KHN: Trump Administration Sinks Teeth Into Paring Down #Drug #Prices

This story notes that CMS approved a Medicaid waiver from Oklahoma in June, but denied a Massachusetts request for a similar exception to existing rules. File_000

Oklahoma’s plan would expand that to negotiate additional prescription price reductions based on value-based purchasing agreements.

Still, CMS’ recent rejection of a related Massachusetts proposal makes it difficult to believe negotiating drug prices will really happen, said Sara Rosenbaum, a professor of health law and policy at George Washington University.

That proposal would have allowed Massachusetts’ Medicaid program to choose drugs 

based on cost and how well the medicines work.

“They have been very good and quite careful with their [Medicaid] program and so why not let them try this?” Rosenbaum said.

Full story below.

Three months after President Donald Trump announced his blueprint to bring down drug prices, administration officials have begun putting some teeth behind the rhetoric.

Many details have yet to be announced. But experts who pay close attention to federal drug policy and Medicare rules say the administration is preparing to incrementally roll out a multipronged plan that tasks the Centers for Medicare & Medicaid Services (CMS) and the Food and Drug Administration with promoting competition, attacking the complicated drug rebate system and introducing tactics to lower what the government pays for drugs.

downloadMark McClellan, director of the Duke-Margolis Center for Health Policy in Durham, N.C., and a former CMS administrator, said that although none of the initial steps has “fundamentally transformed drug prices,” there is “a lot going on inside the administration.”

Two HHS officials who are rolling out the plan, Dan Best and John O’Brien, described their efforts to Kaiser Health News not as a public relations strategy but a push to reform the system.

“This administration is trying to go after root causes” of high drug prices, said Wells Fargo analyst David Maris.

But others are not so optimistic.

Ameet Sarpatwari, an instructor in medicine at Harvard Medical School in Boston, said policies the administration has rolled out thus far “alone will not translate into meaningful cost savings for most Americans.”

Broadly, the strategy falls under a handful of steps:

1. Attacking The Rebates

Health and Human Services Secretary Alex Azar has said Americans “do not have a real market for prescription drugs” because drug middlemen and insurers get a wide range of hidden rebates from drugmakers, but those savings may not be passed on to consumers or Medicare. In July, the administration submitted a proposed rule that could change the way rebates are handled.

Details of the proposal have not been made public. But O’Brien, a deputy assistant secretary at HHS, explained during a recent conference on federal drug spending sponsored by the Pew Charitable Trust: “You don’t have to use market power to get rebates, you can use market power to obtain discounts, to actually lower the price of the drug on the front end.”

Umer Raffat, an investment analyst with EverCore ISI, said “it’s not clear [that drug prices are going down]” but the “rebate structure is changing.”

2. Bringing More Negotiation To Medicare

This week, CMS Administrator Seema Verma announced that Medicare Advantage insurers can use a step-therapy approach to negotiate better prices for Part B drugs — those administered in hospitals and doctors’ offices. These private plans will be allowed to require patients to first select the least expensive drug before stepping up to more costly drugs if the original medications aren’t working.

The administration is also looking at ways to introduce more competition into Part B drug purchasing. That idea was mentioned deep inside the annual Medicare outpatient payment rule released last month.

Peter Bach, director of Memorial Sloan Kettering’s Center for Health Policy and Outcomes in New York, pointed to the possible introduction of a competitive purchasing program in which a firm negotiates with drugmakers to buy their drugs and then sells them to the doctors and hospitals that will administer the medications. Bach said that helps ensure that hospitals and doctors can’t make more money by prescribing more expensive drugs.

Currently, Medicare pays the average sales price plus 6 percent to doctors or hospitals when they purchase drugs, a pricing mechanism that can benefit the providers if the drug costs go up. If there were a third party buying the drugs, it would “have a huge effect,” Bach said.

3. Paying For Value

Trump’s blueprint calls for CMS to encourage “value-based care” to lower drug prices, shifting from paying a set fee for drugs to basing payments on how well the patient does on them.

Louisiana’s Medicaid program could show the way. The state is working with CMS to explore a subscription-based model to pay for hepatitis C medicines. Louisiana would pay a fixed price to a drug manufacturer that would then get unlimited access to treat patients enrolled in Louisiana’s Medicaid program or in prison.

The program would move “from a big payment upfront to paying less over time based on actual outcomes,” said McClellan, who also serves on the boards of health care giant Johnson & Johnson and insurer Cigna.

CMS also approved a Medicaid waiver from Oklahoma in June. Medicaid programs are allowed to negotiate drug prices. Oklahoma’s plan would expand that to negotiate additional prescription price reductions based on value-based purchasing agreements.

Still, CMS’ recent rejection of a related Massachusetts proposal makes it difficult to believe negotiating drug prices will really happen, said Sara Rosenbaum, a professor of health law and policy at George Washington University.

That proposal would have allowed Massachusetts’ Medicaid program to choose drugs based on cost and how well the medicines work.

“They have been very good and quite careful with their [Medicaid] program and so why not let them try this?” Rosenbaum said.

4. Tackling Foreign Drug Costs

Pharmaceutical makers often sell their drugs at substantially lower prices in many foreign countries than they do in the United States. Trump emphasized in May that “it’s time to end the global freeloading once and for all,” saying U.S. consumers were paying part of the cost of the medicines that patients in other countries use.

He directed U.S. Trade Representative Robert Lighthizer to address the situation. Lighthizer’s office declined to comment.

When Sen. Todd Young (R-Ind.) asked during a Senate health committee hearing in June whether trade agreements with other countries should be used to “level the playing field,” Azar’s response was swift: “We absolutely believe we should be using our trade agreements to get them to pay more even as we have our job to pay less.”

Avalere Health President Matt Brow, who has been involved in talks with the administration, said it’s clear the focus on overseas pricing isn’t going away and the administration is “talking a lot about how to get the president what he wants.”

5. Increasing Competition

FDA Commissioner Scott Gottlieb has become the Trump administration’s lead proponent for increasing competition among drugmakers.

Competition resonates with Americans “because people see it every day in their experience in Costco and other places,” said Rena Conti, an assistant professor at the University of Chicago.

Gottlieb has announced plans to bolster the use of generic drugs and an “action plan” to encourage the development of biosimilars, which are copycat versions of expensive biologic drugs made from living organisms.

And to combat anti-competitive behavior in the market, Gottlieb said the FDA has passed along information to the Federal Trade Commission and hinted at potential action to come: “I think we’ve handed them some pretty good facts.”

KHN’s coverage of prescription drug development, costs and pricing is supported in part by the Laura and John Arnold Foundation.

Kaiser Health News (KHN) is a national health policy news service. It is an editorially independent program of the Henry J. Kaiser Family Foundation which is not affiliated with Kaiser Permanente.

 

Advertisements

Can the states step in if the feds cut marketing $$$ for Affordable Care Act?

Your correspondent spent much of the ’90s covering health care in North Carolina. Found this while visiting family. See story below from Kaiser Health News. Probably won’t find it next visit. How the cuts will play our in Massachusetts is an unknown at this point. In the meantime, hospitals in Boston reported surpluses yesterday.

nc aca
Posted in mid-August in rural NC library

Trump Administration Whacks Millions From Budget Used To Push Obamacare

Republished with permission from Kaiser Health News

President Donald Trump has insisted for months that “Obamacare is already dead.”

His administration matched its harsh words with damaging action on Thursday — slashing millions of dollars from the government’s budget to promote the health law’s annual open enrollment season beginning in two months.

The move is likely to translate into reduced marketing and fewer navigators — trained representatives deployed by nonprofit groups that receive federal grants to help people understand health insurance options and purchase a plan. The effect could cause more confusion for consumers in an abbreviated enrollment period that is 45 days shorter than last year — running from Nov. 1 to Dec. 15.

Grants to the nonprofits that supply navigators will fall by 40 percent to $36.8 million this year and advertising will drop by 90 percent to $10 million, the Centers for Medicare & Medicaid Services said. The money will be spent in 38 states that use the government’s healthcare.gov exchange.

Administration officials said that five years into the Affordable Care Act, most people know they need to sign up and what their options are, and that there is no evidence that more advertising leads to higher enrollment. Last year’s $100 million advertising budget was double that of 2015’s.

The administration’s announcement was denounced by prominent Democrats, former Obama administration officials and navigator organizations.

“The Trump administration is deliberately trying to sabotage our health care system,” said Senate Minority Leader Chuck Schumer (D-N.Y.).

“I can’t think what the justification is for doing this” because experience has shown people need help getting through the enrollment process, said Jodi Ray, who leads the University of South Florida’s navigator program. It has won the largest navigator award in the country for the past several years, about $5.9 million.

Ray doesn’t know what USF will get this year. Grant amounts to navigators have not been announced yet.

“It’s going to be a really big challenge and doing a lot of extra work with fewer people on the ground and doing the work in half the time,” she said.

Shelli Quenga, director of programs for the Palmetto Project in Charleston and Columbia, S.C., fears her group will have to reduce its workforce and events. Palmetto received $1 million last year.

“We will face massive cuts to our budget,” Quenga said. “I am very worried for the fate of South Carolinians who need access to impartial and unbiased information.”

Funding for 98 navigator organizations will be tied to how each performed last year relative to the enrollment goals they set for themselves. Those that didn’t meet their goals — 78 percent did not, according to CMS — will get less money this year. If an organization hit only 30 percent of its goal last year, it will receive 30 percent of last year’s funding.

That formula has some flaws, said Lori Lodes, who directed CMS’ outreach efforts in 2014 and 2015 under the Obama administration.

For one, navigators don’t get credit for every enrollment they help produce. Sometimes, consumers consult navigators about their choices and then complete their enrollment in private at home, said Lodes, who now directs the Families USA campaign called Protect Our Care.

Another problem with the formula, she said, is that it fails to recognize the large amounts of time that navigators sometimes invest in helping people who are not native English speakers or have disabilities and need more help finding suitable health plans. That could contribute to groups signing up fewer people than anticipated.

“The people that really need help come from more vulnerable populations,” Lodes said. “More vulnerable populations are not going to get the care they need.”

In a background briefing for reporters, Health and Human Services Department officials said too much money was spent in past years with too little to show for it. They cited a navigator group in one state last year that enrolled only one person in an insurance plan but received $200,000, which they said could have paid insurance premiums for 31 people in that state for the entire year.

They noted that the advertising budget doubled last year, but despite the increase, enrollment fell by 42 percent, or about 500,000 people.

But Joel Ario, a former HHS official in the Obama administration who oversaw the federal and state insurance exchanges, challenged their judgment.

The decrease resulted from the Trump administration’s decision to end advertising as 2017’s open enrollment period entered its final weeks in January, he said.

“It’s disingenuous to say that ads didn’t tie to enrollment,” Ario said.

States that run their own marketplaces are not included in the navigation program. But some of them are continuing to put resources into enrollment. California’s 2017-18 marketing budget stands in stark contrast to the federal government’s. The state is poised to spend $111.5 million advertising Obamacare, more than 10 times what CMS plans to spend in 38 states.

Kaiser Health News (KHN) is a national health policy news service. It is an editorially independent program of the Henry J. Kaiser Family Foundation.