# E14: USA - Ross Margulies

*The Payer Exchange* · https://open.spotify.com/episode/0njzxwlAmOZD3UBLISHSnP

## Summary

In this season finale of The Payer Exchange, host Omar Ali speaks with Ross Margulies, a Washington-based healthcare attorney at Manat, about how US drug pricing policy is reshaping global launch and market access strategy. They cover international reference pricing, the MFN (Most Favored Nation) agenda, the Guard and Globe models, the Generous agreement, and the evolution of the CMS drug price negotiation program into its third cycle (IPA3). The discussion closes with a look ahead to the midterm elections and the prospect of bipartisan drug pricing reform.

## Key points

- Ross Margulies is a healthcare attorney at Manat, a hybrid policy and legal firm, with about 17 years of experience working across the drug supply chain and life sciences industry.
- Most of his clients believe international reference pricing is here to stay regardless of the outcome of the November midterm elections, and many manufacturers are holding ex-US launches in response.
- Guard and Globe rules have reached the Office of Management and Budget and are expected to be finalized this year, but Ross is highly confident they will face legal challenge because Congress has never authorized international reference pricing.
- The 17 largest manufacturers have signed voluntary MFN pricing agreements with the Trump administration, exempting them from Guard and Globe, and smaller manufacturers are now negotiating similar deals.
- MFN reporting works in two ways: method one relies on third-party commercial data sources, while method two is a voluntary process where manufacturers open their books to report their true net prices.
- IPA3 brings Part B physician-administered drugs into CMS drug price negotiations for the first time and moves the program from guidance-driven to a formal rulemaking process.
- Products with a negotiated MFP are still subject to MFN models like Guard and Globe, but their MFP price is protected from being overridden by an MFN price in renegotiation.
- Spain is considering legislation to make confidential discounts contractually non-disclosable, which could complicate MFN reporting but is unlikely to be a sustainable long-term solution.

## Notes

### Guest and Context
- Ross Margulies is a healthcare attorney at Manat, a hybrid policy and legal firm, with roughly 17 years of experience focused on the drug supply chain and life sciences.
- His practice sits at the intersection of policy and law, acting as his clients' ears and eyes in Washington.

### International Reference Pricing and MFN
- Ross notes that international reference pricing has been proposed since the Obama administration, but the second Trump administration has leaned into it most strongly.
- His clients generally believe international reference pricing is here to stay irrespective of the November election outcome.
- Many manufacturers are holding international launches to avoid triggering future US price impacts. Some have publicly said they will not launch in Germany.
- The Guard and Globe models have reached the Office of Management and Budget and are expected to be finalized this year. Ross is highly confident they will face legal challenge.
- Congress has not authorized international reference pricing. CMS is using demonstration authority, which is legally more vulnerable than statutory authority.
- The 17 largest manufacturers have signed voluntary MFN pricing agreements with the Trump administration, exempting them from Guard and Globe. Smaller manufacturers are now negotiating similar deals.
- The Generous model would offer international reference price in Medicaid and require manufacturers to commit to prospective MFN pricing at launch.

### Price Reporting
- Method one relies on third-party data sources such as Eversana's Navlin and IQVIA (IQEMIDAS).
- Method two is voluntary, where manufacturers open their books to report their true net prices in international countries.
- Both methods ultimately use the second lowest price of the grouping of countries as the reference point.
- Manufacturers have been forced to subscribe to these databases to understand what prices are being listed.

### CMS Drug Price Negotiations (IPA3)
- IPA3 brings Part B physician-administered medicines into negotiations for the first time and moves from guidance-driven to formal rulemaking.
- CMS has largely put into regulation the program as it operated over the first two IPAs, with the program feeling rule-based and institutionalized already.
- Legal counsel attended most IPA1 meetings but has been absent in IPA2 and IPA3.
- Litigation against the program continues at the circuit court level but none has succeeded. Ross sees more potential in narrow challenges, such as the treatment of fixed-dose combination products with hyaluronidase.
- CMS has not yet addressed how providers will be made whole on Part B drugs under the negotiation program.
- Products with a negotiated MFP can still be included in MFN models, but the MFP price is protected from being overridden by an MFN price in renegotiation.

### Strategic Outlook
- Ross is advising clients to build MFN, Guard, Globe and drug price negotiation into their launch and market access plans from the beginning.
- Spain is considering legislation to make confidential discounts contractually non-disclosable to block MFN reporting, which Ross sees as potentially workable short-term but unlikely to be sustainable.

## Transcript

[00:07] Welcome to the Payer Exchange, a podcast where I sit down with payers from around the world to talk candidly around what is shaping access value and decision making when it comes to drug pricing reimbursement in their markets.

[00:30] Thank you. So, welcome back to the Payer Exchange. Throughout this season, we've explored these changes from the perspective of health plans, commercial organisations... and those working alongside employers. We've looked at how different parts of the healthcare system are adapting, what this could mean for pharmaceutical manufacturers, and not just local US, but global impact. So to finish the season, I really wanted to step back and ask a broader question. How do pharmaceutical companies make global strategic decisions while the policy landscape undergo seismic shifts literally beneath their feet? This is why I am so pleased to bring Ross Margulies from Manat Health into this season. He has spent much of his career helping manufacturers navigate exactly these kinds of challenges.

[01:21] Now, I've known Ross for many years, professionally, as we've supported multiple pharmaceutical manufacturers during CMS drug price negotiations, right from the beginning, in fact. And personally, over this time, me and Ross have become great friends. Just a few weeks ago, we met up in London for lunch, and it was just really an amazing experience. In this episode, I'll be discussing with Ross global launch sequencing, international reference pricing, MFN policy, and how is it that decisions made in Washington are increasingly influencing pricing and market access strategies far beyond the US borders. This last and final episode will be pulling all the threads together on US policy and the effect on geopolitical landscape across the globe.

[02:10] you're going to listen to it this season.

[02:21] Hello and welcome. Today's episode, we have a really special guest. We've discussed with payers, we've discussed with providers and health plans, employers. Today, we're really talking policy, and it gives me great pleasure to introduce a great friend, a great professional colleague, Ross Margules, lawyer, Washington-based firm Manat. Ross, it's great to have you today. Omar, it is always so fun to be with you, and I'm really excited for the discussion today. It's a fun time to be having these conversations around drug pricing and MFM. So, Ross, let's first give a little brief intro. So this is a, just so for the listeners are aware of this, this is, we're doing like a season of U.S. deep dive. And we've spoken to payers, we've spoken to health insurers, provider, policy, and really yours comes into the policy bracket. Tell us a little bit about yourself and your firm and what you do so that we can launch into some of these key themes.

[03:18] Yeah, sure. Absolutely. So I'm trained in practice as a as a health care attorney. You know, my clients are across the health care spectrum, although I spend a lot of my time focused on the drug supply chain and the life sciences industry specifically. And my practice is sort of sits at the intersection of. policy and law. And so, you know, my clients tend to come to me to be their ears and eyes in Washington from a policy perspective, how federal agencies, how Congress, how, are making changes that require them to be, you know, thinking ahead, responding, and interacting in ways that continue to push their business forward. And so those range from sort of both legal questions, policy questions, strategic market access questions. And I've been doing this for about...

[04:15] 17 years now. I'm currently at Manat, which is a hybrid sort of policy legal firm. And I work with a bunch of lawyers and non-lawyers, including clinicians and data analysts working with our clients to sort of do exactly what I do. So it's a really fun time. And I think as we're about to dive into the topics we're going to discuss, you're going to see sort of how busy we've both been, I think. Yeah, that's awesome. Thank you. That's just really great experiential wealth here So the first theme, which has been a riding theme through all of our guests and discussion, is MFN, looking at Guard and Globe and different perspectives, particularly our international pricing models are kind of coming in to the U.S. and sort of legally affecting drug pricing, state, federal policy.

[05:15] on pharma and payers, broadly speaking in the US today. And how does navigating this kind of I guess almost reference pricing effect coming, like it's a global effect coming into the US. How does that work from a day to day when it comes to the payers in the US and well, payers and pharma, I should say? Yeah, it's a great question. And I think in the last... year in particular, we've seen a really significant shift in in the... Psyche and positioning and thinking of both payers and manufacturers, the concept of incorporating some form of international reference pricing into U.S. markets is not brand new, although it has taken on a certain strong significance today. in the second Trump administration. But going back,

[06:07] To the Obama administration, there had been a series of proposals to incorporate the international prices. We saw that again in the first Trump administration. And then again, now, as we're in the second Trump administration, they have really leaned into this concept of... I think it is rooted in core... populist beliefs of fairness and this belief that the U.S. may pay too much for drugs. And in the last year, we've really seen, I think, a shift, and that shift being the a recognition, that international reference pricing is probably here to stay as a, as a concept, right. And that it's not going to live or die with one political party, right. We, there's a lot of uncertainty around the upcoming November elections, right.

[07:04] whether Democrats take the House, whether Democrats would take both houses, the Senate, the House and Senate, but sort of irrespective, I think, the political outcome in November, I think most of my clients tend to think that The... idea of incorporating some form of international reference pricing is probably here to stay. You asked sort of, you know, what does that, how is it impacting them? You know, from a manufacturer perspective, you know, I think the initial impact really has been some degree of sort of freezing and waiting period. In other words, I think a lot of manufacturers feel like this time, the pace of change is frenetic, Everything feels very uncertain. And I can say a lot of our clients are holding...

[07:50] international launches. trying to understand exactly what is going to happen here. And trying to avoid a situation where, for example, they go into a negotiation with Germany or launch in Germany. and the UK. UK has made a bad example. They launch in Japan and have somehow triggered a series of significant future price impacts in the United States. And so, There continues to be a lot of uncertainty right now. You mentioned sort of the frameworks like Globengarde as to whether or not those models will ultimately move forward or they'll survive the legal challenge. And so I think And manufacturers right now really are in a bit of a wait and see period, although the action they have taken in many cases is pretty impactful in that they've actually made a decision, at least temporarily, to not launch in certain ex-US jurisdictions.

[08:45] I think payers are probably a little further behind. I think they're waiting to see whether or not these concepts are, hold, whether or not international reference pricing ultimately becomes embedded in into pricing structures, but I think they certainly see this as an opportunity for cost savings going forward. Well, I mean, we've spoken and we've worked actually with clients where this is really playing out. The idea that you might launch in a European country, the net price that used to be confidential kind of isn't confidential. We can discuss that a little bit. And then it transfers and sort of haunts its way back to the US. And of course, the revenue generation of the U.S. becomes significantly impacted. They want to launch in Europe or some European countries, to say. Can you see, if you say that international reference pricing is here, maybe for the foreseeable future, can you see on the domestic side within the U.S. legal and constitutional hurdles around this? Or, like, is Garden Globe being challenged legally even to this point? In the same way we've seen, we're going to talk about CMS drug price negotiations,

[09:55] as well, but that's been, you know, progressed through. How does that play out? And so and does that only add to the kind of uncertainty? And, you know, drug companies can't just cause a launch forever. Right. Like going to have to do something like they've invested in the R&D. They've invested in clinical trial. We are seeing drugs being launched, but they're kind of struggling with the context of how to navigate. that launch now. So let me begin with the boring... legal answer role, although I'll try to make it not boring, which is... there's a real big distinction between when Congress has authorized something and when a federal agency is acting using existing authority. I think it's important to know that to date, Congress has not authorized something

[10:41] CMS or any other agency to utilize an international reference pricing framework. So today, the models that are being proposed are being done using what's known as demonstration authority, which is a sort of broad grant of authority to, or broad but not limitless grant of authority from Congress to the agency to run sort of demonstration tests, right, experiments. to test whether certain changes to how Medicare operates can improve the program. I think Garden Globe, if they are so garden, the current status of Garden Globe is that they are, we have proposed rules and final rules have now arrived at what's called the Office of Management and Budget, which is really the last step before those rules would be finalized.

[11:31] There's always some degree of possibility they're not finalized, but my personal expectation is that those rules will be finalized sometime this year. I think there's a great deal of legal uncertainty as to whether or not those rules two models, Garden Globe, will survive the legal challenge, and I am highly confident that they will be subject to legal challenge. So, at So that's that's. Point one. Point two is... Congress may have an interest. in legislating on international reference pricing. And that's a very different legal question. If Congress authorizes... CMS to incorporate international reference prices, either in how they generally pay for drugs or, for example, another concept would be incorporating international reference pricing into the drug price negotiation program.

[12:22] legal challenges are still possible on constitutional grounds, but... I think the chances of those laws surviving legal challenge are much higher than Globe and Card would be. From a manufacturer's perspective, would they view Globengard as mandatory, even if it's not statutory in place? Yeah, so there's sort of an interesting dance currently playing out. If Globe and Guard go into effect, they are, and they survive legal challenge, they are designed as mandatory models. So any manufacturer subject to the model would be subject to the model. But there's a really big footnote there, which is simultaneously, the Trump administration has been negotiating what I'll generally call most favored nation policies.

[13:11] pricing agreements with manufacturers. They started with the largest 17 manufacturers, of which they've entered into agreements with all of those now, and they're now... entering into agreements with a smaller subset of small and mid-sized manufacturers. Are... understanding, is that those manufacturers, if they execute those agreements, And there's a number of different commitments as part of those agreements, including – some pricing commitments in Medicaid would be exempt from Guard and Globe. So we may enter a very interesting situation. situation where if Garden Globe are finalized, let's say this fall, and they survive legal challenge, A portion of U.S. manufacturers will be subject to those claims.

[13:58] But a large portion, including the largest manufacturers, which constitute the largest significant force of drug spending, will actually be exempt based on voluntary pricing commitments they've already made. generous or is that another one? No, no, you're right. So that's right. So the 17 manufacturers plus this other group of manufacturers currently negotiating now are agreeing to a series of voluntary commitments. One is what you just referenced, Generous. This is a voluntary model where you would offer international reference price in Medicaid.

[14:44] RFRX website, and they want manufacturers to commit to prospective MFN. That is, going forward, manufacturers are committing to launching products at an aggregated net price in the U.S. that is no greater than the most favored nation price overseas, which is also pretty significant. And in exchange for those commitments, those manufacturers will receive both some degree of

[15:14] well as we understand Globe and Guard exemptions. So, One of the things we're seeing play out is how the stakeholders of this are trying to dance to avoid the scenario. So, for example, a drug company manufacturer is, says, OK, we're going to delay launch in Europe. So that whether it's the 19 OECD basket from Globe Guard or the eight countries, the G7 minus US. Yeah, and generous. Got Denmark, Switzerland, right, and generous. So what you do is you say, okay, so I'm not going to launch in those markets yet. I'm going to wait. I'm going to launch in the US. There is no reference price. to compare and aggregate and i launched in the us today and i'm going to sit and wait maybe two three years and launch later.

[15:59] And we've seen some manufacturers even come out and say, oh, we're not going to Germany. Yeah. So, number one, does that get around, this whole reporting? And in theory, does that obfuscate any notion that there'll be a cheaper drug price in the U.S.? Because if there's no cheaper European price, then you can just launch whatever price you want. One, I would say my first reaction is I think – I've been struck by how unique every single manufacturer is. circumstances, right? That it depends widely on how many products you have, where you manufacture, what your tariff exposure is, and the size of your patient population, right? So there's a different story for companies launching rare disease products versus companies launching, you know, a new GLP-1. There's a major difference for companies that have one or two drugs versus companies that have 75 drugs.

[16:54] commercialized products. But I guess the short answer to the question is yes. I mean, I think some companies will be able to engage in strategic launches that enable them to avoid the broadest effects of current MFN agreements. The other piece that's happening that I think is really important to pay attention to, we already saw it happen in the UK. It's currently potentially happening in Germany, uh, is, is the concept of, adjustments occurring and the prices paid by those international countries, right? You're closer to what occurred within the U.K., There's a process that's currently occurring in Germany today. You know, it's interesting. Within the Trump administration, there are really two schools of thought, and they're pretty evenly divided. There is one school that is very comfortable with this idea that,

[17:45] that manufacturers in the U.S., should receive less money for their products, right? That reimbursement should be lower. There's another group of people who are not comfortable with the idea of ice setting, but they're very comfortable with the idea of using the US's strategic and international strength to force other countries to pay more. As you might imagine, pharma companies are... hoping that the latter is really where the pressure ends up going, right? In other words, is there some world in which... It's not necessarily that the U.S. is spending significantly less money on prescription drugs. But... European countries in particular start to pay their quote unquote fair share. Totally. And we get that. And you're right. In the UK and England, for example, with Nice, they have adjusted the cost per quality threshold. They've raised it from 20 to 30,000 to 25 to 35 sort of.

[18:47] 15-20% increase. They also agreed to spend more, like doubled 0.3% to 0.6% over a certain number of years on GDP, on innovative medicines. And that wasn't because of any argument about who should be paying more or less. It was because of tariffs and trade deals. And we actually didn't want tariffs on pharmaceuticals in the UK. So you're right. The US were able to use other broader and overarching methods in negotiation for us to affect our internal pricing dialogue. And we've seen already, in fact, the U.S. trade relations, I think, have opened up a legal system. Section 301, I think, in Germany. That's right. Yes. It's quite extraordinary. Like for an external country to say they're opening a legal kind of challenge on a country's own internal pricing policy is quite remarkable. And so they've done that to Germany and people are asking how they can do it to other countries. So.

[19:42] How is that going? I mean, I'm just trying to see where that takes place. Like, this is all just pushing, isn't it, from different methodologies, just trying to get other countries to pay more. That's what this is about.

[20:00] led by the Department of Commerce and Secretary Lutnik, that really is focused on that piece, right? My assumption is there's going to be push and pull on both sides, right? I think some of those efforts internationally will be successful in increasing the prices paid by foreign countries. But I also think, it's likely that there's going to be bleed over of ultimately lower international reference prices to some extent. into US pricing. Okay. And before we go to CMS drug price negotiations, which I'm sure we'll have lots of stories we could share, let's just look at the reporting of these prices. So we know that let's say you're a pharmaceutical manufacturer, and you do launch in European countries. And we know there's this method one reporting and method two reporting. So the way in which CMS actually get the prices of,

[20:51] I guess what were confidential net prices, but get the net prices to transmit back to the US, for MFN Guard Globe Generous. So method one, it's using data systems like, for example, I think Eversana have a Navlin, IQEMIDAS, the idea being that they track not just list price, but some net prices may be aggregated, may or may not be correct. And CMS... use those commercial software to say, right, we've conceived that you're doing 20, 30% discount European countries. So we're going to apply that here. This pressure test that we is that good? Are we good with that? Yeah, yeah, that's exactly right. So the method one is essentially, manufacturer, you're not required to report anything to us. We're going to rely on these third-party data sources. I'll just say a note. I think this has been a boon for those. I think many of our manufacturer clients didn't necessarily have subscriptions to all of those resources, and now I felt sort of their hand forced being like, well, if we're going to at least consider the possibility of method one, we should probably understand what

[21:54] what prices are listed in those databases. Right. Am I right now in thinking, well, there is a method two, which is a more voluntary open your books. So if you kind of say you don't like method one or you go and buy your IQVM-itis, look at the reporting or every sign of Navlin and you go, whoa, whoa, these guys are way off. What we'll do is method two. We will come and we'll open our books and we'll I guess it's auditable factual tracing and say, actually, our net price looks more like this. So can you not use method one? Could you please use method two? I'm trying to simplify, but is that kind of what we're talking about? That's right. Yes. and Under the method 2, And under method one, is the calculation the same or is like method one more about like the second least expensive and method two is more an aggregated or is it a similar calculation? It's no, it's the same. Ultimately, it's the second lowest price of that grouping of countries. But I mean, the difference really is.

[22:53] Um, I think there's a great deal of uncertainty for manufacturers and loss of control associated with method one, right? Relying on... third-party data sources that may or may not be accurate. Whereas, you know, the both upside and downside of method two is that it's your true net price in those international countries. Got it.

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[24:07] Let's go to our second theme, IRA, CMS, drug price negotiations. It's been a pleasure to work with you, with various clients, and present at conference. We've seen round one IPA. We've seen round two IPA. We've been on many journeys together. Now, IPA3, what's interesting about IPA3 is a couple of things. Number one, we're bringing in Part B medicines, physician administered within the hospital, as opposed to just the kind of Part D that we're kind of outpatient self-administration. And the second thing is we're moving, and I'll probably get you to explain this a bit better to our audience, We're moving from kind of CMS interpreting what the guidance is to a more formalized rulemaking of that guidance, which means there's slightly more of a legal shift on the procedure and the methodology of how CMS will be negotiating. I'm guessing probably more legal counsel and presence and maybe less deviation and exploration or interpretation, but more a rigid standard framework.

[25:07] I agree. Yeah, let me start with the move... of the program, again, back to boring lawyer stuff, from the move of the program from one driven by... guidance to one driven by regulation. And there are your correct nuances and important considerations as we move to a program that is bound by and driven by regulation versus one that's driven by guidance. And, and, and, Just to update the audience, we're currently in that rulemaking process, right? So CMS has proposed... a series of regulations. And we're currently in the 60-day climate period for those regulations. And we're working with dozens of manufacturers that have a stake in those regulations, and they're submitting public comments. I think overarching, the most important piece here is,

[26:03] I think it's a fair assumption that once CMS finalizes these regulations, although they'll update them probably every year, that the program is going to become even more solidified. You know, that said, I don't want to under I don't overstate the significance of this moment, because I think the headline story from the proposed rule was. CMS is largely putting into regulation the program that was finalized over the first two IPays. So we had some shifts between IPay 1 and IPay 2. But really, CMS has been remarkably consistent with, You know, in the actual negotiating room, CMS sits with copies of their guidance in front of them, and they really are driven by that guidance. And so while the program has been technically driven by guidance, it's felt very...

[26:52] regulatory driven. It's felt very rule-based. And so I actually think one of the more interesting pieces here is that the proposed rule really has not proposed a major shift in terms of how the agency has governed the program and will govern the program forward. It feels like it has entered into sort of It has institutionalized fairly quickly, and that CMS has clearly come up with, a lot of internal processes and procedures to try to make the negotiation possible, work in as non-arbitrary as a way as possible. Do you think, how will that play out in the negotiations? Because when we've both supported manufacturers, we've had legal counsel, usually with a manufacturer, and occasionally, maybe a bit later, not always necessarily with CMS. Do you think that this changes that or not? I actually do. I mean, CMS is largely, if you recall, in IPA26, the first IPA, CMS sent legal counsel to most of the meetings. Some of that, I think, was driven that we were also at the early stages of litigation in the drug price negotiation program, which we may talk about. In IPA2 and IPA3, legal counsel has been absent from those meetings. It's not that they're

[28:11] Most of our clients tend to still send an attorney with them, although not all clients. We, me, as a lawyer, advising clients on this process, still lives and breathes. and dies by the guidance. And it will be helpful for me to have something drafted in regulatory text. You know, there continue to be, constantly issues of uncertainty that come up in advising clients as to what CMS is obligated or not obligated to do with respect to the program. And I do think it'll be helpful to have actual regulations to work with, but I'm not necessarily certain it'll change the overarching structure of who attends the meeting or how they operate. And just on that legal challenge, I remember many of the manufacturers, or maybe all of them,

[28:59] who also in parallel had a legal challenge to this whole procedure. Have they all materialized? Have they been thrown out or are they still ongoing? So litigation is ongoing, although, you know, to date, none of them have been successful. There are but there are a handful of cases that continue to work their way. through the courts, we're now sort of the federal courts, circuit court level or federal appeals court level, you know, I would say most Court observers are not terribly optimistic about, that any of these challenges will ultimately... to materialize in a way that strikes down the entire program. I do think there continues to be a possibility – of legal challenges on specific issues. And I'll just give you an example of one. While I mentioned the current proposed rule for the drug price negotiation program, the

[29:53] you know, largely puts into regulation the program as it operates today. One of the proposals that's gained a lot of attention and is a proposal for the treatment of fixed-dose combination products. Right. With, you know, in particular... products where there's a subcutaneous version of an intravenous product, often with the addition of the active ingredient hyaluronidase. CMS has proposed that while fixed dose combination products are generally treated as separate drugs and not negotiated together, where hyaluronidase or another active ingredient has been added, and the only effect of that addition is to change the route of administration, say from IV to sub-Q, I think CMS is likely to finalize that proposal, and I think CMS is likely to

[30:43] to be legally challenged on that proposal. And I think a court could consider... arguably... a more narrow challenge to certain drug price negotiation policies, even if it's unlikely that the entire law is found unconstitutional at this point. Got it. Yeah, that was a great answer, actually, because I've spoken to a few payers that have been knocking this one around and without necessarily a solution on it. The other thing I mentioned was Part B. I mean, in the US, you've got the whole Part B are fundamentally tied to provider buy and build economics rather than the traditional Part D kind of pharmacy benefit. I can... I've been hearing, I mean, you'll see this when we have spoken to payers in the system who have got all sorts of issues with this, and maybe small providers, GPOs, other people now being drawn into this whole freakonomic, if you like, of these drug price negotiations. How do you see this playing out when it's now affecting this kind of buy and bill and injectables and going to ASP?

[31:48] of organizations either going underwater or struggling with that kind of reimbursement. Yeah, and I'll say, you know, one of the potentially – more promising challenges to the drug price negotiation was one actually – brought by the infusion centers. Right. So, but I, you know, my, I continue to believe, that this issue has gained less. I think most providers continue to be not fully aware of, of what is coming for this third buy pay, right? The fact that there are going to be highly high-volume, Part B drugs where they earn significant margin today, where they will be where they will that margin will be significantly reduced. And I think there's growing awareness that it's slower than you might expect.

[32:37] We're still waiting on, even though we're just around the corner, CMS has continued to kick the can down the road on how they are going to effectuate or make providers whole on Part B drugs under the Drug Price Negotiation Program. Really fascinating that they've been able to push this that long. It actually wasn't included in the proposed rule for IPA3, even though IPA3 will be the first year that Part B products are being negotiated. And it may be that until the prices are effective January 1, 2028, that really or leading up to that, that we don't see major provider activation. But I do think. There are a lot of really unique considerations as we move from negotiating just pharmacy dispense products to physician dispense products.

[33:24] I think it's likely there is going to be, right? So when a provider prescribes a pharmacy dispense product that's been negotiated, I don't think we believe necessarily that there's really any significant difference impact to prescribing behavior. Maybe there has been some impact of formulary behavior, although frankly I don't think we've seen that. It's going to be different when we have the prescriber buying and billing the product and being reimbursed at MFP. So I think one major change here to watch for is, are we going to see a real change in prescribing behavior and physicians retreating away from that? prescribing drugs with MFPs. And do you remember, Ross, when, I mean, often in the negotiations, this kind of idea of a system affects, right? That, look, if you negotiate a really low MFP that's so low.

[34:15] then you're actually going to have formularies move away. and almost penalize the mfp product you just spend nine months negotiating in favor of better rebate products and i don't think that really panned out when we spoke to health plans and payers and formularies it was quite clear that if they started penalizing mfp products they would lose their medicare business like in fact i remember some of our payers i said that cms have actually rejected bids for the first time now based on plans, trying to move. And so they're doing other things like moving from a copay to co-insurance model and raising premiums and kind of hiding MFPs and some of that. If when it comes to the. intravenous like what are you saying is physicians may penalize mfp intravenous drugs right i mean if there's two you know if there are two competing products

[35:06] The clinician views them as clinically comparable and one has an MFP, you know, arguably I could see strong incentives for the prescriber to move away from prescribing the one that has a lower reimbursement differential, right? Yeah. Where the net between the buy-in bill is lower. It might be the survival of the organization. If it's small, it might be out... you know, in some of it might be not a large teaching academic unit. It may be like a small out in the rural area. regions and they may well struggle. We're going to sort of wrap up with some of the lifespans and future of MFN. I know we've covered some of this already. One of the popular questions we've had, and people have been feeding me questions already, going, oh, you're going to have policy and payers. The intersection of MFP and MFN has cropped up a few times. In fact, some of our payers didn't even know the answer to this. If a product has been through the negotiation with an MFP,

[36:03] whether it's Part D or Part B. and then it's suddenly subject to MFN, Guard Globe. Is there a carve-out? Is there a statutory carve-out which says, look, the fact you've been through MFP means you're actually safe from Guard and Globe, or is that not the case, or do we not know? No, that's not the case. My understanding is that products that have been negotiated can still be included in models like, for example, Generous or Guard and Globe. Right. So it doesn't protect them in any way? are protected from is having that MFM price incorporated into the drug price negotiation or a renegotiation. Right. So what you're saying is, say you have an MFP. that's been negotiated. If an MFN would kind of give you a lower price, that won't then override it. That's correct. Your MFP price is protected from that part of the equation. Yeah. Yes, that's right. Got it. Okay. That makes sense. That makes sense. And –

[37:02] As we wrap up, tell me, how are you kind of advising pharma clients now as they're planning their longer term U.S. and ex-U.S. launch strategies? What are you telling them or how are you advising them? And they can't always necessarily watch and wait. What is what is where is the direction? And I get there's a heterogeneous model depending on the drugs, depending on the disease areas.

[37:32] Kind of map broadly how that might play out when you're supporting or what companies might be doing. Yeah, well, I mean, I guess I think the most fundamental piece is we're building it into the models and the market access plan, right? I'm just to give an example. I'm working with a client right now putting together... sort of a memo on they're launching their first product in the U.S., later this fall, and they sort of asked for a soup to nuts, right, from a – federal payer perspective, what do we need to do from a Medicare coverage, coding, reimbursement, Life cycle management, all of these pieces. And, you know, two years ago, discussions of MFN and the Guard and Globe and and and even three or four years ago, drug price negotiation would not have been a part of that plan. They have to now. Right. So now, you know, companies need to be thinking about.

[38:22] launch indications, launch sequencing very differently than they did a few years ago. Companies need to be thinking about market sequencing, right, where they're launching different than they did, right? I mean, one helpful thing, frankly, is you know, at least right now is, you know, now that these models have come to light, you know, And we understand, for example, the market basket of countries and, you know, how CMS will select the price from those market baskets of other countries. companies are able to start designing or building around these constraints, Although I think one big limiting factor is it's a little, you know, I don't think we're in a stable period. You know, we don't know if Globe and Guard are here to stay. You know, we don't know if Generous is here to stay. We don't know if Congress, the next Congress, may wish to legislate on MFN. And so I will say it's a really difficult time to.

[39:14] to be a manufacturer and plan for these things, right? Because it's very hard to plan around uncertainty. You know, the last thing you want to do is not, you know, is wait to launch in Germany for three years only to find out that you could have launched in Germany. and made your product available to patients and saved lives or, you know, reduced harm and you would have been fine. Right. So I do think that that's keeping a lot of C-suite folks up at night. Right. Which is this just, total lack of uncertainty as to where, all of this is going. But I guess my key point is No organization should be going through planning, of a product and not taking into account these important factors. Yeah, totally. And one of the legal things that's come through, which could be very

[40:00] is. Some markets, like Spain recently, is looking to put through legislation which says, These confidential discounts legally and contractually are confidential. You can't share them with anyone outside. So if you come to Spain now and you want to give a discount, you can't just go and tell the U.S. president. It's meant to be a two way protection because some of the countries are seeing that they're not going to get launches there because the view is, well, the confidential price isn't confidential.

[40:35] to tell other countries what discounts they've been giving. So if markets suddenly start doubling down on this confidentiality illegally, if you go to Spain, come and give us 30% discount, that's great, 'cause we want access. We're never gonna pay a US price, it's never gonna happen, but this is a contractual obligation, you can't go and share it now. with the US and you're going to sign that contract so we get access and to kind of block an MFN route. How does that look now if you then want to go and do a voluntary reporting, If you signed a deal which says you can't share our contract. I mean, my understanding is that most of the agreements to date, the sort of NFN agreements, you know, contain clauses,

[41:18] that recognize that a manufacturer may in certain instances, you know, be... compelled, from reporting, right? In other words, can't report and create exemptions for that. which seems to suggest the Spain model could be a really good model. But I also had this suspicion that, that, um... U.S. federal policymakers, commerce... are going to be really unhappy with that move, right? And that long-term, that's probably not... a sustainable model, right? If every country just makes these prices not... Disclosable There's going to be something that comes next I just can't imagine that's how this all nets out Totally, totally So Ross, I mean, I'd love to speak to you for another hour I think This is going to be a special episode Because I think yours is going to be the longest Because we've covered the most

[42:11] content. You have been totally awesome, Ross. Anything exciting for you now over the next sort of – we're halfway through the year now. What does the next six months look like for you? Are you coming over to Europe at all? I'm coming over to London in 12 days. I've got your dates on my calendar. Yeah, got our little flat booked and made a veil. Wonderful. And we'll have to eat some spicy Indian food together. I'm going to take you out and test your waters, I think. Yes, I love that. Yeah, and I guess I would just say, I mean, it is that I don't anticipate the pace of change slowing. I do think it's really important to watch the outcome of the midterm elections because I think Democrats and Republicans have slightly different

[42:57] perspectives on MFNs. And then I think one of the really, but divided government is a high likelihood that, in 2027,000, to 2029 or 2728. And I think the question will be, is there a bipartisan path to towards some sort of broader drug pricing reform that incorporates mfn ross i think you're going to probably be the most popular episode we'll definitely have to have you back thank you so much giving us your time your expertise i look forward to working with you again i look forward to presenting with you again and i'm definitely looking forward to seeing you in london soon same my friend we'll see each other soon okay take care thanks for having me thank you thank you

[43:46] had to bring this to a close because in fact this might even be one of our longest podcasts i need Yeah, Ross is amazing. In fact, thanks to all of our guests across this season for being so generous with their time, their unique insights, perspectives, and really shaping, I think, maybe a different direction, I sense. our payer exchange going? Because really, we've gone from interviewing different payers across different seasons to maybe this deep dive, this US deep dive, whereby we've kind of gone and explored right down to the root of what's happening in the US and then the global economy. implications of that. Now, when we started planning this season, the objective was simple. Understand how changes in US pharmaceutical policy might influence the future of market access. Now, having listened to all four conversations, I think the discussion has become much broader than that. We've heard from a regional plan.

[44:42] specialty pharmacy, self-insured employers and policy expert from the legal perspective for manufacturers. So some of the biggest changes the industry has seen in decades, each looked at The same challenge through a different lens with some common themes, but we kept coming back, to some key issues. How do we support innovation while keeping healthcare affordable? How do we demonstrate value beyond price alone? And how do organizations make good decisions when they're not going to be able to do it? while the policy landscape is still evolving? Those questions aren't confined to the US. They increasingly influence pharmaceutical manufacturers, payers and healthcare systems around the world. So where next for the payer exchange? Well, let me tell you, season four is already in pre-production. We're planning our return to Europe for an entire season focused on one healthcare market that's changing rapidly. And I'm delighted to say we'll be welcoming back one of our most popular guests from our very first season. Until then, thanks for listening. Thanks for joining me on the payer

[45:49] If you would like to participate, maybe you're a current or former payer, maybe you're involved with policy, maybe you've heard and you want to be part of the conversation. Please contact me on LinkedIn or on Vipora.com and I'd love to engage with you. Until then, it's bye from me. Thank you very much. Omar Ali, Head of Payers at Vipora.

[46:19] Thank you. Every conversation in this season explores a different perspective on the challenges shaping pharmaceutical market access today. Together, they reflect the kind of discussions we're having every day with payers, policy experts and life science organizations around the world. You know, at Vipora, we're all about access strategy. We help pharmaceutical companies bridge the gap between the value of innovation and the realities of health care funding.

[47:02] we support better decisions, stronger partnerships, and ultimately better patient access to your innovative medicines. If today's conversation has inspired questions about your own challenges in market access, pricing, value-based and innovative contracting, or you'd just simply like to continue the discussion, we'd be delighted to hear from you. Visit Vipora.com to connect with our team, discover more episodes of the Payer Exchange, and more specialist on-demand content. you