Washington Healthcare Update

April 9, 2018

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This Week: House and Senate committees release more legislation on opioids…Talk of taking back some of the spending from the just-passed budget deal…CMS releases final Medicare Advantage rule

1. Congress



2. Administration

1. Congress


House Republican Leadership Looks at Rescinding Spending in the Budget Deal

Because the conservatives in the House were unhappy with the size of the budget deal recently enacted, President Donald Trump and congressional Republicans are considering forcing votes that would cut billions of dollars in spending from that deal. Under the 1974 Budget Act, which provides the rules for budget legislation, a rescission resolution could pass the Senate on a simple majority vote. Some Senate Republicans could balk at some cuts after they recently supported the omnibus spending bill.

It is not clear what health programs might be included in a recession package or when the House would vote on such a package. The White House had proposed reductions in such programs as NIH funding as part of the president’s FY 2019 budget that the budget deal ignored. The White House also proposed nearly $15 billion in budget cuts as part of last year’s hurricane relief package, which were never acted upon.

Trump has demanded line-item veto power to cut out spending programs preferred by Democrats and a line-item veto has been declared unconstitutional in the past. Trump had threatened to veto the $1.3 trillion omnibus spending package before eventually signing it. White House lawyers are reportedly exploring ways to allow a new line-item veto to pass constitutional muster.

Democrats slammed GOP leaders and the White House for floating the rescission package right after pushing through a budget deal, saying Republicans were simply reacting to negative news coverage by conservative outlets.

House and Energy Commerce Committee Releases More Bills on Opioids

As the House Energy and Commerce Committee moves closer toward a markup concerning opioid legislation, two more proposals have been released. One of the bills, for example, requires each state’s Medicaid program to integrate a prescription drug-monitoring program into Medicaid providers’ clinical workflow. Another bill requires the Children’s Health Insurance Program to cover treatment of mental illness and substance use disorders.

The committee plans to have legislation on the floor of the House before the Memorial Day recess.


HELP Committee Releases Draft Opioid Bill

The Senate HELP committee released a draft on their approach on opioids. The committee also has scheduled a hearing for April 11 and are hopeful that they can have legislation passed before summer. 

The Senate draft does not include new funding, but does authorize the creation of a number of new grant programs and the addition of funding to existing grant programs. If the bill passed, appropriators would need to pass additional legislation to fund the programs. The omnibus spending bill that was signed into law last month already provides an additional $4 billion in new opioid funding for 2018.

The discussion draft would:

  1. Reauthorize a grant program created under the 21st Century Cures Act that provided states $1 billion to fight opioid abuse over two years. The language tweaks the funding formula, prioritizing states with the highest overdose death rates, including West Virginia, New Hampshire and Ohio, as well as setting aside money for tribes that have been devastated by drug abuse.
  2. Authorize new grants for communities to set up comprehensive opioid recovery centers that are required to provide medication-assisted treatment, counseling and any inpatient treatment or housing services as needed.
  3. Require HHS to issue guidance on best practices for operating recovery housing.
  4. Make permanent the ability for nurse practitioners and physician assistants to prescribe drugs. Congress had allowed them to write the prescriptions through 2021.
  5. Codify physicians’ ability to prescribe opioid treatment buprenorphine to up to 275 patients. Current law allows for a waiver for doctors to treat 275 patients.
  6. Provide flexibility for NIH to move faster on opioid-related research. This would allow NIH proactively to approach companies or universities instead of waiting for them to submit grant requests.
  7. Task the FDA with spurring new medications by updating the development process for new non-addictive and non-opioid pain medicines. 
  8. Require FDA to develop guidance on clinical trial designs for new pain medicines, encourage companies to develop drugs to reduce or eliminate use of opioids, and clarify requirements for getting a product approved with a claim that a medicine is as effective at controlling pain as opioids or allows for a reduction in the amount of opioids a patient needs.  

2. Administration

HHS Secretary Names Staff

HHS Secretary Alex Azar announced on March 29 that David Best will be HHS senior advisor to the secretary for drug pricing reform. Best is a former executive with CVS Caremark. Azar also named Brett Giroir senior advisor to the secretary for mental health and opioid policy. Giroir is a Texas pediatrician who was CEO of Texas A&M’s Health Science Center from 2013 to 2015. He also is a four-star admiral in the U.S. Public Health Service Commissioned Corps, and from 2006 to 2008 he led the Defense Sciences Office at the Defense Advanced Research Projects Agency, a Pentagon agency that develops new military technologies.

The two appointments are part of the secretary’s plans for his two top initiatives: reducing drug prices and combating the epidemic of opioid addiction.

CMS Criticizes Budget Law’s Donut Hole Changes

CMS officials criticize the new budget law for making brand drug makers pay 70 percent of Part D donut-hole costs while plans cover 5 percent of those beneficiary costs. They worry that the new law could lead to higher drug costs by removing plans’ incentive to negotiate cheaper prices.

“[W]e have significant concerns about the impact these changes will have on drug costs under Part D in 2019 and future years, particularly as plan liability in the gap significantly decreases for brand name drugs beginning in 2019,” states the Medicare Advantage and Part D rate notice published by CMS April 2.

As part of the budget deal, Congress increased drug manufacturers’ share of coverage-gap costs from 50 percent to 70 percent, leaving plans to cover just 5 percent. CMA officials will monitor the long-term effects of the law because of concerns over long-term effects on negotiations.

Democrats pushed the donut-hole measure because it closes the coverage gap a year earlier and it reduces Medicare spending by lowering the premiums that the government subsidizes. The law is expected to lower premiums because plans base premiums on how much they pay for drug coverage, and now they don’t have to pay as much.

Some worry that Medicare Part D allows drug companies to raise prices because taxpayers cover the brunt of catastrophic costs. Medicare pays 80 percent of the cost of drugs during catastrophic coverage, plans pay 15 percent and beneficiaries pay 5 percent. Then, Medicare risk corridors insure plans against high aggregate drug spending. Congressional Medicare advisors say reinsurance accounts for a fast-growing share of Part D spending, from 19 percent in 2007 to 39 percent in 2014.

CMS Releases Medicare Advantage Rule and Part D Call Letter 

On April 2, CMS finalized the Medicare Advantage and Part D Call Letter and rate notice. In that rule, CMS finalized a broader interpretation of what counts as a supplemental benefit that Medicare Advantage plans can provide in 2019. CMS says that the recent budget law—which expands supplemental benefits for chronically ill beneficiaries in 2020—doesn’t affect CMS’s interpretation of the supplemental benefit standard. CMS says it will provide guidance that will differentiate between the newly allowed supplemental benefits for 2019 and the new benefits available for the chronically ill in 2020.

Under CMS’s new interpretation, MA plans could provide items or services as supplemental benefits if they are used to diagnose, prevent or treat an illness or injury, compensate for physical impairments, act to ease the impact of an injury or health condition or reduce avoidable emergencies and health care use. CMS says in a fact sheet this will effectively increase the number of allowable supplemental benefit options.

CMS says the primary purpose of an item or service will be determined by its typical usage by most people and patterns of care. The items and services must be medically appropriate and recommended by a provider as part of a care plan if not directly offered by one. The agency says it will provide detailed guidance to plans on this before the 2019 bid submissions are due.

See the rule.

CMS Says They Can Require Plans to Share Rebates

CMS officials maintain they can require plans to share rebates and pharmacy price concessions with beneficiaries at the pharmacy counter. Administrator Seema Verma said April 2 that policy is still being considered but declined to say when CMS will decide whether to propose such a rule. Congress is split, even among Republicans, over whether forcing plans to share rebates and pharmacy price concessions with beneficiaries would be considered an interference in negotiations between brand drug makers and plans.

“While we are not finalizing any policy in this area at this time, we appreciate the detailed submissions from stakeholders and we are evaluating these comments as we consider future proposals,” Verma said April 2.

In a proposed rule, CMS included a Request for Information to gain input on sharing drug rebates and pharmacy price concessions with seniors. Several Republicans, mostly in the House, hinted that those proposals would amount to government interference in negotiations between drug makers and plans. Republican leaders of the Senate Finance, House Energy & Commerce and Ways & Means committees asked CMS not to include those policies in the final rule because those policies were not included in the proposed rule and there would be no public comment period specifically on them. Separately, House Ways & Means health subcommittee Chair Peter Roskam (R-IL) and Rep. Sam Johnson (R-TX) spearheaded a letter with four other Energy & Commerce and Ways & Means Republicans that made similar arguments. Both letters emphasized that CMS should avoid violating the Part D Noninterference Clause, but they didn’t outright say the policies in the Request for Information would amount to that violation.

Conversely, bipartisan groups of 80 House members and 20 senators signed letters urging CMS to include the point-of-sale policies in the final rule.

Pharmacy benefit managers’ representatives met with administration officials in February to argue against proposals in that Request for Information, according to the White House Office of Management and Budget website. They said forcing plans to share all rebates with beneficiaries would cause a 22 percent premium increase for drug coverage.

CMS Releases Third Year of Home Health Utilization and Payment Data

CMS has posted the third annual release of the Home Health Agency Utilization and Payment Public Use File (Home Health Agency PUF) with data for 2015. The Home Health Agency PUF presents summarized information on services provided to Medicare beneficiaries by home health agencies. It contains information on utilization, payment (Medicare payment and Medicare standardized payment), submitted charges, and demographic and chronic condition indicators organized by CMS Certification Number (6-digit provider identification number), Home Health Resource Group (HHRG) and state of service.

The 2015 PUF has information for 10,526 home health agencies, over 6 million claims and $18 billion in Medicare payments for 2015. CMS protects beneficiaries’ personal information in all public data releases.

Also being released today are updated versions of the Home Health Agency PUFs for calendar years 2013 and 2014. These new versions reflect changes made to the underlying enrollment data source that is used to create the PUFs.

View the updated 2015 data and supplemental information.

FDA Research Shows Little Need for Opioids After Many Surgeries

New FDA research shows one day of opioids is sufficient to control pain for many common surgical procedures, according to a new agency analysis of nearly 1 million patients. Most patients are given more than a one-day prescription.

FDA is working on how to give doctors better prescribing guideposts for pain control while reducing the potential for addiction. Commissioner Scott Gottlieb, who addressed the National Rx Drug Abuse and Heroin Summit in Atlanta last Wednesday, acknowledged a need for flexibility—some patients getting a hip replacement or heart surgery may need a longer duration of opioids, for example.

FDA Head Calls on Social Media and Others to Help in Fight Against Opioid Misuse

FDA Commissioner Scott Gottlieb said on April 4 that internet service providers and social media companies should join the fight against the opioid crisis by cracking down on illegal online sales of drugs like fentanyl that are fueling the epidemic.Gottlieb said there’s ample evidence that narcotics are being advertised and sold online and internet companies simply aren’t taking practical steps to find and take down these illegal listings for opioids. Many illegal drugs entering the U.S., including products laced with lethal doses of synthetic opioid fentanyl, are being bought online and shipped in the mail, Gottlieb said at a national opioid crisis forum in Atlanta.“Although the sale of prescription opioids without a valid prescription is illegal, the FDA continues to see these products in the packages we inspect,” Gottlieb said in prepared remarks. “And we find offers to purchase opioids all over social media and the internet, including Twitter, Facebook, Instagram, Reddit, Google, Yahoo and Bing.”A recent congressional investigation found that it was easy to find fentanyl advertised online, pay for it in cryptocurrency, a credit card or even a prepaid gift card and have it shipped via international mail to anywhere in the U.S., Gottlieb said.The investigation identified more than 500 financial transactions totaling $230,000 linked to 300 people in 43 states, and even traced to these online sales seven people who died from fentanyl overdoses, Gottlieb said.“The easy availability and online purchase of these products from illegal drug peddlers is rampant and fuels the opioid crisis,” Gottlieb said.

The FDA wants to work with internet companies and to that end, it will host a summit meeting with internet CEOs, academics and advocacy groups to work on solutions, like changing search algorithms to show potential opioid purchasers pages offering valid treatment programs, Gottlieb said.

Additionally, Gottlieb said the time may also have come for health care providers who prescribe opioids to go through mandatory training on pain management and addiction treatment.

“Too many doctors from around my generation were trained in a manner that encouraged prescribing that was far too liberal,” said Gottlieb, who is 45 years old.

The training could also include information about appropriate dosing and length of opioid prescribing for the most common outpatient procedures, Gottlieb said.

NIH Almost Doubles Opioid Research

The new funding Congress included in the recently passed budget deal is allowing NIH to put $1.1 billion into opioid research in fiscal 2018, up from $600 million it dedicated to the crisis two years ago. NIH will fund a long-term study of patients after surgery and acute onset of pain, with the agency hoping to identify which patients are at risk of transitioning to chronic pain. The wide-ranging initiative, known as Helping to End Addiction Long-term, includes plans to develop new medication-assisted treatments and study genetic and social factors that increase addiction risks.

Trade Policy Might Impact Drug Prices

President Donald Trump’s proposal to slap new tariffs on $50 billion worth of imported goods from China could increase the cost of drug manufacturing—raising prices for U.S. consumers, according to the Association for Accessible Medicines.

The proposed list, published April 3 by the U.S. Trade Representative (USTR), includes a variety of drugs and active pharmaceutical ingredients used to make finished medicines that include insulin, antibiotics and vaccines.

While the generic industry manufactures a large amount of medicines in the U.S., it relies heavily on ingredients from other countries. Both the brand and generic industries import about two-thirds of active pharmaceutical ingredients used to make finished drugs. 

Also of concern are retaliatory actions from China, since generic companies sell their U.S.-produced products worldwide. 

The brand drug trade lobby PhRMA said it is reviewing the product list released by USTR to determine the impact of the tariffs on the branded drug industry.

If you have any questions, contact the following individuals atMcGuireWoods Consulting:

StephanieKennan, Senior Vice President
Anne Starke, Research Associate

Founded in 1998,McGuireWoods Consulting LLC(MWC) is a full-service public affairs firm offering infrastructure andeconomic development, strategic communications & grassroots, and governmentrelations services. McGuireWoods Consulting is a subsidiary of theMcGuireWoods LLPlaw firm and has been named in The National Law Journal’s special annualreport, “The Influence 50,” for the past several years. In the most recentreport, McGuireWoods Consulting was ranked 15th of the 1,900 governmentrelations firms in Washington, D.C.

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