Services Administration (HRSA). At least four pharmaceutical manufacturers have sued the federal government over HRSA’s decision to prohibit implementation of a 340B rebate model; those lawsuits are still ongoing.

In October 2024, the Centers for Medicare and Medicaid Services (CMS) finalized guidance on the Medicare Drug Price Negotiation Program for initial price applicability year (IPAY) 2027 and how MFPs will be effectuated in IPAYs 2026 and 2027.  The agency will create two distinct modules for the Medicare Transaction Facilitator (MTF)—a data module and a payment module—but CMS did not directly address outstanding questions related to 340B discount non-duplication. As a result, it will be up to 340B stakeholders (e.g., manufacturers, covered entities, 340B third-party administrators) to verify a drug’s 340B eligibility before issuing an MFP retrospective discount to the dispensing entity within the required 14 days.

While manufacturers remain concerned about 340B duplicate discount risk (see Figure 1), MFP effectuation also raises broader concerns for dispensing entities and patients. According to a recent analysis, dispensing entities are expected to face financial risk and cash flow disruption while awaiting receipt of MFP refunds. This may cause some pharmacies to no longer stock selected products, which could hinder access for Medicare patients taking these widely used products. In the absence of clear CMS guidance, stakeholders may look to market and contractual solutions to address these challenges.

Figure 1. Flow of Transactions for Duplicate Discounts Between 340B and MFP

Potential Components of a Rebate Model

Stakeholders have debated the merits of a 340B rebate model since 2020. Supporters assert that it would provide the clarity needed to avoid duplicate discounts, while opponents are concerned that converting upfront 340B discounts to rebates would have a negative administrative and financial impact on safety-net providers. Given the ongoing 340B duplicate discount risk as CMS finalized its approach to MFP effectuation in 2026, the focus on a rebate model has reemerged.

To prevent both a 340B discount and MFP refund on the same claim, a rebate model can be designed with the following key components:

• Covered entities purchase a drug from the wholesaler at wholesale acquisition cost (WAC) (similar to non-340B covered entities) and immediately submit purchase data to the rebate model administrator. Currently, 340B covered entities purchase drugs at or below the 340B ceiling price.
• After dispensing to a 340B-eligible patient, covered entities submit claims data within a specified time period to the 340B rebate model platform.
• The 340B rebate model platform validates the claim in terms of eligibility, location, and timeliness of submission.
• If sufficient, the 340B rebate model platform issues a rebate to the covered entity for the difference between the WAC and 340B ceiling price.

Stakeholders continue to have different perspectives on what actions are permissible under the 340B program. As noted above, HRSA previously responded, maintaining that such an approach is inconsistent with the 340B statute and litigation is ongoing. A relevant analog to consider is that a rebate model framework has been historically used for AIDS Drug Assistance Programs, obtained through written consent from HRSA’s HIV/AIDS Bureau. HRSA previously took a similar position when manufacturers began implementing 340B contract pharmacy restrictions in 2020.

Further, 340B covered entities achieve savings by purchasing drugs at or below the 340B ceiling price, while some covered entities secure sub-ceiling 340B discounts through the Prime Vendor Program. Under a rebate model, covered entities would access the savings once a refund is paid. Stakeholders may want to consider the economic impacts of a rebate model to covered entities if it results in entities losing access to sub-ceiling 340B discounts.

Key Questions for Stakeholders

There are several outstanding questions for stakeholders to consider in the near term:

1. Catalyst for Federal Reform: In the previous session of Congress, several bills were introduced to reform the 340B program but did not advance further. Senator Cassidy (R-LA) has been a proponent of 340B reform and is now the Chair of the Senate Health, Education, Labor and Pensions (HELP) Committee, which has jurisdiction over 340B matters.

Stakeholder Questions: Could growing 340B contract pharmacy restrictions, continued state-level activity, stakeholder interest in a 340B rebate model, and new HELP Committee leadership catalyze efforts to reach alignment on 340B program reform in 2025?

2. Uncertainty in the New Administration: While a new HRSA Administrator, Tom Engels, has been sworn in under the second Trump administration, it is unclear how HRSA and CMS intend to handle the 340B program and/or how it intersects with MFP effectuation.

Stakeholder Questions: Will new HRSA and CMS leadership impact the 340B program? Will the agencies continue look to stakeholders to address these operational challenges on their own?

Key Takeaways & Conclusion

With less than a year until MFP effectuation in January 2026, manufacturers of negotiated drugs and dispensing entities will need to continue with implementation efforts while monitoring for potential policy changes under the new administration. The intersection of MFP effectuation and the 340B program will be a critical area for ongoing stakeholder and policymaker engagement. Policymakers will have to balance numerous factors across stakeholders and interest groups. To learn more about how Avalere can partner with you on IRA, MFP effectuation, 340B and months. Policymakers will have to balance numerous factors across stakeholders and interest groups. To continue exploring these issues connect with us.

The post Updated: Key Considerations for MFP Effectuation and the 340B Rebate Model appeared first on Avalere Health Advisory.

Some key agency appointments have already been rolled out, but stakeholders are also watching closely the pending confirmation hearings for Robert F. Kennedy, Jr., the nominee for HHS Secretary, who will address the Finance Committee on January 29 and the Health, Education, Labor and Pensions Committee on January 30. If confirmed, Kennedy may elevate new public health and immunization policy priorities, including those related to vaccine approvals, safety, and coverage. Stakeholders should monitor the confirmation hearings and prepare for any potential implications for vaccine access.

Short-Term Considerations

Given the communication freeze in the lead up to the Kennedy confirmation process, previously scheduled 2025 vaccine advisory committee meetings have been postponed. For example, the National Vaccine Advisory Committee (NVAC) was scheduled to discuss priorities for the 2026–2030 National Vaccine Strategic Plan at the end of February and the Advisory Commission on Childhood Vaccines (ACCV) was scheduled to discuss the Vaccine Injury Compensation Program (VICP) this week. These meetings were postponed without public notice and rescheduling plans remain unclear.

In addition, the Centers for Disease Control and Prevention (CDC) did not publish its Morbidity and Mortality Weekly Report, which serves as a key resource for monitoring infectious disease and public health trends.

Historically, federal advisory committee activities and CDC publications have proceeded as planned amid administrative changes, so these changes and pauses underscore heightened uncertainty for vaccine policy. Should these delays persist for a longer period, it could delay critical vaccine use recommendations and create challenges to public health implementation at all levels, including federal and state programs and immunization jurisdictions.

Figure 1. Scope and Oversight of Key Vaccine Advisory Committees*

*Not all-inclusive. HHS: US Department of Health and Human Services; HRSA: Health Resources and Services Administration; OASH: Office of the Assistant Secretary for Health

When external communication resumes, certain administration agency officials could be in place to facilitate communication as other leadership positions await Senate confirmation (including the Food and Drug Administration Commissioner and, for the first time, the CDC Director). Selection and confirmation of these individuals will ultimately determine who sets the priorities for the top US public health agencies, potentially underscoring new expectations and oversight for healthcare policymaking.

Longer Term Considerations Under New HHS Leadership

• While the ACIP considers clinical safety evidence in its decision making, Kennedy’s stated prioritization of vaccine safety could lead to increased scrutiny of the Committee’s recommendation development process. ACIP recommendations require endorsement by the CDC Director, an executive function delegated by the HHS Secretary, before they can inform coverage policy.
• ACCV may also play a larger role in vaccine policy and communications related to safety. Its charter allows the Commission to recommend changes to the Vaccine Injury Table, recommend vaccine injury-related research activities, and advise on developing or revising vaccine information materials. These materials include Vaccine Information Statements (VIS), which are published by the CDC and required to be given to patients before administering a vaccine.
• Kennedy may also prioritize VICP reform. Rep. Lloyd Doggett (D-TX-37) introduced the VICP Modernization Act in the previous Congress, which would increase the number of vaccine injury claim adjudicators, increase the statute of limitations for filing claims, and add adult vaccinations to the Injury Table. A nonprofit organization started by Kennedy, however, supported a different bill that would remove liability protections for manufacturers of COVID-19 vaccines, increasing their financial responsibility for any COVID-19 vaccine-related injury claims.

What’s Next

While Kennedy’s potential confirmation and the days following could provide clarity on what to expect from future health agency communications, much remains uncertain. With that in mind, new agency leadership and policy changes require stakeholders to remain adaptable. To learn more about how Avalere’s Vaccines Team can help you prepare flexible evidence, policy, and access strategies in the face of uncertainty, connect with us.

Appendix: Advisory Committee Authorizing Statute

The post Vaccine Policy and Access Under New HHS Leadership appeared first on Avalere Health Advisory.