Health Policy Report (12/9)

The Week in Review

Government funding negotiations for fiscal year (FY) 2020 continued into this past weekend with fewer than two weeks left to iron out a compromise. While appropriations “Cardinals” expressed cautious optimism about the current state of government funding talks, Speaker Nancy Pelosi (D-CA) stated last week that lawmakers will need to pass another stopgap funding measure that will fund the government “just after Christmas” if an agreement isn’t reached within the next few days. Key issues that remain unresolved include Title X family planning grants, homelessness assistance grants, gun violence research, and border wall funding.

On the floor last week, House lawmakers overwhelmingly passed a bipartisan, bicameral measure that seeks to crack down on illicit robocall practices. The lower chamber also passed a bill out of the Financial Services Committee that would codify a ban on insider trading. Meanwhile, Senators continued their work on clearing the chamber’s queue of presidential nominations.

The Week Ahead

Congress returns to a jam-packed week as lawmakers look to clinch key legislative priorities. In addition to a vote on the House Democrats’ drug pricing package and 17 suspension bills, the lower chamber is set to consider the conference report for the FY 2020 National Defense Authorization Act (NDAA) after defense negotiators struck an agreement over the weekend. Additionally, House Appropriations Chairwoman Nita Lowey (D-NY) indicated that the House could begin taking up government funding bills as soon as next week if an agreement is reached. Lawmakers have until Friday, Dec. 20 to strike a deal.

In the upper chamber, Senators will resume consideration of pending presidential nominees. This includes a final confirmation vote on Stephen Hahn’s nomination to lead the Food and Drug Administration (FDA).

House to Vote This Week on H.R. 3

Last Thursday, Speaker Nancy Pelosi (D-CA) announced that the House will take up H.R. 3 this week — House Democrats’ signature drug pricing legislation. The bill 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 nonparticipation in negotiations; (2) place caps on prescription drugs’ annual price growth; and (3) restructure the Medicare Part D benefit. In a joint statement with the chairs of the Ways & Means, Energy & Commerce, and Education & Labor Committees, Speaker Pelosi announced that leaders had “received enough guidance” from the Congressional Budget Office (CBO) to move ahead with the bill. CBO released a preliminary score on the legislation in October but did not offer a full score at the time. Since then , it has encountered delays in developing a more comprehensive estimate of the legislation’s effects. Those delays have constituted a major impediment to bringing the bill to the floor following October markups in the three committees of jurisdiction.

House Republican leaders released a summary of their own bipartisan alternative to Speaker Nancy Pelosi’s prescription drug pricing plan on Friday. The measure — known as the Lower Costs, More Cures Act (H.R. 19) — adopts more than 40 bipartisan drug pricing provisions, many of which were advanced earlier this year by the House Energy & Commerce, Ways & Means, and Education & Labor Committees. Such reforms are designed to promote generic and biosimilar competition, add transparency to PBMs and pricing, prevent “gaming” of the patent system, streamline the regulation of over-the counter products, and more. The bill also includes reforms to Medicare Part D, which had not been passed by any House committees, including a $3,100 out-of-pocket cap and a 10 percent manufacturer responsibility throughout the benefit. The bill also creates a new Chief Pharmaceutical Negotiator at the Office of the United States Trade Representative to ensure “other countries aren’t treating our innovators unfairly.” The alternative measure could provide cover for Republicans who are seeking to position themselves as concerned with the issue of prescription drug prices while also opposing the austere approach endorsed by House Democrats. President Donald Trump's tweets ahead of the Thanksgiving break were consistent with this messaging, emphasizing that “House Republicans are… prepared to enact bipartisan solutions for drug prices."

Although Democrats say they now have sufficient guidance from CBO to move ahead, it is unclear when — or if — a full score will be released to the public. The Rules Committee will meet early this week to reconcile the versions of H.R. 3 passed by the committees of jurisdiction and write a special rule for consideration of the bill. It is likely that the bill will be considered under a structured rule, under which amendments must be submitted to the Rules Committee in advance for review and selection for floor consideration. While the bill is expected to pass the House, consideration by the Senate is unlikely given opposition by President Trump and Senate Republicans.

Sens. Grassley, Wyden Release Updated Drug Pricing Bill, Health Extenders Agreement

Bipartisan leaders of the Senate Finance Committee released an updated version of their drug pricing legislation on Friday which includes an agreement on certain health care extenders impacting Medicare, Medicaid, and public health programs. The highly anticipated update to the bipartisan drug pricing bill from Chairman Chuck Grassley (R-IA) and Ranking Member Ron Wyden (D-OR) includes several changes to Medicare Part D, including reducing beneficiary cost-sharing in the initial phase of the benefit, shifting drug manufacturer discounts, and instituting a monthly out-of-pocket (OOP) cap.

While the comprehensive drug pricing measure includes several controversial provisions that have been opposed by Senate Republican leadership and many rank and file members (e.g. inflationary caps), the agreement on “extenders” reflects broad bipartisan priorities which could be advanced as soon as the next two weeks as part of a year-end spending package. Although the path forward for the health extenders remains uncertain, it’s possible that those provisions could be included in an appropriations package ahead of the December 20 deadline and could see their costs offset by some of the less controversial provisions in the broader drug pricing package.

Additionally, the bill includes a multi-year extension of Medicare, Medicaid, and public health programs and policies collectively called the “extenders.” Those extenders include funding for the Puerto Rico Medicaid program and a delay of disproportionate-share hospital (DSH) payment cuts that are set to expire this month. The bill also would reauthorize the Patient-Centered Outcomes Research Institute (PCORI) and extend programs such as Temporary Assistance for Needy Families (TANF) and Maternal, Infant, and Early Childhood Home Visiting (MIECHV), among others.

Hospital Groups Sue HHS Over Price Transparency Rule

As expected, a group of hospitals sued the Department of Health and Human Services (HHS) last Wednesday over a rule on price transparency that was finalized in mid-November. The rule would require that hospitals disclose not just chargemaster prices for “shoppable” services, but also those negotiated with insurers. In the lawsuit, hospitals claim that the rule exceeds HHS’s authority and violates hospitals’ first amendment rights by compelling disclosure of proprietary information. They also assert that the rule would place an undue burden on hospitals and that the disclosed information would simply confuse patients without giving additional information on their health costs. No dates have been set at this time for legal proceedings. It also remains to be seen whether or not a stay on the implementation of the rule will be issued. Plaintiffs are seeking a swift ruling, as the rule is slated to go into effect on the first of the year. The administration’s transparency rule affecting plans is currently in the midst of a comment period that closes January 14, 2019.

Transparency has been a priority of the Trump Administration, being the subject of an Executive Order and multiple subsequent rulemakings. The administration previously finalized a rule mandating disclosure of list prices in direct-to-consumer drug advertisements, which was struck down in federal court. At the same time as HHS finalized the rule at the center of this lawsuit, it proposed another rule that would set standards for plans to offer personalized pricing information tools to their beneficiaries. In addition, plans would be required to publicly post their in-network negotiated rates and historical payments of allowed amounts for out-of-network care. Observers have noted that the proposal for plans may be more likely to stand up in court.

CMS Actuary: Health Spending Growth Increased 4.6 Percent in 2018

National health spending rose 4.6 percent in 2018 bringing total spending to $3.6 trillion, according to a new report from the Centers for Medicare & Medicaid Services (CMS) Office of the Actuary. The increase in the growth rate— which was faster than the 4.2 percent increase seen in 2017 — was primarily due to faster growth in private health insurance and Medicare, which were impacted by the reinstatement of the health insurance tax. The share of the economy devoted to health care as measured by gross domestic product (GDP) ticked down slightly to 17.7 percent in 2018, compared to 17.9 percent in 2016-2017. Despite the stable growth in expenditures for goods and services last year, CMS’ actuaries project the suspension of the health insurance tax for 2019 and expansion of Medicaid coverage in additional states will drive changes in spending for 2019.

CMS officials largely attributed the faster growth in health care spending in 2018 to the net cost of health insurance, which is the amount of spending attributed to nonmedical expenses, rather than spending for goods and services. The net cost of health insurance skyrocketed to 13.2 percent in 2018, after growing 4.3 percent in 2017. The CMS actuaries ascribed the faster growth in 2018 to the health insurance tax, a fee that was reinstated in 2018 following a one-year moratorium in 2017. The increase in health care spending for goods and services in 2018 was 4.1 percent, the same as in 2017. While the growth rate was stable, the report found mixed trends in the three largest goods and services categories: hospital care, physician and clinical services, and retail prescription drugs. The analysis also stated that the growth in per capita spending jumped in 2018 to four percent, following a rate of 3.5 percent in 2017, as faster growth in medical prices more than offset slower growth in the use and intensity of health care goods and services.

With respect to the sources of spending, spending by the federal government increased 5.6 percent, up from 2.8 percent in 2017. The federal portions of Medicare and Medicaid were major drivers of the acceleration: federal expenditures for the Medicare program increased 6.5 percent in 2018 compared to 1.3 percent in 2017. There was also an increase in federal Medicaid payments to 3.2 percent in 2018 following growth of 0.3 percent in 2017 – the first year states began contributing (5 percent) to the spending on the Medicaid expansion population.

Senate HELP Committee Advances FDA Nomination

The Senate Committee on Health, Education, Labor, and Pensions (HELP) has advanced President Trump’s nominee for FDA Commissioner, Dr. Stephen Hahn. An oncologist from Texas, Dr. Hahn faced questioning at a November hearing where members probed his views on topics including e-cigarette regulation, drug importation, and the opioid crisis. While a handful of Democrats on the panel opposed the nomination, there was overwhelming support for the nominee, who advanced last week on a recorded vote of 18-5. A Senate floor vote on Dr. Hahn’s nomination is expected later this week — the final step in the confirmation process.