Biden’s day in the sun

Aug 16, 2024

With Ben Leonard

Driving The Day

Kamala Harris speaks while Joe Biden looks on during an event.

Vice President Kamala Harris speaks while President Joe Biden looks on at an event to announce the lowering of costs for 10 prescription drugs for Medicare beneficiaries. | Francis Chung/POLITICO

A DRUG PRICING WIN — Surrounded by a friendly crowd in Maryland, Vice President Kamala Harris lauded the results of the first Medicare drug price negotiations Thursday before turning the stage to President Joe Biden to take a victory lap on his signature domestic policy achievement.

“Somebody who needs the medication — who may be suffering from a serious illness — that they would by themselves be able to negotiate against a big drug company to lower that price is virtually impossible,” Harris said.

The government will save $6 billion across the 10 drugs when new prices take effect in 2026, according to the White House, and beneficiaries could save roughly $1.5 billion in out-of-pocket costs.

But it’s not simple to evaluate just how successful the government was in negotiations with pharmaceutical companies, given confidential rebates previously negotiated by pharmacy benefit managers on behalf of health insurers.

The Biden administration repeatedly boosted the discount the negotiated prices represent relative to list prices, the costs charged by companies before discounts and rebates that don't represent what older Americans actually pay.

Rachel Sachs, a health law professor at Washington University in St. Louis, said the decrease from the list price could be consequential for some.

“Right now, a lot of patients’ cost-sharing is based on the list prices, and under the [Inflation Reduction Act], patients’ cost-sharing for the negotiated drugs will be based on the negotiated prices,” said Sachs, who recently worked as a senior adviser in the HHS Office of the General Counsel.

Several industry lawsuits against the program are ongoing, and new claims could be filed now that the prices have been finalized.

So far, CMS has won the cases heard in federal district courts. But that could change as they’re appealed — and many legal experts expect litigation to reach the U.S. Supreme Court.

PhRMA CEO Steve Ubl cautioned that, once the new prices go into effect in 2026, payers and PBMs will impose additional coverage restrictions on the negotiated drugs.

While the law mandates that insurance plans cover the drugs, insurers could place them on nonpreferred formulary tiers, which could lead to certain prescription drugs having higher copays.

With insurers exposed to new costs due to factors like the $2,000 out-of-pocket cap, they are likely to use tools like prior authorization to suppress costs, according to Benedic Ippolito, a health policy expert at American Enterprise Institute.

IT’S FRIDAY. WELCOME BACK TO PRESCRIPTION PULSE. We want to know what you make of the prices Medicare reached.

Reach out and send tips to David Lim (dlim@politico.com or @davidalim) and Lauren Gardner (lgardner@politico.com or @Gardner_LM).

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Industry Intel

A sign for Eli Lilly & Co. stands outside their corporate headquarters.

Drugmaker Eli Lilly is taking action against compounders who produce versions of their weight-loss and diabetes GLP-1 drugs. | Darron Cummings/AP

TENSIONS COMPOUND — Eli Lilly has sent cease-and-desist letters to providers of compounded weight-loss drugs, warning them to stop making and selling tirzepatide products and to confirm they’ve done so by today.

A company spokesperson told Prescription Pulse the letters were sent to “a number of med-spas, wellness centers and telehealth providers.”

A lawyer for the company argues in the letters that it’s illegal for compounders to sell “essentially a copy” of FDA-approved drugs like Mounjaro and Zepbound that are “commercially available.”

But the FDA still considers tirzepatide injections to be in shortage, according to the agency’s database. While all dosages of the drug are listed as “available,” that information comes from the manufacturer, and the FDA must assess whether the company is fulfilling back orders and otherwise able to meet demand, agency spokesperson Amanda Hils said.

As long as the FDA says there’s a shortage, “state-licensed compounders may continue filling prescriptions from licensed providers in whose judgment the compounded drug is appropriate for their patient,” Scott Brunner, CEO of the Alliance for Pharmacy Compounding, said in a statement.

What’s next: Lilly’s spokesperson suggested government entities should do more to stem the flow of compounded GLP-1s to patients.

“Lilly is exploring all options to protect people from illegal, unsafe, untested and unproven drugs, but our efforts alone are insufficient,” the spokesperson said in a statement. “We call upon state and federal regulators to do the same in order to stop the mass-manufacture, marketing, and sale of unapproved drugs.”

Lilly has sued a number of entities selling compounded tirzepatide products, arguing they’ve misled the public by advertising their wares as equivalent to their FDA-approved drugs when they’re not evaluated by regulators.

LYKOS SLASHES STAFF — A week after the FDA rejected Lykos Therapeutics’ application for MDMA and talk therapy as a post-traumatic stress disorder treatment, the drugmaker is cutting 75 percent of its staff, Erin writes.

Rick Doblin, who pioneered the push to bring MDMA-assisted therapy to the public, is also leaving the company's board.

FDA outside advisers who evaluated Lykos’ plan to treat post-traumatic stress disorder with MDMA and therapy cited concerns about missing safety data in Lykos’ trials, allegations of trial manipulation and the potential risk for misconduct among therapy practitioners.

What’s next? Dr. David Hough, a former Janssen executive, will lead Lykos’ regulatory efforts. Before the FDA’s decision, Lykos said it had planned to create more oversight, including establishing an independent advisory board of experts in corporate and medical ethics, innovation, psychiatry and military and veteran health.

In Congress

TOP HOUSE REPUBLICANS PRESS CTP — Rep. Morgan Griffith (R-Va.), chair of the House Energy and Commerce Oversight Subcommittee, and Rep. Brett Guthrie (R-Ky.), chair of the Health Subcommittee, want the Government Accountability Office to probe how the FDA’s Center for Tobacco Products spends its money amid a backlog of tobacco product applications, Ben reports.

It’s the latest in attacks against the agency from Republican lawmakers, who have been critical of its pace at addressing pending premarket tobacco product applications.

“It is our view that the CTP has made little progress to implement some of its core responsibilities,” Guthrie and Griffith said in a letter obtained by POLITICO.

GAO spokesperson Sarah Kaczmarek said the agency has received the request and is going through a process to decide whether it will respond to the questions. The process can take weeks, she said.

“We take congressional inquiries seriously,” an FDA spokesperson said in an email. “Ensuring new tobacco products undergo premarket evaluation by FDA is a critical part of our mission to protect the public health, particularly youth, and to reduce tobacco-related disease and death.”

Tobacco

FDA TRIES TO BOOST E-CIG IMPORT TRACKING — The Biden administration is taking steps to crack down on illicit imports of e-cigarettes by allowing U.S. customs agents to more easily tell whether products comply with FDA regulations.

Under a proposed rule released Thursday, the Department of the Treasury and the FDA want importers of e-cigarette products to file an associated product tracking number into a system maintained by the U.S. Customs and Border Protection.

Pharma Moves

The National Association of Accountable Care Organizations announced its board selected Jeff Micklos as its next president and CEO. He currently works as the executive director of the Health Care Transformation Task Force.

WHAT WE'RE READING

Even when the FDA recalls a medical device, consumers often keep using the products, raising questions about how the agency protects the public, KFF Health News reports.

If Medicare expanded coverage of anti-obesity drugs, annual Part D spending could jump an estimated $3.1 billion if 5 percent of newly eligible patients were prescribed such a drug, Benedic Ippolito and Joseph Levy write in Health Affairs.

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Document Drawer

The FDA published a preliminary assessment of efforts to meet voluntary sodium reduction targets for food.

The White House Office of Information and Regulatory Affairs completed a review of a final rule that would increase the minimum verification age for sales of tobacco products from under 27 to under 30 and increase the minimum age for facilities with vending machines that sell tobacco products from 18 to 21 years of age.

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