The next drug pricing target: pharmacy benefit managers - Axios
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The next drug pricing target: pharmacy benefit managers

Richard Saxon / Flickr Creative Commons

Pharmaceutical companies have a big target on their back. But there's also a push to shine more light on the intermediaries known as pharmacy benefit managers and how they fit into the national furor over drug prices.

Why it matters: These intermediaries are getting some of the money from drug sales, so they may be part of the chain that's leading to higher drug costs. Read on to find out what might happen.

David Balto, a former antitrust attorney with the Justice Department and Federal Trade Commission and a critic of pharmacy benefit managers, has been in touch with Democratic leaders about regulating the companies. Balto wouldn't say who those legislators were, but it's likely the 19 senators who wrote to President-elect Trump in December about drug prices, including Bernie Sanders and Elizabeth Warren, will be interested.

A possible bipartisan issue: A spokesperson for Republican Sen. Chuck Grassley, who hasn't been shy about taking a critical eye toward the health care industry, said the senator is "looking at all factors that might contribute to higher drug prices, including the role of PBMs."

Why now: Employers, unions and health plans hire pharmacy benefit managers to create pharmacy networks and negotiate down prices from drug makers. They've hit criticism in the past. Balto, who represents consumer groups and independent pharmacies, argues that pharmacy benefit managers "don't do anything other than build the network and move information and money."

Last year, pharmacy benefit managers were partially blamed for the rising price of EpiPens. Mylan, which makes the EpiPen, circulated a chart that said pharmacy benefit managers and other actors in the supply chain were eating big slices of the cost pie. Pharmacy benefit managers, in particular, pocket sizable sums of the drug rebates they negotiate. Hence, the higher price.

PBMs aren't having it: Mark Merritt, chief executive officer of the Pharmaceutical Care Management Association, the PBM lobbying group, told me that nobody was buying Mylan's chart or the testimony of Heather Bresch, Mylan's CEO. "It was a load of bull. She was trying to distract that she had made a simple pricing decision."

Merritt added: "Drug pricing is not well understood by just about anybody. You and your compadres in the press get it wrong all the time."

But drug pricing economics is extremely complex: Even experts at the Medicare Payment Advisory Commission, which advises Congress on health care policy, think pharmacy benefit managers are overly covert. "There is a real complexity in how PBMs operate and where they get their revenues," the commission said in a June 2016 report. "Because rebate amounts are proprietary, it is difficult to know with certainty."

Why this won't go away: New York Gov. Andrew Cuomo unveiled new regulations for the benefit managers this month, such as requiring them to be licensed and disclose reasons why certain drugs are promoted. If the federal government doesn't look into those companies, more states could.

Balto said pharmacy benefit managers operate in a "regulatory-free zone" and rules like those in New York will help. But Merritt countered that regulations will raise drug costs, and the New York measure could be illegal based on the Employee Retirement Income Security Act, the federal law that governs many pension and health plans.

Size and scope: CVS, Express Scripts and OptumRx dominate the pharmacy benefit manager space, processing about 75% of all prescription drug claims. Although they have relatively small profit margins, they are handling a lot of money. Express Scripts, for example, banked $2.5 billion in profits in 2015 off of $102 billion in revenue.

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World Bank president comments on Ivanka Trump's investment fund

Michael Sohn/ AP via pool

World Bank Group president Jim Yong Kim has released a statement about Ivanka Trump's involvement in a fund for women entrepreneurs to be administered by the World Bank (which Trump told our own Mike Allen about on Tuesday):

"The World Bank Group is working with partners on the details around creating a facility for women's economic empowerment, specifically through providing access to finance, markets, and networks. Typically, the governance of facilities we manage is decided among donors, and the secretariat sits within and is administered by the World Bank Group. We are very grateful for the leadership Ms. Trump and Chancellor Merkel have demonstrated on this important issue."

Axios' Dan Primack still has some questions about the fund, including whether Trump or adviser Dina Powell will be actively soliciting contributions while working in the White House.

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Courtesy of Gett

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One notable piece of the $200 million acquisition is that Juno is rescinding the restricted stock unit program for drivers it rolled out last summer, and will send a one-time payment to participating drivers. The RSU program was the differentiator that immediately attracted the most attention when Juno first opened up shop last year, advertising itself as the "anti-Uber."

Broken promise? The combined company won't roll out any equity program to drivers in the future, instead focusing on rewarding loyal drivers in other ways, such as cash bonuses, a Juno spokesperson confirmed to Axios via email. The company added that it realized even before the sale that implementing the program turned out to be more difficult than anticipated.

Opposing views: Shortly after the deal was announced, the Independent Drivers Guild in NYC expressed disappointment in the company's move, calling it a "bait-and-switch." Juno, on the other hand, maintains that while the equity compensation was important, it wasn't its only differentiator. "Juno is about the unique culture we created, about the way we treat drivers and riders, about our 24/7 live support, about a fair lower commission," the spokesperson said via email, adding that these aspects will "only get better."

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Evan Vucci / AP

Only 36% of people say they would vote to re-elect President Trump if the 2020 election were today, per a Fox news poll, compared to 55% who would vote for someone else.

Most have already made up their minds: 21% say they would definitely vote for Trump and 47% would definitely vote for someone else.

At this point in his first term, 52% said they'd vote to re-elect Barack Obama, and 31% said they'd vote for someone else.

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Carolyn Kaster / AP

President Trump has told the Washington Examiner he is "absolutely" considering breaking up the 9th Circuit, where judges have struck down both his travel ban and sanctuary cities order.

"There are many people that want to break up the 9th Circuit. It's outrageous.... Everybody immediately runs to the 9th Circuit. And we have a big country. We have lots of other locations. But they immediately run to the 9th Circuit. Because they know that's like, semi-automatic."

The circuit includes... Alaska, Arizona, California, Hawaii, Idaho, Montana, Nevada, Oregon and Washington and is by far the largest of the 13 appellate circuits.

Deep breath: It's not clear that splitting the court in two would be particularly helpful to Trump, or that this is something he's actually inclined to move ahead with.

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Data: Instagram; Chart: Andrew Witherspoon / Axios

Why it matters: Instagram announced the growth achievement the same day Twitter reported its Q1 earnings, where it touted a 2.8% quarterly increase in monthly active users to to 328 million — still less than half of the user base of Instagram, which is four years younger. Instagram rival Snapchat will also be taking note of these numbers, as its audience has dwindled since Instagram launched a copycat stories feature in August. Instagram's stories audience has increased so quickly that it surpassed Snapchat's total audience by nearly 40 million MAU a few weeks ago.

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Carolyn Kaster / AP

There's been a lot of buzz this afternoon about the White House supposedly promising to continue the Affordable Care Act's insurer payments. The reality is that it's only going to continue the payments "for now," per a White House official.
But that was enough to convince House Minority Leader Nancy Pelosi, who had clashed with Office of Management and Budget Director Mick Mulvaney over the issue, to dial down the threats of a government shutdown.
From the White House: "While we agreed to go ahead and make the CSR payments for now, we haven't made a final decision about future commitments."
From Pelosi: "Our major concerns in these negotiations have been about funding for the wall and uncertainty about the CSR payments crucial to the stability of the marketplaces under the Affordable Care Act. We've now made progress on both of these fronts ... Our appropriators are working in good faith toward a bipartisan proposal to keep government open."
Behind the scenes: Pelosi talked to White House chief of staff Reince Priebus this afternoon, who has been more conciliatory on the spending bill negotiations than Mulvaney.
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Wong Maye-E / AP

A senior White House official said the U.S. is considering adding North Korea to the list of state sponsors of terrorism, per Reuters.

The club: North Korea would be joining Iran, Sudan, and Syria. It was de-listed as a state sponsor in 2008 after agreeing to scale back its nuclear program.

Context: Defense Secretary Mattis, Secretary of State Rex Tillerson, DNI Dan Coats, and Joint Chiefs Chairman Joesph Dunford are briefing Senators in at the White House today on North Korea.

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Emily Pidgeon/TED

Odds are that the U.S. will remain a party to the Paris climate accord former Vice President Al Gore said Wednesday In a brief appearance at the TED conference in Vancouver.

"I think there is a better than 50-50 chance the Trump administration will decide to stay in the Paris agreement," Gore said. "I don't know that for sure."

Gore said there is a debate taking place tomorrow inside the White House with a decision set to be announced the third week in May before a G-20 summit. "I think the odds are they will decide to stay in Paris agreement. I certainly hope so."

The backdrop: Gore's comments came during an entire session devoted to the impact on climate change. Discussions ranged from more accurate pictures of the crisis to weighing radical solutions, including shooting chalk into the atmosphere in order to reduce the amount of sunlight heating the earth. That idea drew criticism from Gore and others.

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Carolyn Kaster/AP

Of the 556 seats that have to be nominated by President Trump and confirmed by the Senate:

  1. 530 seats are empty
  2. 20 Cabinet-level seats filled, 2 await confirmation, 1 failed
  3. 37 nominees awaiting confirmation
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The precedent: at the 100-day mark, Obama had 487 empty, George W. Bush 521, and Clinton 507

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Marius Boatca via Flickr CC

Only 1% of female founders use venture capital funding to back their businesses, according to an Ernst & Young (EY) and Women's Presidents' Organization (WPO) report, obtained by Fortune. The study looked at 430 women-owned businesses over their lifetime, including old and new companies, and found that:

  • 8% of the women are using personal savings instead of VC funding
  • 22% incurred personal debt
  • 18% received a loan from friends or family

Why not: Co-founder of EY's Entrepreneurial Women program said some women don't seek out venture capital funding in the first place and see it as a point of pride and a source of control — 100% ownership of the business.

Where it stands: 2.19% of all venture capital funding went to women last year, which is a smaller percentage than almost every year in the last decade.