Hello ERIC members,
Congress is wrapping up its week today. Next week is the Republican National Convention (RNC) in Milwaukee, so things should be quiet in the District, but Congress also needs to wrap up its appropriations bills. July is going to be a mad dash leading up to August recess.
There are several upcoming events this month that we hope you can join us for!
- Third Thursday Health Care Call on Thursday, July 18 at 4:00 p.m. (ET)
- For those of you in Chicago, James Gelfand will be speaking at Seyfarth Shaw’s “Celebrating ERISA’s Golden Anniversary” on Thursday, July 18. The event is open to ERIC members. If you’re in town and interested in attending, click HERE.
- ERIC Meet & Greet with Derek Theurer, Senior Policy Advisor, Office of the Speaker on Monday, July 22 at 12:30 p.m. (ET) in Room 401 of the Cannon House Office Buildin on Capitol Hill! Derek leads tax policy efforts for Speaker Johnson, and will provide his perspective on the policy climate.
Today we’ll discuss: (1)FTC Staff Report on PBMs, (2)Congress to the Agencies – Chevron, (3)Problematic Model State PBM Legislation(4)P4ESC Tax Exclusion Advocacy, (5)Site Act Advocacy, (6)Comments on Double Patents, (7)Republican Platform, (8)Spring Unified Agenda, (9) What We’re Reading.
FTC Staff Report on PBMs
The Federal Trade Commission (FTC) released its interim staff report on “PBMs: The Powerful Middlemen Inflating Drug Costs and Squeezing Main Street Pharmacies” on Tuesday, July 9. In its study, the FTC finds that pharmacy benefit managers (PBMs) have gained increased concentration and vertical integration within the health care system causing less competition and inflated drug costs. In a case study of two specialty generic drugs, the FTC explores concerns related to the steering of prescriptions by PBMs to their affiliated specialty pharmacies, the preferential rates paid to them, and the bargaining dynamics between large PBMs and smaller independent pharmacies. Pharmacies affiliated with three large PBMs are often paid 20- to 40-times the National Average Drug Acquisition Cost (NADAC) for the two case study specialty generic drugs.
The report also discusses contracts that may block access to generic and biosimilar drugs acknowledging PBMs’ incentive and ability to engage in steering prescription revenues to their own pharmacies through specialty drug classification and contracting terms. Through public documents, the FTC found tier placement, the use of additional rebates, step therapy requirements, prior authorization, and other concerning practices like “dispense as written” and “NDC Blocks” are ways in which a PBM can control what drug products patients can access. The report has sparked the FTC to potentially take legal action against the largest PBMs and their steering practices.
Senate Finance Committee Chair Ron Wyden reacted to the report and issued a statement that he plans to go “to the mat to deliver PBM legislation to the president’s desk this year.” The ERIC team is also working hard for PBM transparency and reform legislation to be included in an end-of-the-year package.
Congress to the Agencies in Light of Chevron
In the wake of the Supreme Court’s Loper Bright decision (regarding the Chevron doctrine), Majority Leader Steve Scalise announced that House Committee Chairs sent letters to the corresponding agencies to demand a review of overreaching regulations. The letters to each agency are all in one document totaling 141 pages, but you can find the letter to the Department of Labor (DOL) starting on page nine and to the Department of Health and Human Services (HHS) on page 127.
The Education and the Workforce Chairwoman requested DOL send by the end of the month “a list of all final agency rules not yet challenged in court that may be impacted by the Court’s Loper Bright decision if they are so challenged” and “a list of all pending agency rulemakings in which the agency is relying on an agency interpretation of statutory authority that might have been eligible for Chevron deference prior to the Court’s decision in Loper Bright.”
Of note, such calls help amplify ERIC’s ongoing push on the administration to not finalize its proposed changes to mental health and substance use disorder parity rules. ERIC is meeting with the Office of Management and Budget (OMB) next week on the proposed rules, so more to come.
Problematic Model State PBM Legislation
As state-level interest in regulating PBM practices continues to grow, the American Legislative Exchange Council (ALEC) recently formulated and released draft legislation for state lawmakers to use as a model when considering PBM legislation. The model bill is set to be debated and considered by ALEC’s Health and Human Services Task Force during the organization’s conference on Friday, July 26. The Task Force is made up of public sector legislators from over 20 states as well as private sector organizations including provider and PhRMa groups.
Importantly, “The Patient and Pharmacy Protection Act” features a combination of concerning provisions similar to the expansive state PBM policy proposals that ERIC has worked to oppose. Specifically, the draft model bill includes:
- Explicit reference and application to self-insured health plans
- No exemption or carveout for ERISA plans
- An expansive “any-willing-pharmacy” provision
- Control of plan formulary design and administration
- Restriction of patient steering practices
- A minimum dispensing fee for all pharmaceutical products statewide
ERIC believes that the regulatory regime outlined by ALEC’s draft model legislation would impact the design and administration of self-insured plans and would create a clear conflict with the principles of ERISA preemption. To prevent this policy trend from spreading to even more state legislatures, ERIC is undertaking an advocacy effort to explain the importance of ERISA preemption and the threat posed by ALEC’s draft model legislation with members of the Health and Human Services Task Force.
If you would like to join our effort, talk through the ALEC model legislation, or discuss ERIC’s state advocacy efforts in the PBM space, please contact my colleague Dillon Clair.
P4ESC Tax Exclusion Letter
The Partnership for Employer-Sponsored Coverage (P4ESC) sent a letter to Congress earlier this week regarding proposals to cap the income tax exclusion for employer-sponsored health coverage. We continue to raise awareness on Capitol Hill on how detrimental this policy would be for employers and their employees. While we do not expect imminent action, we anticipate such proposals could continue to generate interest among lawmakers as they consider a number of policy priorities that could be in play early next year as part of a potentially broad tax reform package and/or budget reconciliation.
SITE Act Advocacy
ERIC joined Third Way, Progressive Policy Institute, unions, and other employer groups yesterday urging the Senate Finance Committee to examine the issue of allowing hospital systems to charge patients and seniors higher prices for outpatient care – which can be fixed by the Site-based Invoicing and Transparency Enhancement (SITE) Act. The letter further explains rising hospital costs are associated with consolidations and acquisitions of hospitals and physician practices. Allowing Medicare to reimburse providers at the same price for the same service regardless of whether it’s performed in a hospital-owned clinic or at an independent doctor’s office would save roughly $40 over ten years. ERIC supports the SITE Act and would like for the policy to apply to employer-sponsored insurance, where there could be more savings across the market.
USPTO Comments on Double Patents
On Tuesday, July 9, ERIC submitted comments on the latest proposed rule from the U.S. Patent and Trademark Office (USPTO) aimed at boosting competition in the prescription drug sector by cracking down on “terminal disclaimers” also known as double patenting. These disclaimers have often been used to delay competition of new prescription drugs, far beyond what was intended by Congress. This reform is an important step in shoring up a more competitive drug market leading to more access to biosimilar and generic alternatives, helping to lower overall drug spending for employers and costs for their workers.
Republican Platform
The GOP Platform was released this week before the RNC, and below are a few highlights. The platform is extremely vague, but we hope to learn more in the coming weeks.
- Reduce healthcare costs and acknowledge that “healthcare and prescription drugs costs are out of control.”
- “Increase transparency, promote choice and competition, and expand access to new affordable healthcare and prescription drug options.”
- Protect Medicare and ensure Seniors aren’t burdened by excessive costs.
- “Support increased focus on Chronic Disease prevention and management, Long-Term Care, and Benefit flexibility.”
- Expand access to primary care, protect care at home, support unpaid caregivers through tax credits and reduced red tape.
Spring Unified Agenda Released
On Friday, July 5, OMB released the Spring 2024 Unified Agenda of Regulatory and Deregulatory Actions. Here are some rules we are watching. You may see some repeats within the agencies.
DOL
- Final Rule Stage
- Mental Health Parity and Addiction Equity Act and the Consolidated Appropriations Act, 2021
- Requirements Related to Air Ambulance Services, Agent and Broker Disclosures, and Provider Enforcement
- Coverage of Certain Preventive Services Under the Affordable Care Act
- Independent Dispute Resolution Operations
- Proposed Rule Stage
- Provider Nondiscrimination Requirements for Group Health Plans and Health Insurance Issuers in the Group and Individual Markets
- Requirements Related to Advanced Explanation of Benefits and Other Provisions Under the Consolidated Appropriations Act, 2021
- Final Rule Stage
- Requirements Related to Air Ambulance Services, Agent and Broker Disclosures, and Provider Enforcement (CMS-9907)
- Mental Health Parity and Addiction Equity Act and the Consolidated Appropriations Act, 2021 (CMS-9902)
- Coverage of Certain Preventive Services Under the Affordable Care Act (CMS-9903)
- Independent Dispute Resolution Operations (CMS-9897)
- Proposed Rule Stage
- Biologics Regulation Modernization
- Amendments to Patent Term Restoration
- Medicare Advantage and Medicare Prescription Drug Benefit Program Payment Policy (CMS-4198)
- Provider Nondiscrimination Requirements for Group Health Plans and Health Insurance Issuers in the Group and Individual Markets (CMS-9910)
- Requirements Related to Advanced Explanation of Benefits and Other Provisions Under the Consolidated Appropriations Act 2021 (CMS-9900)
- Final Rule Stage
- Requirements Related to Air Ambulance Services, Agent and Broker Disclosures, and Provider Enforcement
- Mental Health Parity and Addiction Equity Act and the Consolidated Appropriations Act, 2021
- Coverage of Certain Preventive Services Under the Affordable Care Act
- Independent Dispute Resolution Operations
- Proposed Rule Stage
- Provider Nondiscrimination Requirements for Group Health Plans and Health Insurance Issuers in the Group and Individual Markets
- Requirements Related to Advanced Explanation of Benefits and Other Provisions Under the Consolidated Appropriations Act, 2021
- The Opaque Industry Secretly Inflating Prices for Prescription Drugs – This June article is the first in a series from The New York Times about how pharmacy benefit managers prioritize their interests, often at the expense of patients, employers and taxpayers. You may need a subscription to access the article. Email Christina if you’d like a copy of the article.
- When Hospital Prices Go Up, Local Economies Take a Hit – Another The Wall Street Journal article explores a new study on how employers are put in a tough position after local hospitals raise their prices. It also tracks the significant hospital mergers across the country and employment declines in a nice graphic. Again, email Christina if you’d like to see the full article.