“Middlemen” who are increasingly getting blamed for pushing U.S. prescription drug prices ever upward appear relatively unfazed even after the verbal thrashing they got from President Trump last week.
In his very Trumpian-style address Friday afternoon — one that involved words such as “total victory” and “rip-off” — the president directed much of his ire toward high drug costs at a confusing and secretive part of the supply chain: the pharmacy benefit managers (PBMs) who negotiate coverage, prices and rebates between drugmakers and health insurers.
“We’re very much eliminating the middlemen. The middlemen became very, very rich, right?” Trump said in the Rose Garden. “Whoever those middlemen were — a lot of people never even figured it out — they’re rich. They won’t be so rich anymore.”
Health and Human Services Secretary Alex Azar, who is scheduled to elaborate further on Trump’s proposals in an agency address this morning, stressed that he wants to change the way PBMs operate. By accepting rebates from drugmakers in exchange for covering a particular medication, these PBMs help create incentives for higher list prices.
“We are calling into question today the entire structure of using rebates in the pharmacy channel,” Azar said Friday after the president’s speech had concluded.
But these PBMs — which have gained increasing influence as they’ve been acquired by pharmacies and insurers in recent years — didn’t appear to suffer on Wall Street. The stock prices for the country’s two largest PBMS, Express Scripts and CVS, rose 2 percent at the conclusion of the speech, indicating investors weren’t particularly fearful of Trump’s threats.
The companies also issued statements that mostly ignored the president’s warnings directed toward them, instead predictably pointing the finger at drugmakers, who enjoyed somewhat more lenient treatment from the president.
“The fundamental issues with prescription drug affordability are the high prices set by and marketing practices of pharmaceutical manufacturers, so we welcome the administration’s focus on reducing drug costs,” said UnitedHealth Group, which owns OptumRx, the third-largest PBM.
“President Trump rightly recognizes drug companies charge way too much, and their prices need to come down,” Express Scripts said in a statement, adding that it “leads the way in reining in costs and improving care.”
The Hill's Peter Sullivan noted CVS Health didn't express negativity either:
Nothing critical in PBM CVS Health's statement: "Policy solutions that lower drug prices for consumers and reduce out-of-pocket costs are aligned with CVS Health’s business model and would not be expected to have a negative impact on profitability. "— Peter Sullivan (@PeterSullivan4) May 11, 2018
Politico's Joanne Kenen:
Key phrase from PBM trade group (which is battling the drugmakers) on trump’s drug price proposals: “Simply put, the easiest way to lower costs would be for drug companies to lower their prices.”https://t.co/3KkASfJtec— Joanne Kenen (@JoanneKenen) May 11, 2018
New York Times's Katie Thomas:
Trump said the "middlemen" won't be so rich anymore. PBM stocks have been climbing since the speech. https://t.co/640KphDCzS— Katie Thomas (@katie_thomas) May 11, 2018
Other sectors of the health-care industry also appeared to shrug their shoulders after the White House rolled out its 44-page “American Patients First” blueprint, which proposes a laundry list of policy ideas to encourage drugmakers to lower the list price of medications and lighten costs for consumers. Major drugmakers Amgen, Gilead Sciences, Merck and Pfizer all enjoyed stock price spikes after the speech, as did the two largest indexes for pharmaceutical and biotech companies.
Trump's plan notably didn’t propose allowing the federal government to negotiate lower Medicare drug prices directly with insurers, an omission Democrats largely focused on but which received a big sigh of relief from the the drug industry. The president also pleased the industry by arguing that American drugmakers subsidize the cost of researching and developing new drugs, which other countries then take advantage of.
But Trump’s blueprint did include changes to Medicare that could lower out-of-pocket costs for some seniors: a suggestion that drugmakers disclose their list prices in TV ads and a discussion about changing the system of secret rebates negotiated off the list prices of drugs, my colleague Carolyn Y. Johnson reported.
None of those ideas on its own is a magic bullet to lowering U.S. drug spending, which is higher per capita than in any other developed country. But analysts say that together, the proposals could have some impact over the long term. Azar said as much in remarks after the president’s speech.
“It’s going to be months for the kind of actions that we need to take here,” Azar said. “Against, this is — it took decades to erect this very complex, interwoven system. We’re talking about entrenched market players, complex financial arrangements that have — would have to be redesigned.”
A positive review from former House Speaker Newt Gingrich:
.@realDonaldTrump approach on drug prices builds on already impressive progress in generic approvals ($9 billion in savings) and Medicare reforms ($300 plus million saved in out of pocket costs in 2018). Absolutely right that PBM and insurer discounts be passed on to patients!— Newt Gingrich (@newtgingrich) May 11, 2018
David Mitchell of Patients for Affordable Drugs via PBS NewsHour:
Today, Trump unveiled his goals for lowering prescription drug prices. @DavidP4AD of Patients for Affordable Drugs explains how Pharmacy Benefit Managers can affect your bottom line. "The PBM process is open to too much abuse," he said. "Tightening it up...will be good" pic.twitter.com/14gRtSGcpM— PBS NewsHour (@NewsHour) May 11, 2018
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AHH: Our colleague Justin Jouvenal takes a deep look at a bold experiment in parenting: Allowing incarcerated women in minimum-security prisons to keep their babies with them. In the Decatur Correctional Center in Illinois, six women and their infants live in a separate unit, which houses typical cells but that also include cribs and changing tables. Prison nursery programs remain rare nationwide, but eight facilities in as many states have opened them amid dramatic growth in the number of incarcerated women.
“The bold experiment in punishment and parenting has touched off a fierce debate," Justin writes. "Advocates say the programs allow mothers to forge a crucial early bond with children, creating healthier kids and a spur for mothers to improve their lives. Detractors say prison is no environment for children and that the programs may simply put off an inevitable split between many children and their mothers, making it that much more painful.”
Participants are specifically selected for the program. They must have only nonviolent offenses, and usually have sentences that are two years or less, so that the children’s time in prison is limited to their earliest years. The women get access to counselors and GED classes.
Justin notes research on prison nursery programs is limited but positive. “One [study] found that a group of preschool-age children who were raised in prison nurseries were less anxious and depressed than a control group of children who were separated from their incarcerated mothers in the early years,” he reports. “Another concluded the recidivism rate of mothers who participated in prison nursery programs was only 4 percent.”
OOF: The first stage of a multibillion-dollar initiative to create a seamless digital health system for the military and VA has been riddled with problems so severe they could have led to patient deaths, according to a report obtained by Politico's Arthur Allen. The Pentagon's evaluation of the $4.3 billion Cerner medical record system, which has been championed by Jared Kushner, lists 156 “critical” or “severe” incident reports with the potential to result in patient deaths, leading experts who saw the report to characterize it as “devastating.”
"The unclassified findings could further delay a related VA contract with Cerner Corp., the digital health records company that began installing the military’s system in February 2017," Arthur writes. "The VA last year chose Cerner as its vendor, with the belief that sharing the same system would facilitate the exchange of health records when troops left the service. The military program, called MHS Genesis, was approved in 2015 under President Barack Obama."
Arthur reported in March that the digital health system had badly failed to achieve its goals, despite promises by Trump it would deliver “faster, better, and far better quality care. “Technical glitches and poor training have caused dangerous errors and reduced the number of patients who can be treated, according to interviews with more than 25 military and Veterans Affairs health IT specialists and doctors,” Arthur wrote at the time.
OUCH: Two years after Congress passed -- and former President Obama signed -- legislation that hampered the Drug Enforcement Administration’s enforcement efforts against the opioid industry, the measure is coming back to haunt many of its sponsors and co-sponsors, The Post's Scott Higham, Steven Rich and Reis Thebault report.
Of 26 lawmakers who sponsored or co-sponsored versions of the legislation in the House and Senate, 15 of them (12 Republicans and three Democrats) are running for reelection or seeking higher office during a volatile political cycle that defies prediction. "In nine of those races, the lawmakers’ support of the law and the money they accepted have become key campaign themes," our colleagues report.
Among the candidates they spoke with was Judy Herschel, who is running for the Democratic nomination against the bill's chief sponsor in the House, Rep. Tom Marino (R-Pa.). As a drug and alcohol counselor and the mother of two young boys, Herschel never considered running for political office. But in one month in summer 2016, Herschel lost eight of her clients to opioid overdoses. She left her job and launched a full-time campaign against the politician she holds responsible for the legislation: Marino.
“It’s a big reason why I chose to run,” Herschel said as she campaigned in a neighborhood not far from Williamsport, a city once known as the Lumber Capital of the World that is reeling from an inundation of pain pills and heroin. “We have lost way too many people to this, and this hits me hard."
— Trump’s advisers spent the weekend praising Sen. John McCain, the Arizon Republican being treated for brain cancer, but stopped short of apologizing for the derisive remark a White House communications aide made last week, per The Post's Paul Kane.
National Security Advisor John Bolton praised McCain during an interview on CNN’s “State of the Union” yesterday, but declined to comment on the remark by Kelly Sadler, who said in a meeting that McCain’s opposition to Gina Haspel as CIA director didn't matter because “he’s dying anyway.” Bolton specifically mentioned McCain's support of his 2005 confirmation to become U.N. ambassador. But when pressed by CNN’s Jake Tapper on whether he would apologize for Sadler’s remark, Bolton responded: “I’ve said what I’m going to say.”
Last night, the senator’s daughter Meghan McCain told ABC News Sadler had called her to apologize but had not yet done so publicly. “I asked her to publicly apologize and she said she would. I have not spoken to her since and I assume that it will never come,” Meghan McCain told ABC.
Sen. Lindsey Graham (R-S.C.) criticized White House officials for not explicitly condemning the comment. “It’s [a] pretty disgusting thing to say, if it was a joke, it was a terrible joke,” Graham said in an interview with CBS’s “Face the Nation.” “I just wish somebody from the White House would tell the country that was inappropriate, that’s not who we are in the Trump administration.”
Asked by CBS’s Margaret Brennan if Trump should apologize, Graham responded: “I’ll leave that up to him, but if something happened like that in my office — somebody in my office said such a thing about somebody, I would apologize on behalf of the office."
White House Press Secretary Sarah Huckabee Sanders told staffers Friday that Sadler’s comment was inappropriate but expressed regret the leak happened to begin with, according to the AP. She said the leak distracted from “everything we’re trying to accomplish for the American people.”
— Last week’s events showed that even 2,200 miles away and after receiving treatment for brain cancer, McCain is a “potent force in national politics and a polarizing figure within the Republican Party,” our colleague Mike DeBonis writes. His opposition to the president’s nominee for CIA director has “prompted reactions from fellow senators and a former vice president, as well as intemperate remarks from some Republicans aligned with Trump, including a White House aide,” Mike writes.
— Sen. Ron Wyden (D-Ore.) is opening an investigation into Swiss pharmaceutical giant Novartis for paying $1.2 million to Trump’s personal attorney Michael Cohen for access to the White House. In a letter sent to the company on Friday, Wyden questioned whether the payments were related to a cancer treatment by the company that was being reviewed last year by the Food and Drug Administration, Stat’s Ed Silverman reports.
“At the same time as the payments to Mr. Cohen’s firm were being made, the company’s in-house lobbyists were meeting with the White House, FDA, CMS, and other Trump Administration agencies regarding a range of issues that could dramatically affect its business,” Wyden, the ranking Democrat on the Senate Finance Committee, wrote to Novartis CEO Vas Narasimhan.
Novartis told Stat it plans to “fully cooperate” with the investigation. Wyden is calling on Novartis to provide all copies of its communications with Cohen and his firm, as well as his contract and payment details.
— A few more good reads from The Post and beyond:
- The NIHCM holds a briefing on “Reimagining Health Care in America.”
- The Senate Health, Education, Labor and Pensions holds an oversight hearing on the 340B program on Tuesday.
- The National Committee on Vital and Health Statistics holds a meeting on Tuesday and Wednesday.
- The American Enterprise Institute holds a hearing on fixing health care on Wednesday.
- The House Veterans Affairs Committee holds a member day hearing on Wednesday.
- AHIP’s holds a webinar on clinical data on Wednesday.
- The House Energy and Commerce is scheduled to hold a markup on legislation to combat the opioid crisis on Thursday.
- The House Oversight and Government Reform Committee holds a hearing on a “Sustainable Solution to the Evolving Opioid Crisis: Revitalizing the Office of National Drug Control Policy” of Thursday.
- The Advisory Board holds a webinar on combating clinician burnout on Thursday.
- The FDA’s Vaccines and Related Biological Products Advisory Committee holds a meeting on Thursday.
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