The Growing Access Barrier Facing Patients: Private Equity

By: Marcus J. Hopkins, Health Policy Lead Consultant, ADAP Advocacy

The acquisition of hospitals and healthcare practices by private equity (PE) firms has increased dramatically over the past two decades, with PE deals involving healthcare businesses tripling from 2009 to 2016, and acquisitions of healthcare-related operations reaching a staggering $79 billion in 2019 (Halabi et al., 2025). This explosive growth in acquisitions has resulted in astonishing profits for PE firms, slashed salaries for PE-owned employees, and worse outcomes for patients.

Photo Source: Purchaser Business Group on Health

According to the Private Equity Stakeholder Project (PESP), approximately 488 hospitals in the U.S. are owned by PE firms, including 8.5% of all private hospitals and 22.6% of all proprietary for-profit hospitals. At least 27.7% of PE-owned hospitals serve primarily rural patients, and nearly a quarter (22.6%) of PE-owned facilities are psychiatric hospitals (PESP, 2025b).

The healthcare sector is particularly attractive to PE firms as healthcare spending accounts for nearly one-sixth (18%) of the U.S. gross domestic product (GDP), growing 7.2% in 2024, and reaching $5.3 trillion or $15,474 per person (CMS, 2026). With spending at those levels, PE firms can very easily increase profitability, which they largely achieve by decreasing expenditures, particularly those related to salaries, and increasing the number of services provided and billed.

Research published in the Annals of Internal Medicine found that emergency department salaries were cut by 18.2% compared with control hospitals, by 15.9% in intensive care units (ICUs), and by 16.6% hospital-wide, reducing the number of full-time hospital employees by 11.6% (Kannan et al., 2025).

These cuts in staffing come with a cost. Using Medicare Part A and B claims and Cost Report data from 2009-2019, Kannan et al. found that, while there was no observable increase in ICU mortality rates, deaths in PE-owned emergency departments increased by 13.4%. In addition, patient transfers to other acute care hospitals from emergency departments increased by 4.2% and from ICUs by 10.6% (Kannan et al., 2025).

Photo Source: PESP Private Equity Hospital Tracker

A study published in Health Affairs found that claims billed by PE-owned hospitals to Medicare increased by 30.5% after acquisition, resulting in a 14.9% increase in Medicare spending per physician over five quarters. Similarly, patients at PE-acquired primary care practices saw a 12.9% increase in the number of services received, including an 11.1% increase in laboratory tests and an 11.3% increase in preventive and screening services (Singh et al., 2026).

These increases in services, when combined with significant decreases in salaries and staffing, result in huge profits for PE firms just from Medicare payments alone. It is harder, however, to quantify any increases in revenues related to the 340B drug pricing program at these practices or hospitals for a few of reasons:

• According to the Private Equity Stakeholder Project (PESP), some hospitals are operated by PE firms through complex ownership structures, often masking who owns, operates, or oversees them (PESP, 2025b).
• Some non-profit hospitals, while not directly owned by PE firms, are managed by companies that are owned by PE firms. Many of these arrangements are not publicly disclosed (PESP, 2025b);
• Providers are not currently required by either the Health Resources & Services Administration (HRSA), the Center for Medicare & Medicaid Services (CMS), or the Internal Revenue Service (IRS) to report annual 340B revenues to the public or on any tax documents.

That does not, however, mean that PE firms don’t have 340B in their sights. In May 2026, Quorum Health, based in Brentwood, TN, announced that they would be abandoning their for-profit business model and switching to a non-profit model under the pretense of ‘…deliver[ing] quality care in rural and mid-sized communities.” Quorum admits that doing so will result in $13 million in annual savings from tax exemptions alone, and that the expected acquisition of eligibility for the 340B Program will result in $11 million in additional revenues. While this shift must be approved by regulators, it’s expected to be approved by Fall 2026 (Van Alstin, 2026).

These negative consequences have not gone unnoticed. The Private Equity Stakeholder Project—a Chicago-based non-profit watchdog organization founded in 2017 to monitor and address the growing impact of private equity and private fund managers in the climate & energy, workers & jobs, housing, healthcare, and detention & surveillance industries (PESP, n.d.)—began tracking hospitals owned by PE firms, creating an easily searchable list for public examination (PESP, 2025a) and an interactive map (PESP, 2025b).

Photo Source: Quartz

While nonprofit organizations and researchers are closely monitoring the impacts of PE firm ownership in the healthcare industry, state and federal legislators and regulators have struggled to keep pace with the pace of PE acquisitions. A recent article published in The American Journal of Managed Care has called on policymakers to “…pursue innovative regulatory solutions, including health care–specific PE law, alignment of state and federal oversight, adoption of alternative payment models, and strengthened patient protections against PE-associated clinical and nonclinical risks (Berman et al., 2026).

ADAP Advocacy echoes this call. Aside from the risks to patients, PE firms represent real and present dangers to the communities being served by the providers and hospitals they own and loot. They raid safety-net hospitals (O’Grady, 2022), bankrupt hospitals and sell off their property (DePillis, 2019), roll back or eliminate essential but less profitable services (Spegele, 2021), and leave communities with few, if any, options for accessing healthcare services. Those PE firms that have managed to worm their way into the non-profit provider sectors are also very likely reaping 340B revenues while patients suffer.

It’s time to curtail PE ownership in the healthcare sector, regardless of how much money it makes for owners and investors.

Disclaimer: All funders of the ADAP Advocacy Association are publicly listed on our website. 

Disclaimer: Guest blogs do not necessarily reflect the views of the ADAP Advocacy Association; rather, they provide a neutral platform for the author to promote open, honest discussion of public health-related issues and updates.

References:

[1] Berman, M. E., Tamirisa, K., Rahim, F. O., Khachadoorian-Elia, H., & Witkowski, M. L. (2026, May 11). Regulating Private Equity in Health Care: A Strategic Policy Agenda. American Journal of Managed Care, 32(5), e138-e140. https://doi.org/10.37765/ajmc.2026.89938

[2] Centers for Medicare and Medicaid Services. (2026, January 14). National health expenditure data: Historical. Washington, DC: United State Department of Health and Human Services: Centers for Medicare and Medicaid Services: Data and Research: Statistics, Trends, and Reports: National Health Expenditure Data. https://www.cms.gov/data-research/statistics-trends-and-reports/national-health-expenditure-data/historical

[3] DePillis, L. (2019, July 29). Rich investors may have let a hospital go bankrupt. Now, they could profit from the land. Atlanta, GA: CNN: CNN Business: Economy. https://www.cnn.com/2019/07/29/economy/hahnemann-hospital-closing-philadelphia/index.html

[4] Halabi, S., Belani, S., & O’Hara, G. (2025). Private Equity and Non-Profit Status in the US Healthcare System. Akron Law Review, 58(4), 687-715. https://ideaexchange.uakron.edu/akronlawreview/vol58/iss4/4?utm_source=ideaexchange.uakron.edu%2Fakronlawreview%2Fvol58%2Fiss4%2F4&utm_medium=PDF&utm_campaign=PDFCoverPages

[5] Kannan, S., Bruch, J. D., Zubizarreta, J. R., Stevens, J., & Song, Z. (2025, September 23). Hospital Staffing and Patient Outcomes After Private Equity Acquisition. Annals of Internal Medicine, 178(11), 1,528-1,538. https://doi.org/10.7326/ANNALS-24-03471

[6] O’Grady, S. (2022, November). How Private Equity Raided Safety Net Hospitals and Left Communities Holding the Bag: A Case Study on Leonard Green & Partners’ Ownership of Prospect Medical Holdings. Chicago, IL: Private Equity Stakeholder Project: PESP Private Equity Hospital Tracker. https://pestakeholder.org/wp-content/uploads/2022/11/Prospect_Primer_Nov-2022.pdf

[7] Private Equity Stakeholder Project. (2025a, April). PE hospital tracker. Chicago, IL: Private Equity Stakeholder Project: PE Hospital Tracker. https://airtable.com/appZYwbt3vioNrb95/shricxhAQSjpv5ec8/tbl058jjL6qNMqzkM

[8] Private Equity Stakeholder Project. (2025b, April). PESP Private Equity Hospital Tracker. Chicago, IL: Private Equity Stakeholder Project. https://pestakeholder.org/pesp-private-equity-hospital-tracker/

[9] Private Equity Stakeholder Project. (n.d.). About us. Chicago, IL: Private Equity Stakeholder Project: About Us. https://pestakeholder.org/about-us/

[10] Singh, Y., Dixit, M. N., & Whaley, C. M. (2026, May 20). Private Equity Acquisitions In Primary Care: Changes In Utilization, Spending, And Workforce. Health Affairs, 45(6), 629-636. https://doi.org/10.1377/hlthaff.2025.01703

[11] Spegele, B. (2021, April 11). A City’s Only Hospital Cut Services. How Locals Fought Back. New York, NY: The Wall Street Journal: Health: Healthcare. https://www.wsj.com/health/healthcare/a-citys-only-hospital-cut-services-how-locals-fought-back-11618133400

[12] Van Alstin, C. (2026, May 24). Nationwide private-equity backed hospital chain announces shift to nonprofit business model. Providence, RI: Innovate Healthcare: Health Exec: Business Intelligence. https://healthexec.com/topics/healthcare-management/business-intelligence/nationwide-private-equity-backed-hospital-chain-announces-shift-nonprofit-business-model

Medicare Drug Price Negotiations Again Target High-Impact Prescriptions, But at what Cost?

By: Marcus J. Hopkins, Health Policy Lead Consultant, ADAP Advocacy

The Trump Administration recently released the next round of medications selected for the Medicare Drug Price Negotiation Program, which includes 15 medications payable under Medicare Part B and/or covered under Medicare Part D, largely for the treatment of chronic diseases and cancer.

Photo Source: CMS

Of greatest concern to ADAP Advocacy is the inclusion of Biktarvy, the most commonly prescribed single-pill oral regimen to treat HIV made by Gilead Sciences, currently taken by over 430,000 people living with HIV in the United States (Gilead Sciences, 2026), or 35.8% of People Living With HIV/AIDS (PLWHA).

In June 2025, ADAP Advocacy submitted public comment to the Centers for Medicare and Medicaid Services (CMS). In this public comment, it requested that CMS create a carve-out exemption for all medications used for the treatment of HIV/AIDS in order to avoid any interruptions of service for PLWHA who rely upon Medicare for their HIV medications.

ADAP Advocacy followed up on this public comment with a sign-on letter to CMS requesting the carve-out exemption, which garnered signatures from nearly 40 organizations and received a direct response from Dr. Mehmet Oz, the current CMS Administrator.

The response?

"CMS acknowledges your recommendation to implement a carve-out exemption for all medications indicated for the treatment and prevention of HIV/AIDS; however, the statute does not specify a specific exclusion for medications used for the treatment of HIV/AIDS from selection under the Negotiation Program."

Essentially, “Sorry. Can’t help you.”

Photo Source: ADAP Advocacy

What Does Price Negotiation Mean?

As ADAP Advocacy detailed in a July 2025 blog, Medicare’s Negotiation Program essentially requires manufacturers to accept the final price after four negotiation meetings set by CMS, reject the offer, and pay a 95% excise tax on all of the medications sold to Medicare payors, or remove their products from the Medicare formularies altogether (Hammond, 2024). Because no business can feasibly accept a 95% excise tax and remain viable, manufacturers are left with the unenviable decision to either accept significant profit losses in the Medicare market or withdraw their drugs (Hopkins, 2025). This process, which is supposed to resemble a negotiation, has been characterized by many as a threat with the full force of the federal government behind it. One public health stakeholder attending ADAP Advocacy’s Health Fireside Chat last year in Minneapolis, Minnesota, called it extortion. 

For PLWHA, the inclusion of one of the most effective single-pill regimens in the history of HIV treatment on this list presents a real and present danger should Gilead Sciences determine that allowing Biktarvy to be purchased at a significant loss by Medicare payors is unacceptable.

Medicare is the 2nd-largest payor of HIV treatment and care in the United States, accounting for 39% of federal spending in 2020, and serving 28% of PLWHA (Dawson, et al., 2023).

Patient advocates continue to share their concerns over Biktarvy, or any other HIV-related product, being targeted by CMS for artificial government price controls. Among them is Aging and HIV Institute’s David “Jax” Kelly, JD, MPH, MBA. Kelly argued, “Nearly 28% of PLWH in the United States are Medicare beneficiaries, and most qualified through disability rather than age… [t]his unique cost profile reflects both the effectiveness and the financial burden of HIV treatment. Interruptions in ART jeopardize not only individual health but also public health goals. Sustained viral suppression—essential to ending the epidemic—depends on reliable, affordable access to medications.”

ADAP Advocacy will follow up with its aforementioned communications with CMS by submitting public comments in response to its request for information about selected drugs and their therapeutic alternatives, because the inclusion of an antiretroviral therapeutic “is playing with fire,” as ADAP Advocacy’s CEO has noted on numerous occasions.

Photo Source: Andreas Marquardt/Shutterstock

What Can Patients Do?

Please find information below on how you can get involved:

[From CMS]:

The Negotiation Program enables Medicare to directly negotiate the prices of certain high-cost drugs. The current cycle of negotiation and renegotiation is underway, and CMS wants to hear directly from patients, caregivers, clinicians, and others to gather input relevant to the selected drugs.

CMS invites you to rally the communities you represent to share information about the public engagement events, including a virtual livestreamed town hall meeting focused on the clinical considerations related to the selected drugs, and private (i.e., not livestreamed or open to press or general public) virtual patient-focused roundtable events, one for each selected drug, for patients, patient advocacy organizations, and caregivers.  

Take Action

• Learn more about the drugs selected for the current cycle of negotiation and renegotiation here.
• Use communication tools available here so that your organization can leverage your various communication channels to share information about these opportunities:
• Complete the Drug Price Negotiation Information Collection Request (ICR).
• Register for public engagement events here. 

Key Dates

• The Drug Price Negotiation ICR is now available, and responses are due by March 1, 2026. It is worth noting that for patients wanting to submit public comments, questions 28-33 are the patient- or caregiver-focused input (so don’t get overwhelmed by the length of the online form)
• Drugs selected for the upcoming cycle of negotiation and renegotiation were announced on January 27, 2026, and registration for the public engagement events is open now until March 6, 2026.
• Public engagement events for Biktarvy include:
• Roundtable event on Monday, April 6 from 2:30 – 4:30 p.m. ET 
• Town Hall Meeting on Wednesday, April 22, Session 1 from 10:30 a.m. – 12 p.m. ET

Photo Source: Portland.gov 

Registration for the opportunity to speak at the public engagement events is now open and will close at 11:59 p.m. PT on March 6, 2026.

• To register for a roundtable event, click here. 
• To register for the town hall meeting, click here. 

Reach out to IRARebateandNegotiation@cms.hhs.gov with any questions, using the subject line “Public Engagement.”

ADAP Advocacy urges patients and patient advocates to weigh in. While financial outlays may be high for PLWHA due to treatment costs, the financial impacts of treatment interruption are far higher. While treatment cessation for any disease state can cause serious complications, the nature of the HIV retrovirus is such that it can quickly mutate to develop resistance to a treatment regimen if that regimen is suddenly halted. This can create a strain of HIV that is multidrug-resistant (MDR-HIV), making the virus more difficult and significantly costlier to treat–and result in premature death. CMS targeting an HIV-related therapeutic signals a threat to AIDS exceptionalism, and it cannot be left to chance.

Disclaimer: Guest blogs do not necessarily reflect the views of the ADAP Advocacy Association, but rather they provide a neutral platform whereby the author serves to promote open, honest discussion about public health-related issues and updates.

References:

[1] Centers for Medicare and Medicaid Services. (2026, January). Medicare Drug Price Negotiation Program: Selected Drugs for Initial Price Applicability Year 2028. Washington, DS: United States Department of Health and Human Services: Centers for Medicare and Medicaid Services. https://www.cms.gov/files/document/factsheet-medicare-negotiation-selected-drug-list-ipay-2028.pdf

[2] Dawson, L., Kates, J., Roberts, T., Cubanski, J., Neuman, T., & Damico, A. (2023, May 27). Medicare and People with HIV. KFF: HIV/AIDS. https://www.kff.org/hivaids/issue-brief/medicare-and-people-with-hiv/

[3] Gilead Sciences. (2026). Biktarvy. Foster City, CA: Gilead Sciences: Biktarvy: About Biktarvy. https://www.biktarvy.com/about-biktarvy

[4] Hammon, J. (2024, August 19). Price controls – bad policy, big problems. Washington, DC: Paragon Health Institute. https://paragoninstitute.org/paragon-prognosis/price-controls-bad-policy-big-problems/

[5] Hopkins, M. J. (2025, July 10). CALL TO ACTION: HIV Medication Carve-Out Exemption from the Medicare Drug Price Negotiation Program. Nags Head, NC: ADAP Advocacy: ADAP Blog. https://adapadvocacyassociation.blogspot.com/2025/07/call-to-action-hiv-medication-carve-out.html

Opioid Use Disorder Among Medicare Beneficiaries

By: Ranier Simons, ADAP Blog Guest Contributor

The United States has the highest levels of opioid consumption worldwide (Cornell et al., 2021). This consumption level is not solely attributed to recreational use but is also a product of prescription rates. United States healthcare providers prescribe opioids for pain more often and at earlier points in treatment, sometimes as first-line therapy (Cornell et al., 2021). This is especially concerning regarding people living with HIV/AIDS (PLWHA). Compounding the potential adverse effects of medically prescribed opioids, PLWHA also have a much higher prevalence of non-medical opioid use compared to the general population of HIV-negative individuals (West et al., 2023). A recent study examined opioid use among older PLWHA specifically.

Photo Source: Clinical Trials Arena

A recently published retrospective cross-sectional study analyzed opioid utilization and the prevalence of opioid use disorder (OUD) among Medicare beneficiaries. The study subjects were aged 65 and older and beneficiaries of Medicare fee-for-service with Part D prescription drug coverage. The study covered the period from January 1, 2008, to December 31, 2021 (Shiau et al., 2025). The researchers examined 163,429 PLWHA, comparing them to 490,287 individuals without HIV, matching based on demographic criteria. 

During the study timeline, 35% of PLWHA, compared to 28.3% of HIV-negative subjects, were prescribed at least one opioid annually (Shiau et al., 2025). PLWHA had a higher prevalence of being prescribed higher-risk prescriptions. High-risk opioid prescriptions are those with higher dosages and longer durations. Dosages are commonly measured in morphine milligram equivalents (MME). Dosages higher than 100 MMEs have twice the risk of misuse and overdose as lower doses, while dosages of 20-50 MME also carry risk (U.S. Dept of Labor, n.d.). In the study cohort, 5.3% of PLWHA received prescriptions with total daily MMEs higher than 90mg compared to 2.2% of those without HIV (Shiau et al., 2025). Additionally, 3.1% of PLWHA, compared to 1.6% of those without HIV, were prescribed opioids with MMEs higher than 120mg (Shiau et al., 2025). Regarding prescription duration, 6.1% of PLWHA, compared to 3.9% of individuals without HIV, were prescribed high-risk opioids with coverage of longer than 90 consecutive days of use (Shiau et al., 2025). 

Photo Source: AIDS Map

It is notable that among the study participants, there was a higher prevalence of OUD indicators in PLWHA compared to those who were HIV-negative. The data analyzed were administrative; thus, OUD indicators include formal diagnosis, OUD medication, and opioid-related emergency department visits (Shiau et al., 2025).  

PLWHA are prescribed opioids for chronic pain. That pain can have multiple causes, such as HIV-related nerve damage, pain from opportunistic infections acquired due to lowered immune response, antiretroviral treatment side effects, and more (Lutton, 2025; Madden et al., 2020). Opioid abuse is not only medically detrimental overall but also has HIV-specific adverse outcomes. PLWHA with OUD are more likely to have difficulty with ART adherence. This is especially true for PLWHA who are also living with mental health challenges. Gravely, ART, opioids, and drugs used to treat OUD are metabolized in the body via the same biochemical pathways (Cernasev et al., 2020). Thus, there can be adverse drug interactions. Moreover, ART medications can enhance or decrease the levels of opioids or OUD treatment drugs in the bloodstream (Cernasev et al., 2020). There are times when the interactions can increase the effectiveness of the ART, opioids, or OUD treatment medications (Cernasev et al., 2020). However, many times the result is often reduced effectiveness or even toxicity (Cernasev et al., 2020). All these potential adverse outcomes are compounded by the fact that many PLWHA have comorbidities.

Photo Source: Valley Spring Recovery Center

Studies indicate that over half of PLWHA will have nonmalignant chronic pain at points throughout their lives (Madden et al., 2020). As a result of medical advances in HIV treatment, PLWHA are living longer. Thus, the population of PLWHA over the age of 65 is going to continue to increase, as will chronic pain issues. The Shiau study indicates the importance of examining better ways to treat chronic pain in PLWHA that do not rely on high-risk opioids. A direct quote from the study text includes, “…clinicians treating older adults with HIV should consider alternative therapies for pain, and public health researchers and policy makers should consider screening and prevention programs for opioid use disorder in older adults living with HIV” (Shiau et al., 2025). 

It is essential to emphasize the holistic well-being of older PLWHA. Physical health, mental health, sexual health, and addiction are all realities that need to remain priorities for all medical professionals who give care to aging populations.

[1] Cernasev, A., Veve, M. P., Cory, T. J., Summers, N. A., Miller, M., Kodidela, S., & Kumar, S. (2020). Opioid Use Disorders in People Living with HIV/AIDS: A Review of Implications for Patient Outcomes, Drug Interactions, and Neurocognitive Disorders. Pharmacy (Basel, Switzerland), 8(3), 168. https://doi.org/10.3390/pharmacy8030168

[2] Cornell, A., Davis-Castro, C., Duff, H., Romero, P. (2021, June 2). Consumption of Prescription Opioids for Pain: A Comparison of Opioid Use in the United States and Other Countries. Retrieved from https://www.congress.gov/crs-product/R46805

[3] Lutton, L. (2025, October 7). Opioid Prescriptions, Addiction More Common in Older HIV Patients. Managedhealthcareexecutive.com; Managed Healthcare Executive. Retrieved from https://www.managedhealthcareexecutive.com/view/opioid-prescriptions-addiction-more-common-in-older-hiv-patients

[4] Madden, V. J., Parker, R., & Goodin, B. R. (2020). Chronic pain in people with HIV: a common comorbidity and threat to quality of life. Pain management, 10(4), 253–260. https://doi.org/10.2217/pmt-2020-0004. Retrieved from https://pmc.ncbi.nlm.nih.gov/articles/PMC7421257/#:~:text=Abstract,(e.g.%2C%20stigma)%20factors.

[5] Shiau, S., Drago, F., Kinkade, C. W., Getz, K., Bushnell, G., Samples, H., Bender, A. A., Bennett, L., Dave, C., Halkitis, P. N., Gerhard, T., Roy, J. A., Martins, S. S., Yin, M. T., & Crystal, S. (2025). Prescription opioid use and opioid use disorder among older adults with HIV in the USA from 2008 to 2021: a retrospective repeated cross-sectional study. 100017–100017. https://doi.org/10.1016/j.lanprc.2025.100017. Retrieved from https://www.thelancet.com/journals/lanprc/article/PIIS3050-5143(25)00017-2/fulltext

[6] West, B. S., Diaz, J. E., Philbin, M. M., & Mauro, P. M. (2023, April). Past-year medical and non-medical opioid use by HIV status in a nationally representative US sample: Implications for HIV and substance use service integration. Journal of Substance Use and Addiction Treatment, 147, 208976. https://doi.org/10.1016/j.josat.2023.208976. Retrieved from https://www.sciencedirect.com/science/article/abs/pii/S2949875923000267#:~:text=Conclusion,%2Drelated%20outcomes%2C%20including%20overdose.

[7] U.S. Department of Labor. (nd). Risk Factors for Opioid Misuse, Addiction, and Overdose. Retrieved from https://www.dol.gov/agencies/owcp/opioids/riskfactors

Disclaimer: Guest blogs do not necessarily reflect the views of the ADAP Advocacy Association, but rather they provide a neutral platform whereby the author serves to promote open, honest discussion about public health-related issues and updates.    

Why are Price Cap Proposals on Medicines Dangerous to Pharmacies and Patients?

By: Shabbir Imber Safdar, ADAP Advocacy Board Member and Executive Director, Partnership for Safe Medicines

**Reposted with Permission from PSM**

Price cap proposals, like upper payment limits currently being debated by prescription drug affordability boards (PDABs) and Medicare maximum fair prices (MFPs), often assume a simple drug/price supply chain which doesn’t reflect reality in the United States. They also don’t account for the fact that members of the drug/price supply chain will react to price caps in ways that could bankrupt pharmacies and reduce patient access.

Colorado approved an upper payment limit on Enbrel a few days after we posted this. We anticipate that this decision will be bad for pharmacies and patients.

The U.S. healthcare system is uniquely complex

Pharmaceuticals in the United States have an incredibly complex supply chain. Everyone agrees that more should be done to address the cost of medicine, but developing workable cost-reduction policies is challenging. This is because unlike a hardware store, where the maker, distributor, and retailer of a hammer are linear and all actors fear competition, the U.S. healthcare market is far more complex.

Healthcare system players like pharmacy benefit managers (PBMs) gatekeep patients from their local pharmacies. It’s as if the maker or distributor of a hammer could tell your local hardware store whether customers could use your hardware store and what you were allowed to charge for the hammer, regardless of how much it costs for you to buy it.

A teachable moment

Recently Dr. Emily Zadvorny of the Colorado Pharmacists Society provided public comment to the Colorado Prescription Drug Affordability Board about their efforts to set upper payment limits for several medicines. Several other states are in this process, and the federal government has been engaged in setting MFPs for medicines in Medicare.

Dr. Zadvorny’s testimony underscored problems with price-setting policy solutions to healthcare costs in the U.S.

"...up to 90% of independent pharmacies are already saying they will not participate in the medication in the Medicare Drug Price Negotiation Program, precisely because there is no guarantee that they can not be underwater on those drugs." [Dr. Emily Zadvorny, 7/11/2025]

Dr. Zadvorny was talking about multiple risks to pharmacies and to patients, which we’ll explain below.

PBM reactions to price caps that affect pharmacy

Most price cap proposals only concern themselves with the maximum price manufacturers, distributors, pharmacies, and insurance companies can charge or reimburse for a medicine. Reducing the maximum price means that players, such as PBMs, will make less money when drugs are dispensed to patients.

Policies like UPLs and MFPs don’t always prevent monopolistic players like PBMs from lowering reimbursements to maintain their profits under the price cap. For example, imagine a medicine that costs a pharmacy $1,000 to purchase. The PBM makes $150 on that medicine and reimburses the pharmacy $1,010. If a price cap says that you can only charge $500 for the medicine, the PBM is likely to lower the reimbursement for the pharmacy to $350. The PBM maintains their $150 profit, and the pharmacy loses money.

Even if the UPL rules say that a medicine can only be sold for $500 and must be reimbursed at the same price of $500, the pharmacy will make $0. Your local hardware store cannot stay in business buying and selling items for $0 profit, and neither can your local pharmacy. How will it pay for salaries, rent, insurance, utilities, and other costs of doing business?

This 2-page summary explains the problem of PBM under reimbursements

Pharmacies as financial lenders to the healthcare system

The Medicare MFP system sets a maximum reimbursement Medicare will pay for a medicine, but leaves the cost of medicines untouched. It requires drug manufacturers to rebate pharmacies for the difference between the two. If the manufacturer is not required to compensate the pharmacy for their full cost, it will be catastrophic. Pharmacies can not stay in business without being made whole on their costs or without making profits.

However, there is another problem: The time between when pharmacies purchase medicine and when they are fully reimbursed is an enormous interest-free loan that pharmacies, which are already operating on razor thin margins, cannot afford. Estimates are that this could be thirty days, or even more. In January 2025, 3Axis Advisors found that under Medicare’s drug price negotiation program pharmacies could see a weekly cash flow shortfall of $10,838.25 compared to prior operations. Nearly 2,300 pharmacies shut their doors during 2024, primarily for financial viability reasons, and cash flow problems because of these proposals will accelerate closures.

Read Unpacking the Financial Impacts of Medicare Drug Price Negotiation on the 3Axis site

What effect will this have on patients?

Many pharmacies have already decided not to stock price-controlled medications rather than risk financial ruin. In fact, the National Community Pharmacists Association (NCPA) January 2025 survey of independent pharmacies found that over 90 percent of independent pharmacies may decide, or have already decided, not to stock price controlled drugs from the Medicare Drug Price Negotiation Program.

Patients cannot get quality healthcare from a pharmacy that’s out of business or that can’t afford to stock the medicine that patients need. Additionally, PBMs may make less profitable price-controlled medicines harder to obtain by placing them on a harder to reach tier, or by hiking patient co-pays, which also impedes access.

Community pharmacies are wary of stocking price controlled drugs from the Medicare Drug Price Negotiation Program (NCPA member survey, January 2025)

Don’t pharmacies make their money on “dispensing fees” anyway, instead of the cost of medicine itself?

Dr. Zadvorny brought this up in her public comment:

We did get [a dispensing fee] into the rules. We got it into the law. But what I heard earlier today that concerns me is that it would be left up to private contracts to ensure that. I can tell you right now that a lot of private contracts are either pennies for a dispensing fee, or sometimes it's not even made whole.

It can be $0. I think if there's any possibility to pay for this, for the board to ensure that there's a fair dispensing fee, I would absolutely implore you to do that. The state of Colorado does gather, cost of dispensing surveys. And there is data on what the real cost of dispensing a medication is. I would encourage that the dispensing fee that's included in these UPL [upper payment limit] drugs is no less than what is in that data from the cost of dispensing survey. [Dr. Emily Zadvorny, 7/11/2025]

Dr. Zadvorny is referring to PBMs giving pharmacies a dispensing fee of a penny (yes, an actual penny) or a few cents for the cost of all the work that goes into dispensing a medicine. This, combined with reimbursements for the cost, or sometimes less than the cost of medicine, explains why pharmacies are wary of proposals that might incentivize PBMs to cut their reimbursements further.

The actual cost of dispensing has been studied in Colorado and at the national level. The state of Colorado does an annual survey of dispensing fees to ensure that fees paid to pharmacies for serving Colorado Medicaid members are aligned with the actual costs of dispensing. In 2025, that cost was estimated at $9.31 to $13.40 per prescription for non-rural pharmacies, based on volume.

A 2020 NCPA study determined a normal dispensing fee should be $12.40, with a higher fee of $73.58 for specialty medicines. Many of the medicines the Colorado PDAB are looking at for upper payment limits are considered specialty medicines.

Example from a 2023 PBM contract showing no payment of dispensing fees

Why can’t we have negotiated prices like Canada?

The Canadian healthcare system for medicine has shortcomings around patient access that we don’t talk about. However, one advantage they do have is a lack of pharmacy benefit managers. PBMs exist in Canada, but do not dictate the terms of every other player in the system as they do in the U.S. healthcare system.

What should we be doing instead?

Stakeholders from all across the supply chain are nearly unanimous in their calls for PBM reform. The business practices of PBMs hamper patient access and bankrupt pharmacies that provide critical patient care.

Managed Medicaid reform

States looking for savings ideas could learn a great deal from states that have reformed the role of PBMs in their Medicaid programs. West Virginia and North Dakota carved prescription drug benefits out of their managed program and saved $54 million and $17 million respectively in a single year. Kentucky moved to a single PBM in 2020 and documented $282.7 million in savings for the 2021-2022 cycle. For more information on savings in this area, see this NCPA publication “Medicaid Managed Care Reform.”

PBM reform to reduce costs in the private insurance market

The Washington State Pharmacists Association, the Washington Health Alliance, and 3Axis Advisors recently undertook the largest state-focused study of the drivers of prescription drug costs. They studied prescription drug costs in the state using data collected from plan sponsors and pharmacies. They found that:

• Markups at PBM-affiliated mail-order pharmacies were more than three times higher than those at retail pharmacies.
• Plan sponsor (employer) costs increased by 30 percent, while commercial pharmacy reimbursement decreased by 3% between 2020-2023.
• PBMs charged employers vastly different amounts for the same prescription medications.
• PBMs drove an increase in employer health care costs over the past four years.

The evidence is that PBMs are increasing costs and decreasing reimbursements, taking money from all other players in the supply chain in ways that benefit themselves. Reforming their role in healthcare by putting strict guardrails on their business practices would create enormous cost reductions and increase access for every other stakeholder.  The full study is available online.

Original Post: Why are price cap proposals on medicines dangerous to pharmacies and patients?

Disclaimer: Guest blogs do not necessarily reflect the views of the ADAP Advocacy Association, but rather they provide a neutral platform whereby the author serves to promote open, honest discussion about public health-related issues and updates.    

Fireside Chat Retreat in Atlanta, GA Tackles Inflation Reduction Act's Adverse Impact on Patient Care

By: Brandon M. Macsata, CEO, ADAP Advocacy & Matt Toresco, Chief Executive Officer, Archo Advocacy LLC

ADAP Advocacy hosted its Health Fireside Chat retreat in Atlanta, Georgia, among key stakeholder groups to discuss the adverse impact on patient care being caused by the Inflation Reduction Act (IRA). The Health Fireside Chat was held from Thursday, September 25th, to Saturday, September 27th. It was a continuation of the conversation surrounding the IRA's drug price controls, which convened earlier this year in Minneapolis, MN. Over two dozen diverse health policy stakeholders attended the event.

Photo Source: Getty Images

The IRA discussion —including its pill penalty provisions, challenges community pharmacies are facing, more restrictive drug formularies increasing, non-medical switching, and patients absorbing greater costs due to shifts from co-pays to co-insurance—was designed to capture key observations, suggestions, and thoughts about how best to address the challenges being discussed at the Health Fireside Chat. The following represents the attendees:

• Guy Anthony, Founder & Executive Director, Black, Gifted & Whole Foundation
• Ninya Bostic,  National Policy & Advocacy Director, Johnson & Johnson
• Richard Brown, Development Manager, Patient Advocate Foundation
• Tori Cooper, Director of Community Engagement, Human Rights Campaign
• Erin Darling, Associate Vice President & Counsel for Federal Policy, Merck
• Nick Garlow, Managing Director, Rational360
• Dusty Garner, Patient Advocate
• Kathie Hiers, President & CEO, AIDS Alabama
• Mark Hobraczk, Director of Public Policy, Ai Arthritis
• Connie Jorstad, Director of Government Relations, ViiV Healthcare
• Amanda Kornegay, Owner, Kornegay Consulting, LLC
• Jen Laws, President & CEO, Community Access National Network
• Darnell Lewis, Paramedic Crew Chief & Patient Advocate
• Brandon M. Mascata, CEO, ADAP Advocacy
• Travis Manint, Director of Communications, Community Access National Network
• Michiel Peters, Head of Advocacy Initiatives, Global Coalition on Aging
• Kalvin Pugh, Director of State Policy, 340B, Community Access National Network
• Stacy Reliford, Alliance Development Director, Pfizer
• Andrew Scott, Director Strategic Alliances and Issue Advocacy, Bristol-Myers Squibb
• Larry Scott-Walker, Patient Advocate
• Ranier Simons, Consultant, ADAP Advocacy
• David Spears, Founder & Director, Magic Box LLC
• Jason Sterne, Director, Policy Advocacy and Alliances, Gilead
• Matt Toresco, CEO, Archo Advocacy
• Monique Whitney, Executive Director, Pharmacists United for Truth and Transparency
• R. Wayne Woodson, Executive Diretor, NEASM

To level set and provide background for discussions, attendees are sent suggested readings in advance. The following are just a few from the thorough list provided for this session:

• The Inflation Reduction Act (IRA): Impact on Medication Pricing, Spending, Affordability, and Access – Analysis by Pioneer Institute
• Alarm Bells are Ringing: Medicare Drug Price Negotiation Program Will Fail Without Changes – Op-Ed by B. Douglas Hoey, RPh, MBA in Drug Topics
• CMS Draft Guidance Creates Regulatory Vacuum in 340B Drug Pricing – Blog by Travis Manint, Community Access National Network
• Is Trump's Executive Order on Most Favored Nations Drug Pricing a Wet Noodle? – Blog by Ranier Simons, ADAP Advocacy
• Three reasons Congress should fix the IRA’s pill penalty – Blog by Brianna Allen, PhRMA
• The Inflation Reduction Act’s Impact Upon Early-Stage Venture Capital Investments – Article in Therapeutic Innovation & Regulatory Science

ADAP Advocacy is pleased to share the following brief recap of the Health Fireside Chat. There were two discussion frameworks:

What Does Effective Advocacy Look Like:

• Defining Effective Advocacy: Data-Guided Strategies for Patient & Policy Impact
• What Works: Cutting Through the Noise in Patient Advocacy
• Shaping Advocacy That Moves Policy
• Building the Blueprint: Effective Advocacy Together

Measuring What Success Looks Like:

• Redefining Success: Measuring Advocacy Wins for Patients & Policy
• What Counts: Defining Real Success for Patients & Policy
• From Policy to Impact: What Success Really Means & Looks Like in Action
• Measuring The Wins: Success Through Shared Impact

Every major policy fight (IRA, 340B, PDABs) ultimately comes back to protecting the patient–provider relationship and the decisions made within it. Patient advocacy is most effective on these issues through branding and and demonstrating value. To that end, patient advocacy must grow its brand and demonstrate both its current and future impact. Meanwhile, pharmaceutical industry partners need to better communicate the value of advocacy internally across medical, policy, regulatory, commercial, and patient support teams. Building capacity, whether alone or in partnership, is essential.

The group identified numerous policy priorities and the need for better coalition building. Future patient advocacy has to address gaps in access to care and treatment. The IRA weakens Medicare's Six Protected Drug Classes and policymakers need to be reminded why these health conditions were protected in the first place. Advocacy organizations need to focus on clearly describing the impacts of policy issues and helping patients see them, as is being done with educating patients on why reforms are needed to strengthen the 340B Drug Pricing Program.

The ongoing government shutdown also shaped much of the policy discussion, with an agreement that longtime allies in Congress need to be engaged but also potential new voices should be cultivated. The work done by patient advocacy groups and healthcare provider associations working with North Carolina Republican Senator Thom Tillis was cited as a prime example. Sen. Tillis has introduced legislation—"Ensuring Pathways to Innovative Cures (EPIC) Act"—to fix the Inflation Reduction Act's small molecule “pill penalty” to ensure continued R&D investments into small molecule medicines.  The Global Coalition on Aging and the Alliance for Aging Research spearheaded 70+ organizations in sending a letter to congressional leadership urging them to support the EPIC Act.

Photo Source: Government Printing Office

Some recent and upcoming milestones offer patient advocacy organizations additional opportunities to shape the policy conversation. They include:

• September 30, 2025: CMS released final guidance for third cycle (IPAY28) of the MDPNP. CMS released IPAY28 draft guidance in May 2025 for public comment, with the final guidance outlining the process for the third cycle of negotiations.
• October 2025 [Anticipated]: Release of expert report detailing drugs anticipated to be selected in 2026 for the MDPNP. Based on 2024 activities, it is expected that a new white paper or brief will be issued in September 2025 that identifies drugs that are likely to be subject to price negotiation in the third cycle of the MDPNP.
• February 1, 2026: CMS releases the list of drugs selected for negotiation. In 2026, CMS will announce the selection of 15 Part D and Part B drugs for which negotiated prices will go into effect in 2028.
• February 1 – March 1, 2026: Public input period (Information Collection Request, or ICR) following CMS announcement of drugs selected for negotiation. The ICR period is intended to help CMS understand how selected drugs are used and their relative value in clinical practice. Individuals can answer questions across varying respondent types (manufacturers, patients/caregivers, physicians, researchers, and "others"), often with a ~3,000-word limit per question. Question topics include therapeutic alternatives, clinical effectiveness, cost/affordability, unmet needs, patient experiences, and other considerations. 

Aligned stakeholders must use every opportunity to create a public record on the issues related to the Inflation Reduction Act and its impact on chronic health conditions and rare diseases.  No additional Health Fireside Chats are planned for 2025.

Disclaimer: Guest blogs do not necessarily reflect the views of the ADAP Advocacy Association, but rather they provide a neutral platform whereby the author serves to promote open, honest discussion about public health-related issues and updates.

A HIV Drug Medicare Carveout Exemption is NOT All About the Profits

By: Marcus J. Hopkins, ADAP 340B Consultant

In July 2025, ADAP Advocacy submitted public comment to the Centers for Medicare and Medicaid Services (CMS) regarding the proposed guidance for the Medicare Drug Price Negotiation Program (“Negotiation Program”) established under the Inflation Reduction Act (2022), requesting a carveout exemption from forced price negotiations for medications used for the treatment of HIV.

Photo Source: ADAP Advocacy

After submitting this public comment, we took the opportunity to reach out to other HIV organizations, including the Aging and HIV Institute (A&H)’s David “Jax” Kelly, JD, MPH, MBA.

Kelly raised several key points that he believes would better center our arguments around patient access, medication affordability, and the elimination of barriers to accessing medications. These points, he told us, would help to reframe our argument to make it more patient-centered and less about pharmaceutical company participation in the Medicare market and profitability.

He was, in part, correct.

ADAP Advocacy is, at its heart, a patient-centered organization. From the beginning, our organization has prioritized patient access to HIV care, treatment, and supportive services. Our initial focus dealt with eliminating the waitlists that prevented patients in dire need of HIV treatment services from enrolling in state AIDS Drug Assistance Programs (ADAPs). Every aspect of our work has been patient-centered, and we have endeavored to frame every project, initiative, research effort, report, and infographic in a manner that prioritizes what is best for patients.

Our submission to CMS attempted to frame pharmaceutical company participation as a broader issue that could prevent patients from accessing their life-saving medications. We contend our framing achieved that objective, but nonetheless, we're open to alternative interpretations. After all, one of our organization's value statements reads, "That the voice of persons living with HIV/AIDS shall always be at the table and the center of the discussion."

With that in mind, ADAP Advocacy asked Kelly for his thoughts on the carveout. In his response, Kelly provided the following insights:

[The following comments were composed by David “Jax” Kelly, JD, MPH, MBA]

David "Jax" Kelly, JD, MPH, MBA

_____________________________________________

Medicare and HIV: A Lifeline for Long-Term Survivors

Nearly 28% of PLWH in the United States are Medicare beneficiaries, and most qualified through disability rather than age (Figueroa et al., 2024; Dawson, 2023). For this population, Medicare Part D is a lifeline, yet HIV medications account for a disproportionate share of program spending. In 2020, prescription drugs made up 63% of Medicare spending for PLWH compared to just 4% for other beneficiaries (Dawson, 2023).

This unique cost profile reflects both the effectiveness and the financial burden of HIV treatment. Interruptions in ART jeopardize not only individual health but also public health goals. Sustained viral suppression—essential to ending the epidemic—depends on reliable, affordable access to medications.

Moreover, a majority (61%) of Medicare beneficiaries with HIV are dually eligible for Medicaid, highlighting their financial and medical vulnerability (Dawson, 2023). These dual-eligible beneficiaries face some of the most complex systemic barriers and are at greatest risk if policy shifts raise out-of-pocket burdens.

Patient Affordability and Financial Burden

Even when medications are technically “covered,” high co-pays and cost-sharing can prevent patients from filling prescriptions. Research shows persistent gaps in ART adherence among Medicare beneficiaries with HIV, often tied to affordability barriers (Li et al., 2023).

The Inflation Reduction Act reshaped Medicare Part D plan designs, and analyses show that some changes may actually increase cost burdens for patients depending on their plan type (Cai et al., 2025; Doshi et al., 2025).

Consider a hypothetical example:

For a retired Medicare beneficiary living on $1,400 a month, an additional $100 in monthly drug costs could force a choice between filling an HIV prescription and paying for groceries or rent. For long-term survivors already managing multiple chronic conditions, even modest increases in out-of-pocket (OOP) costs can destabilize adherence and jeopardize viral suppression.

Drug coverage protections exist—ART is already a “protected class” under Part D—but these safeguards do not directly limit cost-sharing. Without a carveout, federal savings from negotiation could inadvertently be achieved at the expense of patient affordability and adherence.

Equity and Systemic Barriers

Medicare beneficiaries with HIV are disproportionately people of color, LGBTQ+ individuals, and long-term survivors. According to KFF, most (77%) qualified for Medicare through disability rather than age, and a majority (61%) are dually eligible for Medicaid (KFF, 2025). These data underscore the extent of financial and medical vulnerability within this population—reflecting the compounding effects of poverty, disability, and structural inequities.

The burden of prescription drug costs falls especially hard on people with HIV. While prescription drugs account for just 4% of Medicare spending among other beneficiaries, they represent 63% of Medicare spending for people with HIV (Dawson, 2023). This disproportionate reliance on costly medications makes beneficiaries uniquely exposed to policy changes that could shift costs onto patients.

Photo Source: HealthHIV

The most recent State of Aging with HIV Report adds further context. Nearly 80% of older adults living with HIV delayed or avoided care due to insurance or out-of-pocket costs, and almost half struggled to pay for housing, food, or utilities (HealthHIV, 2025). Insurance restrictions such as step therapy and prior authorizations are increasingly blocking or delaying access to needed HIV medications. At the same time, many report fragmented care: over one-third rely on emergency departments for non-urgent needs, while 63% lack access to case management services (HealthHIV, 2025).

These inequities extend beyond finances. Nearly half of older adults with HIV report feeling lonely or isolated, and more than three-quarters experience moderate to high levels of mental health stress (HealthHIV, 2025). Meanwhile, providers highlight systemic barriers as well: 59% cite shortages of clinicians trained in both HIV and geriatrics as the most pressing obstacle to appropriate care.

Equity in drug policy is not just a matter of fairness; it is central to survival. The National HIV/AIDS Strategy emphasizes reducing disparities in HIV outcomes for racial and ethnic minorities, LGBTQ+ communities, and older adults. If CMS drug price negotiations inadvertently increase barriers to HIV treatment, they risk undermining these national goals at a time when they are already under political attack.

Protecting affordability and uninterrupted access through a carveout would ensure that Medicare policy advances—rather than reverses—the nation’s commitment to equity in HIV care and outcomes.

_____________________________________________

Kelly’s comments offer additional clarity and justification in favor of a carveout exemption in a way that focuses less on the continued participation of pharmaceutical companies and more on the real-world needs of patients who rely upon the Medicare program.

One of the primary reasons we work with collaborative partners and organizations is to ensure that the work we’re doing is focused on meeting the needs of patients. ADAP Advocacy specifically works with other organizations and policy shops to inform, refine, and bring clarity to the positions we release.

We are incredibly grateful to Jax Kelly for helping us to fulfill that mission.

References:

Cai, C. L., Bhaskar, A., Kesselheim, A. S., & Rome, B. N. (2025). Changes in Medicare Part D plan designs after the Inflation Reduction Act. JAMA Internal Medicine. Advance online publication. https://doi.org/10.1001/jamainternmed.2025.4003

Dawson, L., Kates, J., Roberts, T., Cubanski, J., Neuman, T., & Damico, A. (2023). Medicare and people with HIV. San Francisco, CA: KFF. https://www.kff.org/hivaids/report/medicare-and-people-with-hiv/

Dickson, S., & Hernandez, I. (2023). Drugs likely subject to Medicare negotiation, 2026–2028. Journal of Managed Care & Specialty Pharmacy, 29(7), 732–739. https://doi.org/10.18553/jmcp.2023.29.3.229

Doshi, J. A., Li, P., Harrison, J., Romley, J., & McWilliams, J. M. (2025). Inflation Reduction Act provisions and Medicare Part D out-of-pocket costs for specialty drugs. JAMA Health Forum, 6(8), e233849. https://doi.org/10.1001/jamahealthforum.2025.1387

Figueroa, J. F., et al. (2024). Antiretroviral therapy use and disparities among Medicare beneficiaries with HIV. Journal of General Internal Medicine, 39(12), 3456–3464. https://doi.org/10.1007/s11606-024-08847-y

Figueroa, J. F., et al. (2025). Use of nonrecommended antivirals among Medicare beneficiaries with HIV. JAMA Network Open, 8(7), e2312345. https://doi.org/10.1001/jamanetworkopen.2025.8296

HealthHIV. (2025). The fourth state of aging with HIV national survey report. Washington, DC: HealthHIV. https://healthhiv.org/wp-content/uploads/2025/01/Fourth-HealthHIV-State-of-Aging-with-HIV-Report.pdf

Kakani, P., Kyle, M. A., Chandra, A., & Maini, L. (2024). Medicare Part D protected-class policy is associated with lower drug rebates. Health Affairs, 43(8), 1290–1298. https://doi.org/10.1377/hlthaff.2024.00273

Li, P., et al. (2023). Antiretroviral treatment gaps and adherence among people with HIV in Medicare. Journal of Acquired Immune Deficiency Syndromes, 92(2), 145–152. https://doi.org/10.1007/s10461-023-04208-8

Patterson, J. A., et al. (2024). Medicare Part D coverage of drugs selected for the Drug Price Negotiation Program. JAMA Health Forum, 5(2), e234562. https://doi.org/10.1001/jamahealthforum.2023.5237

Sadeghi, A., & Varisco, T. J. (2025). Medicare Drug Price Negotiation Under The Inflation Reduction Act: Ensuring the Continuity of Critical Real-world Pharmaceutical Studies. Value in health : the journal of the International Society for Pharmacoeconomics and Outcomes Research, S1098-3015(25)02466-0. https://doi.org/10.1016/j.jval.2024.12.012

White, E. N., Saxon, M., Hodge, J. G., Jr, & Michaels, J. (2023). Medicare Drug Pricing Negotiations: Assessing Constitutional Structural Limits. The Journal of law, medicine & ethics : a journal of the American Society of Law, Medicine & Ethics, 51(4), 956–960. https://doi.org/10.1017/jme.2024.12 

Disclaimer: Guest blogs do not necessarily reflect the views of the ADAP Advocacy Association, but rather they provide a neutral platform whereby the author serves to promote open, honest discussion about public health-related issues and updates.     

CALL TO ACTION: HIV Medication Carve-Out Exemption from the Medicare Drug Price Negotiation Program

By: Marcus J. Hopkins, ADAP 340B Consultant

ADAP Advocacy has submitted public comments to the Centers for Medicare and Medicaid Services (CMS) regarding the proposed guidance for the Medicare Drug Price Negotiation Program (“Negotiation Program”) established under the Inflation Reduction Act (2022):

While ADAP Advocacy’s objections to the Negotiation Program’s proposed implementation are several, our primary request is for the creation of a carve-out exemption for all medications used for the treatment of HIV/AIDS in the U.S. that would prevent these treatments from being eligible for any future Medicare price negotiations.

Photo Source: CMS

ADAP Advocacy has requested this carve-out exemption due to the serious nature of the threat facing People Living with HIV/AIDS (PLWHA), should HIV medications be selected as part of the Negotiation Program. While the HIV treatment landscape has improved significantly over the last 25 years, today only a handful of manufacturers continue to work in the HIV space, including Gilead Sciences, ViiV Healthcare, and Merck. Over the past decade, three manufacturers—Bristol Myers Squibb, AbbVie, and Johnson & Johnson—have withdrawn from the HIV space for various reasons, not least of which is the difficulty of competing in a landscape where many of the most significant innovations, including well tolerated single-pill regimens, long-acting injectable agents, and highly effective oral and injectable prophylaxis, have already occurred.

As part of this effort, ADAP Advocacy has also spearheaded a national sign-on letter seeking support from national, state, and local advocacy organizations. The letter and the signature form are available online at: https://www.adapadvocacy.org/letter-cms-hiv-carveout.php. 

The Negotiation Program essentially requires manufacturers to accept the final price after four negotiation meetings set by CMS, reject the offer, and pay a 95% excise tax on all of the medications sold to Medicare payors, or remove their products from the Medicare formularies altogether (Hammond, 2024). Because no business can feasibly accept a 95% excise tax and remain viable, manufacturers are left with the unenviable decision to either accept significant profit losses in the Medicare market or withdraw their drugs.

Photo Source: Inside Sources

The prospect of losing access to HIV medications paid for through Medicare poses a significant risk to PLWHA. Medicare is the 2nd-largest payor of HIV treatment and care in the United States, accounting for 39% of federal spending in 2020, and serving 28% of PLWHA (Dawson, et al., 2023). Additionally, 77% of PLWHA who are enrolled in Medicare first qualified for the program not because of age but because of a disability diagnosis.

Patients who lose access to HIV medications may fall out of treatment entirely, placing them at risk of dying from opportunistic infections or having their HIV mutate to develop resistance to the medications used to achieve viral suppression—when the number of actively replicating HIV cells drops below 200 copies per milliliter of blood. In addition to these primary risks, patients whose HIV is not virally suppressed, or undetectable, can pass along the virus to others. In contrast, those whose viral load is undetectable are unable to do so.

In addition to the carve-out for HIV medications, ADAP Advocacy made the following recommendations:

1. CMS should implement a standardized Market Fair Price calculation methodology that replaces the methodology outlined in section 60.3 that is clear, transparent, and made available to manufacturers at the time the Market Fair Price is determined and when the initial offer is made to manufacturers;
2. CMS should revise its definition of “selected drug” as set forth in section 30.1 to ensure limit the inclusion of multiple formulations and strengths of medications to ensure that price determinations and negotiations are made in good faith;
3. CMS should undertake an immediate patient engagement campaign prior to the implementation of the proposed guidance for the Negotiation Program to ensure that Medicare beneficiaries have a clear understanding of how the Program will directly impact them and to allow patients to provide meaningful feedback and opinions to help guide the program to better patient-centered outcomes; and
4. CMS should exclude any cost-effectiveness calculations that utilize biased and discriminatory metrics, including Quality-Adjusted Life Years and similar measures of medical intervention efficacy.

A precedent already exists for protecting vulnerable populations from the unintended consequences of changes to the healthcare ecosystem, as evidenced by Medicare’s six protected classes (6PC). In Medicare Part D, 6PC protects vulnerable seniors and low-income beneficiaries with severe and complex health conditions, while also allowing Part D insurance plans to utilize the necessary tools to control costs. Medicines for some of the sickest patients in Part D are covered within the six protected classes, including those for cancer, epilepsy, HIV/AIDS and mental illness. Many of these conditions require patients to attempt a variety of therapies before they and their doctor settle on the most appropriate treatment, so there is no one-size fits all medicine for these conditions (Johnson, 2019).

Photo Source: VAROS

Healthcare decisions for complex health conditions should be left to patients, and their doctors. For people living with HIV/AIDS, numerous factors come into play when determining the appropriate highly active anti-retroviral therapy (HAART). And now with the advent of injectable HIV therapy, such decisions take-on an entirely new dimension."

These recommendations represent the bare minimum of changes that should be made to the Negotiation Program. ADAP Advocacy asks advocacy organizations to add their names to the circulating sign-on letter, as it continues to work with legislative and administrative officials to ensure that patient voices are heard and their access to life-saving treatments is sustained.

[1] Dawson, L., Kates, J., Roberts, T., Cubanski, J., Neuman, T., & Damico, A. (2023, May 27). Medicare and People with HIV. KFF: HIV/AIDS. https://www.kff.org/hivaids/issue-brief/medicare-and-people-with-hiv/

[2] Hammon, J. (2024, August 19). Price controls – bad policy, big problems. Washington, DC: Paragon Health Institute. https://paragoninstitute.org/paragon-prognosis/price-controls-bad-policy-big-problems/

[3] Inflation Reduction Act of 2022, Pub. L. No. 117-169, 136 Stat. 1818 (2022). https://www.congress.gov/117/plaws/publ169/PLAW-117publ169.pdf

[4] Johnson, Juliet (2019, January 31). New Research Shows Changes to the Six Protected Classes Would Harm Most Vulnerable Patients and Are Unnecessary. ADAP Blog. Retrieved online at https://adapadvocacyassociation.blogspot.com/2019/01/new-research-shows-changes-to-six.html 

Disclaimer: Guest blogs do not necessarily reflect the views of the ADAP Advocacy Association, but rather they provide a neutral platform whereby the author serves to promote open, honest discussion about public health-related issues and updates.