Capsule: Consolidation Crusaders, Medicare & Overseas Drug Drama

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By Jacquie Lee

Welcome to Capsule—your weekly dose of health-care news, where we give you a recap of this week’s highs and lows for key players in the health-care industry. You can expect us every Friday morning as a bookend for your week.

Even I’ll admit Capsule isn’t as fun to read as news coverage of Nick Jonas and Priyanka Chopra’s wedding. Lucky for you, we keep Capsule shorter than Chopra’s wedding veil (which was 75 feet long). On that note, let’s take a look at this week’s health policy news.

Here’s who ended the week on a high note:

Consolidation Crusaders
  • When drug companies, insurers, or drug middlemen team up, the move is typically criticized for creating monopoly-like companies that will take away patients’ choice and purchasing power. But a major health insurer says it’s cutting costs through teaming up with health-care providers, potentially a good sign for those who support consolidation within the health-care industry.
  • Highmark Inc. cut the cost of care for 2,000 of its sickest members through a new program that includes a team of Allegheny Health Network health-care providers, Sara Hansard reports. Within a year, the costs to treat the patients, who have at least six chronic conditions, were reduced by about 20 percent, and emergency room visits were reduced by 13 percent.
  • The Highmark CEO didn’t provide any data to support his claims, so take the cost cutting with a grain of salt. But if it’s true, it could appease those who say consolidation always eventually leads to higher prices.
Health-Care Accounts
John O’Brien
  • HHS Secretary Alex Azar tapped John O’Brien to become the department’s new “drug czar” Dec. 6, a sign Azar is looking for consistency within the agency after a former drug adviser’s death. O’Brien has held multiple positions within the Health and Human Services Department, including adviser to the secretary for health reform and drug pricing and deputy assistant secretary for heath policy.
  • Now O’Brien will head up the agency’s efforts to lower drug prices, a high profile position given the Trump administration’s efforts to lower health-care costs. He replaces Daniel Best, the former secretary for drug pricing reform.
  • Like his predecessor, O’Brien has experience working for industry stakeholders, including BlueCross BlueShield. He’s also worked for the federal Medicare agency though. That experience will likely come in handy because many of the Trump administration’s drug policy changes have revolved around Medicare drug plans.

It was a bleak week for others. Here’s whose Thursday closed on a downswing:

Drug Policies Overseas
  • If you think drug policies in the U.S. are riddled with problems, you should take a look across the pond. Drugmakers like GlaxosmithKline and Pfizer with plants in the U.K. aren’t entirely sure how their U.S.-bound drugs are going to be inspected after Brexit, Jeannie Baumann reports.
  • The European Medicines Agency stopped assigning work to the U.K.’s pharmaceutical regulator earlier this year, unsure whether the two organizations will need to stop collaborating after Britain leaves the European Union in March, according to Bloomberg News.
  • Meanwhile in Russia, drugmakers and distributors will begin to see extra costs and regulatory hurdles late next year under a new Russian law that expands drug quality certification requirements, Sergei Blagov writes.
  • As for Trump’s latest Chinese fentanyl agreement, there’s a good chance it’ll fall through, Bloomberg News reports. This week China promised to tighten supervision and revise rules around the production of the highly addictive opioid painkiller that’s often shipped to the U.S.. But that will be a hard promise to keep, in part because the ingredients are commonly used in legitimate products and aren’t widely regulated.
Medicare Expansion
  • Democrats are pushing for policies that would allow some to buy into the public health insurance for seniors, Alex Ruoff reports. Supporters are selling the idea as a commonsense, low-cost step toward bolder proposals like Medicare for All in hopes of gaining the support of those who want to give free health insurance to all Americans.
  • However, expanding Medicare to more patients isn’t popular among Republicans and was pummeled this week by a top Trump administration health-care official, Shira Stein writes.
  • The administration’s health-care officials have previously argued against Medicare for All, but this is the first time any of them have argued against allowing people currently ineligible for Medicare to buy into the program, Stein notes.
Patenting Treatments
  • Drugmakers are eagerly awaiting the outcome of a court battle between branded drugmaker Endo Pharmaceuticals Inc. and generic maker Teva Pharmaceuticals USA Inc., Dana Elfin reports. The oral arguments were yesterday, and the dispute is over whether a treatment method for an existing opioid drug is able to be patented.
  • The question of what ideas can or can’t be patented is a major topic in life sciences and the invalidation of a patent has huge financial consequences for parties in the lawsuit. This court case could also set a dangerous precedent for certain drug companies.
  • If Endo loses, it could push drug companies to shift their research and development efforts away from exploring new uses for existing drugs.

Thanks for joining us this week and have a great weekend. I’m all ears when it comes to your two cents, tips, critiques, or coordinating exclusive interviews. Send them my way at jlee1@bloomberglaw.com.

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