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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

Federal judge orders Trump administration to restore DACA

DACA recipients and their supporters rally outside the U.S. Supreme Court on June 18. Photo: Drew Angerer via Getty

A federal judge on Friday ordered the Trump administration to fully restore the Deferred Action for Childhood Arrivals program, giving undocumented immigrants who arrived in the U.S. as children a chance to petition for protection from deportation.

Why it matters: DACA was implemented under former President Obama, but President Trump has sought to undo the program since taking office. Friday’s ruling will require Department of Homeland Security officers to begin accepting applications starting Monday and guarantee that work permits are valid for two years.

Updated 1 hour ago - Politics & Policy

Coronavirus dashboard

Illustration: Aïda Amer/Axios

  1. Politics: Fauci says he accepted Biden's offer to be chief medical adviser "on the spot" — The recovery needs rocket fuel.
  2. Health: CDC: It's time for "universal face mask use" — Death rates rising across the country — Study: Increased testing can reduce transmission.
  3. Economy: U.S. economy adds 245,000 jobs in November as recovery slows — America's hidden depression: K-shaped recovery threatens Biden administration.
  4. Cities: Bay Area counties to enact stay-at-home order ahead of state mandate
  5. Vaccine: What vaccine trials still need to do.
  6. World: UN warns "2021 is literally going to be catastrophic"
  7. 🎧 Podcast: Former FDA chief Rob Califf on the vaccine approval process.
2 hours ago - Health

Bay Area counties to enact stay-at-home order ahead of state mandate

Golden Gate Park. Photo: Justin Sullivan via Getty

Counties around the San Francisco Bay Area will adopt California’s new regional stay-at-home order amid surges in cases and ICU hospitalizations, health officials said Friday.

The big picture: California Gov. Gavin Newsom announced a three-week stay-at-home order on Thursday that would go into effect in regions with less than 15% ICU capacity. Despite the Bay Area’s current 25.3% ICU capacity, health officials from Alameda, Contra Costa, Marin, Santa Clara, San Francisco and the city of Berkeley are moving ahead with a shelter-in-place mandate in the hopes of reducing risk.

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