Fixed-Combination Drug Price Controls are a Recipe for Disaster

Price controls are an abysmal failure whenever and wherever tried, and government meddling in medication prices is no different. This misguided policy was first implemented under President Biden, via the 2022 Inflation Reduction Act (IRA), and has continued under President Trump. As economist Tomas J. Philipson noted in The Wall Street Journal, “Since [the IRA’s] passage, companies have halted at least 55 research programs and abandoned 26 medicines.” And now, the government is about to make a bad situation worse by ignoring drug improvements and innovation in its so-called “negotiations” with producers.

The Centers for Medicare & Medicaid Services (CMS) has proposed changing how certain fixed-combination drugs are grouped for Medicare price negotiation. Under its 2026 proposal, CMS would, in specified circumstances, aggregate a drug with a reformulated version that adds an ingredient enabling a different route of administration. Currently, CMS generally treats fixed-dose combinations containing distinct active ingredients as separate products for drug selection purposes, even when one ingredient is also found in an existing medicine. 

CMS argues that this status quo can create opportunities to delay negotiation by adding an ingredient to an existing product. Its proposed response to this supposed issue would treat certain related products as one qualifying single-source drug and use the earlier approval date to assess eligibility. That response to a (purely hypothetical) problem risks treating clinically meaningful formulation improvements as if they contributed little independent value.

Consider the difference between an intravenous infusion and a subcutaneous injection. A new formulation can change where, how, and how long patients receive treatment. For some therapies, this may reduce time spent at infusion centers and make treatment less disruptive. The policy is particularly consequential for oncology medicines formulated with an additional absorption-enhancing ingredient, a category identified in analysis of the proposal. Such advances are not necessarily equivalent to discovering a new molecule, but neither are they automatically trivial. For patients managing serious chronic conditions, the practical burden of repeated treatment visits can influence whether a prescribed therapy fits into everyday life. Policymakers should evaluate those patient-centered benefits alongside changes in drug acquisition costs.

CMS maintains that its approach addresses program integrity and reflects statutory requirements to aggregate dosage forms and strengths. But the agency fails to explain how its policy accounts for the costs and clinical value of developing alternative delivery methods. A rule designed to prevent strategic reformulations should not inadvertently discourage improvements that make treatment easier for patients.

The concern extends beyond any one medicine. Research after an initial approval can produce new indications and routes of administration. Those projects require capital and clinical evidence, even when they build on an established active ingredient. If a reformulated medicine is placed on an accelerated negotiation timeline because of an older product’s approval date, developers may face weaker incentives to pursue some of those projects. The size of that effect can be significant and is a pivotal issue for the agency to assess.

As a team of researchers noted in the peer-reviewed journal Pharmacoeconomics, “Significant incremental innovation to existing pharmaceutical products has been occurring in the form of supplementary approvals for new dosages, formulations, and indications. These innovations account for a substantial share of drug utilisation and associated economic and medical benefits. Productivity trends for research and development based on counts of new molecular entities alone have therefore overlooked an important source of innovation in biopharmaceuticals.” This significant source of innovation must be accounted for in any regulatory analysis.

CMS should withdraw the proposed fixed-combination provision and make clear that even seemingly minor changes can result in clinically meaningful innovations. More fundamentally, the federal government should reject price controls and implement long-overdue Food and Drug Administration reforms to lower drug costs. It’s time that policymakers finally recognize that “negotiations” have failed millions of patients.