Axios Vitals

A briefcase with a red cross on the front.

February 10, 2017

Good morning and happy Monday. We've got your first look at how much money the health insurance giants spent on those failed mergers and we'll help you get smarter on the latest huge drug price hike. Meantime, the Obamacare town halls are getting louder and rowdier — just in time for a congressional recess that could be full of them.

The price tag of those failed insurance mergers: $1.5 billion

Aetna didn't get to merge with Humana, and Anthem didn't get to merge with Cigna, but at least they're $1.5 billion poorer for it. That was the total amount of fees they paid to the lawyers and investment bankers who tried to help them combine, Bob Herman found after adding up all the fees they disclosed in Securities and Exchange Commission filings. Bob has been working on this piece for quite a while, and it's a good look at just how much the companies sank into the efforts — and how all of that spending affects consumers and investors.

Among the firms that got the money: banks like Goldman Sachs, Citigroup and Credit Suisse, and law firms like White & Case and Jones Day. It started with summer 2015, when the proposed mergers were announced, and ended with the court rulings that slapped them down. Except it's not really over for Anthem, since it's going to appeal the ruling against the Cigna merger. Read Bob's story here.

What we're learning from the Obamacare town halls

You've probably seen the viral video of a Florida GOP official getting shouted down this weekend at a town hall meeting after trying to revive the old, false rumor about Obamacare "death panels." (Here's what I wrote about it on Saturday.) There's been a lot of pro-Obamacare eruptions at Republican town halls lately, so here's what we're learning from them:

  • Republicans don't have a lot of ready answers when they're asked how sick people will get health coverage if Obamacare is repealed. "That issue will have to be addressed in some form or manner, but it hasn't been addressed yet," Rep. James Sensenbrenner said at a town hall meeting in Wisconsin on Saturday.
  • The Florida Republican official who made the false "death panels" claim has a history of spreading conspiracy theories and racist jokes, per the Washington Post's David Weigel, so don't take him as evidence that mainstream Republicans are reviving the claim.
  • But Rep. Gus Bilirakis did try to support him by saying he meant the Independent Payment Advisory Board, CNN's Eric Bradner reports.
  • House Speaker Paul Ryan has called a "rationing board," and that line of attack is still in mainstream use, even though law specifically says the board can't ration health care. Bilirakis has written that the board's payment cuts could cause "de facto rationing."
  • Rep. Jason Chaffetz didn't do himself any favors by suggesting the protesters at his town hall last week were paid, without presenting any evidence.
  • That said, it's not as if there's no organizing to generate a big turnout. Liberal volunteers are spreading the dates and locations of future town halls through activities like the Town Hall Project.
  • Republicans will have to get ready for many more of these eruptions — because the House and Senate will be on recess next week, and there will be more town halls and "office hours" throughout that week.

Repeal watch: Miller promises Trump plan "very soon"

White House senior policy adviser Steve Miller told Face the Nation yesterday that "we have a plan that we're putting into motion now" on President Trump's Obamacare replacement, and that we should see the plan "very soon." The only specific piece he mentioned was an expansion of health savings accounts, but he insisted that "we're very far along on this. Farther than many people realize."

Reality check: It could be true, but remember that Trump has claimed before that his plan was almost ready to go, and that he'd release the plan as soon as Tom Price was confirmed as Health and Human Services secretary — which has already happened.

The repeal-first crowd: Jonathan Swan reports that the House conservatives who met in New York last week are united in their calls for a sweeping, quick Obamacare repeal vote. His source says there was a "consensus that we need to move forward with a repeal vote that is at least as robust as what we have previously passed in 2015 and that we should move quickly." That's important because it's a big block of Republicans who may not be as interested in replacement as the rest of the party.

While you were weekending ...

  • New Jersey Gov. Chris Christie told CNN's State of the Union that his state's Medicaid expansion has helped his constituents and "I want them to continue to be able to have coverage" — but added that "there can be lots of different ways that that can happen."
  • Budget expert Stan Collender writes in Forbes that Republicans' two-step plan for repealing Obamacare and passing tax reform through two budget "reconciliation" bills may be falling apart.
  • The Wall Street Journal reports that HHS Secretary Tom Price sent this note to agency staffers shortly after he was sworn in Friday: "Your efforts will ensure that we advance positive changes to our health care system to improve its affordability, accessibility, quality, and responsiveness."

What to do about the Marathon price hike?

The latest sky-high drug price hike comes from Marathon Pharmaceuticals, which is going to charge a list price of $89,000 for an old drug that will be used to treat Duchenne muscular dystrophy. There's been a lot written about it over the last few days, but so far, no official comments from President Trump — who's still on a tear about rising drug prices — or Republicans and Democrats in Congress who have focused on the issue.

Most analysts agree it's not on the same level as Martin Shkreli — who jacked up the price of an old drug without adding any new uses for it — but it's not good. "This is the kind of thing that gives the entire industry a black eye, even though it's justified under the law," Paul Howard of the Manhattan Institute, who has done a lot of work on medical innovation, told me. Here are the fixes he suggested:

  • Give the Food and Drug Administration the option of approving cheaper medications that have already been approved in other countries with high standards. (He wouldn't make the approvals automatic, as Ted Cruz has suggested.)
  • Make more use of "real-world data" to speed the process of bringing other alternatives to market.

The best one-stop read about Marathon

Drug pricing is so complicated it'll make your head hurt, but Forbes' Matthew Herper makes it sound easy. His take on the Marathon price hike: It's a case where they did it because the law allows it. Yes, Marathon had to do the clinical trials to get the Food and Drug Administration's approval to market the drug in the United States. But a 6,000 percent price hike? It's "absurd," Herper writes, and can't be justified just because drug companies have to jump through all those hoops for a drug that was already available in other countries at way lower prices.

  • Pharmaceutical Research and Manufacturers of America spokesman Robert Zirkelbach, however, calls it "the first broad-based, FDA-approved medicine that is giving children with this rare genetic disorder higher quality lives and more years with their families."

What we're watching this week: Senate Finance Committee confirmation hearing for Seema Verma, Thursday; the release of the HHS rule to stabilize the Obamacare markets, date unknown.

Thanks for reading, and let me know what you're hearing or what you want to know more about: [email protected]