Congress returns from its August recess with a long list of things to do and not a lot of time to do them. The fiscal year ends Sept. 30, and it’s possible that lawmakers will fail to finish work not only on the annual appropriations bills, but also on any short-term spending bill to keep the government open.
Meanwhile, Medicare has announced the first 10 drugs whose prices will be negotiated under the Inflation Reduction Act of 2022. Exactly how the program will work remains a question, however. Even how the process will begin is uncertain, as drugmakers and other groups have filed lawsuits to stop it.
This week’s panelists are Julie Rovner of KFF Health News, Rachel Cohrs of Stat, Joanne Kenen of the Johns Hopkins Bloomberg School of Public Health and Politico, and Alice Miranda Ollstein of Politico.
Among the takeaways from this week’s episode:
- Hard-line Republicans are refusing to back even a temporary government spending bill, suggesting a government shutdown looms — with repercussions for health programs. While the Senate and House have come to intra-chamber agreements on subjects like community health center funding or even have passed spending bills, Congress as a whole has been unable to broker an overarching deal.
- A coalition of House Republicans is falsely claiming that global HIV/AIDS funding through PEPFAR promotes abortion and is battling efforts to extend the program’s funding. PEPFAR is a bipartisan effort spearheaded by then-President George W. Bush and credited with saving millions of lives.
- The PEPFAR fight underscores the dysfunction of the current Congress, which is struggling to fund even a highly regarded, lifesaving program. Another example is the months-long blockade of military promotions by a freshman Republican senator, Alabama’s Tommy Tuberville, a member of the Senate Armed Services Committee. His objections over an abortion-related Pentagon policy have placed him at odds with top military leaders, who recently warned that his heavy-handed approach is weakening military readiness.
- The Biden administration recently announced new staffing requirements for nursing homes, as a way to get more nurses into such facilities. But how long will compliance take, considering ongoing nursing shortages? And the drug industry is reacting to the news of which 10 drugs will be up first for Medicare negotiation, with much left to be sorted out.
- In abortion news, a Texas effort to block patients seeking abortions from using the state’s roads is spreading town to town — and, despite being dubiously enforceable, it could still have a chilling effect.
Also this week, Rovner interviews Meena Seshamani, who leads the federal Medicare program, about the plan to start negotiating drug prices.
Plus, for “extra credit,” the panelists suggest health policy stories they read this week that they think you should read, too:
Julie Rovner: JAMA Health Forum’s “Health Systems and Social Services — A Bridge Too Far?” by Sherry Glied and Thomas D’Aunno.
Alice Miranda Ollstein: The Washington Post’s “Heat’s Hidden Risk,” by Shannon Osaka, Erin Patrick O’Connor, and John Muyskens.
Rachel Cohrs: The Wall Street Journal’s “How Novartis’s CEO Learned From His Mistakes and Got Help From an Unlikely Quarter,” by Jared S. Hopkins.
Joanne Kenen: Politico’s “How to Wage War on Conspiracy Theories,” by Joanne Kenen, and “Court Revives Doctors’ Lawsuit Saying FDA Overstepped Its Authority With Anti-Ivermectin Campaign,” by Kevin McGill.
Also mentioned in this week’s episode:
- The Washington Post’s “Highways Are the Next Antiabortion Target. One Texas Town Is Resisting,” by Caroline Kitchener.
- KFF Health News’ “Biden Administration Proposes New Standards to Boost Nursing Home Staffing,” by Jordan Rau.
- Stat’s “The Curious Case of J&J’s Stelara, The Unluckiest Drug on Medicare’s List,” by Rachel Cohrs.
[Editor’s note: This transcript, generated using transcription software, has been edited for style and clarity.]
Julie Rovner: Hello and welcome back to “What the Health?” I’m Julie Rovner, chief Washington correspondent for KFF Health News, and I’m joined by some of the best and smartest health reporters in Washington. We’re taping this week on Thursday, Sept. 7, at 10 a.m. As always, news happens fast, and things might have changed by the time you hear this. So here we go. We are joined today via video conference by Rachel Cohrs of Stat News.
Rachel Cohrs: Good morning.
Rovner: Joanne Kenen of the Johns Hopkins Bloomberg School of Public Health and Politico.
Joanne Kenen: Hi, everybody.
Rovner: And Alice Miranda Ollstein of Politico.
Alice Miranda Ollstein: Hello.
Rovner: Later in this episode, we’ll have an interview with Meena Seshamani, who runs the Medicare program for the federal government, with an update on the Medicare drug negotiation debate as, we’ll discuss, the first 10 drugs that will be subject to negotiation were announced last week. But first, this week’s news. So Labor Day is behind us, and Congress is back — sort of. The Senate is back. The House returns next week. And there are lots of questions to be answered this fall, starting with whether or not Congress can finish the annual spending bills before the start of fiscal 2024 on Oct. 1. Spoiler: They cannot. But there’s also a real question whether Congress can even pass a short-term bill to keep the government running while lawmakers continue to work on the rest of the appropriations. As of now, what do you guys think are the odds that we’re going to end up with some kind of government shutdown at the end of the month?
Ollstein: Well, it’s whether it happens at the end of the month or at the end of the year, really. Folks seem pretty convinced that it will happen at some point. It could be short-lived. But, yeah, like you said, you have some hard-line House Republicans who say they won’t support even a temporary stopgap bill without spending cuts, policy changes, without sort of extracting some of their demands from leadership. And you could work around that in the House by cobbling together a coalition of Republicans and Democrats. But that also puts [House Speaker Kevin] McCarthy’s leadership in jeopardy. And so, we’re having sort of the same dynamic play out that we saw earlier this year, trying to navigate between the hard-line House Republicans and, you know, the more vulnerable swing districts’ members. So it’s … tough.
Rovner: Yeah, it’s the Republicans from districts that [President Joe] Biden won … basically.
Ollstein: Yeah. And so you have this weird game of chicken right now where both the House and Senate are trying to pass whatever they can to give themselves more leverage in the ultimate House-Senate negotiations. They think, OK, if we pass five bills and they only pass one, you know, then we have the upper hand. So we’ll see where that goes.
Rovner: It’s funny, because the Senate has been a well-oiled machine this year on the spending bills, which is unusual. I was about to say I will point out that there are two women: the chairman and ranking member. But that’s actually also true in the House. We do have women running the appropriations process this year. But I was amused that Kevin McCarthy, sometime during August, a couple of weeks ago, said, you know, very confidently, well, we’ll pass a short-term spending bill. You know, we won’t let the government shut down. And by the next day, the hard-line Republicans, the right wing, were saying, yeah, no you won’t. You’re going to have to deal with us first. And, obviously, there’s lots of health stuff that’s going to get caught up in that. The end of the fiscal year also marks the end of funding authority for a number of prominent programs. This is not the same as the appropriations programs whose authorizations lapse can continue, although things can get complicated. PEPFAR, the two-decade-old bipartisan program that provides AIDS and HIV prevention and treatment around the world, is one of those programs that, at least as of now, looks pretty stuck. Alice, is there any movement on this? We’ve talked about it before.
Ollstein: Not yet. So the latest we know, and we got this last night, is that [Foreign Relations Committee] Chairman [Bob] Menendez in the Senate is floating a new compromise. Basically, supporters of PEPFAR have been pushing for the full five-year standard reauthorization. And a coalition of House Republicans who are claiming that PEPFAR money is going to abortion say they want no reauthorization at all. They just want the program to sort of limp along through appropriations. So between five years and zero, Menendez is now suggesting a three-year extension. There is a huge desire not to just have the one-year funding patch because that would kick all of this into the heat of the 2024 season. And if you think the debate is ugly now over abortion and federal spending, just wait until 2024.
Kenen: I mean, this … [unintelligible] money … it’s saved tens of millions of lives — and with bipartisan support in the past.
Rovner: It was a Republican initiative.
Kenen: Right. It was President Bush, George the second.
Rovner: George W. Bush. Yeah.
Kenen: And they’re not saying they’re actually going out and using the AIDS dollars to conduct, to actually do abortions. They’re saying that there’s, you know, they’re in the world of abortion and they’re promoting abortion, etc., etc. So the conversation gets really, really, really, really muddled. Under U.S. law, they cannot use U.S. dollars for abortion under the Hyde Amendment, you know, all sorts of other foreign policy rules. So it’s hard to overstate how important this program has been, particularly in Africa. It has saved millions and millions of lives. And I think Alice might have broken the story originally, but it got caught up in abortion politics, and it caught people by surprise. This is not something … everything in Washington gets caught up in politics, except this! So I think it’s been quite shocking to people. And it’s, I mean — life-and-death sounds like a, you know, it’s a Washington cliché — this is life-and-death.
Ollstein: Yeah, absolutely. And, you know, even though the program won’t shut down if they don’t manage to get a reauthorization through, you know, I talked to people who run PEPFAR services in other countries, and they said that, you know, having this year-to-year funding and instability and uncertainty — you know, they won’t be able to hire, they won’t be able to do long-term planning. They said this will really undermine the goal to eliminate HIV transmission by 2030.
Cohrs: Oh, I actually did just want to jump in about another Sept. 30 deadline, because there was a big development this week. I know we were just talking about long-term planning. There is funding for community health centers that’s expiring at the end of September as well. DSH cuts could go into effect for hospitals. We do this routine every so often, but the House is actually more in step than the Senate on this issue; they released — at least Republicans released — a draft legislation, where all three committees of jurisdiction are in agreement about how to proceed. There are some transparency measures in there.
Rovner: The three committees in the House.
Cohrs: In the House. Yes, yes, we’re talking about the House. Yeah. So, they have reconciled their differences here and are hoping to go to the floor this month. So, I think they are out of the gate first, certainly with some sort of longer-term solution here. Again, could get punted. But I think it is a pretty big development when we’re talking about these extenders that the industry cares about very much.
Kenen: Congress is so polarized that it can’t even do the things that it agrees on. And we have seen this before where CHIP [Children’s Health Insurance Program] got caught up a few years ago. Community health clinics have gotten caught right in that same bill, right? But, you know, we really have this situation where it’s so dysfunctional they can’t even move fully on things that everybody likes. And community health centers date back to the early ’60s. However, they got a really big expansion, again, under second President Bush. And they’re popular, and they serve a need, and everybody likes them.
Rovner: They got a bigger expansion under the Affordable Care Act.
Kenen: Right, but they, you know — but I think that the Bush years was like the biggest in many years. And then they got more. So again, I mean, are they going to shut their doors? No. Is it going to be a mess? It is already a mess. They can’t — they don’t know what’s coming next. That’s no way to run a railroad or a health clinic.
Rovner: All right, well, one more while we’re on the subject of abortion-related delays: Alabama Sen. Tommy Tuberville is still blocking Senate approval of routine military promotions to protest the Biden administration’s policy of allowing funding for servicewomen and military dependents to travel for abortions if they’re posted to states where it’s banned. Now, the secretaries of the Army, Navy, and Air Force are joining together to warn that Tuberville’s hold is threatening military readiness. Tuberville apparently went on Fox News last night and said he’s got more people who are coming to support him. Is there any end to this standoff in sight? I mean, people seem to be getting kind of upset about it. It’s been going on since, what, February?
Ollstein: Yeah, there is not yet an end in sight. So far, all of the attempts to pressure Tuberville to back down have only hardened his resolve, it seems, you know, and he’s gone beyond sort of his original statement of, you know, all of this is just to get rid of this policy that doesn’t pay for abortions; it just allows people to travel out of state if they’re stationed — they don’t get to choose where they’re stationed — if they’re stationed somewhere where abortion is not legal or accessible. And so now he’s making claims about other things in the military he considers too woke. He’s criticized some of these individual nominees themselves that he’s blocking, which was not sort of part of the original stand he took. And so, it’s tough, and there isn’t enough floor time to move all of these and go around him. And so this pressure campaign doesn’t seem to be really making any headway. So I don’t really see how this gets resolved at this point.
Kenen: Except that other Republicans are getting a little bit more public. I mean, they were sort of letting him run out for a while. And there’s more Republicans who are clearly getting enough of this. But I mean, unless McConnell can really get him to move — and we don’t know what’s gone on behind closed doors, but we’re certainly not seeing any sign of movement. In fact, as Alice said, he’s digging in more. I mean, like, Marines and woke are not the two words you usually hear in one sentence, but in his worldview, they are. So, I think it’s unprecedented. I mean, I don’t think anyone’s ever done this. It’s not like one or two people. It’s like the entire U.S. military command can’t move ahead.
Rovner: I’ve been doing this a very long time, and I don’t remember anything quite like this. Well, the one thing that we do expect to happen this fall is legislation on — and Rachel, you were referring to this already — sort of health care price transparency and PBMs, the pharmacy benefit managers. Where are we with that? They were supposed to work on it over the August break. Did they?
Cohrs: They were supposed to work on it. The House was clearly working on it and reconciling some of their differences. They’re planning to introduce legislative text on Friday. So, I think Democrats aren’t on board yet, so things could change from the draft they had been circulating early this week. But again, Republicans don’t really need Democrats to move forward, at least in the House. The Senate has been pretty quiet so far. Not to say that no work has gone on, but they certainly weren’t ready for the rollout in the same way that the House was. You know, I think there are still some big questions about, you know, what they’re planning to accomplish with insulin policy, how they’re planning to fit together this jigsaw puzzle of PBM transparency and reforms that have come out of different committees. And I think it’ll come down to [Senate Majority Leader] Sen. Schumer making some tough choices. And from my understanding, that hasn’t quite happened yet. But if the actual showdown happens November, December, they still have some time.
Rovner: Yeah. Now they’re not going out early. They’re clearly going to be fighting over the appropriation. So, the legislative committees have plenty of time to work on these other things. All right. Well, let’s turn to Medicaid for a moment. The quote-unquote “unwinding” continues as states move to redetermine who remains eligible for the program and who doesn’t following the pandemic pause. As predicted, it’s been a bit of a bumpy road. And now it seems a bunch of states have been incorrectly dropping children from Medicaid coverage because their parents are no longer eligible. That’s a problem because nationwide, income limits for children’s eligibility is higher than parents’. In some states, it is much higher. I remember after Hurricane Katrina, in Louisiana, parents were only eligible if they earned 15% of poverty. Somebody said 50, and the Medicaid director said, “No, 15, one-five.” Whereas kids are eligible to, I believe it’s 200% of poverty. And I think that’s a national level.
Kenen: Now, in some states it’s higher.
Rovner: Yes. But I say this is happening in a bunch of states because federal government won’t tell us how many or which ones. We do know it’s more than a dozen, but this is the second time the administration has admonished states for wrongly canceling Medicaid coverage. And they wouldn’t say which states were involved at that time either. Is this an effort to keep this as apolitical as possible, given that the states most likely to be doing this are red states who are trying to remove ineligible people from Medicaid as fast as they can, that they’re trying to sort of keep this from becoming a Republican versus Democrat thing.
Ollstein: It seems like, from what we’re hearing, that the administration is really wary of publicly picking a fight with these states. They want the states to work with them. And so, even if the states are going about this in a way they think is totally wrong, they don’t want to just put them publicly on blast, because they think that’ll make them, again, double down and refuse to work with the government at all. And so, they’re trying to maintain some veneer of cooperation. But at the same time, you’re having, you know, millions of people, including children, falling through the cracks. And so, you know, we have sort of this sternly-worded-letter approach and we’ll see if that accomplishes anything, and if not, you know, what measures can be taken. You know, the administration also created a way for states to hit pause on the process and take a little more time and do a little more verification of people’s eligibility. And some — a couple states — have taken advantage of that, and it’s been successful in, you know, having fewer people dropped for paperwork reasons, but it’s not really happening in the states where it sort of most needs to happen, according to experts.
Rovner: The administration has had fingers pointed at it, too, because apparently it approved some of these plans from the states that were going to look at total family income without realizing that, oh, that meant that kids who are still eligible could end up losing coverage because their parents are no longer eligible.
Kenen: Right. And I also read something yesterday that in some cases it’s sort of a technical issue rather than a “how much outreach and what your intentions are,” that it’s a programing issue, which is related to what Julie just said about the plan. So, it’s not that these states set about to drop these kids, and there may be some kind of goodwill to fix it, in which case you don’t want to get in — and I don’t know that it’s 100% red states either. So —
Rovner: No, that’s clear. We assume, because they’re the ones going fastest, but we do not know.
Kenen: Right, so that there seems to be some kind of — the way it was set up, technically, that can be remedied. And if it’s a technical fix as opposed to an ideological fight, you don’t really want to — you want to figure out how to reprogram the computer or whatever it is they have to do and then go back and catch the people that were lost. So, they’ve been pretty low-key about politicizing rewinding in general. But on the kids, I think they’re going to be even more — CHIP passed, another thing with bipartisan support that’s a mess. I mean, it seems to be the theme of the day. But, you know, CHIP was created on a bipartisan basis, and it’s always been sustained on a bipartisan basis. So, I think that the issue, I don’t know how technically easy it is to fix, but there’s a big difference in how the administration goes after someone that’s intentionally doing something versus someone who wrote their computer programmer set something up wrong.
Rovner: Well, we will definitely keep on this one.
Kenen: But it’s a big mess. It’s a lot of kids.
Rovner: It is a big mess. And let’s turn to the thing that is not bipartisan in Congress, and that is —
Kenen: That’ll be a bigger mess.
Rovner: — Medicare drug negotiations. Yes. While we were away, the federal government released its much-anticipated list of the 10 brand-name drugs that will be the first tranche up for potential price negotiation. I say potential, because the companies have the option of negotiating or not — sort of — and because there are now, I think, nine lawsuits challenging the entire program. My interview with Medicare administrator Meena Seshamani will get into the nuts and bolts of how the negotiation program is supposed to work. But Rachel, tell us a little bit about the drugs on the list and how their makers are trying to cancel this entire enterprise before it even begins.
Cohrs: Sure. So, a lot of these drugs that we’re seeing on the list are blood thinners. Some are diabetes medications. There are drugs for heart failure, rheumatoid arthritis, Crohn’s disease, and there’s also a cancer treatment, too. But I think overall, the drugs were chosen because they have high cost to Medicare. And it was —
Rovner: So that either could mean a lot of people use an inexpensive drug —
Rovner: — or a few people use a very expensive drug.
Cohrs: Correct. And it was Wall Street’s favorite parlor game to try to guess what drugs were going to be on this list of 10 drugs that are going to be the guinea pigs to go through this program for the very first time. But it was interesting, because there were a few surprises. Medicare officials were using newer data than Wall Street analysts had access to. So, there were a couple drugs, especially further down on the list, that people used more in the period CMS [Centers for Medicare & Medicaid Services] was studying than had been used previously. So, we saw a couple very interesting instances of a drug being chosen for the list, even though it just kind of fell through the cracks. It was J&J’s [Johnson & Johnson’s] Stelara. It’s a Crohn’s disease treatment, and it does have competition coming in the market soon, but just because of a fluke of kind of when it was approved by the FDA, it just missed cutoffs for some of these exemptions and is now subject to some pretty significant discounts through the program.
Rovner: We’ll link to your very sad story about Stelara.
Cohrs: Sad for the company, but not sad for the patients who will hopefully be paying less for this medication. And there’s also the case of Astellas [Pharma Inc.], which makes a prostate cancer drug that’s very expensive. A lot of people expected that to be selected, but actually wasn’t. And Astellas had sued the Biden administration already before the list came out and then had to withdraw their lawsuit yesterday because their argument that they were going to be harmed by this legislation was made much weaker by the fact that they weren’t selected for this first year of the program. So, who knows? They could dust off their arguments a year from now or two years from now. But it was interesting to see kind of some of these surprises on the list. Again, there are still several, like you mentioned, outstanding lawsuits in several different jurisdictions. I think the main one that we’re watching is by the [U.S.] Chamber of Commerce, which requested a preliminary injunction by the end of this month. So, we’ll see if that comes through. But it is a very long road to 2026. There might be a new administration by then. So, I think there are still a lot of questions about whether this reaches the finish line. But I think it’s a very important step for CMS to get this list out there in the world.
Rovner: So, I spent some time digging in my notes from earlier years, and I dug up notes from an interview I did on Aug. 26 with a spokesperson from the drug industry about how the Medicare drug benefit, quote, “impact the ability of companies to research new medicines. And if that happens, the elderly would be the ones hurt the most.” That quote, by the way, was from Aug. 26 of 1987. Some things truly never change. But is this maybe, possibly, the beginning of the end of drugmakers being able to charge whatever they want in the United States? Because it’s the only country where they can.
Cohrs: Oh, they can still charge whatever they want. This law doesn’t change that. It just changes the fact that Medicare won’t be paying whatever drugmakers happen to charge for an unlimited amount of time. Like, they can still charge whatever they want to Medicare for as long as they can get on the market before they’re selected for this negotiation program. But certainly there could be significant cost — significant savings to Medicare, even if those prices are high. And it’s just kind of a measure that forces price reductions, even if the generic or biosimilar market isn’t functioning to lower those prices through competition.
Kenen: Right. And it’s only Medicare. So, people who are not on Medicare — insurance companies also negotiate prices, but they’re not the government. It’s different. But I mean, these drugs are not going to start being, you know, three bucks.
Rovner: But they may stop being 300,000.
Kenen: Well, we don’t know, because there are some people who think that if Medicare is paying less, they’re going to charge everybody else more. We just don’t know. We don’t know what their behavior is going to be. But no, this does not solve the question of affordability of medication in the United States.
Rovner: The drug companies certainly think it’s the camel’s nose under the tent.
Kenen: They have some medicine for camels’ noses that they can charge a lot of money for, I’m sure.
Rovner: I bet they do. While we are on the subject of things that I have covered since the 1980s, last week the Biden administration finally put out its regulation requiring that nursing homes be staffed 24/7/365 by, you know, an actual nurse. One of the first big reconciliation bills I covered was in 1987 — that was a big year for health policy — and it completely overhauled federal regulation of nursing homes, except for mandating staffing standards, because the nursing homes said they couldn’t afford it. Basically, that same fight has been going on ever since. Except now the industry also says there aren’t enough nurses to hire, even if they could afford it. Yet patient advocates say these admittedly low staffing ratios that the Biden administration has put out are still not enough. So, what happens now? Is this going to be like the prescription drug industry, where they’re going to try to sue their way out of it? Or is it going to be more like the hospital transparency, where they’re just not going to do it and say, “Come and get us”?
Kenen: My suspicion is litigation, but it’s too soon to know. I assume that either one of the nursing home chains — because there are some very big corporations that own a lot of nursing homes — there are several nursing home trade industry groups, for-profit, nonprofit. Does one owner — is in an area where there is a workforce shortage, because that does exist. I mean, I’d be surprised if we don’t see some litigation, because when don’t we see that? I mean, it’s rare. That’s the norm in health care, is somebody sues. Some of the workforce issues are real, but also this proposal doesn’t go into effect tomorrow. It’s not like — but I mean, there are issues of the nursing workforce. There are issues about not just the number of nurses, but do we have them in the right places doing the right jobs? It’s not just RNs [registered nurses]; there are also shortages of other direct care workers. I did a story a few months ago on this, and there are actually nursing homes that have closed entire wings because they don’t have enough staff, and those are some of the nonprofits. There are nursing issues.
Rovner: And a lot of nursing home staff got sick at the beginning of the covid pandemic, and many of them died before there were good treatments. I mean, it’s always been a very hard and not very well-paid job to care for people in nursing homes. And then it became a not very pleasant, not very well-paid, and very deadly job. So I don’t think that’s probably helping the recruitment of people to work in nursing.
Kenen: Right, but the issue — I think a lot of people, when you have your first family experience with a nursing home or, you know, or those of us reporters who hadn’t been familiar with them until we went and did some stories on them, I think people are surprised at how little nursing there actually is. It’s nurses’ aides; it’s, you know, what they used to call licensed practical nurses or nursing assistants; and CNAs, certified nursing assistants. They’re various; different states have different names. But these are not four-year RNs. The amount of actual nursing — forget doctors. I mean, there’s just not a lot of RNs in nursing homes. There’s not a lot of doctors who spend time in nursing homes. A lot of the care is done through people with less training. So, this is trying to get more nurses in nursing homes. And there’s been a lot of stories about inadequate care. KFF Health News — I think it was Jordan Rau who did them. There have been some good stories about particularly nights and weekends, just really nobody there. These are fragile people. And they wouldn’t be in a nursing home if they weren’t fragile people. There are a lot of horror stories. At the same time, there are some legitimate — How fast can you do this? And how well can you do it? And can you do it across the country? I mean, it’s going to take some working out, but I don’t think anybody thinks that nursing home care in this country is, you know, a paragon of what we want our elders to experience.
Rovner: And the nursing home industry points out, truthfully, that most nursing home payments now come from Medicaid, because even people who start out being able to afford it themselves often run out of money and then they end up — then they qualify for Medicaid. And Medicaid in many states doesn’t pay very much, doesn’t pay nursing homes very much. So it’s hard for these companies. We’re not even talking about the private equity companies. A lot of nursing homes operate on the financial edge. I mean, there are —our long-term care policy in this country is, you know, just: What happens, happens, and we’ll worry about it later. And this has been going on for 50 years. And now we have baby boomers retiring and getting older and needing nursing home care. And at some point, this is all going to come to a head. All right. Well, let us turn to abortion. This week marks the second anniversary of the Texas abortion ban, the so-called heartbeat bill, that bans most abortion and lets individuals sue other individuals for helping anyone getting an abortion, which the Supreme Court, if you’ll recall, allowed to take effect months before it formally overturned Roe v. Wade. And, I guess not surprisingly, Texas is still in the news about abortion. This time. The same people who brought us Texas SB 8, which is the heartbeat bill, are going town by town and trying to pass ordinances that make it illegal to use roads within that town’s borders to help anyone obtain an abortion. They’re calling it abortion “trafficking.” Now, it’s not only not clear to me whether a local ordinance can even impact a state or an interstate highway, which is what these laws are mostly aimed at; but how on earth would you enforce something like this, even if you want to?
Ollstein: So, my impression is that they do not want to. These are not meant to be practical. They are not meant to be enforced, because how would you do it other than implementing a very totalitarian checkpoint system? This is meant to —
Rovner: Yes, have you been drinking and are you on your way to get an abortion?
Ollstein: Right. Right, right, right. So, it seems like the main purpose is to have a chilling effect, which it very well could have, even if it doesn’t stand up in court. You know, you also have this situation that we’ve had play out in other ways, where people are challenging laws in courts for having a chilling effect, and courts are saying, look, you have to wait till you actually get prosecuted and challenge it, you know, do an as-applied challenge. If you can’t challenge unless there’s a prosecution but there’s no prosecutions, then you sort of just have it hanging over your head like a cloud.
Kenen: Like Alice said, there’s no way you could do this. Like, what do you do, stop every car and give every person a pregnancy test? Are you going to, like, have, you know, ultrasounds on the E-ZPass monitors? Like, you go through it, it checks your uterus. So, I mean, it’s just not — you can’t do this. But I think one of the things that was really interesting in one of the stories I read about it, I think it was in The Washington Post, was that when they interviewed people about it, they thought it was trafficking, like really trafficking, that there were pregnant woman being kidnapped and forced to have an abortion. So even if you’re pro-choice, you might say, “Oh, I’m against abortion trafficking. I mean, I don’t want anyone to be forced to have an abortion.” You know, so, it’s — the wording and the whole design of it is, they know what they’re doing. I mean, they want to create this confusion. They want to create a disincentive. There’s no way — you know, radar guns? I mean, it’s just, there’s no way of doing this. But it is part of the effort to clamp down even further on a state that has already really, really, really clamped down.
Rovner: Although, I mean, if one could sue and if one could then know about something that’s happening and then you could presumably take the person to court and say, I know you were pregnant and now you’re not, and somebody took you in a car to New Mexico or whatever …
Kenen: You can’t even prove — how do you prove that it wasn’t a miscarriage?
Rovner: That’s —
Kenen: Right? I mean …
Rovner: I’m not saying — I’m not talking about the burden of proof. I’m just saying in theory, somebody could try to have a case here. I mean, but we certainly know that Texas has done a very good job creating a chilling effect, because we still have this lawsuit from the women who were not seeking abortions, who had pregnancy complications and were unable to get health-saving and, in some cases, lifesaving care promptly. And that’s still being litigated. But meanwhile, we have, you know, just today a study out from the Guttmacher Institute that showed that despite how well these states that are banning abortion have done in banning abortion, there were presumably more abortions in the first half of 2023 than there were before these bans took effect, because women from ban states were going to states where it is not banned. And there has been, ironically, better access in those states where it is not banned. I can’t imagine that this is going to please the anti-abortion community. One would think it would make them double down, wouldn’t it?
Ollstein: We know that people are leaving their states to obtain an abortion. We also know that that’s not an option for a lot of people, and not just because a lot of people can’t afford it or they can’t take time off work, they can’t get child care — tons of reasons why somebody might not be able to travel out of state. They have a disability, they’re undocumented. We also have — it’s become easier and easier and easier to obtain abortion pills online through, you know, a variety of ways: individual doctors in more progressive states, big online pharmacies are engaged in this, overseas activist groups are engaged in this. And so, you know, that’s also become an option for a lot of people. And anti-abortion groups know that those are the two main methods. People are still continuing to have abortions. And so, they’re continuing to just throw out different ways to try to either, you know, deter people or actually block them from either of those paths.
Rovner: This fight will also continue on. So, that is this week’s news. Now we will play my interview with Meena Seshamani, and then we will come back and do our extra credits.
Hey, “What the Health?” listeners, you already know that few things in health care are ever simple. So, if you like our show, I recommend you also listen to “Tradeoffs,” a podcast that goes even deeper into our costly, complicated, and often counterintuitive health care system. Hosted by longtime health care journalist and friend Dan Gorenstein, “Tradeoffs” digs into the evidence and research data behind health care policies and tells the stories of real people impacted by decisions made in C-suites, doctors’ offices, and even Congress. Subscribe wherever you listen to your podcasts.
I am pleased to welcome back to the podcast Dr. Meena Seshamani, deputy administrator and director of the Center for Medicare at the Centers for Medicare & Medicaid Services. Meena was with us to talk generally about Medicare’s new prescription drug negotiation program earlier this summer. But now that the first 10 drugs subject to negotiation have been announced, we’re pleased to have her back. Welcome.
Meena Seshamani: Thank you for having me.
Rovner: So, remind our listeners, why hasn’t Medicare been able to negotiate drug prices until now — they negotiate prices of everything else — and what changed to make that happen?
Seshamani: That’s right. It was because of the Medicare law that Medicare did not have the ability to negotiate drugs. And thanks to the new drug law, the Inflation Reduction Act, now Medicare has the ability to negotiate the prices of the highest-cost drugs that don’t have competition. And that is part of the announcement that we had on what the first 10 drugs are that have been selected.
Rovner: So, as you say, last week, for the first time and in time for the Sept. 1 deadline, Medicare announced the list of the first 10 drugs that will be part of the first round of price negotiations. Why these 10 specifically? I imagine it’s not a coincidence that the list includes some of the drugs whose ads we see the most often on TV: drugs like Eliquis, Xarelto, and Jardiance, which I of course know how to pronounce because I see the ads all the time.
Seshamani: Well, the process of selection really was laid out in the drug law and also through the guidance that we put out that we had incorporated everybody’s comment for. So, what we did is we started with the, you know, over 7,500 drugs that are covered in the Part D Medicare prescription drug program. From there, we picked those drugs that had been on the market for seven years for a drug product or 11 years for a larger molecule or biologic product that did not have competition. And then from there, there are various exemptions and exclusions that, again, are laid out in the law: for example, drugs that have low Medicare spend, of less than $200 million; drugs that are plasma-derived products; certain orphan drugs. An orphan drug is a drug that is indicated for a rarer disease. So that, again, those specific criteria are laid out in the law and in our guidance. And then there were opportunities for manufacturers to apply, for example, for a small biotech exemption; if their drug was, you know, 80% of their, you know, Medicare Part D revenue, they could say, “Hey, I’m a small biotech.” Again, a lot of these criteria were laid out in the law. Or for a manufacturer of a biosimilar, which is kind of like a generic drug for one of these biologic drugs, they could say, “Hey, we have a biosimilar that’s going to be coming on the market, has a high likelihood of coming on the market, so you should delay negotiating” the brand, if you will, drug. So, again, all of these steps were laid out in the drug law, and those are the steps and criteria that we followed that came to that list of 10 drugs that we published.
Rovner: I did see the makers of one drug — and forgive me, I can’t remember which one it was — saying, “But our drug isn’t that expensive.” On the other hand, their drug is used by a lot of people on Medicare. So, it’s not just the list price of the drug, right? It’s how much it costs Medicare overall.
Seshamani: That’s right. The list is made up of those drugs that have the highest gross total cost to the program — so, price per unit times units of volume that is used.
Rovner: So, how does this negotiation process work? What happens now? Now we have this list of 10 drugs.
Seshamani: Yeah, a lot of this is also laid out in the law, and then we fleshed out further in our guidance. So, from the list of 10 drugs, on Oct. 1, manufacturers now have to decide if they want to participate in the negotiation program. It is a voluntary program. It is our hope that they will come to the table and want to negotiate, because I think we all have shared goals of improving access and affordability and really driving innovation for the cures and therapies that people need. So, Oct. 1, they sign agreements for the negotiation program if they decide to participate. And Oct. 2 is the deadline for gathering data. We put out what’s called an information collection request to say, this is the kind of data we’re thinking about collecting. We got lots of comments and incorporated that. So, that provides the framework for the data that we’re requesting both from the manufacturer of the selected drug, but also, there are aspects open to the public on, you know, how the drug benefits populations, for example. So that’s Oct. 2. Then we’re going to have patient-focused listening sessions, a session for each drug, for patients, their caregivers, you know, other advocates, to be able to share what they see as the benefits of the drugs that are selected. And, we will have meetings with each of the manufacturers. All of that information will come together in an initial offer that CMS will make Feb. 1, 2024, and that is a date that is stipulated in the law. The manufacturer then has about 30 days to evaluate that. If they like that offer, they can agree. If they want, they can make a counteroffer. From that counteroffer, CMS has the ability to agree or to say, “You know, we don’t agree, so let’s now have a series of negotiation meetings.” There can be up to three negotiation meetings that provides that back-and-forth, ultimately leading to an agreed-upon what’s called maximum fair price in the law. And those maximum fair prices are published by Sept. 1, 2024. Again, that Sept. 1 is stipulated in the law. And also as part of this process, CMS will publish a narrative about that negotiation process — you know, the data that was received, you know, the back-and-forth, and also we’ll publish ultimately the maximum fair prices that are agreed to.
Rovner: And does that maximum fair price just apply to Medicare?
Seshamani: The maximum fair price just applies to Medicare. The information will be available. I mean, we don’t have any authority. You know, the commercial sector, they do their own negotiations, and they will continue to do so. But part of this is an opportunity to really further the conversation about how drugs impact the lives of people. We have an opportunity now with some drugs that have been on the market for quite a while, right? Minimum of seven years or 11 years, to see how these drugs work in the real world, in people’s communities, so that we can incorporate that into what it is that we need and want for people to be healthy, to stay out of the hospital, to live meaningful lives. So it’s really an opportunity to further that conversation. And a lot of that data, a lot of those listening sessions, that will all go into our negotiation process and will be part of the narrative that we publish.
Rovner: And what happens if the drug company says either we don’t want to negotiate or we don’t like our final offer? If they say they don’t want to play, what happens?
Seshamani: Julie, I will say again, to start with, we are hopeful that the drug companies will come forward and will want to negotiate because, again, through many conversations that we have had, we do have shared goals of access and affordability and really driving innovation and procures and therapies that people need. And it is a choice for drug companies if they want to participate or not, as stipulated in the law. If a drug company decides not to sign, you know, the negotiation agreement, not to participate in negotiation, then we would refer them to the Department of Treasury for an excise tax. That excise tax is also described in the law. If a drug company has this excise tax applied, they can get out of paying the excise tax. If, No. 1, they decide to come to the table and negotiate, or No. 2, if they exit the Medicare and Medicaid market. So those are kind of their off-ramps, if you will, for that excise tax.
Rovner: So they don’t have to participate in the negotiation, but they also don’t have to participate in Medicare and Medicaid.
Rovner: So I saw a lot of complaining last week with the first group of drugs that this is really only going to benefit the people on Medicare who take those drugs. But, in fact, if there really is a lot of money saved, the benefits could go well beyond this, right?
Seshamani: Yeah, I think two points. So, yes, this negotiation is for, you know, some of the highest-cost drugs to the Medicare program that don’t have competition. And the negotiated drug prices apply to the Medicare program. However, as we talked about, this really drives a conversation around drugs and really grounding this negotiation process in the clinical benefit that a drug provides. Considering things like if a drug is easier for someone to take and it’s easier for a caregiver, that can have tangible improvements to the health of the person they’re caring for, right? And I think we have that opportunity to really drive the conversation. And as we know in many aspects of health care, people look to Medicare to see what Medicare is doing. And also, the transparency around providing that narrative of the negotiation, publishing the maximum fair prices that are agreed to. That’s all data that anybody can use as they would like. And I think the second piece that’s important to remember is that negotiation is one very important piece of a very big change to Medicare prescription drug coverage. You know, alongside the $2,000 out-of-pocket tab that’s going to go into effect in 2025, the no-cost vaccines, $35 copay cap for insulin that have already gone into effect. So, really, it is part of a larger sea change in Medicare drug coverage that will help millions of people and their families. You know, I did a roundtable with seniors as we were rolling out the insulin copay cap. And one woman was telling me that she was providing money to her brother every month so that he could pay for his insulin on Medicare. So, really, I mean, this has tremendous impact not just for people on Medicare, but their families, their communities, and really furthers the conversation for the entire system.
Rovner: I was actually thinking of more nitty-gritty money, which is if you save money for Medicare, premiums will be lower for people who are getting drug coverage, and taxpayers will save money, too, right? I mean, this is not just for these people and their families.
Seshamani: Our priority is being able to reach agreement on a fair price for the people who rely on these medications for their lives and the American taxpayer in the Medicare program.
Rovner: I know you can’t comment on lawsuits, and there are many lawsuits already challenging this. But the drug companies, one of their major arguments is that if you limit what they can charge for their drugs, particularly in the United States, the last country where they can charge whatever they want for their drugs, they will not be able to afford to keep the pipeline going to discover more new, important drugs. This is an argument they’ve been making since, I told somebody earlier, since I covered this in the late 1980s. What is your response just to that argument?
Seshamani: Well, I think there were several articles, many articles were written about this on the day that the 10 selected drugs were published. They were published before the stock market opened. And there really was no impact on the stocks of the companies. There were many financial pieces written about this. So I think that is one indication of the fact that the pharmaceutical industry is strong, it is thriving, and it is designed to innovate. And what we’re hoping to do through this negotiation program is really reward the kinds of innovations that we all need, the cures and therapies that people need. Recently, the venture fund that backed Moderna invested in a new startup for small molecules. Bayer has recently invested a billion dollars in the U.S. So you see, the industry very much is thriving. That is what the stock market response also shows. And it’s also the way that we are approaching negotiation to make sure that we’re rewarding the kinds of innovations that people need.
Rovner: Well, Meena Seshamani, thank you so much. I hope we can come back to you as this negotiation process for the first time proceeds.
Seshamani: Absolutely. Thanks again, Julie.
Rovner: OK. We are back, and it’s time for our extra-credit segment. That’s when we each recommend a story we read this week we think you should read too. As always, don’t worry if you miss it. We will post the links on the podcast page at kffhealthnews.org and in our show notes on your phone or other mobile device. Alice, why don’t you go first this week?
Ollstein: Yeah, I picked a very sad story from The Washington Post about how people who have schizophrenia are a lot more vulnerable to extreme heat. And it’s rare to find one of these health care stories where you’re just astonished. You know, I had no idea about this. You know, it really walks through not only are people more vulnerable for mental health reasons, you know, it profiles this terrible story of a guy in Phoenix who wandered off into the desert and died because he was experiencing paranoid delusions. But also, just physically, people with schizophrenia have difficulty regulating their body temperature. A lot of medications people take make people more dehydrated, less able to cope. And just an astonishingly high percentage of people hospitalized and killed by extreme heat have these mental illnesses. Of course, they’re also more likely to have housing instability or be out on the street. So just a fascinating piece, and I hope it spurs cities to think of ways to address it. One other small thing I want to compliment is it just, technically, on this article online, they have a little widget where you can convert all of the temperatures cited in the lengthy story from Fahrenheit to Celsius. And I just really appreciated that for allowing, you know, no matter where you live, you sort of get what these high temperatures mean.
Rovner: Yeah, graphics can be really helpful sometimes. Rachel.
Cohrs: Yeah. So I chose a story in The Wall Street Journal and the headline is “How Novartis’s CEO Learned From His Mistakes and Got Help From an Unlikely Quarter,” by Jared S. Hopkins. And I think it was a really interesting and rare look inside one of these pharmaceutical companies. And Novartis hired a Wall Street analyst, Ronny Gal, to help advise them. And I think I had read his analysis before he crossed over to Novartis. So I think it was interesting to just hear how that has integrated into Novartis’ strategy and just how they’re changing their business. But I think as we’re, you know, having these conversations about drug pricing and how strategies are changing due to some of these policies, it is helpful to look at who these executives are listening to and what they’re prioritizing, whose voices in this decision-making process that really has impacts for so many people who are waiting for treatments. And I think there are tough choices that are made all the time. So I just thought it was very illuminating and helpful as we’re talking about how medicines get made in D.C.
Rovner: Yeah, maybe there will be a little more transparency to actually how the drug industry works. We will see. Joanne.
Kenen: With Julie’s permission, I have two that are both short and related. I wrote a piece for Politico Nightly called “How to Wage War on Conspiracy Theories,” and I liked it because it really linked political trends and disinformation and attempts to debunk, with very parallel things going on in the world of health care and efforts to the motivations and efforts to sow trust and what we do and do not know about how to debunk, which we’re not very good at yet. And then the classic example, of course, is the related AP story, which has a very long headline, so bear with me. It’s by Kevin McGill: “Court Revives Doctors’ Lawsuit Saying FDA Overstepped Its Authority With Anti-Ivermectin Campaign.” And, basically, it’s that the 5th Circuit, a conservative court that we’ve talked about before, is saying that the FDA is allowed to inform doctors, but it can’t advise doctors. And I’m not really sure what the difference is there, because if the FDA is informing doctors that ivermectin, we now know, does not work against covid, and it can in fact harm people, there’s ample data, that the FDA is not allowed to tell doctors not to use it. So the ivermectin campaign is a form of disinformation, or misinformation, whatever you want to call it, that at the very beginning, people had, you know, there were some test-tube experiments. We had nothing else. You can sort of see why people wanted … might have wanted to try it. But we have lots and lots and lots of good solid clinical research and human beings and, no, it does not cure covid. It does not improve covid. And it can be damaging. It’s for parasites, not viruses.
Rovner: It can cure worms. Well, I’m going to channel my inner Margot Sanger-Katz this week and choose a story from a medical journal, in this case the Journal of the American Medical Association. Its lead author is Sherry Glied, who’s dean of the NYU Robert F. Wagner Graduate School of Public Service and former assistant HHS [Department of Health and Human Services] secretary for planning and evaluation during the Obama administration — and I daresay one of the most respected health policy analysts anywhere. The piece is called “Health Systems and Social Services — A Bridge Too Far?” And it’s the first article I’ve seen that really does question whether what’s become dogma in health policy over the past decade that — tending to what are called social determinants of health, things like housing, education, and nutrition — can improve health as much as medical care can. Rather, argues Glied, quote, “There are fundamental mismatches between the priorities and capabilities of hospitals and health systems and the task of addressing social determinants of health,” and that, basically, medical providers should leave social services to those who are professional social service providers. That is obviously a gross oversimplification of the argument of the piece, however, but I found it really thought-provoking and really, for the first time, someone saying, maybe we shouldn’t be spending all of this health care money on social determinants of health. Maybe we should let social service money go to the social service determinants of health. Anyway, we will see if this is the start of a trend or just sort of one outlier voice. OK, that is our show for this week. As always, if you enjoy the podcast, you can subscribe wherever you get your podcasts. We’d appreciate it if you left us a review; that helps other people find us, too. Special thanks, as always, to our amazing engineer, Francis Ying. Also, as always, you can email us your comments or questions. We’re at firstname.lastname@example.org. Or you can tweet me, or X me, or whatever. I’m still there @jrovner, also on Bluesky and Threads. Rachel?
Cohrs: I’m @rachelcohrs on X.
Rovner: We will be back in your feed next week. Until then, be healthy.
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