You are here

Providers poised to pounce on midterm results for pharma beatdown

The Democrat-led House of Representatives and the Trump administration are poised to square off against the pharmaceutical industry as they look to rein in drug prices, and providers are more than willing to join the fight against their common adversary.

Democrats gained control of the House in the midterm elections Tuesday night for the first time in nearly a decade, while the Republicans retained the Senate majority. A split House and Senate likely means that most of the sweeping policy changes related to a complete overhaul of the Affordable Care Act or implementing a single-payer system are off the table until 2020. Instead, lawmakers, the Trump administration and healthcare lobbyists can focus on areas like drug pricing, transparency and cost control, experts said.

"Now that Democrats control the House, they will push harder on prescription drug costs," said Tracy Carter, vice president of government relations for Cleveland, Ohio-based MetroHealth. "(HHS Secretary Alex) Azar is lasered-in on that. They believe it is out of control and there has to be a better solution for the patient. We in the provider community would like to be in the room to talk about that."

The administration has made some strides on the pricing and transparency front. Although, not all of President Donald Trump's promises have come to fruition.

Late last month, Trump announced a proposal to tie prescription drug rates paid by Medicare Part B to the lower prices paid in other advanced countries. The mandatory proposal would save the government and Medicare beneficiaries an estimated $17.2 billion over five years.

About a week later, HHS said it would move ahead with its plans to cap the prices drugmakers can charge hospitals that participate in the 340B drug discount program.

In his drug pricing blueprint, Trump advocated bolstering competition by introducing more generic and biosimilar drugs, allowing private plans to negotiate discounts for Medicare beneficiaries, creating incentives to lower list prices and reducing consumers' out-of-pocket spending. But the administration has walked back its promise to allow the government to negotiate drug prices directly with manufacturers.

While the House may hold more hearings on drug pricing and how the Trump administration's proposals have fallen short, those haven't materialized into price controls, Height Capital Markets wrote in a note to clients.

"I think they can all agree on beating up pharma, and pharma never seems to have too much of a problem with that, as long as not too much happens," said Drew Altman, president and CEO of the Kaiser Family Foundation.

The talk about collaborating to curb drug prices may be just that—talk, Altman said.

"I think they'll have more rhetorical agreement then agreement on anything significant," he said. "That will break down into the usual partisan logjam, and in a presidential campaign time, just resistance to the idea of anyone giving anyone else a victory."

A Democrat-controlled House gives generic drug manufacturers more support to help pass the Creates Act, which would benefit generic drugmakers, according to Height Capital Markets. Meanwhile, branded pharmaceutical manufacturers would likely have to pay a higher price to delay the Medicare Part D out-of-pocket spending cliff that lawmakers must address by April 2019 as well as scale back Part D coverage gap discounts, Height wrote.

Rep. Lloyd Doggett has been one of many critics of Trump's drug pricing strategy claiming that it hasn't gone far enough. Doggett, who helped found the House Democratic Affordable Prescription Drug Caucus, will be positioned to influence that strategy as the newly elected head of the House Ways & Means Committee's health subcommittee.

There may be more pressure to tweak the drug rebate model, given that a third of drug spending is in the pharmaceutical supply chain, said Ben Isgur, who leads PwC's research institute.

But Wall Street didn't seem too concerned about the threat of drug pricing overhauls as the pharmaceutical stocks increased Wednesday. Shares of Gilead, Pfizer, AbbVie and Amgen stock traded up more than 3%.

On the Medicaid expansion front, Utah, Nebraska and Idaho are on track to expand the public health insurance for low-income Americans. And Democratic victories in Wisconsin, Kansas and Maine gubernatorial races set the table for Medicaid expansion in those states. The six states could potentially add about half a million beneficiaries to the rolls.

"If there was any winner in the election, it was healthcare coverage," Isgur said. "It's no surprise. Many voters said that healthcare coverage is not affordable so they have to find other ways to get it through Medicaid or the exchanges."

States still have a lot of control regarding Affordable Care Act implementation through skimpier association health plans, reinsurance programs and Medicaid work requirements.

MetroHealth's Carter said she expects Medicaid work requirements to be implemented in Ohio soon, following the lead of others states like Wisconsin.

"We advocate against any restriction that could prevent individuals from accessing coverage in a timely fashion," Carter said.

Medicaid expansion is vital in easing the burden of uncompensated care on the system, said Ceci Connolly, Alliance of Community Health Plans' president and CEO.

"We are hopeful the new Democratic House will work to ensure we do not see further erosion of the Affordable Care Act and will work constructively with the administration to tackle high drug prices," Connolly wrote in an email to Modern Healthcare.

The Association for Community Affiliated Plans lauded the prospect of expanding Medicaid coverage.

"Expanding health coverage improves access to care, leads to better health outcomes, lowers uncompensated care for healthcare providers, and helps people with low incomes stay out of crushing medical debt," ACAP CEO Margaret Murray said in a statement.

Medicaid expansion and bolstering MetroHealth's managed care programs have helped the system trim nearly 30% in spending as well as boost outcomes, according to Carter.

"Coverage works," she said.

While Congress likely won't be able to muster the political will to overturn the ACA, the Texas-led lawsuit is a "wild card" looming over the industry's head, said Chip Kahn, the president and CEO of the Federation of American Hospitals.

Twenty Republican state attorneys general, led by Ken Paxton of Texas, are seeking a preliminary injunction to halt enforcement of the law effective Jan. 1. They argue that the ACA is unconstitutional because it no longer falls under Congress' taxing authority since the GOP eliminated the individual mandate penalty.

Still, the underlying forces of the healthcare industry remain. Healthcare costs are increasing significantly faster than inflation, which is eating into state budgets, business profits and consumer spending. Those forces combined with healthcare outsiders creeping into the picture will exert more pressure to develop a more efficient system.

Medicare spending is increasing at an unsustainable pace, said Michael Abrams, managing partner of healthcare consultancy Numerof & Associates.

Debate related to which political party has an edge distracts from what should be the ultimate goal—addressing the core factors of high healthcare costs and lagging outcomes, he said.

"If we just talk about partisan advantage we will continue to spin our wheels and two years from now we will not be any closer to a solution," Abrams said. "We will be closer to the failure of our healthcare system."

Let's block ads! (Why?)

Original URL: 
https://www.modernhealthcare.com/article/20181108/NEWS/181109927