October 10, 2023
Back at it, gang. We have a look at how the latest legal challenge to Medicare drug price negotiations could force a court to grapple with the very definition of what's a drug.
- Plus there's an update on next steps for the Senate Finance Committee's PBM bill.
- With the House in for the speaker election and the Senate out, we'll be back in your inboxes when they've figured this speaker thing out.
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1 big thing: IRA and the definition of a drug
Illustration: Sarah Grillo/Axios
Novo Nordisk, the latest drug company to challenge the Inflation Reduction Act's Medicare negotiation provisions in court, is making a legal argument that could force a judge to grapple with the very definition of a drug, Axios' Caitlin Owens reports.
Why it matters: Any of the nine pending lawsuits could potentially stop the implementation of the law, regardless of whether they're challenging its constitutionality or the way the administration has implemented it thus far.
But Novo Nordisk argues that "CMS has substantially increased the number of drug and biological products subject to price controls, including products that do not satisfy the selection criteria dictated by Congress."
- It's referring to the inclusion of six Novo insulin products as one drug on CMS's list of the first 10 drugs subject to negotiation.
- "CMS has violated these clear and express mandates by treating all of a manufacturer's drug or biologic products containing the same active ingredient or active moiety as a single 'product' and sweeping them together into the price 'negotiation' process," the lawsuit adds.
The big picture: This fits with an emerging pattern in which drug companies argue not only that the IRA violates the constitution, but also that CMS is implementing it unlawfully.
Yes, but: Congress also restricted judicial review of the agency's actions in the law, meaning Novo has to overcome that legal hurdle before a judge weighs the merits of its argument about grouping multiple products together.
- "Courts are loathe to generally set aside something that Congress carefully crafted, and it's not like this is an aberration of limiting judicial review of certain decisions," said Zachary Baron, associate director of the Health Policy and the Law Initiative at Georgetown University's O'Neill Institute.
What they're saying: "If you define 'what is a drug' too narrowly, a company can make tiny shifts, declare it a 'new drug' and escape Medicare negotiations entirely. In fact, that is a classic strategy, often called evergreening," said Robin Feldman, a professor at the University of California Law San Francisco.
- In its lawsuit, "the company left out the key part of the statute. That's what the court will focus on interpreting," Feldman added.
- She pointed to language directing HHS to "use data that is aggregated across dosage forms and strengths of the drug, including new formulations of the drug, such as an extended release formulation, and not based on the specific formulation or package size or package type of the drug."
A spokesperson for CMS said the agency is unable to comment given the pending litigation, but pointed to guidance for the negotiation program from earlier this summer that defends its position.
2. Next steps on Senate Finance PBM bill
Illustration: Natalie Peeples/Axios
Senate Finance Committee leaders Ron Wyden and Mike Crapo released the text of their PBM bill at the end of September, so Peter caught up with Wyden to talk about next steps and odds of getting across the finish line.
Driving the news: Asked about folding the measure into an end-of-year package, Wyden told Axios: "We're going to pull out all the stops to pass it. I've talked about it with Leader Schumer on many occasions."
What's next: Beyond the policies already in the bill, which center on "delinking" PBM compensation from the price of a drug, we obtained a letter from Wyden and Crapo to the Congressional Budget Office laying out additional provisions that could be added to the bill.
- The letter is from July, but these policies are still on the table. They include pushing back on PBMs' practice of steering patients to pharmacies they own, new reporting requirements on PBM-owned pharmacies and efforts to increase access to low-cost biosimilars and generic drugs.
Between the lines: The Finance bill is just a start, because leadership will likely have to pick and choose among its provisions and those in PBM bills from the HELP and Commerce Committees, not to mention the House.
- But the projected savings on the table will be attractive options as Congress looks to pay for items like community health centers. The CBO found the Finance bill would save about $1.7 billion over 10 years.
- Wyden downplayed the differences between the different committees. "All of the committee bills on PBMs are moving in the same direction," he said.
3. Catch me up: Obesity drug costs, MIPS complaints
Illustration: Annelise Capossela/Axios
Here's what caught our eye over the weekend:
1) Obesity drug coverage: At current prices, anti-obesity medicines would cost Medicare more than the government would save from reducing other health care spending and increase the deficit over the next decade, the CBO said in a new analysis.
2) Medicare quality program: Medicare's Merit-Based Incentive Payment System, or MIPS, was supposed to incentivize high-quality care. But physicians say it's become unduly burdensome and hasn't delivered as promised.
3) DEA prescribing rules: The Drug Enforcement Administration is extending telehealth flexibilities that allow the prescribing of controlled substances without an in-person visit through the end of 2024.
4) Genetic info compromised: Genetic testing company 23andMe said that it believes some of its users' data was compromised in a credential-stuffing attack and is being circulated on the dark web.
✅ Thank you for reading Axios Pro Policy, and thanks to editors Adriel Bettelheim and David Nather and senior copy editor Bryan McBournie.
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