Washington Healthcare Update

July 2, 2018

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This Week: Pandemic bill marked up, Senate committees hold hearings on drug costs and Medicaid fraud, CMS says yes to Oklahoma but no to Massachusetts. 

1. Congress



2. Administration

3. Courts

1. Congress


House Appropriations Committee Delays HHS Markup

House GOP appropriators have again postponed consideration of their Labor-HHS-Education spending bill. The markup, which had been rescheduled for Tuesday, is now likely to be held after the upcoming July Fourth recess.  Aides to majority Republicans said it had to do with scheduling problems rather than larger disputes.

Energy and Commerce Marks Up Pandemic Bill

House Energy and Commerce Committee sparred over the Trump administration’s family separation policy during a health subcommittee markup on unrelated, bipartisan public health legislation.

Republicans and Democrats each used more than two hours of the markup to discuss the work they’ve done to address the migrant crisis. The actual object of the markup, the Pandemic and All-Hazards Preparedness Reauthorization Act of 2018, was approved unanimously.

The panel unanimously adopted an amendment from Marsha Blackburn that would require HHS to report to the committee on a weekly basis the status of children separated from their parents, craft a strategy to reunite families and address any deficiencies at the facilities.

Review of Stark Law Encouraged

House Ways & Means Chair Kevin Brady (R-TX) and Senate Finance Chair Orrin Hatch (R-UT) said they are pleased CMS is looking into how the physician self-referral restriction, also known as the Stark Law, affects alternative pay models. Hatch is reviewing legislative options in that area, his spokesperson said.

In 2016 Hatch released a paper laying out stakeholders’ suggestions for reform of the Stark Law. On June 20, CMS solicited input on changes to physician self-referral law exemptions that would reduce barriers to care coordination in alternative pay models.

Brady said he was pleased with CMS’s taking that step, and said he wants to work with CMS. He also said Stark Law concerns have come up at the Medicare deregulatory roundtables that health subcommittee Chair Peter Roskam (R-IL) has hosted with physicians, post-acute care groups, hospitals and other providers.


Finance Holds Hearing on Drug Costs

HHS Secretary Alex Azar testified at the Senate Finance hearing, nearly four weeks after President Donald Trump promised that drug makers would lower prices in two weeks. Azar spent much of his time answering questions concerning immigration and issues related to separating children from their parents.

View the hearing.

Senate Homeland Security and Governmental Affairs Holds Hearing on Medicaid Fraud and Overpayments

On June 27, the Senate Homeland Security and Governmental Affairs Committee held a hearing focusing on Medicaid overpayments. Testifying at the hearing were Comptroller General of the United States Eugene L Dodaro and Assistant Inspector General for Audit Services for HHS Brian P. Ritchey.

The Comptroller General said he was testifying because he felt strongly about the need to address the issues related to Medicaid overpayments. The GAO made 83 recommendations to address shortcomings in Medicaid oversight and suggested four matters for congressional consideration. HHS and CMS generally agreed with the recommendations and had implemented 25 of them.  

View the hearing and access the testimony. 

Senate Health, Education, Labor, and Pensions Committee Holds Hearing on Health Care Costs

This week the Senate Health, Education, Labor, and Pensions Committee discussed the broader issue of health care costs. The hearing included testimony from academics and the Health Care Cost Institute President Niall Brennan.

See the hearing.

Senate Appropriations Approves Labor-HHS-Education Funding Bill

Senate Appropriations Committee approved its Labor-HHS-Education measure on a 30-1 vote June 28, with Sen. James Lankford (R-OK) casting the single vote of opposition. The legislation would dedicate $3.7 billion to fighting the opioid epidemic and preserve funding for the Title X family planning program. The Labor-HHS-Education subcommittee unanimously approved the proposal increasing HHS’s discretionary budget by $2.3 billion to $90.1 billion for fiscal 2019. Under the bill, NIH would receive a $2 billion increase over the prior fiscal years. The bill also funds a series of programs aimed at combating opioid abuse, including $1.5 billion for the state opioid response grant operated by SAMHSA.

The bill would set top-level spending at nearly $180 billion, about $3 billion more than the House’s bill.

The Senate Appropriations Committee has officially sent all 12 of its spending bills to the floor—its quickest pace since 1988, the panel touted in a press release.

2. Administration

FDA Approves First Medical Treatment Created From Marijuana

The Food and Drug Administration approved GW Pharmaceuticals PLC’s Epidiolex, the first-ever medical treatment created from a marijuana plant in the country, to treat two forms of childhood epilepsy. The medicine is made from the compound cannabidiol, which is not the same as the chemical that produces a high in users, and FDA Commissioner Scott Gottlieb said that while Epidiolex “is an important medical advance,” it does not mean the agency approves of marijuana or all of its components.

CMS Denys Massachusetts Request to Limit Drug Coverage

The Trump administration denied a request from Massachusetts that would have let the state limit which drugs are covered under its Medicaid program. State officials argued this concept could give them more flexibility in the program and better leverage over pharmaceutical companies. The administration said the proposal violates federal law and that if Massachusetts wants to select which drugs are covered under its Medicaid program, it would lose rebates on drugs and need to negotiate directly with the manufacturers.

CMS Says Yes to Oklahoma

On June 27, CMS approved a Medicaid amendment allowing Oklahoma to enter into value-based purchasing arrangements with drug manufacturers. 

It is the first arrangement in which a state will be allowed to pursue supplemental rebate agreements for drugs if certain results are not achieved. Drug companies have worked with private payers on agreements that require additional rebates if patients on heart drugs have a heart attack or are hospitalized.

3. Courts

U.S. Supreme Court to Hear Case on Drug Labeling

The U.S. Supreme Court will hear arguments next term in a case concerning a series of state lawsuits against Merck that argued the labeling of its osteoporosis drug Fosamax didn’t adequately convey the risk of fractures. Merck argued the lawsuits were preempted because it tried to strengthen warnings on the drug label in 2009 only to be rebuffed by FDA.

The case could have implications for when drug manufacturers are protected from consumer lawsuits alleging harm due to FDA’s control of the content of warning labels.

The case, Merck v. Albrecht, revolves around the 3rd Circuit Court of Appeals’ interpretation of a landmark Supreme Court ruling in Wyeth v. Levine. Justices in 2009 held that FDA’s approval of a drug label doesn’t insulate manufacturers from failure-to-warn lawsuits under state law because drug companies have a responsibility to constantly monitor their products and provide updated information to FDA when new safety concerns emerge.

Merck argued that it should be preempted because it tried to warn about the risk surrounding Fosamax only to be turned away. The 3rd Circuit disagreed, arguing a jury could decide that FDA’s objection was to Merck’s specific wording of the warning and that a slightly different version might have been approved.

Merck argues the 3rd Circuit’s decision is part of a broader trend that makes it impossible to use the preemption protection provided to drug companies by the Supreme Court’s decision in the Wyeth case.

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

StephanieKennan, Senior Vice President

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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