Drug Fights, One Victory
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The Hill Health Care reports that Merck has sued the Biden administration over Medicare drug price negotiation, contending that the “negotiations” are one way only. “Drug companies have been railing against the law since it was passed last year. The provisions won't take effect until 2026, but the administration is slated to release a list of the first 10 drugs for negotiation on Sept. 1.”
The newsletter Policy & Medicine provides background, as follows: “On March 15, 2023, CMS released initial guidance detailing the requirements and parameters on key elements of the new Medicare Drug Price Negotiation Program for 2026, which is the first year that negotiated prices will apply under the Inflation Reduction Act of 2022. The Inflation Reduction Act authorizes Medicare to directly negotiate drug prices for certain high expenditure, single source Medicare Part B or Part D drugs, meaning only those drugs for which there is no generic or biosimilar competition.”
The Hill Health Care report noted that “The law only applies to certain drugs that have been on the market for years without generic competition. Merck's diabetes drug Januvia is likely to be on that initial list, and the company's cancer blockbuster Keytruda could be eligible in 2028.”
In the complaint (here), Merck argues that the Inflation Reduction Act is unconstitutional, that the law allows the government to force drugmakers to sell their property without ‘just compensation’ at prices the government decides, and that the negotiation efforts are “tantamount to extortion.” Under the law, drugmakers can reject Medicare’s final offer and walk away, but such a resolution would result in a tax on the company.
340B Nerves
Hospitals are concerned that reconfiguration of the 340B program will result in reduced profit. Modern Healthcare reports (here) that “On May 11, the Health Resources and Services Administration removed guidance from its website, issued in June 2020 during the COVID-19 pandemic, that allowed 340B-eligible hospitals to prescribe discounted drugs for patients seen at off-site clinics before those clinics were registered with the Office of Pharmacy Affairs Information System and were listed on a Medicare cost report. Hospitals expected the June 2020 guidance to be made permanent rather than tied to the COVID-19 public health emergency, which ended May 11.”
340B, which began in 1992 as a program to assist a handful of safety net hospitals, has ballooned into a significant part of the income of more than half of the nation’s hospitals, the only section of the Public Health Act with its own lobby (340B Health, here), and its own newsletter (340B Report, sample here).
Legislators at the federal (and now state) level are looking at limiting the activities of some 340B “covered entities,” primarily community pharmacies signed up by participating hospitals as 340B sites, and therefore eligible to purchase prescription drugs at lower prices and sell them at higher—the difference being the source of profit which has now become important to hospitals. One Congressional initiative is limited to increased reporting by 340 covered entities, another would seek to compel drug manufacturers—some of which have taken matters into their own hands, and have refused discounts to the community pharmacies—to reverse course, bolstered by a Third Circuit opinion in their favor.
Connecticut appears to be the first state which will require reporting by 340B covered entities. An earlier version of the proposed legislation would have compelled drug manufacturers to offer 340B subsidies to the pharmacies.
Mark Cuban, Again
The Dallas Mavericks owner, campaigning to demonstrate that the cost of generic prescription pharmaceuticals can be dramatically lower, has engaged in a joint venture on a biologic product, as reported (here) in The Wall Street Journal.
“Starting in July, a biosimilar version of the world’s highest-grossing drug, Humira, will be available on the billionaire’s website costplusdrugs.com for $569.27 in cash plus fees—a 90 discount to the $6,922 that AbbVie, the maker of the branded drug, charges as its list price. The move, announced jointly with the biosimilar maker Coherus BioSciences, was significant enough to send AbbVie’s stock sharply down when the news broke last week.”
The Journal explains, however, that while the price is a victory for patients using Humira, that model is uncertain of further success. This is because it leaves no room for pharmacy benefit manager profit.
“Coherus’s strategy isn’t likely to be popular with many of the pharmacy-benefit managers that control how most Americans get their drugs. Though it sounds odd, these gatekeepers don’t like it when drugs are priced very cheaply. In a normal marketplace, a nearly identical product priced at a discount should win market share.”
The Journal continued, “But in America’s warped drug system, pharma companies first price their drugs at artificially high levels and then offer juicy rebates to those middlemen. A large portion of those discounts get passed onto payers, but huge, hard-to-track sums wind up with the middlemen. For example, Johnson & Johnson’s drug unit in 2022 said it paid $39 billion in rebates, discounts and fees to private payers, government programs, providers and distributors.”
An opinion piece in JAMA Internal Medicine (here) discusses possible policy solutions for the conflicting financial incentives, with focus on specialty drug spending. “Among patients with commercial health insurance, specialty drugs account for less than 5% of use but nearly 50% of retail prescription drug spending.”
HOSPITALS, NURSING HOMES AND OTHER HEALTH CARE FACILITIES
Consolidation, Continued
The Senate Finance Committee will hold a hearing Thursday (livestream here) on “Consolidation and Corporate Ownership in Health Care: Trends and Impacts on Access, Quality, and Costs,” with Zack Cooper, Karen Joynt Maddox and others.
MEDICARE, MEDICAID, AND COMMERCIAL HEALTH INSURANCE
Becker’s reports (here) that 80 of the list of Fortune 500 companies are from health care, with insurers leading the way. “The annual list of the largest corporations in the U.S. ranked by revenue for the 2022 fiscal year includes 80 healthcare companies . . . The list includes eight health insurance and managed care companies. UnitedHealth Group comes out on top in this group, landing fifth in the Fortune 500 rankings overall with $324.16 billion in revenue, up 12.7 percent year over year. Fourteen pharmaceutical and health service companies are ranked, with CVS Health in the top spot of this group. It holds the sixth spot in the Fortune 500 rankings overall with $322.46 billion in revenue, up 10.4 percent year over year.”
DRUGS & DEVICES
FDA Allows Import of Chinese Cancer Drug (and only through Canada), Safety Problems Apparently No Longer an Issue
Reports Beckers (here), “Cisplatin treats bladder cancer, squamous cell head and neck cancer, cervical cancer, lung cancer, osteosarcoma, esophageal cancer, adrenal cortex carcinoma, breast cancer, endometrial cancer and liver cancer. It went into shortage in February, and U.S. drugmakers recently said they expect their supply to rebound in June.”
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Notes to Fred Hyde, MD, JD, MBA, news@dcmedicalnews.org
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