Health Policy Report

August 31, 2015

The Week in Review
The House and Senate were in recess last week.
The Week Ahead
Both chambers of Congress are in recess until Tuesday, September 8. When the Senate reconvenes, members are set to immediately consider a measure which would disapprove of President Obama’s nuclear deal with Iran. For a full rundown on the major legislative issues due to be considered after the summer break, please refer to TRP’s Fall Legislative Outlook.


State Regulators Confirm Some Big Premium Hikes, Force Others Down Considerably
Various states across the country have begun issuing their finalized health insurance premiums for the coming year, and many of the large increases originally proposed by insurers are being upheld by state regulators. This includes hikes of 36.3%, 25.1%, and 25.6% in the largest insurance plans for Tennessee, Kentucky, and Oregon respectively. The Obama administration has played down the hikes and touted the Affordable Care Act (ACA) provision that allows state regulators to negotiate with insurers before large premium increases are finalized. While many states gave yet to issue their finalized rates, Republican opponents are likely to seize on these figures as evidence of the ACA’s failure to keep insurance prices down. 
While some states have accepted significantly higher rates, however, others have seen much more modest increases. Plans from the ACA exchange in Florida will see a hike of 9.2%, which is slightly lower than the proposed 9.5% put forward by insurers. Other plans in Florida were cut even more sharply, such as its largest insurer Aetna, whose proposed 20.9% increase was dropped to 13.9%. The mixed evidence from insurance markets across the country is sure to provide plenty of ammunition for the ongoing fight over the ACA as the 2016 general election approaches. 
Congress to Consider ACA Tax Repeals in Fall
Media reports from last week suggested that bills to repeal certain ACA taxes, notably the medical device tax and the so-called “Cadillac” tax, are set to be considered by Congress after they return from recess. The medical device tax repeal (H.R. 160) passed the House in June with significant Democratic support and a spokesperson for Majority Leader Mitch McConnell (R-KY) has signaled that Republican leadership wants the bill to reach the Senate floor. The largest remaining obstacle, according to the report, is finding a way to replace the funding produced by the tax, with both sides struggling to find a suitable pay-for that will ensure the repeal is budget neutral.
On Friday, National Journal reported that a bill repealing the tax on high-cost health plans, or the “Cadillac tax,” will be introduced by Sen. Dean Heller (R-NV) when Congress returns in September. The tax is due to go into effect in 2018, but it has been the subject of criticism from Members on both sides of the aisle and the target of an intense lobbying campaign from the insurance industry. In the House, the Ways and Means Committee has signaled that they aim to mark up multiple ACA tax bills this fall, including some new measures that have yet to be introduced. Health Subcommittee Chairman Kevin Brady suggested that in addition to the Cadillac tax, a bill reforming the ACA’s rules governing tax-preferred accounts, such as health savings accounts, may be introduced and quickly marked up this fall. Republicans are seeking to rescind the ACA provision that prevents those accounts from being used to purchase over-the-counter drugs.
While the bills are all likely to receive some bipartisan support, many Democrats are hesitant to give any ground on the landmark health care law, fearing that it may lead to more substantial changes. Additionally, the bills are also under veto threat from the White House as the President seeks to protect his signature legislative achievement before leaving office in 2017.
HRSA Issues 340B Omnibus Guidance
On Wednesday, the Health Resources and Services Administration (HRSA) issued guidance on the 340B drug discount program, a program that requires drug manufacturers to provide outpatient drugs to eligible health care organizations at discounted prices. Republican lawmakers have criticized the program as overly expansive and lacking accountability, and this guidance has been viewed as the HRSA’s response to those charges. Many of the proposed policy changes in the “omnibus guidance” are aimed at curtailing eligibility and benefits under the program, including a significant alteration to 340B’s patient definition that will require individuals to undergo outpatient care to receive certain drugs.
Statutory changes to the 340B program were considered for inclusion in the sweeping medical research bill known as 21st Century Cures, but industry advocates urged the House Energy and Commerce Committee to wait for HRSA to issue its long-awaited guidance. Committee member Rep. Renee Ellmers (R-NC) failed to reveal whether the Committee will pick up the issue when Congress returns from recess, only saying that lawmakers will “need to review the proposed guidance in detail.” The lengthy guidance is open for public comment, with the comment period ending on October 28.
FDA Proposes Individual Suffixes for Biologics, Biosimilars
In another highly-anticipated guidance, the Food and Drug Administration (FDA) released its proposal on the nonproprietary naming of biologics and biosimilars. According to the guidance, the FDA intends to incorporate all biologics, including biosimilars, under a shared core substance name, but will assign unique suffixes for each individual product. The new naming model will place substantial compliance costs onto “innovator” drug manufacturers, many of which had lobbied the agency to give specific names to biosimilars while sparing the original biologic from any naming changes.
The details of the guidance stipulate that many originator products will need to change their names in order to comply with the regulation, which could have an adverse effect on the logistical procedures currently used by manufacturers and providers. It remains unclear how the industry will approach this challenge, and the measure is sure to receive scrutiny as the guidance is subjected to public comment. Additionally, the FDA is actively soliciting advice on how to approach “interchangeable” biological products, specifically seeking debate on whether the nonproprietary names for such products should also include distinct suffixes. All comments on the guidance are due by October 26.