All signs are pointing to the President deciding to withdraw the rebate rule.

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July 12, 2019


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Splish, Splash, Rebate Rule Takes a Bath


We were all awaiting the posting of a final rule on the removal of safe harbors from drug rebates in Medicare Part D and Medicaid managed care organizations, but, on Thursday, multiple sources reported the White House abandoned it. This is likely due to concerns that premiums would increase for all Medicare patients and the federal government would end up spending more money, with only some beneficiaries getting the benefit of lower drug costs.

While this policy proposal appears to be no longer on the table, last week President Trump told the press that a “favored nations law” Executive Order would be coming soon for drug pricing, potentially indicating that the US would pay whatever the lowest amount that another country pays. (See Heard on the Street.) This could be an ominous foreshadowing for the release of a proposed rule on the International Pricing Index (IPI), a policy that would change the market-based system and mandate a reference price.

This mandated price-control policy is bitterly opposed by the pharmaceutical industry—with providers and hospitals raising concerns as well about potential limits on provider choice and patient access. With a federal judge ruling in favor of pharmaceutical manufacturers opposing the Administration’s proposed requirement to include the list price in direct-to-consumer ads (see Regulatory Update), there could also be pushback over the Centers for Medicare & Medicaid Services’ (CMS) legal authority to implement this type of national demonstration program.


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Legislative Byte

  • As reported by The Hill, Senate Finance Committee Chairman Chuck Grassley (R-IA) plans to advance a bipartisan deal to lower drug prices “very soon,” though there are still questions as to whether objections from other Republican Senators on the committee could derail it.

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Planning for a Rainy Day: Revising the Prescription Drug Benefit for 2020+


The Medicare prescription drug benefit (Part D) was enacted over 15 years ago and remains a model of private-public partnership with high beneficiary satisfaction. But despite its success, the program needs to evolve to meet the needs of beneficiaries moving forward. Since Medicare Part D was implemented in 2006, utilization of drugs has evolved. While there is high generic utilization, availability of specialty medication options has increased, creating affordability challenges for beneficiaries.

According to the Kaiser Family Foundation, over 1 million beneficiaries had spending in the catastrophic phase of the benefit in 2017. While this may not seem significant, these beneficiaries often have chronic conditions for which they face significant medical expenses in addition to their prescription drug costs. Access is measured, in part, by affordability, and the benefit is not working for these beneficiaries.

While the Affordable Care Act (ACA) did allow for branded pharmaceutical manufacturer discounts (now 70%) in the coverage gap to assist with beneficiary out-of-pocket (OOP) costs and help move them to catastrophic coverage, the issue is that 5% of a drug that costs thousands of dollars still puts it out of reach for many beneficiaries.

There has been momentum in Congress to look at the Part D benefit structure to determine the feasibility of a true OOP cap. The American Action Forum (AAF), inspired by Aetna’s work with Milliman, released a proposed model for the Part D benefit which would incentivize plans to do more to control drug spending. In recent weeks, it has proposed an alternate model, which we are calling AAF+, that modifies its original proposal but moves manufacturer discounts over the course of the benefit.

But who do these models help? Xcenda was commissioned on behalf of the Council for Affordable Health Coverage to create patient profiles for typical patients with various conditions to determine the impact of the models on patient OOP spending. The results from the full report clearly demonstrate that the OOP caps would create a meaningful step toward more affordable access for beneficiaries who face significant drug spending.

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2020 Flash Flood Warning: Potential ICER Topics Coming Down Like Cats and Dogs


On Tuesday, the Institute for Clinical and Economic Review (ICER) released its preliminary list of topics for assessment in 2020. This list is intended to provide stakeholders with an early summary of topics currently being considered by ICER, but it does not guarantee that all topics will undergo an ICER review. Final decisions are formally announced at the beginning of the review process, which starts approximately 8 months prior to a corresponding public meeting.

The prescription drug topics under consideration for 2020 review are:

On Wednesday, ICER also announced the publication of the Final Evidence Report and Report-at-a-Glance for its Peanut Allergy evaluation, which assessed AR101, VIASKIN Peanut, and non-commercialized oral immunotherapy. During the meeting, the panel determined that the evidence was inadequate to demonstrate a superior net health benefit of either AR101 or VIASKIN Peanut relative to strict avoidance of peanuts. Given that the clinical uptake goal may surpass ICER’s potential budget impact threshold, it has issued an Affordability and Access Alert for both therapies.

Additionally, this week the Washington State Health Technology Assessment program posted draft key questions for its review of cell-free DNA prenatal screening for chromosomal aneuploidies. Public comments on the draft key questions will be accepted until close of business on July 23 and can be emailed to The Health Technology Clinical Committee is scheduled to review the final evidence report on this topic at a January 2020 public meeting.

As always, if you need assistance with all things ICER or value-related, please contact

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Judge to HHS: No Singing in the Rain About Drug Prices in TV Ads


In an 11th hour ruling, on Monday a federal judge struck down a new rule mandating drug-pricing disclosure in direct-to-consumer advertisements set to go into effect Tuesday. The Department of Health and Human Services (HHS) released a rule in May requiring drugs greater than $35 per month covered by Medicare and Medicaid to disclose their list price or wholesale acquisition cost (WAC) in television ads.

Merck, Eli Lilly, and Amgen filed a lawsuit, along with the Association of National Advertisers, arguing that requiring them to disclose list prices amounted to coercion that would violate their free speech rights under the Constitution. In addition, it would confuse consumers by forcing manufacturers to disclose an irrelevant price to patients with health insurance.

In his ruling, however, US District Court Judge Amit Mehta avoided debating the First Amendment, instead observing that the Trump Administration failed to demonstrate it had legal authority. Mehta noted, “But no matter how vexing the problem of spiraling drug costs may be, HHS cannot do more than what Congress has authorized.”

HHS representatives will return to the Justice Department to discuss appealing the ruling, while pharmaceutical manufacturers have a reprieve from the pricing mandate for the time being.


Storms Ahead for the ACA?


A panel of federal appeals court judges on Tuesday seemed open to upholding a lower-court ruling that a key provision of the ACA is unconstitutional. Although the judges have not indicated when they will rule, questioning and repeated interruptions of defense lawyers by the 2 Republican-appointed judges suggested a strong leaning toward upholding the unconstitutionality of the ACA’s mandate that most Americans must have health insurance. The single Democratic appointee remained silent during the proceedings.

Whether or not the unconstitutionality of the mandate would negate the entire ACA is unclear. Plaintiffs have argued the law was never intended by Congress to stand without the mandate, while defendants reject that argument outright. Notably, enrollment in the program has dipped only slightly (approximately 300,000 out of 11 million) since Congress eliminated the penalty. This would seem to put into question what was once universally considered the essential nature of the penalty to the success of the Act. Defendants of the law also argue that, without the penalty, the plaintiffs have no case since there is no harm to them—whereas the plaintiffs argue the ACA continues to cause harm by forcing additional spending on government healthcare coverage.

Judge Kurt Englehardt, appointed by President Trump, added more uncertainty about the trio’s ruling by suggesting it was not up to the court to decide whether the entire law should be struck down in asking, “Why does Congress want the Article III judiciary to become the taxidermist for every big game legislative accomplishment it achieves?” He added, “Congress can fix this.”

In addition to eliminating the healthcare exchange, striking down the ACA would remove protections in place for the coverage of pre-existing conditions, could eliminate OOP caps for covered services, and would change the types of care insurers must cover without cost-sharing requirements. Striking the ACA would also upend CMS’ Center for Medicare and Medicaid Innovation (CMMI), the biosimilars approval pathway, as well as many other healthcare-related provisions that have become intertwined in federal and commercial healthcare markets. Senate Majority Leader Mitch McConnell (R-KY) has stated he fully supports the continued protection of pre-existing conditions but has stepped away from an earlier promise of the Republican Party to replace the ACA with something better.


Same Number of CKD Models as Inches of Rain Fell in an Hour in DC


On Wednesday, HHS and CMS announced a proposal for Advancing American Kidney Health. The proposed rule outlines an End-Stage Renal Disease (ESRD) Treatment Choices (ETC) Model and 4 other optional models to improve patient access, care quality, and coordination for those with chronic kidney disease (CKD). The ETC Model includes a new payment system with performance-adjusted bonuses and penalties that will reward ESRD treatment centers that prevent disease progression, emphasize transplants over dialysis, and provide home-based rather than in-center dialysis.

The ETC Model prefers home-based dialysis, as it integrates more easily with patients’ lifestyles. Home-based dialysis gives the patient more control over the duration and frequency of their treatment, and the new model incentivizes education initiatives by providers to ensure patients understand their kidney treatment options. Under the proposed ETC Model, participating ESRD treatment centers will be selected based on geography and will represent about 50% of adult Medicare patients with ESRD. The model will protect ESRD centers by risk-adjusting the performance payments to each center based on the severity of their patient populations. The ETC Model will run from January 1, 2020 to June 30, 2026.

The 4 other optional payment models are designed to complement the ETC plan and intended to support care quality and cost reduction in ESRD. The Advancing American Kidney Health initiative was drafted in response to an Executive Order from the President, which called for a number of other initiatives related to the management of CKD. These initiatives include a public awareness campaign centered on CKD, new legislation around organ procurement and management, extended support for living donors, and incentives for developers of innovative artificial lung technologies. Collectively, these programs should help to advance treatment quality and trim avoidable costs in the CKD space.


Information Buffet (AKA, Other Stuff That Caught Our Attention)


We kept running into stories we wanted to bring to your attention, so here’s a quick hit list of other news we thought you should know:


“We’re going to be announcing something very shortly—a favored nations clause. As you know, for years and years, other nations paid less for drugs than we do—sometimes by 60, 70 percent…. We’re working on a favored nations clause, where we pay whatever the lowest nation’s price is. Why should other nations, like Canada…pay much less than us? They’ve taken advantage of the system for a long time…. So we’re working on…a favored nations clause, so that whatever the lowest nation is…we will pay that amount.”

– President Trump

 Source: “President Trump White House Departure,” C-SPAN, July 5


$94 Billion


A study published in JAMA Oncology estimates that individuals between the ages of 16 and 84 who died of cancer in the US in 2015 alone account for over $94 billion in lost earnings.

Source: “National and State Estimates of Lost Earnings From Cancer Deaths in the United States,” JAMA Oncology, July 3


Count on Health Policy Weekly for an at-a-glance view of legislative and regulatory developments and news that impacts the healthcare industry.


Jennifer Snow
Vice President,
Reimbursement and
Policy Insights,

Scott Shields
Associate Director,
Health Policy



Doug Cook
President | Commercialization Services & Animal Health

Kristine Flemister, PharmD
President | Xcenda

Tommy Bramley, PhD, RPh
President | Lash Group

Stacie Heller
Vice President | Government Policy | AmerisourceBergen Corporation

Rita Norton
Senior Vice President | Government and Public Policy | AmerisourceBergen Corporation

Ana Stojanovska
Vice President | Commercial Consulting | Xcenda


Anuja Kanaskar | Jenna Kappel | Stew Kaufman | Jefferson Pike | Scott Shields | Diane Smith


Laurie Kozbelt | Ellen Olson | Tia O’Brien


July 12, 2019


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