HEALTH CARE BRIEFING: Drug Prices Deal Targets ‘Market Failures’

Democrats struck a deal to negotiate with drugmakers on the price of medicines yesterday, potentially delivering a major campaign promise of President Joe Biden’s by targeting the highest price drugs that have emerged from patent protections.

Under the agreement, the government would negotiate for lower prices on 10 drugs that rank among those that cost Medicare the most each year, starting in 2023, according to Finance Committee Chairman Ron Wyden (D-Ore.). That number would ramp up to 20 in subsequent years, he said.

The proposal would also require drugmakers to pay back to the government any profits made from increasing the price of their products past inflation starting in 2022. This would apply to price hikes on Medicare and on employer-sponsored plans, Wyden said.

“Today we’ve taken a massive step forward,” Senate Majority Leader Chuck Schumer (D-N.Y.) said in announcing the agreement.

The landmark deal would empower Medicare, the government insurance plan for those 65 and older, to negotiate with drugmakers on prices for the first time. But in order to win over party holdouts, the negotiations would apply to a narrower set of drugs than House Democrats originally proposed.

The Health and Human Services Department would select the drugs from a list of the highest gross spending products in both Medicare Part B, the outpatient benefit, and Part D, the medicines provided to beneficiaries through a pharmacy. Only drugs outside their initial patent exclusivity period would be subject to price negotiation, Wyden said. Read more from Alex Ruoff.

Plan Draws Support: Two Democrats who opposed an earlier, more expansive proposal, Sen. Kyrsten Sinema (D-Ariz.) and Rep. Scott Peters (D-Calif.), said they supported the plan, Alex Ruoff, Erik Wasson and Laura Litvan report. Sinema said in a statement that Speaker Nancy Pelosi (D-Calif.) sought her out over the weekend to continue talks on getting the drug pricing provision nailed down. She called the resulting deal a “historic, transformative Medicare drug negotiation plan that will reduce out-of-pocket costs for seniors.”

Drugmakers’ Trade Group Says Deal Is Flawed: A key lobbying group for the pharmaceutical industry the plan gives the government too much power to dictate how much drugs are worth, Catherine Larkin reports. “If passed, it will upend the same innovative ecosystem that brought us lifesaving vaccines and therapies to combat COVID-19,” PhRMA President and CEO Stephen Ubl said in a statement. “While we’re pleased to see changes to Medicare that cap what seniors pay out of pocket for prescription drugs, the proposal lets insurers and middlemen like pharmacy benefit managers off the hook when it comes to lowering costs for patients at the pharmacy counter,” Ubl said.

House Vote Imperiled by Moderates: Still, despite the deal on drug pricing, a handful of fiscally conservative House Democrats threaten to torpedo Pelosi’s plans to vote on the economic legislation this week. Pelosi huddled behind closed doors yesterday with fellow Democrats and emerged saying she is hopeful they could finalize the massive tax and spending bill by the end of the day, a remarkably quick turnaround for a party that has spent weeks haggling on the package’s details.

But with the narrowest of majorities and only three votes to spare, Pelosi’s plans for a swift vote could be scuttled by at least five Blue Dog Democrats who said they won’t support the legislation without more deficit information from the Congressional Budget Office and the Joint Committee on Taxation. In a letter to Pelosi, they echo comments made Monday by Sen. Joe Manchin (D-W.Va.). Read more from Billy House and Erik Wasson.

The Coronavirus Pandemic

CDC Gives Go-Ahead for Pfizer’s Pediatric Covid Vaccine: Younger children across the U.S. are now eligible to receive Pfizer’s Covid-19 vaccine, after the head of the Centers for Disease Control and Prevention granted the final clearance needed for shots to begin. CDC Director Rochelle Walensky recommended the vaccine for children from 5 to 11 years old. The decision ushers in a new phase in the U.S. pandemic response, widening access to vaccines to some 28 million more people at the same time that Americans who received shots earlier in the pandemic are lining up for booster doses.

The CDC’s Advisory Committee on Immunization Practices, a group of outside experts, earlier voted 14-0 in favor of giving children the shot, developed by Pfizer and BioNTech, after it was cleared on Friday by U.S. regulators. Administered in two injections three weeks apart, the vaccine is one-third the dose authorized for adults. Read more from Fiona Rutherford.

  • Biden declared a “major step forward” in the fight against Covid-19 after the CDC gave a go-ahead, Catherine Larkin reports. The news “will allow parents to end months of anxious worrying about their kids, and reduce the extent to which children spread the virus to others,” Biden said in statement. Biden reiterated the administration’s commitment to get vaccine program for young children fully up and running during the week of Nov. 8.

GOP Raises Concerns on Airline Passenger Data Security: Republican senators wrote to the Biden administration to “express concerns” about a Centers for Disease Control and Prevention order, which requires that airlines gather information from passengers coming into the U.S. for Covid-19 contact tracing, Lillianna Byington reports.

“It is unclear at this time whether the aviation industry is equipped to collect and retain more personal information from passengers than it does today and share it across multiple proprietary systems before responsibly and securely transmitting it to the CDC,” the senators wrote in a letter yesterday to White House Coronavirus Response Coordinator Jeffrey Zients. The also asked him to tell Congress how the Biden administration will address data privacy and security concerns around the CDC order.

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What Else to Know

Medicare to Let Doctors’ 3.75% Pandemic Pay Bump Expire: Medicare payments to cardiologists, radiation oncologists, and numerous other medical specialty providers will take a hit in 2022 after the Biden administration allowed a temporary 3.75% payment hike in 2021 to expire next year. In the 2022 Medicare Physician Fee Schedule final rule released yesterday, (RIN 0938-AU42), the multiplier—or “conversion factor” used to determine provider reimbursement in traditional Medicare—drops to $33.59 next year from $34.89 in 2021. That erases the 3.75% increase awarded in 2021 under the Consolidated Appropriations Act to “provide relief during the COVID-19 public health emergency.”

As a result, “several specialties, including interventional radiology, vascular surgery, radiation oncology, and cardiology,” will see their Medicare reimbursements decrease next year, while other specialty providers like “diagnostic testing facilities, portable x-ray, podiatry, hand surgery, and geriatrics” will see payment increases, the Centers for Medicare & Medicaid Services said. Read more from Tony Pugh.

Biden’s HHS Locks in Methadone Pay Rate: The Biden administration is holding off on lowering government funding for the use of methadone to treat opioid use disorder, fearing rate changes could block Medicare recipients from crucial treatment during the Covid-19 pandemic. Implementing a “sudden and significant decrease in the rate for methadone” could affect treatment programs’ ability to offer services to Medicare patients, impeding access “at a time when overdose deaths are at an all-time high,” the Department of Health and Human Services said in an interim final rule (RIN 0938-AU95) released yesterday.

The rule halts an annual process for updating government coverage of methadone used by opioid treatment providers. The Food and Drug Administration has given the OK for providers to use methadone for patients, but pharmacies can’t dispense it. Read more from Ian Lopez.

Outpatient Services, Home Health to See Boost: Medicare payments to hospitals for outpatient services will see a 2.0% increase in payment rate for 2022, while home health providers will get a 2.6% boost. The increases were part of a pair of rules released yesterday by the Centers for Medicare & Medicaid Services. The rules will take effect once published in the Federal Register. Read more from Allie Reed.

Food Programs Said to Worsen Nutrition Problems: Federal food aid programs are failing to provide low-income homes with nutritious meals, exacerbating the public health “crisis” of diet-related diseases and obesity within the U.S., both lawmakers and poverty analysts said yesterday. “While the federal government tells us that our plates should consist largely of fruits and vegetables, currently less than 2% of our federal agriculture subsidies in the U.S. go to these healthy foods,” said Cory Booker (D-N.J.), chairman of the Senate Agriculture panel on nutrition. Read more from Megan U. Boyanton.

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To contact the reporters on this story: Zachary Sherwood in Washington at zsherwood@bgov.com; Brandon Lee in Washington at blee@bgov.com

To contact the editors responsible for this story: Giuseppe Macri at gmacri@bgov.com; Michaela Ross at mross@bgov.com

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