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 concrete action this step requires, who is responsible, and when it happens relative to enactment.

#	Action	Owner	When	Trade-off
1.9.1	Start with the union of all Medicare Part D formularies, so no patient loses access to a drug they take on day one.	Formulary Board	Month 0–6	Starting with every Part D drug avoids disruption but delays exclusion of low-value drugs.
1.9.2	Year-1 interim prices: Medicare negotiated prices where they exist; elsewhere the lower of Medicaid's net price + 10% or the median price in 11 reference countries + 20%.	Formulary Board	Month 6–12	Interim reference prices give immediate savings but may be challenged as arbitrary before full negotiation.
1.9.3	Run full negotiations for the 500 highest-spend brand drugs over Years 1–3, using value assessments from the HTA Institute.	Formulary Board / HTA Institute	Years 1–3	Negotiating the top 500 drugs first targets most spending but leaves cheaper brands at higher prices for longer.
1.9.4	Define the §1498 process: if a manufacturer won't sign a price within 18 months, the Board may contract for generic supply and pay the patent holder 'reasonable and entire compensation' set by the Court of Federal Claims.	Formulary Board / DOJ	Month 12	A §1498 backstop strengthens bargaining but risks trade retaliation and fewer future launches.
1.9.5	Pay pharmacies directly: a dispensing fee ($10.50 per prescription, roughly the Medicaid average) plus acquisition cost. Spread pricing and PBM rebates end.	UHA	Month 18	Paying pharmacies directly ends PBM spread pricing but sets dispensing fees that may not sustain rural pharmacies.
1.9.6	Include physician-administered drugs (now Part B and hospital outpatient) in negotiation; hospitals and clinics are reimbursed at the negotiated price + 6%.	Formulary Board	Year 2	Including physician-administered drugs saves money but cuts oncology practices' drug margins.
1.9.7	Exceptions process: a physician can request a non-formulary drug, with a 72-hour decision (24 hours if urgent).	UHA	Month 18	A non-formulary exceptions process protects individual patients but creates a new administrative channel.