Health Policy Report

The Week in Review

House Democrats forced Republicans to vote against some of their own drug pricing bills last week by packaging them with measures intended to shore up the Affordable Care Act (ACA). As part of the package, Democrats voted on three bills that would help remove barriers to generic drugs entering the market and would crack down on tactics that lawmakers say pharmaceutical companies use to tamp down competition and keep prices high. The bills were bipartisan and passed unanimously out of the Energy and Commerce Committee, but Democratic leaders combined them with legislation rolling back some of what they call the administration’s “sabotage” of the ACA, challenging Republicans to vote against them. Additional details on the vote are included further below.

Additionally, the House passed 13 bills under suspension of the rules, including a financial services measure (H.R. 2578) that would extend the National Flood Insurance Program (NFIP) through Sept. 30. The short-term reauthorization for NFIP is expected to be swiftly taken up by the Senate, as funding for the program is set to expire at the end of the month. Lawmakers also passed an anti-discrimination measure (H.R. 5) that would amend the Civil Rights Act of 1964 to include sex, sexual orientation, and gender identity among the prohibited categories of discrimination or segregation in places of public accommodation. 

In the upper chamber, Senators resumed clearing the presidential nominations queue. In addition to approving a host of judicial nominees, the Senate passed the nomination of Jeffrey Rosen to be Deputy Attorney General of the United States.

The Week Ahead

Lawmakers return for legislative business this week before leaving for a Memorial Day district work period. On the House floor, lawmakers will take up a comprehensive, bipartisan retirement savings package (H.R. 1994) that seeks to: (1) boost incentives for retirement savings; (2) allow small businesses to band together and start multi-employer 401(k)s; and (3) provide retirement eligibility for part-time workers who have worked at least 1,000 hours in one year. Additionally, House Democrats will look to roll back some of the Trump administration’s policies at the Consumer Financial Protection Bureau (CFPB).

In the upper chamber, lawmakers will look to break the impasse over disaster relief funding. Senators will vote on disaster relief legislation after lawmakers and the White House reportedly struck a deal on aid for Puerto Rico as well as funding for “humanitarian needs” at the U.S.-Mexico border. Despite reports of progress on the disaster relief front, it remains to be seen whether President Trump will sign off on a final measure that is not in line with his requests on border funding and aid for Puerto Rico. 

House Passes Drug Competition, ACA Package

Last Thursday, the House passed a package of drug pricing reforms (which were bipartisan) and measures to roll back Trump-era Affordable Care Act (ACA) regulations (which were backed mostly by Democrats). The House passed the package in a 234-183 vote, with Democrats drawing only five Republicans to vote with the majority. The bill is dead on arrival in the Senate, and lawmakers will need to find an alternative vehicle to pass the bipartisan drug pricing legislation.

Packaging the drug pricing legislation with ACA bills was designed to place Republicans in a difficult position, forcing them to choose between supporting bipartisan drug pricing legislation and opposing legislation that strengthens a law opposed by their caucus. Republicans attempted to strip the ACA provisions out of the legislation, but, predictably, the amendment was voted down on a party-line vote. Other amendments were approved by the body, including an amendment put forth by Energy & Commerce Chairman Frank Pallone (D-NJ) that clarifies the process for providing samples to generic manufacturers under the CREATES Act.

CMS Finalizes Regulations on Part B Step Therapy, Leaves Protected Classes Intact

The Centers for Medicare and Medicaid Services (CMS) released a final rule last week addressing drug costs in Medicare Parts B and D, ultimately dropping the most controversial element of their proposal. The long-awaited final rule did not finalize new changes to the “six protected classes” of prescription drugs in Part D, instead putting in regulation practices that are already permitted. On the Part B side, however, the agency implemented a framework for step therapy (ST) for physician-administered drugs. CMS also finalized changes that require Part D plans to implement real-time benefit tools (RTBT) that can integrate with prescribers’ electronic health records (EHRs).

In the proposed rule, CMS had informally considered redefining “negotiated price” to include pharmacy price concessions. The idea was generally supported by pharmacists, though it met considerable resistance from pharmacy benefit managers (PBMs). As patient cost-sharing is based on the list price — somewhat misleadingly referred to as the “negotiated price” — including pharmacy price concessions in that number would reduce the prices that seniors pay out-of-pocket for drugs in Part D. CMS did not implement the redefinition, however, it indicated that it would continue to study the issue, on which it received over 4,000 comments. The agency indicated that it could revisit a redefinition down the road.

Competing Surprise Billing Legislation Introduced in House and Senate

A pair of competing bills to address surprise medical billing were introduced in the House and Senate last week — one led by Energy & Commerce Committee Chairman Frank Pallone (D-NJ) and Ranking Member Greg Walden (R-OR), and another resulting from over eight months of deliberations by a working group led by Sens. Bill Cassidy (R-LA) and Maggie Hassan (D-NH). The bill released by the Senate group calls for an arbitration process to settle disputes between providers and insurers — a policy that is at odds with legislative principles recently released by the White House. The draft released in the House, on the other hand, tracks closely with the Trump administration’s principles by setting a benchmark payment rate for out-of-network services, which is based on the average in-network rate for that geographic area.

Insurers have pushed for Congress to set a low benchmark rate for any out-of-network services —favoring the House draft — while providers are more likely to support the Senate version, which retains their ability to negotiate rates. These competing versions complicate the outlook for surprise billing legislation, as even as the Trump administration has indicated that it would be more closely aligned with the House’s approach. In fact, Ranking Member Walden said last week that he would be willing to consider arbitration, adding that the draft legislation that he released with Chairman Pallone is "in the beginning stages." Moreover, while the Trump administration has been vocal in its calls to address surprise billing, it's unclear how strongly their thumb will be on the scale pushing for their preferred approach; they may ultimately take the policy "win" however they can get it.

The Senate Health, Education, Labor, and Pensions (HELP) Committee is expected to include the legislation in a bipartisan package of other health care bills — including drug pricing legislation — at some point next month.

Budget Caps Deal Could Serve as Major Health Care Vehicle

Congress is heading into another fall fiscal showdown this year as key deadlines are approaching ahead of the 2020 presidential election — and if recent history if any precedent, a deal to increase discretionary spending is likely to be paired with a handful of key health care provisions. Since the Budget Control Act of 2011 was passed, Congress has advanced four major spending agreements to curb sequestration — each of which has served as the primary vehicle for other major policy reforms. In some instances, these policy riders were revenue-raising provisions or spending cuts, but in others these bipartisan budget deals have included provisions that increased federal spending. As Congress engages in high-profile debates on a number of high-profile health care issues, there is a distinct possibility that a budget caps deal could serve as the underlying legislative vehicle for other major policy priorities.

In recent years, major health care policies have frequently been attached to budget agreements. For example, a 2012 extension of the “doc fix,” a 2013 deal to alter Medicaid Secondary Payer rules, a 2015 measure expand Medicaid drug rebates to generic drugs, and a myriad of policies in 2018 (including changes to the Medicare Part D donut hole and repeal of the Independent Payment Advisory Board (IPAB)) were all included in previous deals to lift the budget caps. With prescription drug pricing, surprise billing, Medicare and Medicaid “extenders,” disproportionate share hospital (DSH) cuts, and more on the docket in 2019, it’s likely that a budget deal could again include major policy changes in the health care realm.

Senate Finance Task Force to Examine ACA Taxes

The Senate Finance Committee has established a group tasked with examining several Affordable Care Act (ACA) taxes, including the 2.3 percent excise tax on medical devices which is scheduled to kick back in Dec. 31. The health task force is also looking at the ACA’s medical expense deduction and its $2 fee imposed on certain health insurers and self-insured plans to support the Patient-Centered Outcomes Research Institute (PCORI). The group, co-led by Sens. Patrick Toomey (R-PA) and Bob Casey (D-PA), is one of several bipartisan task forces focused on examining tax policies in the areas of health, community development, workforce, energy and business cost recovery.

Sen. Toomey is one of several lawmakers in both the House and Senate who have pushed for passage of legislation that would repeal the device tax, which was passed as part of the ACA. Since 2015, a pair of two-year moratoria have prevented the tax from taking effect. The Finance Committee’s health task force will focus on establishing more long-term certainty in the medical device space, as well as in the health insurance arena.