Washington Healthcare Update

April 8, 2019

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Coming Week’s Highlights: Congress will continue to examine drug pricing; on Tuesday, the Senate Finance Committee will hold the third in a series of hearings, this one focused on pharmacy benefit managers (PBMs). The House Energy and Commerce Subcommittee on Oversight and Investigations will also have a hearing Wednesday on insulin pricing.

Upcoming Hearings

Upcoming Events








Upcoming Hearings

Tuesday, April 9, 2019

Senate Finance Committee: “Drug Pricing in America: A Prescription for Change, Part III”
The Senate Finance Committee will continue its drug pricing series by inviting pharmacy benefit manager companies (PBMs) to testify before the committee. The invitation was extended on March 12 to Cigna, CVS Caremark and CVS Health, Humana, OptumRx and Prime Therapeutics; all have accepted to testify before the committee. The hearing was rescheduled to April 9 due to NATO Secretary General Jens Stoltenberg’s joint address to Congress on the original date, April 3. Find a link to witness testimonies, member statements and the hearing live feed here.

House Ways and Means Committee: TBA Hearing on Bipartisan Drug-Pricing Bills
The House Ways and Means Committee is expected to hold a hearing this week on four bipartisan bills aimed at lowering prices after the House Energy & Commerce Committee this week passed six separate bipartisan bills aimed at speeding generic drug competition. On April 4, Senate Finance Committee Ranking Member Ron Wyden (D-OR) issued a supportive statement after an announcement by the House Ways & Means Committee that it will be marking up drug pricing legislation including Wyden-initiated bills that address price gouging and secrecy in the drug-pricing system. Find more on the SPIKE Act and C-THRU Act from Sen. Wyden here.

Wednesday, April 10, 2019

House Committee on Energy and Commerce: “Priced Out of a Lifesaving Drug: The Human Impact of Rising Insulin Costs (Second Hearing)”
The Subcommittee on Oversight and Investigations of the Committee on Energy and Commerce will hold a hearing to address the consequences of rising insulin costs. This will be the second hearing on the rising prices of insulin. Eli Lilly, Novo Nordisk and Sanofi, the only three companies that manufacture insulin in the United States, will testify about their pricing practices. In March, Lilly reported that the net price of Humalog, a fast-acting insulin taken before meals, decreased in price by 8.1 percent over the previous five years. The price fell to an average of $135 a month per patient, from $147 in 2014. Over the same time, the average list price of Humalog increased 52 percent from $391 to $594. Find a link to witness testimonies, member statements and the hearing live feed here.

Upcoming Events

April 11-12, 2019

MACPAC April Public Meeting
The Medicaid and CHIP Payment and Access Commission will hold this month’s public meeting during the second week of April. The MACPAC April meeting agenda will be posted here.

April 4-5, 2019

MedPAC April Public Meeting
The Medicare Payment Advisory Commission held this month’s public meeting last week. Find the MedPAC April meeting agenda and briefs here.



House Committee on Energy and Commerce: “Priced Out of a Lifesaving Drug: The Human Impact of Rising Insulin Costs”

Tuesday, April 2, 2019: The Subcommittee on Oversight and Investigations of the Committee on Energy and Commerce will hold a hearing to address the consequences of rising insulin costs. This was the second hearing on the rising prices of insulin. The subcommittee chair, Rep. Diana DeGette (D-CO), is also chair of the House Diabetes Caucus. Insulin has become an example of a drug for which prices have increased significantly. Find a link to witness testimonies, member statements and the hearing live feed here.

Why this is important: The subcommittee is focused on the cost of insulin and putting pressure on manufacturers as they work to address high drug prices. Three companies control 99 percent of the world’s insulin, and Rep. Diana DeGette), chairwoman of the House Energy and Commerce oversight subcommittee, is leading the initiative on bipartisan and bicameral probes into the insulin market.

House Committee on Energy and Commerce: Full Committee Markup

Wednesday, April 3, 2019: The House Committee on Energy and Commerce held a full committee markup that included 12 health care-related bills—six bills were part of a drug package to lower prescription drug costs and the remaining six make reforms to the Affordable Care Act (ACA). Find a link to the legislation discussed and vote tallies here.

Find a full summary of the markup here. 


Meadows Introduces the State-Based, Market-Oriented Prescription Drug Negotiations Act

On April 4, Rep. Mark Meadows (R-NC) introduced H.R. 2038, the State-Based, Market-Oriented Prescription Drug Negotiations Act. The bill allows insurers to jointly negotiate prices of prescription drugs purchased from drug manufacturers. The bill also creates safe harbor from antitrust liability for private health insurers, so they can jointly negotiate with drug manufacturers. The added element of competition is intended to create more choices for consumers, thereby lowering costs for consumers.

Monitor H.R. 2038 here.

Bipartisan House, Senate Bill Aligns 42 CFR Part 2 with Less-Strict HIPAA

On April 3, Reps. Markwayne Mullin (R-OK) and Earl Blumenauer (D-OR) reintroduced bipartisan legislation to align the strict privacy scheme for substance abuse treatment records, 42 CFR Part 2, with a less demanding Health Insurance Portability and Accountability Act (HIPAA). Sens. Joe Manchin (D-WV) and Shelley Moore Capito (R-WV) introduced an accompanying bill in the Senate.

Monitor H.R. 2062 here.

Eight Republicans Condemn Administration’s Stance in ACA Lawsuit

On April 2, eight Republicans voted with Democrats to adopt a resolution condemning the Trump administration’s decision not to defend the Affordable Care Act (ACA) in an ongoing federal lawsuit. The measure passed 240-186, with all Democrats, except for Rep. Collin Peterson (MN), supporting the resolution. Freshman Rep. Colin Allred (D-TX) introduced the resolution.

Republicans voting in favor of the resolution include Rep. Fitzpatrick (PA), John Katko (KY), Tom Reed (NY), Denver Riggleman (VA), Chris Smith (NJ), Pete Stauber (MN), Elise Stefanik (NY) and Fred Upton (MI).

The resolution is largely symbolic and unlikely to impact the case’s proceedings going forward. House Democrats filed a legal brief defending the ACA in the courts earlier this year.

House and Senate Pass Short-Term Money Follows the Person Extension

On April 1, the House passed the Medicaid Services Investment and Accountability Act, a bill introduced by Rep. Raul Ruiz (D-CA) that provides an extra $20 million in funding for the Money Follows the Person (MFP) demonstration for fiscal year 2019. The Senate passed the bill on April 3.

Find the bill here.


Senate HELP Chair: Goal to Have Finance, Health Bills by June to Lower Health Care Costs

On April 4, Senate HELP Committee Chairman Lamar Alexander (R-TN) during a Senate floor speech highlighted suggestions for lowering prescription drug costs that he received from think tanks and stakeholders during a Senate floor speech. Alexander said he plans to hold a vote on proposals to lower health care costs in his committee’s jurisdiction in early summer, and then combine them with proposals under the Finance Committee’s purview. Alexander is focused on the expansion of the Trump administration’s point-of-sale-rebate proposal beyond Medicare and Medicaid to the commercial insurance market.

At the end of March, Alexander said that he is working with health committee ranking Democrat Patty Murray (WA), Senate Finance Committee Chair Chuck Grassley (R-IA) and ranking Democrat Ron Wyden (OR) to develop a bill in each committee to lower health care costs by summer.

Democrats Reintroduce Bill to Add Public Option to ACA Marketplaces

On April 4, Sens. Sheldon Whitehouse (D-RI) and Sherrod Brown (D-OH) and Rep. Jan Schakowsky (D-IL) reintroduced a bill to add a Medicare-like, publicly operated health insurance option to the Affordable Care Act’s (ACA) individual markets. The Consumer Health Options and Insurance Competition Enhancement (CHOICE) Act makes a public option available starting with the 2020 plan year. The plan has to comply with all ACA requirements, provide a comprehensive benefits package and offer the same premium tax credits and cost-sharing reductions as ACA plans. The legislation preempts any state law that prohibits the offering of such public option health insurance.

Bennet, Kaine Announce “Medicare X” Bill to Expand Coverage

On April 2, Sens. Michael Bennet (D-CO) and Tim Kaine (D-VA) reintroduced an option that would allow anyone to buy Medicare plans, a proposal in response to Medicare-for-all legislation that would eliminate private insurance companies. The “Medicare X” option is a response to debates within the Democratic party on whether to support a single-payer “Medicare-for-all” system, or to support efforts to reform and protect the Affordable Care Act (ACA).

“Medicare X” initially would be available on the individual exchange in areas where there is a shortage of insurers or higher health care costs due to less competition – including rural communities in Colorado and Virginia – but not just in Colorado and Virginia. The plan would expand to the entire country by 2024. By 2025, the plan would be added to the Small Business Health Options Program Marketplace.

Senate Passes First Drug-Pricing Bill of Session, Sent to President

On April 2, the Senate passed a bill to stop drug companies from avoiding Medicaid rebates by misclassifying brand drugs as generics, sending the first drug-pricing bill of this Congress to the president’s desk. The bipartisan Right Rebate Act was included in a larger Medicaid package with provisions to provide an additional $20 million to the Money Follows the Person demonstration, and create a state option for health homes for children with medically complex conditions, previously known as the ACE Kids Act.

Find the bill here.


CMS Plans to Test Drug Rebate Overhaul for Two Years, Starting in 2020

On Feb. 6, 2019, the Department of Health and Human Services published a proposed rule that would expressly exclude from safe harbor protection under the Anti-Kickback Statute rebates on prescription drugs paid by manufacturers to Part D plan sponsors, Medicaid managed care organizations and pharmacy benefit managers under contract with them. The rule also proposed the creation of two new safe harbors.

The comment period ends today, April 8, 2019.

The proposed overhaul of drug rebates is expected to lead to higher Medicare Part D premiums and the Centers for Medicare and Medicaid Services (CMS) is helping insurers keep premiums artificially low by allowing them to choose to have taxpayers cover the cost of setting premiums too low for the first two years. Without the newly planned demonstration, the upcoming rebate rule would likely cause premiums to rise right before the 2020 presidential election.

The deadline for insurers to submit bids for next year is June 3, but plans are having a difficult time setting those bids because the existence of drug rebates is in question. HHS proposed either eliminating rebates or only allowing rebates that are shared with seniors at the pharmacy counter. Comments on that proposal are due today, April 8, which makes it difficult for HHS to finish the regulation in time for plans to set bids based on the new rebate system.

Under the demonstration, further guidance regarding the application process will be provided at a later date.

Find the CMS press release here.

Gottlieb Reveals 2019 Compounding Agenda Before Departing FDA

On April 4, the Food and Drug Administration (FDA) agency commissioner Scott Gottlieb announced an agenda for the FDA to shape its regulatory system for drug compounding in 2019. The FDA announced that it will issue guidance, propose rules and host a public meeting and listening sessions in four key areas: maintaining quality manufacturing and compliance; creating lists of bulk drug substances; finalizing the FDA’s partnership with states; and clarifying compounding requirements for hospitals and health systems.

The FDA will host a public meeting in May to discuss current good manufacturing practices (CGMPs) and gauge the potential impact of them on office stock access for health care providers. The FDA will also host listening sessions with stakeholders to solicit their views on the bulk lists and manufacturing requirements for outsourcing facilities.

Gottlieb’s last day was on April 5.

Find the press release here.

OMB Reviewing Protected Drug Classes Rule

On April 4, the Office of Management and Budget (OMB) announced that they are reviewing the Center for Medicare and Medicaid Services’ (CMS) final rule to lower Part D drug costs, which might include eliminating coverage protections in six drug classes. The proposed rule lets plans exclude drugs in protected classes from formularies when their makers hike prices faster than inflation or when drug companies make new formulations of drugs already on the market.

The final rule also allows Part D plans to more broadly use step therapy and prior authorization, including for protected class drugs, and also makes plans tell enrollees how much they must pay for drugs when doctors write prescriptions.

CMS Finalizes What Supplemental Benefits MA Plans Can Offer in 2020

On April 1, the Centers for Medicare and Medicaid Services (CMS) finalized a policy to let Medicare Advantage (MA) plans offer supplemental benefits for the chronically ill in 2020, including those that may increase a beneficiary’s property value, as part of the MA and Part D call letter for next year. CMS announced plans will also have to list the supplemental benefits on the Medicare Plan Finder tool.

The finalized rule gives MA plans a 2.53 percent pay raise in 2020. The final rate is less than the 3.4 percent raise MA plans received for 2019, which was one of the biggest pay raises plans have received in years.

Find the final rule here.

CMS Seeks Recommendations That Allow Americans to Purchase Health Insurance Across State Lines

On March 6, the Centers for Medicare and Medicaid Services (CMS) issued a request for information (RFI) for recommendations on how to eliminate regulatory, operational and financial barriers to enhance issuers’ ability to sell health insurance coverage across state lines. This announcement builds on President Trump’s Oct. 2017 executive order “Promoting Healthcare Choice and Competition Across the United States,” which intends to provide Americans relief from rising premiums by increasing consumer choice and competition. 

In particular, CMS requests feedback on how states can take advantage of Section 1333 of the Patient Protection and Affordable Care Act, which provides for the establishment of a regulatory framework that allows two or more states to enter into a health care choice compact to facilitate the sale of health insurance coverage across state lines. CMS is primarily looking for input on how to expand access to health insurance coverage across state lines, effectively operationalize the sale of health insurance coverage across state lines and understand the financial impacts of selling health insurance coverage across state lines.

Comment period ends May 6, 2019.

Find the RFI and submit comments here.

FDA: Modifications to Compliance Policy for Certain Deemed Tobacco Products

On March 13, the Food and Drug Administration proposed an end to current compliance policy as it applies to flavored electronic nicotine delivery system (ENDS) products such as electronic cigarettes (other than tobacco-, mint- and menthol-flavored products), and prioritizing enforcement of such products offered for sale in ways that pose a greater risk for minors to access these tobacco products.

In addition, the FDA expects manufacturers of all flavored ENDS products (other than tobacco-, mint- and menthol-flavored) that remain on the market under these new conditions to submit premarket applications to the agency by Aug. 8, 2021. This application date is one year earlier than the agency previously proposed.

Public release is TBD.


FDA: Update on Nonproprietary Naming of Biological Products

On March 7, the Food and Drug Administration (FDA) issuing draft guidance that proposes to apply the naming convention only to new originator biologics and interchangeable biosimilars and to exempt currently licensed or approved biologics or products that are in the process of being licensed, including insulin. The draft guidance is a reversal of the FDA’s 2017 decision to require that all biologics follow a nonproprietary naming protocol.

The FDA cited brand-biologic industry concerns that changing the names of older biologics would impose costs on the health care system that could then be passed onto patients, and could create confusion among patients and health care providers.

Comment period ends on May 7, 2019; comments can be submitted here.

Find the draft guidance here.

FDA: Quality Considerations for Continuous Manufacturing

On Feb. 26, the Food and Drug Administration (FDA) released a draft guidance on what factors brand and generic drug manufacturers should consider when setting up and using a continuous manufacturing system to produce their products. The guidance outlines the benefits of continuous manufacturing over traditional batch manufacturing, including the efficiency that comes with continuous manufacturing that could eventually lead to lower drug prices for consumers.

Comment period ends on May 28, 2019; comments can be submitted here.

Find the draft guidance here.

FDA: Competitive Generic Therapies Draft Guidance

On Feb. 19, the Food and Drug Administration (FDA) published a draft guidance on how drug manufacturers can apply for the competitive generic therapy (CGT) pathway, intended for generic versions of drugs that have little-to-no competition in the market. This guidance encourages more generic drug manufacturing and explains how exclusivity would work under the CGT pathway, including exclusivity given to multiple CGT pathway-approved drugs that fit certain criteria.

Comment period ends on April 22, 2019; comments can be submitted here.

Find the draft guidance here.

ONC/CMS: Interoperability; Exceptions to Information Blocking

On Feb. 11, the Centers for Medicare and Medicaid Services (CMS) and the Office of the National Coordinator (ONC) released proposed rules to support secure access, exchange and use of electronic health information. The Interoperability and Patient Access Proposed Rule from CMS outlines opportunities to make patient data more useful and transferable through open, secure, standardized and machine-readable formats while reducing restrictions on health care providers. The ONC rule calls on the health care industry to adopt standardized application programming interfaces (APIs), which will allow individuals to securely and easily access structured electronic health information (EHI) using smartphone applications.

In addition to the policy proposals, CMS released two requests for information (RFIs) to obtain feedback on interoperability and health information technology (health IT) adoption in post-acute care (PAC) settings, and the role of patient matching in interoperability and improved patient care.

Comment period ends on May 3, 2019.

Read the proposed rule and submit comments here.

HHS Proposal Calls for Reforming Drug-Rebate System

Published on Feb. 6, a proposal by the Department of Health and Human Services (HHS) called for a ban on drug rebates, unless shared directly with seniors at the pharmacy counter, significantly lowering out-of-pocket retail drug spending for the minority of seniors on expensive drugs. The proposal would raise premiums for all Medicare beneficiaries. Part of the administration’s plan is set to take effect in a year and an anticipated legal challenge by pharmacy benefit managers (PBMs) could delay implementation.

The proposal cuts rebates tied to a percentage of list price that drug manufacturers pay to Part D plans, Medicaid managed care and PBMs by taking away the long-standing exemption for rebates in anti-kickback law. The administration proposed two new safe harbor protections: one that would allow rebates that are shared with patients at the point of sale and another that would let PBMs charge flat fees for their services.

Comment period ends on April 8, 2019.

Read the proposed rule here.


Oklahoma Drops Several Claims in Opioid Case Against Johnson & Johnson, Teva

On April 4, in a lawsuit alleging pharmaceutical companies played a role in the ongoing opioid epidemic, Oklahoma’s attorney general dropped all claims except one public nuisance claim against Johnson & Johnson and Teva Pharmaceutical Industries Ltd., one week after reaching a $270 million settlement with Purdue Pharma. Attorney General Mike Hunter said the other five claims violated the Oklahoma Medicaid False Claims Act, yet dropping them will have no influence on the amount of damages sought by the state.

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

Stephanie Kennan, Senior Vice President
Mariam Eatedali, Research Associate

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