By Megan R. Wilson

Listen to this briefing

• Biosimilar boost: The Trump administration wants to lower drug costs by cutting some of the red tape slowing the approval of biosimilar medication approvals
• State scan: Lawmakers are deadlocked on whether — or when — to extend enhanced Obamacare tax credits, but the major players say they’re ready to update plan rates as quickly as possible should Congress strike a deal.
• Opioid crisis: Federal appeals court overturns a previous decision that had absolved large pharmaceutical companies of contributing to opioid crisis in West Virginia.

Good afternoon and welcome to Health Brief. Send all your best health policy intel, tips and scoops to megan.wilson@washpost.com or message me on Signal at megan.434.

This newsletter is published by WP Intelligence, The Washington Post’s subscription service for professionals that provides business, policy and thought leaders with actionable insights. WP Intelligence operates independently from the Washington Post newsroom. Learn more about WP Intelligence.

FDA Commissioner Marty Makary at the White House on Oct. 16. (Demetrius Freeman/The Washington Post)

	The Lead Brief

In an effort to lower drug costs, the Trump administration is moving to make it easier to approve biosimilars, which are medications that mimic more expensive versions of treatments, to bring prices down.

This is a big win for companies such as Sandoz and Teva Pharmaceuticals that make cheaper alternatives to biologics. Brand name companies including Pfizer and Amgen also have a pipeline of biosimilars.

The Food and Drug Administration wants to streamline the process and eliminate certain studies necessary for approval. It issued draft guidance on Wednesday and is soliciting public comment.

This morning, FDA Commissioner Marty Makary gave executives from the generic and biosimilar industry a preview of the agency’s plans, saying the FDA wants to “eliminate the comparative study requirement for biosimilars.”

The ballroom broke out into applause.

“It takes, like, four to six years for a biosimilar to get developed, and then you add the FDA review time — [it takes] five to eight years for a biosimilar to get to the market. Why?,” Makary said at the Association for Accessible Medicines’ annual conference in North Bethesda. “Hopefully that will shave off a couple years — three or four years — from the process.”

→ Biologic medications are produced from living sources like cells and bacteria, rather than from chemicals. They include vaccines, insulins and treatments for conditions such as autoimmune disorders and cancer.

Biologics are also extremely expensive, accounting for large shares of Medicare Part B and Part D spending. The Department of Health and Human Services says that although just 5 percent of prescriptions in the U.S. are biologic medications, they account for 51 percent of total drug spending.

Advertisement

They’re more complex than normal drugs, which means they can’t be duplicated exactly. Still, biosimilars “must have no clinically meaningful differences from their original biologic,” according to the FDA.

Gaining approval from the agency can be more strenuous than it is for generic drugs, so the administration is proposing to nix the need for human clinical trials — which aren’t required for generic medications — and allowing biosimilar manufacturers to “rely instead on analytical testing.”

“We’re going to see real benefits from this,” John Murphy, the chief executive of AAM, who hosted Makary at the conference, told me after their fireside chat.

Murphy said the administration’s actions could ultimately lead to more domestic investments by the industry, another major priority for President Donald Trump.

“One of the things we talked to the commissioner about is, the more the government can signal its interest in prioritizing these products, the easier it is to make the case to develop more of these products here,” Murphy said of a meeting with Makary and the association’s board.

The Post’s Paige Winfield Cunningham went to HHS headquarters near the Capitol to hear top health officials unveil the administration’s plans further.

At the briefing, Makary said just 76 biosimilars have been approved in the past 10 years, but there “probably should have been 200 or 300, but there has been a series of onerous requirements FDA has had.”

Advertisement

Juliana Reed, the executive director of the Biosimilars Forum, another industry group, said the action could help avert the “biosimilar void.”

“There are 118 reference biologics set to lose patent protection in the next decade, yet only 10% have biosimilars in development,” Reed said in a statement. “This biosimilar void threatens to leave patients without affordable alternatives, forcing them to rely on high-cost brand-name drugs which will only worsen the healthcare affordability crisis.”

HHS Secretary Robert F. Kennedy Jr. blamed the slow approval of biologics on lobbying by the pharmaceutical industry that has resulted in too much red tape for getting them approved and prices that are too high for patients.

“Some biologics cost patients up to $500,000 or more,” Kennedy said. “That is not a health care system, that’s a hostage crisis.”

→ In response, PhRMA, the main trade group for brand name drugmakers, argued that pharmaceutical middlemen known as pharmacy benefit managers, or PBMs, are a primary culprit of excluding access to biosimilars.

	State scan

States and insurers are grappling with the uncertainty of how health care premiums could change as Republicans and Democrats on Capitol Hill continue to spar over whether — or when — to extend the enhanced Affordable Care Act premium tax credits.

→ Lawmakers appear no closer to a deal, but, should one materialize, prices for various health plans would shift dramatically for many Americans.

Open enrollment begins on Saturday, and notices have already been sent to people telling them about sweeping premium increases that have been estimated with the assumption that Congress will remain deadlocked.

We’ve reported on the sticker shock that people who purchase health insurance from the Affordable Care Act exchanges are likely to see, but how are the players setting themselves up before open enrollment starts on Nov. 1?

→ The rates insurance plans have submitted to state exchanges aren’t necessarily locked in: If Congress does extend the enhanced premium tax credits, “additional changes” from insurance plans “could be allowed” that would be reflected for consumers, Caron Brookens, a spokesperson for the Illinois Department of Insurance, tells me.

Although the enhanced premium tax credits don’t expire until the end of the year, Americans who want their coverage to begin on Jan. 1 will have until Dec. 15 to choose a health plan — making the timing for insurers all the more pressing. People are able to make changes or enroll in health plans until Jan. 15, which could cause more confusion.

“The longer this goes, the harder it is to actually fix,” said David Merritt, senior vice president of external affairs at the Blue Cross Blue Shield Association. “It's like a health condition — if you let something go untreated, it's going to be more expensive and more difficult to actually treat it, even though there may still be a solution.”

Plans, along with other sectors throughout the health system, have been heavily lobbying lawmakers in Congress to extend the enhanced subsidies, originally passed as part of coronavirus relief.

My colleague Paige scooped last week that the premiums for the most popular federal plans on Healthcare.gov are set to increase by an average of 30 percent — not including the increase many people will be paying if the enhanced subsidies expire. States running their own exchanges are also reporting big premium increases, though a majority of marketplace enrollees will still be eligible for assistance to lower their monthly premium costs.

Kris Haltmeyer, another executive at the Blue Cross Blue Shield Association, said that “CMS can operationalize that very, very quickly,” if Congress were to come to a deal, “and that will dramatically reduce premiums.”

HHS and CMS, which manages the federal marketplace via Healthcare.gov, didn’t respond to an inquiry about how they could respond.

KFF Health News has a report today detailing how a few states that run their own Affordable Care Act plan exchanges are prepping, including being ready to temporarily pause enrollment to update plan costs if lawmakers on Capitol Hill manage to reach some kind of deal on an extension of the tax credits.

However, updating those prices could take about a week on state exchanges, Jessica Altman, the director of California’s marketplace, Covered California, told KFF Health News. And that’s only if the enhanced tax credits are extended with no changes — something Republicans haven’t been open to discussing.

	Numbers Game

10 percent

The amount of pharma giant GSK’s U.S. revenue comes from the Medicaid program, according to CEO Emma Walmsley on the company’s third quarter earnings call this morning — a moderate level of exposure to the health insurance program for low-income Americans.

Walmsley declined to comment on the status of any kind of drug pricing deal with the Trump administration, saying only that the dialogue is ongoing. One of its best known drugs is Trelegy Ellipta, which helps treat chronic obstructive pulmonary disorder (COPD). It’s a majority owner of Viiv Healthcare, which specializes in HIV prevention and treatment medicines.

“We absolutely agree we should be working towards constructive reform in the U.S. system, and that we want to have affordable, accessible drugs in a sustainable way. We absolutely agree that other countries … should be recognizing the value of innovation more,” she said.

→ One of Trump’s demands for large drugmakers is to offer their products to the Medicaid program at the prices other wealthy countries pay, known as most-favored0nation pricing.

This complicates things for companies such as Gilead, which has a larger exposure to the program. The company derives 22 percent of U.S. revenue from the Medicaid program, according to an investor note cited by CNBC, in part due to HIV treatment Biktarvy.

Pfizer, the first company to make a deal with the administration, only generates 5 percent of its revenue from Medicaid.

	Litigation Report

A federal judge erred when he ruled that drug distribution companies didn’t cause a “public nuisance” in one West Virginia community when it was flooded with millions of addictive opioid medications, a federal appeals court ruled on Monday.

The ruling, from the U.S. Court of Appeals for the Fourth Circuit, overturns a previous decision that had absolved large pharmaceutical companies of allegations from local governments that they had fueled the state’s opioid crisis by shipping “suspicious” amounts of the painkillers to pharmacies.

Cabell County and the City of Huntington in West Virginia sued AmerisourceBergen — now called Cencora — Cardinal Health and McKesson, which control 90 percent of the market share for opioid distribution in the U.S., according to the court filing. They have denied all wrongdoing.

→ The suit had been part of a high-profile test of a legal strategy that has led to billions in opioid settlements across the country from the pharmaceutical industry while also delivering losses in some states.

West Virginia was one of the states hardest hit by the nation’s opioid crisis. The West Virginia governments requested $2.5 billion to implement measures to help prevent and treat those with addiction. The appeals court on Tuesday said the governments are entitled to damages — but deferred on how much.

Cities and states assert the opioid industry’s failure to rein in pills bound for the illicit market addicted thousands while stretching thin resources of public safety and health agencies. Following the decision on Tuesday, attorneys representing thousands of plaintiffs nationwide said in a statement they are “thankful for another opportunity to seek civil justice.”

Meanwhile, Cencora said the company is “disappointed” with the ruling and it is deciding whether to appeal.

“Distributors of pharmaceutical products are asked to walk a legal and ethical tightrope between providing access to necessary medications and acting to prevent diversion of controlled substances,” Mike Iorfino, a company spokesperson, said in a statement.

Cardinal Health declined to comment. McKesson did not respond to a request for comment.

— David Ovalle in the Washington Post newsroom contributed.

	What We’re Reading

“Bausch Health leaves Medicaid and 340B programs as drugmakers face changing calculus on pricing,” writes Ed Silverman at Stat.

“Health department brings back staff to process rural health fund applications,” Ruth Reader writes for Politico Pro.

“Louisiana officials waited months to warn public of whooping cough outbreak,” according to Rosemary Westwood at NPR.

“Citing Trump Order on ‘Biological Truth,’ VA Makes It Harder for Male Veterans With Breast Cancer to Get Coverage,” reports Eric Umansky at ProPublica.

“RFK Jr. Orders CDC to Study Alleged Harms of Offshore Wind Farms,” report Josh Eidelson and Ari Natter at Bloomberg.

“Cotton blocks Trump-backed effort to make daylight saving time permanent,” reports Politico’s Benjamin Guggenheim.