Overnight Health Care: Lawsuit challenges Arkansas Medicaid work requirements | CVS program targets high-cost drugs | Google parent invests in ObamaCare startup Oscar

Welcome to Tuesday’s edition of Overnight Health Care. In today’s big stories, Alphabet is investing in health insurance startup Oscar, CVS is targeting the cost-effectiveness of new drug launches, and we finally have a date for oral arguments in Texas’s lawsuit against ObamaCare.

 

We’ll start with another lawsuit, this time over Medicaid:

 

Advocates sue Trump officials to block Arkansas Medicaid work requirements.

Opponents of work requirements won an initial victory in June when a judge blocked Kentucky’s Medicaid work requirements. Now, they’re taking the battle to Arkansas.

The National Health Law Program, which advocates on health policy issues for low-income people, filed suit in federal district court in Washington to block the work requirements in Arkansas.

The suit argues that imposing work requirements in Medicaid is not within the Trump administration’s authority without action from Congress, and enacting the measures is “threatening irreparable harm to the health and welfare of the poorest and most vulnerable in our country.”

The context: This is part of a larger fight over the direction of Medicaid. The Trump administration wants to move it in a more conservative direction by imposing work requirements. Democrats say that just means people will lose coverage.

Indiana and New Hampshire are also moving forward with Medicaid work requirements.

Despite the judge’s ruling on Kentucky’s requirements, the Trump administration has vowed to press forward with its plan to impose work requirements in states that request them.

Read more here.

 

In other Medicaid developments: Maine is rejecting Medicaid applicants who are supposed to be eligible under the state’s Medicaid expansion, according to the state-based advocacy group Maine Equal Justice Partners.

A redacted copy of an Aug. 7 denial letter from the Maine Department of Health and Human Services shared with The Hill states that the applicant is “not in a coverable category and is not eligible for full Medicaid coverage.”

Maine’s DHHS did not immediately respond to a request for comment.

Voters overwhelmingly approving an expansion ballot measure 59 percent to 41 percent in November 2017, but Gov. Paul LePage (R) has blocked the expansion from taking effect. 

 

Google parent invests $375M in ObamaCare startup Oscar

Expect more buzz around Oscar Health now. The company is already being closely watched after sharing its ambitious plans to shake up the health industry. Now it’s got a sizeable investment to help work toward that goal.

Google’s parent company, Alphabet, is investing $375 million in Oscar.  

Why it matters: The infusion of funding from the parent of a major technology giant is a vote of confidence in Oscar Health.

“It’s fantastic for us because it will really allow us to focus fully on the core model we’ve been building for the past 6 years, which is: use technology, use data, use design, use a human approach to build a very different health care experience,” Oscar Health CEO Mario Schlosser told Wired. “And that’s what this allows us to do.”

What does Oscar do? Oscar offers health coverage through ObamaCare in six states and seeks to make the system smarter through innovations like having a “concierge” team, including a nurse, that helps enrollees with tasks like finding the right doctor.

Political angle: The co-founder of Oscar Health is Josh Kushner, the brother of President Trump’s son-in-law and adviser Jared Kushner.

That relationship has drawn attention in the past because of Oscar Health’s participation in ObamaCare.

Schlosser told Wired that Josh Kushner’s connection to Trump “does not affect what we do.”

Read more here.

 

Mark your calendars: A judge today set oral arguments for Sept. 10 in the closelywatched Texas lawsuit arguing ObamaCare is unconstitutional. Democrats have made the threat the case poses to pre-existing condition protections a major part of their argument in the midterm elections and against President Trump’s Supreme Court nominee, Brett Kavanaugh.

 

New CVS program targets high-cost drugs

CVS Caremark will allow its clients to exclude coverage of drugs with extremely high launch prices under a new program the company said is aimed at pressuring manufacturers to lower drug costs.

According to CVS, launch prices have been steadily rising for years, and are completely up to the discretion of the manufacturer. The high prices put an unsustainable burden on the country’s health system, CVS said.  

The goal: To use the free market to pressure drug companies to be more cost-effective about launching new drugs. “We believe as more PBM [pharmacy benefit management] clients adopt such programs, manufacturers will begin to moderate launch prices,” CVS said in the announcement. “No one but manufacturers have, until now, had any control over the launch price of newly patented drugs.

The model: Basically, CVS wants to implement something similar to what happens in Europe, where drugs are priced based on effectiveness. Of course in Europe, the government sets the standards for effectiveness. CVS’s program will let clients– insurers and employers– do it, using publicly available data from the non-profit Institute for Clinical and Economic Review (ICER).

PhRMA reaction: In a statement to The Hill, the drug lobbying group Pharmaceutical Research and Manufacturers of America did not address the plan directly. But the group said it opposes “the misuse of subjective, one-size-fits-all cost effectiveness thresholds to deny patient access to life saving medicines.”

Read more on CVS’s new program here.

 

More on CVS: Senate Judiciary Committee Chairman Chuck Grassley (R-Iowa) wrote to the Department of Justice asking for a vigorous review of the two biggest proposed mergers in the health sphere: Cigna with Express Scripts, and CVS Health with Aetna. Both involve insurers merging with pharmacy benefit managers.

“Part of Congress’s role is to encourage new strategies and experimentation among these market participants to drive down drug prices. To that end, vertical integration, like the proposed transactions, can often result in increased efficiencies and consumer benefits, and should be evaluated accordingly,” Grassley wrote.

“Such integration, however, can also lead to increased barriers to entry for competition in each standalone market. As such, we must ensure that these transactions do not foreclose competition and consumer access, or hinder innovation, especially in underserved rural areas,” he continued.

Read Grassley’s letter here.

 

Right-leaning group proposes reforms to Medicare drug benefit

The right-leaning American Action Forum is out with a new paper proposing reforms that would save money in Medicare Part D, which covers prescription drugs.

AAF’s Tara O’Neill Hayes writes that federal government spending on the program has been rising “rapidly” in recent years.

She proposes a move that “realigns incentives” by placing more financial risk on both insurers and drug companies, while also providing a new cap on out of pocket spending to protect patients.

“These changes are likely to lead stakeholders to alter their behavior in ways that reduce overall Part D expenditures for all stakeholders and ensure the program’s continued success,” she writes.

Read the full paper here.

 

What we’re reading

New York becomes 27th state to sue opioid manufacturer Purdue (The Hill)

Nebraska becomes first state to execute inmate using fentanyl (The Hill)

Trump’s sabotage of ObamaCare is illegal (New York Times opinion)

As states battle Trump’s health plan changes, signs of ObamaCare stability show (Governing)

 

State by state

Anthem looks to join Virginia’s ObamaCare marketplace (Daily Progress)

South Carolina attorneys: Blocking Medicaid to Planned Parenthood does more good than harm (The State)

 

From The Hill’s opinion page:

Pandemics have an edge in our most vulnerable countries — here’s how to fight back

Medicaid needs to be allowed to experiment with work requirements