Jul 26, 2019

Axios Vitals

Good morning ... Speaking as a guy who once slipped and wiped out on a banana peel while on a date — I'm talking legs in the air, landed on my back, fully cartoon-style — I strongly encourage you to read and take seriously this lesson on the very real menace of banana peels.

In the meantime, I have 981 words/<4 minutes of health care news for you. Watch your step.

1 big thing: Trump's next move on drug prices

Photo: Chip Somodevilla/Getty Images

The White House is preparing another big executive order on drug prices, Reuters scooped last night.

  • Citing industry sources who had discussed the plan with the administration, Reuters reports that it would likely seek to lower prices in Medicare Part D, which covers drugs you pick up at the pharmacy counter.
  • The administration's most sweeping proposal to date — to piggyback off of the lower prices in European countries — was limited to Part B, which covers drugs administered by a doctor.
  • It's not clear whether the new Part D proposal would also rely on international pricing, per Reuters. Part D is much bigger than Part B.

Between the lines: It's probably no coincidence that this threat is being floated just as the White House is trying to build support for the Senate Finance Committee's drug-pricing bill, despite Republican objections.

  • In fact, Sen. Chuck Grassley made that point explicitly, The Hill reports.
  • "Who knows what he's going to do at the last minute,” he said, referring to Trump. “If he would join forces with Pelosi, look at what that would do to everything that we Republicans stand for."
  • “It seems to me that the Grassley-Wyden approach is a very moderate approach [compared] to what could come out,” he added.
2. Where it stands in the Senate

Sens. Ron Wyden and Chuck Grassley. Photo: Mark Wilson/Getty Images

Finance approved the Grassley-Wyden bill yesterday, but the proceedings left no doubt that there are still stark divisions within the GOP over drug pricing, and more resistance than we're used to seeing on policies Trump supports.

The intrigue: Nine of the committee's 15 Republicans voted against the bill. All of the Democrats supported it, leading to a final vote of 19-9.

  • The bill's proposal to cap price increases within Part D is clearly the biggest sticking point for Republicans. An amendment to strike that provision, offered by Sen. Pat Toomey, failed on a 14-14 vote.

What's next: Pharma's best bet is probably to stop the Senate from passing anything.

  • That would prevent an eventual conference between the House and Senate, in which Pelosi and Trump could make good on Grassley's predictions and strike up an alliance (if she wanted to help Trump claim a win on drug prices, which is far from a sure thing).
  • But that's a tall order, so expect pharma and its allies to keep trying to water down the Senate package while waging that bigger-picture fight.

The bottom line: “This bill is not anywhere near action on the floor,” Sen. John Cornyn said yesterday, per The Hill.

3. Medicare payment rules are around the corner

White House budget officials have signed off on Medicare’s 2020 outpatient and physician payment rules, meaning they should be publicly released in short order, Axios' Bob Herman notes.

What we’re watching: Whether Medicare continues to scrutinize inflated billing.

Why it matters: Hospital outpatient and physician services are a material part of the federal health budget, projecting to hit $140 billion in payments this year.

4. GOP governors have no post-ACA plans


Much like their counterparts in Congress, Republican governors are not prepared to deal with the fallout if they finally succeed in persuading the courts to throw out the entire Affordable Care Act.

What they're saying, via the AP:

  • Utah Gov. Gary Herbert: "It's been talked about for so long, people are saying 'Why worry about it until it happens?'" I think there's a little bit more of a lackadaisical thought process going on."
  • Arizona Gov. Doug Ducey: "They're going to rule how they're going to rule and we'll deal with the outcome. The best plans are to have dollars available."
  • Arkansas Gov. Asa Hutchinson told the AP that Congress would need to quickly restore funding for the ACA's Medicaid expansion. "Congress can't just leave that out there hanging," Hutchinson said.
  • The Medicaid expansion would go away if Republicans' lawsuit succeeds.

Blue states are somewhat more prepared, because they're more willing to pass their own versions of some of the ACA's coverage requirements, but it would still impossible for even the most motivated state to reconstitute the entire law.

My thought bubble: 🤯

5. How consultants helped push opioid sales

The New York Times takes a step back from the lawsuits and criminal charges against opioid manufacturers to note that McKinsey, the consulting firm, also keeps coming up in those proceedings.

The big picture: Purdue Pharma and Johnson & Johnson both hired McKinsey to boost opioid sales.

  • McKinsey hasn't been charged or sued for any role in the crisis, but details about the company's involvement have nevertheless crept out through testimony and court filings.

Details: McKinsey advised one pharmaceutical company to “get more patients on higher doses of opioids," the Times reports, and to study ways of "keeping patients on opioids longer.”

  • It advised Johnson & Johnson to step up its "targeting and influencing [of] prescription behavior in pain clinics," per the Times.

Why it matters: One constant, in every lawsuit and criminal case, is that drugmakers were laser-focused on sales above all else — sometimes illegally, but sometimes just by treating the drugs like any other corporate sales project.

  • Former Insys executives were recently convicted of bribing doctors to prescribe its painkiller, Subsys. But the trial also revealed a host of other, more mundane tactics designed to boost Subsys sales.
  • Emails show a similar mindset at Purdue. When told that OxyContin addiction would get worse if the drug wasn't regulated as a controlled substance, former CEO Richard Sackler asked, "How substantially would it improve your sales?”
  • And you hire McKinsey because of its expertise in maximizing profit, not because it knows how best to treat patients.

That sales-first mentality did not start or stop with opioids.

  • Johnson & Johnson testified that it's still working with McKinsey on its other drugs, the Times notes.
  • Pharmaceutical companies spend roughly $26 billion per year on marketing.

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