Lobbying Spend

Industry groups and Medicare Advantage insurers have mounted a public fight against a CMS proposal that they contend would reduce payments to MA plans. But even before that proposal, their lobbying expenditures reached record highs.

On Feb. 1, CMS released the 2024 Advance Notice for Medicare Advantage and Part D plans — the agency’s annual proposed update to methodologies used to calculate payments to the plans — and estimated a 1.03% pay hike for MA plans, on average, when accounting for an underlying risk score trend of 3.3%. However, insurers argued that the rule would result in a cut to plans due to technical changes in how risk scores are calculated, leading to higher premiums and fewer enrollee benefits. Just prior to releasing the Advance Notice, CMS also finalized a long-dreaded final rule that will allow the government to claw back billions of dollars’ worth of overpayments to MA organizations.

AbbVie Inc. is leaving several lobbying organizations, including the Pharmaceutical Research and Manufacturers of America (PhRMA), widely regarded as the most powerful drug industry trade group, according to Politico. PhRMA has had a tough year. In August, the trade group faced its most notable political failure in a generation when Democrats passed Medicare drug price negotiation as part of the Inflation Reduction Act. In the months since, PhRMA has launched an internal review of that episode and has dismissed several of its most prominent executives.

Amgen Inc. plans to acquire Horizon Therapeutics plc. for $27.8 billion, or $116.50 per share, according to regulatory filings; the deal is the largest health care merger of the year, per the Wall Street Journal. Horizon develops specialty drugs for autoimmune and inflammatory diseases. The firm’s best-seller is Tepezza (teprotumumab-trbw), a treatment for thyroid eye disease. If, as expected, Tepezza earns approval in the European Union and Japan, Horizon projects $4 billion in global annual revenue from the drug.

Pharmaceutical Research and Manufacturers of America (PhRMA), the drug industry’s most powerful lobbying group, has commissioned a major lobbying firm to review its failure to kill Medicare drug price negotiation, among other drug price reforms included in August’s landmark Inflation Reduction Act (IRA), Politico reported. The lobbying firm, BGR Group, will place its chairman and CEO, former HHS aide Bob Wood, in charge of the review. “Like most organizations, it’s our standard operating procedure to do an after-action review following a large-scale, organization-wide advocacy effort,” PhRMA spokesperson Brian Newell told Politico.

Meanwhile, the Association for Accessible Medicines (AAM), a pharma lobbying group that represents generics manufacturers, is in the middle of leadership turmoil, according to STAT. AAM fired its president, Dan Leonard, and will replace him with the group’s current executive vice president of sciences and regulatory affairs, David Gaugh. Leonard denied he was fired, but anonymous sources told STAT that his ouster was also related to the passage of the IRA.

While lobbying expenditures from the health care industry have been rising in recent decades, drugmakers and providers — not insurers — are the main drivers of that spending growth, according to recent research. Still, experts tell AIS Health, a division of MMIT, that the managed care sector’s influence over policy shouldn’t be underestimated.

“Overall, the fact that the industry keeps lobbying means that this investment has some good return; otherwise, they would have stopped,” says Ge Bai, Ph.D., a professor at Johns Hopkins University’s schools of business and public health.

Lobbying spending by the health care industries reached $713.6 million in 2020, a 70% increase over the past two decades, according to a recent JAMA Health Forum analysis based on data compiled by OpenSecrets. The growth was mainly driven by pharmaceutical and health product manufacturers and providers. Expenditures were highly concentrated among a small subset of firms, especially for payers, with the top 10% of health plans responsible for 70.4% of spending.

While lobbying expenditures from the health care industry have been rising in recent decades, drugmakers and providers — not insurers — are the main drivers of that spending growth, according to recent research. Still, experts tell AIS Health, a division of MMIT, that the managed care sector’s influence over policy shouldn’t be underestimated.

“Overall, the fact that the industry keeps lobbying means that this investment has some good return; otherwise, they would have stopped,” says Ge Bai, Ph.D., a professor at Johns Hopkins University’s schools of business and public health.

Lobbying spending by the health care industries reached $713.6 million in 2020, a 70% increase over the past two decades, according to a recent JAMA Health Forum analysis based on data compiled by OpenSecrets. The growth was mainly driven by pharmaceutical and health product manufacturers and providers. Expenditures were highly concentrated among a small subset of firms, especially for payers, with the top 10% of health plans responsible for 70.4% of spending.

The FDA’s controversial accelerated approval of Biogen Inc.’s Aduhelm (aducanumab) has yielded new fallout, as members of the U.S. House of Representatives have introduced a bill seeking to unwind CMS’s national coverage determination that limited access to the Alzheimer’s treatment — and prevent CMS from issuing restrictive NCD decisions on future drugs.

D.C. insiders tell AIS Health, a division of MMIT, that the bipartisan bill’s fate will likely depend on the outcome of the upcoming midterm elections. They add that the NCD bill represents a renewed effort by the pharmaceutical industry to flex its lobbying muscle after it faced an unprecedented defeat with the passage of Medicare drug price negotiation as part of the Inflation Reduction Act.

The American Medical Association (AMA) and American Hospital Association (AHA) on Sept. 20 both pulled lawsuits challenging rulemaking related to the No Surprises Act (NSA), the federal law that banned most balance billing. In a joint statement, the country’s two largest provider trade groups said that “the lawsuit became moot when the Administration released a revised final rule on Aug. 26. However, the AHA and AMA remain concerned that the final rule continues to favor insurers and does not line up with what Congress intended when it passed the law.” A broad group of providers objected to the Biden administration’s guidance on Independent Dispute Resolution (IDR), the HHS-managed arbitration process that will resolve balance billing disputes. Payers and providers have viewed IDR regulations as a zero-sum issue. Providers have argued that rulemaking favored insurers at their expense. The Biden administration recently released new guidance designed to address providers’ concerns and head off legal challenges; while that has worked in the AMA and AHA’s cases, several other lawsuits from providers are still in progress.

Moody’s on Aug. 19 released a report “stating that the drug pricing provisions in the Inflation Reduction Act of 2022 are credit negative for the pharmaceuticals industry, as the savings to the federal government and consumers will generally be borne by the industry,” the credit rating firm said. The most substantial impact on drug manufacturers will come from the IRA’s Medicare provisions, which the report observes are “estimated to save the US government $102 billion over 10 years. This cost will fall largely to the industry, as will the price curbing provisions and the reduction in the beneficiary out-of-pocket costs.” Moody’s also expects pharma’s early-stage transaction trend to accelerate: “One implication of the Inflation Reduction Act will be an increase in industry-wide acquisitions, as companies will seek ways to improve longer-term growth rates, given pressure on earnings growth that will result from the legislation. By acquiring companies with promising pipeline-stage products, pharmaceutical companies can increase the number of future drug launches to drive higher earnings.”