Access to Care and Drug Prices: Recent Department of Health and Human Services Guidance

This is the second in a series of 4 discussions for the 40th anniversary of ONCOLOGY on the affordability of health care. The first topic evaluated the affordability of the Affordable Care Act. The subsequent topics will evaluate prior authorization required by health care insurers and governmental health care programs.

Affordability will be the top issue in the upcoming midterm elections. A primary driver of skyrocketing health care budgets has been the cost of prescription medications. This is particularly true for oncology, as personalized medicine is the standard of care. Approximately 35% of guideline-based, FDA-approved treatments for cancer are rejected by insurance companies. As an example, financial authorization delayed immunotherapy by more than 2 weeks in 41.7% of 218 patients with gynecologic cancer and was completely denied in 11% of the patients. These delays were associated with a worse progression-free survival and correlated with insurance type; Medicaid patients had the worst outcomes.¹

The National Health Interview Survey conducted by KFF in 2024 found that 11% of Americans had difficulty paying and 45% worried about their ability to pay medical bills; 17% of adults delayed or did not get health care due to cost.² More than 40% of American adults have not taken medications as prescribed due to costs. The high cost of prescription medications caused 19% of Americans to cut pills in half or skip doses, 27% to not fill a prescription, and 31% to take an over-the-counter drug instead of the prescribed medicine.³ The survey also found that 59% of all Americans, compared with 44% in 2018, are concerned about affording prescription drugs. This percentage increases to 67% among those with annual incomes less than $40,000 and 64% of those taking at least 4 prescription medications. Legislation regulating the high cost of prescription medications has broad bipartisan support in Congress. Public support of drug pricing regulation totals 72% overall, with 77% of Democrats, 72% of independents, and 68% of Republicans.

While overall Medicaid spending increased 52% between federal fiscal year 2019 and 2024, the percentage of Medicaid spending on prescription drugs has remained stable at 6% of the Medicaid budget since 2006—even with Medicaid expansion under the Affordable Care Act (ACA) in 2010.⁴ The remaining Medicaid budget is also unchanged over this time frame, with 38% spent on hospital stays, 37% on long-term care, and 15% on providers. Like all Medicaid programs, management of prescription drug benefits continues to be focused at both the state and federal levels. The emergence of new, high-cost drugs, however, has placed significant pressure on state Medicaid budgets, especially as COVID-19 pandemic–era Medicaid subsidies expire.

There are 3 primary drivers of skyrocketing drug costs. First, the innovation of new therapeutics is a long process that not only adds cost but also delays the availability of potentially lifesaving agents. An economic evaluation of
268 US-traded drug developers found that 20 firms accounted for 80.8% of research and development (R&D) activity. The median cost for new drug development was $708 million, with a range of $247 million to $1.42 billion, while the mean cost was $1.31 billion in 2019 US$.⁵ The 2019 US$ conversion is a gross domestic product and price deflator for the COVID-19 and inflation years from 2020 to 2024. Estimated costs for each phase of R&D are as follows: (1) phase 1, $5.26 million for an average of 39 patients ($136,783 per patient); (2) phase 2, $18.49 million for 71 patients ($129,777 per patient); and (3) phase 3, $52.84 million for 479 patients ($113,030 per patient).⁶ R&D costs for new drugs are therapeutic-area specific, with oncology being the highest. The cost of bringing a new molecular entity to market in oncology ranges from $944 million to $4.54 billion in 2019 US$.⁷ Grants and contracts for the conduct of clinical trials are negotiated by each institution and include indirect costs that range from 30% to 70%.⁸

Second, the cost of therapeutic development has been borne by the US, which has long paid 2-fold to more than 3-fold the drug prices paid by countries having the most-favored-nation (MFN) designation. Unlike most high-income countries, which use centralized price negotiation tactics or regulations, the US has a fragmented system in which multiple payers negotiate separately with pharmaceutical firms. The Medicare Prescription Drug, Improvement, and Modernization Act of 2003 prohibited direct government price negotiations until the Inflation Reduction Act of 2022 changed that. The Trump administration ordered a policy change that would have Medicare pay no more than 102% to 105% of the lowest MFN prices. The policy targets Medicare Part B drugs, including systemic cancer therapies and biologics.⁹

Beyond the cost paid by patients through higher insurance premiums for prescriptions after FDA approval, Americans also individually bear the costs of participating in clinical trials. A study of clinical trial participants that consisted of 72% non-Hispanic White patients, where 45% had annual incomes of $60,000 or less, 50% lived more than 300 miles from the clinic, and 37% required air travel, found significant personal expenses beyond costs covered by health insurance or the pharmaceutical firm. Out-of-pocket costs totaled at least $1000 per month in 48% of the 213 clinical trial participants studied; over half of the clinical trial participants had additional medical expenses of at least $200 per month. Savings were used to pay for clinical trial participation by 53%; 18% withdrew money from retirement accounts, 10% borrowed money from friends or family, and 9% had a personal fundraiser.¹⁰

Since 2014, the ACA mandated health insurance coverage of routine care costs during clinical participation. Three factors, however, undermine health insurance coverage of clinical trial expenses: (1) grandfathered self-funded employer plans are not subject to state Employee Retirement Income Security Act (ERISA) of 1974 regulations, (2) Medicaid coverage limits are not addressed under the ACA, and (3) the uninsured.¹¹ Medicare covers the routine care costs within a clinical trial that fulfill the following 3 requirements: (1) the purpose of the trial must fall within a Medicare benefit category and is not statutorily excluded from coverage (eg, cosmetic surgery, hearing aids), (2) the clinical trial must have a therapeutic intent, and (3) patients must have a diagnosed disease. Healthy volunteers are excluded except in the setting of a study control group.¹²

Third, pharmacy benefit managers (PBMs) have added significant costs to prescription drugs, holding an enviable middleman position. Managing prescription drug plans for insurers and/or employers, the PBM position was established approximately 70 years ago under ERISA to help insurers control prescription drug spending and manage benefits. Like health care facilities and insurance corporations, the PBM market has undergone consolidation and vertical integration, raising concerns that reduced competition will lead to even higher drug prices.¹³ The system for defining, calculating, justifying, and assessing the PBM fees has become convoluted. The Big 3 PBM firms and their Big Insurance owners have set up group purchasing organizations (GPOs); 2 of the 3 GPOs are located offshore, making it nearly impossible to follow the money.

None of the 10 top-selling prescription drugs from the IQVIA 2017-2019 national sales database were oncology drugs. The average annual spending on these 10 prescription drugs accounted for $83.4 billion and 19.0% of all prescription drug costs. Medicare was the most common source of reimbursement of these drugs, except for adalimumab (Humira) and dimethyl fumarate (Tecfidera), which were most frequently covered by private insurance. These 10 prescription drugs represented 8.7%, 19.0%, 24.7%, and 13.0% of the total spending on prescription drugs by Medicaid, Medicare, private health care insurance, and out-of-pocket payments, respectively.¹⁴

In an attempt to reduce prescription drug prices, an executive order was issued in April 2025 and lauded by the National Community Pharmacists Association. The executive order mandated that the US Office of Management and Budget and the Health and Human Services and Labor Departments evaluate the “direct and indirect compensation received by pharmacy benefit managers.”¹⁵ In December 2025, federal lawmakers introduced the bipartisan PBM Fiduciary Accountability, Integrity, and Reform (FAIR) Act, which would amend ERISA and impose fiduciary duties and responsibilities on PBMs. Additionally, many states have introduced legislation that would impose fiduciary obligations on PBMs. Key PBM reforms were codified within the Consolidated Appropriations Act of 2026 and signed by President Donald Trump on February 3, 2026. The law increases transparency, increases pharmacy access, and reforms the business practices of PBMs within Medicare and Medicaid.^16-20 Due to PBMs, federal programs currently pay different prices for the same drug. For example, the Department of Veterans Affairs pays, on average, 54% less for more than 400 brand-name and generic prescription drugs than Medicare Part D, even after accounting for rebates and price concessions.²¹

Burgeoning health care costs continue to add to the affordability crisis in America. Health care insurance is provided to 23 million Americans through the ACA. Now that the COVID-19–era ACA subsidies have expired, 1.5 million Americans, approximately 10% of ACA enrollees, have dropped their policies, citing expense and poor coverage.^22,23 The cost of prescription drugs represents about one-fourth of all health care expenditures. Efforts have begun to reduce prescription drug costs through MFN designation and TrumpRx, but much work remains to unburden the American people from these unsustainable costs. The American people simply need fairness and politicians who care as much for their health and financial well-being as their vote.

References

1. Morton M, Chalif J, Sciuva J, et al. The price of delay: insurance-related treatment delays in patients with gynecologic cancer receiving immunotherapy. Gynecol Oncol. 2025;201:144-151. doi:10.1016/j.ygyno.2025.08.019

2. Rakshit S, Cotter L, McGough M, Claxton G. How does cost affect access to healthcare? KFF. March 10, 2026. Accessed May 6, 2026. https://tinyurl.com/t3mv7k98

3. Kearney A, Montero A, Montalvo J, Valdes I, Kirzinger A, Hamel L. Public views on prescription drug costs: regulation, affordability and TrumpRx. KFF. March 13, 2026. Accessed May 6, 2026. https://tinyurl.com/4mwh3bha

4. Williams E. Five key facts about Medicaid prescription drugs. KFF. March 13, 2026. Accessed May 6, 2026. https://tinyurl.com/4b2fp8bt

5. Mulcahy A, Rennane S, Schwam D, Dickerson R, Baker L, Shetty K. Use of clinical trial characteristics to estimate costs of new drug development. JAMA Netw Open. 2025;8(1):e2453275. doi:10.1001/jamanetworkopen.2024.53275

6. Andhalkar N. Phase-by-phase clinical trial costs: what every sponsor needs to know! ProRelix Research. May 5, 2025. Accessed May 7, 2026. https://tinyurl.com/3en78sx4

7. Schlander M, Hernandez-Villafuerte K, Cheng CY, Mestre-Ferrandiz J, Baumann M. How much does it cost to research and develop a new drug? a systematic review and assessment. Pharmacoeconomics. 2021;39(11):1243-1269. doi:10.1007/s40273-021-01065-y

8. Nelson B, Faquin W. The hidden costs of clinical trials: fierce debate over the reimbursement of indirect costs linked to NIH grants is shining a new light on the burden borne by the facilities and participants needed to conduct clinical trials. Cancer Cytopathol. 2025;133(6):e70021. doi:10.1002/cncy.70021

9. Mustopoh SY, Fink JL. Most favored nation drug pricing: analysis and implications. Pharmacy Times. February 4, 2026. Accessed May 6, 2026. https://tinyurl.com/3abnu55a

10. Huey RW, George GC, Phillips P, et al. Patient-reported out-of-pocket costs and financial toxicity during early-phase oncology clinical trials. Oncologist. 2021;26(7):588-596. doi:10.1002/onco.13767

11. Mackay CB, Gurley-Calvez T, Erickson KD, Jensen RA. Clinical trial insurance coverage for cancer patients under the Affordable Care Act. Contemp Clin Trials Commun. 2015;2:69-74. doi:10.1016/j.conctc.2015.12.002

12. Routine costs in clinical trials. CMS. May 27, 2024. Accessed May 6, 2026. https://tinyurl.com/5n85wvbk

13. What are pharmacy benefit managers (PBMs) and why we need reform? American Medical Association. Updated February 4, 2026. Accessed May 6, 2026. https://tinyurl.com/4fkdz7m4

14. Chavehpour Y, Balkrishnan R, Segel JE. Prescription drug spending by payer: implications for managed care. Explor Res Clin Soc Pharm. 2024;13:100406. doi:10.1016/j.rcsop.2024.100406

15. Hoey BD. Trump zeroes in on PBMs with executive order. National Community Pharmacists Association. April 18, 2025. Accessed May 6, 2026. https://tinyurl.com/5n8u3dt3

16. Consolidated Appropriations Act, HR 7148, 119th Cong (2026). Pub L No. 119-75. Accessed May 6, 2026. https://tinyurl.com/3sed23ek

17. Lim D, Chu A. Congress is about to overhaul the drug market: consumers may never feel it. Politico. February 3, 2026. Accessed February 4, 2026. https://tinyurl.com/bdertmne

18. Kupar S, Leach B. Trump signs bill to end government shutdown and fund DHS for two weeks. NBC News. February 3, 2026. Accessed February 4, 2026. https://tinyurl.com/5ytvxkca

19. PBM Reform Act of 2025, HR 4317, 119th Cong (2025). Accessed February 4, 2026. https://tinyurl.com/m7br3368

20. Halpern L. PBM reform within 2026 appropriations bill signed into law. Pharmacy Times. February 4, 2026. Accessed May 6, 2026. https://tinyurl.com/2p9nta7j

21. Prescription drug spending. US Government Accountability Office. Accessed May 8, 2026. https://tinyurl.com/p6apfu5a

22. Japsen B. One million+ Obamacare enrollees drop coverage after tax credits expire. Forbes. March 11, 2026. Accessed May 6, 2026. https://tinyurl.com/yxdpheb4

23. Kekatos M. 1 in 10 ACA enrollees dropped their coverage due to rising health care costs: poll. ABC News. March 19, 2026. Accessed May 6, 2026. https://tinyurl.com/mr3ccp95