Health Policy Report

The Week in Review

While House lawmakers returned to their districts for August recess, the Senate reconvened for another week of legislative work prior to leaving for a two-week break. The upper chamber cleared a host of priorities including: (1) a four-bill appropriations minibus (H.R. 6147) containing the Transportation-Housing and Urban Development, Agriculture, Interior, and Financial Services appropriations packages; (2) a short-term funding reauthorization (S.1182) for the National Flood Insurance Program (NFIP); and (3) approving the FY19 National Defense Authorization Act (NDAA) conference report (H.R. 5515). Senators also continued their push to clear the presidential nominations queue, confirming Britt Cagle Grant to be United States Circuit Judge for the Eleventh Circuit.

Prior to leaving Washington, the Senate passed the Animal Drug User Fee Amendments (ADUFA) and Animal Generic Drug User Fee Amendments (AGDUFA) (H.R. 5554) by voice vote, sending the bill to President Trump’s desk. The bill, if signed, would reauthorize the FDA’s Center for Veterinary Medicine to continue collecting animal drug and animal generic drug user fees from the drugs’ sponsors. 

Majority Leader Mitch McConnell (R-KY) also named his team of farm bill negotiators, setting up a contentious bicameral showdown over the inclusion of work requirements for the Supplemental Nutrition Assistance Program (SNAP). While the House passed a version of the bill that included a provision requiring “work-capable” adults ages 18 to 59 to work at least 20 hours a week (or spend equivalent time in job training or workfare), the Senate’s bill rejected that provision, leaving in place the current SNAP requirement for beneficiaries to register for work and accept a suitable job if offered. The list of Senate farm bill conferees includes: Leader McConnell, Sens. Pat Roberts (R-KS), John Boozman (R-AR) John Hoeven (R-ND), Joni Ernst (R-IA), Debbie Stabenow (D-MI), Pat Leahy (D-VT), Sherrod Brown (D-OH), and Heidi Heitkamp (D-ND).

The Week Ahead

Senate lawmakers have left Washington for a brief recess. The upper chamber will return on Wednesday, August 15th at noon and will then seek to clear the nominations of Marvin Quattlebaum Jr. and Julius Ness Richardson to be judges on the Fourth U.S. Circuit Court. The Senate is also expected to consider another appropriations measure that combines defense spending (S.3159) and Labor, Health and Human Services, and Education appropriations (S.3158).

House lawmakers have left town for August recess, and will not return to Washington until Tuesday, September 4th.

Final Rule Expands Short-term Health Plans Exempt from ACA Rules

The Departments of Health and Human Services, Labor and Treasury jointly issued a final rule which amends the definition of short-term, limited-duration insurance coverage. The widely anticipated policy change permits insurers to sell such plans for an initial period of less than 12 months, thereby overturning the three-month maximum policy established by the Obama administration. The administration also finalized a new policy allowing consumers to renew their plans from year to year for up to 36 months, though they are not guaranteed continued access to their plan.

This is the latest in a series of controversial actions and policy changes the administration is taking to reshape the marketplace for individual health insurance with the intent of facilitating lower-cost insurance options for individuals and families. This policy change expands the types of coverage policies that are exempt from the federal marketplace insurance rules, including the requirement to cover pre-existing conditions, age rating requirements and benefit mandates. In a statement accompanying the rule, Health and Human Services Secretary Alex Azar noted, “These plans aren’t for everyone, but they can provide a much more affordable option for millions of the forgotten men and women left out by the current system.” The administration also included severability language in anticipation of a legal challenge to the new 36-month maximum duration policy.

Critics of the proposal are expected to closely monitor whether there is an exodus of healthier individuals from the ACA’s marketplace plans which in turn could lead to higher premiums for remaining enrollees and market destabilization. As noted in the final rule, however, states have flexibility to establish a different, shorter maximum initial contract term consistent with state law. Therefore, many key approval and enforcement decisions now rest with state regulators. Individual states are beginning to take divergent paths, with some moving to prohibit such policies and others welcoming the non-ACA compliant plans.

Dem’s Report Finds Medicare Drug Price Negotiation Could Save $2.8 Billion

In the release of her latest report on rising prescription drug costs, Sen. Claire McCaskill (D-MO) found that allowing the federal government to directly negotiate drug prices could save the Medicare Part D program $2.8 billion in a single year on the 20 most commonly prescribed brand-name drugs in the program. In the report, “How better negotiation could save billions for Medicare,” Sen. McCaskill compared Part D spending on the 20 most commonly prescribed brand-name drugs in the program to corresponding prices negotiated by the Department of Veterans Affairs (VA) for 2015, and reported that other government agencies permitted to negotiate were able to secure pricing that rose at “significantly lower rates” than wholesale prices in Part D. The Senator’s report goes on to argue for a policy change permitting the practice, saying that “getting bulk discounts is something every business does,” and claiming that not allowing the government to negotiate puts “the profits of big pharma ahead of the interests of seniors.”

With attention to prescription drug costs on the front burner, Democrats and Republicans are amplifying divergent approaches to address consumers’ affordability concerns. In her role as the Ranking Member on the Senate Homeland Security and Government Affairs Committee (HSGAC), Sen. McCaskill has been examining healthcare and prescription drug costs and introduced several bills aimed at lowering costs. Meanwhile, the Trump Administration continues to pursue its own strategy around drug costs, which does not include seeking authority for Medicare to directly negotiate prices with drug manufacturers.

Trump Administration officials and Republican Congressional leaders continue to refute claims about the benefits of the federal government directly negotiating the price of Medicare prescription drugs. In May, Department of Health and Human Services Secretary Alex Azar cited a 2007 report from the nonpartisan Congressional Budget Office that found that negotiations would not achieve lower prices than current third party negotiation an competition in Part D without restricting access to the medicines seniors rely on. The Pharmaceutical Research and Manufacturers of America (PhRMA) touted a recent study in response to McCaskill’s report that found that Part D beneficiaries could live two years less than current life expectancy rates if Part D imposed a restrictive formulary similar to the one used by the VA.

Bipartisan House Committee Leaders Send Letters to Opioid Manufacturers

Leaders of the House Energy and Commerce Committee and the Subcommittee on Oversight and Investigations sent bipartisan letters to three manufacturers of prescription opioid products, Purdue Pharma, Mallinckrodt Pharmaceuticals, and Insys Therapeutics. The letters reference media reports that have alleged concerning practices by these companies and pose a series of questions seeking more information on the companies’ practices and activities pertaining to the opioid crisis. The letters were signed by Committee Chairman Greg Walden (R-OR), Ranking Member Frank Pallone, Jr. (D-NJ), Oversight Chairman Gregg Harper (R-MS), Oversight Ranking Member Diana DeGette (D-CO), Oversight Vice Chairman Morgan Griffith (R-VA), and Committee Vice Ranking Member Kathy Castor (D-FL). This latest development reflects the ongoing bipartisan effort to investigate the complex issues driving the nation’s opioid epidemic as well as its work to mitigate the crisis. The Committee’s press release — which includes links to the three letters — is available here. 

House E&C Leaders Request Additional Information from 340B Contract Pharmacies

Republican leaders on the House Energy & Commerce Committee sent letters to nine contract pharmacies participating in the 340B Drug Pricing Program, requesting responses to questions covering a range of topics, including the scope of their contract pharmacy agreements, the data and processes for tracking prescriptions, and protocols for preventing diversion, among others. The letter was signed by Energy and Commerce Committee Chairman Greg Walden (R-OR), Health Subcommittee Chairman Michael C. Burgess, M.D. (R-TX), and Oversight Subcommittee Chairman Gregg Harper (R-MS),

The letter cites a report issued by the majority staff last January, which itself followed a two-year investigation showing that the 340B program lacks robust oversight, meaningful reporting requirements, and reliable data to keep up with its tremendous growth. Additionally, the Government Accountability Office (GAO) released a report in June which found “weaknesses in the Health Resources and Services Administration’s oversight that impede its ability to ensure compliance with 340B Program requirements at contract pharmacies,” and included seven recommendations to address weaknesses it identified in HRSA’s practices — three of which were subject to push-back from the Department of Health and Human Services (HHS).

The Energy & Commerce Committee has held several hearings on the 340B program, the latest of which occurred in July and focused on contract pharmacies. During the July hearing members also discussed a slate of bills aimed at improving the integrity of the federal drug pricing program. Additionally, the Senate Health, Education, Labor, and Pensions Committee recently concluded its own series of hearings on the 340B program.

CMS Announces 2019 Part D Premiums, MA Benchmarks

The Centers for Medicare and Medicaid Services (CMS) has released their annual Part D National Average Bid Amount and Other Part C & D Bid Information, which notes that the Part D base beneficiary premium is expected to fall from $33.59 this year to $32.50 next year. The release also includes information on the income-related monthly adjustment amounts for enrollees in Part D prescription drug plans who have incomes above certain threshold amounts, the Part D regional low-income premium subsidy amounts, the Medicare Advantage (MA) regional PPO benchmarks, and the Medicare Advantage employer group waiver plan (EGWP) regional payment rates. The upcoming annual Medicare open enrollment period begins on October 15, 2018, and ends on December 7, 2018.

In a release, CMS cites several policy changes as factors in the reduction in 2019 Part D premiums: (1) reducing the maximum amount that low-income beneficiaries pay for biosimilars; (2) allowing for certain generic drugs to be substituted onto plan formularies more quickly during the year; (3) removing the requirement that certain Part D plans have to “meaningfully differ” from each other; and (4) clarifying the “any willing provider” requirement to increase the number of pharmacy options that beneficiaries have.