TRP Health Policy Report

Both chambers of Congress were in session last week, with the House debating two fiscal 2015 appropriations bills and expired tax breaks, while the Senate focused on veterans’ care and student loan costs. Last Tuesday, the House approved the fiscal 2015 Transportation-HUD spending bill (H.R. 4745) in a 229-192 vote. Earlier that day, House members voted 426-0 for a bill (H.R. 4810), to make healthcare reforms at the Department of Veterans Affairs. Last Thursday, House lawmakers began consideration of the fiscal 2015 Agriculture-FDA spending bill (H.R. 4800), but put off further debate until next week. Instead, the House debated and passed two bills to extend expired tax breaks. House members approved the first bill (H.R. 4453) 272-144 and the second measure (H.R. 4457) passed 263-155.

Last Wednesday, the Senate voted 93-2 to approve a bipartisan bill (S. 2450) that would address recent allegations of delayed care at Veterans Affairs health centers across the country. The bill is similar to the measure passed by the House earlier in the week, making it likely that a unified measure soon will be sent to President Obama’s desk. Earlier in the week, Senators blocked consideration on a student loan reform bill (S. 2432) in a 56-38 vote, failing to gain the 60 votes needed to advance. Elsewhere, Senators approved a series of executive and judicial nominations.

At the committee level, the Senate Appropriations Labor-HHS Subcommittee approved a $156.8 billion fiscal 2015 spending bill last Tuesday by voice vote. The funding measure was scheduled to be marked up in the full Senate Appropriations Committee last week, but Sen. Tom Harkin (D-IA) postponed it indefinitely, citing difficulty in securing floor time and in getting agreements on amendments with Republicans. Harkin said the bill is unlikely to be considered separately on the floor and may end up as part of an omnibus package. In agency news, Kathleen Sebelius turned over leadership of HHS to new Secretary Sylvia Matthews Burwell last Monday. Burwell went through a relatively quick nomination hearing to replace the departing secretary. On June 12, she was confirmed by the Senate in a 78-17 vote.

The Week Ahead

This week, House leadership elections and appropriations action in both chambers look to dominate the agenda on Capitol Hill. In the House, GOP leaders have scheduled a Thursday election for the next House majority leader following Eric Cantor's loss in last week's Virginia Republican primary. Cantor said he would step down from his leadership post on July 31. Meanwhile, both chambers plan to continue work on appropriations legislation for fiscal 2015.

In the Senate, lawmakers may consider a mini-omnibus that rolls together the spending bills for Commerce-Justice-Science (CJS) (S. 2437), Agriculture-FDA (S. 2389) and Transportation-HUD (S. 2438). The vehicle for the “minibus” will be the House-passed CJS spending bill for fiscal year 2015 (H.R. 4660). Both chambers may also try to reconcile discrepancies between their respective VA healthcare measures. Off the floor, the Ways and Means Committee holds a hearing Wednesday on the Medicare Payment Advisory Commission’s (MedPAC) June report to Congress.

Cantor's Defeat Dampens ACA Repeal, Replace Efforts

House Majority Leader Eric Cantor (R-VA), who lost his re-election bid in a Republican primary election last Tuesday, announced Wednesday that he would relinquish his leadership role on July 31, all but ensuring that his efforts to repeal and replace the Affordable Care Act have stalled. At a Capitol Hill press conference, Cantor did not mention future plans for healthcare as he discussed his legislative priorities before he steps down as majority leader. Passage of an Affordable Care Act alternative plan was already seen as unlikely despite numerous GOP promises to "repeal and replace" the health law. A busy floor schedule and a leadership transition further complicate the possibility. Meanwhile, House Republicans have moved quickly to find a House Majority Leader replacement because the uncertainty could cause instability at the leadership level in the committees that have jurisdiction over health policy matters.

The race to replace Cantor as Majority Leader seems likely to go to the current Majority Whip Kevin McCarthy (R-CA). While there is no way to forecast how McCarthy will perform in the elevated role, he was a driving force behind the 2010 Pledge to America, the Republican campaign pledge that, among other provisions, called for the full repeal of the 2010 health law. Indeed, some analysts suggest that Cantor's defeat might be linked to his refusal to adopt a harder stance against the ACA, citing his efforts to advance a replacement plan over a straightforward repeal measure. Cantor’s defeat, coupled with strong ACA opposition by large elements of the GOP voter base could make it difficult for Republican lawmakers to get enough votes to make even minor changes to the health law this year. At the same time, GOP members themselves are divided over whether to move forward with an alternative plan, since specific legislation could give Democrats ammunition to attack them in this year’s midterm elections.

House Panel Holds Hearing on 21st Century Cures Initiative

Last Wednesday, the House Energy and Commerce Health Subcommittee convened for a hearing on the recently-announced 21stCentury Cures initiative. The hearing focused on examining the role of incentives in advancing treatments and cures, and whether current economic and regulatory incentives are sufficient to encourage robust research and development investment for innovative drugs and medical devices. Full committee Chairman Fred Upton (R-MI) and Rep. Diana DeGette (D-CO) recently announced the launch of 21st Century Cures, a new initiative that aims to accelerate the pace of cures and medical breakthroughs, with focus on the three stages of the innovation cycle – discovery, development and delivery. Since the initiative was launched, Energy and Commerce has held two hearings and a roundtable with leading experts.

In his opening statement, Subcommittee Chairman Joe Pitts (R-PA) said Congress should be looking at the challenges faced by companies and venture capitalists that wish to invest in the development of new therapies. He said that while investment is in the interest of patients suffering from rare or chronic diseases, it is also necessary for stakeholders to have a predictable regulatory process. Ranking member Frank Pallone (D-NJ) and other panel Democrats pointed to the high cost for new cures, noting that their cost is potentially higher than the market can support, thereby limiting access.

Lawmakers from both parties lauded the 1984 Hatch-Waxman Act, but several Republican panel members called for a review of the exclusivity terms of the thirty year-old law. Rep. Henry Waxman (D-CA) and other Democrats called for either maintaining the current patent structure or increasing the opportunities for generic drug makers to come to market faster. Members also discussed the length of FDA approval for new drugs and devices and the amount of post-approval data required by CMS to authorize reimbursements for new treatments. The Subcommittee heard testimony from several stakeholder witnesses, who offered perspectives on the incentives needed to encourage investment in innovation, including extending market exclusivity protections and providing adequate resources for the FDA to complete new drug approvals.

Policy Experts: Excessive Health Law Subsidies May Not Be Recovered

Last Tuesday, members of the House Ways and Means committee were told that the federal government could lose more than $150 billion over 10 years because it can’t accurately verify the incomes of people who qualified for subsidies to help purchase insurance under the ACA. Appearing before a joint hearing of the Ways and Means Health and Oversight subcommittees, a group of conservative policy experts said some recipients who were overpaid will refuse to give back the difference while the government will remain unable to identify everyone who receives too much money. Douglas Holtz-Eakin, president of American Action Forum and a former Congressional Budget Office director said losses could reach $152 billion, based on overpayment statistics under the Earned Income Tax Credit program for low-income taxpayers. He said the figure is based on an estimate that 21 percent of the extra money may not be recovered.

But Democrats and liberal advocates said the concerns were overstated. Ron Pollack, executive director of the consumer advocacy group Families USA, said that the number of individuals who will have to repay credits is considerably lower than Republicans suggest. Committee Democrats including Linda Sanchez (D-CA) and Jim McDermott (D-WA) said that the hearing was simply a partisan effort designed to discredit implementation of the ACA. Under the health law, low-income individuals are eligible to receive subsidies on a sliding scale. The credits are based on consumers’ estimate of their earnings in the coming year. But critics say recipients whose incomes rise or change could easily game the system and obtain excessive subsidies. CMS officials are asking more questions of around 1.2 million people whose past income is significantly different from what those consumers projected they will make. Holtz-Eakin asserted that the government does not have a good track record of tracking down overpayments, while other witnesses predicted a challenging year ahead for the IRS, taxpayers and accountants.

House Panel Approves Drug Scheduling, Enforcement Action Legislation

Last Tuesday, the House Energy and Commerce Committee approved legislation (H.R. 4299) that would speed the drug scheduling process by requiring the DEA to issue an interim final rule within 45 days of receiving an FDA scheduling recommendation. The bill passed the committee despite reservations by the DEA about meeting the scheduling process outlined in the bill. DEA and FDA are crafting a memorandum of understanding that could streamline the scheduling process, although the agencies have said it is still in draft form. Lawmakers say the bill would speed drug development. "Ultimately, this will allow new and innovative treatments to get to patients who desperately need them faster," said Health Subcommittee Chairman and bill co-sponsor Joe Pitts (R-PA).

The committee also advanced a bill laying out new requirements for drug enforcement actions against unscrupulous facilities. The “Ensuring Patient Access and Effective Drug Enforcement Act” (H.R. 4709) would require the U.S. Attorney General to notify facilities before revoking or suspending their registration and allow time for violators to submit a corrective action plan. The Attorney General would then decide whether further enforcement action is needed after receiving the plan. The bill also calls for a report to Congress on the effects of law enforcement activities on patient access to medications. Congressional supporters and advocacy groups say the legislation will allow for more collaboration and transparency between supply chain stakeholders and the DEA to better address prescription drug abuse and diversion.

Senator Seeks CBO Score on Fiscal Impact of ACA

Last week, Sen. Ron Johnson (R-WI) introduced legislation (S. 2446) requiring the CBO to provide annual estimates of the fiscal impact of the Affordable Care Act. The measure would require the CBO to provide yearly estimates of the effect of the health law on spending, revenue and the deficit. Johnson’s bill is modeled after an amendment the Senator introduced and that was adopted by the Senate Budget Committee as part of a fiscal 2014 budget resolution. Johnson’s bill has not attracted any co-sponsors yet, but an aide said the Senator is optimistic given that his amendment last year won approval from both the Budget Committee and full Senate.

In a report on the ACA in April, the CBO said it is unable to estimate the full fiscal impact of the health law because many of its provisions modified existing federal programs and made changes to the tax code. The budget office is still working to estimate the changing insurance provisions of the law, which include insurance subsidies, a Medicaid expansion and penalties for not providing or purchasing insurance. Johnson said while the CBO “undoubtedly faces considerable challenges in separating the impact of the law from some of the other programs that interact with it,” the agency “can and should be able to estimate those costs and impacts so that Congress and the American people understand the true scope of financial harm that…” the ACA is causing. He added that “estimates related to coverage-only provisions are inadequate for assessment of a law that touches nearly every aspect of our healthcare system.”