Health Policy Report

The Week in Review

The week was bookended by two significant announcements from the White House on the Iran Deal and the Administration’s drug pricing blueprint, respectively. On Tuesday, President Trump announced that the U.S. would be withdrawing from the 2015 agreement with Iran and world powers – known as the Joint Comprehensive Plan of Action (JCPOA) – in a move criticized by Democrats and Europe, but praised by most Republicans, Israel, and Saudi Arabia. That decision was followed by another high-profile announcement for the Administration’s plan to lower prescription drug prices, which is broken down in detail in our policy roundup below.

In Congress, the House passed four measures, most significantly a Senate-passed resolution (S.J. Res. 57) that would nullify guidance on auto lending issued by the Consumer Financial Protection Bureau (CFPB) per the provisions of the Congressional Review Act (CRA). The most consequential element of the measure – which was approved on a largely party-line 234-175 vote – is that it will repeal agency guidance (as opposed to a rule) which sets a new precedent for congressional oversight of regulations. The House also approved a nuclear waste related bill (H.R. 3053), but both senators from Nevada – Republican Dean Heller and Democrat Catherine Cortez-Masto – have sworn that the bill will not make it out of the upper chamber due to its language renewing the use of the Yucca Mountain storage site in the Silver State.

The Senate, meanwhile, is in the midst of a lengthy judicial confirmations battle, with two nominees making it through the gauntlet last week. Kurt Engelhardt was confirmed to the 5^th Circuit Court of Appeals and Michael Brennan was confirmed to the 7^th Circuit in a particularly controversial vote, as Republicans ignored the objections of the home state senator for the nomination – Sen. Tammy Baldwin (D-WI) – breaking the Senate’s long-standing “blue slip” precedent which allowed for the courtesy of approval from a nominee’s Senators.

Last week also saw the first wave of primary elections in the 2018 cycle, with contests on Tuesday in Indiana, West Virginia, Ohio, and North Carolina. Establishment candidates largely emerged victorious over their insurgent opponents, including in the closely-watched Republican Senate primary in West Virginia where State Attorney General Pat Morrissey beat the controversial coal executive Don Blankenship and Rep. Evan Jenkins. However, the most surprising result of the night came from North Carolina where the sitting Rep. Robert Pittenger (R-NC) lost his primary to a right-wing challenge from former pastor Mark Harris.

The Week Ahead

This week, House lawmakers are set to focus on the Agriculture and Nutrition Act of 2018 (H.R. 2), more colloquially known as the “farm bill.” Controversially, the measure currently features a significant revamp for the Supplemental Nutrition Assistance Program (SNAP) that would tighten work requirements, which Republicans say could help lift individuals out of the welfare system. Democrats strongly oppose the changes, however, and have said that the bill as written would be little more than a messaging exercise that would stand little chance of clearing the Senate. 

The Senate is due to continue its slog through federal judicial confirmations next week. Two final confirmation votes are expected today, namely on the nominations of Michael Scudder and Amy St. Eve to join the 7th Circuit Court of Appeals.

Aside from floor action, more primaries are scheduled tomorrow, with voters in Idaho, Nebraska, Oregon, and Pennsylvania headed to the polls. In Washington, President Trump is scheduled to visit Capitol Hill on Tuesday, where he will meet with Senate Republicans to discuss the upcoming summit with North Korea and economic issues. And finally, one last item to watch will be the ongoing drama around a possible discharge petition being organized by a group of moderate House Republicans to force a series of immigration proposals to the House floor. While Speaker Ryan has criticized the process, only seven more Republican signatures are needed for a successful petition, assuming that all Democrats support the effort.

Trump Announces Drug Pricing Blueprint

After months of speculation and behind-the-scenes policy development, President Trump announced the administration’s blueprint to lower drug prices in a speech on Friday, entitled ‘American Patients First,’ which highlights steps the administration has taken, outlines future actions, and requests public comment on “even bolder actions” to bring down drug prices. The wide-ranging proposals include reforms to Medicare Part D and Part B, Medicaid, the Food and Drug Administration (FDA), the 340B program, and more.

The plan — which largely builds upon the initiatives presented in the White House’s 2019 fiscal year budget proposal and previously outlined in a white paper from the Council of Economic Advisors — aims to address four key problems: (1) high list prices; (2) rising out-of-pocket costs; (3) foreign governments “freeloading” on American innovation; and, (4) obstacles to negotiation, particularly for high-cost medications. The plan effectively spares pharmaceutical manufacturers from the reforms they have most vehemently opposed — including government-negotiated drug prices, drug importation, and reference pricing — and instead offers a slate of proposal designed to curb consumers out-of-pocket costs, increase competition through transparency and faster drug approvals, and increase negotiating power for insurers. Still, the Pharmaceutical Research and Manufacturers of America (PhRMA) released a statement expressing concern that “while some of these proposals could help make medicines more affordable for patients, others would disrupt coverage and limit patients’ access to innovative treatments.”

OMB Submits $15 Billion Rescission Proposal to Congress, Including $7 Billion from CHIP

Last week, the Office of Management and Budget (OMB) submitted to Congress a proposal to rescind $15.4 billion in federal spending. According to OMB, this is the first of several rescission packages the Administration plans to submit to Congress to fulfill the President’s commitment to cut federal spending. The Trump administration had originally planned to send a much larger rescission package to Congress, but softened the current proposal amid pushback from party leadership.

The current proposal targets spending from domestic programs that is not likely to be spent. Among the most widely discussed cuts, the administration is proposing to eliminate $7 billion from the Children’s Health Insurance Program (CHIP). OMB also proposes to eliminate $800 million from the Center for Medicare and Medicaid Innovation (CMMI), which officials stated is in excess of the funds needed in fiscal years (FY) 2018 or 2019. They also justify this cut by stating that CMMI will receive a new appropriation of $10 billion in 2020. Additionally, more than $250 million in unspent money from the Ebola virus outbreak would be cut.

The House is expected to pass the package, but its success is highly uncertain in the closely divided Senate. Senate Democrats have already announced strong opposition to the rescission, and Senate passage would effectively require full Republican support. Majority Leader Mitch McConnell (R-KY) has reportedly warmed to the idea, while moderates including Sens. Susan Collins (R-ME) and Shelley Moore Capito (R-WV) have raised tepid concerns over the proposal.

E&C Oversight Panel Grills Drug Distributors on Opioid Epidemic

The House Energy and Commerce Subcommittee on Oversight and Investigations held a hearing last week to examine concerns about opioid distribution and diversion. This hearing followed investigative work conducted by the Subcommittee regarding the role of five drug distributing companies in dispensing millions of pills into towns deeply affected by the opioid crisis. During the investigation, Committee members claimed that the volume of dispensed opioids in various West Virginia towns appeared “to be far in excess of the number of opioids that a pharmacy in that local area would be expected to receive.”

Executives from the country’s top five drug distributing companies were brought before the Committee to address their role in the opioid crisis. Executives asserted that responsibility for the opioid crisis rests mainly with “bad actors” at pharmacies and corrupt doctors participating in illicit over-prescribing habits, with only one distributor executive admitting that distributors may be contributing to widespread opioid abuse. Executives fought to defend the reputations of their companies’ substance monitoring programs, saying that updated technology now allows them to identify over-prescribing practices more efficiently than in previous years. Additionally, executives emphasized that their organizations are not adequately equipped to override a prescribing decision that is made between a physician and a patient. 

While there was bipartisan agreement that drug distributors were at least partially responsible for the opioid epidemic, Republicans generally emphasized that chief responsibility falls upon doctors, pharmacists and the Drug Enforcement Administration (DEA), while Democrats placed a majority of blame on the distributors.

CMS Says ‘No’ to Lifetime Medicaid Limits

Last Monday, the Center for Medicare and Medicaid Services rejected a request from Kansas to impose lifetime limits on Medicaid coverage after adult beneficiaries reached a 36-month enrollment cap. The move indicates that the administration has a limit with regard to how it will allow states to modify their Medicaid programs. The CMS Administrator noted that the administration was determined to make sure “Medicaid remains the safety net for those that need it most,” and contrasted the state’s lifetime-limit proposal with CMS’ approval of temporary lock-out periods in other states. Arizona, Maine, Utah and Wisconsin have similar requests pending before the agency.

Democrats and beneficiary advocates have sharply criticized the lifetime-limit proposals, which have no precedent in the history of Medicaid, and 24 House Democrats wrote to HHS Secretary Alex Azar in March advocating against the policy. Healthcare providers had urged CMS to deny Kansas’ proposal, claiming it would significantly increase hospitals’ uncompensated care costs and increase the uninsured rate.