Sep 25, 2018

Axios Vitals

Good morning ... Let's start with what's obviously the biggest news of the past 24 hours: "OK" is officially a permissible two-letter word in Scrabble now. Total game-changer. 🚨

1 big thing: Final opioids bill takes shape

A woman who is homeless and addicted to heroin in Philadelphia. Photo: Spencer Platt/Getty Images

Congress' final opioids legislation will expand Medicaid coverage for addiction treatment and will not include a Medicare provision the pharmaceutical industry has lobbied for, according to Modern Healthcare's Susannah Luthi.

The details: Per Modern Healthcare, the House and Senate have agreed to lift the so-called "IMD exclusion" in their final opioids package, which will allow federal Medicaid money to flow to more treatment centers.

  • The bill will include Sen. Rob Portman's relatively expansive proposal, lifting the exclusion not just for opioid abuse but for all forms of addiction.

The pharmaceutical industry lost its push to include changes to the Medicare program, perhaps as part of a compromise on drug prices.

  • Earlier this year, Congress voted to put the pharmaceutical industry on the hook for more of the costs seniors incur when they fall into Medicare's "donut hole." Drugmakers had been aggressively lobbying lawmakers to reverse that policy as part of the opioids bill.
  • Democrats blocked the measure, Modern Healthcare reports, but it will likely come back up as a standalone bill later this year.
2. Drug prices aren’t going down

Photo: Joe Raedle/Getty Images

Drug prices are still climbing higher, despite President Trump’s promises of big and immediate discounts.

By the numbers: At the end of July, drugmakers had raised the price of brand-name products more than 4,400 times this year, compared with 46 price cuts, according to an Associated Press analysis. That works out to 96 increases for every reduction.

  • In the two months after Trump announced his administration's blueprint to lower drug prices, there were 16.5 price hikes for every price cut.
  • Both the median price hike and median price cut were smaller than usual during that period, suggesting the industry may be “self-policing” — but not enough to change the overall upward trajectory of drug prices.
  • “The rate of increases has slowed down, but prices haven’t decreased,” Stephen Schondelmeyer, a professor of pharmaceutical economics at the University of Minnesota, told AP.

Eternal caveat: Few patients pay the full sticker price for drugs. Discounts and rebates can hold insured patients’ costs flat even as list prices rise.

  • But sticker prices are still the starting point for those negotiations, so they’re an important part of the process — and uninsured patients do have to pay the whole thing.

Flashback: The illusion of lower drug prices

3. Gilead goes generic with hep C medicines

Starting next year, patients who have hepatitis C can get generic versions of Harvoni and Epclusa at a list price of $24,000, drug giant Gilead Sciences said yesterday. Both drugs still hold their patents until at least 2030.

Yes, but: Health insurers and government programs are already paying about $24,000 for the brand-name versions after rebates and discounts. So this won’t really affect how much the system as a whole will pay for hepatitis C drugs, Axios’ Bob Herman notes.

  • The generic drugs’ $24,000 price tags are about 75% lower than what Harvoni and Epclusa cost, and it will help people who face high copays and coinsurance based on list price.
  • AbbVie’s Mavyret has been crushing Gilead in sales, and these generics give Gilead a better shot of getting reimbursed by commercial insurers and Medicaid programs.
  • Harvoni and Epclusa generated $972 million of U.S. revenue in the first half of 2018 — a 72% drop from $3.5 billion in the first half of 2017.
4. WellCare's embrace of Bobby Jindal

Publicly traded Medicaid insurer WellCare Health Plans is paying former Louisiana Gov. Bobby Jindal $240,000 a year in cash and stock to sit on its board, Bob reports.

The big irony: Jindal, who refused to expand Medicaid in Louisiana, now stands to benefit from a company that operates in six states that expanded Medicaid.

Looking ahead: WellCare does not operate in Louisiana, which has since expanded Medicaid eligibility under Jindal’s successor, Gov. John Bel Edwards.

  • WellCare lost out on the state’s managed Medicaid contract several years ago, but Louisiana will be rebidding contracts in January 2019. Like all big insurers, WellCare almost certainly will throw its hat in the ring.
5. Clinical trials are a small part of R&D costs

Axios' Caitlin Owens flags a new JAMA study that says the median cost for key drug trials is $19 million — less than 1% of the average total cost of developing a new drug.

Why it matters: Pharmaceutical companies often justify high prescription drug prices by saying that developing these drugs is expensive. And clinical trials, which are the basis for FDA approval, are part of that process.

  • The total cost of developing a new drug has recently been estimated at $2 billion–$3 billion.

The details: Unsurprisingly, costs are higher for trials that last longer or include more patients. They also tend to be higher for trials that compare a drug to an existing standard of care, rather than to a placebo.