Health Policy Report

The Week in Review

The federal government inched closer to a partial shutdown last week following an intense oval office meeting between President Trump and Democratic leadership. President Trump told House Minority Leader Nancy Pelosi (D-CA) and Senate Minority Leader Chuck Schumer (D-NY) that he would be “proud” to shut down the government if the spending deal does not include his $5 billion border security request, frustrating Republican lawmakers who are looking to avoid an end-of-the-year spending fight. Leaders Pelosi and Schumer both reiterated their desire to pass the six funding bills where lawmakers have agreement, and extend the current Homeland Security funding until next September through a continuing resolution (CR).

Meanwhile, House Democratic Leader Nancy Pelosi (D-CA) struck a deal with a group of insurgent Democratic lawmakers that will likely ensure she’ll have the votes she needs to claim the speaker’s gavel in the 116^th Congress. The agreement would limit her tenure and that of Whip Steny Hoyer (D-MD) and Assistant Leader Jim Clyburn (D-SC) to no more than four additional years. Despite potential opposition to the rule from within the caucus, Leader Pelosi stated she will abide by this agreement regardless of whether House Democrats vote to approve a rule change that would limit their top three leaders to no more than four two-year terms.

Congressional lawmakers also passed a final version of the Farm Bill (H.R. 2) this last week. The measure sailed through both chambers despite conservative ire over a lack of tougher work requirements for recipients of the Supplemental Nutrition Assistance Program (SNAP) in the final version of the bill. Despite President Trump’s adamant support for work requirement language, lawmakers expect the president to sign the bill and potentially pursue the measures through the federal rulemaking process.

In a notable midterm election development, state lawmakers in North Carolina approved legislation that would require new primaries if the state elections board calls for a second vote of a congressional election — opening the door for an entirely new race in the Tar Heel State's disputed 9th Congressional District. North Carolina’s State Board of Elections and Ethics Enforcement, which has not certified the race, is expected to hold a hearing in the coming weeks to explore credible allegations of election fraud with respect to illegally handled or altered absentee ballots.

The Week Ahead

Lawmakers will return to Washington this week in the hopes of striking a deal to avoid a partial government shutdown. The appropriations process has been deadlocked in a contentious debate over President Trump’s $5 billion border wall demand, leaving the seven remaining funding bills in limbo heading into Friday’s deadline. Among some of the options to avoid partial shutdown that have been discussed include: (1) a short-term continuing resolution (CR) through Christmas to allow lawmakers to come back and try to reach a deal before the end of the year; (2) a two-month CR through January to punt to the next Congress; and (3) a CR for the Department of Homeland Security and passage of the other six remaining appropriations bills.

The Senate will be the first chamber to resume legislative business this week. On the floor, Majority Leader Mitch McConnell (R-KY) recently announced that the Senate will begin consideration of a comprehensive criminal justice reform bill. Despite substantial support from Senate Democrats and the Trump administration, the bill — which would ease some mandatory-minimum sentences for nonviolent offenders —faces opposition from a group of GOP Senators who argue that the measure would let repeat offenders out of prison.

Meanwhile, House lawmakers are expected to return to Washington on Wednesday to tackle the impending government funding deadline, but an official schedule for the truncated work week has yet to be announced. 

W&M Chairman Brady Updates Tax Bill to Include ACA Tax Delays

Last Monday, House Ways and Means Chairman Kevin Brady (R-TX) announced the reintroduction of the year-end tax package (H.R. 88) that seeks to address a host of issues some lawmakers are interested in tackling in the lame-duck session. In hopes of improving the bill’s legislative outlook for the remainder of the 115th Congress, the revamped tax package includes a host of key health care provisions including: (1) a five-year delay of the medical device tax (until Dec. 31, 2024); (2) a two-year delay for the health insurance tax (until Dec. 31, 2021); and (3) a one-year delay for the “Cadillac” tax (until Dec. 31, 2022).

While provisions that would renew industry-specific “tax extenders” and expand the deduction for start-up businesses have been removed, the bill retains measures that provide tax relief for disaster victims, promote incentives for retirement savings, and make technical fixes to the Tax Cuts and Jobs Act (TCJA). The bill also repeals the Johnson Amendment — a measure that prohibits all 501(c)(3) non-profit organizations from endorsing or opposing political candidates — which could boost conservative enthusiasm for the year-end package.

On November 29, the House voted to approve the rule governing debate on this bill — a sign that typically means a vote on the House floor will come shortly thereafter. However, the bill has yet to be brought to the House floor amid skepticism from lawmakers in both chambers. Should the bill pass the lower chamber, the GOP still needs several Senate Democrats to support the bill in order to meet the 60-vote threshold to advance legislation and avoid a filibuster in the upper chamber. Democrats may oppose the bill in interest of taking up the issues once they gain control of the House in January. The addition of the health care provisions — coupled with the Johnson Amendment repeal as well as the subtraction of controversial “tax extenders” language — could make the bill palatable enough for lawmakers who initially threw cold water on the bill’s lame-duck prospects. 

Medicaid Extenders, Drug Rebate Reforms Passes House

The House passed legislation to pay for popular Medicaid programs and crack down on misclassification of drugs in the Medicaid drug rebate program (MDRP) this past Tuesday. The IMPROVE Act (H.R. 7217), introduced by Rep. Joe Barton (R-TX), would extend the Money Follows the Person (MFP) demonstration and a provision that protects spouses of beneficiaries with significant home and community-based service needs from impoverishment through the end of March 2019. The extensions are paid for in part by a bill introduced recently by Senators Chuck Grassley (R-IA) and Ron Wyden (D-OR) that is included in the package. It would give the Department of Health and Human Services (HHS) greater oversight authority over the classification of drugs in the MDRP and allow HHS to impose civil monetary penalties for knowingly misclassifying drugs. The package would also include the ACE Kids Act, which establishes a health home program in Medicaid for children with complex medical issues.

The authorizations for the spousal impoverishment provisions and MFP are currently due to expire at the end of the year. Passage of this bill would extend them through the end of March 2019, giving the 116th Congress time to arrive at a longer-term fix. Senators Grassley and Wyden introduced their bill as a standalone last week as part of their focus on bringing down prescription drug prices. The projected cost savings from their bill would help offset the cost of the spending provisions.

Sens. Grassley and Wyden have said they’re hopeful the legislation will pass through the Senate by the end of the 115^th Congress, though it may be derailed by opposition to the ACE Kids Act by some groups. Representatives of the Medicaid managed care industry say that states already have the tools to implement the sort of care coordination addressed by the bill and that the approach is biased towards fee-for-service Medicaid. The ACE Kids Act, the program extensions, and a proposal to remove manual wheelchairs from the competitive acquisition program together would cost $198 million, though a CBO analysis finds that offsetting provisions including the bill championed by Sens. Wyden and Grassley would make the net cost of the package negligible.

FDA Withdraws Rule Allowing Generic Drugs to Update Product Labels

Last Thursday, the Food & Drug Administration decided to pull back a proposed rule that would have allowed generic drug makers to update drug labels and communicate safety-related information for generic drugs as they gleaned it. The rule had been debated for years, and was originally proposed five years ago in response to a 2011 U.S. Supreme Court decision ruling that generic manufacturers were unable to make label changes independently and could not be held accountable for any failure to warn against risk. The FDA explained last week that they worried the proposed rule would create “unintended consequences” if doctors and patients became confused when labels were not revised on a timely basis, or if generic labels did not match those of their branded counterparts. FDA’s explanation for pulling the proposed rule also pointed to concerns from generic manufacturers that added costs associated with complying with the rule would cause them to raise prices. Consumer groups have already criticized the FDA decision to withdraw the proposed rule, arguing that generic labeling would be insufficient to warn patients about risks as generic use increases yearly.

FDA Issues Guidance to Support Biosimilars Market

Tuesday, the Food and Drug Administration (FDA) issued a package of guidance documents designed to stimulate additional competition and innovation in the biological products marketplace. FDA Commissioner Scott Gottlieb announced the new guidance during his remarks to the joint FDA CMS Summit convening in Washington, DC this past week. He acknowledged additional changes are needed to the biosimilars policy framework to support continued progress toward a viable and robust pathway, and noted today’s guidance is a key part of that evolution. 

In his remarks, Commissioner Gottlieb highlighted new steps the agency is taking to address anti-competitive behavior, stating that “too many branded products are still misusing these programs as rhetorical smokescreens to hide anti-competitive behavior. We’re not going to be partners to these deceptions.” In particular, he noted one of the four documents is a draft Q&A guidance which addresses tactics companies use to delay or derail access to reference product samples that would support biosimilar applications. According to this guidance, FDA will, upon request, review study protocols submitted by biosimilar applicants to assess whether their protocols contain comparable safety protections to those in the REMS for the reference product they’re trying to reference. If requested, the FDA will issue a letter to the reference product holder informing them that comparable protections exist, and that the FDA won’t consider it to be a violation of the branded drug company’s REMS to provide the biosimilar sponsor with a sufficient quantity of the reference product to perform testing necessary to support its biosimilar application.

Commissioner Gottlieb went on to say FDA now plans to devote the same level of scrutiny to biologic makers’ potentially anti-competitive practices as it has done for small molecule makers. He noted that this is a dynamic market, and “we’ll continue to address potential barriers to competition as they emerge, including in partnership with colleagues at the Federal Trade Commission (FTC).” His comments are consistent with FTC’s letter stating its readiness to collaborate with the FDA on abuse of the citizen petition process, as well as other potentially anticompetitive issues. FDA is sending its strongest signals yet that it will work with the FTC as well as potential biosimilar applicants to take a more responsive and proactive approach to addressing anti-competitive practices and monitoring markets. In 2019, the agency could provide additional guidance that would make it easier for biosimilar manufacturers to use reference products from outside the U.S.

HHS Solicits Input on HIPAA's Potential Barriers to Care Coordination

The Office of Civil Rights (OCR) for the Department of Health and Human Services (HHS) announced Wednesday a widely anticipated request for information on how the current Health Insurance Portability and Accountability Act (HIPAA) privacy and security rules may impede the transformation to coordinated, value-based health care. HHS welcomed comments on “how the rules could be revised to promote these goals, while preserving and protecting the privacy and security of such information and individuals’ rights with respect to it.” Responses to the RFI are due February 11, 2019. 

In a statement accompanying the extensive list questions in the RFI, Deputy Secretary Hargan also links the effort to “fine-tune[d]” HIPAA with concerns that have emerged in the context of the opioid crisis, saying, “we’ve heard stories about how the Privacy Rule can get in the way of patients and families getting the help they need.” HHS has several pending items that dovetail with the HIPAA request and broader work to advance the transition to value-based care. Most immediately, HHS’ Office of the National Coordinator is expected to release its proposed rule to combat the threat of information blocking. HHS officials have also signaled they are working on changes to 42 CFR Part 2 to make it easier for doctors, hospitals, and payers to coordinate in delivering value-based care and fighting the opioid addiction crisis.

Chairman Alexander Signals Commitment to Addressing Unnecessary Health Costs

Senate Health, Education, Labor, and Pensions (HELP) Committee Chairman Lamar Alexander (R-TN) said last week that the U.S. may spend up to $1.8 trillion in unnecessary healthcare costs each year. In a speech on the Senate floor, Chairman Alexander cited testimony from a series of hearings he oversaw in the HELP committee to address the cost of healthcare in this country in which the panel heard that between 30 and 50 percent of the nation’s overall health spending on unnecessary expenses. Chairman Alexander brought up this figure repeatedly through the series of hearings, and witnesses consistently agreed that unnecessary treatments, tests, and administrative costs could make up such a large portion of the nation’s healthcare spending.

While the speech represented an epilogue of the committee’s work in the 115th, the Chairman also is setting the stage for the committee’s health care agenda in the 116th Congress. In other recent publicly delivered remarks, Chairman Alexander has stressed his commitment to forging bipartisan consensus on targeted bills tackling high healthcare costs. Senator Alexander’s speech was accompanied by a letter he sent to the Brookings Institution and the American Enterprise Institute, two think tanks with respected healthcare experts whom he hopes can assist in bringing recommendations to the table that could help lower healthcare costs. The solicitation of recommendations is open to the public as well, and Chairman Alexander requested on behalf of the committee specific steps to lower costs, improve outcomes, and boost transparency.