On Thursday, January 31, 2019, the Trump Administration announced a proposed rule to eliminate rebates from drug manufacturers to pharmacy benefit managers (PBMs) in the Medicaid managed care and Medicare Part D programs. The proposed rule accomplishes this aim by removing safe-harbor protection[1] under the federal Anti-Kickback Statute (AKS)[2] for these rebates. In addition, the administration proposed new safe-harbor protections for rebates and other price reductions that will reduce the cost-sharing for patients when they purchase prescriptions and protect some flat PBM service fees (i.e. fees that are not tied …

In November 2018, The Source reported that CVS was finalizing its merger with Aetna after getting approval from the Justice Department. In the past two weeks, however, statements by Judge Richard Leon, a judge from the US District Court for the District of Columbia, have made that merger less certain. The approval from the Justice Department is conditional until approved by the courts. As a result, Judge Leon could rule to prevent the merger, but because the transaction already closed,[1] some legal experts have called untangling the companies akin to …

On November 21, 2018, the California Attorney General conditionally approved the Dignity Health and Catholic Health Initiatives (CHI) merger. The new merger would result in a new $28.4 billion organization called CommonSpirit Health.[1] CommonSpirit will operate 139 hospitals and 700 care sites nationwide, including 30 hospitals in California.[2] According to the California Attorney General’s press release, CommonSpirit Health must maintain emergency services and women’s healthcare services for ten years, and the AG has the right to review the impact of any changes to these services. CommonSpirit Health must also create …

A New York Times article came out today highlighting how hospital mergers result in higher healthcare prices to patients, based on research and analysis conducted by UC Berkeley’s Nicholas C. Petris Center. While hospitals claim that consolidation would save consumers money, the opposite is true due to reduced competition resulting from the consolidation. In addition to continued consolidation of hospitals across the country, the article suggests there is a growing trend of large hospital systems buying up doctors’ groups and medical practices. According to Richard Scheffler, Director of the Petris …

*Updated: October 10, 2018 On Wednesday, October 10, President Trump signed into law both bills passed by Congress to ban gag clauses in pharmacy contracts: the Patient Right to Know Drug Prices Act (S.2554) affects employer-sponsored and individual drug plans and the Know the Lowest Price Act (S.2553) will affect Medicare Part D and Medicare Advantage plans. Trump expects an immediate impact on drug prices and remarked at the signing: “All our citizens deserve to know the lowest price available at our pharmacies, and now that’s what they’ll be getting.”   *Updated: …

*Updated: September 27, 2018 On Tuesday, September 25, the House voted to pass the Patient Right to Know Drug Prices Act, so the bill currently awaits President Trump’s Signature. In addition, both the House and Senate passed the Know the Lowest Price Act of 2018 (S.2553), which bans gag-clauses in Medicare Advantage or Medicare Part D plans. In a tweet on September 17, President Trump expressed his support of legislation that will remove gag clauses. As a result, gag-clauses at pharmacy counters will likely be prohibited, so pharmacists will be …

On Monday, September 17, the Senate overwhelmingly passed S.2554, the Patient Right to Know Drug Prices Act, with a vote of 98-2.[1] Congress appears to be building on the momentum of recent state action to prohibit gag-clauses that prevent pharmacists from telling insured patients when the cost of their co-payment exceeds the cash price of the drug. While the Senate bill does not forbid pharmacists from collecting more than the cash price for a prescription, it does allow them to tell patients when their out-of-pocket costs using their health plan …

On June 27, 2018, the Centers for Medicaid and Medicare Services (CMS) denied Massachusetts’ request to implement a closed drug formulary in its Medicaid program. In a previous post, the Source described the request and explained why it has the potential to save the state millions of dollars every year. In denying the request, CMS said that it would consider the waiver if Massachusetts no longer used the federal Medicaid Drug Rebate Program in which manufacturers give the state rebates when the state purchases a drug to ensure that Medicaid …

California’s attorney general announced today that his office has filed an antitrust and unfair competition lawsuit against Sutter Health. Attorney General Xavier Becerra said at a press conference that the state’s complaint follows a six-year statewide investigation that found the Northern California hospital giant engaged in anticompetitive conduct that drove up healthcare prices for patients and employers in the state. Specifically, the complaint alleges that Sutter engaged in “all-or-nothing” contracts with health insurers that restricted insurers from providing low-cost plan options to Californians, set excessively high out-of-network prices, and restricted price …

On Friday, February 9, 2018, the White House released a report from the Council of Economic Advisers (CEA) entitled “Reforming Biopharmaceutical Pricing at Home and Abroad”. The report identifies two seemingly conflicting goals of the current administration: 1) reducing domestic drug prices and 2) spurring economic investment in medical innovation. These goals appear to conflict since lower prices would likely mean lower profits for drug companies, resulting in lower investment in research and development. The report also accuses foreign governments of eroding global returns for investment in pharmaceuticals, stating: “nations …