Health Policy Report

The Week in Review

Health care legislation cleared the House floor last week as lawmakers passed a slew bills pertaining to drug pricing and the Affordable Care Act (ACA). The House passed a bill (H.R. 986) that would prohibit the Departments of Health and Human Services (HHS) and Treasury from taking any action to implement, enforce, or otherwise give effect to Section 1332 State Innovation Waivers — which were designed to allow states to experiment with other strategies to provide health coverage to residents that deliver at least the same level of protections guaranteed under the ACA. Meanwhile, the drug pricing suspension measures (H.R. 1503 and H.R. 1520) would respectively update the FDA’s Orange Book and Purple Book to provide better information on brand drug and biologic patent exclusivity.

Additionally, House lawmakers also passed (257-150) another disaster relief bill (text; summary) prior to wrapping up legislative business for the week. The $19.1 billion bill includes additional funding for Army Corps of Engineers projects, Community Development Block Grant-Disaster Recovery (CDBG-DR) assistance, and the Department of Agriculture's Emergency Conservation program. The bill would also provide an extension of the National Flood Insurance Program (NFIP), pushing the expiration date from the end of this month to Sept. 30 in hopes of providing Congress with more time to hammer out a long-term reauthorization measures. While lawmakers on both sides of the aisle have stressed the importance of passing a disaster relief supplemental, an end to the contentious stalemate over the funds remains uncertain as President Donald Trump continues to harangue against additional aid for Puerto Rico. 

In the upper chamber, Senators continued their work on confirming presidential nominations, including three nominees to the Export-Import (Ex-Im) Bank — an agency that has been somewhat hamstrung due to Congressional inaction on nominees. The Senate cleared the nomination of Kimberly Reed to be Ex-Im President, as well as the nominations of former Rep. Spencer Bachus (R-AL) and Judith DelZoppo Pryor to be Members of the Ex-Im Board of Directors. Confirmation of the three Ex-Im nominees provides the bank with the necessary quorum to approve transactions greater than $10 million, something it has not been able to do since 2015 amid gridlock over the bank’s mission. 

The Week Ahead

Key health care legislation will be on the House floor again this week as Democratic leadership has set up votes on a package (rules committee print) of bills aimed at addressing prescription drug pricing and rolling back Trump-era ACA regulations. While the drug pricing legislation enjoys bipartisan support, the addition of Democrat-backed legislation to shore up the ACA ensures it will be a non-starter with most Republicans. Additionally, the lower chamber will also consider an anti-discrimination measure (H.R. 5) that would amend the Civil Rights Act of 1964 to include sex, sexual orientation, and gender identity among the prohibited categories of discrimination or segregation in places of public accommodation. 

In the upper chamber, Senators will resume clearing the presidential nominations queue. In addition to approving a host of judicial nominees, the Senate is expected to hold a final confirmation vote on the nomination of Jeffrey Rosen to be Deputy Attorney General of the United States.

CMS Finalizes DTC Advertising Rule

On Wednesday, the Centers for Medicare and Medicaid Services (CMS) finalized its rule to require pharmaceutical manufacturers to disclose their products’ list prices in TV advertisements. The measure, which is scheduled to go into effect in early July, is largely unchanged from CMS’s proposal in October of last year. It requires that every direct-to-consumer (DTC) TV advertisement for a drug or biologic product carry a statement of the drug’s wholesale acquisition cost (WAC). CMS’s rule applies to all drugs and biologics that are eligible to receive Medicare or Medicaid payment for which the monthly cost or the cost of a typical course of treatment is over $35. While the agency will maintain a list of companies and drugs out of compliance with the rule, it will not pursue further enforcement actions, instead relying on competitors to sue each other to ensure compliance.

In a press release, CMS Administrator Seema Verma said that the rules would help consumers demand greater “value” from pharmaceutical companies. CMS was unpersuaded by commenters’ arguments that WAC does not provide an accurate view of what patients pay for their prescriptions. The agency noted that companies may include supplemental information in their advertisements, such as project OOP costs and costs of competitors’ drugs, so long as they are presented in a non-misleading fashion. CMS also rejected arguments that placing WAC in advertisements would dissuade some patients from seeking care due to unfounded cost considerations.

Some commenters, including PhRMA, challenged the rule based on CMS’s standing to issue it. Specifically, they stated that the Food and Drug Administration possesses the primary authority to regulate pharmaceutical advertisements and that CMS has not been given such authority by Congress. Additionally, industry commenters claimed that the requirement to disclose list prices in advertisements could represent a First Amendment violation. CMS rejected these arguments, however, finding that pharmaceutical pricing disclosure in advertisements constitutes a legitimate public interest. The rule is scheduled to go into effect on July 9, 2019. PhRMA issued a statement shortly after the release of the rule criticizing CMS’s policy and announcing a new website to help consumers understand drug costs and find options for affording their prescriptions.

Trump Administration Releases Principles on Surprise Medical Billing

The Trump Administration took their most significant step to date in the effort to curb surprise medical bills (or “balance billing”) by releasing a new fact sheet and principles document in conjunction with a White House event Thursday morning. Last week’s release came as lawmakers hone in on their own plan to shield patients with commercial insurance from surprise medical bills — and President Trump was flanked at the event by three key players in that process: Sens. Bill Cassidy (R-LA) and Maggie Hassan (D-NH), who are leading a working group to draft legislation, and Senate HELP Committee Chairman Lamar Alexander (R-TN), whose panel holds jurisdiction over the issue and hopes to include language in a broader package this summer.

Competing ideas and deeply entrenched stakeholders have complicated the push to address surprise medical bills, and the principles released by the White House may serve to further complicate matters rather than clarify things. In Congress, the working group led by Sens. Cassidy and Hassan appears set on creating a system of binding arbitration between the provider and the insurer — an option used in several states that insurer and employer groups oppose but providers prefer. But senior administration officials emphasized Thursday that they are less than eager to adopt arbitration, saying that it could lead to "a lot of potential abuses" that would hurt patients. Instead, the White House outlined their interest in ideas such as mandatory pay bundles, with a hospital required to send one comprehensive bill that includes all the care a patient has received. As he laid out the principles for congressional legislation, President Trump emphasized that any solution: (1) shouldn't add to the federal budget, (2) should ban balance billing for emergency care, and (3) should mandate that patients scheduled for non-emergency care should be given "a transparent bill upfront."

Sens. Cassidy, Hassan and their counterparts are already far along in negotiations, and have reportedly sent iterations of their legislation to the Congressional Budget Office (CBO). It had once been expected that their legislation would be released in April, and Sen. Cassidy acknowledged to the press that “we're very advanced in our considerations.” Meanwhile, three House committees have expressed interest in tackling the issue — and the House Education and Labor Committee held a hearing last month — but the chamber's panels aren't as far along as the Senate in crafting their own bill. Nevertheless, Energy and Commerce Committee Chair Frank Pallone (D-NJ) and Ranking Member Greg Walden (R-OR) released a joint statement last week pledging to work together on "bipartisan legislation that protects patients and families from surprise medical bills."

FDA Finalizes Interchangeability Guidance for Biosimilars 

Last week, the U.S. Food and Drug Administration (FDA) released its long-awaited final guidance on demonstrating interchangeability of a biosimilar with its reference product. The final guidance entitled "Considerations in Demonstrating Interchangeability With a Reference Product," overviews the core scientific considerations in demonstrating interchangeability with a reference product and explains the scientific recommendations for an application or a supplement for a proposed interchangeable product. FDA also said that it plans to issues separate guidance with more detailed recommendations to support the design and evaluation of comparative analytical studies and related scientific considerations needed to support an application.

In a statement, FDA Acting Commissioner Ned Sharpless reiterated that, “… well-functioning biosimilar and interchangeable pathways are critical to the agency’s broader efforts to improve competition.” He also sought to inspire confidence in the interchangeable designation, saying, “Our rigorous scientific standards for approval will be maintained for interchangeable biologics and should serve as assurance to health care professionals and patients that they can be confident in the safety and effectiveness of both interchangeable products and biosimilar products, just as they would be for reference products.”

The guidance is intended to help biosimilar developers demonstrate that their products are interchangeable with a reference biologic for the purposes of submitting their marketing applications or supplementing them under the Public Health Service Act. A designation of interchangeability will allow a product to be substituted for its reference at the pharmacy level in the United States.

CMS Guidance Addresses SUPPORT Act’s SUD-Focused Health Home Program

The Centers for Medicare & Medicaid Services (CMS) released guidance last Tuesday to states addressing the SUPPORT for Patients and Communities Act's (H.R. 6, 115th Congress) Medicaid substance use disorder (SUD) provisions. The guidance implements the SUPPORT Act provisions which provide enhanced Medicaid funding for states with certain SUD-focused health home programs. The higher federal match is now available for 10 fiscal year quarters (instead of the previous 8) for health home programs approved by CMS on or after October 1, 2018. States whose plans were approved on or after that date may now request the additional two quarters of enhanced funding.

CMS previewed plans to issue separate guidance addressing the new reporting requirements for some states. States that receive approval for an additional two quarters of enhanced federal funding for a SUD-focused health home state plan amendment will need to report the following, with respect to SUD-eligible individuals receiving services through a SUD-focused health home:

• The quality of health care provided to these individuals, with a focus on outcomes relevant to the recovery of each such individual;
• The access of these individuals to health care; and
• The total expenditures of these individuals for health care. 

CMS stated in its recent bulletin that it plans to issue guidance on the new reporting requirements, including information on deadlines, in the "near future."