Health Policy Report

March 26, 2018

The Week in Review

Congress went for an omnibus roller coaster ride last week as lawmakers struggled to negotiate the terms of the legislative package, but ultimately approved a mammoth $1.3 trillion spending bill ahead of the deadline to prevent a government shutdown on Friday. The 2,232-page bill was released late Wednesday night and will keep the government funded through Sep. 30, 2018 and conforms to spending levels of the two-year bipartisan budget agreement reached in February to adjust defense and nondefense discretionary funding caps for FY2018 and FY2019. Despite little time to pour over the details of the package, the House passed the bill 256-167, followed by the Senate’s approval by a 65-32 margin, and finally President Trump – despite a late veto threat – signing the omnibus into law on Friday.

Stalled negotiations led congressional leaders to abandon action on many controversial policy riders they had considered including in the must-pass bill — likely one of the last major legislative vehicles to reach the President’s desk before the midterm elections. There is no agreement to protect so-called Dreamers, as Democrats had initially sought, nor cuts to funding for sanctuary cities, as Republicans had wanted. Lawmakers also declined to insert Affordable Care Act (ACA) market stabilization language due to disagreements on whether ACA funds could be used for abortions.

Other floor action was relatively limited, with the House passing a pair of financial services measures and a ‘Right to Try’ bill after the measure initially failed in a suspension vote last week. More details on that development are included in our roundup below.

Finally, President Trump continued the recent shake up of White House staff by announcing last week that former U.S. Ambassador to the United Nations John Bolton would be replacing H.R. McMaster as National Security Advisor. The change comes as the White House seeks to take a more aggressive posture in world politics, particularly in regards to North Korea and Iran. The National Security Advisor is not a Senate-confirmed position and Bolton will officially take the role early next month. 

The Week Ahead

Congress is starting a two-week recess for the Easter and Passover holidays with the Senate due back in Washington on Monday, Apr. 8, and the House a day later on Apr. 9. Senate lawmakers will return to Washington with a new colleague, as Mississippi Governor Phil Bryant has tapped Agriculture Commissioner Christina Hyde-Smith to be the new senator from the state – and the first woman ever to hold a Senate seat from Mississippi – after Sen. Thad Cochran (R-MS) steps down for health reasons on Apr. 1.  

Health Care Highlights in the FY18 Omnibus

Senate lawmakers passed (65-32) the omnibus late Thursday night, allowing Washington to start their two-week spring recess without the cloud of a possible government shutdown. Although President Trump threatened to veto the bill in a tweet Friday morning, he announced he had signed the “ridiculous” bill later in the afternoon. Notably, Congressional leaders were unable to overcome hurdles on a number of health care issues, including market stabilization proposals and brand drug manufacturers’ concerns with recent changes to the Medicare Part D “donut hole” costs. The decision to keep these contentious items out came despite inclusion of the 2018 fiscal year spending bill for the Departments of Labor, Health, and Human Services and Education, which has historically been one of the most politically challenging.

On the health care front, the major story coming out of the omnibus deal arguably was what members were not able to accomplish. Congress did not act on any of the controversial issues that were in play over the past several weeks, including market stabilization and changes to the Medicare Part D “donut hole” responsibility. As has been widely reported, the most significant health care related inclusion was the increase in funding for a number of opioids and related programs and initiatives. Congress noted its concerns with some of the approaches the Administration has taken to date with its dissemination of opioid-related funding. To this end, appropriators provided detailed direction which appear designed to improve the potential uses of funding and transparency around allocation of the funding. The bill should provide both members and President Trump with much to tout about around their opioids work ahead of the midterm elections.

Overall, Congress agreed to $3.6 billion for various opioids and related programs. These will augment funding for existing programs and provide dollars to launch new initiatives. Some Congressional leaders have called this a first-year down payment on the $6 billion for opioid addiction and mental health programs that was allocated over two years in the Bipartisan Budget Act the President signed last month.

Right to Try Act Passes House on 267-149 Vote; Faces Uncertain Success in Senate

Wednesday evening, the House passed the Right to Try Act (H.R. 5247) on a vote of 267-149, with 32 Democrats joining all but two Republicans in support. Previously, the bill failed to garner the two-thirds majority needed to pass under “suspension of the rules,” which is normally reserved for non-controversial bills. Democrats have raised concerns over the potential exposure of patients to unsafe products. Additionally, the House-passed bill narrows the eligibility criteria for patients from language that passed in the Senate last year.

The measure would allow terminally ill patients access to experimental treatments still being considered by the Food and Drug Administration. Although a version of the bill was passed unanimously in August by the Senate, the House updated the language to narrow the definition of patients eligible for the loophole to treatment, strengthened informed consent requirements, gave greater flexibility for the FDA to determine how use under “right to try” will impact a drug’s approval, and equalized liability for doctors and drug makers.

With the fiscal year 2018 omnibus provisions now enacted, the path for passage of a “right to try” bill in the Senate has become more complicated as Republicans are now tasked with finding another vehicle to attach the language to. Alternatively, the bill’s sponsor – Sen. Ron Johnson (R-WI) – could threaten to block another bill if his language isn’t attached. Neither route poses guaranteed success for the Right-to-Try movement.

CEA Issues Paper Critical of ACA's Impact on Health Insurer Profits

The White House Council of Economic Advisers (CEA) has released a brief paper addressing the practices and profitability of health insurance companies in following implementation of the Affordable Care Act (ACA). The report is critical of both the industry and the ACA generally, saying that after initial losses, health insurers have adjusted to the characteristics of the marketplace risk pools and the Medicaid expansion population. The CEA writes that insurers’ post-ACA profits have risen due to “…substantial premium increases, government premium tax credits that pay for those premium increases, and the large, government-funded, Medicaid expansion.” According to the CEA, the ACA subsidies are structured to ensure that, “insurance companies receive subsidies regardless of how high the premiums go and reduc[e] incentives for price competition as taxpayers fund almost all of the higher premiums.” Finally, the paper notes that the recent tax reform bill is likely to further increase profitability for all health insurers.

So-called market stabilization had been one of the controversial issues playing a role in the extended negotiations on the 2018 fiscal year omnibus appropriations package, and could fuel continued efforts to pass a stabilization bill. This report could lend support to some ACA critics that have claimed extending subsidies for health insurers would be an unnecessary “bailout” of the industry and that insurers are benefitting from state funds through Medicaid expansion. Further, the CEA’s brief could bolster the case for the Trump Administration’s efforts around regulatory changes impacting the health insurance marketplaces and ACA subsidies, including proposals creating more flexibility around Association Health Plans and short-term, limited duration plans.   

President Trump Calls for Action, Investment to Tackle Opioid Crisis

Last Monday, President Trump, the First Lady and senior administration officials traveled to New Hampshire to roll out the White House’s new Opioid Initiative. At the press event, the President offered remarks on the issue, spotlighted individual families personally affected by opioids, and praised federal employees who have been on the front lines. As was widely reported earlier that day, the specific proposals in the President’s plan fall into three categories, namely: (1) preventing drug use initiation and reducing demand; (2) cracking down on bad actors fueling drug supply; and, (3) expanding access to evidence-based, world-class care and treatment.

The President focused his remarks largely on the opioids proposal; however, he also weighed in on several tangential issues. He connected the Administration’s promised border wall to the opioid crisis, saying that it would help keep heroin and fentanyl out of the United States. In backing the role of law enforcement in the crisis, the President also controversially alluded to capital punishment for certain drug offenses, saying that the issue required  “toughness [that] includes the death penalty.”

The President announced that the White House will hold a press conference/event on prescription drug pricing issues in about a month. Health and Human Services Secretary Alex Azar said they will roll out a slate of new proposals designed to decrease costs and pass on discounts to patients in addition to advancing existing efforts. Trump expressed strong support for federal “Right to Try” legislation and called on Congress to “get it done.” He stated they will launch a massive education and awareness campaign, including spending significant sums pushing out stories on TV and through the Internet. Further, they are standing up a website, “” where individuals can share their story about opioid addiction.

President Trump also emphasized the need to reduce front end demand and called for additional investment for development of non-addictive pain killers. He discussed the specific goals around overprescribing and focus on evidence-based treatment, suggesting that the Administration would use its authority in various public health care and insurance programs to support these goals. Lastly, the President applauded ADAPT Pharm®, maker of NARCAN® (naloxone HCl) which announced it will provide free NARCAN® supplies to all high schools, colleges and universities in the United States free of charge and support education and awareness programs.

Congress Presses CMS to Address Medicaid Drug Misclassification, Narrow Exceptions

A bipartisan group of lawmakers from the House and Senate sent a letter to Centers for Medicare and Medicaid Services (CMS) Administrator Seema Verma last Thursday, requesting additional information on CMS’s oversight of the Medicaid Drug Rebate Program (MDRP).  The letter follows a Department of Health and Human Services (HHS) Office of Inspector General (OIG) report showing a possible loss of $1.3 billion in rebates for just ten drugs and an established history of congressional interest in the issue, which was amplified by drugmaker Mylan’s misclassification of their epinephrine auto-injector, EpiPen, in a way that forced state Medicaid programs to pay a higher price for the drug. The letter was signed by leaders of the Senate Finance Committee, House Energy and Commerce Committee and Health Subcommittee, and House Oversight and Investigations Health Subcommittee.

Several of the members, particularly Sen. Grassley, have been holding CMS’s feet to the fire around the misclassification controversy and related issues. The letter appears to formalize the conversations and requests that members have made to CMS for more than a year.

Among the requests the health leaders made to CMS were: (1) improve transparency surrounding the breadth of the misclassification issue and drug pricing; (2) notify the members of CMS’s plan to address the OIG report’s findings and recommendations; (3) clarify whether the administration needed greater authority to address misclassification offenders; and (4) provide information about the “narrow exceptions” process the agency is utilizing to consider a drug manufacturer’s request to continue to classify a drug approved under the New Drug Application as a non-innovator.