With almost half of the U.S. population using prescription medications, expensive sticker prices on certain medications have led policymakers to address drug prices through proposed legislation and regulation. This paper examines the various factors that influence how drugs are priced–including regulatory burdens and health care payment models–in order to provide an understanding of these prices in the larger picture of American health care.

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With the passage of the Affordable Care Act and the transformation of the nation’s health care system, HHS has gone from a minor regulatory player to the second most-burdensome regulator, measured by the amount of paperwork they pile on Americans, behind only the IRS.

In 2008, HHS imposed roughly 412 million hours of paperwork, up sharply from 152 million hours in 1995. By 2016, however, with the help of hundreds of new ACA regulations, HHS’s paperwork burden has increased to roughly 700 million hours, an increase of more than 300 million hours since President Obama took office.

There were two notable Affordable Care Act rules this week. A final rule for “Covered Outpatient Drugs,” which has been planned since the fall of 2010, contains $330 million in new annual costs, in addition to 3.1 million hours of paperwork. The 189-page rule regulates drug pricing, confidentiality, rebate payments, and requirements for states.

The administration also finalized “face-to-face” provisions under the ACA. The rule would require health care providers to document face-to-face encounters with Medicaid recipients when delivering health services. The rule imposes $23 million in annual costs and 190,000 paperwork burden hours.

Since passage, based on total lifetime costs of the regulations, the ACA has imposed costs of $50.1 billion in state and private-sector burdens and 177.9 million annual paperwork hours (167 million from final rules).

Last week, the Congressional Budget Office released its latest Budget and Economic Outlook. In this report, CBO notes that the deficit in 2016 is expected to be $544 billion and federal outlays will rise by 6 percent, to $3.9 trillion, compared with 2015. Mandatory spending—such as that for entitlement programs like Social Security, Medicare, and Medicaid—will rise $168 billion this year. Federal spending on major health care programs will account for the largest portion of this rise as federal outlays for Medicare, Medicaid, exchange subsidies, and the Children’s Health Insurance Program (CHIP) will increase $104 billion (11 percent) in 2016.

Eliminating the artificially low limits on FSA accounts would provide significant benefits to families with special-needs children, diabetics, and employees who – or whose families – need vision, hearing, dental or orthodontic care, or any other health care not normally covered by health insurance. It would also lessen the pain of higher health insurance deductibles and other patient cost-sharing, which could even reduce insurance premiums, and therefore federal premium subsidies. The result would be substantial help with health care expenses to families who need it most, with a minimal impact to the federal budget.

In addition, eliminating the FSA “use it or lose it” rules would provide benefits to those same families and many more, while at the same time eliminating wasteful health care spending and possibly reducing health insurance premiums, with almost no

The Affordable Care Act was signed into law nearly six years ago. Since that time, 106 regulations have been finalized to implement the ACA. These regulations will cost businesses and individuals more than $45 billion and will require approximately 165 million hours of paperwork in order to comply.

In addition to these regulations, hundreds of guidance documents regarding the ACA have been published by various federal agencies during this time as well. However, more regulations—and additional costs—are still to come.

The tax policy in the ACA is inefficient, at odds with the objective of raising revenue with as minimal interference on economic decisions as feasible, and not supportive of long-term growth. The overwhelming economic burden of the ACA taxes will fall on those in the middle-range income brackets. These are among the reasons that Senate conservatives used the recent reconciliation bill to repeal every single one of the ObamaCare taxes. Unfortunately, the president is expected to veto this effort.

Conservatives may get another bite at the apple – albeit with less than perfect policy – in the so-called extenders bill now before Congress. Specifically, reports indicate that the bill would provide for a 2-year halt of the medical device tax, a 2-year delay of the Cadillac tax, and a 1-year moratorium of the “premium tax” (the annual fee on health insurers).

Aware of the unsustainability of rising health care spending, policymakers have sought to implement myriad policies and programs aimed at reducing such spending growth. One such attempt is the Independent Payment Advisory Board (IPAB) authorized under ObamaCare. However, IPAB’s statute limits its ability to achieve long-term success. IPAB is not likely to be successful in reducing health care costs without having harmful effects on Medicare beneficiaries.

Tara O’Neill of the American Action Forum argues that the decision over how biosimilars should be reimbursed by the Centers for Medicare & Medicaid Services (CMS) should be determined by economic principles based on the value of the medication to patients and without putting patient safety and access to such products at risk. If the statutory text does not clearly provide for the favorable regulatory outcome of these factors, it should be amended.

The new individual marketplace created under ObamaCare was intended to rival that of the employer sponsored insurance marketplace in stability and predictability, while premiums were to rise at rates much lower than the historical average. This study from the American Action Forum evaluates the degree to which these promises have been fulfilled. AAF found that the cost of both the benchmark Silver plan and the lowest cost Bronze plan will increase by 10% in 2016.