Conversation with FDA Commissioner Marty Makary & CMS Admin Mehmet Oz | Future of Health Summit 2025

Drug Pricing and International Standards (Most Favored Nation)

• The administration advocates for a "Most Favored Nation" (MFN) strategy, arguing it is unfair for U.S. consumers to pay triple the price for identical drugs sold in Europe.
• The president views drug pricing disparities as an internal threat comparable to cancer or autoimmune crises, necessitating a global fight where nations with high influence contribute proportionally.
• Pharmaceutical companies, including Pfizer and AstraZeneca, have voluntarily adopted MFN pricing in recognition of market sustainability, bypassing the need for immediate legislative action.
• Prior authorization processes, while cost-effective, are being modified by private insurers to reduce friction with the physician-patient covenant.

FDA Initiatives and Biosimilars

• The FDA aims to reduce the time for biosimilars to reach the market from the current 5–8 years to 2.5–5 years.
• New regulatory requirements will lower the cost of bringing a biosimilar to market by approximately $100 million per product.
• Biosimilars represent a critical cost-control lever; while they constitute only 5% of drug types, they account for over 50% of drug spending growth.
• FDA Commissioner Dr. McCary emphasizes the need for more competition to curb healthcare inflation, which is outpacing general economic inflation.

Administrative Reform and Fraud Prevention

• The administration identified $100 billion in annual fraud, waste, and abuse within the healthcare system (approx. 8% of total bills).
• Administrative costs within CMS are estimated at 12% of the $1.75 trillion it administers.
• Skin substitute fraud was a specific target; spending in this sector surged from $250 million to a projected $23 billion in five years.
• A new rule effective January 1st prohibits the use of certain skin substitutes and associated payment structures that incentivized fraud (e.g., doctor kickbacks of 6% of product price).
• In the ACA, the administration estimates 6 million of 24 million enrollees may be unaware of their coverage or do not use it, with only 50% of enrollees filing claims.

Data Modernization and AI Integration

• A digital health pledge signed by 60 companies has expanded to 450 companies, committing to data interoperability, transparency, and user data ownership.
• The CMS contracted 13 engineers upon entry, a number drastically increased by Amy Gleason of the U.S. Digital Service to manage the modernization of the agency.
• Approximately $3 billion in contractor contracts were terminated following an audit, including a $200 million five-year contract yielding zero usable output.
• AI tools for scientific reviewers at the FDA were rolled out agency-wide ahead of the June 30th deadline, accelerating review times from days to seconds.
• A national provider directory is being built to standardize authentication and provider availability, addressing gaps in current commercial directories.

Regulatory Flexibility and Review Speed

• The FDA is challenging the assumption that new drug approval requires 10–12 years by eliminating animal testing, potentially shaving one year off the timeline.
• Continuous clinical trials are being proposed to replace the current multi-year, multi-application submission model.
• A national priority review program aims to deliver decisions within weeks rather than months.
• Regulatory flexibility was exercised for a childhood deafness study involving only 12 participants, resulting in a regulatory review voucher issued within hours for the successful candidate.
• Animal testing is being replaced by computational modeling due to its low efficacy, with 90% of drugs passing animal trials failing in humans.

Healthcare System Costs and Outcomes

• The U.S. spends $4.9 trillion annually on healthcare, yet life expectancy lags behind peer countries by an average of four years.
• Healthcare inflation in the private commercial sector and Medicare is running at approximately 9%, while Medicaid grows at a similar healthy clip.
• Obesity and related complications account for roughly 25% of total healthcare costs and 50% of all chronic illness.
• Next year, the average Medicare beneficiary is projected to pay an additional $40 in premiums ($240 total) unless cost-reduction measures are implemented.

Clinical Trials and Supply Chain Security

• The administration plans to address geographic disparities in clinical trial sites, which historically lack coverage in the central United States.
• "National Priority Review" vouchers will be awarded for drugs meeting specific national goals: U.S. manufacturing, affordability, unmet public health needs, and reduced downstream utilization.
• A major security crisis exists regarding the lack of onshore production for active pharmaceutical ingredients (APIs) and basic medications like antibiotics.
• CMS will use funding mechanisms to incentivize domestic development of starter materials and finished products.
• "Trump Rx," a government-owned entity launching this year and functional by early next year, will allow consumers to find the lowest-cost options for their medications, highlighting U.S.-made generics.

Leadership and Collaboration

• The FDA has restructured its six major centers into 16 smaller units to break a "fiefdom culture" and foster a teamwork-oriented environment.
• CMS and FDA have integrated their operations, allowing for faster label changes (e.g., food dye removal) and immediate payment coverage decisions (e.g., LUCERVIN for autism).
• The administration plans to utilize big data for immediate post-approval surveillance of drug safety and efficacy, avoiding the lag that led to crises like Vioxx or OxyContin.
• A $50 billion Rural Transformation Fund competition concluded with all 50 states submitting applications, aiming to increase rural Medicaid funding by 50% over five years.

Public Trust and Future Outlook

• Public trust in doctors and hospitals has dropped 31 points, from 71% in 2019 to 40% currently, necessitating a rebuilding of trust through humility and transparency.
• The administration explicitly rejects incremental price reductions (1–2%), aiming instead for massive price cuts, such as reducing a medication from $243 to $10.
• Both officials expressed a "generational opportunity" to recruit top-tier talent and young innovators to modernize the healthcare system.
• The FDA commits to meeting all user fee deadlines while cutting idle time without compromising safety standards.