Nonprofit hospitals and health clinics are alarmed about a change that's coming to federal drug purchasing discounts next year.

• They'll have to pay up front and then get rebates — rather than direct price cuts — in a pilot with eight pharmaceutical companies.

Why it matters: The new system, greenlit by the Trump administration, is a win for drugmakers, and it could be a big hassle for providers.

• Under the test, which starts in January, providers will pay full price for drugs they currently get at a steep discount.
• They'll get reimbursed the difference after the drugmaker determines they qualify for the lower price under the 340B program, which allows nonprofit safety net providers to access lower-cost outpatient drugs.

What they're saying: "Many hospitals are concerned about cash flow around this," Maureen Testoni, CEO of the provider trade group 340B Health, said on a recent call with reporters.

• Providers will have to hire new staff to submit data to get the rebates, or at least shift employee responsibilities around, she said.
• She noted that the change comes as providers prepare for cuts to Medicaid reimbursement and other likely changes that could reduce their Medicare payments.

Where it stands: The Health Resources and Services Administration last week approved 340B rebate programs for nine popular drugs, including Bristol Myers Squibb's blood thinner Eliquis and Janssen's Stelara and Xarelto.

• The pilot will run for at least one year to test whether rebates work for 340B discounts, HHS said in July when it first announced the idea.

PhRMA sees the rebate pilot as a step toward more transparency and accountability in the 340B program, senior director of public affairs Molly Jenkins said in a statement.

• The administration should go further and allow rebates across all 340B-covered outpatient drugs, Jenkins added.
• Several pharmaceutical companies have tried to implement their own rebate systems in recent years, arguing they guard against providers getting duplicate discounts or diverting 340B drugs to ineligible patients.
• Courts have so far blocked them from doing so without HHS approval.

Yes, but: The nonprofit health system Advocate Health says the savings from direct discounts allow it to invest $6 billion annually into free clinics, charity care and community-based programs.

• "A shift to a rebate model, as opposed to the current discount model, would undercut our ability to continue this level of care," the health system's leaders wrote in a comment letter to HHS earlier this year.
• The rebate model "is a clear case of the fox guarding the hen house," Jennifer DeCubellis, CEO of America's Essential Hospitals, said in a statement, adding that "drug manufacturers are the only winners" of the program.

The other side: HHS maintains that the pilot is a limited, data-driven effort to improve 340B, press secretary Emily Hilliard told Axios via email.

• HHS is undertaking the project to "better understand the merits and shortcomings of the rebate model from the perspective of affected stakeholders," she wrote.

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Liberal Democrats dug in yesterday after Tuesday's elections, maintaining their health care push as moderate Democrats were quieter and said talks are continuing.

Why it matters: The aftermath of Democrats' big election night wins highlighted the strains within the Democratic Party over how long to keep battling Republicans for extending enhanced Affordable Care Act tax credits.

Driving the news: "It would be very odd right after the country rewarded Democrats for taking a stand and fighting, for us to immediately stop fighting," said Sen. Chris Murphy (D-Conn.).

• Sen. Bernie Sanders (I-Vt.) added that "what people want is that the Democrats stand up and continue to fight," saying any ACA agreement needs buy-in from Speaker Mike Johnson and President Trump to ensure it actually becomes law.

Between the lines: More moderate Senate Democrats, who earlier in the week were looking for a way out of the shutdown, were less forceful and more tight-lipped yesterday.

• "All I'm going to tell you is that the discussions are ongoing and they've been very positive," said Sen. Jeanne Shaheen (D-N.H.), when asked if the election results mean that there needs to be more than just a promise of a vote on the ACA subsidies.
• Sens. Jacky Rosen (D-Nev.) and Gary Peters (D-Mich.) also declined to comment specifically on whether the promise of a vote on the ACA subsidies is enough, saying they did not want to get ahead of talks.

The bottom line: Other Democrats have stressed they need Trump and the House involved to make sure it isn't just a failed show vote.

• Democrats, including Minority Leader Chuck Schumer, pointed to Trump's own comments Wednesday that the shutdown was "negative for the Republicans" in the election, and called on him to negotiate.

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The Affordable Care Act's subsidy structure, especially with COVID-era enhancements, discriminates against people with employer insurance and creates disincentives to work, an influential conservative think tank argues in a new brief provided first to Axios.

Why it matters: Treat this as a preview of a likely new line of attack on the Hill as Congress continues to brawl over the future of the enhanced subsidies.

• Paragon Health, which has close ties to both the former and current Trump administrations, has long argued against an extension of the subsidies.
• It recently demonstrated its influence with congressional Republicans when its attacks against Medicaid provider taxes and state-directed payments ultimately were reflected in major components of the GOP's Big Beautiful Bill.

What they're saying: Paragon crunched numbers and is arguing that ACA enrollees receive a much bigger tax benefit than those with employer insurance, which has several negative consequences.

• "Workers face a large penalty if they receive health insurance through their employers rather than through the exchanges," the authors write.
• Older workers may have an incentive to retire early, and the structure of the law "discourages people from working for employers who offer health coverage" and encourages small companies to drop health coverage.

The bottom line: Paragon obviously has a perspective, but "bad for people with employer insurance" could end up being a potent political argument against the enhanced subsidies.

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That's the latest split in public opinion on whether Democrats should keep fighting to extend the enhanced Affordable Care Act subsidies or whether they should vote to end the government shutdown, according to a new KFF poll out this morning.

• 48% want the Democrats to keep fighting, 50% want to end the shutdown without addressing the subsidies.

Why it matters: It's not a lopsided mandate to keep up the fight — at least not as lopsided as you might think for the margins of the Democratic victories in Tuesday's elections.

• What is still lopsided is the public support for extending the subsidies so they don't expire: 74% of Americans say Congress should renew them.
• That's close to the amount of support the subsidies had in a KFF poll in September, but Republican backing has dropped a bit during the shutdown — mostly among self-identified MAGA supporters.

Methodology: The survey was conducted Oct. 27-Nov. 2 online and by telephone among a nationally representative sample of 1,350 U.S. adults in English and in Spanish. The margin of sampling error is plus or minus 3 percentage points for the full sample.

📱 Keep an eye on this: Senate HELP Committee Chair Bill Cassidy (R-La.) introduced a bill to expand health privacy protections to technologies like smartwatches and health apps.

💪 The White House is defending FDA commissioner Marty Makary despite the turmoil over the ousting of one of his deputies. (Politico)

🤖 An FDA advisory committee is meeting today to discuss how to regulate therapy chatbots and other generative AI devices. (Stat)

🏥 Iowa has a severe shortage of OB-GYNs — and some physicians worry it's going to get worse under the state's abortion ban. (NPR/KFF Health News)