Navigating Value and Policy in U.S. Cancer Care and Pharma Pricing

International reference pricing could drastically reshape drug costs in the U.S. and threaten domestic innovation. In this latest episode of AVBCC’s Value-Based Voices, join Jayson Slotnik, JD, MPH, Partner, Health Policy Strategies, Inc., and Member of the AVBCC Board of Directors, and healthcare policy strategist Brian Reid, MS, Founder of Reid Strategic, as they unpack the complex debate over the proposed international MFN models like Globe, Guard, and Generous — and whether they will do more harm than good for U.S. patients and providers.

We break down key insights that every healthcare leader and policymaker must understand including: 

·         The likelihood of lawsuits derailing MFN policies

·         Political winds shifting in favor of international price controls

·         How China’s emerging role could reshape global drug markets 

Reid offers a clear framework on the potential legal, economic, and geopolitical impacts of this battle, plus practical predictions about the next steps for PBMs and 340B. 

This episode is essential listening for executives, clinicians, and advocates eager to grasp how these international pricing debates could dictate the cost and availability of cancer drugs and other critical medicines in our lifetime

Tune in now to navigate the murky waters of international reference pricing and stay ahead of the policy curve that could dramatically alter cancer care in America.

Resources & Links:

• Cost Curve Newsletter
• Brian Reid's Website
• Connect with Brian Reid:
• LinkedIn
•  Connect with Jayson Slotnik:
• LinkedIn

Contact Value-Based Voices

- Follow AVBCC on LinkedIn  

- View our podcast lineup 

- Contact us at info@avbcc.org

Thanks for listening! 

Transcript

Jayson (00:00) 
Welcome to Value-Based Voices, a podcast from the Association for Value-Based Cancer Care. Each episode dives into the shifting terrain of cancer care in the United States, exploring what value means in today's clinical, policy and patient-centered environments. Our mission is to spark informed dialogue, promote transparency and equip every stakeholder, from providers to payers to patients, with the insight they need to navigate cancer care with clarity, confidence and purpose

Jayson (00:00:35)
My name is Jayson Slotnik, a partner in Health Partner Strategies and AVBCC Board Member and I’ll be your host for this episode. 

It’s my honor to have Brian Reid of Reid Strategic with me today and we’ll be covering a range of topics, from Most Favored Nation to PBMs and beyond. We have a lot to cover so let’s get to it.

Welcome Brian and thank you for joining us.

Brian Reid (00:01:02) 
I'm thrilled to be here.

Jayson (00:01:04) 
Well as I said, let's get into it. The topic du jour here in the swamp as it always has been  since the beginning of the new year is Most Favored Nation, the Globe, the Guard, the Generous.

You author a very successful blog. I don't know anybody else who has their pulse on Washington the way you do. So, give us an open introduction about what you do and how you have your finger on that pulse. And what are your thoughts about the Globe and Guard and the Generous and where this is going and what to expect?

Brian (00:01:38) 
That sounds great. Thanks for having me. As you noted, I write a newsletter called Cost Curve. The goal here is to get everyone on the same page. There's so much going on in the commercial environment and the policy environment. My goal is every morning to just hoover that up and spit back something that's going to help make sense of it. Obviously, spent a lot of time lately thinking about the broader universe of MFN policies. How do we bring international reference pricing to the United States? That's obviously a priority of the administration. And so you mentioned the regulatory piece of it. Can we do this? Can we bring international prices in via Medicare, Medicaid? And so CMS has come up with a number of models.

I don't know how completely they've been thought through, but a lot of thought has gone into the naming of them. So, we've got the Generous model, the Globe model, and the Guard model. To take those in order, Generous is the model that's designed to bring in international prices into Medicaid. We probably don't need to talk too much about that. Medicaid already gets pretty good prices. 

The Generous formula is kind of baked into the MFN agreements that have been signed with 16 big pharma companies. I don't think anyone thinks that that's necessarily all that dramatic or interesting. The bigger deal, I think, here is that Globe and Guard. So, this is how we get international prices into Medicare and Medicaid.

Of course, this is just a proposal. There is a lot of back and forth, as I think you know even better than I, about how this is all gonna work out in the end. So, there's probably a couple of ways to look at it. One is on the very kind of operational end. What are these programs? How do they work? What countries are we referencing pricing from? How do we get those prices in? And I think there's gonna be a lot of back and forth on that because these are incredibly difficult questions. You run into these tricky details almost immediately. So, what is a price? How do we deal with confidentiality? How do we deal with the reality that the company that markets a drug in Europe may not be the company that markets a drug in the United States? And actually, if you look at the comments from BIO, the trade organization, they say, well, sometimes there's actually three parties. You've got the small biotech that invented the drug, and then they licensed the rights in the United States to one company, and they licensed the rights in Europe to a third company. How do you begin to coordinate between all of those pieces in a way that's going to be legally kosher?
So I think there's a lot of operational questions. And then there's the philosophical question of whether or not the United States really wants to put power to control prices in this country in the hands of European bureaucrats. It's not clear to me why we think that Belgium should have veto power over what drugs cost in the United States. And I don't mean to pick on the Belgians. It's just, you know, again, the idea of European governments essentially setting U.S. policy strikes me as something that was traditionally ideologically opposed by a lot of policymakers, and now we seem to be in the world in which that's okay.

Jayson (00:05:04) 
So you follow this administration very closely, right? Yeah. Every morning, God bless you and your family for getting up and doing all what you do.
Right, and you mentioned the 16 deals. We know—you and I have discussed—that other countries are meeting with CMS on possibly deals, swapping Globe, Guard, or just painting in the Generous. Where do you see this going ahead. I feel like the agency sort of boxing itself in. It has to finalize the Globe/Guard rules and the game is afoot regarding litigation. And so where—what do you—like I said, where do you see this going?

Brian (00:05:45) 
I mean, I think you've got it right. There's going to be litigation. Apparently, if you have signed an MFN deal with the White House, you are exempt from Globe and Guard. Globe and Guard only affect—they're designed as models, so they're only targeted at 25% of the population. They're time-limited. There's a lot of reasons to think that this is not going to be the magic bullet that suddenly brings in international reference pricing. So, I think this is why there is much vogue among administration officials for: What can we do to codify this in law? I've used the word codify more in the last six weeks than I think I have in my entire life. You know, this idea that can we do something to create some teeth to make this a longstanding thing? And quite frankly, when you start talking about enshrining something in law, people get real nervous. Industry doesn't like it. Suddenly, you know, conservative Republicans, people like me who remember the eighties, remember what kind of conservative political thought stands for, start getting real nervous about putting the idea that, again, the French or the Belgians or the Spanish are going to—enshrined in U.S. law—have the power to set U.S. prices. That effort seems to be on rocky shores a little bit.

Jayson (00:06:59) 
Yeah, I agree, I don’t think there's an appetite, especially for the remaining time we have in this Congress, for the Congress to pass anything codifying. You’re right. I mean, I have used the word codified more than even I think when I was practicing law. I've used codified more the last couple of weeks, even when I was practicing law.

Brian (00:06:59) 
I agree. It’s terrible.

Jayson (00:07:21) 
So yeah, and then I think, like I said, I think we even box ourselves in to finalizing the rules, and then they'll be litigation, and it’s gonna be fascinating to me, as you mentioned—mentioned BIO's comments—this former… there's a lot of already preview what those legal arguments are going to be, both constitutional and policy oriented. So we'll get to that, but give us a prediction. You've got some reading of the tea leaves and how you think this is going to go.

I know it's an unfair question. I'm happy to answer it too, but I want to get your thoughts first.

Brian (00:07:55) 
I mean, it's hard to see—again, when you look at all of the exemptions and exceptions and moving pieces and time-limited and the prospect of litigation—it's really easy to say, look these models are not probably important in themselves. I think you're going to end up clarifying a few things though. One, you may end up with some better idea of what CMS has the authority to do. And B, you're essentially setting a debate that's going to go forward because one of the more amusing things that's happened so far this year is every once in a while Bernie Sanders will come out and try to slip an amendment that looks very much like Trump's MFN policy into an actual Republican-sponsored, you know, HELP bill. And everyone kind of laughs and votes against it. But I think it's showing that there is—this is not just a Trump thing. And as we look out towards 2028, 2032, does the political wind shift in Washington? It's pretty clear that there's a constituency for equalizing U.S.–international pricing. And so it's very difficult to see this as a trend that somehow magically goes away when Trump leaves office or magically goes away if Republicans lose control of Congress. This is something where it polls great. Again, I think there are technical reasons and philosophical reasons why it's a bad idea, but man, people love it.

Jayson (00:09:20) 
So, my answer is I think we're going to—I think we’re gonna have litigation. I think it's very tenuous that the government survives the litigation. I think there are constitutional issues regarding appropriations, major issues doctrine, like we saw with the tariffs, and then there's a lot of abuse of authority on the CMMI statute in and of itself here.
But I also agree that this issue is going to go away.  It polls well. And because of the way the question's asked—“Do you want to pay lower prices for your drugs?” Of course, right. And so, where everybody was like—it reminds me of the ACA debate. I don't want the government involved in my business and don't touch my Medicare, right, which is sort of counter intelligent, right. So, I agree with that.

I'll go first—my question—so that we can bounce it off a little bit. And my next question is: What should we be watching for that maybe people aren't watching, that will crystallize your point about this MFN debate not going away. And so, what I speak about is the PDUFA negotiations, right? We've got a PDUFA negation that is come coming—needs to be wrapped September 27, right? October 1 the new fiscal year is a new PDUFA and most of the agreement is already baked from what I understand. But to you point is, while pricing European model but not importing European qualities and everything else. Can you see a situation where, especially McCary if he's still there, right, talks a lot about drug pricing. Do you see a situation where perhaps as a condition of FDA approval all of a sudden we have a HTA analysis? Is that a sleeper issue or do you think that's a bridge too far. 

Brian (00:11:10) 
I mean, you're the lawyer. That strikes me as being far outstripping the FDA's authority, and that feels like something that would be fun and easy to litigate. Now, you see them trying—you see the administration trying to slip some of that in there. You know, one of the criteria for the commissioner's priority review vouchers is, you know, if you're willing to cut prices or if you're willing to accept MFN, you know, we will give you some goodies. Of course, there's been questions about whether or not that's kosher as well.
So, I think that's certainly, you know, one way of doing it. I think—as long as we're kind of running counterfactuals here—I think one of the things that may take this train off the tracks a little bit is this idea that, you know, if we make it harder to enter international markets by demanding the prices go up internationally—which is of course the flip side of demanding that prices go down in the United States—I really wonder over the next five or ten years if the Chinese don't see that as an opportunity.
If U.S. companies can't compete in Europe and the Chinese do, is that essentially the United States giving up access to European markets and allowing me-too-ish drugs from China to go into a vacuum that's essentially created by the MFN policy? You're beginning to see that crop up in commentary more.

Jayson (00:12:31) 
Yea, no, I agree completely that if I'm a European leader—and I've had these discussions with consultants across the pond—you are now sitting back and thinking I can’t rely on the United States for my drug supply anymore, right? That is gone. I need a safety net. I have a responsibility to my citizens, right? And so what does that mean? Either I compulsory license or I just let China come in and do exactly that. So, so I agree. It's ironic because it is—the policy will have the exact opposite consequence. Which, doesn't surprise anybody here that it would have the exact opposite consequence.

Jayson (00:13:12) 
So I think we pretty much agree that there’s a lot more to be written here on the Globe, Guard, and the Generous—or broadly—that even if those are defeated in some way, this concept of “I'm paying too much for my drug” as a political issue is not, however—right—is not, however, gone by any stretch. And speaking of which, right—and an issue I know is a favorite of yours—is—what do we do about the quote-unquote horrible middlemen that our president has talked about on the campaign trail and executive orders. And now we have FTC agreements, we have department of labor proposals, we have new legislation, you’ve been following this very closely. Are we at a point where we have a distinction without a difference? Have we actually done anything to the PBM model? Do our listeners need to worry about access to new oncology drugs or old oncology drugs and more prior auth and more this and that? Or will the experience at the patient level still be the same? So give us a little bit more: What is sort of occurring and what your thoughts are and how all these separate swim lanes that I just filled meet at some point at the end of the pool.

Brian (00:14:29) 
Yeah, well, I mean, clearly there's more pressure on the PBM business model. The legislation that passed earlier this year—you know, that adds transparency, that moves toward delinkage of PBM fees and prices—that's all good. You know, that's all good. That's all been widely advocated. The Express Scripts settlement with the FTC, and it looks like we may get another one or two here shortly.

I think those too—very much about transparency, bringing those lower prices to patients, getting rid of some of the games being played with rebates. Looks great on paper. DOL, the Department of Labor rule that would really amp up the fiduciary responsibilities of PBMs—I think that's all pushing in the right direction. There are reasons to say, yeah, this is good. This is going to bring us to a PBM industry that gets back to what PBMs used to do, which is: They're gonna play this role to smooth transactions. They're gonna play this role to kind of find lowest prices. That's what they ought to be doing.

So you can look at all of this and say, this really sets the stage for an evolution in the right direction—an evolution toward patient centricity. You can also say, well, great, this is—we have seen the PBMs under pressure repeatedly, really over the last decade, and they have always found a way to shift their business model.

You know, they moved away from rebates and now they're into fees. Now they're into specialty pharmacy. How are they going to adapt to these new pressures? Because they've done this successfully in the past. And if you look at the FTC settlement, if you look at some of these other pressures

Jayson (00:16:10)
Honestly, it shifts a lot of the responsibility to holding PBMs accountable to their customers—to employers. If employers choose to keep buying the oldschool PBM offering because that’s what brokers tell them to do, or because it’s too complex and they don’t understand what’s going on, they’re going to be stuck with the old PBM system.
And so I think there’s a big question as to whether the system can get smarter faster than the PBMs can try to evade this. 

Jayson (00:16:36)
Which way does it go?

Brian (00:16:38)
Honestly, you can start asking independent pharmacists. You’ve already started seeing contracts from PBMs going to independent pharmacies.
Under these new rules created by the FTC and congressional legislation, what independents will tell you is these deals may look different, but they’re not better for them. At the end of the day, PBMs are still getting their cut. They’re finding ways to make contractual alterations that keep them within the letter of the law without redistributing the money, the dollars, or the revenue. The question is how much more of this we’re going to see.

Jayson (00:17:20)
So let’s look at players here—the independent specialty pharmacies. Or the independent pharmacies, bricks and mortar. Probably net neutral, maybe even a little worse. Because they’ve got an expense transitioning through a different contract paradigm. What about—you mentioned the—the customer of the PBM, whether it’s the health plan or the selfinsured. I’ll give you my thoughts—I think—I agree with you, a lot more transparency. I think some of that transparency is good.

Some of it could be bad, right? What we do with all that information and how some of that works. We’ve got pharma companies that live on both sides of that fence—seeing how all the rebates are, and seeing how you competitors channel.

And what I also don’t know is how AI integrates all of that information, and really starts understanding the employee experience, in designing formularies, and designing networks, and what role the PBM ultimately has.

I think it’s really too early to tell what that does for the plan and for the selfinsured. I agree with you there, but what does this mean for the innovator and the launch of a new oncology drug? What do you think is going to happen there?

Brian (00:18:38)
What’s happening in oncology with PBMs is probably different from a lot of the other legislative bit. Oncology manufacturers have long priced drugs based on the fact that the drugs are an important tool for the clinical community. There have not been a ton of formulary gains with oncology and there has not been a big gross-to-net bubble to talk about unlike a lot of other more general medicines. 

But what you are beginning to see is this recognition that maybe those days are over and maybe you’re going to see more pressure to contract and rebate in oncology. So if you’re a manufacturer I think you’re worried that essentially PBMs are increasingly going to stand between your physicians who are prescribing your drugs freely according to patient needs and the PBMs ability to regulate that. And I think that’s where that change is starting to come in. You’re beginning to see that in small ways where there are more restrictions and more barriers being put on PBMs on how cancer drugs are used, and I think that’s worth watching. And I think how people respond to that – manufacturers, lawmakers. Do we want PBMs to play a large role in cancer care. I think if you’re a patient or physician, you probably don’t want PBMs playing a larger role in cancer care—but that’s likely where we’re headed.

Jayson (00:20:24)
So what I’ve seen early on is the following. You’ve got the PBM business model transitioning and this requirement that the rebates passthrough and the transition to bona fide service fees at dollar values, as you mentioned that occurs through legislation and the DOL. And what is going to be interesting to see per your comment, I agree, is that the PBM now has to make up for that percentage-based contract on the services with actual dollar services and come up with more services. And how A is that a legitimate serviced and B is it at fair market value. So I’m seeing my manufacturers, and I’m wondering if you are too, coming up with, “what services do we think a PBM should be providing to patients, physicans, their customer, and then what should we be paying for it.” I don’t know what these are going to be but what are your thoughts on that?”

Brian (00:21:28)
No, that’s absolutely where we’re going. I don’t know how happy the manufacturers are going to be to be paying for any of that because I’m not sure that the PBMs are providing a service that is commiserate with what they’re demanding. But you know, they’re the gate keepers. That’s the problem. You really are negotiating with a group that has a tremendous amount of leverage so I don’t know a single manufacturer who thinks those fees are worth what they’re paying. But again, what are you going to do. You have 3 payers controlling 80% of the market. You don’t have a lot of flexibility to play hardball. 

Jayson (00:22:09)
I agree, and one service I’m already seeing already is trying to reintroduce a value-based contract. So we’ll see how all of that goes. You and I have been around healthcare long enough we sort of say what’s old is new again. 

Brian (00:22:27)
I mean they’re great ideas, but just really hard to execute. Right, no one is going to say I’m against paying for value but you start saying how are you going to pay for value.

Jayson (00:22:40)
That’s how you give me a rebate.

Brian (00:22:42)
Exactly—that’s my call to make, don’t ask for the math, just trust me.

Jayson (00:22:52)
Speaking of the PBM market, we’ve just gone through some rulemaking and rate setting on the Medicare Advantage and Medicare Part B market which continues to evolve with the introduction of the Inflation Reduction Act which created an out-of-pocket max on Part D which in theory great for patients but is creating really interesting financial pressures on the payers as we would expect and as you have mentioned. 

So give us insight into what you think the Medicare Advantage and Part D market is going and what is the future there. Do you see any future changes, give a couple sentences on your thought on the marketplace and what you expect. 

Brian (00:23:44)
You teed this up really well. Prices are going up and there’s only two things that can happen in an environment when prices are going up for the plans. One is you can charge more for premiums and two you can do your best to control costs in terms of what patients receive. 

There are actually two other things. You can just leave the market entirely or just ask the government for help. And we’ve seen a lot of that. Shrinking number of plans and we are seeing continued government subsidies. But at the end of the day everyone has to be prepared to be living in a world in which you are paying more and getting less for your Part D dollar and that doesn’t make anyone happy. But I haven’t seen anyone propose a structural solution for how we’re going to get out of that.

Par of this is because we have instituted this out-of-pocket cap for patients and that’s obviously a fantastic thing but the reality is that a lot more of the responsibility shifted to manufacturers and mostly plans and they are acting absolutely as once would expect when they have more financial skin the game. They’re going to raise prices and lower offerings. 

Jayson (00:25:04)
Ever since Congress introduced this concept of mandating rebates of Medicaid in 1992, congress has been addicted to rebates, rebates, rebates. They love them but this incentivizes higher launch prices. I think we’re headed toward a significant issue by the end of this decade, when you look at the trends for the outofpockets. Numbers are adjusted by drugs but not CPI. By the end of the decade it could be a $3K out of pocket and by the end of the decade we’re back to affordability issues.

It’ll be an interesting ride for the next couple years.

We’ve got this PBM reform, you’ve got this Medicare rebate change, and now price negotiations. So, give us your thoughts about how the negotiation program has been working the last two years. This is the first full year the administration is negotiating drugs. Do you foresee a significant difference in the outcome in 28 versus 27? How do you think it’s going so far? 

Brian (00:26:40)
It’s interesting, you don’t hear a whole lot about this either way. It’s certainly not creating a huge benefits for patients, saying your Eloquist is available to the payers at a cheaper price. It doesn’t mean your burden is going to be less. Despite all the hype when the IRA was passed, I haven’t seen rosy pictures about seniors who are suddenly unshackled from the high price of one of these first 10 medication to be negotiated. What will be interesting over time, is this program going to take pressure off the payers in a meaningful way. I think we’ve established it’s not going to have dramatic impact on the actual our-of-pocket cost for seniors. The out-of-pocket cap is making a diffence. But negotiated prices haven’t dramatically improved affordability for seniors. So the question is will the payers see the benefit and when they do, will that get passed back along to the patients. And those are big and important unanswered questions. 

Jayson (00:28:18)
So last issue—which sort of continues the theme of a program that is growing but there’s no control – which I know is a favorite of yours…

Brian (00:28:38)
Never has there been a program that is more boring yet more important. The ratio of dullness to critical is outrageous. 

Jayson (00:29:01)
It seems to me that where we are, is that the way we’re going to get 340B reform is not through congress, but through the courts. And that’s what we’re seeing. So give us your thoughts. 

Brian (00:29:31)
So at this point, almost everything in 340B is being litigated. We’re going to have legal answers one way or another – and we may get the state contract pharmacy regulations heard before the supreme court which would be a big victory for people who care about 340B but can’t get others to care. The point I try to make on this is for people who try their best not to care about 340B – this is an enormous program, $80billionayear at 340B prices. You’re looking at hospital profit or additional margin of $60, $70, $80 billion a year. If you take that out, 20% growth, hospitals are going to make an additional trillion dollars in revenue over the next ten years. There’s not a single problem in healthcare you can’t solve with a trillion dollars. The real question is whether 340B is solving the right problem. Do I trust Congress to tackle this???? Maybe not.

Jayson (00:31:25)
No. I agree—we are where we are with the courts on 340B so it will be a long road through all of these issues. 

Alright, last question. What issue is perculating that most people are paying attention to that is really an important issue. 

Jayson (00:31:42)
It’s an obvious answer to me and that’s the continuing use of AI. There was an article recently how patients are using Chatbots to appeal claims and how physicians are using it to “more accurately code” with costs going up. So the depth and breadth of AI – but what are your thoughts about what the listener should be thinking about that is going to be relevant that we haven’t talked about or you haven’t seen a lot in headlines. 

Brian (00:32:32)
Let me rift more on something related to 340B. You’re seeing hospitals and phsycians profiting off things that are not patient care. I think the most clear evidence is pharmacy. If you look at any big hospital system they have seen over the last 5 years, significant increases in their revenue from pharmacy. And my question is, what becomes of our healthcare system and our drug supply channel when our providers and others who aren’t seen as the key drivers find a way to profit off drug pries or spreads. We’ve had a 10 year experiment when PBMs figure out how to tap into that revenue stream. Increasingly, hospitals are coming to the same discovery. And ultimately what is that going to do to the system and how is that going to work in ways that we don’t fully anticipate.  

Jayson (00:33:45)
I think what we’ve sort of concluded here is that there’s a lot more news, a lot more change, a lot more headline risk, which is why everyone listening should subscribe to The Cost Curve.

Brian (00:34:03)
Absolutely. We’re going to have to fix this in the next 18 months but over the next 18 months you should totally be reading.

Jayson (00:34:13)
So that wraps up this episode of ValueBased Voice. Thank you for listening, and thank you, Brian, for sharing your insights and for joining me in this conversation.

Brian (00:34:25)
Thanks a lot, it’s been a blast.

Jayson (00:34:29)
If you find this conversation thought provoking subscribe to Brian’s distribution list on his website and to Value-Based Voices wherever you get your podcast. Stay tuned for more episodes spotlighting voices shaping the future of oncology.