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President Trump and HHS Secretary Alex Azar. Photo: Nicholas Kamim/AFP/Getty Images

The Trump administration is making another incremental move toward lower drug prices, opening up a new part of Medicare to well-established competitive pressures.

The big picture: "Step therapy" allows insurance companies and pharmacy benefit managers (PBMs) to set up a system under which patients have to start with a cheaper drug first, switching to a higher-cost alternative only if they need to.

  • Step therapy is common in private insurance and in Medicare’s coverage for the kinds of drugs you pick up at a pharmacy.
  • Now, the administration is allowing the use of step therapy for some drugs that are administered at a doctor’s office — which are some of the most expensive drugs on the market.

How it works: The idea behind step therapy is partially just to switch patients to cheaper drugs. But there’s also a hope that it will prod more expensive products to offer bigger discounts, so that insurers won’t subject them to step therapy.

The impact is hard to predict. The new rules only apply to Medicare Advantage, not to traditional Medicare. MA accounts for about a third of all Medicare beneficiaries.

  • Some plans won’t adopt step therapy. Some MA enrollees will prefer the plans that don’t. And some of the relevant drugs don’t have cheaper alternatives.

Why it matters: The Trump administration’s top health officials have said they’re going to bring down drug prices through greater competition, and they’ve acknowledged a lot of that will have to happen without Congress.

  • However well or poorly that process ultimately works, this is what it looks like — a series of small, incremental changes.
  • Patients for Affordable Drugs, an advocacy group that often pushes the administration to be more aggressive on drug prices, supported the move.

What’s next: PBMs cheered yesterday’s announcement, but they’re next on the chopping block. The administration is working on regulations to roll federal protections for PBMs’ highly lucrative rebates.

Go deeper

Updated 2 hours ago - Technology

From Malcolm X to "Free Britney," new media shapes the justice system

Illustration: Shoshana Gordon/Axios

True crime documentaries, podcasts and social media campaigns are bringing new attention to real-world legal proceedings — and are often affecting the outcome.

Why it matters: New media platforms can instantly put a national spotlight on cases that have long been forgotten or buried under red tape.

Updated 4 hours ago - Health

The next big bottleneck in the global vaccination effort

Illustration: Rae Cook/Axios

The world still needs more coronavirus vaccines, but an additional bottleneck has emerged in many low-income countries: They need help getting shots in arms.

Why it matters: Increasing vaccination rates across the world is both a humanitarian necessity and the best way to prevent dangerous new variants from emerging, but it increasingly requires complex problem-solving.

Updated 5 hours ago - Health

COVID-19 Omicron variant cases identified in Europe, U.K.

People wearing masks walk in London on Nov. 25. Photo: Li Ying/Xinhua via Getty Images

Health officials in the United Kingdom, Italy and Germany announced on Saturday that they've detected the first known cases of the new COVID-19 Omicron variant.

Why it matters: The discoveries come as the world scrambles to respond to concerns over the new variant, discovered in South Africa earlier this week.

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