Health Policy Report (12/16)

The Week in Review

Last week, Congressional Appropriations “Cardinals” announced an agreement in principle on $1.37 trillion in government funding for fiscal year (FY) 2020. The tentative agreement — which was struck hours after a meeting between Speaker Nancy Pelosi (D-CA), Treasury Secretary Steven Mnuchin, House Appropriations Chairwoman Nita Lowey (D-NY), and Senate Appropriations Chairman Richard Shelby (R-AL) — signals an end to months of tense negotiations that primarily revolved around border wall funding, Title X family planning grants, gun control, and hundreds of additional “poison pill” issues that stymied the process. Although details are still being negotiated, there are indications that the year-end spending package could include some major health policy related surprises, such as repeal of the Affordable Care Act’s “Cadillac Tax” and medical device tax.

In notable floor activity, House lawmakers passed the Democrats’ signature drug pricing legislation, the conference report for the FY 2020 National Defense Authorization Act (NDAA), and a package of bipartisan bills (text; amendments) that seek to protect vulnerable coastal and Great Lakes communities from climate change. In the upper chamber, senators cleared a bill that seeks to reform the Food and Drug Administration’s (FDA) approval process for over-the-counter medicines by adding new incentives and user fees — ranging from $100K to $500K — to the agency’s process for approving drugs that do not require a prescription.

The Week Ahead

Congress returns to action this week to close out 2019 with votes on key legislative priorities. As appropriators work to finalize details on funding legislation for FY 2020, House Majority Leader Steny Hoyer (D-MD) stated that lawmakers could vote on a series of “minibus” packages to fund the government for the remainder of the fiscal year as early as Tuesday, with the Senate following suit shortly thereafter. While Chairman Shelby expressed optimism about the prospects of support from both GOP leadership and President Donald Trump, it ultimately remains to be seen whether the President will sign off on the measures if his border-related priorities are not met. Congress has until midnight on Friday, Dec. 20 to fund the government and avert a shutdown. 

As lawmakers seek to wrap up government funding issues in their final legislative week of the year, several key health care policies are also likely to be addressed. A slate of Medicare, Medicaid and public health “extenders” will expire on Dec. 20 if not for action from Congress. While lawmakers have been nearing an agreement on the duration and policy changes for the extenders — which include funding for Community Health Centers (CHCs), disproportionate share hospitals (DSH), and more — it’s expected that a short-term extension could push major health care negotiations into 2020. Meanwhile, rumors have circulated that the upcoming spending deal could include permanent repeal of the ACA’s “Cadillac Tax, medical device tax, and health insurance tax. 

In addition to government funding, the House is poised to take up implementing legislation for the United States-Mexico-Canada Agreement after a deal was struck early last week, as well as articles of impeachment against President Trump. Meanwhile, the Senate will look to clinch next year’s NDAA with a vote on the conference report for the $735.2 billion measure. 

House Passes Democrats' Drug Pricing Bill

Last Thursday afternoon, the House voted (230-192) to pass the Elijah Cummings Lower Drug Costs Now Act (HR 3). House Democrats' flagship drug pricing package would: (1) permit negotiations on insulins and up to 250 other drugs annually, with prices backstopped at 120 percent of the average of prices in a basket of select wealthy countries and severe penalties for non-participation in negotiations; (2) place caps on prescription drugs’ annual price growth; and (3) restructure the Medicare Part D benefit. Despite the bill's high-profile passage last week, HR 3 is not expected to be considered by the GOP-controlled Senate. Additionally, the Trump Administration has issued a veto threat against the bill, instead throwing its support behind both the Senate Finance Committee's Prescription Drug Pricing Reduction Act as well as the House GOP’s Lower Costs, More Cures Act in its Statement of Administration Policy. Thus, the bill serves largely as a messaging document of Democratic drug pricing priorities.

HR 3 cleared the House with the support of every Democrat, as well as Republican Reps. Brian Fitzpatrick (R-PA) and Jaime Herrera-Beutler (R-WA). Every other Republican, as well as Rep. Justin Amash (I-MI), voted against the measure. The bill gained unanimous Democratic support after leadership reached a last-minute deal with progressive Democrats to increase the minimum number of drugs that must be negotiated annually to 50. In addition to the underlying bill, members also considered 12 amendments. A substitute amendment consisting of House Republicans' Lower Costs, More Cures Act failed, but 11 amendments offered by Democrats passed.

Dr. Stephen Hahn Confirmed as FDA Commissioner

The Senate last Thursday confirmed Dr. Stephen Hahn to be Commissioner of the Food and Drug Administration (FDA) by a 72-18 vote. An oncologist from Texas, Dr. Hahn previously faced questioning at a November confirmation hearing where members probed his views on topics including e-cigarette regulation, drug importation, and the opioid crisis. Dr. Hahn garnered the support of a slew of FDA-aligned advocacy groups, as more than 40 patient and research advocacy organizations recently endorsed his nomination, calling him “the right person to ensure the FDA keeps pace with science and innovation without sacrificing the safety and efficacy gold standard established by the agency.”

While Dr. Hahn was able to garner significant Democratic support, the 18 votes in opposition makes him one of the more contentious picks to lead the FDA in recent memory, despite the nominee’s apparent efforts to avoid controversy. His predecessor, Dr. Scott Gottlieb, was confirmed by the Senate 57-42. But the two most recent Democratic nominees for the position, Drs. Robert Califf and Margaret Hamburg, cleared the Senate resoundingly. Dr. Califf was approved 89-4 and Dr. Hamburg was confirmed unanimously.  Sens. Patty Murray (WA), Charles Schumer, (NY), Maggie Hassan (NH), Brian Schatz (HI), Tom Udall (NM), and Ron Wyden (OR) were among the Democrats to oppose Dr. Hahn’s nomination.

White House, House Democrats Reach USMCA Deal

Last Tuesday, the Trump Administration and Congressional Democrats reached an agreement on the United States-Mexico-Canada Agreement (USMCA) that omits major provisions on exclusivity for biologic drugs. House Speaker Nancy Pelosi (D-CA) and Ways and Means Committee Chairman Richard Neal (D-MA) signaled their support for the deal at a press conference Tuesday morning where Democrats broadly praised the revised USMCA as a step away from the "NAFTA-lite" agreement that had previously attracted Democratic criticism. With the submission of implementing legislation imminent, the deal is expected to swiftly clear Congress with bipartisan support next week.

Most notably, the revisions to the deal drop a number of provisions dealing with the healthcare industry, including a 10-year exclusivity period for biologic drugs. While an extension of that exclusivity from seven to 10 years was considered a key win for US negotiators in the initial agreement, it had attracted criticism from Congressional Democrats and ambivalence from President Trump. The changes to the trade agreement also discarded language regarding "patent evergreening" and providing for exclusivity extensions based on the submission of clinical information. In addition, the agreement revises language clarifying the circumstances under which biosimilar and generic drugs can be brought to market, implements data protection provisions from US law intended to encourage generic competition, and incorporates access to medicine principles that have been included in previous trade deals.

CMS Approves First Medicaid Work Requirements for Non-Expansion State

Last Thursday, the Trump administration approved the first Medicaid work requirement program for a non-expansion state in South Carolina. CMS approved two Medicaid demonstration waivers for South Carolina last week: one expanding Medicaid coverage for parents and “targeted adults,” and one implementing Medicaid work requirements. Under the expanded coverage, parents or caretakers with incomes above 62 percent of the federal poverty line but below 100 percent of poverty will be newly eligible for Medicaid, as well as chronically homeless adults or those in need of substance use disorder treatment. The newly expanded population, as well as existing parents and caretakers qualifying for Medicaid, will be required to comply with the new work requirements, with exceptions. The work requirement waiver requires beneficiaries to show they can comply with the requirements before signing up for Medicaid, and beneficiaries will only have 90 days to meet the program’s requirements if they fall out of compliance. South Carolina Gov. Henry McMaster (R) also signed an executive order establishing a taskforce to immediately put the waivers in place last Thursday.

CMS, notably, did not approve several parts of the state’s waiver request, including an extension of Medicaid coverage for beneficiaries up to one year after they give birth, although said the state could designate 1,000 additional spots under a different program for postpartum beneficiaries with substance-use disorders. CMS also did not approve the state’s request to provide exchange premium subsidies to individuals who lose Medicaid coverage due to an employment-based income bump but who are not eligible for employer-sponsored insurance. The administration reported it is working with the state on a state plan amendment to cover pregnant women with incomes from 194 percent of the federal poverty line up to 241 percent under the Children’s Health Insurance Program.