Drug Giants Score a Win Against the Trump Administration

Plus, Trump plans health care overhaul that could save billions

Judge Nixes Trump Rule Requiring Drug Companies to Disclose List Prices in TV Ads

A federal judge on Monday blocked a Trump administration rule requiring pharmaceutical companies to disclose the wholesale prices of their drugs in television ads. The new policy, which would have applied to drugs with a list price of more than $35 a month, had been set to take effect today.

In a lawsuit filed last month by drugmakers Merck, Eli Lilly and Amgen as well as a trade group for advertisers, U.S. District Judge Amit Mehta ruled that the Department of Health and Human Services does not have the authority from Congress to force drugmakers to disclose their prices.

“That policy very well could be an effective tool in halting the rising cost of prescription drugs,” the judge wrote. “But no matter how vexing the problem of spiraling drug costs may be, HHS cannot do more than what Congress has authorized. The responsibility rests with Congress to act in the first instance.”

Why it matters: The ruling is a blow to the Trump administration’s efforts to bring down drug prices and increase transparency around health care costs.

The television ad rule would have been the first key element of the administration’s proposed prescription-pricing blueprint to take effect — and the most visible.

Why it might not matter: Some experts have questioned just how effective the rule would be in pushing down costs. Critics noted, for example, that it would have allowed the industry to police itself, with no other enforcement mechanism. Drugmakers and others also warned that having list prices in ads could scare patients away from taking medications they need, even as they might not have to pay that advertised price if they have insurance.

What’s next: HHS said that it was disappointed in the court’s decision and would work with the Department of Justice on next steps. And, according to Bloomberg, Trump adviser Kellyanne Conway told reporters Tuesday that the administration may continue to fight for the rule in court.

Trump Plans Overhaul of U.S. Kidney Care and Organ Transplant Systems: Reports

President Trump will reportedly order a series of initiatives means to overhaul the nation’s kidney dialysis and organ transplant systems. The moves could save the federal government billions of dollars.

Politico’s Dan Diamond and Rachel Roubein reported:

“HHS will announce new payment models intended to shift treatment for patients with chronic kidney disease away from standalone clinics, arguing that receiving dialysis at home is both safer for patients and more cost-effective, four individuals familiar with the plan said.

“The health department also will announce an agency-wide initiative to encourage home dialysis and ramp up better prevention and screening for kidney disease.”

Why it matters: The nation’s kidney dialysis and organ transplant systems desperately need some attention. Some 30 million Americans suffer from kidney disease, which was the ninth leading cause of death in 2017, Politico said. Medicare spending on patients with chronic kidney disease or end-stage renal disease totaled more than $114 billion in 2016, or 23% of total Medicare fee-for-service spending.

“One of the key reasons for our failing policies is that kidney care in particular has some of the worst incentives in American healthcare,” HHS Secretary Alex Azar told the National Kidney Foundation’s annual patient summit in March, according to Politico.

More than 500,000 people with end stage kidney disease receive dialysis, The Washington Post’s Lenny Bernstein and Kimberly Kindy report, citing data from the National Kidney Foundation. “In the United States, most people receive hemodialysis, a treatment that requires a device to filter waste and toxins from their blood in hours-long sessions three times a week. Most receive it in clinics or private facilities that serve dozens of people each day.”

Two companies, DaVita and Fresenius Medical Care and DaVita, dominate the market for clinic-based hemodialysis and generate the lion’s share of $24 billion in annual dialysis center revenue. And, Bernstein and Kindy add, doctors are typically reimbursed at higher rates for treating dialysis patients than patients who don’t yet require such treatment.

The bottom line: “In all, the government believes it can make 17,000 more kidneys and 11,000 more hearts, livers, lungs and other organs available for transplant every year, as well as save money for Medicare and Medicaid, which cover much of the cost of dialysis and transplantation,” The Washington Post reported.

Column of the Day: Trump’s ‘Scattershot’ Approach to Health Care Reform

The health care news this week — from the court decision invalidating the Trump administration’s drug pricing disclosure requirement to arguments in a lawsuit seeking to strike down Obamacare to the president’s planned order on kidney dialysis and organ transplants — all highlights “the confusing and contradictory story of President Donald Trump’s efforts to change American health care,” Bloomberg columnist Max Nisen writes:

“The kidney initiative is among the administration’s better notions, along with its effort to index some drug costs covered by Medicare to the lower prices available abroad. Yet even when the administration lands on a good idea in health care, it seems to get in its own way. The Trump-backed ACA lawsuit, for example, would directly undermine the kidney initiative and price-indexing plan. And while the president has a variety of other proposals in the works – from an effort to pass drug discounts directly to consumers to a plan to force hospitals to make their pricing transparent – many could be exposed to the kind of legal risks that killed the drug-ad initiative. It’s all part of a scattershot and often incoherent approach that isn’t as effective as it could be.”

Read the full column at Bloomberg.

Chart of the Day: A Surprise Spending Slowdown

Economists expected higher federal spending to boost growth in 2019, but some of the fiscal stimulus provided by the 2018 deal to raise budget caps has failed to show up this year, according to Kate Davidson of The Wall Street Journal.

Defense spending has come in as expected, but nondefense spending has lagged, and it’s unlikely to catch up to projections even if it accelerates in the coming months. Lower spending on disaster relief, the government shutdown earlier this year and federal agencies spending less than they have been given by Congress all appear to be playing a role in the spending slowdown, Davidson says.

Larry Kudlow Again Says That US Debt Isn’t a Problem

Larry Kudlow, director of the National Economic Council, said Tuesday that in his view the $22.5 trillion national debt is not a pressing issue. "I don't see this as a huge problem at all right now. [It's] quite manageable,” Kudlow told CNBC’s Kelly Evans.

Kudlow has not always been so sanguine about the national debt. In 2009, he sharply criticized the Obama administration for its efforts to stimulate the economy through deficit spending that increased the debt. “The families of America take a look at this budget and these humongous deficits and the doubling of the debt and so forth and the out of control spending ... this is the most unbalanced fiscal story coming out of Washington, really in our history," Kudlow said at the time.

Kudlow also claimed on Tuesday that the Republican tax cuts were largely paying for themselves. "I would argue strongly that the corporate tax cut has already been paid for and roughly 2/3rds of the overall tax cut has been paid for," he told Evans.

Although this is a frequently repeated talking point in the Trump administration, most economists say the Republican tax cuts have not and will not pay for themselves, with the Congressional Budget Office estimating that they will reduce federal revenues by $1.9 trillion over 10 years. Reviewing a recent analysis of the issue by the Congressional Research Service, Howard Gleckman of Tax Policy Center concluded that the Tax Cuts and Jobs Act have fallen “wildly short of paying for itself in growth-driven new revenue.”

High-Income Households in High-Tax States Were Big Winners in GOP Tax Overhaul

Millions of upper-middle class households in high-tax states paid lower taxes in 2018 thanks to the Tax Cuts and Jobs Act, despite the new $10,000 limit on state and local tax deductions, says The Wall Street Journal’s Richard Rubin.

According to calculations by the Tax Policy Center, the tax law’s big increase in the alternative minimum tax (AMT) exemption more than made up for the loss of state and local tax deductions for millions of high-income taxpayers. About 95% of the 3.5 million households earning between $200,000 and $500,000 that paid the AMT before the tax overhaul went into effect got a tax cut in 2018, with the cuts averaging more than $3,600.

“AMT cuts outweighed the hit from the deduction cap” for that income group, Rubin says, while noting that AMT households earning less than $200,000 and more than $500,000 received smaller cuts on average.

Why it matters: Some blue state lawmakers are pushing to raise or eliminate the $10,000 state and local income tax deduction, saying it unfairly hurts households in high-tax states such as New York and California, but that would likely end up giving another tax cut to households that already benefited from the Republican tax law thanks to changes in the AMT.

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