Health Policy Report

October 9, 2018

The Week in Review

The Senate convened last week to clear an array of high-profile legislative items — headlined by a contentious debate over the nomination of Brett Kavanaugh to be an Associate Justice of the Supreme Court. Prior to consideration of the Kavanaugh nomination, Senators passed a $90 billion funding bill (H.R.302) that reauthorizes the Federal Aviation Administration (FAA) for five years. The Senate also held a final roll call vote on the opioid crisis response legislation, sending the bill to President Trump’s desk for signature into law.

After reviewing the FBI’s report regarding allegations of misconduct against Supreme Court nominee Brett Kavanaugh, the Senate voted to confirm his nomination on Saturday (50-48-1). Kavanaugh’s nomination cleared the upper chamber thanks to the support of previously undecided Sens. Jeff Flake (R-AZ), Susan Collins (R-ME), and Joe Manchin (D-WV). Following the Senate’s confirmation, Kavanaugh was immediately sworn into the high court on Saturday evening.

In notable news from the administration, U.S. and Canadian negotiators struck a deal late last Sunday to replace the North American Free Trade Agreement (NAFTA) with the U.S.-Mexico-Canada Agreement (USMCA). The deal — which still needs to be ratified by the three countries’ legislatures — includes a provision that would give pharmaceutical companies ten years of marketing exclusivity for biologics, barring drug makers with generic alternatives from bringing their goods to the market during that time. Currently, new biologics get 12 years of market exclusivity in the United States, but the revised trade deal would increase the period of market exclusivity in Canada and Mexico.

The Week Ahead

The Senate is due back in Washington today for legislative business. As of now, Senators are expected to take up the legislative vehicle (S. 3021) for reauthorization of the Water Resources Development Act (WRDA). Majority Leader Mitch McConnell (R-KY) has also filed cloture on three presidential nominations, including: (1) Jeffrey Bossert Clark to be an Assistant Attorney General; (2) Eric S. Dreiband to be an Assistant Attorney General; and (3) James N. Stewart to be an Assistant Secretary of Defense.

With respect to the lower chamber, House members have left Washington to hit the campaign trail and are not scheduled to be in session until after the November midterm elections.

Senate Passes Compromise Opioid Legislation

The Senate last week passed sweeping legislation to combat the opioid epidemic on a 98-1 vote. The bill represents a bipartisan, bicameral compromise, including proposals from dozens of members representing both parties and both chambers. Among the provisions in the bill are efforts to increase access to substance abuse treatments through Medicaid, stop illegal shipments of synthetic opioids like fentanyl, and fund grants to combat substance abuse. However, the bill did not address one of the most significant issues that arose during the development of the legislation: Part 2 privacy for substance abuse records. The legislation now awaits President Trump’s signature to become law.

Although the bill passed with broad bipartisan majorities in both chambers, several Democrats had hoped the legislation would go further. House Energy and Commerce Ranking Member Frank Pallone, Jr. (D-NJ), Ways & Means Ranking Member Richard Neal (D-MA), and Judiciary Ranking Member Jerrold Nadler (D-NY) said, “This bill will make a difference, but if we want to seriously combat this crisis, we need to make significant federal investments, and that is unfortunately something that has been missing from this package from the very beginning.” The statement portends a potentially more aggressive approach to addressing the opioid crisis should Democrats win control of the House during the November midterms.

Trade Deal Includes Win for Biologic Exclusivity

Under the recently renegotiated North American trade deal, now titled the US-Mexico-Canada Agreement (USMCA), biologic drugs will have ten years of marketing exclusivity. The new agreement would allow U.S. branded pharmaceutical companies longer monopoly protection on some of the most expensive drugs in Canada and Mexico, and serve as a bigger barrier to generic companies looking to enter the market. Currently, Mexico provides only five years of biologic marketing exclusivity, and Canada provides eight years. Democrats have previously pushed to decrease the U.S. protection as low as seven years, but the new trade deal would ensure 12 years are provided and would ban the U.S. government from dipping below ten years of biologic marketing exclusivity. Republicans celebrated the new trade agreement, declaring that the deal would spread the cost of developing new drugs beyond the U.S. market, and lower pharmaceutical prices for Americans.

FDA Releases Revised Guidance to Thwart Anticompetitive Practice, Increase Generic Competition

Last week, Food and Drug Administration (FDA) Commissioner Scott Gottlieb issued a statement outlining new draft guidance aimed at improving the process for reviewing generic drug marketing applications and boosting competition in the prescription drug market. The proposed changes to guidance for 505(q) citizens petitions will allow the FDA to reject a petition if the agency determines the primary purpose is to delay the approval of a competitor product. The changes were driven by the agency’s concern that many of the petitions have been filed with the sole purpose of delaying competition. The revised guidance follows the FDA’s Drug Competition Action Plan, released in June 2017.

The FDA Commissioner outlined the steps the agency will be taking to remove citizen petitions as a barrier to generic approval and noted this will allow the agency to direct its resources to “petitions that are most likely to present an obstacle to the availability of generic drugs.” The draft guidance states that if a citizen petition is received while a product application is already under review, and if the goal date for that review falls within the next 150 days, the FDA would expect to respond to that petition within 150 days. The revised guidance also discusses the various factors the agency will use to determine if a petition has been submitted with the primary purpose of delaying the approval of a generic drug application, and transparently deny the petition if so. Additionally, the agency’s determination will be part of the petition response, and all petition responses will be publicly available. Commissioner Gottlieb committed that the FDA will highlight these rejected petitions in the agency’s annual report to Congress. To further dissuade companies from improperly using citizens petitions, FDA plans to refer the matter to the Federal Trade Commission for anticompetitive practices.

CMS Updates Local Coverage Determination (LCD) Process

The Centers for Medicare and Medicaid Services (CMS) has released changes to its Medicare Program Integrity Manual aimed at increasing transparency and boosting stakeholder engagement in the Medicare administrative contractor (MAC) local coverage determination (LCD) process. Stakeholders have long been critical of the LCD process, saying that it is ill-defined, opaque, and inconsistent. The changes come as part of CMS’s Patients Over Paperwork initiative and responses to requests for information, and CMS says it will continue to solicit and consider feedback on the changes. The changes directly respond to Congress' requirement in the 21st Century Cures Act for more transparency in the LCD process. Among the key changes to the manual: establishing an LCD roadmap; establishing a clear meeting process; expanding the Contractor Advisory Committee; requiring evidence summaries; retiring old proposals; and establishing a process for requesting an LCD.

CMS Administrator Seema Verma envisions the revamped LCD process as encouraging innovation, asserting that the changes will allow innovative medical technology to reach Medicare beneficiaries more quickly as companies can seek LCDs for their products through a more transparent process. The changes come as Congress considers legislation revamping the LCD process, which has passed the House and is awaiting action in the Senate. The changes address some of the concerns that legislators raised in introducing the bill, including requiring MACs to hold public meetings on proposed LCDs, providing for the submission of public comments, and posting information about meetings regarding the LCD process online.

FDA Announces Additional Medical Device Cybersecurity Efforts

U.S. Food and Drug Administration (FDA) Commissioner Scott Gottlieb last Tuesday announced efforts to strengthen the medical device cybersecurity program. The three new actions are aimed at increasing cybersecurity preparedness and information-sharing among medical device stakeholders, and include a cybersecurity “playbook” for health care delivery organizations and two memoranda of understanding to bring together stakeholders to facilitate information-sharing and transparency around cybersecurity risks. Commissioner Gottlieb also stated that FDA plans to “significantly update cybersecurity guidance for medical devices.” Yesterday’s announcement follows the April release of the Medical Device Safety Action Plan, which outlined the FDA vision for how the agency will continue to enhance programs and processes to assure the safety of medical devices through advancing cybersecurity.

Commissioner Gottlieb stressed that “securing medical devices from cybersecurity threats cannot be achieved by one government agency alone,” and said that “every stakeholder – manufacturers, hospitals, health care providers, cyber security researchers, and government entities – all have a unique role to play in addressing these modern challenges.” In the coming weeks, FDA plans to issue a “significant” update to the premarket medical device guidance finalized in 2014. The revised guidance is expected to reflect the FDA’s current understandings of cybersecurity and highlight the utility of providing customers and users with a “cybersecurity bill of materials” aimed at increasing awareness of potential vulnerabilities. Notably, Commissioner Gottlieb’s statement called attention to the President’s fiscal year 2019 budget which requested funding to create a Center of Excellence for Digital Health. The fate of funding for the new center is tied up in Congress’ ongoing negotiations over the fiscal year spending bill that funds the FDA.