Washington Healthcare Update

May 4, 2015

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This Week: House E&C Releases Discussion Draft of 21st Century CuresLegislation Ahead of Legislative Hearing… FDA Finalizes Biosimilar GuidanceDocuments… CMS Updates Wage Index and Payment Rates for the Medicare HospiceBenefit

1. Congress

House of Representatives


2. Administration

3. State Activities

4. Regulations Open for Comment

5. Reports

1. Congress


House E&C Releases Discussion Draft of 21st Century Cures Legislation Ahead of Legislative Hearing

On April 29, bipartisan House Energy and Commerce Committee leaders—Chairman Upton, Oversight and Investigations Subcommittee Ranking Member DeGette,full committee Ranking Member Frank Pallone, Jr. (D-NJ), Health Subcommittee Chairman Joe Pitts (R-PA) and Health Subcommittee Ranking Member GeneGreen (D-TX)—jointly released a discussion draft markingcontinued progress in the 21st Century Cures initiative. The five bipartisan leaders said, “We’ve done things differently with 21st Century Cures,taking our time to listen and solicit feedback from every corner of the health care innovation infrastructure. It is because of this transparent,collaborative process that we are now ready and excited to take the next step in boosting research and delivering hope to patients and families allacross the country. The ideas outlined in this draft represent a year of listening and working together to develop a product that we believe will trulyhelp patients and bring our health care innovation infrastructure into the 21st century.”

  • The discussion draft of the 21st Century Cures legislation includes provisions to:
  • Incorporate the patient perspective in the discovery, development and delivery process.
  • Increase funding for the National Institutes of Health, through both reauthorization and $10 billion over five years in mandatory funding, starting in FY 2016.
  • Foster development of treatments for patients facing serious or life-threatening diseases.
  • Repurpose drugs for serious or life-threatening diseases and conditions.
  • Modernize clinical trials.
  • Break down barriers to increased collaboration and data sharing among patients, researchers, providers and innovators.
  • Help the development of personalized and precision medicines so the right patient can receive the right treatment at the right time.
  • Provide for continued work in the telehealth space.
  • Advance a truly interoperable health care system.
  • Provide clarity for developers of software products used in health management and medical care.

A complete section-by-section summary of the discussion draft is available onlinehere.

A one-page summary is available onlinehere.

Moreover, on April 30, the House Energy and Commerce Subcommittee on Health held a legislative hearing on the draft, which included testimonyfrom Dr. Kathy Hudson, Deputy Director for Science, Outreach, and Policy at the National Institutes of Health; Dr. Janet Woodcock, Director of theCenter for Drug Evaluation and Research at the Food and Drug Administration; and Dr. Jeff Shuren, Director of the Center for Devices and RadiologicalHealth at the FDA.

Energy and Commerce HearingExamines Federal Response to Opioid Abuse Epidemic

On May 1, the Energy and Commerce Subcommittee on Oversight and Investigations held a hearing entitled “What is the Federal Government Doing to Combat theOpioid Abuse Epidemic?” The purpose of this hearing was to confer with the relevant Federal agencies regarding their ongoing efforts to combat the opioidabuse epidemic and explore how Federal policies can most effectively incentivize the development and broaden use of evidence-based practices andtreatments. Subcommittee members heard testimony from senior officials representing the full range of multi-disciplinary activities composing the Federalresponse to this epidemic.


Michael Botticelli
Office of National Drug Control Policy

Richard Frank, Ph.D.
Assistant Secretary for Planning and Evaluation
Department of Health and Human Services

Nora Volkow, M.D.
National Institute of Drug Abuse
National Institute of Health

Douglas Throckmorton, M.D.
Deputy Director
Center for Drug Evaluation and Research
U.S. Food and Drug Administration

Debra Houry, M.D., M.P.H.
Director of the National Center for Injury Prevention and Control
Centers for Disease Control and Prevention

Pamela Hyde, J.D.
Substance Abuse and Mental Health Services Administration

Patrick Conway, M.D., M.Sc.
Deputy Administrator for Innovation and Quality & CMS Chief Medical Officer
Centers for Medicare and Medicaid Services

For more information, or to view the hearing, please visitenergycommerce.house.gov.

Legislation Introduced to Repeal “Cadillac” Health Insurance Tax

On April 28, Rep. Joe Courtney (D-CT)introduced legislation that would repeal the excise tax on high-costhealth insurance plans scheduled to go into effect in 2018. Also known asthe “Cadillac tax,” the policy would apply a 40 percent tax on healthinsurance expenditures over $10,200 per person and $27,500 per family. Theexcise tax was established in a later version of the Affordable Care Act,but its scheduled implementation was delayed five years by an effort led byCourtney with 191 House colleagues in 2010. Studies of the policy haveindicated that it will have a disproportionate and rapidly increasing impacton older workers, women and workers in high-cost regions. “The excise tax isa poorly designed penalty that will put a dent in the pocketbooks of manyfamilies and businesses with health insurance plans that do not resemble the‘Cadillac’ plans originally targeted when this policy was adopted—instead,the excise tax will punish people living in higher cost areas, with ‘FordFocus’ level plans,” Courtney said.

House Passes FY 2016 Budget Plan

On May 1, the House adopted the final Republican budget plan for FY 2016 by a vote of 226-197, bringing Republicans one step closer to enacting a spendingblueprint that sets the stage for this summer’s spending bills. The budget framework would balance the budget in 10 years without raising taxes, and pavethe way for sending an Obamacare repeal to the president’s desk. The Senate will take up the measure next week. In astatement, House Budget Committee Chairman Tom Price(R-GA) said, “With today’s passage of a joint House and Senate balanced budget—the first of its kind in over a decade—we have provided a positive visionfor how we can achieve those goals. The credible solutions we are championing will build a brighter future for all Americans.” Of note, the agreement wouldrepeal the Affordable Care Act and replace the measure with “real, patient-centered health care reform.”


Senate HELP Committee Holds Hearing on Medical Innovation in Light of Upcoming Comprehensive Health Care Legislation

On April 28, the Senate Committee on Health, Education, Labor, and Pensions held a hearing to investigate medical advancements and federal researchbeing undertaken to speed up innovation of medical products. “Our task is to help ensure that the exciting new technologies being developed anddiscoveries being made are reaching patients, and that the NIH is equipped to support the early-stage research required to make these advancements andthat the FDA is equipped to handle them,” Chairman Lamar Alexander said in his opening statement. At the hearing, Director of the Center for DrugEvaluation and Research at the Food and Drug Administration Jane Woodcock suggested to members that developing new biomarkers and clinical trialnetworks, among other strategies, could help improve the drug development process; similarly, she also cautioned committee members that giving theagency a “large number of unfunded mandates” would cause review performance to suffer, echoing comments made by the former commissioner before shestepped down in March. The hearing, entitled “Continuing America’s Leadership: The Future of Medical Innovation for Patients,” was held at 10 a.m. in430 Dirksen Senate Office Building.

Witness List

Roderic I. Pettigrew, Ph.D., M.D.
Director, National Institute of Biomedical Imaging and Bioengineering
National Institutes of Health

Christopher P. Austin, M.D.
Director, National Center for Advancing Translational Sciences
National Institutes of Health, Bethesda, MD

Janet Woodcock, M.D.
Center for Drug Evaluation and Research
Food and Drug Administration

Jeffrey E. Shuren, M.D., J.D.
Center for Devices and Radiological Health
Food and Drug Administration

For more information or to watch the hearing, please visit help.senate.gov.

Upcoming: Senate HELP Committee to Hold Hearing on President’s Precision Medicine Initiative

The Senate Committee on Health, Education, Labor, and Pensions will hold a hearing May 5 entitled “Continuing America’s Leadership: Realizing thePromise of Precision Medicine for Patients.” Members of the Committee will hear testimony from Administration witnesses on the progress made on therollout of President Obama’s 2015 Precision Medicine initiative and possible intended patient outcomes expected from its advancement as theinter-agency collaboration in health care research and health IT moves forward. The hearing will be held at 2:30 p.m. EDT in 430 Dirksen Senate OfficeBuilding.

Witness List

Francis Collins, M.D., Ph.D.

National Institutes of Health

Karen DeSalvo, M.D., M.P.H., M.Sc.
National Coordinator for Health Information Technology

Jeff Shuren, M.D., J.D.
Center for Devices and Radiological Health
Food and Drug Administration

For more information or to view the hearing, please visit help.senate.gov.

Bipartisan Legislation Reintroduced in Senate to Exempt Low-risk Medical Software and Apps from FDA Regulation

On April 27, Senators Orrin Hatch (R-UT) and Michael Bennet (D-CO) reintroduced a bill, theMedical Electronic Data Technology Enhancement for Consumers’ Health (MEDTECH) Act, that would exempt low-risk medical software and mobile apps fromFDA regulation and provide greater certainty regarding what software will be regulated by the agency to protect consumers. The bill aims to cut redtape at the Food and Drug Administration (FDA) and help boost innovation in health IT. “New and innovative technology is helping our health careproviders better take care of their patients, and it’s putting tools into the hands of families that help them manage their own health,” Sen. Bennetsaid. “Some of these tools, whether a new app to track your calorie intake or an activity tracker to help you while you exercise, are low risk anddon’t require in-depth oversight by the government. This bill provides certainty for innovators in the life sciences and the FDA as to which devicesand software should be monitored to keep consumers safe.” The legislation was originally introduced in December 2014 and, according to lawmakers, it“limits and clarifies” FDA’s role in regulating administrative software, wellness and lifestyle products, certain aspects of electronic health records,and software that aids health care providers in developing treatment recommendations for their patients.

Bipartisan Senate Bill Introduced to Leave Small Group Expansion Decisions Up to States

On April 29, Senators Tim Scott (R-SC) and Jeanne Shaheen (D-NH), both members of the Senate Committee on Small Business and Entrepreneurship,introduced legislation intended to protect America’s small businesses from potential health care premium increases under the Affordable Care Act (ACA).The Protecting Affordable Coverage for Employees (PACE) Act, S.1099, would allow states to maintain the current small groupmarket definition, which applies to businesses with up to 50 employees, in order to prevent premium increases and disruption for small and mid-sizedbusinesses. “The PACE Act will ensure that small and mid-sized businesses in South Carolina and across America are not faced with drastic premiumincreases as a result of the Affordable Care Act,” said Sen. Scott in a press release. “Working together, we can findcommon sense solutions to stop this major disruption for many mid-sized businesses, their employees and their families.” Under the ACA, on Jan. 1,2016, the definition of the state-based small group markets is scheduled to change from 50 to include employers with up to 100 employees. This changewould require many small and mid-sized businesses to be subject to different rating rules and requirements, with the potential of increasing the healthinsurance premiums for small businesses, their employees and their families. Worth noting, last month Congressmen Brett Guthrie (R-KY) and TonyCárdenas (D-CA) led a bipartisan group of lawmakers in introducing the PACE Act, H.R. 1624, in the House of Representatives.

2. Administration

Changes to the Requirements for Part D Prescribers — Interim Final Rule

On May 1, CMS issued aninterim final rule with comment period that would revise requirements related to beneficiary access to covered Part D drugs. Underthese revised requirements, pharmacy claims and beneficiary requests for reimbursement for Medicare Part D prescriptions, written by prescribers other thanphysicians and eligible professionals who are permitted by state or other applicable law to prescribe medications, will not be rejected at the point ofsale or denied by the plan if all other requirements are met. In addition, a plan sponsor will not reject a claim or deny a beneficiary request forreimbursement for a drug when prescribed by a prescriber who does not meetthe applicable enrollment or opt-out requirement without first providingprovisional coverage of the drug and individualized written notice to thebeneficiary. This interim final rule with comment period also revisescertain terminology to be consistent with existing policy and to improveclarity. The regulations are effective on June 1, 2015.

Medicaid & CHIP: February 2015 Monthly Applications, Eligibility Determinations and Enrollment Report

According to areport issued May 1, over 70.5 million individuals were enrolled inMedicaid and CHIP in February 2015. This enrollment count is point-in-time(on the last day of the month) and includes all enrollees in the Medicaidand CHIP programs who are receiving a comprehensive benefit package. Of thattotal, 561,609 additional people were enrolled in February 2015 as comparedto January 2015 in the states that reported comparable February and January2015 data. Looking at the additional enrollment since October 2013 when theinitial Marketplace open enrollment period began, among the 49 statesreporting both February 2015 enrollment data and data from July-September of2013, over 11.7 million additional individuals are enrolled in Medicaid andCHIP as of February 2015, an approximately 20.3 percent increase over theaverage monthly enrollment for July through September of 2013. (Connecticutand Maine are not included in this count.)

FDA Finalizes Biosimilar Guidance Documents

On April 28, FDA finalized three guidance documents, which are intended to assist drugmakers who are developing follow-on versions of branded biologicaldrugs under an abbreviated pathway established by the Biologics Price Competition and Innovation Act of 2009 (BPCI Act), following public comments on theFebruary 2012 drafts. The first two guidances lay out the scientific and quality considerations for demonstrating biosimilarity to a reference product, andthe third contains questions and answers on the biosimilar pathway. The BPCI Act amends the PHS Act and other statutes to create an abbreviated licensurepathway in Section 351(k) of the Public Health Services Act for biological products shown to be biosimilar to or interchangeable with an FDA-licensedbiological reference product (see Sections 7001 through 7003 of the Patient Protection and Affordable Care Act (Affordable Care Act) (Public Law 111-148)).

Biosimilars: Questions and Answers Regarding Implementation of the Biologics Price Competition and Innovation Act of 2009

This guidance provides answers to common questions from sponsors interested in developing proposed biosimilar products, biologics license application (BLA)holders and other interested parties regarding FDA’s interpretation of the BPCI Act. Specifically, the Q&A addresses four main topics: QualityConsiderations in Demonstrating Biosimilarity of a Therapeutic Protein Product to a Reference Product, Scientific Considerations in DemonstratingBiosimilarity to a Reference Product, Biosimilars: Questions and Answers Regarding Implementation of the BCPI Act, and Formal Meetings Between the FDA andBiosimilar Biological Product Sponsors or Applicants.

Scientific Considerations in Demonstrating Biosimilarity to a Reference Product

This guidance is intended to assist sponsors in demonstrating that a proposed therapeutic protein product is biosimilar to a reference product for purposesof the submission of a marketing application under Section 351(k) of the Public Health Service Act (PHS Act). Although the 351(k) pathway applies generallyto biological products, this guidance focuses on therapeutic protein products and gives an overview of important scientific considerations fordemonstrating biosimilarity. The scientific principles described in this guidance may also apply to other types of proposed biosimilarbiological products. View the guidance: 

Quality Considerations in Demonstrating Biosimilarity of a Therapeutic Protein Product to a Reference Product

This guidance describes the Agency’s current thinking on factors to consider when demonstrating that a proposed therapeutic protein product (hereinafterproposed product or proposed biosimilar product) is highly similar to a reference product licensed under Section 351(a) of the Public Health Service Act(PHS Act) for the purpose of submitting a marketing application under Section 351(k) of the PHS Act. Specifically, this guidance is intended to providerecommendations to sponsors on the scientific and technical information for the chemistry, manufacturing and controls (CMC) section of a marketingapplication for a proposed product submitted under Section 351(k) of the PHS Act. View the guidance:

CMS Releases Figures on Medicare Part D Spending and Prescribing Trends

The Centers for Medicare & Medicaid Services (CMS) released a newdatasetand correspondingfact sheet April 30that details information on the prescription drugs that individual physicians and other health care providers, including dentists and nursepractitioners, prescribed in 2013 under the Medicare Part D Prescription Drug Program. The dataset describes the specific medications prescribed andstatistics on their utilization and costs and is intended to provide key information to consumers, providers, researchers and other stakeholders tohelp drive transformation of the health care delivery system. It provides data on more than one million distinct health care providers who collectivelyprescribed $103 billion in prescription drugs under the Part D program. CMS created the new dataset using information from the Prescription Drug EventStandard Analytic File (SAF), which has final-action claims submitted by Medicare Advantage Prescription Drug (MA-PD) plans and by stand-alonePrescription Drug Plans (PDPs). CMS officials cautioned that “the new drug data reflected raw prescription claim numbers and shouldn’t be used to drawconclusions about the quality of care delivered by individual providers. Worth noting, according to the CMS analysis, the top-spending drug in 2013 wasfor Nexium®, used to treat heartburn, at $2.53 billion, and the most prescribed drug in the program was Lisinopril, a hypertensiontreatment, with 36.9 million claims. As it stands, approximately 68 percent of all Medicare beneficiaries are enrolled in the Part D program, or about36 million people.

HHS OIG to CMS: Issue Guidance to Clarify Definition of “Operating Expenses” to Avoid Misuse of ACA Funding for State Exchanges

Inwarning memorandum dated April 27 from the Department of Health and HumanServices, Inspector General Daniel Levinson to Acting Centers for Medicare and Medicaid Services (CMS) Administrator Andy Slavitt, the oversight bodyrelayed concerns that without more detailed guidance from CMS, state-based marketplaces might have used and might continue to use, establishment grantfunds for operating expenses after Jan. 1, 2015, contrary to existing funding provisions with the Affordable Care Act (ACA). CMS plans to issue formalguidance on what qualifies as a health insurance exchange’s “operating expenses”—and therefore not allowed to be funded by federal establishmentgrants—following a warning from the HHS Inspector General about potentially illegal exchange spending. “We have observed that some state basedmarketplaces (SBMs) face uncertain operating revenues in 2015 and future years,” Inspector Levinson wrote. Whether the agency intends to fast-trackthose details by putting out a frequently asked question response or a bulletin prior to the exi