Republicans Scramble to Find ‘Magic Pixie Dust’ in Health Care

Plus, 3 ways to bring down drug prices

Mulvaney: Trump Obamacare Replacement Plan Coming ‘Fairly Shortly’

Acting White House Chief of Staff Mick Mulvaney said on Sunday that the Trump administration will release an Obamacare replacement plan before the 2020 elections.

“I do think you’ll see a plan here fairly shortly,” Mulvaney said on “Fox News Sunday.”

Mulvaney reportedly met with top administration officials and White House aides, including Centers for Medicare & Medicaid Services Administrator Seema Verma and Health and Human Services Secretary Alex Azar, at Camp David on Saturday to discuss health care policy. “The talks ranged from messaging strategies to lowering drug prices to individual health insurance marketplaces,” CNN’s Sarah Westwood reports.

The Trump administration caught Republican lawmakers off guard last month when it decided to back a legal ruling invalidating the entire Affordable Care Act and the president called on GOP lawmakers to again try to replace the law — a call they didn’t exactly race to embrace.

“It's clear that a week into the Trump-mandated makeover as the ‘Party of Health Care,’ few lawmakers want ownership of an issue proven toxic to Republicans’ political futures,” Politico’s Adam Cancryn and Alice Miranda Ollstein write. “The GOP has been deadlocked on a replacement since its high-profile repeal effort collapsed in the fall of 2017. That’s left the party paralyzed — reluctant to contradict Trump but scared of entering another campaign cycle without a coherent health care message. Those most qualified to craft a plan have no interest in the job, while others eager for another repeal effort aren’t gaining traction.”

GOP lawmakers are still divided on health care, split between conservatives who want to completely wipe out Obamacare and some moderates who worry about voters losing coverage or protections for those with pre-existing medical conditions.

“A Trump health plan could reduce regulations, spending, taxes, and premiums under the ACA,” Larry Levitt of the Kaiser Family Foundation tweeted Monday. “It couldn't simultaneously cover as many people, lower deductibles, and provide equal protections for people with pre-existing conditions. There's no magic pixie dust in health care.”

That hasn’t stopped the White House from pushing ahead with its search for a plan. “Republicans have better ideas than Democrats. We should not be afraid to talk about that,” Mulvaney said Sunday “We want to run on this.”

Chart of the Day: The Incredibly High Administrative Costs of US Health Care

A new report from the Center for American Progress details one of the key burdens of the U.S. health care system: high administrative costs. “Each year, health care payers and providers in the United States spend about $496 billion on billing and insurance-related (BIR) costs,” the center’s Emily Gee and Topher Spiro estimate, with about half of that spending wasteful or unnecessary.

The authors write that administrative spending can be lowered by simplifying the billing and payment process, which can be done in a number of different ways — and wouldn’t necessarily require a transition to a single-payer system. “Two avenues for reducing administrative costs as well as overall health costs are global budgeting and uniform rate-setting,” they write. “These two concepts are central to health systems around the world and are also responsible for keeping administrative costs lower, whether a country has a multipayer or single-payer system.”

Read the report or read more about it at Vox.

3 Ways to Bring Down Drug Prices

Prescription drug prices have been rising at a blistering rate over the last few decades. Between 1980 and 2016, overall spending on prescription drugs rose from about $12 billion to roughly $330 billion, while its share of total health care spending doubled, from 5% to 10%.

Although lawmakers have shown renewed interest in addressing the problem, with pharmaceutical CEOs testifying before the Senate Finance Committee in February and pharmacy benefit managers (PBMS) scheduled to do so this week, no comprehensive plan to halt the relentless increase in prices has been proposed, let along agreed upon.

Robin Feldman, a professor at the University of California Hastings College of Law, takes a look at the drug pricing system in a new book, “Drugs, Money and Secret Handshakes: The Unstoppable Growth of Prescription Drug Prices.” In a recent conversation with Bloomberg’s Joe Nocera, Feldman said that one of the key drivers of rising prices is the ongoing effort of pharmaceutical companies to maintain control of the market.

Fearing competition from lower-cost generics, drugmakers began over the last 10 or 15 years to focus on innovations “outside of the lab,” Feldman said. These innovations include paying PBMs to reduce competition from generics; creating complex systems of rebates to PBMs, hospitals and doctors to maintain high prices; and gaming the patent system to extend monopoly pricing-power.

Feldman’s research on the dynamics of the drug market led her to formulate three general solutions for the problem of ever-rising prices:

1. Transparency: The current system thrives on secret deals between drug companies and middlemen. Transparency “lets competitors figure out how to compete and it lets regulators see where the bad behaviors occur,” Feldman says.

2. Patent limitations: Drugmakers have become experts at extending patents on existing drugs, often by making minor modifications in formulation, dosage or delivery. Feldman says that 78% of drugs getting new patents are actually old drugs gaining another round of protection, and thus another round of production and pricing exclusivity. A “one-and-done” patent system would eliminate this increasingly common strategy.

3. Simplification: Feldman says that “complexity breeds opportunity,” and warns that the U.S. “drug price system is so complex that the gaming opportunities are endless.” While “ruthless simplification” of regulatory rules and approval systems could help eliminate some of those opportunities, Feldman says that the U.S. doesn’t seem to be moving in this direction.

Read the full interview at Bloomberg.

Number of the Day: $1 Billion

Axios’ Bob Herman, who has been tracking the annual proxy filings of health care corporations, reports that 62 CEOs of those businesses made a combined $1.1 billion in 2018, using the actual value of their sold stock. That’s not a huge dollar amount relative to the $3.7 trillion size of the U.S. health care sector, Axios notes. “But it’s also $157 million more than what the Centers for Disease Control and Prevention spent in 2018 on chronic disease prevention.”

Pharmacy Middlemen Take Their Turn in the Congressional Hot Seat

Executives from five pharmacy benefit managers (PBMs), the middlemen who negotiate prescription drug formularies and prices for insurers, will testify in a much-anticipated hearing before the Senate Finance Committee on Tuesday morning.

“When pharmaceutical executives had their turn at the Senate Finance Committee in February, they characterized the PBMs as the bad guys, complaining that these third-party negotiators don’t pass drug discounts along to consumers but pocket them instead,” The Washington Post’s Paige Winfield Cunningham says in a preview.

“Expect an opposite narrative tomorrow, when executives for the country’s top three PBMs — CVS Health, UnitedHealth’s OptumRx and Cigna’s Express Scripts — will sit before the Finance Committee for its latest hearing on the high cost of prescription drugs. … They’ll undoubtedly characterize the drugmakers as the villains who push list prices ever higher, while arguing their own role is crucial for obtaining rebates and other savings that ultimately result in consumer savings.”

Winfield Cunningham notes that two-thirds of U.S. spending on pharmaceutical drugs in 2016 went to the drugmakers, compared to 4 percent that was captured by PBMs.

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