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Next Obamacare open enrollment: Stability mixed with trepidation. Obamacare's insurance exchanges, after years of skyrocketing premiums and bolting insurers, are showing signs of something that has been elusive since the first open enrollment six years ago: Stability. When consumers take part in this year's open enrollment period on Nov. 1, they'll be avoiding the sticker shock of previous years. Insurers are, on average, making modest rate increases ahead of the period. And some insurers are also returning to Obamacare’s insurance exchanges after watching their colleagues rake in profits. “Carriers that stayed in the market figured out how to make money,” said Katherine Hempstead, senior policy adviser for the Robert Wood Johnson Foundation. “Other carriers watched that.” Yet there is still room for doubt over the future. Obamacare's allies are worried about the effects of cuts to advertising and outreach for open enrollment, along with the presence of new competition from Trump administration-approved plans that could erode enrollment in the exchanges.

So how did insurers start to make money in Obamacare? The key was limiting consumers to a narrow network of doctors, Hempstead said. “I think that control of network is a key aspect of success in this market,” she said. Offering a narrow network helps an insurer control costs by restricting the services and doctors that a consumer can go to. But the downside is that it also hinders access to services for consumers, and can result in surprise medical bills when consumers unwittingly go to doctors or hospitals outside of their network. There's been a steep decline in plans that allow consumers to go to any doctor. In 2018, just 29 percent of the plans provided that option. In 2015, 58 percent did, according to data from the Robert Wood Johnson Foundation.

Welcome to Philip Klein’s Daily on Healthcare, compiled by Washington Examiner Managing Editor Philip Klein (@philipaklein), Senior Healthcare Writer Kimberly Leonard (@LeonardKL) and Healthcare Reporter Robert King (@rking_19).  Email dailyonhealthcare@washingtonexaminer.com for tips, suggestions, calendar items and anything else. If a friend sent this to you and you’d like to sign up, click here. If signing up doesn’t work, shoot us an email and we’ll add you to our list.

Trump administration proposes requiring drugmakers to disclose list prices in ads. The Trump administration released a proposed regulation on Monday to force drugmakers to put the list prices of their products in TV ads, setting up a showdown with the pharmaceutical lobby.

“Patients deserve to know what a given drug will cost when being told about the risk or benefits it may have,” Health and Human Services Secretary Alex Azar said at the National Academy of Medicine annual meeting. The regulation was previously announced in the Trump administration’s May blueprint for combating high drug prices. It applies to drugs that are covered under Medicare and Medicaid. The proposed regulation, which will be finalized after a public comment period, said that the list price to be included must reflect the cost of a 30-day supply of the product.

The pharmaceutical lobby has fought back on the regulation. The Pharmaceutical Research and Manufacturers of America, the drug industry’s top lobbying group, said on Monday that all of its 33 members agreed to develop a website that includes the list price and average out-of-pocket costs of their products. The drug companies would feature a link to the ad in their TV advertising for products but not for digital or radio. PhRMA argues that putting in just the list prices in ads would be confusing to consumers because prices do not include context, such as rebates or discounts. But the group was not specific on key aspects of their voluntary program, including how the companies calculate the advertised out-of-pocket average cost. Azar bashed the industry initiative as a way to distract from the new regulation. “We appreciate their effort, but placing information on a website is not the same as placing it in an ad,” he said.

Grassley and Durbin cheer the proposed regulation. Sens. Chuck Grassley, R-Iowa, and Dick Durbin, D-Ill., both praised the regulation. The two senators pushed for adding an amendment to the September appropriations bill that would have required drug prices to be included in drugmaker ads, but it was dropped from the final package that was passed last month. “Making drug prices available to consumers is a commonsense way to lower prices. No one buys a gallon of milk without knowing the price,” Grassley said in a statement. “Why should prescription drugs be any different?” Durbin said in a separate statement that the additional transparency will empower patients and could help to slow down drug prices.

But advocates and some experts question the proposal’s benefit. Some patient advocacy groups questioned whether the added transparency would lead to lower drug prices. “Even with this information, consumers, and to a large extent patients, have limited or no ability to choose an alternative product," said Peter Maybarduk, director of the advocacy group Public Citizen’s Access to Medicines Program, in a statement. "This is due to the monopolies our government provides to prescription corporations, in the form of patents and other exclusivities, with virtually no conditions or restraints on abuse.” The drug pricing reform group Patients for Affordable Drugs said that the administration should prevent drugmakers from deducting TV ads from their taxable income instead of requiring them to put up list prices. “There is no evidence that providing patients and consumers access to list prices will result in lower prices for prescription drugs,” Executive Director Ben Wakana said in a statement.

In an odd move, CMS will oversee the regulation and not the FDA. The Centers for Medicare & Medicaid Services released the proposal instead of the Food and Drug Administration, which has the authority to regulate drug TV ads. Normally the FDA monitors whether TV ads for drugs disclose the full risks or side effects. But an administration official told reporters on Monday that the FDA can only regulate drugs for safety or effectiveness, and not for price. The official said that the rule cites the authority for CMS to administer Medicare and Medicaid in a way that minimizes “unreasonable expenditures.” But one law professor questioned that argument. “Given that FDA has explicit authority here and CMS' authority is tied specifically to Medicare/Medicaid, [regulations] that try to regulate marketing more broadly need greater justification,” tweeted Rachel Sachs, an associate law professor at Washington University.

A legal challenge based on the First Amendment could target the regulation. PhRMA didn’t say specifically it will sue the administration but a legal challenge could be coming, and industry’s track record in marketing cases has been pretty good. The FDA has had its authority to regulate marketing of off-label drug uses, which are uses that are not approved by the FDA, severely curtailed due to a series of court rulings. This marketing isn’t in the form of TV ads, but usually through a salesman engaging with a doctor to promote the off-label use. For instance, in 2015 a federal judge ruled that the FDA had violated the First Amendment rights of the drugmaker Amarin when it curtailed promotion of an off-label use for its drug Vascepa. But CMS has not had any such legal challenges because it has never regulated drugmaker ads, a possible reason why the Trump administration decided to house the regulation in CMS instead of the FDA.

Alex Azar takes sharp tone against pharma, his old stomping ground. Azar targeted the pharmaceutical industry during his speech outlining the proposed regulation. “Despite the ample precedent for this commonsense measure, the pharmaceutical industry has resisted it fiercely,” he said. Azar, the former head of drugmaker Eli Lilly’s U.S. division, also said that more regulations are going to be on the way. “Sometimes markets evolve on their own, but sometimes, it takes government to make the first move, to disrupt a broken system, and to lay down new rules of the road,” he said. But the blueprint has been criticized for not having enough teeth to get drugmakers to lower prices. For instance, Azar said that 15 companies announced rollbacks of price hikes for the rest of the year and overall companies have taken 60 percent fewer price increases for brand drugs this year compared to last year. But an analysis published by the Associated Press last month said that over the first seven months of 2018 there were 96 price hikes for every price cut.

Maine official responsible for work requirements for food stamps joins Trump health team. Mary Mayhew, a Maine official who shepherded work requirements for food stamps in the state, has been appointed to a top role at CMS, where she will be responsible for overseeing health programs for low-income people. Mayhew is joining the agency as the Trump administration is working to expand work requirements in the Medicaid program. Under the proposals, approved in a handful of states, certain low-income people who are covered by Medicaid would need to work, take classes, or volunteer as a condition of staying enrolled in the program. Mayhew oversaw the rollout of food stamp work requirements in 2014, when she was commissioner for Health and Human Services under GOP Gov. Paul LePage. Mayhew co-authored an opinion piece on Fox News earlier this year with former House Speaker Newt Gingrich praising the Trump administration's push to add work requirements to more welfare programs and close exemptions. Prior to joining the LePage administration, Mayhew was a lobbyist representing the Maine Hospital Association. According to the Bangor Daily News, Mayhew had “preliminary conversations” when President Trump took office with officials interested in hiring her as an administrator of the food stamp program, but she told them she wanted to run for Maine's governor. She failed to gain the Republican nomination, however, and is taking up the helm at CMS, replacing Brian Neale, who left in January. Tim Hill had been working as acting director. Her official title would be deputy administrator and director of the Center for Medicaid and CHIP Services, a position that does not require Senate confirmation.

Failing to meet work requirement, 4,000 more Arkansans dropped from Medicaid. Another 4,109 people in Arkansas will be removed from the Medicaid program after failing to meet the state's work requirement, bringing the total number to 8,462 four months into implementation of the requirements, new state data show. Arkansas was the first state to require certain Medicaid enrollees work or train for work as a condition of staying enrolled in the program. People on Medicaid in Arkansas have to log their hours online, and if they fail to do so, they are taken out of the program and are not allowed to re-enroll until the following year. State officials said some people who didn't log their hours had moved to another state, obtained a job, or increased their salary and no longer qualified, while others had failed to either fulfill the requirement or to log it. About 73,266 people on Medicaid were originally subject to the requirement to work, volunteer, or take classes as a condition of staying enrolled in the program, and 52,714 of them were exempt from reporting because they were already meeting the requirement or because the state exempted them. The number of people who reported their hours was lower than the number of people who did not. The report from the state shows 1,532 people reported their hours and 16,757 did not. People are not kicked off of Medicaid until they fail to report for three consecutive months.

Anthem agrees to pay $16 million for cyberattack failures. Major insurer Anthem agreed to pay $16 million to Health and Human Services after a series of cyberattacks led to the exposure of protected health information for nearly 79 million people. This was the highest fine ever under the Health Insurance Portability and Accountability Act’s privacy and security violations, the previous high being $5.5 million. “Unfortunately, Anthem failed to implement appropriate measures for detecting hackers who had gained access to their system to harvest passwords and steal people’s private information,” said Roger Severino, director of HHS’ Office of Civil Rights, in a statement. Anthem also failed to identify and respond to suspected security incidents as far back as February 2014.

RUNDOWN

Kaiser Health News Drugmakers funnel millions to lawmakers, with a few dozen getting $100,000-plus

The Hill Trump attacks ‘Crazy Bernie’ Sanders over Medicare plan

Politico Scott Walker, in fight for his political life, slow-walks Medicaid work rules

New York Times Republicans are suddenly running ads on pre-existing conditions, but how accurate are they?

Omaha World-Herald Medicaid expansion would create jobs and economic benefits, study says

Reuters Congo confirms 33 Ebola cases in the past week, of whom 24 died

KCUR Kansas’ race for governor could make or break Medicaid expansion

TUESDAY | Oct. 16

House and Senate in recess until after the Nov. 6 midterm elections.

Oct. 14-18. America’s Health Insurance Plans conference on Medicare, Medicaid, and dual eligibles. Agenda.

Oct. 14-17. New Orleans. Employee Benefits Conference. Details.

Oct. 15-16. Marriott Wardman Park. Rare Diseases and Orphan Products Breakthrough Summit. Agenda.

1:30 p.m. Alliance for Health Policy webinar on “Potential Midterm Election Implications for Healthcare.” Details.

THURSDAY | Oct. 18

3 p.m. 1775 Massachusetts Ave. NW. Brookings conversation with Centers for Medicare and Medicaid Services Administrator Seema Verma. Details.

FRIDAY | Oct. 19

Noon. G-50 Dirksen. Alliance for Health Policy event on “Flexibility and Innovation in Medicaid.” Details.