Last-minute drug pric­ing rules likely to face le­gal fights

The Washington Post - - POLITICS & THE NATION - BY YAS­MEEN ABUTALEB yas­meen.abutaleb@wash­post.com

Pres­i­dent Trump an­nounced two sweep­ing drug pric­ing rules Fri­day that his ad­min­is­tra­tion is rush­ing to fi­nal­ize be­fore In­au­gu­ra­tion Day to make good on his long-stand­ing 2016 cam­paign prom­ise to re­duce what Amer­i­cans pay for their medicines.

But ex­perts said the rules are un­likely to sur­vive le­gal chal­lenges af­ter the ad­min­is­tra­tion short­cut crit­i­cal parts of the rule­mak­ing process to get them done be­fore Pres­i­dent-elect Joe Bi­den as­sumes of­fice. Some in­dus­try lob­by­ists also noted that it was un­usual to im­ple­ment con­tro­ver­sial pol­icy changes solely through ex­ec­u­tive au­thor­ity just be­fore leav­ing of­fice.

“I was very proud to have got­ten this done,” Trump said at an af­ter­noon news brief­ing, at which he took no ques­tions. “We’re push­ing it very hard, as we did with the vac­cines and other things.”

One of the rules — known as the “most fa­vored na­tions” rule and adamantly op­posed by the phar­ma­ceu­ti­cal in­dus­try, which has vowed to sue to stop it — would tie the prices of drugs in Medi­care Part B to the lower prices in other de­vel­oped coun­tries, many of which ne­go­ti­ate those prices di­rectly with drug­mak­ers.

The other, the “re­bate” rule, would end a wide­spread prac­tice in which drug­mak­ers give re­bates to in­sur­ance mid­dle­men in gov­ern­ment pro­grams such as Medi­care to in­clude those drugs in their cov­er­age. The idea is to chan­nel that money to con­sumers in­stead. How­ever, the ad­min­is­tra­tion scut­tled ear­lier plans for such a rule more than a year ago be­cause its own analy­ses showed it would raise, rather than lower, se­niors’ pre­mi­ums and in­crease gov­ern­ment spend­ing.

Although the ad­min­is­tra­tion had dis­cussed both ideas for sev­eral years, Trump health of­fi­cials still found them­selves rush­ing to get the rules fi­nal­ized be­cause of sig­nif­i­cant in­ter­nal feud­ing over the pro­pos­als. Trump in­tro­duced both rules again in July as ex­ec­u­tive orders, but le­gal ex­perts ques­tioned whether they went through proper rule­mak­ing pro­cesses and said those ques­tions left them par­tic­u­larly vul­ner­a­ble to le­gal chal­lenges.

Fri­day was the last day the ad­min­is­tra­tion could re­lease a rule to be fi­nal­ized in the 60 days be­fore In­au­gu­ra­tion Day on Jan. 20.

It is un­clear whether the Bi­den ad­min­is­tra­tion would im­ple­ment and up­hold the rules or over­turn them af­ter be­ing sworn in. The Bi­den tran­si­tion team did not re­spond to a re­quest for com­ment Fri­day.

As vice pres­i­dent, Bi­den, along with Pres­i­dent Barack Obama, tried to get Congress to change a law pro­hibit­ing Medi­care of­fi­cials from ne­go­ti­at­ing drug prices di­rectly with man­u­fac­tur­ers — but the pro­posal was re­peat­edly blocked by con­gres­sional Repub­li­cans.

In me­an­der­ing re­marks Fri­day, Trump touted the new rules while also falsely claim­ing that he won the pres­i­den­tial race and lam­bast­ing Pfizer for the tim­ing of its an­nounce­ment — sev­eral days af­ter the elec­tion — that its coro­n­avirus vac­cine can­di­date is more than 90 per­cent ef­fec­tive. Trump has base­lessly ac­cused both Pfizer and the Food and Drug Ad­min­is­tra­tion of in­ten­tion­ally with­hold­ing the news un­til af­ter the vote, even though Pfizer did not have ac­cess to the data un­til the Sun­day af­ter the elec­tion.

“Pfizer and oth­ers de­cided to not as­sess the re­sults of their vac­cine . . . un­til just af­ter the elec­tion. That’s be­cause of what I did on ‘fa­vored na­tions,’ ” the pres­i­dent said, with­out of­fer­ing any ev­i­dence. “We are do­ing some­thing that no­body thought any­body would do. The sav­ings are go­ing to be in­cred­i­ble.”

Democrats and Repub­li­cans alike praised some of the mea­sures an­nounced Fri­day. Sen. Mark R. Warner (D-VA.) called an anti-kick­back rule en­abling in­creased co­or­di­na­tion be­tween physi­cians and other health-care en­ti­ties “a sig­nif­i­cant step in the right di­rec­tion for im­prov­ing pa­tient care.”

But some law­mak­ers raised con­cerns about Trump’s ef­fort to push through such sweep­ing rules at the end of his term.

“By delaying un­til the end of his pres­i­dency tak­ing ac­tion he could have un­der­taken at the be­gin­ning, Trump of­fers an in­vi­ta­tion to le­gal chal­lenges — not a guar­an­tee of re­lief from price goug­ing,” said Rep. Lloyd Doggett (D-tex.).

The phar­ma­ceu­ti­cal in­dus­try, which has al­ready killed at least one sig­nif­i­cant Trump ad­min­is­tra­tion drug pric­ing rule in the courts, sig­naled that it would chal­lenge the ad­min­is­tra­tion over the “most fa­vored na­tions” rule. The in­dus­try ar­gues that the rule — af­fect­ing drugs in Medi­care Part B that are of­ten ad­min­is­tered by a health-care provider or through med­i­cal equip­ment at home — would re­sult in fewer new medicines be­ing de­vel­oped. The pro­posal is also anath­ema to most con­gres­sional Repub­li­cans, who say it is akin to price con­trols.

And the Phar­ma­ceu­ti­cal Care Man­age­ment As­so­ci­a­tion, a trade group rep­re­sent­ing phar­macy ben­e­fits man­agers — the mid­dle­men tar­geted by the re­bate rule — said it would “ex­plore all pos­si­ble lit­i­ga­tion op­tions to stop the rule from tak­ing ef­fect and desta­bi­liz­ing the Medi­care Part D pro­gram.”

The De­part­ment of Health and Hu­man Ser­vices “had time to put these through the nor­mal pro­cesses and is­sue them in ac­cor­dance with rel­e­vant law,” said Rachel Sachs, a law pro­fes­sor at Wash­ing­ton Univer­sity in St. Louis. “The fact that they’ve cho­sen not to do so puts any gains in jeop­ardy. . . . On these drug pric­ing rules, there will be strong le­gal chal­lenges to both of them, not only on the ba­sis of their sub­stance but the pro­ce­dural way in which they are be­ing pushed.”

Trump’s de­ci­sion to fi­nal­ize the re­bate rule marks a sig­nif­i­cant win for Health and Hu­man Ser­vices Sec­re­tary Alex Azar, a for­mer Eli Lilly of­fi­cial, who be­gan push­ing the pro­posal al­most im­me­di­ately af­ter be­ing sworn in to his post in early 2018. The rule caused sig­nif­i­cant in­fight­ing last year with key White House staffers, who per­suaded Trump in the sum­mer of 2019 to with­draw the rule af­ter gov­ern­ment analy­ses showed it could raise pre­mi­ums in Medi­care.

Ex­perts said that since the ad­min­is­tra­tion with­drew the rule, the process should have restarted with an­other no­tice and com­ment pe­riod. But ad­min­is­tra­tion of­fi­cials main­tain that both rules went through all the nec­es­sary steps.

“With the fi­nal re­bate rule, we are tak­ing on a bro­ken sys­tem and de­liv­er­ing big dis­counts di­rectly to Amer­i­can pa­tients,” Azar said in a state­ment. “Our ac­tion on re­bates has the po­ten­tial to be the most sweep­ing change to how Amer­i­cans’ drugs are priced at the phar­macy counter, ever.”

The phar­ma­ceu­ti­cal in­dus­try sup­ports the re­bate rule be­cause drug re­bates are essen­tially dis­counts off the list prices of med­i­ca­tions that drug­mak­ers have to pay to phar­macy ben­e­fit man­agers, or di­rectly to in­sur­ers, in ex­change for a drug be­ing cov­ered by a given health plan.

JABIN BOTSFORD/THE WASH­ING­TON POST

At the White House, Pres­i­dent Trump an­nounces two new rules de­signed to lower pre­scrip­tion drug costs, say­ing, “I was very proud to have got­ten this done.” But ex­perts said that the rule­mak­ing process was rushed and that the new rules may not sur­vive le­gal chal­lenges.

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