PBMs brace for House health package

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Sep 06, 2023 View in browser   By David Lim, Lauren Gardner and Katherine Ellen Foley With Megan R. Wilson Driving the Day Congress is floating proposals to overhaul the practices of the the pharmaceutical middlemen that negotiate drug prices between manufacturers, insurers and government health providers. | Julio Cortez/AP Photo PBMs GEAR UP — As legislation to overhaul the practices of pharmacy benefit managers snakes its way through Congress, the PBM industry faces an uphill battle against a cadre of opponents — including pharmacies, provider organizations, pharmaceutical companies and AARP, which advocates for consumers over age 50. Critics emphasize that the three largest PBMs — the pharmaceutical middlemen that manage prescription drugs for health insurers — control 80 percent of the market. But JC Scott, president of the trade group Pharmaceutical Care Management Association, said the industry is offering “alternative approaches” to insurance plans and new entrants into the PBM market. The impact of a largely consolidated PBM market can be consequential for smaller drug companies, such as Arcutis Biotherapeutics, according to its CEO Frank Watanabe. The executive, who has spoken with lawmakers on Capitol Hill, said that rebates to PBMs and administrative fees to related entities, called group purchasing organizations, are “far and away [his] biggest cost” among all the expenses Arcutis incurs to get its drug to patients. The House is readying a sweeping health care package with the hope of bringing it to the floor for a vote sometime this month — and the legislation is expected to contain a win for advocates pushing for changes to how PBMs operate, Megan reports. The bill, expected within the next week, likely contains provisions meant to illuminate the fees and rebates PBMs extract from drug companies and a prohibition on spread pricing in Medicaid so that a PBM cannot reimburse a pharmacy less for a drug than what it charged the insurance provider. PCMA is stepping up efforts to influence the package. The group recently hired former Pennsylvania Republican Rep. Ryan Costello to lobby on its behalf, who told POLITICO he is talking with his former colleagues about the benefits of PBMs. And Scott told POLITICO the proposals being floated in the House and Senate, if enacted, could limit “choices in ways that inadvertently lead to increasing costs to employers and unions.” IT’S WEDNESDAY. WELCOME BACK TO PRESCRIPTION PULSE. The Senate returns to a sweltering D.C. It should be cooler when the House returns next week. Send news and tips to Lauren Gardner (lgardner@politico.com or @Gardner_LM), David Lim (dlim@politico.com or @davidalim) and Katherine Ellen Foley (kfoley@politico.com or @katherineefoley). TODAY ON OUR PULSE CHECK PODCAST, host Daniel Payne talks with POLITICO health care reporter Alice Miranda Ollstein, who explains why abortion disputes threaten the reauthorization of PEPFAR, a law governing the United States’ global HIV/AIDS relief work. Listen to today’s Pulse Check podcast In Congress Congress faces a heavy health care agenda as lawmakers return from recess. | Anna Moneymaker/Getty Images A FULL HEALTH CARE PLATE — A number of competing priorities await Congress this month, including an urgent FDA agenda on drug shortage policy and funding for the agency. On Sept. 14, the House Energy and Commerce Health Subcommittee is expected to debate policies that would address persistent drug shortages, according to a preliminary committee calendar obtained by POLITICO. Then on Sept. 19, the health subcommittee is expected to examine “Medicare innovation,” according to the calendar. And on Sept. 20, the E&C Oversight and Investigations Subcommittee is slated to debate the Inflation Reduction Act’s implementation — likely including Medicare drug price negotiation provisions.   DOWNLOAD THE POLITICO APP: Stay in the know with the POLITICO mobile app, featuring timely political news, insights and analysis from the best journalists in the business. The sleek and navigable design offers a convenient way to access POLITICO's scoops and groundbreaking reporting. Don’t miss out on the app you can rely on for the news you need. DOWNLOAD FOR iOS – DOWNLOAD FOR ANDROID.     In the Courts A NEW JUDGE FOR AN IRA CHALLENGE — Michael J. Newman, a Trump-era judicial appointee, has been assigned the U.S. Chamber of Commerce’s lawsuit challenging the constitutionality of Medicare drug price negotiations. Judge Thomas M. Rose, a George W. Bush appointee to the Ohio Southern district court, recused himself from the case Friday following a watchdog group’s revelation that he owns stock in Johnson & Johnson and AstraZeneca — two companies with their own lawsuits aimed at reducing or eliminating the new drug pricing authorities. The change in judges comes just weeks before the court is expected to rule on the Chamber’s request for a preliminary injunction, which if granted, would halt the drug price negotiations while the case winds its way through the legal system. Will he or won’t he? A GOP appointee is likely more inclined to pause the program, per Chris Meekins at Raymond James, and the switch to a Trump appointee who’s participated in Federalist Society events is notable. But Newman won his current post with some Democratic support, including from Democratic Sen. Sherrod Brown of Ohio. NOVARTIS FILES NINTH IRA LAWSUIT — Novartis has become the seventh drug manufacturer (and the ninth plaintiff) to sue HHS over the drug price program. And it’s the first drugmaker on CMS’ list of the initial 10 drugs subject to negotiation. The company’s heart failure drug Entresto is included in the batch of products. The complaint alleges the program runs afoul of the First, Fifth and Eighth amendments — the three constitutional arguments made by most other drugmakers challenging the law. Legal update: Spokespersons for AbbVie, which owns the company that makes the blood cancer drug Imbruvica, and Novo Nordisk had no updates Tuesday on whether the companies plan to take legal action. Those manufacturers — plus Amgen, which didn’t respond to requests for comment — are the only ones with products on the list that haven’t already filed lawsuits challenging the program. Coronavirus COUNTDOWN TO UPDATED COVID SHOTS — With the CDC’s vaccine advisory committee slated to discuss updated Covid-19 vaccines on Sept. 12, all eyes are on the FDA’s decision within the next week on updated shots from Pfizer-BioNTech, Moderna and Novavax. In June, the FDA’s independent advisers recommended that all updated shots target the XBB.1.5 subvariants of the Omicron variant. At the time, XBB.1.5 made up about 40 percent of cases. But as of last week, the EG.5 and FL.1.5.1 subvariants make up more than 30 percent of cases in the U.S., while it appears XBB variants, which are targeted by the forthcoming updated shots, are on the decline. Globally, the new BA.2.86 subvariant seems to be gaining traction. All three manufacturers say their updated shots provide protection against the EG.5 subvariant, and independent research labs have generated some evidence that the shots — or infections with XBB variants — could generate an increased number of antibodies capable of neutralizing EG.5, FL.1.5.1 and BA.2.86 strains. Global health authorities have endorsed the Pfizer-BioNTech updated vaccine. The U.K.’s regulatory authority approved the Pfizer-BioNTech shot Tuesday, and Europe’s Committee for Medicinal Products for Human Use recommended in August that the EU’s drug authority also authorize the companies’ updated shot. Pharma Moves Genomic sequencing company Illumina announced it has appointed Jacob Thaysen as CEO, effective Sept. 25. The Healthcare Distribution Alliance named Kala Shankle its vice president of regulatory affairs. QUICK HIT The New York Times detailed the mystery surrounding flat Medicare spending, while warning that the curve is expected to climb again soon. Document Drawer Researchers from the University of California, San Diego, and California State University, Fullerton, identified nearly 4,000 unique, unauthorized e-cigarettes on the market in a letter published Tuesday in JAMA Internal Medicine. The FDA set a one-year “stabilization period” to give pharmaceutical trading partners more time to comply with electronic documentation requirements mandated by the 2013 Drug Supply Chain Security Act. The agency also released final guidance identifying standards for electronic data exchange within the drug distribution supply chain, also required by the DSCSA. The FDA issued guidance on using real-world evidence to help support the approval of a new indication for an already-approved drug and the post-approval study requirements.   DON’T MISS POLITICO’S TECH & AI SUMMIT: America’s ability to lead and champion emerging innovations in technology like generative AI will shape our industries, manufacturing base and future economy. Do we have the right policies in place to secure that future? How will the U.S. retain its status as the global tech leader? Join POLITICO on Sept. 27 for our Tech & AI Summit to hear what the public and private sectors need to do to sharpen our competitive edge amidst rising global competitors and rapidly evolving disruptive technologies. REGISTER HERE.       Follow us on Twitter David Lim @davidalim Lauren Gardner @Gardner_LM Katherine Ellen Foley @katherineefoley   Follow us

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