An inside look at Medicare drug negotiation's day in court

The post-pandemic world we live in has gotten more friendly to remote hearings and meetings — but not the U.S. District Court of Delaware. So my enterprising colleague John Wilkerson trekked up to Wilmington to give you an inside view on how a key judge viewed arguments in the first court test of the new Medicare drug price negotiation program.

The hearing was called by Colm Connolly, chief judge of the U.S. District of Delaware, in a case brought by AstraZeneca. It's the first of the slew of lawsuits filed by the pharmaceutical industry and its allies that had an oral argument, and a chance to glean real-time insight from a judge on how they view the arguments on either side.

Don't miss the telling quote from the judge about AstraZeneca's main argument during the three-hour hearing. More on that here.

medicare negotiation

Ready, set, negotiate

As the court battles ramp up, HHS is working to stand up Medicare's first negotiation process one step at a time. And today, Biden administration officials said they are sending initial price offers to pharmaceutical companies — they just won't tell us what they are.

That could change, however, if the manufacturers decide to disclose the information themselves, a senior administration official told reporters Wednesday. The prospects for that aren't looking too rosy yet, as Novo Nordisk said in a statement that the information Medicare provides is "confidential" and a Novartis spokesperson said the company doesn't plan to share the offer.

The administration also said that HHS could have up to three more meetings with manufacturers in the spring and summer as the process continues. Here's the state of play.

regulations

A pretty mid MA update

If there's one thing to take away from CMS' newest proposals for Medicare Advantage plans, it's that the Biden administration didn't really want to rock the boat in an election year, my colleague Bob Herman reports.

CMS expects the average benchmark payment for MA plans to decrease by 0.2% in 2025, the agency said Wednesday. But that doesn't mean MA plans will be paid less next year. After accounting for the industry's intensive coding practices (which history has shown has resulted in a lot of exaggerated diagnoses), Medicare still expects to pay MA plans an extra $16 billion compared with this year.

The Biden administration didn't trot out many surprises within the proposal. It's sticking with the second year of phasing in a new system for how insurers can code those health conditions of their members — a system known as risk adjustment that is the main reason why payment rates would decrease. It didn't increase the "coding intensity" adjustment, despite pleas to do so. A lot will change between now and April 1, when the final policies will come out. One thing is a near-guarantee: that payment cut will flip into an increase after insurance industry lobbying and after federal actuaries factor in more updated data on Medicare cost trends.

capitol hill

Latest Covid hearing breaks little ground, again

At least the two parties agreed on something — sort of. House Democrat Robert Gracia lamented during a hearing on HHS' cooperativeness with Congress on lingering coronavirus questions that "this could have been email," and Select Subcommittee Chair Brad Wenstrup (R-Ohio), who called the hearing, actually agreed.

"This could have been an email. But it wasn't," he said after two hours of testimony from HHS legislative director Melanie Egorin. The hearing — one in a series of both public and private meetings with top health officials on Covid-19's origins and the government response — produced no new information and seemed to satisfy none of the lawmakers present. Republicans charge that HHS is withholding information from the early pandemic, while Democrats pushed the panel to focus on other challenges like potential pathogen threats ahead.

Egorin, for her part, repeatedly stated that HHS has been "responsive" to the panel's requests and shared relevant documents. But she swerved questions about internal deliberations on the congressional requests. More from Sarah.

fda

Califf: Menthol rule not ready for showtime

FDA Commissioner Rob Califf chatted with the Alliance for a Stronger FDA on Wednesday. A couple interesting tidbits from the conversation:

On the forthcoming menthol rule: "Everybody knows we're trying to get the final rule through. It's not quite done yet."
On regulating lab-developed tests: Califf said there are a lot of opinions, but that the rule is "moving along in important ways."
The agency is working to hire a bunch of top-notch scientists to work on cell and gene therapies.
On Janet Woodcock's departure from the agency: Califf said she "put down swim lanes" for the agency's reorganization. "Even last night in our final meeting, she was coming up with new ideas about what needs to be done," he shared.

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