Washington Healthcare Update

April 15, 2019

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This week in Washington: Congress is in recess.











Senate Finance Committee: “Drug Pricing in America: A Prescription for Change, Part III”

Tuesday, April 9, 2019: The Senate Finance Committee continued 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. 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.

Why this is important: Executives from CVS, Humana and Prime Therapeutics said they would back a bill banning spread pricing, while OptumRx took no position. Cigna said the company would support an industry standard. The executives also said they were open to more transparency, such as having advisory bodies to Congress examine their way of doing business, so long as confidential information is kept from the public. Chairman Chuck Grassley (R-IA) made it clear that the hearings are not meant to regulate the PBMs out of business.

House Ways and Means Committee: Markup of Prescription Drug Pricing Legislation

Tuesday, April 9, 2019: The House Ways and Means Committee held a markup last week on a bipartisan bill aimed at lowering drug prices. The legislation was passed by the committee 40-0. Find legislative text, including recorded amendments and votes here.

Why this is important: The committee unanimously passed the bipartisan Prescription Drug STAR Act (H.R. 2113) which requires price transparency from drug manufacturers and pharmacy benefit managers (PBMs). Rep. Lloyd Doggett (D-TX), despite voting for the bill, criticized the measure for not going far enough. The bill requires drug manufacturers to justify price hikes and high launch prices and orders the Department of Health and Human Services (HHS) to conduct a study on Medicare Part A drug costs, make HHS publish aggregate rebates and price concessions negotiated by PBMs on a public website and push drug manufacturers to submit information to HHS on the average sales prices for drugs in Medicare Part B.

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

Wednesday, April 10, 2019: The Subcommittee on Oversight and Investigations of the Committee on Energy and Commerce held 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, testified 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.

Why this is important: House Energy & Commerce Oversight Chair Diana DeGette (D-CO) said she hopes to have bipartisan legislation ready by July or September of this year to make insulin affordable. At the hearing drug manufacturers present did not take responsibility for increased prices, but said they are forced to raise list prices to compensate for the growing rebates demanded by PBMs. The PBMs disagreed, arguing the real reason for the rising costs is the high list prices set by drug manufacturers along with the lack of generic alternatives. Members of the subcommittee were united on the need for taking action, but specifics were not outlined. 


Bipartisan Bill Introduced to Allow Nurses, PAs to Order Home Health Services

On April 11, the Home Health Care Planning Improvement Act of 2019, a bipartisan bill, was introduced. The bill would allow physician assistants, nurse practitioners, clinical nurse specialists and certified nurse midwives to order home health services for Medicare beneficiaries. Currently, only physicians can order home health.

The bill was introduced by Reps. Jan Schakowsky (D-IL), Buddy Carter (R-GA), Ron Kind (D-WI), Mike Kelly (R-PA), Susan Wild (D-PA) and David Joyce (R-OH) and follows the of legislation (S. 296) in the Senate, Jan. 2019, by Sens. Susan Collins (R-ME) and Ben Cardin (D-MD).


Grassley, Wyden Push HHS to Investigate PBMs’ Spread Pricing

On April 10, Senate Finance Chair Chuck Grassley (R-IA) and Ranking Member Ron Wyden (D-OR) sent a letter to the Department of Health and Human Services (HHS) asking for an investigation of pharmacy benefit managers (PBMs) concerning the practice of reimbursing pharmacies less than what they charge health plans for prescription drugs, known as spread pricing. The letter was sent the day after the committee held a hearing focusing on PBMs. 

The letter is a response to multiple states that have audited their Medicaid programs and determined that PBMs were using spread pricing to make millions of dollars in excess of what pharmacies were being paid for prescription drug claims. The request also follows a Senate Finance hearing on April 9, in which the committee questioned the executives of five major PBMs on spread pricing practices—Cigna and CVS said they both practice spread pricing, while Humana said it only did it for one type of plan. UnitedHealth only offers the option for spread pricing to its commercial plans, while Prime Therapeutics was the only organization that did not practice spread pricing.

Find the letter here.

Sanders Reintroduces Medicare for All Bill, Receives Criticism

On April 10, Sen. Bernie Sanders (D-VT) reintroduced Medicare for All legislation similar to his legislation last Congress, but with the addition of coverage for long-term care. The legislation is similar to that introduced in the House earlier this year. The White House commented on its efforts to lower drug costs and end surprise billing as a response to Sanders’ bill. Cosponsors of Sanders’ bill include Sens. Cory Booker (D-NJ), Kirsten Gillibrand (D-NY), Kamala Harris (D-CA) and Elizabeth Warren (D-MA).

The bill establishes a national, single-payer Medicare system and prohibits private plans from competing with Medicare, eliminating cost-sharing. The universal long-term care in home and community settings is a new benefit, although the legislation would continue Medicaid’s role in covering institutional care, and states would determine the standard of eligibility.


Trump Administration Increases Control Over Federal Regulators

On April 11, the Office of Management and Budget Director (OMB) released a memo to broaden Congress’s ability to direct federal regulators to submit nonbinding guidance documents to OMB for review. The administration’s move slows down the enactment of any rule with a potentially large impact on the economy and subjects the documents to the same scrutiny as regulations that carry the force of law.

Any guidance document deemed major by the Office of Information and Regulatory Affairs (OIRA) would need to be sent to Congress, and Congress would have the ability to strike it down under the review act, a law that gives Congress a small window to roll back a rule. The memo takes effect in 30 days.

Find the memo here.

CMS: Provider Pilot Program Launch

On April 10, the Centers for Medicare and Medicaid Services (CMS) Division of National Standards announced the launch of a volunteer Provider Pilot Program to test the process for reviewing compliance with HIPAA Administrative Simplification Rules among providers.

Any providers who conduct electronic health care transactions can volunteer for the Provider Pilot Program on behalf of themselves, not their group practice or hospital, unless authorized by their group practice or hospital to do so. This month, the Department of Health and Human Services (HHS) will select three health care providers from the pool of volunteers to participate.

Find more information on the program here.

CMS: 2021 Hospice Benefit in New VBID Demo

On April 9, the Centers for Medicare and Medicaid Services (CMS) laid out a vision of hospice benefit in its expanded Value-Based Insurance Design (VBID) demonstration. The VBID is designed to allow Medicare Advantage (MA) beneficiaries to opt in to receive palliative and supportive care services.

The VBID includes giving hospices the ability to meet patient needs by collaborating with plans and showcasing the role of upstream palliative services; designating MA plans as points for accountability to ensure access to a continuum of care choices; and giving beneficiaries the full scope of hospice services, education and ability to choose care options.

Find more on the VBID here.

Federal Agents Uncover $1.2 Billion Medicare Brace Scam

On April 9, federal agents ended a $1.2 billion Medicare scam that peddled unneeded orthopedic braces to hundreds of thousands of senior citizens. Two dozen people were charged, including doctors accused of writing bogus prescriptions.

The Department of Justice (DOJ) said the scheme relied on overseas call centers to get Medicare numbers from beneficiaries. Authorities also announced charges against owners of call centers, telemedicine firms and medical equipment companies that shipped unneeded back, shoulder, wrist and knee braces.

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.

Comment period ends today, April 15, 2019.

Find the draft guidance and submit comments here.

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.


House Democrats Request Information on DOJ’s Position in Texas v. Azar

On April 10, Reps. Frank Pallone (D-NJ), Elijah Cummings (D-MD) and Richard Neal (D-MA) sent letters to the White House, the Department of Health and Human Services (HHS) and the Department of Justice (DOJ) asking for clarity on the Trump administration’s new stance in the Texas v. Azar case. At the end of March, the Department of Justice (DOJ) filed a letter with the 5th Circuit appeals court, urging it to uphold the decision to strike down the Affordable Care Act (ACA)

The federal court case, Texas v. Azar, ruled that the entire ACA is unconstitutional as a result of Congress’s repealing the ACA’s individual insurance mandate. The letters include requests for documents from the administration that explain its decision to back the case ruling and argue that the DOJ’s position goes against the administration’s function of enforcing the law.

On April 9, House Democrats questioned Attorney General William Barr over the administration’s switch of positions in the case, asking Barr to make DOJ attorneys available for questioning by April 22. 

Find the letters here.


Medicaid and CHIP Payment and Access Commission Votes on Recommendations

The Medicaid and CHIP Payment and Access Commission met April 11 and 12 to vote on recommendations to Congress. Among the recommendations, the commission voted:

  • To recommend removing the drug-rebate cap in Medicaid. The Trump administration supports this recommendation also. 
  • To recommend that Congress change the definitions of the so-called Medicaid shortfall in order to impose stricter limits on the amount of supplemental payments that disproportionate-share hospitals can receive. 

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

Stephanie Kennan, Senior Vice President
Mariam Eatedali, 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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