September 14, 2026
Centers for Medicare & Medicaid Services
Attn: Dr. Mehmet Oz, Administrator of the Centers for Medicare and Medicaid Services
Submitted on regulations.gov
CMS-1848-P; RIN 0938-AV82
Re: Medicare and Medicaid Programs; CY 2027 Payment Policies Under the Physician Fee Schedule and Other Changes to Part B Payment and Coverage Policies; Medicare Shared Savings Program Requirements; and Medicare Prescription Drug Inflation Rebate Program
On behalf of National Taxpayers Union (NTU), the nation’s oldest taxpayer advocacy organization, we write with brief comments on the Centers for Medicare and Medicaid Services’ (CMS) proposed rule for the 2027 Medicare Physician Fee Schedule and related Medicare policies. NTU was founded in 1969 to achieve favorable policy outcomes for taxpayers with Congress and the executive branch. Our experts and advocates engage policymakers on important matters affecting taxpayers in a variety of settings, including administrative actions that impact federal health care programs. While this rule addresses a multitude of policies, we would like to highlight the proposed updates for the Medicare Prescription Drug Inflation Rebate Program (particularly the new reporting requirements for 340B-covered entities under the Medicare Part D Claims Data 340B Repository). We also wish to offer some general observations on the fiscal impact of Medicare and Medicaid reimbursement policies, and the need for farsighted approaches that emphasize treatments and preventative diagnostics to forego more expensive health care liabilities over the longer term.
The Inflation Reduction Act requires pharmaceutical manufacturers to provide rebates to Medicare if the prices for certain drugs rise faster than the rate of inflation. Federal law prohibits manufacturers from being required to provide both a 340B discount and a Medicare rebate on the same units of a drug. However, in practice, the lack of any substantive transparency requirements in 340B creates opportunities for duplicate discounts with other federal health care programs to occur undetected. As such, we commend CMS for its efforts to improve the accuracy of Medicare’s inflation rebate calculations by mandating that covered entities submit claims data to a centralized federal database. Rather than relying on flawed estimates, this approach will give CMS the transaction-level information it needs to identify 340B-discounted units and administer Medicare inflation rebates in line with congressional intent.
Prescription drugs are one of the few scalable solutions that keep patients out of expensive clinical settings like hospitals that have an outsized burden on federal health programs. Taxpayers, therefore, have a significant stake in how the federal government approaches prescription drug development, deployment, and payment. NTU’s analysis indicates that a policy and regulatory environment that promotes access and innovation can, over the long term, reduce health care utilization by obviating more expensive medical procedures and hospitalizations. As one of the biggest purchasers of drugs in the world, it is vital that the federal government refrain from pricing and reimbursement practices that could inadvertently weaken incentives for pharmaceutical research and development (R&D).
Unfortunately, the Inflation Reduction Act’s (IRA’s) price-setting provisions for certain drugs administered in Medicare are already having a chilling effect on pharmaceutical R&D. The threat of a 95% excise tax on worldwide sales of manufacturers that refuse to comply with the IRA’s “negotiation” provisions leaves drug makers with few practical choices but to accept the federal government’s final price dictates. Rather than operate at a loss, many manufacturers have abandoned research projects altogether: so far, according to the Incubate Coalition’s Life Sciences Investment Tracker, 56 research programs and 26 drug developments have been discontinued since passage of the Inflation Reduction Act.1
Against this backdrop, allowing Medicare inflation rebates to operate with limited safeguards would be a profound disservice to taxpayers. Between 2026 and 2056, the share of federal noninterest outlays consumed by major health care programs is projected to rise from 30% to 38%2, and hospital care is already one of the fastest-growing components of national health expenditures.3 By identifying and removing 340B-discounted units from Medicare’s inflation rebate calculations, CMS can avoid further penalizing pharmaceutical R&D at precisely the time when taxpayers need more innovation to slow the growth of health care spending. As such, taxpayers stand to benefit from a 340B repository for Part D claims with mandatory participation for covered entities.
NTU also wishes to note the interconnectedness between CMS-1848-P and other guidance and rulemakings CMS has proposed to implement the Inflation Reduction Act. To give just one example, in July 2026, CMS issued draft guidance on how pharmaceutical manufacturers are to effectuate (beginning in 2028) the Maximum Fair Price (MFP) concept that was mandated under the Inflation Reduction Act’s Medicare Drug Price Negotiation Program (MDPNP).4 The 102-page document, which covers just one among dozens of MDPNP’s regulatory areas, creates options for implementing the MFP prospectively or retrospectively, the latter (known as Standard Refund Default Amount, or SDRA) in an attempt to rationalize a refund mechanism reflecting the difference between acquisition cost and the new MFP. Unfortunately, the four options for such a mechanism the government proposes for SDRA have the potential for more pricing distortions, because they rely on wholesale acquisition cost or average sales price—measurements that present particular challenges in the case of Part B rather than Part D drugs. NTU believes a whole new measurement may be necessary for CMS to achieve its objectives in this guidance, even though it would be in service to an overall effort—MDPNP—that has the prospect of ultimately harming taxpayers.
Another portion of the July 2026 guidance raises a third connection to CMS-1848-P. The guidance seems to indicate that CMS will expand the use of “modifier” data that will further facilitate nongovernmental parties’ efforts to avoid duplication of Medicare and 340B claims on Part D drugs. This data is already ahead of the Part D curve in helping to identify possible duplication instances, although CMS continues to disavow any role in actively policing such instances. Nonetheless, both CMS-1848-P and the MFP effectuation guidance cannot be separated from the policy implications of a recent CMS request for information regarding a potential 340B Rebate Model Pilot Program. By reforming the current 340B reimbursement arrangement, which some have compared to a “pay and chase” situation, a rebate model could strengthen nonduplication provisions elsewhere in the CMS regulatory architecture.5
The purpose of raising these separate rulemaking and guidance tracks is simply to note that changes to CMS procedures, even minute ones, should be considered for the part they can play in holistic trends, both for better and for worse. Loosely- or un-coordinated policies can have nearly as deleterious an impact as well-coordinated ones consciously intended to expand government and thereby harm taxpayers. We hope that CMS will ensure that, to the greatest extent possible, the price control effects of the Inflation Reduction Act be minimized and the fiscal discipline potential of steps such as the 340B payment model be maximized.
Finally, we wish to note that taxpayers are depending upon policymakers to make perspicacious decisions in the nearer term about Medicare and Medicaid coverage for prescription drugs, devices, and diagnostic tools that can help to bend the cost curve of numerous health conditions. In recent comments to various government entities as well as media outlets, we have noted:
- In an NTU paper from 2023 entitled, “How Much is Medicine Worth to the American Taxpayer?” research showed that a new generation of pharmaceutical interventions for hypertension, cholesterol, and diabetes slowed per-capita Medicare spending by $824 in the 2000s.6
- Ongoing research of GLP-1 usage by Aon, involving 192,000 workers, observed significant slowdowns in medical treatment costs and employer-provided insurance claims along with reduced hospitalizations for major adverse cardiovascular events in the near term—not just over periods of many years.7 Phasing in GLP-1 coverage for government health programs requires careful management to achieve pro-taxpayer outcomes.
- Another study from late 2023 by BMC Health Services Research put the value of life-years saved over 25 years from early diagnostics for four common cancers at $6.5 trillion. At least a portion of this economic value would have accrued to federal, state, and even local health care programs, thereby lessening the burden on taxpayers. Early detection was key to delivering this benefit.8
- The Alzheimer’s Association estimates that patient care for those afflicted by the disease will more than triple by 2050 to nearly $1 trillion. On the other hand, a treatment that delays the onset of Alzheimer’s by five years would “reduce total health and long-term care spending” by one-third. Yet, testing procedures that are key to current medical therapies, such as CET scans, have been impeded by a government procedure known as Coverage with Evidence Development.9
- Through this rulemaking as well as other guidance and policy tools, CMS has the opportunity to address future fiscal challenges in government health programs by emphasizing early detection and prevention of costly treatments in the long-run by fortifying availability of diagnostics, pharmaceuticals, and minimally invasive devices in the nearer term.
Thank you for your consideration, and should you have any questions, we are at your service.
Sincerely and Respectfully,
Alexander Ciccone
Policy and Government Affairs Manager
National Taxpayers Union
Pete Sepp
President
National Taxpayers Union
1 Life Sciences Investment Tracker | Incubate Coalition
2 The Long-Term Budget Outlook Data: 2026 to 2056 | Congressional Budget Office
3 Hospital Spending Accounted for 40% of the Growth in National Health Spending Between 2022 and 2024 | KFF
4 See ipay-2028-effectuation-draft-guidance.pdf.
5 See NTU comments on the 340B Pilot at: 340B Rebate Pilot Can Provide Valuable Lessons for Future Reform - Publications - National Taxpayers Union.
6 See our study at: How Much is Medicine Worth to the American Taxpayer? A Cost-Benefit Analysis - Publications - National Taxpayers Union.
7 Cited in NTU comments at: Expanding Access to Cardiac Procedure Could Control Medicare Costs, Benefit Taxpayers - Publications - National Taxpayers Union.
8 See the study at: The aggregate value of cancer screenings in the United States: full potential value and value considering adherence | BMC Health Services Research | Springer Nature Link.
9 See NTU’s comments on this topic at: Regulatory Reforms for Alzheimer's Treatment Could Boost Well-Being for Patients, Reduce Costs for Taxpayers - Publications - National Taxpayers Union.