(480) 923-0802

Our Take: Biden’s proposed budget seeks to further lower drug costs for seniors by building on provisions in the Inflation Reduction Act

Mar 13, 2023

Part of President Joe Biden’s plan to keep Medicare solvent for another generation entails strengthening several provisions in the Inflation Reduction Act (IRA) passed last year, including Medicare’s new capacity to negotiate prescription drug prices.

Currently, the new law calls for price negotiations to begin with 10 Part D drugs in 2026 and increases the number to 20 Part B and D drugs per year by 2029. The president’s proposed budget for fiscal year 2024, released Thursday, would double those numbers. 

The proposed budget also would reduce the number of years that a prescription drug can be marketed post-launch before it becomes subject to price negotiation. The IRA allows for nine years of marketing for small-molecule drugs and 13 years for biologics before Medicare can negotiate prices. The proposed budget would shorten the period to five years for both types of treatments. 

Additional pricing measures in the proposed budget include capping Medicare Part D cost-sharing at $2 for “high value” generic drugs used to treat common chronic health conditions such as high cholesterol and hypertension. The cap would apply to members enrolled in Medicare Advantage plans as well as Original Medicare beneficiaries. 

In addition, the IRA’s $35-per-month limit on Medicare beneficiaries’ out-of-pocket costs for insulin would be extended to members of commercial health insurance plans.

Further, the rebates drug manufacturers are required to pay to Medicare under the IRA if they raise prices beyond the rate of inflation would be extended to commercial health insurance.

In an op-ed published in The New York Times ahead of the proposed budget’s release, President Biden said these and other steps would make the Medicare Hospital Insurance Trust fund solvent beyond 2050 “without cutting a penny in benefits.” The fund is on track to become insolvent by 2028, according to the latest Medicare Trustees Report, unless the government intervenes.

More information about how the proposed budget would affect Medicare, Medicaid, and other government health programs is available in a fact sheet issued by The White House and a press release from the Department of Health and Human Services (HHS). 

Our Take: We already know that Congress won’t pass the proposed budget as it currently stands. That would be highly unlikely even if the president’s party controlled both chambers of Congress.

But, when you know you’re going to have to make concessions, there’s no harm in asking for your entire wish list. As a number of news outlets reported, the budget is a statement of the administration’s priorities as much as anything. 

One item in the budget that could have an immense long-term impact, but would be an easy target for those who want to quickly trim the budget, is the request for $5 billion to fund a five-year program designed to eliminate hepatitis C (HCV) in the U.S. The money would be used to provide rapid diagnostic testing; increase access to treatments for patients covered by commercial insurance, Medicare, or Medicaid; and enhance public health measures to prevent and cure HCV-related illness. 

Francis Collins, former director of the National Institutes of Health, and his senior adviser, Rachael Fleurence, noted in a JAMA Viewpoint article published online Thursday that although the program would be “a sizable investment,” economists estimate the program would more than pay for itself by preventing “tens of thousands of expensive cases of liver failure and liver cancer.” 

An estimated 2.4 million Americans are living with HCV, according to HHS, though the number may be much higher because the virus can go undetected for years. As many as 51% of those who are infected don’t know it, HHS estimates, and for years the rate of reported infections has been rapidly increasing. 

There’s a chance this program might be funded, even though Congress is so sharply divided. We say that because, as a recent PBS News Hour article pointed out, it was the previous administration that “pledged to put the U.S. on track to eliminate hepatitis C by 2030.”

What else you need to know
Atrium Health, part of Advocate Health, is partnering with Best Buy to develop new offerings “that will enhance the patient experience of receiving hospital-level care in the home,” according to a press release. Launched in early 2020 to address COVID-19 surges, Atrium Health’s hospital-at-home program has become one of the largest in the country, providing care for patients with cardiac conditions, COPD, pneumonia, asthma, infections, and other health conditions. Best Buy has been steadily building its health care product and service lines through acquisitions such as GreatCall, Critical Signal Technologies, and Current Health, a remote care management platform that combines patient monitoring, telehealth, and patient engagement into one solution for health care providers. Current Health has relationships with several of the country’s largest health systems. Best Buy also brings to the table its Geek Squad, which assists with logistics and in-home tech support.

Sanford Health and Fairview Health Services endorsed returning the academic medical center on the University of Minnesota’s campus to the university in an effort to move their proposed merger forward, though the health systems disagree with the university over how that should happen. Fairview Health paid $87.5 million in 1997 to acquire the university’s main hospital building and related assets, with the intent to create a new medical center combined with Fairview’s Riverside hospital. The current dispute centers on whether the university should reacquire the facilities on its campus through a market-value sale or a transfer of charitable assets back to the state. Meanwhile, as the Minnesota attorney general’s investigation into the merger moves into a “new phase,” MPR News reported that the AG’s office issued subpoenas to Sanford Health to obtain sworn statements.  

Aledade signed two value-based agreements, one with Humana and the other with CareFirst Blue Cross Blue Shield. Aledade helps independent, community-based, primary care practices succeed in value-based care arrangements by providing technology, tools, and support. Through the new 10-year collaboration with Humana, which builds on a relationship established in 2019 in limited markets, in-network “Aledade-enabled” physicians will provide care to Humana’s Medicare Advantage members. The collaboration will be phased in for current and new statewide agreements, which include a pathway to full risk, the companies said in a press release, and will grow as new practices and prospective markets join Aledade’s network. The strategic alliance with CareFirst will give physician practices in CareFirst’s network access to Aledade’s resources, which include on-site business support, data analytics, guided workflows, a technology platform that works with 100+ electronic health record systems, and expertise in health care policy. The announcement did not specify the length of CareFirst-Aledade alliance.

California rescinded its renewal of a multimillion-dollar contract with Walgreens that was to take effect on May 1 after Walgreens said earlier this month it would not make mifepristone available in at least 20 states, including some where abortion is legal. Attorneys general in those states said in February they would take legal action against pharmacies that sell mifepristone because doing so would violate state abortion laws or existing or proposed restrictions on dispensing abortion pills. The FDA approved Mifeprex (mifepristone) in 2000 in combination with misoprostol to end pregnancy through seven weeks of gestation and later extended the gestation period to 10 weeks. Plaintiffs in ongoing lawsuits contend that states can’t regulate or restrict FDA-approved drugs. Meanwhile, an anti-abortion group is attempting in a separate lawsuit to reverse the FDA’s approval of mifepristone. Earlier this year, the FDA said retail pharmacies could get certified to dispense mifepristone; previously, the drug could only be dispensed by clinics, physicians, and certain mail-order pharmacies. The state AGs say federal law prohibits sending or receiving abortion pills by mail, but in January the U.S. Department of Justice cleared the U.S. Postal Service to deliver abortion pills. Walgreens said last week it intends to dispense mifepristone where it can do so legally once the company is certified. 

Eli Lilly ceased development of solanezumab, an Alzheimer’s disease treatment candidate, after it failed to slow cognitive decline (primary endpoint), clear brain amyloid plaque, or halt accumulation of amyloid in participants of the Phase III Anti-Amyloid Treatment in Asymptomatic Alzheimer’s disease (A4) study, which was launched in 2013. Those who enrolled in the study had PET-imaging evidence of amyloid plaque accumulation in the brain but no clinical impairment. Solanezumab binds only to soluble amyloid-beta protein, Lilly noted in a press release, and was not expected to significantly remove deposited plaques. Two of Lilly’s other Alzheimer’s candidates, donanemab and remternetug, do target deposited amyloid plaque and have demonstrated plaque-clearance capabilities. Both are in Phase III development. 

Lori Herndon is retiring as president and CEO of AtlantiCare after being with the health system for 40 years. She began as a critical care nurse in 1983 and has led southern N.J.-based AtlantiCare since 2016. Herndon will transition her CEO responsibilities on May 31, according to the announcement, and will retire on June 30. The board has undertaken a search for her successor. 

What we’re reading
Electronic Prior Authorization for Prescription Drugs — Challenges and Opportunities for Reform. NEJM, 3.9.23

The Silicon Valley Bank meltdown could be a disaster for downtrodden biotech startups. Fortune, 3.10.23


Contact Darwin Research Group and we will get right back to you.