Oct 11, 2018

Axios Vitals

Good morning from Boston, where I’m at the Digital Healthcare Innovation Summit to talk about where we stand and what’s next in the politics and policy of health care. If you’re here, too, don’t hesitate to say hello.

1 big thing: “More to come” on drug prices

HHS Secretary Alex Azar. Photo: Oliver Contreras-Pool/Getty Image

“In the weeks and months ahead, there is a lot of action — regulatory action that we are working on,” HHS Secretary Alex Azar told me in an interview yesterday.

Driving the news: President Trump signed a bill yesterday to outlaw the “gag clauses” that pharmacy benefit managers (PBMs) sometimes impose on pharmacists, preventing them from telling patients when it would be cheaper to pay cash for a prescription than to use their insurance.

“We still view ourselves as at the advanced stage of beginning at this effort” to lower drug prices, Azar said, reiterating that “everything is on the table if it helps deliver a solution.”

Between the lines: Eliminating pharmacy gag clauses had bipartisan support in Congress, and the PBM industry’s qualms faded very quickly, at least in public.

  • There isn't much more low-hanging fruit on drug prices. From here, it’s a very short road into policies — including elements of the Trump administration’s plan — that will engender hardcore opposition from one industry or another, including PBMs and pharmaceutical companies.

What’s next: “There’s no one single step that solves all of those issues around drug pricing. We’re chipping away at them,” Azar said.

  • He wouldn’t elaborate on the order of operations, but a proposed rule to alter the legal protections for PBM rebates is under review at the White House — strongly suggesting it’s either next, or very close to next, on the itinerary.

The bottom line: PBMs continue to take the biggest beating from the Trump administration, though Azar said pharma could still have a turn on the front burner.

  • “We’re taking on anybody that we need to take on,” he told me.
2. CVS and Aetna get their merger

The Justice Department yesterday approved the $70 billion merger between CVS and Aetna, clearing the way for a new behemoth in the rapidly consolidating health care industry.

The big picture: Combining insurers and PBMs is so hot right now.

  • CVS is the country’s biggest pharmacy chain and one of the biggest PBMs. And Aetna is the third-biggest health insurer.
  • In addition to the CVS-Aetna deal, Cigna is in the process of merging with Express Scripts, the country’s biggest PBM. They’re both hoping to counter the serious market power of UnitedHealth Group, which operates the country’s biggest insurer and one of the leading PBMs.
  • The move was also spurred in part by CVS’ fears that Amazon will enter the pharmacy business.

The bottom line: The CVS-Aetna merger is "more defensive than offensive," an industry analyst said earlier this year.

3. Centene expands its ACA footprint

Centene will enter the Affordable Care Act’s insurance markets in 4 new states and expand its offerings in another 6 states where it already sells ACA coverage.

Why it matters: It’s another sign that the ACA’s exchanges are doing OK, despite the past 2 years of policy and political upheaval.

  • Modest premium increases and expanding competition (in some parts of the country) caught some experts by surprise, but Centene has been bullish about its ACA business for a while. And it’s not the only insurer making money on the exchanges.

Details: Centene said it will begin selling coverage next year in North Carolina, Pennsylvania, South Carolina and Tennessee.

  • It will expand its offerings in Florida, Georgia, Indiana, Kansas, Missouri and Texas.

Yes, but: Low premiums aren’t free, and Centene has been criticized — sued, even — over its tightly limited networks of hospitals and doctors.

4. Trump takes on "Medicare for All"

Let’s be clear up front: Everything in health policy comes with a tradeoff, including “Medicare for All,” no matter how you define it. Those costs very well may be more than American voters ultimately want to accept.

But President Trump did not lay out those choices particularly well in his USA Today op-ed yesterday. Here's some of what he wrote...

“Under the Democrats' plan, today’s Medicare would be forced to die.”

  • Reality check: This has become a common refrain — that Medicare and “Medicare for All” are mutually exclusive. They’re not. You could keep the existing program intact and expand government coverage elsewhere — you’d just have to find a way to pay for it.

“The Democratic proposal … would cost an astonishing $32.6 trillion during its first 10 years.”

  • Reality check: This is an accurate summation, if we're taking "Medicare for All" to mean Sen. Bernie Sanders' plan. (There are others.)
  • But it's worth noting that we’re expected to spend roughly the same amount under the status quo.
  • The difference is how we spend it — in taxes, or in the existing hybrid of taxes, premiums and out-of-pocket costs.

“As a candidate, I promised that we would protect coverage for patients with pre-existing conditions … I have kept that promise.”

  • Reality check: The Trump administration is currently arguing in court that the ACA’s protections for pre-existing conditions should be struck down. It has no replacement plan. It also supported ACA repeal, which would have eroded many of those protections.

Between the lines: This is a campaign document, designed to fire up and turn out Republican voters, and it's a preview of what's to come as "Medicare for All" enters the political mainstream in 2020.

  • Some of these arguments are drawn from the anti-ACA playbook — but this time a "government takeover of health care" is actually on the table (Sanders' bill would ban private insurance).
  • So expect to hear this and more, not only from Republicans but also the entire health care industry.