WEBVTT - Pharma and Biotech Drug Pricing Policy Outlook 0:00:13.200 --> 0:00:16.079 Hello everyone, and welcome to the Votes and Verdicts podcast, 0:00:16.160 --> 0:00:19.600 hosted by the policy and Litigation team at Bloomberg Intelligence, 0:00:19.880 --> 0:00:24.000 the investment research platform of Bloomberg LP. This podcast series 0:00:24.040 --> 0:00:28.720 examines the intersection of business policy and law. I'm Tishwalker 0:00:28.760 --> 0:00:33.080 and analysts with Bloomberg Intelligence covering pharma patent litigation. Today, 0:00:33.159 --> 0:00:35.560 I'll be joined by my colleagues Duane Wright, a senior 0:00:35.600 --> 0:00:39.880 policy analyst covering healthcare policy, and ode Gerspatcher, who leads 0:00:39.920 --> 0:00:43.280 the Global Healthcare team and also covers patent and healthcare litigation. 0:00:43.840 --> 0:00:46.120 They're going to be doing the heavy lifting today as 0:00:46.120 --> 0:00:50.240 we discuss key policy, regulatory, and litigation issues that impact 0:00:50.240 --> 0:00:54.080 the therapeutic sector. This includes the Inflation Reduction Act, drug 0:00:54.080 --> 0:00:57.680 pricing implementation and the legal challenges there too, the three 0:00:57.800 --> 0:01:01.319 forty B drug discount program and related litigations, as well 0:01:01.320 --> 0:01:05.680 as Medicare coverage outlook for some newer therapeutics. Let's dive 0:01:05.880 --> 0:01:08.280 right into it. We're going to start with the Inflation 0:01:08.400 --> 0:01:11.800 Reduction Act, or the IRA. Dwayne, My first question is 0:01:11.840 --> 0:01:14.560 going to be for you. So we've been talking about 0:01:14.560 --> 0:01:17.399 the IRA, it seems like for almost two years now. 0:01:17.480 --> 0:01:21.200 So where does implementation stand today for the drug pricing 0:01:21.240 --> 0:01:23.800 provisions of the law and what do you think we 0:01:23.840 --> 0:01:25.959 should expect over the coming months. 0:01:26.680 --> 0:01:30.360 Thanks Tish. So this is an issue where there are 0:01:30.480 --> 0:01:33.960 parallel tracks with the IRA, and I'll focus on the 0:01:33.959 --> 0:01:38.200 policy and implementation phase. And so I think we're in 0:01:38.240 --> 0:01:42.880 the quiet phase of the negotiation process that we've heard 0:01:42.920 --> 0:01:47.600 anecdotes about Medicare's initial offer and the fact that pharma 0:01:47.680 --> 0:01:53.160 companies have countered. So the initial offer was provided by 0:01:53.240 --> 0:01:58.400 CMS February first, and while will not surprised that pharma 0:01:58.480 --> 0:02:02.440 kept them secret, we did hear from one CEO that 0:02:02.920 --> 0:02:08.519 the offer at least wasn't outrageous and so this will 0:02:08.520 --> 0:02:11.960 all culminate in a final take or leave it offer 0:02:12.120 --> 0:02:18.640 on July fifteenth and end negotiations around August first. The 0:02:18.720 --> 0:02:21.440 key here, which is what we've talked about a lot 0:02:21.480 --> 0:02:26.280 at PI, is that will know the maximum fair price 0:02:26.440 --> 0:02:29.680 by September first. And as a reminder, the law sets 0:02:29.720 --> 0:02:35.399 in place a maximum fair price for these drugs, which 0:02:35.440 --> 0:02:37.280 is based on the amount of time it's been on 0:02:37.320 --> 0:02:41.920 the market or FDA approved a higher ceiling for those 0:02:41.960 --> 0:02:44.000 that have been on the market for a shorter amount 0:02:44.000 --> 0:02:48.160 of time and a much lower ceiling price for those 0:02:48.160 --> 0:02:52.280 products that have been on longer. We'll see an explanation 0:02:52.600 --> 0:02:57.600 for those maximum fair prices in March of twenty twenty five. 0:02:58.120 --> 0:03:01.280 And keep in mind the factor for setting the maximum 0:03:01.280 --> 0:03:05.440 fare price include R and D cost, production costs, market 0:03:05.520 --> 0:03:09.040 data in the US, and other factors. One thing I'm 0:03:09.440 --> 0:03:14.760 looking for to is how medicare pricing could affect pricing 0:03:14.800 --> 0:03:18.160 for other payers. I don't think there's a lot of 0:03:18.240 --> 0:03:23.760 consensus on the issue. There's some concern by employers that 0:03:23.840 --> 0:03:26.560 are worried about potentially higher costs to make up for 0:03:27.280 --> 0:03:32.639 Medicare losses. Some would say that if that was the case, 0:03:32.680 --> 0:03:35.520 we'd already see higher prices, But it could also be 0:03:35.600 --> 0:03:39.840 the case that just because Medicare gets a specific price 0:03:41.560 --> 0:03:44.200 employers those in the commercial market might not be able 0:03:44.240 --> 0:03:48.040 to demand that same price. So time will tell as 0:03:48.040 --> 0:03:51.760 to what the spillover effects will have. But we're looking 0:03:51.800 --> 0:03:55.880 forward to the next couple of months playing out where 0:03:55.920 --> 0:04:00.960 there are counter offers and potentially meetings between CMS and 0:04:01.000 --> 0:04:04.200 the drug makers over what that maximum fair price should be. 0:04:05.040 --> 0:04:07.119 Yeah, I think that's going to be interesting and certainly 0:04:07.400 --> 0:04:10.560 something that everyone is looking forward to, especially you know 0:04:10.760 --> 0:04:14.040 what you noted on how could this impact pricing outside 0:04:14.080 --> 0:04:17.479 of the meticicare market. Now we've heard some you know, 0:04:17.480 --> 0:04:20.200 I know there's been some movement to maybe look at 0:04:20.240 --> 0:04:23.880 modifications to the law. We've talked a lot about parity. 0:04:24.040 --> 0:04:27.560 So what's your outlook on modifications to law? Do you 0:04:27.600 --> 0:04:30.480 see any potential changes in the works. 0:04:30.760 --> 0:04:35.600 So when the initial bill came out and became law, 0:04:35.720 --> 0:04:40.360 there was pushed back by pharma or a whole host 0:04:40.400 --> 0:04:44.120 of reasons, but there was targeted feedback in terms of 0:04:44.160 --> 0:04:47.320 some of the pieces that they didn't like and set 0:04:47.320 --> 0:04:50.919 the stage for potential modifications. Now, to answer the question, 0:04:51.040 --> 0:04:54.360 I would say that the likelihood of modifications in the 0:04:54.440 --> 0:04:57.840 near term is pretty low, and I'll get into why 0:04:57.920 --> 0:05:00.640 in a second, but I'll focus on what some of 0:05:00.680 --> 0:05:07.000 these pieces might be. One area is in the space 0:05:07.160 --> 0:05:10.560 of orphan drugs, and we need to keep in mind 0:05:10.640 --> 0:05:14.360 what the law does. The IRA exempts from negotiation those 0:05:14.560 --> 0:05:18.400 orphan drugs designating for only one rare disease or condition 0:05:19.360 --> 0:05:23.680 where the approved indication is for the disease or conditions. 0:05:23.720 --> 0:05:30.039 So drugs with multiple designations for multiple rare diseases or 0:05:30.080 --> 0:05:34.800 conditions aren't exempts, even if the additional indications haven't been 0:05:34.839 --> 0:05:38.760 approved by the FDA, And as a reminder, orphan drugs 0:05:38.760 --> 0:05:41.880 are used to treat rare diseases or conditions that affect 0:05:41.960 --> 0:05:45.599 fewer than two hundred thousand people in the US. It's 0:05:45.680 --> 0:05:48.800 an open question as to how many of these orphan 0:05:48.920 --> 0:05:52.279 drugs would be affected under the law, because you have 0:05:52.320 --> 0:05:57.200 to keep in mind there is a spending threshold two 0:05:57.279 --> 0:06:02.320 hundred million dollars per year in medicare spending to qualify 0:06:02.360 --> 0:06:08.880 as a drug negotiation eligible drug. And so we've written 0:06:08.920 --> 0:06:14.080 about how some studies have shown orphan drugs are approved 0:06:14.240 --> 0:06:18.160 just for one rare disease, there's a small number approved 0:06:18.200 --> 0:06:23.080 for multiple rare disease, multiple rare diseases, and then a 0:06:23.120 --> 0:06:26.640 slightly larger portion that are proved for a rare and 0:06:26.880 --> 0:06:31.839 common disease. So what this, what a proposal would do, 0:06:32.040 --> 0:06:35.800 is exempt from negotiation drugs that have orphan designations for 0:06:35.920 --> 0:06:41.760 one or more rare diseases or conditions. I'll get into 0:06:41.760 --> 0:06:45.159 the outlook in a second. There's a separate bill that 0:06:45.760 --> 0:06:51.960 is another pharma priority, which would create parity between how 0:06:52.080 --> 0:06:57.200 small and large molecules are treated under negotiation. As a reminder, 0:06:57.760 --> 0:07:03.080 small molecules become heligible for the program after seven years 0:07:03.360 --> 0:07:08.920 of that the approval the large molecules are eleven, with 0:07:09.200 --> 0:07:13.200 the prices implemented after nine to thirteen years. And the 0:07:13.320 --> 0:07:17.720 concern from not just pharma but also other stakeholders is 0:07:17.960 --> 0:07:22.840 the potential for distincentivizing R and D development into these 0:07:22.880 --> 0:07:28.440 smaller molecules and a shift towards these large molecule drugs. 0:07:29.040 --> 0:07:33.640 And so what a proposal would do is allow for 0:07:36.040 --> 0:07:40.240 parody between small and large molecule drugs by making them 0:07:40.640 --> 0:07:44.239 the negotiation eligible at the same time after eleven years, 0:07:44.280 --> 0:07:48.240 as opposed to the split. Now, we took a look 0:07:48.280 --> 0:07:50.920 at what that might mean if that bill were to 0:07:50.960 --> 0:07:54.880 become less year or that provision was in the IRA. 0:07:55.640 --> 0:07:59.720 The interesting thing is when you think about next year's list, 0:07:59.760 --> 0:08:03.800 which we'll go into a bit later, drugs like a 0:08:04.040 --> 0:08:10.120 zembic and drugs like standy would not be subject to 0:08:10.360 --> 0:08:14.680 negotiation until much further out later into this decade. But 0:08:15.160 --> 0:08:18.320 it also means that there are other drugs that would 0:08:18.480 --> 0:08:21.320 take its place on the list. So as we think 0:08:21.360 --> 0:08:25.720 about the outlook, one, Democrats aren't really chumping at the 0:08:25.720 --> 0:08:29.080 bit to make any changes to the law. While the 0:08:29.120 --> 0:08:34.800 bills do have democratic support, it's not overwhelming, and it's 0:08:34.920 --> 0:08:38.560 unclear if it I don't say it's unclear. I highly 0:08:38.600 --> 0:08:42.479 doubt that Republicans would bring up a bill to modify 0:08:42.720 --> 0:08:46.240 the law as opposed to just repeal it outright, So 0:08:47.040 --> 0:08:50.680 I think the again, the outlook on any kind of 0:08:50.920 --> 0:08:55.400 movement for these bills is very low. And this is 0:08:55.480 --> 0:09:02.000 great bodder for members of Congress to talk about how 0:09:02.600 --> 0:09:06.880 the law is imperfect and how it could impactation access. 0:09:06.960 --> 0:09:09.960 But it's really just a talking point that sets up 0:09:09.960 --> 0:09:14.240 a conversation for twenty twenty five in the next Congress. 0:09:15.559 --> 0:09:17.160 Well, as you just alluded to here, I mean, we're 0:09:17.200 --> 0:09:21.679 in an election year, so you know, thinking about potentially 0:09:21.720 --> 0:09:24.599 a different administration, can you forecast how let's say a 0:09:24.640 --> 0:09:29.320 potential Trump administration might implement or deal with the IRA 0:09:30.240 --> 0:09:33.200 and what could he pursue to perhaps weaken the law. 0:09:34.160 --> 0:09:39.719 Yeah, so a lot depends on what happens with the 0:09:40.120 --> 0:09:43.160 outcome of the election, not just at the presidential level, 0:09:43.160 --> 0:09:47.800 but also with Congress. I'll focus on what President Trump 0:09:47.800 --> 0:09:52.160 can do. And I think it's worth noting that candidate 0:09:52.240 --> 0:09:58.719 Trump between sixteen supported negotiation and did in fact propose 0:09:58.880 --> 0:10:04.320 some of his own ideas on how to lower prices 0:10:04.360 --> 0:10:10.160 by or through international reference pricing, tying prices for Part 0:10:10.160 --> 0:10:13.680 B drugs, some part drugs to what's paid overseas. But 0:10:14.400 --> 0:10:18.080 he did during his four years in office back away 0:10:18.120 --> 0:10:23.760 from negotiation that said, what can he do keeping in 0:10:23.800 --> 0:10:28.880 mind that the underlying loss sets a sealing price for 0:10:29.720 --> 0:10:36.040 these drugs, these negotiation eligible drugs, but CMS can negotiate 0:10:36.559 --> 0:10:40.679 prices below that. You could see one of two things happened. 0:10:40.800 --> 0:10:43.880 One Trump could say could do nothing and just do 0:10:43.960 --> 0:10:48.200 the bare minimum, and his HHS basically does what the 0:10:48.280 --> 0:10:51.439 laws says is the maximum or the minimum that they 0:10:51.440 --> 0:10:54.080 can do in terms of price cuts. He could say 0:10:54.120 --> 0:10:58.440 he's the master negotiator and go for much deeper discounts 0:10:58.440 --> 0:11:03.200 than you might see under a Biden administration. So that's 0:11:03.400 --> 0:11:08.400 one potential way he could go about implementing this law. 0:11:08.880 --> 0:11:11.960 There are other avenues, such as some of the definitional 0:11:12.400 --> 0:11:16.360 pieces that were clarified as part of guidance last year. 0:11:16.520 --> 0:11:21.000 So as an example, we have terms like single source 0:11:21.040 --> 0:11:24.600 drug and which is in the in the statute, but 0:11:24.720 --> 0:11:28.760 you also have terms like bonified generic marketing and competition, 0:11:28.880 --> 0:11:34.679 which is basically a regulatory interpretation. Bonifide's not statute, and 0:11:34.720 --> 0:11:38.240 it's a determination that is at least CMS said will 0:11:38.280 --> 0:11:40.679 be made on a case by case basis as to 0:11:41.559 --> 0:11:45.959 whether or not a drug as a bonafied generic competitor 0:11:46.000 --> 0:11:50.520 for purpose of purposes of being selected or getting off 0:11:51.000 --> 0:11:56.480 the list. And what CMS has said is that it 0:11:56.520 --> 0:12:02.040 will weigh factors like generic utilization of a drug, a 0:12:02.320 --> 0:12:09.280 generic and prescription drug event data to determine if there's 0:12:09.480 --> 0:12:14.400 a bonafide marketing. Now that's the bonafide side. On the 0:12:14.400 --> 0:12:18.679 single source side, the agency defined it as based on 0:12:18.840 --> 0:12:24.440 the active ingredient, which enables it to group multiple therapies 0:12:24.480 --> 0:12:31.120 with different either NDAs or blas. And we could see 0:12:31.120 --> 0:12:35.960 a Trump administration narrow the interpretation of what it means 0:12:35.960 --> 0:12:39.480 to be a single source drug, which would potentially limit 0:12:39.920 --> 0:12:43.200 some of these limit the number of drugs or type 0:12:43.200 --> 0:12:46.520 of drugs that are subject to negotiation. You know, I 0:12:46.559 --> 0:12:49.680 want to go back to the bonafide piece and why 0:12:49.720 --> 0:12:55.599 that's important I mentioned it earlier. It determines whether a 0:12:55.679 --> 0:12:59.600 drug gets on the list or gets off. If there's 0:12:59.600 --> 0:13:03.319 a bond phi generic before the end of the negotiation process, 0:13:04.280 --> 0:13:08.040 then the drug won't see price cuts for the first 0:13:08.080 --> 0:13:12.400 applicable year. If we see or CMS determines that there's 0:13:12.440 --> 0:13:17.000 a bonophi generic after the negotiation process, but before April 0:13:17.360 --> 0:13:21.120 of the applicable price year, the price cuts to the 0:13:21.120 --> 0:13:24.440 brand drug going to effect for that year, but they 0:13:25.160 --> 0:13:27.280 will not be effective the year after. And then if 0:13:27.280 --> 0:13:33.160 it's after the April of the first year, then those 0:13:33.280 --> 0:13:37.120 price cuts as negotiated will be in effect for two years. 0:13:37.120 --> 0:13:40.920 So that timing is pretty critical, and that's important because 0:13:40.960 --> 0:13:44.040 when you think about some of the negotiated prices, they 0:13:44.080 --> 0:13:48.680 could be much lower than what we would see from 0:13:49.600 --> 0:13:53.959 generic typical generic entry. So looking at some data provided 0:13:54.000 --> 0:14:00.160 by FDA, we did see that in some cases, if 0:14:00.160 --> 0:14:06.360 it's an extended monopoly or a long monopoly drug, the 0:14:06.400 --> 0:14:09.720 price would be pretty much lower than what we see 0:14:09.760 --> 0:14:13.920 from typical first to market generics. So that could have 0:14:14.040 --> 0:14:17.480 an impact on generic manufacturers, and obviously it could have 0:14:17.520 --> 0:14:22.200 an impact on brand manufacturers as well. So a lot 0:14:22.200 --> 0:14:25.920 of these interpretations could have a pretty significant impact on 0:14:25.960 --> 0:14:29.960 how the law impacts a lot of these companies moving forward. 0:14:31.000 --> 0:14:33.400 Yeah, and I know we've talked about it on podcasts before, 0:14:33.640 --> 0:14:37.880 just potentially even how it impacts generic litigation strategy and 0:14:37.920 --> 0:14:40.800 how a company is going to approach that given the timelines. 0:14:40.840 --> 0:14:43.320 But what about repeal, I mean, do you think that's 0:14:43.360 --> 0:14:45.760 possible at this point that the law could be repealed. 0:14:47.600 --> 0:14:52.440 I'm skeptical at this point, and largely because the key 0:14:52.520 --> 0:14:56.240 date coming up is the September first date when the 0:14:56.280 --> 0:15:01.360 maximum fair prices will be public, and then next year 0:15:01.400 --> 0:15:06.880 when they're when the explanation for those prices is made available. 0:15:06.960 --> 0:15:11.320 And so I think we have to remember that the 0:15:11.360 --> 0:15:15.680 pieces of the IRA that drug pricing components are actually 0:15:15.800 --> 0:15:19.160 very popular, and so once those prices are out and 0:15:19.200 --> 0:15:24.360 there's this expectation of lower prices, I think it might 0:15:24.400 --> 0:15:27.520 be hard to kind of pull that back and say 0:15:27.680 --> 0:15:33.560 to people, know, you don't deserve those lower prices. The 0:15:33.600 --> 0:15:36.480 program doesn't deserve those lower prices. So I think there 0:15:36.520 --> 0:15:39.440 might be a bit of an optics challenge for trying 0:15:39.520 --> 0:15:42.360 to repeal it now. I think all of that depends 0:15:42.400 --> 0:15:46.000 on what happens with the election, But even if there 0:15:46.040 --> 0:15:50.479 is a sweep on the Republican side, I'm still skeptical 0:15:50.600 --> 0:15:53.240 at this point that we could see some kind of 0:15:53.360 --> 0:15:55.200 legislative action that repeals the law. 0:15:56.240 --> 0:15:59.400 So, you know, given that you know, there's maybe some 0:15:59.520 --> 0:16:03.160 skeptical on whether repeal is possible. Obviously, there's been several 0:16:03.240 --> 0:16:07.920 drug manufacturers that have challenged this law in court, so oed, 0:16:07.960 --> 0:16:10.680 I'm going to turn the focus to you. So on 0:16:10.760 --> 0:16:14.480 the litigation front, what are the key procedural and constitutional 0:16:14.560 --> 0:16:19.600 challenges that have been brought so far about this drug 0:16:19.720 --> 0:16:23.240 about the drug pricing provisions of the IRA, and how 0:16:23.280 --> 0:16:26.200 have the courts ruled so far in these cases? 0:16:27.240 --> 0:16:30.560 Yeah, thanks, Tish. So the main you know, if we're 0:16:30.600 --> 0:16:36.120 talking about challenging the law, there are four constitutional challenges 0:16:36.160 --> 0:16:38.240 that we see over and over again in all of 0:16:38.280 --> 0:16:43.880 these litigations, and then there are also some statutory challenges. 0:16:43.960 --> 0:16:49.560 Most of them revolve around the Administrative Procedural Act, which 0:16:49.600 --> 0:16:54.080 is the law that governs the process of how government 0:16:54.120 --> 0:17:00.960 agencies can regulate. And so we think that if there's 0:17:01.160 --> 0:17:08.920 any chance of this these litigations to be successful to 0:17:09.240 --> 0:17:13.320 you know, negate this law, it would be a constitutional challenge, 0:17:13.720 --> 0:17:16.520 although it isn't argue that this is going to happen. 0:17:16.680 --> 0:17:20.520 But I will tell you about the four main arguments 0:17:20.640 --> 0:17:25.479 under the first, fifth, and eighth Amendments. The first is 0:17:25.760 --> 0:17:29.200 the first Amendment and that they under the compelled speech doctrine, 0:17:29.840 --> 0:17:33.639 which borrows the government from compelling people and then companies 0:17:34.320 --> 0:17:37.000 to say anything they don't want to say. The argument 0:17:37.320 --> 0:17:42.120 here is that the IRA compels drug companies to speak 0:17:42.280 --> 0:17:45.240 by mandating that they enter it and be signatories to 0:17:45.400 --> 0:17:52.400 certain negotiating agreements that essentially, they say, you know, makes 0:17:52.400 --> 0:17:56.639 them endorse the medicare prices as the maximum fair price. 0:17:57.680 --> 0:18:03.240 And there are two arguments under the Fifth Amendment. One 0:18:03.320 --> 0:18:05.840 is due process. We can talk a little bit about that. 0:18:05.920 --> 0:18:10.840 We talked about the March seventh hearing that we just attended, 0:18:11.359 --> 0:18:15.400 But that is the provision that prohibits the government from 0:18:15.400 --> 0:18:19.159 depriving a person of property without due process. So I 0:18:19.200 --> 0:18:22.200 mean that there must be an opportunity to prevent any 0:18:22.280 --> 0:18:27.120 deprivation of property i e. These pharmaceutical companies drugs. And 0:18:27.160 --> 0:18:31.600 then under the Fifth Amendment there is also taking this clause, 0:18:32.200 --> 0:18:35.120 and that taking as clause requires the government to pay 0:18:35.440 --> 0:18:39.679 just compensation when it takes private property. So here the 0:18:39.840 --> 0:18:42.560 argument is made that the IRA requires drug makers to 0:18:42.720 --> 0:18:47.400 enter to force sales at price discounts, and they say 0:18:47.400 --> 0:18:50.200 it's under the threat of corrosion because there are penalties 0:18:50.200 --> 0:18:53.280 attached to it. And they are not compensated for the 0:18:53.320 --> 0:18:57.520 price difference that they would get on the private markets. 0:18:58.040 --> 0:19:01.440 Then there's the Eighth Amendment of the US Constitution has 0:19:01.520 --> 0:19:05.040 a theory of excessive fines, and that just prohibits the 0:19:05.080 --> 0:19:10.080 government from imposing signs that are that exceed the punishment 0:19:10.240 --> 0:19:17.920 for a certain offense. And then of course the statutory challenges, 0:19:18.359 --> 0:19:21.080 you know, those are more sort of in the weeds. 0:19:21.280 --> 0:19:25.160 They have to do with guidance that CMS has issues 0:19:25.359 --> 0:19:30.000 or about issued or about certain definitions or lack thereof 0:19:30.200 --> 0:19:33.160 in the statute, et cetera. And so these we don't 0:19:33.160 --> 0:19:36.879 think would kill the law. We just think it would 0:19:37.280 --> 0:19:42.080 modify some behavior, probably by CMS. So so far we've 0:19:42.119 --> 0:19:47.800 seen ten lawsuits. One was dismissed very early on, two 0:19:48.320 --> 0:19:51.320 have been rolled on. One was in Texas and it 0:19:51.400 --> 0:19:56.280 was essentially dismissed for lack of standing in jurisdiction. And 0:19:56.320 --> 0:20:00.720 then a more recent one was the Astrodeneka case, which 0:20:00.920 --> 0:20:05.679 was also dismissed, and that was for lack of jurisdiction, 0:20:06.280 --> 0:20:11.600 but it also did address one constitutional challenge, which was 0:20:11.640 --> 0:20:14.960 the due process clause of the Fifth Amendment, and essentially 0:20:15.040 --> 0:20:18.600 the judge there said that he had no jurisdiction, but 0:20:18.680 --> 0:20:24.440 that because medicare participations in voluntary, there is no issue 0:20:25.160 --> 0:20:30.640 because the parties can just exit. The other seven cases 0:20:30.680 --> 0:20:38.480 which are still pending are actually all stimilarly situated where 0:20:38.520 --> 0:20:42.400 there have been motions and cross motions on summary judgment, 0:20:42.800 --> 0:20:46.359 each side asking the court to essentially throughout the case, 0:20:46.920 --> 0:20:50.560 and we are waiting on all those decisions. We just 0:20:50.600 --> 0:20:55.439 had a hearing in the New Jersey court and that 0:20:55.640 --> 0:20:57.639 was for for the cases that are in front of 0:20:57.680 --> 0:21:00.679 the same judge. But other than that, we have a 0:21:00.760 --> 0:21:04.720 case in the seven District of Ohio, one in Connecticut, 0:21:04.920 --> 0:21:08.440 and one in DC, and all of those are essentially 0:21:08.480 --> 0:21:12.720 waiting for the judge to decide. We haven't seen oral 0:21:12.840 --> 0:21:17.120 arguments in any other case. Besides the New Jersey ones 0:21:17.240 --> 0:21:21.880 are still pending. We haven't seen any requests for it. 0:21:21.880 --> 0:21:26.000 It's possible that that might come, or the judges could 0:21:26.000 --> 0:21:28.840 just decide to roll off of the papers that have 0:21:28.880 --> 0:21:29.480 been submitted. 0:21:30.280 --> 0:21:32.720 Let's talk a little more about that March seventh hearing 0:21:33.359 --> 0:21:36.160 you and I both attended. Certainly there were a lot 0:21:36.200 --> 0:21:39.240 of issues to be unpacked and argued that day. The 0:21:39.320 --> 0:21:42.879 judge certainly kept it lighthearted. The best he could, but 0:21:43.280 --> 0:21:45.399 there was a lot going on. So what were some 0:21:45.480 --> 0:21:48.600 of the key takeaways that you took from that March 0:21:48.680 --> 0:21:52.920 seventh District court hearing that involved, you know, the arguments 0:21:52.960 --> 0:21:58.000 from J and J. Bristol, Myers, Nova Nordisk, and nov Artists. Yeah. 0:21:58.040 --> 0:22:01.760 So, I mean, I'll focus on the constant titutional challenges 0:22:02.560 --> 0:22:05.640 because I think we'll just see more only one one 0:22:05.680 --> 0:22:08.919 party that was really talking about the statutory challenges. And 0:22:09.000 --> 0:22:12.199 like I said, I think the constitutional challenges are the 0:22:12.240 --> 0:22:14.000 ones that are more important to these drug companies if 0:22:14.000 --> 0:22:15.840 they just want to get out of this all together, 0:22:16.720 --> 0:22:19.800 which again we don't think they will, but that is 0:22:19.960 --> 0:22:25.880 the goal. So I'll start with actually the Fifth Amendment 0:22:26.000 --> 0:22:29.240 taking class, which was I think maybe surprising to both 0:22:29.240 --> 0:22:31.720 of us tis but definitely to me how much time 0:22:31.800 --> 0:22:35.200 the parties spent on it. They spent the hearing went 0:22:35.440 --> 0:22:38.760 full day, They spent pretty much half of their time 0:22:39.080 --> 0:22:43.399 talking about this particular issue. So, you know, it's my 0:22:43.520 --> 0:22:47.399 assumption that these pharmachool companies thought that this was probably 0:22:47.440 --> 0:22:50.719 their best argument. Like I said earlier, you know, this 0:22:51.080 --> 0:22:57.159 argument just really revolves around the fact that the drug 0:22:57.200 --> 0:23:01.280 makers say that they are you know, sort of forced 0:23:01.520 --> 0:23:08.639 to sell their products at a significant discount under this 0:23:08.880 --> 0:23:12.800 threat of coersion, which is also the topic of the 0:23:12.800 --> 0:23:15.760 Eighth Amendment. Right, these are the excessive fines that they 0:23:15.840 --> 0:23:21.360 talk about and with no compensation. So you know, the 0:23:21.359 --> 0:23:24.960 plaintiffs definitely argued at each turn that the IRA just 0:23:24.960 --> 0:23:30.640 specifically requires h HS to impose drug prices that fall 0:23:30.880 --> 0:23:33.960 well below what the companies would normally get on the 0:23:34.000 --> 0:23:37.520 private market, and so that difference is a is a 0:23:37.560 --> 0:23:40.919 big deal to them in the billions of dollars that 0:23:40.920 --> 0:23:44.600 they are fighting for. Like I said, they double down 0:23:44.640 --> 0:23:47.120 on this. We spent a lot of time on it. 0:23:47.560 --> 0:23:49.320 I think it's fair to say that there were a 0:23:49.320 --> 0:23:52.359 lot of questions, including from the judge, and we certainly 0:23:52.440 --> 0:23:56.560 had a lot of questions. But you know, essentially the plaintiffs, 0:23:56.960 --> 0:24:01.199 you know, for this issue, you know, argued to the 0:24:01.320 --> 0:24:04.320 judge that unlike you know, what I mentioned with the 0:24:04.359 --> 0:24:09.480 Astrozenica case, where the government had a defense of the 0:24:10.240 --> 0:24:14.879 participation of medicare being voluntary, the plaintiff's here just after 0:24:14.960 --> 0:24:18.400 judge and not consider that at all. Right, it's their 0:24:18.480 --> 0:24:22.040 position that the determination of whether there is a taking 0:24:22.119 --> 0:24:26.760 on their Fifth Amendment should be decided regardless of whether 0:24:26.800 --> 0:24:29.240 it's voluntary or not, if you're in the program, is 0:24:29.280 --> 0:24:31.760 it a taking or is it not a taking? And 0:24:31.800 --> 0:24:35.320 so that was a key question for the judge, you know, 0:24:35.400 --> 0:24:38.439 because I think that he in the very beginning, I 0:24:38.680 --> 0:24:40.919 actually couldn't read what he thought after they had argued 0:24:41.320 --> 0:24:44.280 all morning, but you know, he definitely thought the special 0:24:44.359 --> 0:24:50.199 issue was whether the statute of requiring whether the Medicare 0:24:50.280 --> 0:24:53.520 participation being voluntary was actually just the only issue that 0:24:53.640 --> 0:24:57.840 to decide. But the companies argue that the special issue 0:24:57.880 --> 0:25:00.879 is actually whether the statute which require the access to 0:25:00.920 --> 0:25:04.920 the maximum fair price is the physical taking of property. 0:25:05.160 --> 0:25:07.560 So they seem to argue that the ability to withdraw 0:25:07.640 --> 0:25:10.080 on this program doesn't have any bearing on this assessment. 0:25:10.640 --> 0:25:13.240 And so whether the judge bought that or not, I 0:25:13.280 --> 0:25:18.800 think will be key to you know, how he approaches 0:25:18.840 --> 0:25:22.840 this question, you know. And so and this is, like 0:25:22.920 --> 0:25:27.199 I said, very much entwined with Eighth Amendment, because the 0:25:27.200 --> 0:25:31.840 excise tax is coercive according to the companies, and so 0:25:32.080 --> 0:25:35.560 if the companies are quote unquote made to agree because 0:25:35.600 --> 0:25:38.240 of this, then they consider that a taking of their 0:25:38.240 --> 0:25:42.199 physical property. The judge did ask all the parties. You know, 0:25:42.240 --> 0:25:43.800 he kind of honed it on the idea of, like, 0:25:43.840 --> 0:25:47.439 has anyone withdrawn from this program? The government confirmed that 0:25:47.480 --> 0:25:50.520 no one had even tried, But that is something that 0:25:50.560 --> 0:25:52.959 he kept coming back to, and so I think that 0:25:52.960 --> 0:25:55.840 that's something in his mind that's probably pretty important. But again, 0:25:56.200 --> 0:25:58.040 I really and tissues jump in if you had a 0:25:58.040 --> 0:26:00.600 different impression, but I really didn't get the depression of 0:26:00.640 --> 0:26:03.879 like whether he agreed with the plaintiffs as to this 0:26:04.160 --> 0:26:08.439 defense of it being voluntary should be disregarded or not. 0:26:10.000 --> 0:26:13.040 The judge also honed in several times during this hearing 0:26:13.119 --> 0:26:15.439 on the economic issue. This was brought up by the 0:26:15.440 --> 0:26:19.280 pharma school companies they would be losing large amounts of money. 0:26:19.840 --> 0:26:23.760 He several times alluded to the large profits that these 0:26:23.800 --> 0:26:26.919 farm school companies are making and said that if an 0:26:26.920 --> 0:26:29.479 economic argument was being made, he'd have to have much 0:26:29.520 --> 0:26:32.240 more information on that, and he'd want to know where 0:26:32.240 --> 0:26:34.439 all the money he's going, where all these going, is 0:26:34.480 --> 0:26:38.359 it R and D is it executive compensations, buybacks, et cetera. 0:26:38.680 --> 0:26:41.560 So he was definitely sensitive to that as well as 0:26:41.560 --> 0:26:45.600 part of their argument. You know, the government essentially just 0:26:46.760 --> 0:26:49.920 rested their entire defense on the fact that the part 0:26:50.000 --> 0:26:53.760 that the program is voluntary, and so again I think 0:26:53.800 --> 0:26:55.840 that's going to be a really important fact. They did 0:26:55.960 --> 0:26:59.840 also argue that in the alternative that this did not 0:27:00.119 --> 0:27:02.560 actually even fall under the Fifth Amendment, that this was 0:27:03.359 --> 0:27:06.879 authority that they had under the spending clause, and you know, 0:27:06.920 --> 0:27:09.720 someone like government contractors. There were a lot of parallels 0:27:09.760 --> 0:27:13.159 drawn during this hearing, so that it's not even a 0:27:13.200 --> 0:27:16.040 regulation issue at all. This was a spending one, and 0:27:16.080 --> 0:27:18.160 it just takes it completely out of the Fifth Amendment. 0:27:19.840 --> 0:27:23.720 You know, again, this was long. We didn't really get 0:27:23.720 --> 0:27:26.800 the impression that the judge was convinced, but you know, 0:27:27.160 --> 0:27:29.440 he was actually a pretty great judge. He was very respectful, 0:27:29.520 --> 0:27:31.880 he listened, he asked a lot of questions. So it's 0:27:31.920 --> 0:27:34.480 a little hard to see like how he fell, which 0:27:34.520 --> 0:27:36.800 thought he saw on this one after the whole morning. 0:27:38.080 --> 0:27:40.480 You know, I did mention the Fifth Amendment you process 0:27:41.040 --> 0:27:47.080 earlier as having been an issue that was raised in 0:27:47.080 --> 0:27:51.800 the Astrosenica case, but it really wasn't addressed at all 0:27:52.200 --> 0:27:54.879 during this hearing, even though it was pretty extensively address 0:27:54.960 --> 0:28:00.159 during the briefing, and so you know, I think that 0:28:00.359 --> 0:28:03.399 probably they just chose not the plaintiffs chose not to 0:28:03.440 --> 0:28:06.520 spend a lot of time on that because the judge 0:28:06.560 --> 0:28:08.960 in Delaware ruled on it, which is in the same 0:28:09.119 --> 0:28:13.919 appeal circuit as New Jersey, and so probably they chose 0:28:14.000 --> 0:28:17.800 to spend their time on new arguments to get all 0:28:17.840 --> 0:28:22.160 that on the record during this particular hearing. And an 0:28:22.160 --> 0:28:23.960 interesting argument. I think you and I both thought it. 0:28:24.000 --> 0:28:26.840 This was interesting, Tish is the was the first Amendment 0:28:28.280 --> 0:28:33.199 and the plaintiffs essentially argued that by signing this template 0:28:33.200 --> 0:28:38.680 agreement that CMS has created and requires the companies to execute, right, 0:28:38.760 --> 0:28:41.640 so it's not like they have a choice, you know, 0:28:41.640 --> 0:28:44.920 they're compelled to agree to the negotiated price or the 0:28:44.920 --> 0:28:48.600 maximum fare price, as Dwayne talked about quite a bit, 0:28:48.680 --> 0:28:53.440 which is in the statute, and that is really you know, 0:28:54.040 --> 0:28:59.040 insinuating that previous higher prices and maybe higher prices that 0:28:59.080 --> 0:29:02.600 would be paid for on the private market are in 0:29:02.680 --> 0:29:06.880 fact not fair. So you know this according to the 0:29:06.920 --> 0:29:10.760 FARMAC companies in these lawsuits, just you know, they consider 0:29:10.800 --> 0:29:13.760 that to be sort of an obligation to speak or 0:29:13.880 --> 0:29:19.720 corursive action to speak through disagreement. The companies had argued 0:29:19.800 --> 0:29:23.600 that it makes them essentially have a value judgment on 0:29:23.640 --> 0:29:26.880 what they're charging, and that this is politically motivated and 0:29:26.920 --> 0:29:30.920 it will just make them look bad. And because of 0:29:31.000 --> 0:29:34.320 the excise tax again, which is part of the arguments 0:29:34.320 --> 0:29:37.400 and the Eighth Amendment. You know, they the plaintiffs argued 0:29:38.320 --> 0:29:39.840 pretty much over and over again, this is just a 0:29:39.880 --> 0:29:42.360 false choice. There's not there's no choice here. They are 0:29:42.400 --> 0:29:45.920 compelled to do all of this and it is tarnishing 0:29:45.920 --> 0:29:51.840 to them. So, you know, the government. The government argued 0:29:51.880 --> 0:29:55.640 that this is actually not about the document that CMS 0:29:55.720 --> 0:29:59.640 is drafted, that a compelled speech argument really goes outside 0:29:59.840 --> 0:30:02.200 of the four corners of that document, and that the 0:30:02.240 --> 0:30:04.800 companies are not required to agree publicly on any of it, 0:30:05.440 --> 0:30:08.680 and you know they can they can have amount of 0:30:08.760 --> 0:30:12.800 campaign against CMS if they want to, that is totally fine, 0:30:12.840 --> 0:30:16.280 and that any compelled speech argument would fall outside of that. 0:30:17.720 --> 0:30:19.600 You know, I think that we both thought this was 0:30:19.640 --> 0:30:24.560 a decent argument for plaintiffs. But in thinking about it afterwards, 0:30:24.720 --> 0:30:27.360 you know, if the crux of this argument rests on 0:30:27.440 --> 0:30:32.360 the CMS template, then this particular constitutional challenge is unlikely 0:30:32.400 --> 0:30:36.080 to result in the statute falling apart, because in essence, 0:30:36.080 --> 0:30:39.280 the court can just ask CMS to change their template 0:30:39.760 --> 0:30:43.760 to something that's satisfactory to all parties, and then that 0:30:43.840 --> 0:30:46.760 problem sort of goes away. And then the last one 0:30:46.800 --> 0:30:52.440 I'll touch on is the Eighth Amendment, and that the 0:30:52.480 --> 0:30:56.760 farmers companies essentially argued there that they are imposes remarkably 0:30:56.840 --> 0:31:00.640 high penalties to millions of dollars per day in this 0:31:00.840 --> 0:31:07.000 exercise tax for refusing to participate in these negotiations. And 0:31:07.880 --> 0:31:10.240 you know, we saw this over and over in the 0:31:10.320 --> 0:31:15.480 hearing that each side had vastly different maths calculating what 0:31:15.560 --> 0:31:20.040 those penalties would be pharmacy companies so that it could 0:31:20.040 --> 0:31:24.000 be up to one nine hundred percent of total Dailly revenue, 0:31:24.560 --> 0:31:27.160 while the government, you know, made the point that it 0:31:27.160 --> 0:31:30.200 would never be more than ninety five percent. And so 0:31:31.360 --> 0:31:35.240 we tend to argue, we tend to agree actually with 0:31:35.320 --> 0:31:37.520 the government when we looked at the math. But I 0:31:37.520 --> 0:31:39.080 think it's just you know, how you look at it. 0:31:39.120 --> 0:31:42.320 So the judge did ask quite a bit about that 0:31:42.600 --> 0:31:45.480 and wanted some clarification there. So I imagine that he 0:31:45.520 --> 0:31:47.840 and his clerks will definitely be digging into that a 0:31:47.840 --> 0:31:51.000 little bit more, because that is somewhat the cross over 0:31:51.000 --> 0:31:54.080 the issue. Is it excessive? Are these fines excessive and 0:31:54.160 --> 0:31:57.880 if so, they violate the Eighth Amendment. If not, then 0:31:58.000 --> 0:32:04.080 CMS can impose them according to the statute. As I said, 0:32:04.560 --> 0:32:09.920 are other challenges that under the APA, and several other 0:32:10.080 --> 0:32:12.720 like separation of powers and and things like that that 0:32:12.800 --> 0:32:15.920 are sort of one off in these lawsuits. We do 0:32:16.120 --> 0:32:19.120 actually think that some of the statutory challenges may have 0:32:19.200 --> 0:32:23.240 more teeth, but like I said, these won't result in 0:32:23.880 --> 0:32:25.000 the law falling apart. 0:32:27.200 --> 0:32:30.680 And I mean, I definitely agree with your takeaways from 0:32:30.680 --> 0:32:34.120 the hearing. I think the taking's clause certainly spent a 0:32:34.200 --> 0:32:35.960 lot of time on that. The judge had a lot 0:32:35.960 --> 0:32:38.680 of questions, and you know, the way I view oral 0:32:38.760 --> 0:32:41.880 arguments is really a chance right to clarify any questions 0:32:41.880 --> 0:32:45.440 that the judge has cement your positions, and you know, 0:32:45.640 --> 0:32:50.320 I don't think you'd necessarily walk away with like a 0:32:50.560 --> 0:32:52.560 or maybe maybe the judge didn't either. I don't know 0:32:52.640 --> 0:32:54.920 of a clear picture of Okay, this is the argument, 0:32:54.960 --> 0:32:57.520 but I think that the judge asked the questions he 0:32:57.600 --> 0:33:01.800 needed to ask, was definitely respectful, listen to both sides, 0:33:01.880 --> 0:33:04.880 and there was really a lot to digest, and so 0:33:05.520 --> 0:33:08.680 I think, you know, it'll be interesting to see how 0:33:08.680 --> 0:33:13.240 he ultimately rules on these issues. But that was obviously 0:33:13.360 --> 0:33:16.000 just one small piece of all this litigation. As we 0:33:16.080 --> 0:33:17.800 see up on the side here, and as you've talked about, 0:33:17.840 --> 0:33:19.240 we have a lot of cases going on. We have 0:33:19.280 --> 0:33:21.560 a lot of cases going on at different locations. So 0:33:22.760 --> 0:33:25.760 does location matter here for these various for all these 0:33:25.840 --> 0:33:28.520 various cases, I mean, are there venues that might be 0:33:28.520 --> 0:33:31.560 more amenable to some of Pharma's claims here than others 0:33:32.280 --> 0:33:33.920 or does it not even matter? 0:33:34.760 --> 0:33:37.040 Yeah, I mean I think it matters. It matters for 0:33:37.240 --> 0:33:41.560 two reasons. I think that there are definitely some courts 0:33:41.600 --> 0:33:44.959 that are in states that are more conservative, so then 0:33:45.000 --> 0:33:48.720 we think that it is being more pro business. So, 0:33:49.360 --> 0:33:52.800 for example, the Ohio case I think will be really interesting. 0:33:52.880 --> 0:33:55.120 That was not that did not have a hearing, but 0:33:55.200 --> 0:33:59.240 it's been fully brief since last year, and so you 0:33:59.240 --> 0:34:02.720 know we expected this decision hopefully suit on that and 0:34:02.760 --> 0:34:05.600 that will get that would get appeal to the Sixth Circuit. 0:34:06.160 --> 0:34:11.279 So when you think about how the courts work, you know, 0:34:11.400 --> 0:34:14.560 like I mentioned it earlier that the case the astrodonicy case, 0:34:14.600 --> 0:34:18.960 which is will likely get appealed, but is in the 0:34:19.000 --> 0:34:23.160 same appealette circuit as New Jersey. This isn't going to 0:34:23.239 --> 0:34:25.560 create a split. And a lot of times we think 0:34:25.600 --> 0:34:29.440 about circuit splits and how that sort of pushes the 0:34:29.440 --> 0:34:32.120 Supreme Court to take up a case. And so you know, 0:34:32.440 --> 0:34:36.680 we've all assumed that the pharmaceutical industry has filed in 0:34:36.760 --> 0:34:39.759 these different places so that they can create more incentive 0:34:39.920 --> 0:34:43.839 for this issue to eventually get decided Supreme Court. So 0:34:44.520 --> 0:34:47.279 I think the text there was a tech a case 0:34:47.320 --> 0:34:49.800 in Texas I mentioned that would have been a pretty 0:34:49.800 --> 0:34:54.480 conservative court probably that would get tinned against, you know, 0:34:54.520 --> 0:34:58.520 something like New Jersey or DC. But right now, so 0:34:58.560 --> 0:35:02.360 we're really just watching that Ohio case to see. But 0:35:02.680 --> 0:35:06.360 you know, as long as the courts are in different circuits, 0:35:06.520 --> 0:35:10.520 they'll get appealed, they'll get two appolled decisions. And when 0:35:10.560 --> 0:35:12.920 there's a split in these decisions, and that's like a 0:35:12.960 --> 0:35:16.440 real recipe for Supreme Court taking up that challenge. But 0:35:16.560 --> 0:35:19.840 it doesn't it does matter, But so far we haven't, 0:35:20.120 --> 0:35:23.440 we haven't seen anything sort of stand. So we'll have 0:35:23.520 --> 0:35:26.279 to watch for all these decisions, which we have quite 0:35:26.280 --> 0:35:28.600 a few comings. So it should be interesting. 0:35:29.120 --> 0:35:31.319 Yeah, I agree, I think it's going to be an 0:35:31.360 --> 0:35:35.480 interesting couple of months. Interesting maybe year dealing with the IRA. 0:35:36.600 --> 0:35:38.680 Just real quickly before we wrap up on the IRA 0:35:38.840 --> 0:35:41.719 section and talk about what's next for it. You know 0:35:41.880 --> 0:35:44.960 you've mentioned the AstraZeneca rulings and rulings and other cases. 0:35:45.040 --> 0:35:47.680 Did any of those hearings or the rulings so far 0:35:47.960 --> 0:35:49.400 change your outlook on the case? 0:35:50.719 --> 0:35:55.000 No? Not, not really. I think that it was our 0:35:55.640 --> 0:36:02.120 original take that the medical companies would likely not prevail 0:36:02.160 --> 0:36:05.800 in these challenges. I think that over time we've become 0:36:05.800 --> 0:36:08.680 more convinced of it. But I do feel like this 0:36:09.080 --> 0:36:12.400 New Jersey case, which this was the first case that 0:36:12.520 --> 0:36:15.520 dealt with all of the challenges in their constitution, I 0:36:15.560 --> 0:36:19.280 think that will be a really interesting decision to see. 0:36:20.440 --> 0:36:24.680 But right now we still think the government prevails in 0:36:24.760 --> 0:36:25.480 their lost hands. 0:36:26.960 --> 0:36:30.960 So wrapping up on the lidicationation piece, then, so what 0:36:31.120 --> 0:36:33.040 in your view is next? What are the key things 0:36:33.080 --> 0:36:35.480 you're going to be looking out for over the next 0:36:35.520 --> 0:36:36.360 couple of months here? 0:36:37.280 --> 0:36:42.799 Yeah, So, I mean, besides these summary judgment decisions, one 0:36:42.840 --> 0:36:44.680 of the things we're going to really start looking at 0:36:44.920 --> 0:36:49.360 is and digging into are the statutory challenges, because I 0:36:49.360 --> 0:36:53.719 think after the constitutional challenges are sort of dealt with, 0:36:54.040 --> 0:36:56.640 maybe even appealed. I think that we'll see a lot 0:36:56.760 --> 0:37:04.120 more detail and fight around for the childes, around the APA, 0:37:04.760 --> 0:37:09.759 around what CMS is doing, guidance anything, anything that's just 0:37:09.840 --> 0:37:12.759 non constitutional. I think that will become a little more 0:37:12.800 --> 0:37:16.759 to the forefront, because we've really just been concentrating on 0:37:16.920 --> 0:37:19.360 knocking out this log constitutional. 0:37:18.760 --> 0:37:25.080 Grounds and Dwane, what about you, what's next in terms 0:37:25.239 --> 0:37:29.479 of the IRA for maybe we can start with what's 0:37:29.520 --> 0:37:34.480 next for sort of the twenty twenty six selected drugs 0:37:34.560 --> 0:37:37.080 on the timeline, and then maybe we can talk about 0:37:37.120 --> 0:37:39.799 what's next for the twenty twenty seven price year. 0:37:40.480 --> 0:37:45.760 Yeah, so there's parallel tracks here as we think about 0:37:46.000 --> 0:37:52.320 the first applicable year twenty twenty six, the negotiation processes underway. 0:37:52.800 --> 0:37:59.319 We'll see that process close by August first, prices will 0:37:59.360 --> 0:38:02.799 be published by September first, and then they'll be implemented 0:38:03.719 --> 0:38:08.399 January one, twenty twenty six, assuming no further hiccups. Now, 0:38:08.440 --> 0:38:13.560 while this is happening, we do have CMS beginning or 0:38:13.719 --> 0:38:17.520 collecting price data for that next set of drugs that 0:38:17.520 --> 0:38:21.840 will be subject to negotiation, and that's fifteen party drugs, 0:38:21.840 --> 0:38:25.560 which based on what we talked about earlier, how drug 0:38:25.560 --> 0:38:29.879 has been defined as it's weighty or ingredient. It could 0:38:30.000 --> 0:38:33.839 actually be more than that, but it is a twelve 0:38:33.880 --> 0:38:36.719 month period that ends no later than October thirty first 0:38:36.719 --> 0:38:39.960 of this year. So we're under the assumption that that 0:38:40.840 --> 0:38:46.240 data collection process started to November first, based on expenditures 0:38:46.440 --> 0:38:52.239 starting November one, twenty twenty three, and similar to this 0:38:52.440 --> 0:38:56.920 current process, we'll see the lists come out, we'll see negotiations, 0:38:56.960 --> 0:39:00.360 and then those prices will be implemented January one, twenty 0:39:00.400 --> 0:39:02.719 twenty seven. Now the big question is who's going to 0:39:02.719 --> 0:39:05.839 be on the list, And we just went back and 0:39:05.880 --> 0:39:10.680 looked at what we have from one month of spending, 0:39:10.719 --> 0:39:12.719 and we don't think there's a ton of variation. But 0:39:14.440 --> 0:39:18.760 you can see here the top fifteen to twenty drugs 0:39:18.760 --> 0:39:23.040 that might be selected. Keeping in mind of zembic and 0:39:23.080 --> 0:39:26.880 rebelsis would be under one drug because they share the 0:39:26.920 --> 0:39:30.440 same ingredients, and then you'd have a whole host of 0:39:30.480 --> 0:39:37.200 other drugs as well. So again, as we're watching one 0:39:37.280 --> 0:39:42.279 process play out, we are we are seeing CMS look 0:39:42.320 --> 0:39:44.560 at what the data says in terms of what's next 0:39:44.600 --> 0:39:49.200 for those drugs that will be selected and subject to negotiation. 0:39:49.320 --> 0:39:53.319 So we could see more litigation on the process. Moving forward. 0:39:54.680 --> 0:39:58.680 Now seeking with drug pricing, but switching gears to sort 0:39:58.680 --> 0:40:01.440 of a different program to implement drug pricing. Let's talk 0:40:01.440 --> 0:40:04.960 about the three forty B drug discount program. So, Dwane, 0:40:04.960 --> 0:40:06.879 can you just still listen quickly about what the three 0:40:06.960 --> 0:40:08.239 forty B program is? 0:40:08.719 --> 0:40:11.759 Yeah. So three forty B if the Public Health Services Act. 0:40:12.120 --> 0:40:14.560 It was created in nineteen ninety two with the goal 0:40:14.600 --> 0:40:19.879 of stretching federal resources to reach as many eligible patients 0:40:20.320 --> 0:40:25.600 and provide more comprehensive health care services. A lot of 0:40:25.600 --> 0:40:30.040 stakeholders are affected by this program. Drug makers. If they 0:40:30.560 --> 0:40:34.800 want to be part of the Medicaid Drug Rebate Program 0:40:34.960 --> 0:40:38.919 or Medicaid, they also have to participate in the three 0:40:39.000 --> 0:40:44.759 forty B program. It also impacts pharmacies PBMs, and we 0:40:44.800 --> 0:40:47.040 can get into that in a second, but I think 0:40:47.080 --> 0:40:52.520 it's worth providing some definitional issues first. The entities that 0:40:52.640 --> 0:40:55.359 participate in a three forty B program, referred to as 0:40:55.400 --> 0:41:01.279 covered entities, are those hospitals that I care for a 0:41:01.360 --> 0:41:07.000 disproportionate share of low income or uninsured patients, Medicaid patients, 0:41:07.800 --> 0:41:13.440 some other hospitals like federally qualified health centers, and these 0:41:13.560 --> 0:41:18.120 covered entities can only provide these three forty B drugs 0:41:18.160 --> 0:41:23.720 to quote unquote eligible patients, and that's defined as any 0:41:23.800 --> 0:41:29.520 individual that as a or a patient that has a 0:41:29.920 --> 0:41:34.360 established relationship with the covered entity and has received healthcare 0:41:34.440 --> 0:41:38.759 services from that entity. And so the key with all 0:41:38.800 --> 0:41:42.480 of this is participation in the three forty B program 0:41:42.719 --> 0:41:49.000 generates revenues for these entities, these hospitals or facilities where 0:41:49.040 --> 0:41:53.120 the insurance reimbursement exceeds the acquisition cost or the three 0:41:53.160 --> 0:41:57.200 forty B acquisition costs. While the law doesn't say how 0:41:57.320 --> 0:42:01.719 providers should use the proceeds, in theory, it's supposed to 0:42:01.840 --> 0:42:05.760 go back into the community that they're serving or provide 0:42:06.520 --> 0:42:11.719 assistance to the patients that they're serving. And we can 0:42:11.719 --> 0:42:14.560 go into some of the challenges, but that's kind of 0:42:14.600 --> 0:42:18.040 the three forty B program in a nutshell, And like. 0:42:18.040 --> 0:42:21.400 All programs, we're going to talk about some controversy with 0:42:21.480 --> 0:42:24.920 the program or some you know, challenges to it. So 0:42:24.960 --> 0:42:27.799 in your view, what are the key issues for the 0:42:27.840 --> 0:42:30.760 three forty B program and what sort of policy changes 0:42:31.320 --> 0:42:36.359 were the catalysts for the current controversy that surrounds this program. 0:42:36.680 --> 0:42:41.600 So in a nutshell, growth and transparency and it's the 0:42:41.640 --> 0:42:45.400 way it's affected stakeholders differently. So when you think about 0:42:45.520 --> 0:42:49.480 the number of covered entities I mentioned earlier, we're now 0:42:49.520 --> 0:42:52.480 at fifty five thousand, three forty to B covered entities. 0:42:52.480 --> 0:42:58.120 That's up from eighty one hundred and two thousand. Again, 0:42:58.160 --> 0:43:01.200 I mentioned it initially covered a small subset of hospitals. 0:43:01.239 --> 0:43:05.640 It's actually grown based on other laws after nineteen ninety two, 0:43:05.680 --> 0:43:08.919 such as the Affordable Care Act. We have the role 0:43:09.000 --> 0:43:16.160 of contract pharmacies. At the program's inception, self administered drugs 0:43:16.239 --> 0:43:19.120 could only be dispensed through an in house pharmacy, but 0:43:19.400 --> 0:43:23.000 very few of these covered entities had an in house pharmacy, 0:43:23.400 --> 0:43:27.160 so they couldn't use the discount program for the self 0:43:27.160 --> 0:43:32.080 administered drugs. That was changed in nineteen ninety six where 0:43:32.239 --> 0:43:37.759 the program was allowed to allowed covered entities to use 0:43:37.760 --> 0:43:40.960 an external pharmacy if they didn't have an in house pharmacy, 0:43:41.480 --> 0:43:45.839 and that was further expanded under the ACA where these 0:43:45.880 --> 0:43:49.839 covered entities could contract with an unlimited number of pharmacies 0:43:49.920 --> 0:43:53.000 to provide through forty B discounted drugs. So we then 0:43:53.120 --> 0:43:57.360 saw the number of these contract pharmacies increased to about 0:43:57.400 --> 0:44:02.800 thirty three thousand last year from thirteen hundred and twenty 0:44:02.840 --> 0:44:06.920 ten based on one estimate. And those big players we're 0:44:06.920 --> 0:44:11.400 talking about CBS, we're talking about Walgreens, We're talking about Walmart, 0:44:11.480 --> 0:44:14.360 and when you think about Signa and United Health, because 0:44:14.400 --> 0:44:20.759 they're so vertically integrated, they are also players. Duplicate discounts 0:44:20.800 --> 0:44:27.040 is also an issue where drugs prescribed to Medicaid patients 0:44:27.280 --> 0:44:30.839 are there's a bit of double billing. There's also there's 0:44:30.880 --> 0:44:34.080 the three for to B discount and then the Medicaid rebates, 0:44:34.640 --> 0:44:40.719 and then transparency and accountability, where's the money going? I 0:44:40.840 --> 0:44:44.000 mentioned the discounts and what the intent was, but there 0:44:44.040 --> 0:44:49.879 isn't any documentation as to where the discounts are are going. 0:44:50.000 --> 0:44:51.840 Is it to the patient or is it the community 0:44:52.280 --> 0:44:55.839 where the covered entity is located or somewhere else if 0:44:55.960 --> 0:45:00.560 that hospital is part of a broader or change. 0:45:00.800 --> 0:45:03.920 So, given the growth of the program and the issues 0:45:03.960 --> 0:45:08.160 you just mentioned are questions around transparency and accountability, how 0:45:08.200 --> 0:45:10.759 have the key stakeholders like the drug makers and the 0:45:10.760 --> 0:45:13.719 pharmacies and the hospitals, how have they responded to this? 0:45:14.360 --> 0:45:18.960 So, starting in twenty twenty, drug makers like at VUCP 0:45:19.320 --> 0:45:26.759 engine unilaterally scaled back their participation in the program by 0:45:26.880 --> 0:45:32.680 limiting reporty Beat discounts to more to just one contract 0:45:32.719 --> 0:45:38.520 pharmacy and also requiring it additional data from those contract 0:45:38.520 --> 0:45:43.720 pharmacies on who's being served and where these drugs are going. 0:45:44.239 --> 0:45:48.359 And so in some ways, these drug manufacturers that we're 0:45:48.400 --> 0:45:53.759 providing all these discounts are seeing some kind of tailwind 0:45:53.840 --> 0:45:58.080 from not having to provide those discounts. Pharmacies like CVS 0:45:58.080 --> 0:46:02.120 and Walgreens are impacted differently because as they do a 0:46:02.120 --> 0:46:06.400 couple of things, they administer their claims, they get dispensing fees, 0:46:06.920 --> 0:46:10.560 and so when they have less volume to these restrictions, 0:46:10.560 --> 0:46:15.800 it impacts their revenue and they've you know, one company 0:46:15.840 --> 0:46:19.360 in particular, CBS, has mentioned in their earnings calls about 0:46:19.360 --> 0:46:22.959 how this has affected their outlook, which they now say 0:46:23.080 --> 0:46:27.960 is pretty much annualized. In other words, they have you know, 0:46:28.000 --> 0:46:32.040 they've seen the initial hits the first quarters first year 0:46:32.400 --> 0:46:35.600 in which these restrictions were in place, and they don't 0:46:35.640 --> 0:46:39.480 see an end to that. So we're seeing these companies 0:46:39.480 --> 0:46:44.080 basically say a lot of these changes, unless there's something 0:46:44.120 --> 0:46:47.920 to reverse, it has had an impact on their overall 0:46:47.960 --> 0:46:49.880 top line and Ode. 0:46:49.880 --> 0:46:52.480 You know, Dwayne talked about some of these interilateral steps 0:46:52.480 --> 0:46:56.120 that have been taken by stakeholders, including pharma, and we've 0:46:56.120 --> 0:47:00.080 seen some litigation that's been a result of this. So 0:47:00.440 --> 0:47:03.120 where do we stand with this litigation around the three 0:47:03.239 --> 0:47:06.000 forty B program? You know, what are the arguments and 0:47:06.400 --> 0:47:09.000 what's the status of these cases today? 0:47:09.960 --> 0:47:13.400 Yeah, I mean on this litigation front, it's just cricket. 0:47:13.960 --> 0:47:16.239 You know, we've we've this has been going on a 0:47:16.320 --> 0:47:20.400 lot longer than the IRA litigation. I mean, essentially the 0:47:20.480 --> 0:47:27.799 pharmacuy companies make similar arguments. Is the argument that sort 0:47:27.840 --> 0:47:32.200 of requiring as we mentioned, drug manufacturers to offer discounts 0:47:33.080 --> 0:47:37.680 to contract pharmacies actually violate the APA. So you saw 0:47:37.719 --> 0:47:40.120 that on the IRA as well and the takings clause 0:47:40.120 --> 0:47:43.640 at the Fifth Amendment. And so we've seen one decision 0:47:43.640 --> 0:47:45.320 in a third circuit and I was in favor of 0:47:45.360 --> 0:47:48.880 the pharmaceutical companies. We have two others that were waiting 0:47:48.920 --> 0:47:52.320 on and when I was speaking about the circuit split 0:47:52.320 --> 0:47:55.160 earlier on the IRA case, we'll probably see that and 0:47:55.200 --> 0:47:58.800 then this will ultimately probably also go to the Supreme Court. 0:47:59.239 --> 0:48:01.399 There are two case us right now, one brought by 0:48:01.440 --> 0:48:06.120 Nevades one by Eli Lilly in two different circuits, in 0:48:06.160 --> 0:48:10.319 the Seventh Circuit and in the DC Circuit. And we 0:48:10.680 --> 0:48:14.759 had arguments in both of these cases on appeal over 0:48:14.800 --> 0:48:19.399 a year ago, so October twenty twenty two, and we've 0:48:19.440 --> 0:48:23.640 seen nothing since. So we're hoping that we'll get a 0:48:25.360 --> 0:48:29.000 decision on both of these and then probably likely once 0:48:29.040 --> 0:48:33.760 we do well, poly see appetitions to Supreme Court based 0:48:33.800 --> 0:48:38.840 on those. I mean, we think that ultimately the Thumbs 0:48:38.920 --> 0:48:43.680 companies prevail on this in the end, but you know, 0:48:45.160 --> 0:48:47.840 just still waiting. So this is definitely not a fast 0:48:47.840 --> 0:48:50.920 moving litigation. We've seen much more action in the IRA 0:48:51.080 --> 0:48:54.040 litigations is of late Dwayne. 0:48:54.080 --> 0:48:58.320 You know, given that there's some litigation ongoing here, moving 0:48:58.360 --> 0:49:01.520 slowly is just told us some split rulings. You know, 0:49:01.600 --> 0:49:05.160 has Congress looked at this? I mean, what policy steps 0:49:05.200 --> 0:49:09.360 has Congress proposed? And you know, if so, sort of 0:49:09.400 --> 0:49:11.680 what's the outlook for action by Congress. 0:49:11.920 --> 0:49:17.760 It's been a slow burn. We're seeing, though, increasing noise 0:49:17.840 --> 0:49:20.840 from the Hill about this issue from a couple of angles. 0:49:21.680 --> 0:49:24.680 Last year twenty twenty three, we saw some members get 0:49:24.719 --> 0:49:30.799 together to essentially get feedback from stakeholders on what to 0:49:30.840 --> 0:49:33.319 do from a policy perspective, because I think a lot 0:49:33.320 --> 0:49:39.480 of members realized that doing something might benefit one stakeholder 0:49:40.000 --> 0:49:42.680 at the expense of another. So, as I mentioned earlier, 0:49:42.800 --> 0:49:49.239 this along with patients in the middle, you have pharmacies, PBMs, 0:49:49.360 --> 0:49:52.719 you know, hospitals, you have drugmakers all over are impacted. 0:49:52.800 --> 0:49:57.920 So that effort led to an initial draft legislative proposal 0:49:58.600 --> 0:50:03.960 that was released earlier in twenty twenty four, and it's 0:50:04.040 --> 0:50:08.400 trying to clarify the role of contract pharmacies, what pharma 0:50:08.520 --> 0:50:11.759 can and cannot do in terms of imposing restrictions on 0:50:11.880 --> 0:50:16.719 three point forty B drug discounts, as well as increasing 0:50:16.840 --> 0:50:21.759 data and transparency around what patients are being served and 0:50:21.800 --> 0:50:24.840 where this money's going. Now, I say it's a draft, 0:50:25.239 --> 0:50:28.960 which means we have not seen a an introduced bill 0:50:29.040 --> 0:50:32.640 on this, and given that a selection year, we're not 0:50:32.680 --> 0:50:36.239 going to see much in terms of movements. But I 0:50:36.280 --> 0:50:40.080 will say there's enough interrance where this is being teed 0:50:40.160 --> 0:50:43.560 up for further action in twenty twenty five. I'll note 0:50:43.560 --> 0:50:50.480 that Senator Cassidy Louisiana Republican from Louisiana is ranking member 0:50:50.520 --> 0:50:55.600 on the Health Committee, and he has been sending out 0:50:56.719 --> 0:51:03.960 letters to hospitals and pharmacies about the drug discount program 0:51:04.000 --> 0:51:07.440 and how it is and might not be working. I 0:51:07.480 --> 0:51:12.120 can see that turning into some kind of legislative package 0:51:12.360 --> 0:51:15.600 in the next session. Now, I mentioned center Cassidy because 0:51:16.320 --> 0:51:19.760 he's ranking member. If Republicans get the Senate, he'll be chairman, 0:51:19.840 --> 0:51:24.480 and he'll pretty much guide part of the healthcare agenda 0:51:25.040 --> 0:51:29.000 in a Republican led Senate. So something to keep in 0:51:29.120 --> 0:51:32.040 mind as that process unfolds, as well as this other 0:51:32.560 --> 0:51:36.480 effort by a bipartisan group of members who are trying 0:51:36.520 --> 0:51:41.920 to address the program, but again were in early innings, 0:51:42.360 --> 0:51:46.319 so I don't expect the status quo to change much 0:51:46.320 --> 0:51:51.800 in terms of who's getting impacted by or who's benefiting 0:51:51.840 --> 0:51:56.719 from limiting these discounts in the program. 0:51:57.000 --> 0:51:59.000 That sounds like no matter which way you look at it, 0:51:59.200 --> 0:52:02.880 the legislation or policy, it's going to be a slow churn, 0:52:03.360 --> 0:52:06.560 and we'll probably be talking about this into next year 0:52:07.080 --> 0:52:12.440 given the three forty v program litigation and policy status. 0:52:13.280 --> 0:52:16.560 But you know, switching gears now from pricing, you know, 0:52:16.680 --> 0:52:20.280 just as important as pricing is obviously coverage of therapies 0:52:20.360 --> 0:52:23.399 right and insurance coverage. So let's switch gears and talk 0:52:23.440 --> 0:52:26.880 a little bit about, you know, Medicare coverage expansion, and 0:52:26.920 --> 0:52:30.839 we'll start with obesity. So Duayane, we've heard a lot 0:52:30.880 --> 0:52:33.799 about some positive data for anti obesity drugs and the 0:52:33.840 --> 0:52:37.120 news lately, you know what changes to Medicare are being 0:52:37.160 --> 0:52:39.120 proposed to expand access. 0:52:40.600 --> 0:52:44.400 So right now it's worth remembering what Medicare does and 0:52:44.520 --> 0:52:50.200 doesn't do. Medicare does cover obc screening, behavioral counseling, periatric surgery, 0:52:50.640 --> 0:52:54.120 but health plans participating in the Metro Party program are 0:52:54.200 --> 0:52:58.920 prohibited from covering drugs used for weight loss, and this 0:52:59.480 --> 0:53:02.399 was embedded in the statute when the Party became law 0:53:02.400 --> 0:53:05.319 in two thousand and three as largely because at the 0:53:05.360 --> 0:53:09.640 time we didn't have a GOVI on the market. Obesity 0:53:09.880 --> 0:53:12.880 was viewed as a cosmetic issue that could just be 0:53:12.960 --> 0:53:17.799 addressed through lifestyle changes, and this was around the time 0:53:17.840 --> 0:53:20.359 that some drugs had been pulled from the market due 0:53:20.360 --> 0:53:26.680 to safety concerns. And so fast forward, there's been legislation 0:53:26.840 --> 0:53:31.839 introduced on the Hill to remove that prohibition. It's been 0:53:32.160 --> 0:53:35.440 introduced during the last five congresses of about ten years now. 0:53:35.480 --> 0:53:40.239 Over ten years now that gets more attention because of 0:53:40.520 --> 0:53:44.080 the change and focus of over what obesity is. It's 0:53:44.120 --> 0:53:49.480 not just a lifestyle issue, is not a cosmetic issue. 0:53:50.640 --> 0:53:53.520 And you have these products on the market that are 0:53:54.160 --> 0:54:00.000 showing pretty good effectiveness data. And so with two drug 0:54:00.120 --> 0:54:05.520 now approved by the FA, there's some independent analysis suggesting 0:54:05.680 --> 0:54:11.640 it could produce some overall health health benefits, not just 0:54:12.560 --> 0:54:18.440 lower weights but also other addressing other conditions like diabetes 0:54:18.480 --> 0:54:25.000 and hypertension. But there are some roadblocks that that is 0:54:25.160 --> 0:54:29.400 slowing down these this bill or this effort. One is 0:54:29.400 --> 0:54:34.480 the cost. Keep in mind, these are chronic drugs. You 0:54:34.520 --> 0:54:36.880 don't just take him for a couple of weeks and 0:54:36.920 --> 0:54:42.240 then you go off. The Congressional Budget Office is another roadblock. 0:54:42.360 --> 0:54:47.080 The CBO provides budgetary analysis of potential legislative changes. They 0:54:47.120 --> 0:54:50.399 haven't provided a detailed fiscal analysis of the proposal yet, 0:54:51.080 --> 0:54:54.160 but they have signal that they're looking at what it 0:54:54.239 --> 0:54:59.160 means to expand coverage to or remove the prohibition so 0:54:59.200 --> 0:55:04.640 that more patients can have access to these drugs. And 0:55:05.640 --> 0:55:09.040 CBO hasn't given a recent signal that it's any closer 0:55:09.080 --> 0:55:14.480 to providing a cost projection for doing so. It's it's 0:55:14.480 --> 0:55:19.120 worth noting, and we did some we did some number 0:55:19.200 --> 0:55:21.840 crunching to see what it might mean for the Medicare 0:55:21.880 --> 0:55:26.799 beneficiaries that have an obese diagnosis. What would happen if 0:55:27.920 --> 0:55:33.279 if they had access to these drugs and if we 0:55:33.880 --> 0:55:36.800 just say a small fraction of the thirty percent or 0:55:36.840 --> 0:55:41.480 so that are diagnosed as obest we could see just 0:55:41.560 --> 0:55:45.040 based on waygov and even with the discounts fifteen billion 0:55:45.040 --> 0:55:47.839 in new Medicare spending, which is based on a again 0:55:47.880 --> 0:55:53.880 a fifty percent discount to Novo's with Goovy, but also 0:55:54.040 --> 0:55:57.440 time limited which again they might not be time limited 0:55:57.480 --> 0:56:04.720 because they're chronic disease drugs. For context, at fifteen billion, 0:56:04.760 --> 0:56:08.279 that's about thirteen percent of projected Part D spending in 0:56:08.320 --> 0:56:12.120 twenty twenty four. Higher uptake would affect a number, but 0:56:12.280 --> 0:56:17.239 also there could be offsets if it reduces spending in 0:56:17.320 --> 0:56:19.719 other areas. But I will point out, and this is 0:56:20.120 --> 0:56:24.480 kind of recent news with way GOVI getting FT approval 0:56:24.640 --> 0:56:30.600 for cardio cardiovascular disease treatment, it could end up lowering 0:56:31.000 --> 0:56:37.640 the cost of expanding Medicare to cover OBCA drugs. I 0:56:37.719 --> 0:56:42.720 say that because CBO recently indicated that it expects Medicare 0:56:42.800 --> 0:56:46.320 is going to cover drugs for the treatment of cardiovascular 0:56:46.360 --> 0:56:50.800 conditions for people with obesity, and if so, that means 0:56:50.840 --> 0:56:55.720 covering it for the indication of obesity would be lower 0:56:55.760 --> 0:56:59.600 because some of that new spending for cardiovascular treatment would 0:56:59.600 --> 0:57:02.359 already be baked into the baseline. In terms of what 0:57:02.520 --> 0:57:06.000 is medicare spending or projected Medicare spending. Now, it doesn't 0:57:06.040 --> 0:57:09.359 mean it automatically goes to zero or closer to zero, 0:57:09.520 --> 0:57:13.560 but it is less and it does mitigate the cost 0:57:13.640 --> 0:57:16.760 of expansion. It just doesn't mean we'll see anything. I 0:57:16.760 --> 0:57:19.920 think this year. I would say, as we look at 0:57:19.960 --> 0:57:23.840 a new Congress and a potential big bill in twenty 0:57:23.880 --> 0:57:29.360 twenty five on Trump's tax cuts on ACA funding, maybe 0:57:29.400 --> 0:57:32.520 this could get wrapped up into that proposal. And best 0:57:32.560 --> 0:57:36.200 case scenario is we could see medicare covers in twenty 0:57:36.240 --> 0:57:38.920 twenty seven, twenty twenty eight. But you have to overcome 0:57:38.960 --> 0:57:42.760 a lot of skepticism on the hill that paying for 0:57:42.880 --> 0:57:47.080 an expensive drug that is going to be needed on 0:57:47.120 --> 0:57:51.960 a regular basis, that that can be overcome regardless of 0:57:51.960 --> 0:57:55.600 who's in charge. So it's worth looking into. 0:57:56.920 --> 0:57:59.520 So you know, it's interesting you say, twenty twenty seven, 0:57:59.640 --> 0:58:04.240 twenty eight, potential best case scenario here wouldn't be a 0:58:04.280 --> 0:58:07.880 conversation without talking about the IRA. We talked earlier when 0:58:07.920 --> 0:58:11.120 you were discussing the IRA that at least for Semma, glue, 0:58:11.160 --> 0:58:14.919 tide Ozempic, and Rybelsis they could be on the list 0:58:14.960 --> 0:58:18.840 for twenty twenty seven IRA negotiations. So in your view, 0:58:19.040 --> 0:58:21.800 you know, how would removing the coverage prohibition in this 0:58:21.880 --> 0:58:26.560 best case scenario have maybe IRA negotiation implications here. 0:58:27.960 --> 0:58:33.560 So correct we talked about earlier in the law, there 0:58:33.640 --> 0:58:37.600 is this diff term called single source drug and it's 0:58:37.640 --> 0:58:41.400 been interpreted by CMS as any drug that has the 0:58:41.440 --> 0:58:44.880 same ingredient regardless of whether there's a different NDA or 0:58:44.960 --> 0:58:50.760 BLA for the drug we Gov, Rebelsi's zempic, they all 0:58:50.800 --> 0:58:54.520 have different NDAs. So Zempic was FTY approved in twenty seventeen, 0:58:54.600 --> 0:58:57.000 so it's now eligible or will be eligible for the 0:58:57.000 --> 0:59:00.960 next round of negotiations. And so you could see a 0:59:01.040 --> 0:59:06.600 scenario where even after discounts, we know that we goby 0:59:06.640 --> 0:59:10.760 as a certain cost element, it could be lower if 0:59:11.000 --> 0:59:15.040 Medicare is able to negotiate include agob as part of 0:59:15.040 --> 0:59:18.880 the program. So you know what that might mean, is 0:59:19.120 --> 0:59:23.680 it be a lower price potentially or lower spending it 0:59:23.720 --> 0:59:26.040 would be new spending, so it's still a new cost 0:59:26.200 --> 0:59:28.240 for the part DEEP program, it just might not be 0:59:28.320 --> 0:59:32.440 as much. So it's something that is an interesting fact 0:59:32.480 --> 0:59:36.360 the way CMS has interpreted single source drug and how 0:59:36.360 --> 0:59:38.480 it could play out for high RA implementation. 0:59:40.080 --> 0:59:42.360 And to wrap it up, let's just talk about coverage 0:59:43.760 --> 0:59:46.600 expansion in some other new areas. So can you talk 0:59:46.680 --> 0:59:50.680 briefly just about selling gene therapy and as well as 0:59:50.720 --> 0:59:53.200 Medicare coverage for Alzheimer's therapies. 0:59:53.840 --> 0:59:57.280 Yeah, so just briefly, we're seeing a lot of news 0:59:57.400 --> 1:00:03.400 with seal gene therapy, especially with the FDA approval of 1:00:03.480 --> 1:00:07.479 two sickle cell drugs, and the question is how does 1:00:07.600 --> 1:00:12.400 all of this affordable, not just for patients, but for 1:00:12.760 --> 1:00:16.640 the medicaid program for Medicare. And I'll just say this, 1:00:16.800 --> 1:00:18.920 You know, a couple of things have happened over the 1:00:19.000 --> 1:00:21.720 last couple of years, and it's not just sallenging therapy 1:00:21.760 --> 1:00:24.520 or recognition that these new therapies like CART as well 1:00:25.960 --> 1:00:29.840 need to be addressed from a cost standpoint to make 1:00:29.880 --> 1:00:34.680 them more accessible. And we saw the administration previous administration 1:00:34.920 --> 1:00:38.040 create a new code for CART therapy within the inpatient 1:00:38.760 --> 1:00:43.320 hospital payment system we're seeing this administration look at sealinging 1:00:43.440 --> 1:00:49.440 therapies through a Medicaid model where it negotiates on behalf 1:00:49.560 --> 1:00:54.680 of all states for these new sickle cell drugs in 1:00:54.800 --> 1:00:59.680 theory creating a lower price, but also trying to implement 1:00:59.760 --> 1:01:05.640 this outcome space pricing where you pay when it works. Essentially, 1:01:06.080 --> 1:01:11.880 it's just starting. We're seeing the application process rollout, and 1:01:12.360 --> 1:01:15.480 we could see that program begin in twenty twenty five 1:01:15.680 --> 1:01:19.800 with expansion after that, so stay tuned for that. And 1:01:19.840 --> 1:01:23.320 we're also paying attention to what might happen within the 1:01:23.360 --> 1:01:26.880 Medicare program. As I mentioned, CARTE did get its own 1:01:27.000 --> 1:01:31.680 DRG beginning in twenty twenty. CMS had indicated it was 1:01:31.720 --> 1:01:35.920 looking at a separate DRG for seal enging therapies and 1:01:36.000 --> 1:01:41.640 future rulemaking. So one potential avenue is one code to 1:01:41.680 --> 1:01:46.080 cover patient costs, one to cover product costs across therapeutic 1:01:46.160 --> 1:01:50.960 product categories. That wascal, you're twenty twenty two. Could we 1:01:51.040 --> 1:01:54.840 see something in the upcoming rulemaking or draft proposal for 1:01:54.880 --> 1:01:58.920 impatient payments for hospitals. It's possible, especially in light of 1:01:59.080 --> 1:02:03.920 the FDA approval of these new sickle cell therapy, so 1:02:03.960 --> 1:02:07.920 stay tuned. It's possible. Now to your last question on 1:02:09.120 --> 1:02:17.000 Alzheimer's therapies, so newer therapies and there's a lot of controversy, 1:02:17.160 --> 1:02:20.160 especially around one of them, Aji Home, which has since 1:02:20.200 --> 1:02:22.400 been pulled for the market, but it's set the stage 1:02:22.440 --> 1:02:29.080 for the current national covere determination where medicare covers Alzheimer's 1:02:29.160 --> 1:02:34.080 drugs that receive traditional left the approval when a beneficiary 1:02:34.120 --> 1:02:39.520 is diagnosed with Alzheimer's disease, dementia and as a physician 1:02:39.640 --> 1:02:44.160 participating in a registry, and some of the other aspects 1:02:44.240 --> 1:02:47.160 that go along with that. Now there's a concern and 1:02:47.240 --> 1:02:51.200 have been concerns that person's location may not have the 1:02:51.320 --> 1:02:55.040 number and type of specialists required for ced or covers 1:02:55.080 --> 1:02:59.960 with every evidence development participation, leaving them unable to access 1:03:00.080 --> 1:03:04.720 the drug, and also concerns that the national coverage determination 1:03:05.200 --> 1:03:08.320 might not be reviewed in a timely fashion, even though 1:03:08.360 --> 1:03:12.720 CMS has stated that any future EFTY label updates may 1:03:12.840 --> 1:03:17.439 lead to a reevaluation of the coverage policy. The trick 1:03:17.520 --> 1:03:23.080 here is that any redetermination follows the typical determination process 1:03:23.160 --> 1:03:26.960 or coverage determination process, So it could be that one 1:03:27.040 --> 1:03:29.960 CMS would have to accept the reconsideration requests and two 1:03:30.080 --> 1:03:32.040 it takes about six to nine months for that to 1:03:32.120 --> 1:03:37.040 be completed, so we're probably not going to see any 1:03:37.560 --> 1:03:41.120 changes anytime soon, largely because CMS took a lot of 1:03:41.160 --> 1:03:45.520 heat when I propose this pathway and they still finalized 1:03:45.600 --> 1:03:50.120 that NCD. I don't see unless we see some significant 1:03:50.160 --> 1:03:52.080 evidence in the next couple of years. I don't see 1:03:52.120 --> 1:03:57.120 that changing. Congress has introduced a number of bills not 1:03:57.200 --> 1:04:02.000 necessarily targeted at Alzheimer's therapy, but the NCD process to 1:04:02.040 --> 1:04:06.320 make it faster in terms of changing course, but that's 1:04:06.560 --> 1:04:11.280 unlikely to change anytime soon. So this is an area 1:04:11.360 --> 1:04:15.240 where a lot of the evidence generation will be key 1:04:16.560 --> 1:04:21.560 in terms of how CMS changes its outlook on Alzheimer's coverage. 1:04:23.080 --> 1:04:25.720 With that, we'll wrap up this episode of Votes and Verdicts. 1:04:25.760 --> 1:04:27.960 Thank you to Dwayne and Ode, and of course you 1:04:28.080 --> 1:04:31.400 the listener for joining us today. As always, the research 1:04:31.480 --> 1:04:33.680 on the issues we discussed today can be found on 1:04:33.720 --> 1:04:55.200 the Bloomberg terminal. Have a great day.