August 17, 2026
Senate Finance Committee Minority Staff
Submitted to drugs@finance.senate.gov
Re: Request for Information: Commonsense Policy Options to Lower Drug Prices for Patients
On behalf of National Taxpayers Union (NTU), the nation’s oldest taxpayer advocacy organization, we write with brief comments on the Senate Finance Committee Minority Staff’s Request for Information (RFI) regarding policy options to lower drug prices for patients. 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 health care. In the prescription drug area of health care policy, NTU’s analysis has indicated that promoting an environment of innovation and access can, over the long term, reduce total health care spending by preventing more expensive medical procedures and hospital stays.
Any serious effort to shore up our nation’s finances must address the unsustainable growth of federal health expenditures. The federal government already spends more than $1.8 trillion1 annually on health care, and, 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 As the U.S. population continues to age, policymakers need to be proactive about leveraging medical therapies that can bend the long-term cost curve of federal health programs.
Given its outsized growth in recent years, hospital spending warrants special attention. Between 2022 and 2024, spending on hospital care represented 40% of the overall growth in national health spending.3 This surge outpaced every other source of medical spending, including physician services and prescription drugs. The burden hospital spending imposes on Medicare is an urgent problem: the fund that pays for beneficiaries’ hospital stays is currently projected to run out of money by 2033 if no reforms are enacted.4
Prescription drugs are one of the few scalable solutions that keep patients out of expensive hospital stays. As such, taxpayers benefit substantially from a policy and regulatory environment that enables patients to access affordable medicines while preserving the incentives to develop and bring innovative therapies to market.
We urge policymakers in both parties to recognize that the U.S. already benefits from a strong pharmaceutical ecosystem. American drug companies are responsible for developing nearly half5 of all new medicines on the global market and spend over $100 billion each year on research and development (R&D). This leads to unrivaled access to drugs for American patients. More than half of all new treatments are launched in the U.S., often a full year ahead of Europe.6 Moreover, nearly 90% of all blockbuster drugs are available to U.S. patients, and more than 90% of prescriptions are filled via generics.7 This balance of access and affordability means that government health care programs benefit over the long term from drug breakthroughs that reduce costly hospitalizations and other treatments, and benefit over the nearer term from the price competition that generics provide.
Against this backdrop, it would be especially self-defeating for Congress to enact policies such as price controls that end up limiting the supply of innovative therapies. Unfortunately, the Medicare drug price-setting program established by the Inflation Reduction Act (IRA) is having this predictable effect. According to the Incubate Coalition’s Life Sciences Investment Tracker, 56 research programs and 26 drug developments have been discontinued since passage of the IRA.8 Moreover, because some drugs falling under coercive negotiation have generic equivalents under development but not yet marketed, there can be a strong deterrent effect on private investment in generics as well.
Most-Favored-Nation (MFN) drug pricing initiatives, which the Trump Administration has proposed, will similarly result in shortages that harm patients and taxpayers alike. By tying Medicare and Medicaid’s drug reimbursement to prices set in European health systems that rely heavily on government mandates instead of market competition, MFN effectively imports foreign price controls that result in delayed patient access to new therapies. This would only further exacerbate the burden federal health programs impose on taxpayers by increasing reliance on expensive hospital stays and other treatments that could be avoided with access to effective drugs.
NTU encourages the Committee to focus its attention on the structural drivers of high drug costs. Studies show that intermediaries in the pharmaceutical supply chain capture9 about one-third of total drug expenditures. Successfully controlling spending on drugs therefore needs to address the incentives and distortions across the prescription drug supply chain, instead of just squeezing one part of that chain with self-defeating price controls.
Addressing the role that middlemen such as pharmacy benefit managers (PBMs) play in driving up prescription drug costs is a good place for lawmakers to start. By aggregating purchasing power and negotiating rebates, PBMs can play an important role in helping control drug spending for employers and government programs. However, growing consolidation in recent years, along with opaque pricing practices, raises legitimate concerns that savings are not always passed down to patients and taxpayers.10
Improving transparency should be a key focus, particularly around the practice of spread pricing, where PBMs keep the difference between what they charge health plans and what they reimburse pharmacies. These hidden markups inflate federal health spending, and taxpayers stand to benefit tremendously from reforms that bring greater accountability and clarity to how federal health dollars are spent. Furthermore, additional disclosure from PBMs on the use of specialty pharmacies in Medicare and Medicaid would help address current gaps in CMS reporting requirements.
Thankfully, policymakers have already introduced legislative proposals in the 119th Congress that address the underlying drivers of elevated drug costs. Recently, NTU endorsed11 H.R. 6610, the Pharmacists Fight Back in Federal Employee Health Benefit Plans Act. Authored by Rep. Auchincloss (D-MA), this bipartisan legislation creates new requirements for pharmacy benefit managers (PBMs) participating in the Federal Employees Health Benefits Program. This bill mandates participating PBMs to provide reimbursements to pharmacies according to specified standards, and to use manufacturer rebates to lower drug costs for beneficiaries. Additionally, it limits PBMs from directing patients to affiliated pharmacies and imposes penalties for violations. Provisions in H.R. 6610 that limit certain PBM practices such as spread pricing, could be of great benefit to taxpayers.
Regulatory barriers to competition represent another key driver of high drug costs that warrants lawmakers’ attention. In this area, NTU has endorsed12 S. 1414, the Expedited Access to Biosimilars Act. Authored by Sen. Paul (R-KY), this legislation streamlines the Food and Drug Administration’s (FDA) convoluted and obsolete approval process for biosimilar drugs. Under current law, manufacturers are required to undertake costly and lengthy clinical studies even when the evidence already shows that the biosimilar they have developed is as safe and effective as the original product. There is ample evidence that prices decline as more competitors enter the market for a given drug. Public policy should, therefore, focus on removing regulatory barriers to entry that keep manufacturers from bringing their drugs to market. S. 1414 represents the kind of good-government reform that actually expands supply in the health care marketplace.
Perverse incentives throughout the health care system can also drive unnecessary utilization and result in increased spending on prescription drugs. NTU has endorsed13 S. 1105, the No Unreasonable Payments, Coding, Or Diagnoses for the Elderly (No UPCODE) Act. Authored by Sen. Cassidy (R-LA) and Sen. Merkley (D-OR), this bipartisan legislation addresses incentives for Medicare Advantage plans to exaggerate patients’ diagnoses to receive higher payments from CMS. Currently, Medicare Advantage payments are based on just one year of patient diagnoses, which makes it easy for plans to exaggerate medical risks. By mandating the use of two years of diagnostic data instead of one, this legislation provides a more accurate way to assess the efficacy of diagnoses and subsequent treatments. This legislation also excludes diagnoses that come solely from chart reviews or in-home health assessments without supporting doctor visits. These practical provisions help prevent unnecessary diagnoses from causing higher utilization of prescription drugs and other treatments.
In summary, lawmakers should focus on addressing the underlying inefficiencies and distortions that drive higher spending rather than imposing policies that undermine the supply of innovative drugs. 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
1 https://www.cbo.gov/publication/61951.
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 What’s in the 2026 Medicare Trustees Report? • Bipartisan Policy Center.
5 https://itif.org/publications/2025/02/21/europe-trails-united-states-over-26-percent-share-global-biopharma-rd/.
6 https://www.ncbi.nlm.nih.gov/books/NBK611302/.
7 https://www.ntu.org/publications/detail/ending-pharmaceutical-free-riding-by-foreign-countries-shouldnt-come-at-the-expense-of-american-taxpayers.
8 For further information, see: Rare Disease Patients Deserve Cures, Too - American Thinker and Life Sciences Investment Tracker | Incubate Coalition.
9 https://pmc.ncbi.nlm.nih.gov/articles/PMC12287691/.
10 How Pharmacy Benefit Managers Impact Taxpayers and Government Spending - Publications - National Taxpayers Union.
11 Bills Would Limit DC Taxation, Reduce Drug Prices - Publications - National Taxpayers Union.
12 Oppose Price Caps, Remove Excessive Regulation to Lower Drug Costs - Publications - National Taxpayers Union.
13 No UPCODE Act Removes Incentives to Overcharge Medicare Advantage - Publications - National Taxpayers Union.