By NextBestFitRetail prescription drugs
A single national formulary negotiating every brand drug cuts brand net prices about 35% (still above the 2-3x lower prices in other wealthy countries, RAND 2024). Generics, about 20% of spending, stay at today's price. 0.8 x 0.65 + 0.2 x 1.0 = 0.72. Medicaid already gets mandatory rebates, so it pays about 70% of the reference price. Removing copays raises fills 8%, mostly adherence to chronic medications. Drugs not on the formulary stay out of pocket (5%).
Result
$380.1B
$467.0B → $380.1B
Per resident, per year
$1,114
÷ 341.1M people
Per household
$2,875
÷ 132.2M households
Range
$339.7B–$459.5B
Lean and costly scenarios.
How it's calculated
| # | Step | Arithmetic | Value |
|---|---|---|---|
| 1 | 2024 spending on this service (CMS NHE Table 4) Sources: CMS Office of the Actuary (2025) | $467.0B | |
| 2 | Private health insurance paid $172.1B at 1.00× the reference price → volume Sources: CMS Office of the Actuary (2025) | $172.1B ÷ 1.00× | $172.1B |
| 3 | Medicare paid $162.8B at 1.00× the reference price → volume Sources: CMS Office of the Actuary (2025) | $162.8B ÷ 1.00× | $162.8B |
| 4 | Medicaid paid $53.9B at 0.70× the reference price → volume Sources: CMS Office of the Actuary (2025) | $53.9B ÷ 0.70× | $77.0B |
| 5 | Out-of-pocket spending in 2024 Sources: CMS Office of the Actuary (2025) | $55.0B | |
| 6 | Stays out of pocket (items UHP excludes: 5%) | $55.0B × 5% | $2.8B |
| 7 | Covered out-of-pocket converted to reference-price volume | ($55.0B − $2.8B) ÷ 1.20× | $43.5B |
| 8 | Care UHP takes over, valued at 2024 prices | $441.1B | |
| 9 | Same care valued at the reference price (Medicare Part D net price (after rebates)) | $455.4B | |
| 10 | Re-priced at UHP rate 0.72× | $455.4B × 0.72× | $327.9B |
| 11 | Price effect (same care, new prices) | $327.9B − $441.0B | −$113.1B |
| 12 | Utilization multiplier 1.08× | $327.9B × 1.08× | $354.2B |
| 13 | Utilization effect (more care) | $354.2B − $327.9B | $26.2B |
| 14 | UHP spending on this service | $354.2B | |
| 15 | Plus spending that stays out of pocket | $2.8B | |
| 16 | Plus Other insurance programs (CHIP, DoD, VA) (continues unchanged) | $16.9B | |
| 17 | Plus Other third-party payers & programs (continues unchanged) | $6.3B | |
| 18 | Total national spending on this service under the plan | $354.2B + $2.8B + $23.2B | $380.1B |
| 19 | Change from 2024 | $380.1B − $467.0B | −$86.9B |
Trade-off: Providers of this service receive $113.1B less for the same care; patients receive $26.2B more care.