By David Pittman and Luis Sanchez | 12/04/2017 12:00 PM EDT

With help from Brett Norman, Caitlin Oprysko and Sarah Karlin-Smith

SENATE PASSES MASSIVE TAX OVERHAUL - Senate Republicans cobbled together enough support to pass what could amount to the biggest rewrite of the tax code in nearly three decades. The bill, H.R. 1 (115) , lowers the corporate tax rate and would offer a one-time reduction on profits U.S.-based multinational companies earn and keep abroad. The repatriation provision is seen as a major victory for pharma manufacturers who store boatloads of cash in countries where tax rates are lower. The Senate bill also scaled back the orphan drug tax credit, a definite loss for drugmakers (the House version repealed the credit outright). The Senate's tax plan now has to be reconciled with the House-passed version in a legislative conference.

- One provision in the bill - the imposition of a 20 percent tax on payments from U.S.-based companies to their overseas affiliates and the treatment of Puerto Rico as a foreign country - could further hurt already devastated drug manufacturers on the island. Pro's Colin Wilhelm has more.

HHS ARGUES FOR 340B CUTS - The Trump administration's attempt to slash drug payments under the 340B discount program is intended to make Medicare payments for covered drugs "more aligned" with providers' acquisition costs, HHS told a D.C. district court late Friday. In arguments for throwing out a legal challenge to the proposed cuts, HHS told the court that some hospital payments under the program are 58 percent higher than what was paid for the drugs. Furthermore, HHS's setting of hospital payment rates for drugs under the 340B discount program is exempt from court review, since federal law that's been upheld in various cases gives the HHS secretary broad authority to set hospital payment rates, the administration argued.

Background: Hospitals have sued the Trump administration over a move to slash payments for physician-administered drugs to about half of 340B-covered hospitals by nearly 30 percent, a move that could cost them $1.6 billion. The cuts, intended to help hospitals that serve low-income patients with the price of drugs, take effect Jan. 1 unless a judge issues an injunction or Congress blocks the cuts. The hospitals argue Congress intended for these drugs to be discounted. A hearing is set for Dec. 21.

ADVAMED'S PUSH FOR DEVICE TAX REPEAL - The medical device lobby is hitting the White House and Congress with a late, six-figure advertising campaign to urge the repeal of Obamacare's 2.3 percent excise tax on device sales. Starting this week, AdvaMed will run a 30-second spot on "Fox & Friends" and "Morning Joe" (any guesses who that's directed at?) paired with other display ads around Washington and Capitol Hill. AdvaMed has been pushing hard for Congress to add a reprieve in end-of-year legislation. A two-year moratorium on the tax expires at year's end.

- The TV spot features patients repeating the phrase "a tax on medical devices is a tax on my," followed by a slate of different aliments. "This campaign will remind lawmakers what's really being threatened if Congress fails to permanently end this onerous tax," AdvaMed CEO Scott Whitaker told Prescription Pulse.

Happy Monday and welcome back to Prescription PULSE, where we survived another week in Washington's never-ending news cycle. Send tips to Sarah, David and Luis at skarlin-smith@politico.com, dpittman@politico.com and lsanchez@politico.com.

ARIZONA MOVES TO LIMIT DRUG PRICES - Arizona wants feedback from CMS on excluding certain drugs from its Medicaid program in an effort to control costs. Federal law requires states to cover a drug if its manufacturer enters the Medicaid Drug Rebate Program with HHS. But Arizona wants to exclude some products until prices are "reasonable" and "sufficient data exists regarding the cost effectiveness." Also, a state committee should be able to check if good alternatives exist. Such a move will likely rile the prescription drug lobby. But Arizona's drug spending increased 42 percent between 2014 and 2016. The state later this month is expected to file a waiver with CMS on different ways to control Medicaid spending. Read the full letter here.

OIG REVOKES APPROVAL OF MAJOR PHARMA CO-PAY CHARITY - The Caring Voice Coalition, which collected $153.2 million in corporate contributions last fiscal year, may close its doors after the HHS Office of the Inspector General concluded it gave pharma companies too much influence over how the charity doles out co-pay assistance, Bloomberg reported.

Charities subsidize often costly co-payments while insurance programs such as Medicare pay the remainder of the drug companies' bill. Pharma funding of such charities has increased in recent years, often in tandem with the prices of drugs, allowing patients to continue taking medicines they might not otherwise be able to afford, according to Bloomberg. To avoid anti-kickback violations, however, the charities are expected to administer the funds independently of their industry funders - and that's where the Caring Voice Coalition strayed, according to an OIG opinion released last week.

OIG found that the charity gave drug companies sway over the disease categories it chose to focus on and gave data to one or more donors that would allow the companies to gauge whether their donations were being used to subsidize their own patients. OIG concluded that the information could give companies "greater ability to raise prices of their drugs while insulating patients from the immediate out-of-pocket effects."

- The Justice Department has also been investigating co-pay charities. At least five major drug makers - Jazz Pharmaceuticals, Celgene, United Therapeutics, Pfizer and Gilead - have received subpoenas recently about their relationships with the charities, according to Bloomberg. Read the story here and the OIG opinion here.

DRUG PRICING REPORT DOESN'T GO FAR ENOUGH - A new National Academies report on lowering drug costs doesn't "comprehensively address" affordability and accessibility issues, dissenting members on the committee that conducted the study wrote. Instead, the country needs a system that better defines and rewards value in drugs.

Transparency, a central theme of the main report, needs to be targeted to areas like pricing and coverage decisions, wrote Rena Conti - a member of the minority perspective committee - in a review of the recommendations for the "Health Affairs" blog. Methods to determine drugs' value aren't mature yet, she adds. Lastly, the report "largely eschews actions that would alter the current system's balance of" improving affordability and incentivizing innovation.

- Last week's National Academies report outlined eight wide-ranging recommendations to make prescription drugs affordable without discouraging the development. More for Pros.

MORE CLARITY NEEDED ON 2019 OBAMACARE PLANS - Patient groups and pharmacists are raising concern that the Trump administration's proposal for regulating Obamacare plans in 2019 could create higher costs and less choice. CMS wants to give states more flexibility to determine "essential health benefits." Without proper guardrails, states could encourage limited and weak benefits packages, the National Community Pharmacists Association told CMS last week.

- The administration's push for a "national benchmark plan standard for prescription drugs" - while undefined as of yet - could also be limited in scope. Such a plan "would limit access to only a select list of drugs, fail to include new innovative drugs, ignore the individual health care needs of people with serious and chronic conditions and limit provider options when treating their patients," the I Am Essential coalition, which includes 138 patient groups, told CMS. Comments on the Nov. 2 proposed rule were due last week.

QUICK HITS

Patent submission dates added to Orange Book - Patent submission dates will now be included in the FDA's Orange Book, which lists approved drugs' patent and exclusivity dates, the FDA announced. Previously, patent submission dates were only available by calling the Orange Book staff. Now, generic manufacturers can easily determine when they can market new generic medicines, FDA Law Blog writes . The FDA points out that more competition in the market and earlier availability can also help lower drug prices, a major focus of the agency.

Amazon in talks with generic drug makers - Amazon has held preliminary talks with generic drug makers, including Mylan and Sandoz, about entering the pharmacy space but remains vague on what role it would play. The discussions centered on Amazon entering the drug purchasing space now dominated by McKesson, Amerisource and Cardinal Health, a person familiar with the conversations told CNBC . The same person said generic manufacturers are eager to establish a relationship with Amazon. However, high regulation hurdles have left some in the pharmaceutical industry skeptical that Amazon will decide to compete in pharmacy.

Real news about fake drugs - Roughly one in 10 drugs in developing nations are fake or substandard, the World Health Organization reports. These medicines' failure to treat diseases can lead to serious illness and death. The University of Edinburgh estimates that at least 72,000 children may be dying from pneumonia and 69,000 people dying from malaria each year because of phony or substandard medicines. The situation may also be contributing to the growing problem of bacterial resistance since products can contain weak doses of antibiotics that aren't capable of eliminating an infection, NPR reports.

PHARMA MOVES

Lobbyist hired for Indian patent bill: Allergan has hired Sixkiller Consulting to lobby on a bill that would make Indian tribes eligible for patent challenges. The legislation from Sen. Claire McCaskill, S. 1948 (115), comes after Allergan transferred the rights of its dry-eye medicine Restasis to the Saint Regis Mohawk Tribe to avoid a patent dispute. Generic drugmaker Mylan is challenging the patent.

PhRMA adds Pence ally to lobbying roster: PhRMA has added Bob Grand of Barnes & Thornburg to its stable of lobbying firms representing the trade group in Washington. Grand is close to Vice President Mike Pence, according to our colleagues at POLITICO Influence.

Pfizer lobbying gets a promotion: Pfizer promoted Jennifer Swenson Walton to vice president for federal government relations. She was previously senior director for federal government relations, heading up Pfizer's outreach to Senate Republicans. She'll report to Ken Cole, Pfizer's senior vice president for U.S. government relations.

DOCUMENT DRAWER

FDA Commissioner Scott Gottlieb and NIH Director Francis Collins testified before the House Energy and Commerce health subcommittee to provide updates on implementation of the 21st Century Cures Act. Read Gottlieb's testimony here, and Collins' testimony here.

The HHS Inspector General released its semiannual report to Congress covering April 1 to Sept. 30.

Healthcare Distribution Alliance President John Gray wrote a letter to Sen. McCaskill last week trying to root out the causes of the opioid epidemic.

EFPIA and PhRMA released a report on their 2016 member company survey, which found that 98 percent of member companies share clinical trial data beyond any legal or regulatory requirements.

FDA, in a blog post, summed up October's Heads of Medicines Summit and the International Medicines Regulatory Authorities annual meeting in Kyoto, Japan.

CMS debuted an updated Medicare Part D opioid prescribing mapping tool that shows geographic comparisons of de-identified Medicare Part D opioid prescription claims across the country.

FDA's Office of Prescription Drug Promotion issued a warning letter to Amherst and Magna Pharmaceuticals for misleading advertising of an oral spray used to treat insomnia, Zolpimist. The warning is only the third that OPDP has issued this year.

CATCHING OUR ATTENTION: Is FDA's lack of transparency helping certain drug companies?

The FDA appears to be protecting the manufacturer of a controversial muscular dystrophy drug by selectively withholding basic information about its side effects, Scientific American argued last week. FDA redacted references to certain side effects and specific outcomes from eteplirsen's clinical trials after Charles Seife, the author of the Scientific American piece, sued for documents on the drug's approval.

When the FOIA suit turned up a chain of emails "in which an FDA reviewer suggests that Sarepta or eteplirsen researchers might be manipulating and misrepresenting scientific images," FDA blocked the release of the raw images that could have shed more light on the issue. The FDA said that any information it didn't turn over is considered "trade secrets and commercial or financial information obtained from a person and privileged or confidential."

"It's easy to make a worthless drug seem effective by hiding the outcome measures that don't show good results and publishing only outcomes that do," Seife wrote. "It's like going through a deck of cards and selecting only the ones you want; you're guaranteed a royal flush every time."

The public deserves to see that data to make better informed decisions about whether drugs are safe or not, he continued. In essence, the agency is protecting corporate secrets at the expense of consumer safety.

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