News: Lawmakers struggle to reform private equity

Tuesday, October 15, 2024

Lawmakers struggle to reform private equity

Oct 15, 2024

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Driving the Day

Elizabeth Warren speaks during a press conference outside the U.S. Capitol building.

Progressives in Congress, like Sen. Elizabeth Warren, want more transparency from hospitals’ private equity investors. | Joe Raedle/Getty Images

STATE OF PRIVATE EQUITY REFORM — Despite a push in Congress and several state legislatures this year to blunt the impact of private equity in health care, the momentum appears to have been stymied for now.

Virtually no laws are likely to be enacted this year in state houses, and the same is expected in Congress. In the wake of hospital chain Steward Health Care’s bankruptcy in May, progressives like Sen. Elizabeth Warren (D-Mass.) and Rep. Pramila Jayapal (D-Wash.) pushed new legislation recently to boost transparency about hospitals’ private equity investors and put them on the hook for the debt of the companies they hold. Others haven’t advanced.

Most recently, California Gov. Gavin Newsom, a Democrat, vetoed a bill that would have regulated private equity deals in the sector.

State legislators in Connecticut, Massachusetts, Minnesota, Oregon and Washington also attempted to pass measures but failed to get them across the finish line amid fierce lobbying by the private equity industry and its allies. The proposals differed but broadly sought to strengthen oversight of private equity’s role in health care, with some bolstering laws governing mergers.

Indiana moved to require notice of certain private equity transactions.

The case for reform: Proponents of more oversight have said private equity firms’ desire for short-term profit could harm patients. They’ve also argued that consolidation driven by private equity firms drives up costs and restricts access to care.

Dr. Jane Zhu, an associate professor of medicine at Oregon Health & Science University whose research has focused on private equity, said significant evidence shows that private equity leads to higher prices, but data on its impact on quality of care and patient outcomes is inconclusive.

Private equity industry stance: Private equity supporters argue the firms inject much-needed investment into the sector and have lowered costs.

“While private equity has been a popular punching bag, once we educate leaders about what’s going on and where private equity can help, I think that they recognize that it’s a small percentage and we need as much capital flowing into this space as possible,” said Drew Maloney, CEO of the American Investment Council, which represents the private equity industry.

What’s next: It’s not entirely clear what proponents of regulation will do now.

John Saran, partner at the law firm Holland & Knight, argued that Newsom’s veto could slow momentum for legislation in other states. California often sets regulatory trends.

“The political reality is that to get something passed, they’re not going to be a strong, robust version that really is needed for greater scrutiny,” Zhu said.

WELCOME TO TUESDAY PULSE. We learned this weekend that D.C. used to have its own celebrity baby hippo. Send your tips, scoops and feedback to bleonard@politico.com and ccirruzzo@politico.com and follow along @_BenLeonard_ and @ChelseaCirruzzo.

A message from PhRMA:

Drug price “negotiations?” Higher costs and less access to medicines are not what seniors were promised when the Inflation Reduction Act (IRA) was signed into law. Learn more about the IRA’s unintended consequences.

Abortion

Members of Arizona for Abortion Access hold a press conference and protest.

In some states like Arizona, abortion-rights supporters and anti-abortion advocates are focusing on state judicial elections. | Rebecca Noble/Getty Images

UNDER-THE-RADAR BUT SIGNIFICANT RACES — Historically overlooked judicial races in places like Arizona, Michigan, Montana, Ohio and Texas are drawing millions in donations this cycle from both sides of the abortion rights debate, POLITICO’s Alice Miranda Ollstein and Megan Messerly report from Phoenix.

Although several states have measures on their ballots to enshrine abortion protections, judges may have the last word.

In Arizona, right-leaning groups are backing conservative judges as they prepare to challenge newly passed ballot measures safeguarding the procedure, and progressive groups are campaigning to make GOP-appointed state high court judges the first in state history to lose a retention vote. They’re reminding voters that the justices — Clinton Bolick and Kathryn King — upheld an 1864 law criminalizing almost all abortions.

Zooming out: State supreme courts gained unprecedented power over reproductive medicine following the Dobbs decision, which eliminated federal protections for abortion and kicked the issue to states. Last year, races in Wisconsin and Pennsylvania, which once flew under the radar, took on national import as progressives made abortion their leading argument.

Even if courts don’t strike down abortion-rights ballot measures as conservatives hope, state justices can decide how the referendums are interpreted and implemented and are expected to rule on whether laws and regulations like mandatory waiting periods will stand.

In Congress

FIRST IN PULSE: DIALYSIS LAME-DUCK PUSH — A broad coalition of organizations, including patient advocacy groups, disability rights groups and the NAACP, is calling on Congress to address a 2022 Supreme Court ruling they argue disrupts access to dialysis.

The backstory: The decision created what dialysis firms have called a “loophole” in coverage for kidney care. Medicare offers coverage for end-stage renal disease to Americans regardless of age.

For individuals with advanced kidney disease who obtain health insurance through their employer, Medicare initially acts as a “secondary payer” and temporarily picks up part of the tab before later becoming the primary payer. Federal law bars private plans from ending coverage or charging higher premiums due to end-stage renal disease.

The Supreme Court found that an employer-based plan didn’t violate federal law when it offered only out-of-network coverage for dialysis services.

The ask: Lawmakers and advocacy groups are pushing to reverse that ruling through legislation in the lame-duck session post-election with support from 32 Democrats and 19 Republicans in the House. The act, which hasn’t been marked up in either chamber, would bar health plans from shifting primary responsibility to Medicare.

Medicare spends tens of billions of dollars yearly on dialysis. The bill hasn’t received a cost score from the Congressional Budget Office.

“Congress must take action to prevent discrimination against kidney patients,” the groups wrote in a letter to key committee leaders led by the Kidney Care Access Coalition, which has high-profile senior advisers in former House Ways and Means Chair Kevin Brady (R-Texas) and former Rep. Cedric Richmond (D-La.). The group is also launching a seven-figure advertising buy on television and virtual platforms in the Washington area.

Insurers’ take: Insurer lobby AHIP has said that employer plans offer “widespread and generous coverage” for dialysis and treatment for people with kidney disease, and legal structures are in place to safeguard coverage based on disabilities.

In the Courts

LATEST IN THE OBESITY DRUG SHORTAGE BATTLE — A federal court is allowing the FDA to reevaluate its decision to remove a popular weight-loss and diabetes drug from its drug shortage list in a win for outsourcing facilities making copies of the products.

The FDA pulled tirzepatide — the active ingredient in Eli Lilly’s Mounjaro and Zepbound — from its shortage list earlier this month in a move that’s reignited a battle between compounders that can make copies of products while they’re in shortage and name-brand drugmakers.

POLITICO’s Lauren Gardner reports that the agency requested a stay in the challenge lodged by the Outsourcing Facilities Association and a member company last week. The groups had argued the agency should have conducted notice-and-comment rulemaking before it pulled the ingredient from the list.

Large compounding sites can make copies of the drugs on the list but have to wind down production within 60 days of being yanked from the registry. Smaller retail pharmacies — which had to immediately stop compounding after the FDA’s decision— aren’t covered by the lawsuit.

In a filing, the FDA said it wouldn’t enforce compounding limitations against outsourcing facilities until two weeks after it makes another shortage determination.

What’s next: Under the court order from Judge Mark Pittman, the FDA and the Outsourcing Facilities Association must file a joint status report by Nov. 21.

A message from PhRMA:

Telehealth

VIRTUAL PRESCRIBING BENEFITS VS. RISKS — CDC researchers are wading into a contentious battle over the future of virtual prescribing of controlled substances like Adderall to treat attention-deficit/hyperactivity disorder.

DEA rules enacted at the outset of the pandemic allow doctors to prescribe many controlled substances without an in-person appointment. Those rules are set to expire at the end of the year, and the Biden administration’s HHS and DEA have been at odds over what to do about them.

Skeptics of virtual prescribing have pointed to the risk of misuse and an alleged $100 million scheme at a digital health firm to overprescribe stimulants for ADHD. Backers have argued it can expand access to care, and that overprescribing is rare and safeguards are in place. POLITICO first reported that the DEA has been eyeing substantial limits to virtual prescribing.

The researchers’ take: In a new report, the CDC researchers found that close to three-quarters of adults taking a stimulant for ADHD said they had problems getting their prescription filled in the last year, which could lead them to seek medication outside of the regulated health care system, increasing risks of overdose. The researchers also found that half of ADHD patients have used telehealth.

They said that “experts on ADHD treatment suggest” that the benefits of telehealth expanding access to care “outweigh the risk of undiagnosed and untreated ADHD.” The CDC warned of potential disruptions in care in the wake of the indictment.

What’s next: The DEA signaled Friday it would again extend the prescribing rules, punting the issue to either a Harris or Trump administration.

Names in the News

Stephen Bittinger, previously of K&L Gates, has joined Polsinelli’s health care practice as shareholder. Allessandra Stewart and Melissa Yates, also previously of K&L Gates, have joined as shareholder and senior associate, respectively.

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A message from PhRMA:

Seniors are feeling the true cost of drug price “negotiations.”

Instead of saving money, some Medicare patients will pay more for medicines.

Others may not be able to get their medicines – 89% of insurers and PBMs say they plan to reduce access to medicines in Medicare Part D because of the Inflation Reduction Act.

Higher costs and less access. That’s not what seniors were promised.

Learn more.