By David Lim and Lauren Gardner

Presented by 340B Health

With Robert King and Megan R. Wilson

CMS is warning Medicare Part D plans that the agency intends to keep close watch over their handling of drugs chosen for price negotiation. | Chris Carlson/AP

HANDLING NEGOTIATED DRUGS — CMS will keep a close eye on Medicare Part D plans to ensure they don’t raise out-of-pocket costs for older adults on any of the 10 drugs chosen for price negotiations when negotiated rates come online in 2026.

Plans in Medicare Part D, the program’s prescription drug benefit, must cover any drug chosen by CMS for price negotiation. However, the agency told Robert it will monitor whether plans increase the use of tools like prior authorization, which requires insurer approval before prescribing a pharmaceutical, on any of the drugs.

CMS also plans to clamp down on other practices such as formulary management, referring to the list of generic and brand name drugs a Part D plan covers. Plans can at times put certain drugs on a formulary tier that requires higher out-of-pocket costs for Medicare beneficiaries.

Part D insurers use both methods to cut down on their drug costs and usually reserve them for the priciest drugs. However, plans have at times cut deals with drugmakers to get rebates in exchange for a preferred place on the formulary.

Meena Seshamani, the director of Medicare, said in a statement to POLITICO that insurers will have “flexibility,” but the agency will also “monitor for any practices that may undermine access to selected drugs.”

The agency will use its formulary review process to root out practices it believes hinders access, according to a CMS guidance released in the summer.

But when 2026 rolls around, plans will face higher costs due to a reform in Part D. The new redesign requires plans to shoulder more of the costs for drug coverage after a beneficiary’s out-of-pocket spending reaches a certain threshold.

“Plans are going to want to try to manage the financial implications of [the reform] probably by trying to seek additional rebates from manufacturers,” said Cate Brandon, a partner in the health sciences and regulatory group for the firm Arnold & Porter.

The nation’s leading Medicare Part D plans — Humana, United Healthcare, CVS Health and Cigna — did not respond to requests for comment. AHIP, the trade group for the insurance industry, declined to comment.

IT’S FRIDAY. WELCOME BACK TO PRESCRIPTION PULSE. Sweater weather!

Send news and tips to Lauren Gardner ([email protected] or @Gardner_LM), David Lim ([email protected] or @davidalim) and Katherine Ellen Foley ([email protected] or @katherineefoley).

TODAY ON OUR PULSE CHECK PODCAST, host Daniel Payne talks with POLITICO global health reporter Carmen Paun about Rep. Michael McCaul’s (R-Texas) push for bipartisan legislation against opioid trafficking — and how seeing the fentanyl crisis up close drives his efforts.

A message from 340B Health:

340B hospitals serve as a vital safety net for essential health care. 340B hospitals provide 77% of all hospital care to Medicaid patients and 67% of all unpaid hospital care in the U.S. Protecting 340B is crucial for the health of patients and communities. Learn more.

The DOJ has asserted in opposition filing that the wrong “Merck” is challenging Medicare's drug pricing program. | Mel Evans/AP

WHOSE DRUG IS IT, ANYWAY? In any legal challenge to federal rules and programs, the question of who has standing is fundamental to judges determining whether a lawsuit moves forward. A major question in some of the Inflation Reduction Act cases is whether the drug companies involved are the proper corporate entities to legally intervene.

This is a significant question in the U.S. Chamber of Commerce’s case in district court in Ohio, where a federal judge asked the group to clarify whether AbbVie, the member company the Chamber cited in the complaint, actually manufactures Imbruvica, a cancer drug CMS selected for price negotiation. The Justice Department has argued that Pharmacyclics, a wholly owned AbbVie subsidiary, is the drug’s primary maker holding the FDA approval, and thus, the company that will negotiate with CMS.

What’s in a name? In Merck’s lawsuit, the DOJ has asserted in its opposition filing that the wrong “Merck” is challenging the drug pricing program.

“According to publicly available information, non-party Merck Sharp & Dohme — not Plaintiff Merck & Co., Inc. — is the relevant manufacturer because MSD currently holds the [new drug application] for Januvia,” a diabetes drug on CMS’ list, the government wrote in arguing for the case’s dismissal.

The Merck name has been the subject of years of litigation globally. Merck declined to comment before their filing, due next week.

And another: AstraZeneca amended its complaint last month to add AstraZeneca AB — the entity HHS named as the program’s “participating manufacturer” — as a plaintiff after discussion with the DOJ, which isn’t due to respond until Nov. 1. A company spokesperson said the amendment was “a procedural decision.”

“It seems like, in cases even where the government hasn’t directly raised it yet, the companies are mindful of it,” said Zach Baron, associate director of the Health Policy and the Law Initiative at Georgetown’s O’Neill Institute.

Still, those arguments won’t apply in every case challenging the program, Baron noted. Even if they prevent one or two of the lawsuits from advancing, he said, “it’s not going to be [the] end of the ballgame here.”

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UPDATED COVID SHOT UPTAKE — The number of Americans who received the updated Covid-19 vaccine in September totaled more than 7 million, according to HHS spokesperson Ilse Zuniga.

Nearly 14 million vaccines have been shipped to pharmacies and other locations amid reports that many are having difficulty obtaining vaccine appointments.

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FOCUS ON CLINICAL TRIAL PAYMENTS — Mural Health, a company that handles payments to participants in clinical trials, is launching a lobbying effort to eliminate taxes on that cash as a means to encourage participation, Megan writes.

The law currently requires anyone who is paid more than $600 to participate in a clinical trial to pay income taxes, something CEO Sam Whitaker — and some academic studies — argues hinders efforts to diversify trials. The company recently hired Troutman Pepper Strategies to lobby policymakers on Capitol Hill and federal regulators.

The effort comes amid growing interest from lawmakers and the Biden administration in ensuring trials for drugs or medical devices are representative of the broader U.S. patient population. The advocacy is meant to remove a barrier for tens of millions of lower-income Americans who might worry any payments could jeopardize their access to federal benefits, including food assistance, known as the SNAP program.

LOBBYING HIRES — Three pharmaceutical companies brought on new lobbyists, according to recently filed disclosures.

Sebela Pharmaceuticals hired KPM Group to work on issues related to prescriptions patients use to prepare for colonoscopies, some of which Medicare and private health plans do not cover.

Michigan-based Woodward Pharma Services brought on ArentFox Schiff to work on “policies related to the domestic manufacturing, packaging and pricing of pharmaceutical products and related active pharmaceutical ingredients,” according to its registration form.

BridgeBio Pharma, which specializes in gene therapies and oncology drugs, registered its first in-house lobbyist. Amanda Malakoff, who served as the executive director of the Rare Disease Company Coalition, will lobby on orphan drug policies.

A NEW POLITICO PODCAST: POLITICO Tech is an authoritative insider briefing on the politics and policy of technology. From crypto and the metaverse to cybersecurity and AI, we explore the who, what and how of policy shaping future industries. We’re kicking off with a series exploring darknet marketplaces, the virtual platforms that enable actors from all corners of the online world to traffic illicit goods. As malware and cybercrime attacks become increasingly frequent, regulators and law enforcement agencies work different angles to shut these platforms down, but new, often more unassailable marketplaces pop up. SUBSCRIBE AND START LISTENING TODAY.

E&C ETHYLENE OXIDE HEARING SCHEDULED — The House Energy and Commerce Environment, Manufacturing, and Critical Materials Subcommittee is set to scrutinize an EPA proposal to boost regulation of ethylene oxide, a carcinogenic gas used to sterilize about half of medical devices in the U.S. The Oct. 18 hearing comes amid concern from the FDA and medical device industry that strict limitations on the gas could disrupt the supply chain for critical medical devices.

“The Environmental Protection Agency has a responsibility to protect people from serious adverse risks posed by chemicals and air pollutants,” E&C Chair Cathy McMorris Rodgers (R-Wash.) and Environment, Manufacturing, & Critical Materials Subcommittee Chair Bill Johnson (R-Ohio) said in a statement. “Yet many of the agency’s recent regulatory actions for the U.S. chemical sector go far beyond what is reasonable and could hurt America’s economy while pushing more innovation overseas to China.”

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Dr. Julie Beitz joined Hyman, Phelps & McNamara as a principal drug regulatory expert. She previously worked at the FDA’s Center for Drug Evaluation and Research.

The European Commission on Thursday ordered genomic sequencing company Illumina to sell multicancer testing company Grail to a similar level before the acquisition, POLITICO Europe’s Varg Folkman reports.

PhRMA filed an amicus brief Thursday supporting the FDA’s appeal to the Supreme Court of a lower court ruling that reversed agency policies broadening access to mifepristone.

The FDA announced Wednesday the establishment of a new digital health advisory committee.

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