Generally, I try to reserve Inflection Point for breaking news, and it’s tough to justify highlighting a Wall Street Journal editorial in this slot. Bear with me.
The WSJ editorial board is not a great arbiter of sober dialogue, but they do have a keen eye for issues onto which they can slap their general worldview. And there is an audience for that analysis, so it’s always worth seeing what topics the WSJ is trying to elevate.
Today, the eddy board is shining a spotlight on a set of proposed changes to Medicaid’s best-price rule. The CMS changes would reshape prices for a huge chunk of the pharmaceutical market. Not just the Medicaid market, but any market where the price is linked to Medicaid — think 340B — would also be implicated.
The rule itself dropped in May — to some consternation — but opposition around it has become more high-profile over the past month. There was this letter from Republican Senators last month, and this letter that hit last week from House Republicans. Both objected to the “stacking” element of the rule.
That’s not the only reason to be concerned about the proposed rule.
The WSJ editorial today rests its argument around concerns of gene therapy companies that the proposed rule would make it easier to create backdoor price controls, relying heavily on the stance of the Alliance for Regenerative Medicine. (ARM, BTW, also just put out a great issue brief on barriers to gene and cell therapy adoption in Medicaid.)
Anyway: the WSJ eddy board might not be “Inflection Point” material, but the proposed rule around Medicaid best price sure is.
Sometimes, reading press releases from PBMs is like dealing with an evil genie. You can make a wish, but you can never be sure how it will be granted. (e.g. “Genie, I want power!” … and the wisher immediately gets struck by lightning.)
The pharmaceutical market has been wishing for transparent, fee-based approaches, so Express Scripts has introduced a new pharmacy network based around a cost-plus model, where medicines are available at cost, plus 15%. Wish granted. The press release is here.
The question is whether there is an evil-genie twist here.
Bloomberg frames this as Express Scripts taking a page from the Mark Cuban Cost Plus handbook by going to a cost-plus approach, but unlike Cuban’s model, the new network isn’t designed to change the game for patients (Express Scripts told Bloomberg that patient OOPs would probably be unchanged). The theory, I suppose, is that this would be better for pharmacies. Express Scripts said it expects most pharmacies to sign on.
But, at the end of the day, this is an option that’s presented to health plans, and it’ll interesting to see if there’s any adoption at all. There is certainly room for all kinds of evil-genie loopholes. Generic drugs will be cheaper, but will plans forfeit rebate dollars or otherwise get rolled on brands? Will Express Scripts monkey with the price benchmarks to put their thumb on the scale? (A recent 3 Axis Advisors report suggests that price benchmarks are less consistent than you’d think.)
To be sure: I may be overly cynical here, and I’d be lying if I told you that all the dynamics at play here were plainly obvious to me. If it turns out that this becomes a core part of the Express Scripts model and plans adopt it, I really hope someone flags that, and I’ll happily correct the record and drop all of the evil-genie silliness.
That said, Antonio Ciaccia’s reaction, via LinkedIn was “Lol buyer beware,” so I’m not sure that I’m all the daring in my skepticism.
The American Medical Association thinks that payers should cover obesity meds. I don’t know that the AMA’s vote in support of coverage is going to move the debate, but it feels like there is a lot of momentum around the idea.
I’m a sucker for wildly impractical, unimplementable solutions to health care spending issues (my personal favorite remains the HealthCoin), so I read with interest this STAT First Opinion on patent buyouts. It’s not clear that such an approach is practical, let alone wise, but we should probably celebrate out-of-the-box ideas, even if they’re not great ideas.
Michigan is looking to roll back a law that exempts pharma companies from certain lawsuits. It’s not clear that the move will have huge practical effects — Michigan is the only state with such a law on the books — but it’s getting attention.
Bernie Sanders declared victory in his battle to hold up NIH Director Monica Bertagnolli’s confirmation in return for drug-pricing concessions. “I think we did send a message,” he told the Washington Post. On the one hand: it’s not clear that Sanders extracted much of a concession from the White House. On the other hand: I get the feeling the debate about the NIH’s role in drug pricing is far from over.
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