Washington Healthcare Update

April 3, 2017

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This Week: House moderate and conservative Republicans tried talking to each other but are unable to agree on how to raise “repeal and replace” from the ashes… Drug prices begin to take the focus again… Others move on to focusing on CHIP and other health issues.

1. Congress



2. Administration

3. State Activities

4. Regulations Open for Comment

5. Reports

1. Congress


House and Senate Democrats Introduce Legislation to Stop Rising Drug Prices

On March 29, Democrats in the House and Senate introduced companion billsto address drug prices. The bill was introduced in the Senate by 15Democrats including Sens. Al Franken (D-MN), Dick Durbin (D-IL) andElizabeth Warren (D-MA). Bernie Sanders (I-VT) also signed on. A companionbill was introduced in the House by Reps. Elijah Cummings (D-MD), JaniceSchakowsky (D-IL), Peter Welch (D-VT) and Rosa DeLauro (D-CT).

The legislation includes a variety of policies from government pricecontrols, drug rebates, disclosure requirements for drug makers’ researchand marketing spending, cost-sharing caps, exclusivity cuts and drugadvertising restrictions.

Transparency is one of the four titles in the bill. Drug companies would beforced to report, by product, their costs for research and development,manufacturing and acquisitions, and HHS would publicly post thatinformation. Companies would also have to report other information, such asfederal investments and revenues. Another transparency section wouldrequire independent charity assistance programs to disclose the amount ofpatient assistance provided for drugs that are donated to those charities.

CMS would be directed to negotiate drug prices, and expensive drugs wouldbe prioritized. The HHS inspector general would monitor drug prices forspikes and take steps to prevent price gouging. The bill would also speedthe closing of the Part D coverage gap by two years, and it would letwholesalers and pharmacies import drugs made at FDA-inspected facilities,starting in Canada. Drug companies would have to provide rebates on drugstaken by dual-eligible beneficiaries for which plans receive low-incomesubsidies.

The bill would limit how much plans can make individuals shoulder the costof drugs. Cost sharing would be capped at $250 a month for each individualand $500 a month for families in either qualified health plans or employerplans.

To spur the development of antibiotics for difficult-to-treat infections,the bill would create a $2 billion fund at the National Institutes ofHealth for companies that develop antibiotics that treat serious andlife-threatening bacterial infections. To get the reward, companies wouldhave to sell products at a “reasonable price” and share clinical data.

The bill would publicly fund clinical trials by creating a clinicalresearch center at NIH, as well.

Lastly, the legislation reduces the exclusivity periods that drug companiescurrently receive.


Pence Casts Tie-Breaking Vote to Roll Back Planned Parenthood Protections

On March 30, Vice President Mike Pence broke a 50-50 tie in the Senate toroll back an Obama administration regulation and allow states to withholdfederal family planning funding from Planned Parenthood and other abortionproviders.

Republican Sen. Johnny Isakson (GA), who is recovering from back surgery,and the vice president were summoned to help pass the measure. All theSenate Democrats opposed the rollback, along with Republican Sens. SusanCollins (ME) and Lisa Murkowski (AL), who have long fought against blockingfunding for the family planning organization.

The bill reverses an HHS regulation, finalized by the Obama administrationin December, which prohibited states from restricting Title X familyplanning grants to Planned Parenthood and other abortion providers. Title Xgrants cover contraception, STD screenings and treatments but cannot beused to pay for abortion services.

Thirteen Republican-controlled states restricted the family planning grantsto Planned Parenthood before the Obama administration issued theregulation. Federal funding for abortion is already prohibited under theHyde Amendment. Republicans say the bill is not an attack on PlannedParenthood and is intended to uphold states’ rights.

Republican Sens. Introduce Legislation for Temporary Obamacare Relief

On March 29, Tennessee Sens. Lamar Alexander, chairman of the SenateHealth, Education, Labor and Pension Committee, and Bob Corkerintroduced legislationdesigned to help Obamacare customers who have no insurance plans to choosefrom on the health insurance exchanges.

Roughly 40,000 residents of the Knoxville area are in this predicamentafter the sole insurer selling exchange plans in that market, Humana,announced that it is pulling out of the market for 2018. Roughly one-thirdof counties nationwide currently have just one insurer selling plans on theexchange.

The Alexander-Corker legislation would allow individuals with no exchangeoptions to use their subsidies to help purchase coverage off of theexchangecurrently, subsidies can only be applied to health planspurchased through state and federal health insurance marketplaces set upunder the law. It would also waive the individual mandate penaltyfor individuals in that situation.

Senate Democrats Ask Trump to Rescind Executive Order for ACA Repeal

On March 29, 44 Senate Democratsaskedthe Trump administration to abandon all efforts to repeal the AffordableCare Act and withdraw its January 20 executive order to unravel the law.

The letter stated that rescinding the order—in which President Donald Trumpcalled on his administration to undo as much of the law as possible butprovided few specifics—could serve as a first step toward bipartisanship onObamacare.

“While we would welcome your sincere interest in bipartisan work to improvequality, lower costs, and expand coverage, we are concerned by your recentstatement indicating it would be a good thing to make the ACA ‘explode,’which would hurt millions of Americans,” the Democrats wrote to Trump.“Instead, we urge you to use your executive authority to support a stable,competitive insurance marketplace.”

Moderate Democratic Sens. Joe Manchin (WV), Jon Tester (MT) and HeidiHeitkamp (ND), as well as Independent Angus King (ME), did not sign theletter.

Sen. McCaskill Launches Investigation into Opioid Manufacturers’ SalesPractices

Sen. Claire McCaskill (D-MO) haslaunched an investigationinto whether the business practices of the country’s top-five opioidmanufacturers contributed to the overutilization of the drugs and theresulting addiction epidemic.

McCaskill sent letters to Purdue, Johnson & Johnson, Insys, Mylan andDepomed on March 28, asking for information related to the sales, marketingand education strategies these companies used to promote opioid use.

“This epidemic is the direct result of a calculated sales and marketingstrategy major opioid manufacturers have allegedly pursued over the past 20years to expand their market share and increase dependency on powerful—andoften deadly—painkillers,” McCaskill wrote. Many opioid makers have facedlegal penalties for these actions, but McCaskill is concerned drugcompanies are still inappropriately marketing opioids today.

McCaskill is seeking marketing and business plans, including those forconsumer and physician marketing developed since January 2012. She alsowants to know what quotas the companies put in place for salesrepresentatives who recruited physicians to speak favorably about thedrugs. And she want details on funding the companies contributed tothird-party pain advocacy groups.

The investigation comes as the White Houseissued an executive orderthat aims to conduct a review of the opioid crisis and take new action tocombat abuse.

2. Administration

FDA Nominee to Recuse Himself From Decisions on Certain Companies

President Donald Trump’s nominee to lead the FDA, Scott Gottlieb, willrecuse himself for one year from agency decisions on more than 20companies, including GlaxoSmithKline and Bristol-Myers Squibb. Thisannouncement came as the Senate HELP Committee announced itwill hold a hearingon Gottlieb’s nomination on April 5.

Gottlieb is a board member or adviser to various drug companies, and hefunds the industry through roles at a venture capital firm, New EnterpriseAssociates, and an investment bank, T.R Winston & Company. His closeties to the drug industry will likely draw intense scrutiny during hisconfirmation process, particularly from Senate Democrats.

For instance, according to financial disclosures, Gottlieb indicatedGlaxoSmithKline has paid him more than $87,000 for consulting work since2016. In 2015, he received nearly $200,000 in payments from eightpharmaceutical companies, according to a federal database trackingdrug industry payments.

Gottlieb earned more than $3 million between 2016 and March 1, according todisclosure forms filed with the Office of Government Ethics. That includesa $1.85 million retainer bonus from T.R. Winston. He was also paid $210,916by the conservative American Enterprise Institute.

White House Executive Order Calls for Agencies to Act on Opioid Crisis

The White House recently released anexecutive orderestablishing “the President’s Commission on Combating Drug Addiction andthe Opioid Crisis.” The order instructs four federal agencies to conduct areview of the opioid crisis and recommend new action within 90 days.

Under the order, President Donald Trump would create a high-levelcommission for “combating opioid abuse, addiction and overdose.” Thecommission would include Attorney General Jeff Sessions, HHS Secretary TomPrice, VA Secretary David Shulkin, Defense Secretary James Mattis and asmany as five other stakeholders who are not federal employees.

New Jersey Gov. Chris Christie, a Trump ally who has made the opioid crisisa policy priority, will chair the commission.

The draft order calls for the participating agencies to:

  • Review the funding and availability of treatment;
  • Determine best practices for prevention and recovery;
  • Evaluate federal programs and the U.S. health system to identify regulatory barriers or ineffective initiatives; and
  • Recommend changes to federal criminal law or other processes.

The commission would review the agencies’ findings and issuerecommendations to agency heads, who would then issue their own directives.

Trump Administration Lays Out Major Cuts to Health Agencies

Overall, the Trump administration has proposed $18 billion in cuts acrossmore than 20 federal departments for the current fiscal year,according toa proposal sent to appropriatorson Friday.

The proposed NIH cut is one of the three largest reductions to individualagencies spelled out in the document—but the cuts are unlikely to beimplemented. House appropriators have said that it is too late for theTrump administration to request drastic cuts to agencies this year.

The proposed reductions would come from long-settled discretionary spendingbills and could prompt a major showdown with only a month left before thedeadline to keep the government funded.

The NIH cuts would include a $1.18 billion reduction in research grants andthe elimination of $50 million in spending on newInstitutional Development Award (IDeA) grants. The White House also would cut more than $300 million from the CDC, withabout $100 million coming from its HIV/AIDS programs and the remaindercoming from various public health research programs, initiatives andpreparedness.

The White House also is calling for a $50 million cut to the Agency forHealthcare Research and Quality (AHRQ)—roughly 15 percent of the agency’sbudget—by reducing new grants and a $40 million cut to FDA through staffingsavings.

The Republican chair of the House Appropriations Labor-HHS subcommitteesaid he will not accept the proposed cuts to the NIH and CDC. Chairman TomCole said during a hearing that reducing funding to the NIH and CDC wouldleave the nation less secure, and that he will push for major revisions tothe budget plan.

HHS Reportedly Working on Drug Pricing Plan

HHS Secretary Tom Price told House appropriators the agency is partneringwith the White House on a strategy for tackling drug pricing reform,emphasizing Trump’s commitment to bringing down the cost ofpharmaceuticals. However, he offered no specifics on how the administrationmight accomplish that. Price has yet to endorse permitting Medicare tonegotiate drug prices or the importation of medicines from other countries,two ideas that Trump has floated as potential solutions for bringing pricesdown.

CMS Delays Reporting Deadline for New Lab Fee Schedule

CMS delayed by 60 days the deadline for certain laboratories to reportprivate payer data for the new lab fee schedule, the agency announced March30. CMS delayed the deadline because many labs won’t be able to give theagency a complete set of information by March 31. The American ClinicalLaboratory Association is pleased with CMS’s decision.

For more information,click here.

CMS Issues Final Rule on Medicaid Disproportionate Share Hospital (DSH)Payments

On March 30, CMS issued a final rule clarifying federal requirementsregarding the treatment of third-party payers in determining thehospital-specific Medicaid DSH payment limit, which is set by statute as ahospital’s “uncompensated costs” incurred in providing hospital services toMedicaid and uninsured patients. The final rule makes clearer the agency’sexisting policy that uncompensated costs include only those costs forMedicaid-eligible individuals that remain after accounting for all paymentsreceived by or on behalf of Medicaid-eligible individuals, includingMedicare and other third-party payments. This is consistent with thestatutory requirements governing Medicaid DSH and applicable limits.

To see the final rule,click here.

For more information,click here.

3. State Activities

Arkansas: Lawmakers Vote to Continue Funding Medicaid Expansion Model

Arkansas state lawmakers have voted to keep funding the state’s Medicaidexpansion model after the legislation initially fell short of the necessaryvotes in the state House and Senate. The Arkansas Legislature has toannually appropriate funding for Medicaid expansion with a three-fourthsmajority of each chamber. Gov. Asa Hutchinson plans to file a new requestto the federal government to make a handful of conservative changes to itsprogram, including a work requirement and limiting eligibility to thosewith incomes up to the federal poverty line, instead of 138 percent of theFPL. He will call a special session for lawmakers to consider the proposedrevisions.

Iowa: New Managed Care Initiative Could Cost Much More Than Expected

Iowa’s decision to help insurance companies stem financial losses from thestate’s new Medicaid managed care program could end up costing the federalgovernment $225 million, on top of $10 million for the state. The newmanaged care initiative, which has been highly contested, began last April.The managed care companies involved say they have been spending more moneybecause Medicaid enrollees have utilized more medical services thanexpected. Gov. Terry Branstad’s office continues to argue that the shift tomanaged care is beneficial to the state both in terms of budget savings andcare for low-income enrollees.

Kansas: Kansas Governor Vetoes Medicaid Expansion

On March 30, Kansas Gov. Sam Brownback vetoed a bill to accept Obamacare’sMedicaid expansion, saying the legislation “burdens the state budget withunrestrainable entitlement costs.”

The legislation, guided by GOP legislators, passed the Kansas state Houseand Senate by overwhelming margins. But it is not clear whether they canoverride Brownback’s veto. The bill was just a few votes short of aveto-proof majority in each chamber.

Brownback said in a veto message that it was unwise to expand Medicaid whenRepublicans are still trying to overhaul Obamacare. He also said he blockedthe legislation because it increased Medicaid funding for PlannedParenthood.

Minnesota: Minnesota Approves Obamacare Stabilization Program

On March 30, the Minnesota legislature passed legislation to set up areinsurance program that would spend $271 million each year in 2018 and2019, similar to what Alaska created last year to prevent its Obamacareexchange from collapsing. Minnesota’s individual market saw skyrocketingpremiums this year, prompting the state’s Democratic governor to issue arare criticism of Obamacare at the height of the presidential campaign.

The new Minnesota program, which would reimburse insurers for theirmost expensive patients, would be funded through state dollars and anexisting health care fund. To establish the program, Minnesota would alsoneed the Trump administration to approve an Obamacare waiver that letsstates enact their own health reforms. If approved, the federal governmentwould potentially pick up most of the program’s cost.

Gov. Mark Dayton will announce today whether he plans to sign or veto thelegislation. HHS Secretary Tom Price has encouraged states to apply for1332 waivers to set up reinsurance programs or high-risk pools to stabilizetheir markets.

Nevada: Nevadans Working to Decrease Insulin Prices

Increasing insulin prices have prompted Nevadans to try to take on the drugindustry. Democratic lawmakers, union leaders and other supporters ofSenate Bill 265want to rein in prices by mandating that pharmaceutical companies reimburseNevada patients for insulin costs that go above the highest price paid inother developed counties and if the price increases are higher thaninflation would warrant. In addition to requiring manufacturers to disclosethe research costs of making drugs for diabetics, it would force them togive government health agencies and insurers a 90-day notice beforeincreasing prices above the previous year’s inflation rate.

4. Regulations Open for Comment

CMS Proposes Average 0.25 Percent Hike for Medicare Advantage Plans

On Feb. 1, the Trump administration issued guidance that proposes updatesto the methodologies used to pay Medicare Advantage plans and Part Dsponsors. The guidance calls for raising Medicare Advantage payments anaverage of 0.25 percent.

Health plans take in roughly $200 billion a year from the government toprovide care for seniors enrolled in private Medicare plans. There arecurrently more than 18 million people enrolled in Medicare Advantage,accounting for roughly a third of all of the program’s beneficiaries. Morethan 1 million seniors have been added to private Medicare plans in thepast year, continuing a trend of robust growth that goes back a decade.

“These proposals will continue to keep Medicare Advantage strong and stableand provide high quality, affordable care to seniors and people living withdisabilities,” said Patrick Conway, acting administrator of the Centers forMedicare and Medicaid Services.

Obamacare included major cuts to Medicare Advantage—America’s HealthInsurance Plans puts the total figure at $200 billion—that were designed tobring payments more in line with traditional government-run Medicare. Lastyear, the federal government paid private plans an average of 102 percentof traditional fee-for-service costs per member.

UnitedHealth Group and Humana are the biggest national players, accountingfor roughly 40 percent of the Medicare Advantage market in 2015.

CMS will accept comments until March 3 and the final notice will be postedon April 3.

To read a fact sheet on the rate proposal,click here.

CMS Announces RFI for Input on Improving Pediatric Care

CMS announced Feb. 27 a Request for Information (RFI) seeking input onapproaches to improve pediatric care, specifically to improve the qualityand reduce the cost of care for children and youth enrolled in Medicaid andthe Children’s Health Insurance Program (CHIP). CMS is also exploringconcepts that encourage pediatric providers to collaborate withhealth-related social service providers at the state, tribal and locallevels and share accountability for health outcomes for children and youthenrolled in Medicaid and CHIP.

CMS is asking stakeholders to submit comments via email toHealthyChildrenandYouth@cms.hhs.govby 11:59 p.m. on March 28, 2017.

For more information about the RFI, visit theCMS Innovation Center website.

FDA Considers Establishing New Office of Patient Affairs

The FDA is considering establishing a new Office of Patient Affairs thatwould centralize its work on patient involvement in the review and approvalof drugs and medical devices, according to aMarch 14 noticein the Federal Register.

Comments on the new office are due by June 12, 2017.

FDA Proposes 1,000 Medical Devices to Exempt From PremarketNotification

On March 14, FDA took one of its first actions to begin implementing the21st Century Cures Act, byproposingmore than 1,000 medical devices it will exempt or partially exempt from thepremarket review process. The devices on the list are sufficiently wellunderstood and do not present risks that require premarket notification toprovide a reasonable assurance of safety and effectiveness, FDA said. Theagency will finalize the list after a 60-day public comment period.Comments are due by May 15, 2017.

FDA Extends Comment Period on Biosimilar Interchangeability Guidance

FDA is extending the public comment period for itsdraft guidanceoutlining how biosimilar sponsors can demonstrate that their products areinterchangeable with other biologics, following extension requests from toptrade associations.

The agency laid out in a January 2017 draft guidance its first attempt atcodifying the requirements that sponsors must satisfy to demonstrateinterchangeability. The agency said it would make case-by-casedeterminations of interchangeability, but indicated it would requirestudies measuring the impact of switching on clinical pharmacokinetics andpharmacodynamics.

The Biotechnology Innovation Organization (BIO), Pharmaceutical Researchand Manufacturers of America and Covington & Burling all requestedcomment period extensions, according to documents posted onRegulations.gov.

The comment period, which was set to close on March 20, will be extended 60days until May 19.

CMS Announces Pediatric Care Improvement Request for Information Extension

On March 28, CMS announced that it is extending the deadline for commentson the request for information (RFI) on approaches to improve pediatriccare announced on Feb. 28, 2017. The deadline for receipt of comments hasbeen extended to April 7, 2017 at 11:59 p.m.

Through this RFI, CMS is specifically seeking input on approaches toimprove the quality and reduce the cost of care for children and youthenrolled in Medicaid and the Children’s Health Insurance Program (CHIP).Furthermore, CMS is exploring concepts that encourage pediatric providersto collaborate with health-related social service providers at the state,tribal and local levels and share accountability for health outcomes forchildren and youth enrolled in Medicaid and CHIP.

Comments and questions can be submitted via email toHealthyChildrenandYouth@cms.hhs.govby 11:59 p.m. on April 7, 2017.

For additional information about the RFI, please visit theCMS Innovation Center website.

5. Reports

GAO Releases Review of PPACA’s Financial Statement Audit

On March 31, GAO released its review of the Patient-Centered OutcomesResearch Institute’s (PCORI) fiscal year 2016 financial statement audit.PCORI was created in 2010 by the Patient Protection and Affordable Care Act(PPACA) as a federally funded, nonprofit corporation. According to PPACA,PCORI’s purpose is to assist patients, clinicians, purchasers, andpolicymakers in making informed health decisions by advancing the qualityand relevance of evidence concerning the manner in which diseases,disorders, and other health conditions can effectively and appropriately beprevented, diagnosed, treated