How do you rejigger Medicare in a way that lowers spending but doesn't hurt patient access to medicines? That’s exactly the line the Trump administration is attempting to walk in its latest move to combat steep U.S. drug prices through changes to the massive government insurance program.
The effort could backfire, but at least it’s bold. Seema Verma, administrator of the Centers for Medicare and Medicaid Services, argues the set of proposals her agency released yesterday will expand choices for seniors and put downward pressure on the price of prescription medicines set by drugmakers. It’s the next step for an administration that’s increasingly seeking to appear tough on the drug industry, backed by strong rhetoric from President Trump.
In the six months since Trump first released his drug-pricing blueprint and vowed to get tough on the industry, the Department of Health and Human Services has taken a series of steps aimed at lowering drug prices, including proposals to require insurers to list prices on television ads and a ban on so-called "gag clauses" preventing pharmacists from telling patients when a lower-cost medication is available.
These latest proposals mostly relate to Medicare’s Part D program — the prescription drug benefit Congress created back in 2003 to ensure seniors could afford the medicines they need. The administration says seniors could save money by giving insurers more power to negotiate with drugmakers and by ensuring patients pay the lowest possible price at the pharmacy counter.
“Consumer choice puts pressure on plans to improve quality and lower cost,” Verma told reporters on a call yesterday.
Here are two of the biggest changes CMS is proposing to implement in 2020:
— Allowing Part D insurance plans to refuse coverage for some drugs in six “protected” categories, which until now had to be covered comprehensively (these categories include antidepressants and immunosuppressants for patients with organ transplants). Under the proposal, plans could refuse coverage of a particular drug within a category as long as they cover at least two drugs within the same category and if the drug meets certain criteria, such as recent steep price hikes.
— Requiring that seniors’ share of a drugs' cost is calculated based not on a drug’s list price but on the actual final price paid by the pharmacy after drug rebates are taken into consideration. This would reduce out-of-pocket costs because they’re typically based on a percentage of a drug’s price. CMS says this change would decrease the amount seniors pay out-of-pocket for their medicines from about $12 billion to $15 billion over a decade.
This isn't the first time CMS has suggested changes to Medicare as a way to tackle drug prices, which are much higher in the United States than in other developed countries. Last month, Trump visited HHS to announce the agency would experiment with tying payments for Part B drugs (administered directly by a doctor) to an international index as a way of lowering costs.
Changes to Medicare’s prescription drug program are even more significant, because that part of the program pays for the bulk of seniors’ medications. Medicare Part D drugs comprise 15 percent of the program’s total spending, whereas Part B drugs comprise just 3 percent.
Even so, the administration's proposals don’t go as far as some in the health-care industry had expected. When HHS Secretary Alex Azar last spring blasted the role pharmacy benefit managers play in the country’s opaque drug-pricing system, observers thought he was readying to crack down on the rebates these PBMs extract from drugmakers, which are often blamed for pushing up the list price of drugs.
JC Scott, president of Pharmaceutical Care Management Association, the lobbying group for PBMs, said the group is "reviewing the proposed rule" and is "encouraged the Administration supports greater use of competitive pharmacy benefit manager (PBM) tools that strengthen Medicare Part D for beneficiaries and taxpayers."
A proposed ban on rebates was noticeably absent from the HHS plan announced Monday — although Verma said that’s still under consideration. But she argued that the series of smaller changes will still have an impact on overall Medicare spending and help out seniors by reducing what they spend on their medications.
Insurers were predictably delighted with the news, because the proposals give them more leverage in constructing the list of drugs from that are covered.
“We commend the administration for its continued focus on reducing drug prices and appreciate its commitment to strengthen negotiating leverage,” Matt Eyles, president of America’s Health Insurance Plans, said in a statement.
But some health-care advocates aren’t pleased about allowing insurers to duck coverage of some drugs within the six protected classes, which were originally set up to ensure patients had sufficient access to the medications they needed.
“Altering those categories would be tantamount to backdoor discrimination, where plans could be designed to exclude treatment for certain conditions,” Chris Hansen, president of the American Cancer Society Cancer Action Network, said in a statement.
Andy Slavitt, who ran CMS under President Obama, said he gives the administration “credit for taking on tough fights with industries like this.” But Slavitt warned he changes ultimately shouldn’t be made if they harm patient access.
“If this reduces the cost of drugs, that’s good,” Slavitt told me. “But if it reduces the availability of drugs or stops covering important drugs, then this is government savings at the expense of patients – not good.”
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AHH: The Food and Drug Administration has approved a new "precision medicine” drug for a broad range of cancers based on a shared mutation rather than tumor locations, our Post colleague Laurie McGinley reports.
“The medication, called Vitrakvi, is the second treatment to receive FDA clearance based on a common biomarker found in an array of cancers,” she writes. “The drug, also called larotrectinib, was approved simultaneously for adults and children. Typically, oncology drugs are considered much later for children.”
The approved drug is for patients with advanced tumors that have the NTRK gene fusion, “a hybrid of two genes that can promote uncontrolled growth,” a defect which can cause cancers of the thyroid, lung, and head and neck, McGinley reports.
But the breakthrough drug is pricey, even as the companies say they expect most insurers to cover the drug, with $20 per month or less in out-of-pocket costs for patients. “The drug’s manufacturer, Loxo Oncology, Inc., and its partner Bayer, announced Monday night that the wholesale acquisition cost will be $32,800 for a 30-day supply of capsules for adults,” McGinley adds. “The cost for the liquid formulation for children will be based on the patient’s surface area but will start at $11,000 per month.”
OOF: A Chinese scientist sparked worldwide shock and skepticism on Monday after claiming he successfully used gene-editing technology to edit the DNA of human embryos to create twin baby girls. He said the twins, Lulu and Nana, were born weeks ago “crying into the world as health as any other babies.”
Here’s what we know about the experiment: Based on a description posted online, He Jiankui of the Southern University of Science and Technology of China “created embryos from couples with an HIV-infected father,” our Post colleague Carolyn Y. Johnson reports. He used a gene-editing tool called CRISPR-Cas9 that can make targeted cuts to DNA.
“The use of the technology immediately raised questions from ethicists because there are other ways to prevent HIV transmission to a fetus, and many think that the first applications of gene-editing should be reserved for diseases that are truly incurable. In a video released on YouTube, He said that only a single gene had been changed by the editing procedure, but gene-editing is known to introduce unintended genetic effects that could raise concerns — either for the children themselves or the human gene pool if the children grow up to pass on their genes.”
Most scientists are shocked and skeptical of the unverified claim. “The controversial experiment … was criticized by many scientists worldwide as premature and called ‘rogue human experimentation,’ ” Johnson reports. “More than 120 Chinese scientists called the experiment ‘crazy’ in a letter, adding that it dealt a huge blow to the global reputation of Chinese science. Southern University said in a statement it would be investigating the experiment, which appeared to have ‘seriously violated academic ethics and codes of conduct.’"
OUCH: Check your refrigerators. The FDA issued a new warning on Monday that romaine lettuce from only certain regions in northern and central California is unsafe to eat. It also announced that going forward, romaine lettuce entering the market will be labeled to note where the lettuce is coming from and when it was harvested.
The new more limited warning follows a broad one issued two days before Thanksgiving to throw away any and all romaine lettuce. If consumers, retailers and food service facilities are not sure where the lettuce was harvested, they should not eat it and should throw it away, our Post colleague Lena H. Sun reports.
The number of people who have been sickened by the outbreak related to the contaminated romaine lettuce increased to 43 people in 12 states.
“No common grower, supplier, distributor or brand of romaine lettuce has been identified in the outbreak,” Sun reports. “Several major romaine lettuce producers have agreed to label products with a harvest date by region, and new romaine from other growing regions, including Florida and Arizona, is being restocked in grocery shelves.”
— The Food and Drug Administration will change the way that it approves medical devices, moving toward less reliance on comparisons with products already on the market, the Wall Street Journal’s Thomas M. Burton reports.
Since the agency began regulating medical devices in 1976, more than 80 percent of such products have been approved for market using the standard of “substantial equivalence,” where products were approved based on a comparison to cleared products.
“By early 2019, the FDA plans to issue a guidance to the industry that will alternatively allow certain well-understood types of devices ‘to rely on objective safety and performance criteria’ to get cleared onto the U.S. market,” Burton writes. “Regarding comparison products, [FDA Commissioner Scott Gottlieb] in an interview said some of them ‘don’t approximate what we would want to establish as modern standards. This represents a pretty aggressive vision to move the pool of predicates in the direction of new performance standards.’”
— The merger between CVS Health and Aetna is expected to close later this week, as the companies have received the final state approval needed for the $69 billion deal, CNBC’s Angelica LaVito reports.
“The companies had been expecting to finalize the merger by Thanksgiving. However, a handful of the 28 states CVS and Aetna needed approval from opposed the combination, saying it would reduce competition and could leave consumers worse off,” LaVito adds.
The deal is set to close nearly a year after it was first announced in December 2017. The companies then got the preliminary green light from the Justice Department in October.
— In a letter to HHS Secretary Azar, dozens of organizations including the American Heart Association, the American Academy of Pediatrics and the Center on Budget and Policy Priorities, called on the department to halt waivers allowing work requirements for Medicaid beneficiaries following coverage losses in Arkansas.
“The undersigned organizations write to express our grave concerns with the loss of coverage resulting from Arkansas’ Section 1115 Medicaid waiver,” the groups wrote. “As you know, between September and November the state terminated Medicaid eligibility for 12,277 individuals who didn’t comply with the new requirement to report work. Thousands of additional Medicaid beneficiaries could lose coverage in upcoming months.”
“We urge you to suspend the Arkansas waiver,” they added. “It is especially problematic that Arkansas is proceeding with its demonstration when there is no evaluation in place. At an absolute minimum, an independent evaluator should be in place and monitoring implementation of the waiver to provide real-time information to you and state officials. An evaluation should determine whether terminations of coverage resulted from red tape and administrative burdens, whether those terminated have been able to find comparable coverage, and whether coverage losses can be mitigated going forward.”
— In an op-ed in the National Review, former Pennsylvania Sen. Rick Santorum (R) called on lawmakers to pass a federal bipartisan paid-leave policy.
He acknowledged in the piece that while Democrats have long championed paid-leave policies, Republicans are “warming to the idea.” He specifically pointed to President Trump’s support for such a policy and Ivanka Trump’s “outspoken” advocacy for paid leave.
“Today, middle-income American families are squeezed from all directions,” Santorum writes. “Supporting the families raising the next generation is vital to our nation’s long-term success and prosperity. … Women cite a lack of paid leave as one of the biggest reasons for not having as many children as they would like. Though estimates vary widely as to how many mothers lack access to paid leave — it depends on how generously the term is defined — the Bureau of Labor Statistics estimates that 85 percent do not have a defined benefit.”
He called on the GOP to “reach across the aisle” to work on such a program, saying he disagrees with the idea that a divided Congress “won’t or can’t get anything done.”
— And here are a few more good reads from The Post and beyond:
- The American Enterprise Institute holds an event with CMS Administrator Seema Verma on "The new Medicare physician payment regulation."
- The Heritage Foundation holds a discussion about fetal tissue research.
- The Senate Health, Education, Labor and Pensions Committee holds a hearing on reducing health-care costs on Wednesday.
- The Senate Armed Services Committee holds a hearing on the nomination of Thomas McCaffery to be assistant secretary of defense for health affairs on Thursday.
Trump compares himself to Elvis during Mississippi rally