340Bonanza: More on the MN Report, Sanofi's Gambit, and HRSA Goes After Providers

I’m paying the price for yesterday’s decision to go all-in on the Minnesota 340B report. There’s a lot to get through. Pitter patter. 

Tomorrow’s Curve will be a game-time decision, based on news flow. (Not the literal game, which you can catch at 2 p.m. ET tomorrow on ESPN+. Go Terriers.)

The big news this morning is that the Biden administration wants the government to start covering obesity medicines in Medicare and Medicaid. There’s a ton of coverage -- here’s a Washington Post piece as a sample -- but I’m not going to go super-deep here. There are questions about the cost numbers, etc., but I’m not sure any of that, you know, matters. 

My assumption is that this gets rolled back by the Trump administration, and I further assume that everyone expects that to happen, so this is a bit of political theater in which Biden gets to offer beneficiaries a goodie knowing that Trump will take a hit when he takes it away. 

That cynical view doesn’t wipe out my general -- if woefully naive -- position on the topic: these meds ought to be covered, and we ought to have a thoughtful conversation about how to pay for them. 

There is no other cost-effective class of medicines that is barred from Medicare coverage, and it’s hard to come up with a good reason why obesity meds should be treated differently. Can you imagine Medicare refusing to pay for PD-1 meds because the budget impact is too large? (PD-1s sales last year were about ~$50 billion.)

Anyway, my mind turns to other purely symbolic acts that Biden could take in anticipation of them being rolled back after Jan. 20. Does this make a rule declaring that pricing is a valid reason to use march-in rights more likely? Wouldn’t bet against it.wsuit.

We’re not remotely done with talking about 340B. 

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Yesterday’s 340B report from Minnesota continues to make waves. For a state-level transparency report, it got decent coverage. 

I flagged the solid Minneapolis Star-Tribune story yesterday, but STAT and Endpoints also ran pieces. That’s a nice change from the crickets that greeted the last big 340B data release (the HRSA numbers, covered only by STAT). 

There are more shoes to drop on that one. As I mentioned yesterday, we’re likely to get more digging into individual providers around a single, straightforward question: “Where did all that money go?” 

State lawmakers are already beginning to probe that, per this press release from a local policymaker: “We must dig deeper into these findings to understand how 340B discounts are used by different types of providers, many of whom do not see significant net revenue from the program, according to the report.”

And there is a broader question of Medicaid and duplicative discounts. I’m not in deep enough to parse that data, but it sounds like Adam Fein is getting ready to do just that. Buckle up. 

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The Minnesota report obscured what would have otherwise been the biggest news of the day: Sanofi has joined J&J and Lilly in pushing a new reimbursement model for 340B, informing providers of their intention to move to the new system -- which covers most Sanofi meds -- in January. (Peter Pitts has a nice overview of the background/implications at Real Clear.)

I’m not clear on the legal implications here. Lilly never even got around to launching its program: it went straight to litigation based on a back-and-forth with the program’s overseer, HRSA. So I can’t tell if the Sanofi bid here is just a prelude to legal action or if they’re going to press ahead, government threats be damned. (Let me know if this is clear and I’ve just missed it.)

My favorite take so far is from Bill Sarraille’s newsletter, where he gives a great spin to the pro-manufacturer argument. Bill pointed out that there’s now a critical mass of companies pushing for the “rebate model,” with Lilly and Sanofi intent on implementing it broadly. 

He wonders aloud if HRSA would have been better off playing ball with J&J, which floated a limited use of the model: only for large hospitals and only for IRA-impacted drugs. Instead, HRSA threatened global thermonuclear war on the company, which Bill said was a signal that HRSA couldn’t be reasoned with, opening the floodgates. 

***

Actually, no one is happy with HRSA. 

Part of the J&J lawsuit points out that the company had tried to figure out if certain covered entities were abusing the 340B program, and it asked HRSA if it could audit those providers. 

HRSA said “sure,” and the providers then went to work stonewalling J&J. 

So J&J pressed HRSA to get the providers to comply, which HRSA has done, leveling some serious threats against the providers. (Global thermonuclear war for all!) 340B Report has the details, and I’ll watch this one closer going forward.

The list of topics on which the researchers at Harvard PORTAL and PhRMA agree is really short. Like, I assume they both like pizza (everyone likes pizza, right?), and they both seem like they’d take Kendrick’s side in the Kendrick-vs-Drake beef. 

Beyond that? Not a lot in common. 

But a new paper in JAMA -- led by London School of Economics and West Virginia University College of Law researchers, along with some PORTAL folks -- suggests that we can add one more area of agreement: both side don’t think there’s any particularly compelling reason to treat biologics different than small molecules in the IRA. 

To be clear, authors of the new paper are framing it as evidence that biologics should not be advantaged, suggesting that the IRA should price control both biologics and small molecules earlier. Industry has pushed the idea that small molecules are being punished and therefore price controls should kick in later. But that’s a policy dispute. On the facts, there seems to be alignment. 

ELSEWHERE: 

• A less hectic day would have demanded more attention to this fantastic WSJ piece -- built on 46Brooklyn data, natch -- that shows that PBMs are charging hundreds of different prices with a huge amount of regional variation. The system is being gamed here. Big time. 

• Speaking of the PORTAL folks, they (in partnership with Public Citizen) had a Health Affairs Forefront piece last week that argued for a set of standards to use when determining when march-in rights should be used for drug-pricing reasons. It includes a chart of the medicines that they said meets those standards. 

• Johns Hopkins’ Marty Makary has been nominated to lead the FDA. Industry seems pretty pleased with the pick. Makary is connected to a telehealth firm with a drug-compounding business, but I’m not aware of a lot of other connections to drug-pricing conversations. (To be fair, I haven’t looked all that hard given everything else going on. Happy to be educated.)

Header image via Flickr user Daniel Foster.

Cost Curve is produced by Reid Strategic, a consultancy that helps companies and organizations in life sciences communicate more clearly and more loudly about issues of value, access, and pricing. We offer a range of services, from strategic planning to tactical execution, designed to shatter the complexity that hampers constructive conversations. 

To learn more about how Reid Strategic can help you, email Brian Reid at [email protected].