HealthCare Roundtable e-News – October 2, 2018

Brand-Name Drug Companies Look to Congress’ Lame-Duck Session After Opioid Bill Excludes Part D Deal

Industry experts expect brand name drug companies will look to the upcoming lame-duck session to convince Congress to address Medicare Part D drug payments changes to reverse an increase in companies’ share of ‘donut hole’ costs. The final version of the opioid bill excluded the brand drug industry-backed Part D changes.

The Pharmaceutical Research and Manufacturers of America (PhRMA) has been pressing to reverse the effects of a budget law enacted in February that raised the share of seniors’ drug costs, which were originally industry-covered.

Drug industry experts said Senate Minority Leader Chuck Schumer (D-NY) was open to including the legislative package in opioids legislation if a compromise on the Roundtable-supported CREATES Act, a bill that intended to make it harder for brand-name drug companies to use FDA-mandated safety programs to keep generic competition off the market, could be agreed upon. Although the brand and generic trades had agreed to a CREATES Act deal “in principle,” neither they nor Schumer agreed on legislative language for the agreement, a drug lobbyist said.

Supreme Court to Review Case Impacting CMS’ Authority to Issue Interpretive Rules

The U.S. Supreme Court agreed Thursday to review a case that could impact as much as $4 billion in hospital payments for uncompensated care. The petition to revisit the case came after a panel of federal judges-including the current Supreme Court Nominee Brett Kavanaugh-invalidated a piece of the government’s Medicare reimbursement calculations for disproportionate share hospital (DSH) payments. Both sides of the case, Azar v. Allina Health Services, could have far-reaching consequences beyond that single issue, with HHS asking the Supreme Court to decide if it can issue interpretive rules without needing a comment period under the Medicare Act.

In 2017, the U.S. Court of Appeals for the D.C. Circuit agreed with the hospitals and ruled that CMS’ change to the payment formula for 2012 was invalid. Judge Kavanaugh’s opinion created a split with several other federal courts that had ruled that CMS has the authority to issue certain interpretations of federal law without formal rulemaking.

Only nine hospitals, led by Allina Health Services, are involved in the case, but claims total $48.5 million in additional reimbursement for a single year. With hundreds of hospitals in similar situations filing follow-on suits, the total amount implicated could be in the area of $3-4 billion for fiscal years 2005 through 2013, HHS said in court filings. Currently, there is no argument date set in the court’s upcoming term.

Azar Credits Trump Administration for Improved ACA Market Stability

Last week HHS Secretary Alex Azar credited President Donald Trump for stabilizing the Affordable Care Act exchanges and bringing down premiums. Many healthcare experts disagree with the statements made by Azar, citing the main reason ACA premiums stabilized for 2019 was that insurers increased premiums dramatically in 2018.

Larry Levitt, senior vice president of the Kaiser Family Foundation, tweeted that premiums are stable primarily because they were so high last year. “Ironically,” Levitt wrote, “one of the most stabilizing actions the Trump administration has taken was cutting off cost-sharing subsidy payments to insurers. That led to an increase in ACA benchmark premiums this year, which in turn led to higher premium subsidies and more stable enrollment.”

In his announcement, Azar pointed to the recent expansion of short-term, limited-duration health plans and association health plans as evidence that the administration is working to provide flexibility from Obamacare. Critics were quick to point out, however, that while Azar claimed the repeal of the individual mandate tax has not had a significant impact on the stability of the individual market, the statement appears to conflict with the administration’s underlying arguments in the court case Texas v. United States affecting protections for pre-existing conditions.

In addition to his criticism of Obamacare, Azar attacked the prospect of Medicare for All and did not take questions from the press after his announcement.

Cigna/Express Scripts Merger Gets Approval from Department of Justice

The Department of Justice recently cleared Cigna’s $67 billion merger with Express Scripts Holding Co. after the deal was announced earlier this year. Cigna, one of the largest health insurers in the US, was recently granted an early termination of the antitrust waiting period by the DOJ for the proposed acquisition.

“We are pleased that the Department of Justice has cleared our transaction and that we are another step closer to completing our merger and delivering greater affordability, choice, and predictability to our customers and clients as a combined company,” said Cigna CEO David Cordani in a press release following the announcement of the DOJ’s decision.

Assistant Attorney General Makan Delrahim said that during its six-month investigation, the Antitrust Division analyzed transactional data from the two companies and other industry firms, as well as more than 2 million documents prior to making its decision. The sign-off is based on analyses that the merger is not expected to substantially hurt competition over pharmacy benefit management services due to Cigna’s already-small PBM business.

The DOJ’s approval also lays the path for Aetna’s pending deal with CVS Health Corp. Both companies, however, have overlapping Medicare Part D prescription drug plan business and will have to divest some of this business to be able to qualify for DOJ’s approval.