Health Policy Report

May 29, 2018

The Week in Review

In Congress, lawmakers in both chambers enjoyed a rare week of advancing bipartisan measures to the White House to be enacted into law. Two of those measures came from the House — namely a financial regulation reform bill (S. 2155) and “right-to-try” legislation (S. 204) — while the Senate pushed through the VA MISSION Act (S. 2372), a $55 billion authorization for the Department of Veterans’ Affairs (VA) that makes some structural reforms to its health care delivery. All three measures were passed with at least some support from the Democratic minority, although Democrat leaders had opposed both the financial regulatory reform and right-to-try bills. President Trump has already signed S. 2155 into law and is expected to follow suit with the other two measures in the coming days.

Aside from that work, House lawmakers also passed the $717 billion FY19 National Defense Authorization Act (NDAA), an annual bill that broadly sets Pentagon policy and funding levels. This year’s iteration is notable for a sizable funding bump ­– reflecting a two-year budget deal struck by Congress earlier this year – as well as an emphasis on future threats in the space and cyber theatres. The Senate’s companion version of the legislation was advanced out of the Senate Armed Services Committee this week, with a conference to reconcile the two chambers’ bills likely coming later this summer.

In addition to their vote on the VA bill, senators approved a handful of nominations, most notably Jelena McWilliams to head the Federal Deposit Insurance Corporation. McWilliams replaces Obama Administration holdover Martin Gruenberg, and comes to the FDIC as the regulator prepares to implement changes enacted into law by S. 2155 last week. She is also likely to speed the regulators’ work at unwinding other rules, as Gruenberg had been an obstacle to those efforts from his position as FDIC Chair

Finally, on the political front, primary elections were held last Tuesday in Arkansas, Georgia, Kentucky, and Texas. It proved to be another successful primary night for upstart female Democratic candidates as voters bucked some candidates with deeper political support and governing experience. History was also made in Georgia, where former state House Minority Leader Stacey Abrams became the first black woman to win a major-party nomination for governor in any state in the country. Abrams will face the winner of a July 24 runoff between Lt. Gov. Casey Cagle and Secretary of State Brian Kemp.

The Week Ahead

Both chambers are in recess for Memorial Day. The Senate aims to return on Monday, June 4, to consider a series of lower-level judicial confirmations, with the House scheduled to reconvene a day later.

CBO Estimates 15% Increase in 2019 ACA Premiums

The Congressional Budget Office (CBO) has issued a new report on the Affordable Care Act (ACA) to update its baseline projections of the federal costs for subsidies under for the 2018–2028 period. The report notes that ACA benchmark premiums are expected to increase by 15 percent in 2019 and seven percent annually through 2028 — largely attributed to the repeal of the individual mandate penalty and expansion of low cost health plans. Additionally, CBO estimates that 35 million people could lack coverage by 2028 due to rising premiums and the elimination of the individual mandate.

The report also states that for ACA-compliant plans, average premiums in 2018 are roughly 34 percent higher than this time last year. CBO cites the cause for this year’s premium increases to be: (1) the elimination of cost-sharing reductions from the federal government; (2) more people living in area with only one insurer in the marketplace; and (3) insurers assuming less enforcement of the individual mandate this year as the primary causes for the 34 percent spike. CBO also forecasts that the federal government will spend $685 million subsiding health care for adults under the age of 65 this year.

While the repeal of the individual mandate penalty and expansion of short-term and association health plans are expected to further contribute to increased premiums, CBO has lowered the estimate of how many more people will be uninsured due to repeal of the individual mandate. There will be 5 million more uninsured Americans in 2027 due to changes in the GOP’s reform bill, according to the agency’s latest projections — far fewer than then 13 million more uninsured that the agency previously projected. CBO also expects insurance marketplaces to be stable in most of the country, noting that that the cutoff of cost-sharing subsidy payments to insurers will result in roughly three million more people buying subsidized insurance through the ACA marketplace.

House Sends 'Right to Try' Legislation to Trump's Desk

The House voted 250-169 to pass ‘right to try’ legislation (S. 204) Tuesday, sending to the President’s desk a controversial measure aimed at making it easier for sick patients to access experimental drugs. The bill, passed by the Senate last August, has recently become a top priority for the White House, spurred by the long-time support of Vice President Mike Pence. The White House has formally acknowledged the administration’s support for the bill, suggesting that “patients and their families should be able to seek access to potentially lifesaving therapies while those treatments are still under review by the FDA.” Meanwhile, opponents say the bill will weaken the FDA’s oversight and argue the agency already has a way for terminally ill patients to use unapproved treatments, under which FDA says it approves more than 99 percent of requests.

The bill will allow the provision of unapproved, investigational drugs to terminally ill patients that have exhausted approved treatment options and are unable to participate in clinical trials involving the innovative treatments. Only drugs that are in active clinical trials and have cleared initial preliminary testing may be considered. It will require the manufacturers of eligible investigational drugs to report annually to the FDA on usage under the law, a summary of which would be published online by the agency. Additionally, the bill will not obligate drug makers to provide the treatments, limits their liability, and does not prevent them from charging patients for associated costs if treatment is provided.

In August, the Senate passed ‘right to try’ legislation by unanimous consent, but the House took up its own version of the measure after Energy and Commerce Committee Chairman Greg Walden (R-OR) expressed concerns with the Senate bill. But after House Democrats voiced concerns about patient safety — a sentiment reinforced by various patient advocacy groups — Senate Democrats followed suit, and the path forward in the upper chamber became increasingly tenuous. As Senate Minority Leader Charles Schumer (D-NY) recently objected to a request to bring the House bill up by unanimous consent, ‘right to try’ advocates have saw a House vote on the Senate-passed version as their best path forward. The House had already passed a separate version of ‘right to try’ legislation on a 267-149 vote, largely along party lines. President Trump has repeatedly acknowledged that FDA Commissioner Gottlieb would be running point for the administration on the bill, and the Commissioner has conceded that the version passed by the House last week could make it harder for the agency to protect patients. He reasoned that the bill would require “a little bit more…in guidance and perhaps in regulation” than the refined House version of the bill, which received input from supporters, drug makers, and FDA staff.

CMS to Ask for Proposals to Allow Third Party Vendors to Buy Part B Drugs for Doctors

The Centers for Medicare & Medicaid Services (CMS) may look to revive a defunct program that allowed third parties to buy drugs on behalf of physicians. CMS is asking third parties for proposals to bring back the Competitive Acquisition Program, which failed more than a decade ago, as part of the president’s plan to lower drug prices. Similarly, President Obama had proposed bringing the program back as part of a larger Part B demonstration, but was advised to implement an amended program instead. The program was originally created by the bipartisan Medicare Modernization Act to allow third party non-profits to buy and sell drugs to physicians, in the interest of removing doctors from the business of buying and storing drugs. The latter was assumed to add a level of risk for providers, however there was not sufficient interest in the original program leading to its demise.

HHS Secretary Alex Azar has noted that the market has changed considerably since the program failed, and said he thinks there will be interest in a future relaunch of the Competitive Acquisition Program. He clarified the program would be used for drugs that are not moved to Part D, as Trump calls for more drugs to be moved from Part B to Part D under his drug pricing plan. The request for information that accompanies the president’s drug-price plan says the administration might change the Competitive Acquisition Program, but the general approach — letting doctors choose either to get drugs from vendors that are selected by a bidding process or to continue buying drugs and being paid by the current reimbursement formula — would remain the same.

Senate HELP Committee Announces Hearing on Trump's Drug Pricing Plan

The Senate Committee on Health, Education, Labor, and Pensions (HELP) announced last week they will hold a hearing on June 12 to examine the Trump administration’s recent drug pricing proposals. The hearing — entitled ‘The Cost of Prescription Drugs: Examining the President’s Blueprint ‘American Patients First’ to Lower Drug Prices’ — will feature testimony from the Department of Health and Human Services (HHS) Secretary Alex Azar, who is expected to continue his stump on behalf of President Trump’s 40-page plan. While Senate HELP Committee Chairman Lamar Alexander (R-TN) has praised the blueprint, many Republicans have said little about the president’s plan since it was announced May 11. The hearing will offer insights to senators’ thoughts about those proposals, as well as insights into the administration’s implementation plans. This hearing will be the Committee’s fourth in a series of hearings this Congress on examining the cost of prescription drugs.