with Paulina Firozi
The administration’s retreat from the proposed rule, which Azar first announced in January, could be viewed as a setback in Trump’s quest to lower prescription drug prices in the United States. It’s also a victory for insurers and their pharmacy middlemen who secretively negotiate drug prices and rebates with drugmakers — a convoluted system that incentivizes higher list prices and keeps patients in the dark about the price of their medications.
Azar and top White House policy advisers had disagreed over the merits of the rule, which the Congressional Budget Office has said would cost $180 billion over a decade and would raise Medicare premiums.
The idea was to reform and simplify the drug supply pipeline by banning rebates. But officials kept running up against concerns that drugmakers would pocket some of the money they currently offer in rebates to pharmacy benefit managers, prompting insurers to push premiums higher in the Part D drug program. And any actions to raise costs for seniors could be harmful for Trump in an election year.
“The decision to jettison the proposed rule was made at an Oval Office meeting this week, in which several advisers, including White House Domestic Policy Council Director Joe Grogan, acting White House chief of staff Mick Mulvaney and Azar, discussed it with the president,” my Washington Post colleagues Yasmeen Abutaleb, Amy Goldstein and Ashley Parker report.
“Several argued that it would raise Medicare premiums right before the 2020 election. … Azar was the only one advocating it,” they write. “Trump made the decision to withdraw the plan.”
Azar, who has harshly criticized the system of rebates, said he’s still just as passionate about the price distortions it creates in the drug supply system. He said that by simply proposing the rule, the administration has “totally changed the debate on rebates.”
“The commercial space is already moving away from rebates and moving to upfront discounts for patients, so rebates’ days are numbered,” Azar said.
It's not the first time the administration has backed off from an action aimed at lowering drug costs. The Centers for Medicare and Medicaid Services didn't follow through on a proposal to allow Medicare drug plans to refuse coverage for some drugs in six "protected" categories, which must currently be covered comprehensively. And its requirement that drug list prices be displayed in television ads was blocked by a court this week.
Rachel Sachs, an associate professor of law at Washington University in St. Louis School of Law:
HHS had proposed three big ideas with the potential to change our drug pricing system: reforms to Part D coverage, Part D rebate reform, and Part B int’l reference pricing. The first two have now been abandoned, and the third is still a long way from implementation. https://t.co/XBQvTxWLit— Rachel Sachs (@RESachs) July 11, 2019
American Enterprise Institute economist Ben Ippolito:
If I have this right, this is where we stand on drug pricing proposals:— Ben Ippolito (@ben_ippolito) July 11, 2019
Eliminating rebates ❌
International Pricing Index ❓
List prices in advertisements ❌
Reform protected classes in part D ❌
Restricting prices in part D 🆕
Still, the administration has other irons in the fire when it comes to drug pricing. Trump’s next step could be to roll out a promised proposal to tie some Medicare drug prices to an international index. Azar wouldn’t comment specifically on the proposed rule, which is currently under review at the White House Office of Management and Budget, but he spoke enthusiastically about its intent.
“The American senior and the American patient have for too long been asked to overpay for drugs to subsidize the socialist systems of Europe,” Azar said. “It’s time for the American patient to stop propping up the socialist systems of Europe.”
And then there’s Congress. Azar and White House spokesman Judd Deere said the White House plans on collaborate with the House and Senate on other approaches to lowering drug costs.
Senate Finance Committee Chairman Chuck Grassley (R-Iowa) said yesterday that a bipartisan package on drug costs will be ready “very soon,” adding that the withdrawal of the rebates rule puts “even more pressure on Congress to step up to the plate.”
“It’s time for Congress to legislate and deliver on our promise to lower health care costs for Americans,” Grassley said in a statement.
PBMs, which had lobbied members of the Domestic Policy Council and Azar to drop it, naturally praised the administration’s retreat.
“Only drug manufacturers have the power to set drug prices. We believe that the key to lowering drug costs is to enact policies that encourage greater competition,” Pharmaceutical Care Management Association chief executive J.C. Scott said in a statement.
Pharmaceutical Care Management Association (PCMA), the lobbying group for PBMs:
But drugmakers called the decision to back away from the rebate crackdown “a blow to seniors.” “Of all the policies proposed in Washington right now, this was the only proposal that would provide immediate savings at the pharmacy counter,” Holly Campbell, a spokeswoman for the Pharmaceutical Research and Manufacturers of America, told my colleagues.
AHH, OOF and OUCH
AHH: A federal appeals court has given a nod to the Trump administration’s rule to cut federal family planning funding to clinics that provide abortion services or provide abortion referrals.
The U.S. Court of Appeals for the 9th Circuit ruled 7 to 4 to let stand its decision from last month to lift injunctions won by California, Oregon and Washington that had blocked the rule from going into effect, Reuters’s Jonathan Stempl reports. Those states now want the appeals court to revisit the decision, which the court will do on an expedited basis.
“Judges Edward Leavy, Consuelo M. Callahan and Carlos T. Bea — all appointed by Republican presidents — wrote that the government is likely to prevail with its argument that the lower courts erred in concluding the rule probably violated the Administrative Procedure Act,” Jonathan writes. “They noted the U.S. Supreme Court upheld a similar HHS regulation in its 1991 Rust v. Sullivan decision that prohibited federally funded clinics from abortion counseling, which ‘largely foreclosed any attempt to argue that the Final Rule was not a reasonable interpretation’ of what Congress intended when it established the Title X program.”
Leana Wen, president of Planned Parenthood Federation of America, called the ruling “devastating”:
OOF: The Mount Carmel Health System in Ohio is firing nearly two dozen employees and making leadership changes after a doctor allegedly gave excessive painkiller doses to patients who died.
"Ed Lamb, who joined the hospital system in November 2016 as its CEO, said he will resign by July 25 — almost two months after William Husel, a former intensive care doctor, was charged in the 25 deaths following a six-month investigation by the Franklin County Prosecutor's Office," NBC New's Erik Ortiz reports.
Husel pleaded not guilty and his attorney argues he was not trying to kill or attempt to euthanize any of the patients, who he says were older and in poor health.
"The patient deaths have exposed a stunning case of medical oversight and alleged medical malpractice, and called into question how repeated failures potentially involving 30 or more employees could have gone unchecked for so long," Erik adds.
OUCH: The Trump administration is transferring hundreds of migrant children from overcrowded border facilities to shelters in Chicago. Some of them are sick – with fever, chicken pox and tuberculosis – and others still are arriving to the new destination traumatized, ProPublica Illinois’s Melissa Sanchez, Jodi S. Cohen and Duaa Eldeib report.
The nonprofit Heartland Human Care Services is one of two organizations in Illinois with federal contracts with HHS’s Office of Refugee Resettlement to shelter migrant kids, caring for the children at five shelters. Officials say some children are arriving with “’behaviors consistent with trauma like heightened anxiety, and fearfulness’ and have described to staff ‘horrible and inhumane conditions’ at border facilities,” Melissa, Jodi and Duaa write. The shelters also seeing a big increase in contagious diseases.
At the shelters, the children are further quarantined to prevent the spread of those diseases, and officials didn’t say how long they’d be isolated, though they said children are treated by doctors, physician assistants and nurses or taken to hospitals.
“Renewed attention to the administration’s immigration policy and conditions at border detention centers has, in recent months, led to a new wave of protests in Chicago and questions about how those children are cared for in the nation’s shelter system," Melissa, Jodi and Duaa add. “Heartland has tried to distance itself from administration policies. Late last month, it published a fact sheet about its shelters showing photos of tidy bedrooms as well as children sitting in class and outside playing volleyball.”
HEALTH ON THE HILL
— Sen. Bernie Sanders (I-Vt.), who is seeking the Democratic presidential nomination, will travel with diabetes patients to Canada to purchase insulin that’s available there for cheaper than in the United States.
“In an interview with CNN Thursday, Sanders directly attributed the rising cost of drugs in the United States, and the disparity with prices in Canada, to the overall difference between the health care systems in the two countries. His focus on prescription drugs is just one part of a broader push for the US to adopt a system similar to the one in Canada,” CNN’s Annie Grayer and Ryan Nobles report.
“Canada has a nationalized, single-payer system that allows them to negotiate much better prices with the drug companies,” Sanders told CNN. “In our country it is a much different story. The pharmaceutical companies brought in $69 billion in profit. That is insane and it is a real threat to the health of every American. Congress needs to do something about this and when I am president we will lower the cost of prescription drugs.”
Sanders will make the trip to Canada with members of Insulin4All on July 28.
— And here are a few more good reads:
- The House Oversight Reform Committee holds a hearing on "The Trump Administration’s Child Separation Policy: Substantiated Allegations of Mistreatment."
How 2020 Democratic presidential candidates tout "conversations" instead of details: