Time running out for PBM reform in Congress

Nov 27, 2024

Driving The Day

Rep. Buddy Carter (R-Ga.).

Rep. Buddy Carter would like to see PBM reform attached to a likely telehealth extension. | Francis Chung/POLITICO

LAME-DUCK PBM UPDATE — Lawmakers pushing to regulate pharmacy benefit managers’ business practices face headwinds in this Congress’ final weeks.

The pharmaceutical industry, along with employer groups and insurers, has made an aggressive push to rein in PBMs, which negotiate drug costs for insurers and employers. Over the past year, the industry’s biggest trade group, PhRMA, has spent $23 million on lobbying and more on advertising, including major online and television campaigns.

Pending House and Senate bills would increase transparency of PBM practices, “delink” the reimbursement that PBMs receive from the drug list price and ban the organizations from charging plans more than what they reimburse pharmacies for drugs. Overhauling PBMs’ business practices has broad bipartisan support, with lawmakers arguing PBMs drive up drug costs.

But lawmakers aren’t projecting optimism that a deal will get done ahead of government funding expiring Dec. 20. Lawmakers appear headed for a short-term stopgap spending deal, which would not bode well for a broader health care package, including PBM legislation.

“Everybody wants to do something about PBMs, but everybody is afraid to do it,” said Rep. Larry Bucshon (R-Ind.), who’s retiring from Congress at year’s end. He said that the PBM’s lobbying, warning that premiums and prices could rise, have made lawmakers “skittish.”

“I don’t think any of that is true, but I think it is a pretty effective lobbying effort,” Bucshon added.

They’re also pointing fingers across the aisle.

Senate Finance Committee Chair Ron Wyden (D-Ore.) said the situation is “fluid” but that “the ball is in the Republicans’ court.”

“I haven’t seen them tip their hand yet,” Wyden said.

Sen. Bill Cassidy (R-La.), the ranking member of the Health, Education, Labor and Pensions Committee, said it comes down to Senate Majority Leader Chuck Schumer’ s priorities.

“We just spent a heck of a lot of time on nominees that we could have spent on … PBM things and other things,” Cassidy said.

One potential path forward: Rep. Buddy Carter (R-Ga.) is angling to get PBM reform tied to a likely telehealth extension as a way to pay for it.

PBMs’ take: The PBMs have responded with a lobbying campaign of their own, arguing their clients like the service they provide and that new regulation would limit their ability to negotiate discounts.

PCMA, a trade group that represents PBMs, said there are better ways to tackle high drug costs, including patent reforms “that score significant savings and will deliver lower drugs to patients.”

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Trump Transition

Stanford University Professor of Medicine Jay Bhattacharya

Jay Bhattacharya, President-elect Donald Trump's choice for NIH director, has said that the agency needs a major overhaul. | Francis Chung/POLITICO

BHATTACHARYA PICKED TO LEAD NIH — President-elect Donald Trump chose Stanford University physician and economist Jay Bhattacharya to head the National Institutes of Health late Tuesday, POLITICO’s Erin Schumaker reports.

“Jay and RFK Jr. will restore the NIH to a Gold Standard of Medical Research as they examine the underlying causes of, and solutions to, America’s biggest Health challenges, including our Crisis of Chronic Illness and Disease,” Trump said in a statement announcing his choice.

Bhattacharya, 56, is known for his controversial views during the Covid-19 pandemic. He’s called for a major overhaul of the research agency and accused former NIH leaders Francis Collins and Anthony Fauci of suppressing scientific debate and research during the pandemic.

“The rot, having accumulated over decades, was plain for all to see,” Bhattacharya wrote earlier this month on the British news and opinion site UnHerd in an endorsement of Robert F. Kennedy Jr., Trump’s pick to lead HHS. Bhattacharya is the latest in a series of contrarian health figures Trump has tapped for top health administration roles.

The pick comes as an appetite grows among Republicans in Congress to overhaul the agency, including downsizing it, further scrutinizing what the agency is funding and assigning it more political appointees.

If Bhattacharya is confirmed by the Senate as NIH director, he would oversee the nearly $50 billion agency, which comprises 27 institutes and centers and is the largest funder of biomedical research in the world.

O’NEILL CHOSEN FOR TOP HHS JOB — President-elect Donald Trump selected Jim O'Neill, who is close to early Trump supporter Peter Thiel, for the No. 2 job at HHS, POLITICO’s David Lim reports.

O’Neill was in the mix to be Trump’s FDA commissioner in his first term and has ties across Silicon Valley. He previously served as HHS’ principal associate deputy secretary during the George W. Bush administration and was the former acting CEO of the Thiel Foundation.

O’Neill argued in 2014 that medicines should be approved once their safety is reviewed by the FDA rather than requiring effectiveness data.

In a post on X Tuesday, O’Neill said that he’s “excited to support [Robert F. Kennedy Jr.] and the great people of [HHS] to make America healthy again.”

POLITICO reported Monday that Trump was eyeing O'Neill for the job.

AROUND THE AGENCIES

The injectable drug Ozempic is shown

CMS' classification of obesity as a disease has led the Biden administration to propose that Medicare should cover weight-loss drugs like Ozempic. | David J. Phillip/AP

WHERE’D THAT IDEA COME FROM? The Biden administration’s move to require Medicare to cover weight-loss drugs rests on an untested, technical legal theory.

CMS’ close reading of the law: CMS classified obesity as a disease, leading to its reinterpretation of a 2003 law barring Medicare coverage for weight-loss drugs. The agency has long held the ban on “[a]gents when used for … weight loss” to apply broadly, regardless of whether used for obesity or general weight loss. Now it’s saying that’s “an outdated medical understanding.”

The determination doesn’t apply to the same drugs when they’re used to treat patients who are overweight — just those with obesity, since “overweight is not recognized as a disease,” the agency wrote in its proposal Tuesday.

It’s unclear whether that reading would hold up in court or whether the Trump administration will finalize the proposal.

What is clear, though, is that lobbyists have been ramping up their push for the agency to make a similar determination this year. Dozens of health advocacy groups and providers pushed HHS to classify obesity as a chronic condition that popular GLP-1 weight-loss drugs could treat. The Obesity Action Coalition, the first signer on a letter pushing for such a change, has received significant contributions from GLP-1 maker Novo Nordisk.

Manatt Health published a paper commissioned by Pfizer last year that made the case that if CMS classifies obesity as a chronic, complex disease, the agency can recognize GLP-1 drugs as anti-obesity treatments — which they said can then be covered under Medicare Part D.

The proposal is expected to cost nearly $40 billion over a decade.

DEMS’ CONCERNS — The Biden administration’s weight-loss drug proposal is drawing scrutiny from progressives, who argue it wouldn’t address drug prices.

“The good news is that HHS recognizes that vitally important anti-obesity medicines like Wegovy and Zepbound should be made available to all Americans,” said Senate HELP Chair Bernie Sanders (I-Vt.) in a statement. “The bad news is that unless Medicare demands that Novo Nordisk and Eli Lilly substantially reduce the prices for these anti-obesity drugs, Medicare premiums for all seniors would skyrocket.”

Rep. Lloyd Doggett (D-Texas), ranking member of the House Ways and Means Health Subcommittee, raised similar concerns.

“President Biden has the authority to reduce drug prices now for weight-loss drugs and for drugs developed at taxpayer expense,” Doggett said, referencing his support for so-called march-in rights, or seizing the patents of certain high-priced medicines. “Without addressing price gouging, today’s announcement only raises false hopes for many who need access to weight loss drugs.”

BARIATRIC SURGERY VS. GLP-1s — Patients undergoing weight-loss, or bariatric, surgery were more likely to lose 15 percent of their body weight within a year versus those on popular weight-loss drugs, according to new data from Epic Research.

Bariatric surgery — invasive procedures that often entail reducing the size of a patient’s stomach — was associated with more than three-quarters of patients losing 15 percent of their body weight within a year compared with nearly half for one type of GLP-1 and just under a third for another. The researchers examined data from more than 186,000 patients nationwide.

The procedure can be costly upfront, but the drugs might need to be taken indefinitely.

Bariatric surgery tied to significant weight loss

The findings are likely relevant for insurers, who are split on covering the pricey and popular drugs known as GLP-1s and policymakers weighing government-backed insurance coverage.

In Congress

FINAL REPORT DUE — The House Select Subcommittee on the Coronavirus Pandemic will mark up the committee’s final report next week, Chair Brad Wenstrup (R-Ohio) said Tuesday.

The report will address Covid-19 origins, vaccine development and other pandemic-related issues after staff reviewed more than a million pages of documents and conducted dozens of interviews and depositions.

Names in the News

Rachel Adams is joining Polsinelli’s health care practice as a shareholder. She was previously at Katten Muchin Rosenman.

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