Overnight Health Care — Presented by Kidney Care Partners — Trump officials make new moves to lower drug prices | Romney offers warning to drug execs | 'Medicare for all' opens up Dem divide

Overnight Health Care — Presented by Kidney Care Partners — Trump officials make new moves to lower drug prices | Romney offers warning to drug execs | 'Medicare for all' opens up Dem divide
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Welcome to Thursday's Overnight Health Care.

It's all about drug pricing. The Trump administration is out with a potential major change in Medicare drug pricing, Mitt RomneyWillard (Mitt) Mitt RomneyTrump's no racist — he's an equal opportunity offender Lawmakers introduce bill to block U.S. companies from doing business with Huawei GOP put on the back foot by Trump's race storm MORE gave a warning to the PhRMA board of directors today, and many of those same CEOs are under pressure from lawmakers to testify in Congress.

We'll start with some news the administration made late this afternoon:


Trump officials make new moves to lower drug prices

A proposed rule from the Trump administration could completely upend the way Medicare beneficiaries purchase prescription drugs.

The proposal is targeting secretive rebates between drug manufacturers, insurers and pharmacy benefits managers as a way to lower drug prices for Medicare.

The details: The proposal would scale back the legal protections for prescription drug rebates, essentially eliminating them. According to the Department of Health and Human Services, the proposal would lower prescription drug prices and out-of-pocket costs by encouraging manufacturers to pass discounts directly on to patients at the point of sale.

"This proposal has the potential to be the most sweeping change to how Americans' drugs are priced at the pharmacy counter, ever, by delivering discounts directly to patients at the pharmacy counter and bringing much-needed transparency to a broken system," HHS Secretary Alex Azar said in a statement.

The politics: The proposal comes just ahead of President TrumpDonald John TrumpAmash responds to 'Send her back' chants at Trump rally: 'This is how history's worst episodes begin' McConnell: Trump 'on to something' with attacks on Dem congresswomen Trump blasts 'corrupt' Puerto Rico's leaders amid political crisis MORE's State of the Union speech next week. While it's a fairly detailed plan, Trump can tout it as a major move to lower drug prices.  

Is this a cost shift? In a way, but HHS says it will benefit all Medicare beneficiaries, especially those who use some of the most expensive drugs. Premiums for Medicare Part D will go up, but the argument is that drug companies will lower their sticker prices. So people will pay less at the pharmacy counter and people who use a lot of expensive drugs will pay a lot less.

Winners and losers: The proposal has been in the works for months, and the PBM industry is ready for a fight. From Pharmaceutical Care Management Association (PCMA) President and CEO JC Scott: "We are concerned ... that eliminating the long-standing safe harbor protection for drug manufacturer rebates to PBMs would increase drug costs and force Medicare beneficiaries to pay higher premiums and out-of-pocket expenses."

But PhRMA is thrilled. For once, they're not the ones taking a hit.

"We applaud the Administration for taking steps to reform the rebate system to lower patients' out-of-pocket costs. Our current health care system results in patients often paying cost-sharing based on the list price, regardless of the discount their insurer receives," PhRMA president and CEO Stephen J. Ubl said.

Get the full rundown on the proposal here



Romney warns drug execs: 'Change is coming'

New Sen. Mitt Romney (R-Utah) is already wading into health care, and he has a warning for drug companies.

In a short interview in the Capitol, Romney described to The Hill his message to the closed-door meeting of the Pharmaceutical Research and Manufacturers of America (PhRMA) board of directors.

"Change is going to come to pricing and the pharmaceutical industry, and that they are wise to be part of the solution as opposed to opposing change," Romney said.

Romney's appearance at PhRMA was first reported by Stat News.

The context: Romney's stances on health care are being closely watched to see if he will position himself as a bipartisan dealmaker or a stronger opponent of ObamaCare and other Democratic priorities.

Read more here.


Drug company execs under pressure to testify

A showdown is brewing between drug companies and powerful Senate Finance Chairman Chuck GrassleyCharles (Chuck) Ernest GrassleyOvernight Health Care — Presented by PCMA — Sanders mounts staunch defense of 'Medicare for All' | Biden, Sanders fight over health care heats up | House votes to repeal ObamaCare 'Cadillac Tax' | Dems want details on fetal tissue research ban Senate approves long-delayed tax treaties in win for business The peculiar priorities of Adam Schiff MORE (R-Iowa).

Grassley said he asked several drug companies to testify, with all but two small companies refusing.

The chairman's request poses a tough choice for drug companies as they try to navigate congressional inquiries and risk being subpoenaed by lawmakers to force them into testifying.

Drug industry's perspective: "I can imagine it would be a pretty ugly call for the person from the Washington office who has to call the CEO and tell them they're going to [have to testify]," said Ian Spatz, a former vice president at Merck who is now a consultant at Manatt, Phelps & Phillips. "It's not something any CEO is going to be eager to do."

Spatz, though, said he expects that "over time ... it's going to happen and there will be CEOs that will appear."

What to watch: Will any drug companies agree to testify in the future when Grassley presses them again? Or will they be subpoenaed?

Read more here.


'Medicare for all' opens up Dem divide

The embrace of "Medicare for all" legislation by top 2020 Democratic presidential candidates has opened up a rift in the party.

Democrats highlighted health care in the 2018 midterm elections and reclaimed the House majority. But their message was focused on protecting ObamaCare, not implementing a single-payer system -- which is favored by progressives.

Some on the left maintain that backing Medicare for all legislation is a must for anyone who wants to secure the Democratic presidential nomination in 2020.

Sen. Kamala HarrisKamala Devi Harris2020 Democrats react to 'send her back' chants at Trump rally Biden's health care gaffe shows he's not ready for prime time The Hill's Morning Report - Trump seizes House impeachment vote to rally GOP MORE (D-Calif.) this week attracted headlines when she told a CNN town hall she wants to eliminate private insurance in an effort to move fully toward Medicare for all.

While other White House hopefuls agree with Harris on moving towards Medicare for all, top Democrats in Congress -- including Speaker Nancy PelosiNancy PelosiSally Yates: Moral fiber of US being 'shredded by unapologetic racism' Al Green calls for additional security for House members after Trump rally #IStandWithPresTrump trends in response to #IStandWithIlhan MORE (Calif.) -- are urging caution. Leadership wants to shore up ObamaCare, and other Democrats support incremental alternatives.

But the support from the surging left could put pressure on moderates and Democratic leadership in Congress, setting up a showdown over what was once considered a fringe policy proposal.

More on the divide here.


Energy & Commerce schedules first hearings on ObamaCare, family separations

The panel's health subcommittee, led by Chairwoman Anna EshooAnna Georges EshooOvernight Health Care — Presented by PCMA — Planned Parenthood ousts its president | Harris releases drug pricing plan | House Dem drug plan delayed until after recess Democratic chair: Medicare negotiating drug prices not moving before August House bill targets use of Pentagon networks for child pornography MORE (D-Calif.), will hold a hearing on the Texas ObamaCare lawsuit on Wednesday at 10:15 a.m.

The Oversight and Investigations Subcommittee, led by Chairwoman Diana DeGetteDiana Louise DeGetteHere are the 95 Democrats who voted to support impeachment Crucial for Congress to fund life-saving diabetes research Overnight Health Care — Sponsored by Campaign for Tobacco-Free Kids — White House withdraws controversial rule to eliminate drug rebates | Grassley says deal on drug prices moving 'very soon' | Appeals court declines to halt Trump abortion referral ban MORE (D-Colo.), will explore the "failures of the Trump administration's inhumane family separation policy" Thursday at 10:30 a.m.

Witnesses haven't been announced for either hearing, but Health and Human Services Secretary Alex Azar has already declined to testify at the family separation hearing.


AARP wants Trump to mention high drug prices during the State of the Union

"Prescription drug prices have reached a crisis point, with many Americans struggling to afford the medicine they need to stay healthy," AARP CEO Jo Ann Jenkins wrote in a letter to President Trump Wednesday.

"Next week you will speak to the nation in your State of the Union address. We urge you to use this opportunity to highlight the problem and talk about what your administration will be doing, and how you will work with Congress to combat the skyrocketing cost of prescription drugs."

Read their letter here.



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What we're reading

The coming Democratic drama over Medicare for all (The Atlantic)

Rising insulin costs are a life-or-death political crisis (New York Magazine)

Family behind OxyContin maker made billions, court papers say (The Wall Street Journal)

Ads for short-term plans lacking ACA protections swamped consumers' online searches (Kaiser Health News)

Teva's generic EpiPen launch stalls months after approval (Reuters)


State by state

Wyoming Medicaid expansion bill passes committee, will proceed to House (Casper Star Tribune)

Utah's Medicaid bill replacing voter-approved Prop 3 could be on the governor's desk next week (Salt Lake Tribune)

The legislative session ends 'when we get Medicaid expansion,' says an aide to North Carolina Gov. Cooper (News & Observer)


From The Hill's opinion page

'Medicare for All' will fail Democrats