Phase 1: Enactment & build · Step 1.9

Create the national formulary & negotiate drug prices

Months 0–18 for the initial formulary; continuous negotiation · National Formulary and Pricing Board; HTA InstituteDiscuss this step

Every existing law, program, institution, or practice this step changes: what it is today, what happens to it, when, and what that costs or trades off.

What	Today	Change	Trade-off
Medicare Part D (drug plans) replacedYear 1 Federal programs	Standalone and MA drug plans run by private sponsors and PBMs; $2,000 out-of-pocket cap (2025); IRA negotiation of selected drugs.	Replaced by the national formulary with $0 cost sharing. IRA negotiation is extended to all drugs.	No premiums or cost sharing; formulary choice moves from plan competition to one public formulary with an exceptions process.
340B Drug Pricing Program replacedYear 2 Provider payment & regulation	Safety-net hospitals and clinics buy outpatient drugs at deep discounts and keep the spread from insurer reimbursement (tens of billions a year).	Ends as a revenue mechanism: UHP pays negotiated drug prices to all; the lost spread is replaced by explicit safety-net budget adjustments.	Ends an opaque subsidy that partly flows to well-off systems and contract pharmacies; covered entities lose flexible revenue.
Medicare Drug Price Negotiation (IRA) expandedYears 1–3 Drugs & devices	Up to 15–20 drugs a year negotiated for Medicare only.	Expanded to every drug and every patient through the National Formulary and Pricing Board.	Large savings; lower innovation incentive.
Physician-administered drugs (Medicare Part B ASP+6%) replacedYear 2 Drugs & devices	Paid at average sales price + 6%, which rewards using pricier drugs.	Negotiated price + flat handling fee.	Removes the incentive for costlier drugs; oncology practices lose margin.
Manufacturer rebates and Medicaid Drug Rebate Program replacedYear 4 Drugs & devices	Opaque rebate system; Medicaid gets statutory rebates and 'best price'.	Replaced by net negotiated prices; Medicaid best-price rules end.	Simpler and transparent; 'best price' cross-market spillovers end.
Medical devices & durable medical equipment pricing amendedYears 2–4 Drugs & devices	Hospitals and payers negotiate device prices; Medicare competitive bidding for some DME.	National reference prices for high-cost implants within hospital budgets; competitive bidding expanded for DME.	Lower prices; device makers' U.S. margins fall.
Group purchasing organizations & drug wholesalers amendedYears 2–4 Drugs & devices	GPOs negotiate hospital supply prices and collect administrative fees from suppliers; three wholesalers distribute most drugs.	Continue for logistics; national reference prices for drugs and high-cost devices reduce their negotiating role.	Less opaque fee income in the supply chain; less room for hospitals to negotiate below reference prices.
Biosimilar and generic substitution amendedYear 1 Drugs & devices	Slow biosimilar uptake because rebates favor brand biologics.	The national formulary prefers biosimilars and generics, with automatic pharmacy substitution.	Large savings; some patients must switch products, and brand makers lose market share faster.
Vaccines for Children & adult vaccine coverage absorbedYear 1 Federal programs	VFC buys vaccines for Medicaid and uninsured children; adult coverage varies by payer.	UHP covers all recommended vaccines for everyone; VFC folds into the formulary.	Universal vaccine coverage; politicization of vaccine recommendations directly affects coverage.
FDA drug and device approval continues— Drugs & devices	Approval is based on safety and efficacy; price and comparative value are not considered.	Unchanged. Approval stays separate from coverage and price, which the Formulary Board and HTA Institute set afterward.	Keeps approval science-based; a drug can be approved but priced or covered narrowly, delaying patient access.