Health Policy Report

The Week in Review
 
The House and Senate were in recess last week.
 
The Week Ahead
 
Congress is set to return today and will begin what is sure to be a hectic period on Capitol Hill.  The first major action for the House will be voting on a formal disapproval of the nuclear deal that the Obama administration has negotiated with Iran, with a floor vote scheduled for Wednesday. The Iran treaty is also at the top of the Senate agenda, as the Senate is set to immediately consider a resolution (H.J. Res. 61) on Tuesday that will act as the legislative vehicle for the Senate’s disapproval of the nuclear agreement. While the Republican-controlled Congress is expected to pass the measure of disapproval, the President has secured enough votes from Democratic Senators to ensure that a presidential veto will not be overridden.

The Iran deal is only the first major issue facing Congress this fall, with the Pope due to visit Washington later this month and government funding set to expire on September 30. For a full rundown on the major legislative issues due to be considered over the next few weeks, please refer to TRP’s Fall Legislative Outlook.
 
Overturning ACA Expansion of Small-Group Insurance Could Happen in Fall
 
In addition to the medical device tax and Cadillac tax repeals, Congress will likely consider legislation this fall that will prevent changing the definition of the small-group market as the Affordable Care Act (ACA) has prescribed. Under current law, the definition of the small-group market will expand to include employers with fewer than 100 employees—rather than only those with fewer than 50 employees—on January 1. The Senate bill (S. 1099) repealing the provision has attracted eight Democratic cosponsors, including Sen. Chuck Schumer (D-NY), a member of the Democratic leadership.
 
Other signs point to the small-group measure faring better than some of the other bills that aim to make revisions to the ACA. Most importantly, the measure will cost very little to implement, meaning that Congress will not need to find substantial pay-fors to ensure the bill is budget neutral. Additionally, the bill is subject to a pressing deadline, as the ACA stipulates for the small-group market to expand at the start of 2016. Finally, the measure is one of the most likely to gain the approval of President Obama as it would not fundamentally alter his signature health care law. While consideration has yet to be scheduled in either the House or the Senate, the National Journal reported last week that Senate Republican leadership has “begun taking its caucus’s temperature on the measure.”
 
Novartis Launches First Biosimilar Drug in the US
 
In a watershed moment for American medicine, the drugmaker Novartis launched the nation’s first biosimilar product, Zarxio, last Thursday. The drug is priced at a 15 percent discount compared to the original product, Neupogen, and its release survived a late legal challenge from Neupogen’s manufacturer, Amgen. A Washington D.C. appeals court denied Amgen’s appeal to block the release of Zarxio on Wednesday, clearing the way for a full release of the drug on Thursday.
 
Biosimilars have attracted a great deal of attention from policymakers and investors alike as companies navigate the complex regulatory and legal framework that governs the production and sale of the copycat products. Insurers are hoping that the widespread adoption of biosimilars will eventually lead to a 40 to 50 percent reduction in the costs associated with biotech drugs. Express Scripts, one of the largest managers of drug benefit plans in the US, has estimated that the nation could save up to $250 billion over ten years if the most prominent biosimilars are able to reach the market.
 
Sanders to Introduce Bill for Federal Negotiation of Drug Prices
 
Democratic Senator and presidential candidate Bernie Sanders (I-VT) announced last Tuesday that he aims to introduce a bill this fall that aims to temper the growth of drug prices. The initiative is said to include a number of past proposals, such as allowing Medicare to negotiate drug prices under the Part D program, providing for drug imports from Canada, and forcing drug companies to reveal both their profits and research and development costs. Another Sanders initiative, to replace drug exclusivity with a prize system, is not set to be included in the legislation, but the Vermont presidential candidate remains supportive of eliminating exclusivity. Drug prices have come under increasing scrutiny, particularly from insurance companies, but most insurers favor disclosure of costs rather than direct government negotiation over drug costs.
 
Results from CMS Test Suggest Medicare Ready for ICD-10
 
The Centers for Medicare and Medicaid Services (CMS) announced the results of their latest round of ICD-10 testing last week and concluded that the agency will be able to process claims under the ICD-10 coding system starting on October 1. This round of testing was conducted in July and included many more claims than previous rounds, but maintained a rate of successful end-to-end processing for about 87 percent of claims. Moreover, the issues that had plagued previous testing were resolved and no new issues were discovered. The agency has used the test results as another way to encourage providers to prepare for the switch to the ICD-10 system that is set to begin next month, albeit with a grace period to assist providers with the transition.
 
Hatch Supports Using Reconciliation for Med Device Tax Repeal
 
Chairman of the Senate Finance Committee Orrin Hatch (R-UT) expressed support for using the budgetary procedure known as reconciliation for the repeal of the ACA’s medical device tax. Proponents of the repeal would prefer a less partisan vehicle, however, such as an end-of-year tax related omnibus.
 
Reconciliation is a parliamentary vehicle that circumvents the 60-vote threshold typically required of major legislation in the Senate. The medical device tax repeal (H.R. 160) earned significant bipartisan support in the House, passing 280-140 in June, and Hatch’s Senate version (S. 149) has attracted 39 cosponsors. The Utah senator views reconciliation as the most effective way to get the measure to the president’s desk, and has also considered including other health-related add-ons, such a measure that would incentivize the manufacture of “orphan drugs” that are used to treat rare diseases. While Republicans would undoubtedly support a medical device tax repeal, many are hoping that a fuller repeal of the ACA is forced through under reconciliation, even though President Obama would be sure to veto such a measure.