I keep promoting a big Minnesota state report on 340B that keeps not appearing. Per statute, something was supposed to go from the state’s Minnesota Department of Health to the legislature on Friday, and I’m going to spend some time today figuring out if it exists and who has a copy.
If you’ve seen it, my DMs are open, as they say.
Earlier this month, J&J dropped a bombshell lawsuit against the government arguing that it had a fundamental right — and, increasingly, a responsibility — to alter the way that it dealt with drug discounts under the 340B program.
Last week, Lilly joined the fun with its own suit against the same government agency — HRSA — raising similar concerns.
At the heart of both cases are plans by the drugmakers to switch to a model in which they would offer the 340B rebate to providers who dispense medicines under the program after the providers show proof that the 340B script didn’t also receive a Medicaid discount or IRA-related price concession.
Once that proof is provided, which the manufacturers said is straightforward, they’d immediately provide a rebate down to the 340B price.
But HRSA has said that the move requires the government’s permission, permission that they won’t give. Hence the lawsuits.
As with the J&J case, if you’re into this, you should just read the filing.
One interesting aside here: in its statement announcing the new suit, Lilly played with the language around what it’s doing. In general, the approach Lilly wants to implement has been called a “rebate model,” to describe how providers will be paid (via rebate).
But Lilly has tweaked that verbiage, and it’s calling its approach a “340B cash replenishment model,” emphasizing a different perspective on what Lilly will be doing: providing cash directly to covered entities as soon as a 340B claim is identified and validated.
It gets away from the vagaries of “rebate,” offers a contrast to the opaque “product replenishment model” that is now standard practice, and makes (somewhat) clearer that this is about making providers whole, quickly … in return for the additional transparency.
I like the tweak, though I’m still concerned that the biggest obstacle to a better 340B system is the impenetrability of the existing one. Fortunately, the courts have generally done a pretty good job of getting to the heart of the 340B law. Here’s hoping that continues.
VALUE IN THE RFK JR ERA, PART ONE**:
I mentioned on Friday, in my “nine thoughts” post on the Robert Kennedy, Jr. nomination,*** that his nomination should prompt a reckoning in how industry talks about value.
The conclusion is driven by my belief that Kennedy sits at the confluence of two growing streams of thought around the consumerization of health care. These are not new ways of thinking, and Kennedy is the only person who can or will carry them. But he’s shown himself to be uniquely adept at injecting these ideas into the conversation.
First, Kennedy is driving the idea that patients should be making the decisions around their health, unencumbered by incentives from the government or the influence of acknowledged experts. This is the “I did my own research” view of the world, one that — for example — rejects government efforts to push vaccines for public health reasons or dismisses cautions about using implausible, disproven approaches to COVID.
This is supposed to sound empowering but — in reality — it leaves patients adrift to sort science from pseudo-science with a toolbox that is at best faulty and at worst rigged against their interests.
This stream of thought overlaps the trend toward patients paying directly for their own care. This shows up most meaningfully in the recent erosion of insurance coverage, such that more and more patients are subject to large deductibles that force financial burdens on them.
This is a trend that’s not going away, and — indeed — a core part of the mainstream Republican perspective on the issue is that patients ought to get some assistance in this area, via health savings accounts that make it easier for patients to pay for their care.
In response, we’re seeing an alternative ecosystem develop that is designed for this environment: direct primary care/concierge medicine, cash-pay generic drugs, GoodRx, direct-to-consumer options for branded medicines.
Taken together, these two concepts — patients will dictate their care, and patients will pay for care directly — mean that patients are going to have to start making more sophisticated decisions about value, decisions that they used to be shielded from.
A real-world example: I’m about to get to the age where I’ll be getting a shingles vaccine. It should be an easy experience, with minimal cost-sharing for me. The health benefits are clear, so it’s a no-brainer.
That could work differently in a Kennedy universe, where there might be inflated cost-sharing or, perhaps, I’d be put in the position of paying $200 for each shot out of my HSA. The shingles decision would suddenly have not only a health angle but a value component, too. The consumer calculus subtly shifts from “Would I benefit?” to “Is this worth it?” ****
To be sure, we’re not at this point. We won’t magically arrive there on Jan. 20, 2025, or on the day that Kennedy assumes power over HHS (assuming that even happens). We might not move in that direction very quickly, and Kennedy might not have a huge impact … this is an evolution that’s already underway and will likely continue, with or without him.
Still, Kennedy’s nomination puts these issues directly on the table, and communicators are going to need to grapple with them, ideally sooner rather than later.
** Today, I’m giving a high-level philosophical overview of where I think we’re headed. Tomorrow, I’ll talk communications-specific approaches for trying to get back ahead of the curve.
*** I don’t want the overly tactical discussions over the next couple of days to distract from the fact that Kennedy is a uniquely dangerous person to head HHS. His policy ideas would harm the public health, and his willingness to spread false information will only make worse the already-existential issues with misinformation and disinformation.
**** The objectively right answer here is “yes,” and it’s how I intend to celebrate my birthday. But I don’t have faith that everyone will arrive at the objectively right answer.
Politics is not my forte, I’ll pass along without comment two worthwhile pieces — one from the Wall Street Journal and one from Politico — which both make the same point: the pharmaceutical industry doesn’t see a lot of benefit from publicly opposing Kennedy’s nomination, and it is instead focusing on how to minimize damage should Kennedy be installed or confirmed.
By now, you know that my view on Trump’s plans on drug-pricing policy is “no one knows anything.” That stance was reaffirmed by this Roll Call piece on the IRA, which uses the word “murky” in the headline and “unclear” three times in the body of the piece.
Also murky: the prospects for PBM reform in the lame duck. This Modern Healthcare article is a fairly good review of the state of play, but until we hear more from the legislators themselves, it’s hard to make book on what’s coming next.
The idea that imposing cost-sharing on patients makes them better, smarter consumers is basically a myth, and the widespread use of cost-sharing simply serves as a barrier to care and a benefit design that forces more costs onto sick people. If you don’t believe me, check out this new paper from Michigan’s Mark Fendrick and friends, in which the researchers set out — and fail — to find some realm in which cost-sharing improves decision-making.
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