Weekend Update / Miscellany

The Politico provided us with the background on the Energy & Commerce Committee's assault against the health insurance industry. According to the report, the investigation started in July with an unsuccessful inquiry into grassroots tactics. As previously noted in the FEHBlog

In this week’s letter to insurance companies, Waxman asked for the individual
names of those who made more than $500,000 between 2003 and 2008 and a list of company events held outside the office. The committee also sought dividend payments, net income and premium revenue numbers as well as claims payments,
expenses and insurance product profits.

U.S. Chamber of Commerce President Tom Donohue wrote to Waxman and Stupak on Friday saying he was “deeply troubled” by the letters the committee sent to insurance companies and urged them to “disavow this letter and withdraw it immediately.”

A prominent Democratic lobbyist, who represents health care and other interests, also called the letters “an an overreach that has the potential to backfire on Democrats. I know nobody likes the insurance industry, but to bludgeon them when you’re losing the legislative debate just looks bad.”

A Wall Street Journal article laid out three end game options for the President -- a small bipartisan bill now being hammered out in the Senate Finance Committee that would be limited to health insurance reform and would be presented as a first step, a mid-sized option with a public plan option or health insurance co-ops and a higher price tag for more insurance subsidies, and a large go for broke option that would be killed but would become a campaign issue in 2010.

Right now, most Democrats are hovering somewhere between the small and midsize
options -- hence the talk that arose this week about breaking the package into
two pieces. One would be the small piece heavy on insurance overhauls, which
might get some Republican support. The other piece -- designed to pass with only
Democratic votes -- would establish either a public option or a new nonprofit
insurance cooperative to compete with private insurers and include subsidies for
expanding coverage.

Wall Street Journal and Modern Healthcare articles published today that read the tea leaves from today's news programs support this analysis. Working against even the mid-sized option is the announcement due this week that the 10 year budget federal government budget deficit is $9 trillion even without factoring in healthcare reform, according to Reuters.

AIS Specialty Pharmacy News published an interesting article on the status of the legislative efforts to create a regulatory pathway for bio similar or bio generic drugs, which will be create a significant cost savings for health plans and consumers.

While nothing is certain when it comes to health reform, it seems the
biotechnology industry and its supporters are gaining the upper hand in
Congress. In the most recent blow to biosimilar supporters, the House Energy and
Commerce Committee voted 47 to 11 on July 31 to attach a provision to its
broader health reform bill that would grant 12 years of data exclusivity to
biologic drugs.

The Wall Street Journal in related news reports that

One version of the health legislation passed by the House Energy and Commerce Committee last month includes provisions that could overhaul how pharmacy-benefit managers -- middlemen hired by insurers to administer prescription-drug benefits -- operate. It would require them to inform the government or federally approved health plans about differences between the average cost of drugs to the PBM and what the PBM charges insurers. It would also require PBMs to disclose rebates they receive from drug makers for pushing certain pills and say whether those rebates are passed on to insurers. * * *

Greater transparency could result in drug makers giving smaller discounts to PBMs, which could lead to higher drug costs for insurers and consumers, according to analyses by the Congressional Budget Office of previous legislative proposals.

The[se] provisions aren't in versions of the health-care bill passed by other House committees. In the Senate, [Sen.] Maria Cantwell (D., Wash.), a member of the Finance Committee, said she wanted her committee's health-care bill to include similar disclosure requirements for PBMs.

The OPM Inspector General similarly argued for greater PBM transparency at a Congressional hearing in June.