Health Policy Report (10/28)

October 28, 2019

The Week in Review

Senators began full consideration of a four-bill spending package last week as the upper chamber looks to jumpstart its fiscal year (FY) 2020 appropriations process. The first Senate “minibus” includes spending measures for Agriculture, Commerce-Justice-Science, Interior-Environment, and Transportation-HUD, all of which were approved by the Appropriations Committee on a bipartisan basis. While Democrats plan to support the first package, Minority Leader Chuck Schumer (D-NY) noted that Democrats still hold reservations about other bills — specifically the spending measures for Defense, Military Construction-VA, Homeland Security, and Labor-HHS-Education — due to disagreements over “poison pill” issues such as border security and family planning.

In other key spending news, Senate Appropriations Chairman Richard Shelby (R-AL) conceded last week that lawmakers will likely need to pass another continuing resolution before the Nov. 21 government funding deadline. As negotiations between House and Senate appropriators continue to lag, Chairman Shelby speculated that the next stopgap would fund the government through February or March of next year.

Meanwhile, House lawmakers passed a sweeping corporate transparency measure. Aimed at addressing concerns over "shell corporations," the Corporate Transparency Act would require persons forming corporations and limited liability companies to disclose the identities of those who control the entity to the federal government. Lawmakers also passed a bill out of the Judiciary Committee aimed at curbing foreign election interference and misinformation campaigns.

The Week Ahead

House and Senate lawmakers will reconvene later today to close out the October legislative session. In the upper chamber, Senators will resume consideration of their first fiscal year (FY) 2020 appropriations package. While the Senate had originally planned to take up a second minibus containing funding for Defense and the opioid crisis, partisan disagreements over President Donald Trump’s border security policies will likely sidetrack consideration of the measure until November. Barring any procedural or political hiccups, the first minibus is expected to pass later this week prior to the next district work period.

In the House, lawmakers have queued up consideration of a host of bills out of the Natural Resources Committee. This includes: (1) a bill aimed at protecting the watershed, ecosystem, and cultural heritage of the Grand Canyon region in Arizona; (2) legislation that would provide for the designation of certain wilderness, recreational management, and conservation areas in Colorado; and (3) a measure that would provide for the withdrawal and protection of certain federal land in New Mexico. Additionally, House will consider 21 suspension bills out of the Energy and Commerce, Education and Labor, and Transportation and Infrastructure Committees throughout the week.

Ways & Means Passes Speaker Pelosi’s Drug Pricing Bill

Last Wednesday, the House Committee on Ways & Means advanced landmark legislation to reduce drug prices in the United States. With the exception of a substitute amendment offered by Chairman Richard Neal (D-MA), the Committee failed to adopt any amendments to H.R. 3, House Speaker Nancy Pelosi’s signature plan to reform drug prices in Medicare Parts B and D over a nearly 12-hour markup. The Committee passed the legislation on to the full House of Representatives on a party-line vote, with Rep. Lloyd Doggett (D-TX) voting present. Ways & Means is the final committee of jurisdiction for H.R. 3, and its passage means that the next stop for the legislation is the Rules Committee before moving on to the House floor. No Republican on either Ways & Means, Energy & Commerce, or Education & Labor voted to refer the legislation to the full House, underscoring the partisan nature of the bill and indicating that if and when the bill comes to the floor, it is unlikely that it will attract meaningful Republican support.

The Rules Committee will work to reconcile the three versions of H.R. 3 passed by the committees of jurisdiction. It is likely that Rules will propose and adopt a structured rule for H.R. 3 in keeping with past practice for controversial legislation. At that point, the House will consider amendments to H.R. 3 and vote on final passage. Staff have indicated that the bill may go to the House floor in early November.

Republican amendments reflected concerns over the impact on innovation due to what they termed “price controls” in Title I of H.R. 3, with Ranking Member Kevin Brady (R-TX) saying that “one cure fewer is one too many.” Those amendments included measures to exclude certain diseases or disease categories, including cancer and Alzheimer’s disease, from H.R. 3’s negotiations and measures to prevent the implementation of the act if it negatively affects U.S. biotechnology jobs and investments. GOP members decried what they termed a lack of bipartisanship in the drafting process of H.R. 3, pointing to a number of policies with bipartisan support that were not included in the bill. Rep. Jodey Arrington (R-TX) offered an amendment to create a chief pharmaceutical negotiator position at the United States Trade Representative (USTR), but withdrew it following the indication that Democrats could work with him on it. GOP members also introduced a number of amendments that would require the passage of pharmacy benefit manager-negotiated rebates to beneficiaries at the pharmacy counter, including one focused solely on negotiated rebates for insulin. On the Democratic side, Rep. Doggett offered an amendment to repeal the noninterference clause, which was voted down with very few Democratic votes in favor.

Republicans Release Health Care Plan Ahead of 2020 Elections

The Republican Study Committee (RSC) released their health care plan last Tuesday, providing a platform guide for the GOP in the 2020 elections and establishing an Affordable Care Act (ACA) replacement plan for the party. The RSC’s health care plan would replace the ACA with a state-grant system, and pre-existing conditions would be protected under HIPAA and risk pools. Chairman Rep. Mike Johnson (R-LA) noted that the proposal would “protect individuals with pre-existing conditions; empower Americans with greater control over their health care decisions and dollars; and personalize health care to meet individual needs.”

The new RSC framework provides Republicans with a rebuttal to Democratic “Medicare for All” proposals ahead of the 2020 elections and looks to fulfill President Trump’s declaration that the GOP would become the “party of health care.” Although the RSC stressed that the plan is just a framework — it lacks, for example, set funding figures for states — and will not be pushed as legislative language, Republicans are hoping the plan will provide a defense against the perception that the party has no plan for fixing the health care system they’ve been accused of attempting to sabotage. RSC Health Care Task Force Chair Rep. Roger Marshall (R-KS) said health care would be the defining issue of the 2020 election and asked, “Do you want a president who wants to have the government take over your health care, or do you want personal choices?” He added that the proposal was “how we’re actually going to get our majority back.” Although the White House has yet to officially throw support behind the plan, Chairman Johnson noted the President has been encouraging and told members to “go get ‘em.”

Although the plan is being touted as a fresh alternative to “Medicare for All,” the core of the proposal relies on ideas the party tried to push during the 2017 movement to eliminate the ACA. The plan would roll back Medicaid expansion and many of the regulations surrounding the individual market, to be replaced with federal block grants to assist states in establishing health insurance markets of their own. States would be given the freedom to use the funding towards supporting low-income patients and creating “guaranteed coverage pools” — ideas pulled from Sens. Bill Cassidy (R-LA) and Lindsey Graham’s (R-SC) failed ACA alternative. Additionally, the RSC argues that the plan will offer plentiful protections for those with pre-existing conditions through a wide array of low-cost coverage options created via “guaranteed coverage pools,” fewer benefit requirements for health plans, and an equalization of the tax treatment for employer-sponsored and individual plans. States would be left with the responsibility of deciding which key ACA protections to keep under the plan and would need to determine whether to require plans set minimum health benefits or allow plans to set price based on age.

CMS Administrator Demurs When Pressed by Dems on Administration’s Health Plan

The House Energy and Commerce Oversight Subcommittee held a hearing last Wednesday on actions taken by the administration to “sabotage” the current health system and Affordable Care Act (ACA) law. Centers for Medicare & Medicaid Services (CMS) Administrator Seema Verma testified before the Committee for the first time since Democrats won a majority in the House, and Democratic members were eager to question her role in many of the recent administration actions they found objectionable. A statement from Chairman Frank Pallone (D-NJ) and Oversight Subcommittee Chairwoman Diana DeGette (D-CO) accompanying the hearing notice last week noted that Administrator Verma has played a “key role” in the administration’s “ongoing efforts to sabotage Americans’ health care while flouting our Congressional oversight requests,” and that the lack of accountability would end at the hearing yesterday.

Democrats set a combative tone for the hearing, and many used the majority of their time to list actions the administration and Administrator Verma have taken that they view as harmful to the health care system. Several Democratic members pointed out that while the administration has stated they have a plan if the ACA is struck down in Texas v. Azar, no details have been revealed. They questioned Administrator Verma repeatedly on whether any plan truly existed, and what it might offer to ensure Americans don’t lose coverage or protections. Rep. Joe Kennedy (D-MA) also grilled Administrator Verma on Medicaid work requirements and asked her to justify her personnel spending. Republicans repeatedly apologized for the “hostile nature” of the hearing and spent their time asking the Administrator to elaborate on her successes in the position and about CMS work on specific issues of interest. 

Additionally, Energy & Commerce Chairman Pallone sent a letter to CMS and the Department of Health and Human Services (HHS) recently threatening to subpoena several documents unless they were submitted to the committee by October 30. Chairman Pallone and others have been requesting access to documents since mid-June, including an Office of the Actuary (OACT) analysis that Administrator Verma referred to in an August 2018 memo to Secretary Azar regarding several policy ACA-related recommendations that the administration was considering at the time — such as ending “silver-loading” and auto-enrollment and changing the methodology used for adjusting premiums. Administrator Verma avoided questions about the matter at the hearing, noting that HHS handled all document requests. She explained that she was satisfied with the final rules that were released and that lower premiums and expanded care choices demonstrated there was no cause for concern.

MACPAC, CMS Release New Data, Report on Addiction Treatment

Last Thursday, the Medicaid and CHIP Payment and Access Commission (MACPAC) released a report to Congress on Medicaid utilization management policies for medication-assisted treatment (MAT). Overall, the MACPAC analysis found that Medicaid utilization management policies vary widely among states and within states for different medications. MACPAC Chair Melanie Bella highlighted the study’s positive findings, saying there is “a trend among states to eliminate prior authorization,” which has been a potential barrier to MAT access. However, Ms. Bella also noted that other approaches make it more difficult to obtain MAT and perpetuate a large treatment gap. The MACPAC study found that Medicaid prescriptions for MAT medications increased dramatically from 2013 to 2017— buprenorphine prescriptions nearly tripled, from approximately 1.8 million to 5.2 million, and naltrexone prescriptions more than quadrupled, from 99,000 to 444,000. Regarding the treatment gap, in 2017, less than half (44 percent) of Medicaid beneficiaries under age 65 with opioid use disorder received any substance use disorder treatment.

Also Thursday, the Centers for Medicare & Medicaid Services (CMS) released the first Substance Use Disorder Data Book. This compendium catalogs the number of Medicaid beneficiaries with a SUD and the services they received, including national and state level data on treatment service utilization. The inaugural version of the data book reflects 2017 data. The agency noted that an online tool will be available on soon.

The MACPAC report and new Medicaid data base serve as important information sources as policymakers continue to assess the impact of the SUPPORT Act provisions and remaining gaps. Congress and the administration may utilize the new data and study to develop and advance changes to Medicaid and MAT policies to address ongoing barriers to opioid and substance use disorder treatment. Additionally, stakeholder organizations are likely to seize upon the findings to undertake state-level initiatives to reduce the treatment gap. 

CRS: Pelosi’s Drug Pricing Bill May Be Unconstitutional

A new report from the nonpartisan Congressional Research Service (CRS) concludes that House Speaker Nancy Pelosi’s (D-CA) drug pricing legislation (H.R. 3) might violate as many as three provisions of the U.S. Constitution. The report, first published for congressional staff on October 21, suggests that the bill might be in conflict with the Fifth and Eighth Amendments, as well as Congress’ taxing power under the Constitution. Notably, the report does not reach a definitive conclusion as to whether the bill is unconstitutional, indeed, the report notes that drug makers would face an uphill battle if they chose to challenge the law in court.

Regardless of the legal challenges, H.R. 3 stands virtually no chance of becoming law in the 116th Congress. Moreover, it’s unlikely that these revelations will deter Democrats from moving forward with a politically-motivated House vote in November. Instead, the report will provide political ammunition to Republicans and pharmaceutical stakeholders who have already been vocal in their opposition to the anti-industry drug pricing package.

As detailed in the report, the most problematic portion of the bill is the provision that escalates taxes on manufacturers who refuse to negotiate with the government over their drug prices. The report notes that while courts have granted Congress a lot of flexibility when it comes to taxing, Congress’ authority is more tenuous with taxes that are actually fines. For example, the report notes that “the Supreme Court has identified a number of factors that are indicative of a regulatory, rather than revenue, motive, including whether… [t]he amount of the tax is proportional to the ‘extent or frequency’ of the [violation].”

Further, even if Congress does have the power to levy the tax, it could still be considered “excessive” under the Eighth Amendment’s excessive fines clause, CRS finds. “Assuming the excise tax is not authorized by Congress’s taxing power alone and is actually a means of enforcing a regulatory drug pricing statutory scheme, it could be viewed as a punitive measure subject to the Excessive Fines Clause,” the report concludes.