Good morning folks. It’s officially “wake up time” and we’re starting another Monday morning “runnin’ down a dream.” As a heads up, a not-to-be-named member of the team spent excessive amounts of time rocking out in the rain to Tom Petty this weekend, so enjoy this Petty-themed installment of The Week That Was (with a stiff dose of healthcare headlines).
For Millennials, you can learn more about Tom Petty by clicking here.
- The Waiting (is the Hardest Part).President Trump and HHS Secretary Azar gave a slightly delayed, much anticipated speech on the Administration’s Blueprint to lower drug prices. After thousands of healthcare consultants attentively viewed the Rose Garden speech, the prevailing verdict is: “You got lucky” pharma, but the devil of the execution will be in the proverbial details (Read our take below).
- Members of Congress said “I need to know” how the nation’s top pharmaceutical distributors allowed the widespread dissemination of opioids creating an epidemic. While Cardinal Health’s CEO said he was sorry for the situation, all the CEOs who were convened for a Congressional hearing stopped short of taking accountability. Over 8 years, McKesson and Cardinal Health shipped an unconscionable 12.3 million pills to one pharmacy in a West Virginia town that had fewer than 2,000 residents (that = 6,150 pills per citizen).
- The state of Ohio said, “I won’t back down” by refusing to implement a Medicaid change that saved West Virginia $38 million. Unlike West Virginia, Ohio is unwilling to part with PBMs who serve as the middle men for buying drugs for the state. The Mountain State realized that jettisoning PBMs and reorganizing its drug purchasing system may save $10M in public costs.
- “You don’t know how it feels” is a lesson psychiatrists are learning about the therapeutic choices they are making for depressed patients. A new study found that genetic tests may unlock answers to identifying the best anti-depressant for a patient who faces intractable depression. The results of precision genetic testing indicate more effectiveness than relying upon on a psychiatrists experience alone, which could lead to unintentional treatment bias.
- Is there a “Breakdown” behind POTUS’s policy on the ACA – and its enforcement? Perhaps. while President Trump claims to have essentially abolished ObamaCare, the IRS has aggressively stepped up its enforcement of the employer mandate.
If you’re secretly saying to yourself “No more,” we’ll pause the Pettyisms for now. You can safely read on for The Week That Was…
►THE WHITE HOUSE ANNOUNCES HUUUUGE ACTIONS ON DRUG PRICING
After much nail biting by healthcare consultants in recent weeks, President Trump and HHS Secretary Azar gave a much anticipated speech in the Rose Garden on Friday, outlining his Blueprint to Lower Drug Prices. The Blueprint outlines a 4-point proposal for addressing high drug costs: 1) increasing generic and biosimilar competition; 2) improving outcomes of negotiations (Medicare Parts D and B); 3) creating incentives for manufacturers to lower list prices; and 4) lowering out-of-pocket costs for patients. What’s notable from the plan is what is missing. The Rose Garden speech was chased by a press conference held by Secretary Azar. Here are a few items of note:
- What the WAC? Sec. Azar asserted manufacturers must be forced to disclose list prices in pharmaceutical ads, suggesting the FDA could mandate this via regulation that considers price part of fair balance. But what price? List, net, patient out-of-pocket?
- PBMs get kick in the shins; by potentially reversing anti-kickback statute: PBM rebate and “middlemen” scrutiny was at the heart of Sec Azar’s briefing. Stating that the administration is “calling into question the entire structure of using rebates as the system of negotiating in the pharma channel,” Azar posited numerous changes that may significantly impact the role of PBMs, such as getting rid of rebates entirely and using flat prices in contracts -- or creating a fiduciary model where PBMs work for insurers or individuals, but not with manufacturers.
- Gag-no-more: The plan will ban the “gag-rule” that prevents pharmacists from telling patients how they could save money on prescriptions.
- State Medicaid experimentation: The published plan proposes that up to five (unspecified) states be allowed to test drug coverage and financing reforms under Medicaid. If recent action from the New York State Drug Utilization Board is any indicator, this could manifest in states taking more HTA-like actions to exclude drugs from coverage or demand higher rebates, consistent with the President’s goal of giving government payers more negotiating power.
- Medicare Part D: Azar proposed a number of changes to the Part D program, including
- Giving more flexibility to adjust formulary or benefit design during the benefit year to address a price increase for a sole source generic drug (designed to dis-incentivize mid-year price increases).
- Allowing plans to negotiate drug costs without competition and pay differently depending on drug indication
- Moving drugs covered under Part B into Part D to allow insurers to negotiate better price.
Investors cheered on Friday as healthcare stock funds soared. Overall, friends and foes of the industry agree that POTUS’s plan is pretty pro-pharma. Notably, the Blueprint doesn’t include the more extreme approaches discussed during Trump’s 2016 campaign—namely, direct negotiation by Medicare Part D and allowing patients to import prescription drugs from ex-U.S. markets. It’s difficult to know which pieces of the plan will start to have an impact—and when. In response to reporter questions, Azar noted they expect patients to see a change in the coming months and that most changes can be implemented through executive action. As said earlier, the devil will be in executing the details.
►THESE FORMULARIES MAY BE CLOSING
As states increasingly seek control over drug pricing, Massachusetts is taking a unique approach. While several states are experimenting with restrictions to their Medicaid programs, such as requiring adults to be employed, the Commonwealth has asked Washington to let its Medicaid program create a selective drug formulary and negotiate prices for the medicines it chooses to cover. Historically, Medicaid has covered all member medications with minimal restrictions, such as a prior authorization requirement to ensure that prescribed medications are medically needed. The concept is supported by the Trump administration, as well as numerous healthcare policy experts, and is opposed by pharmaceutical interests and medical consumer groups, who fear that formularies restrict people's access to treatments.
To paraphrase legendary U.S. Supreme Court Justice Louis Brandeis, states should be laboratories for trying novel social and economic experiments. It remains to be seen if Massachusetts’ approach is the right one, or if it will even be implemented. The Centers for Medicare and Medicaid Services has yet to reply to this waiver request and those from other states. However, for states like Massachusetts (which have long been a bellwether of U.S. healthcare policy) proposing closed formularies is something to watch. Our bet: change is coming.
►TENNESSEE ALLOWS OFF LABEL PROMOTION (FOR REALS)
There are now two states that allow drug companies to market their products for off-label use. No, we’re not kidding! Tennessee has joined Arizona in passing a law that lifts restrictions on pharmaceutical manufacturers' interactions with physicians and payers, so long as the off-label information is truthful and not misleading. Arizona set the precedent in March 2017 and Tennessee’s law takes effect July 1. For its part, the FDA last year put out a 63-page memo and draft guidance that made clear its concerns that public health can be jeopardized by promotions that go too far. At the center of the debate is First Amendment rights and patient safety. Some detractors of these policies say that off-label marketing could harm patient health by the efficacy being extrapolated.
While two states do not make a trend, this development merits monitoring, as several others states have introduced similar bills, and it is being pushed aggressively by the Goldwater Institute think tank (yes, this is the same Libertarian group that promotes the Right-to-Try movement). But without federal-level guidance, how many established companies will take a risk? Word to the wise, if you’re a medicines company; be prepared to be asked what your policy is regarding promoting off label use of their drugs.