Health Policy Report

The Week in Review

House and Senate lawmakers have left Washington to hit the campaign trail.

The Week Ahead

Both chambers are scheduled to resume legislative business one week after the midterms on Tuesday, November 13th. While the House’s schedule has yet to be announced, Senators are slated to take up the legislative vehicle (S.140) for Coast Guard reauthorization and consider the nomination Michelle Bowman to be a member of the Board of Governors of the Federal Reserve.

CMS Proposes to Require Manufacturers to Include Drug Prices in TV Ads

The Centers for Medicare and Medicaid Services (CMS) has released a proposed rule that would require pharmaceutical manufacturers to include the list prices of drugs in direct-to-consumer (DTC) advertisements. Specifically, the proposal would require manufacturers to indicate the Wholesale Acquisition Cost (“WAC,” otherwise known as the list price) for either a typical 30-day regimen or for a typical course of treatment — whichever is most appropriate — as determined on the first day of the quarter during which the ad is aired. The agency is also soliciting comments on potential future actions including include: (1) an enhanced CMS drug pricing dashboard, (2) a new payment code for drug pricing counseling, and (3) intelligent plan selection or the use of intelligent assignment.

In anticipation of the proposal, the Pharmaceutical Research and Manufacturers of America (PhRMA) announced that its member companies would begin to implement their own public disclosures. Specifically, PhRMA members will direct patients to a website that provides the list prices of medicines, out-of-pocket costs, and other context about the potential cost of the medicine and available financial assistance in their ads. Additionally, the biopharmaceutical industry will launch a new platform in early 2019 that will provide patients, caregivers, and providers with cost and financial assistance information for brand name medicines, as well as other patient support resources. PhRMA members have until April 15, 2019 to comply with their self-imposed direct-to-consumer advertisement rules.

In response to the PhRMA proposal, Health and Human Services (HHS) Secretary Alex Azar criticized the pharmaceutical industry in a speech at the National Academy of Medicine’s annual meeting for failing to take action on pricing transparency until the last minute. Placing information on an advertised website — as proposed by the pharmaceutical industry — is not the same as including it in an advertisement, according to the Secretary, although he clarified the updated industry guidance on direct-to-consumer advertising would be a good “co-pilot” to CMS’ proposed requirements.

CMS Names Mary Mayhew as Medicaid Director

The Centers for Medicare and Medicaid Services (CMS) internally announced that former Maine Department of Health and Human Services (DHHS) head Mary Mayhew has been appointed Deputy Administrator and Director of the Center for Medicaid and CHIP Services (CMCS). According to press accounts of an internal CMS memo, Mayhew, who mounted an unsuccessful bid for governor after spending six years in Governor Paul LePage’s (R-ME) administration, will take the reins from ActingDirector Timothy Hill. The position does not require Senate confirmation.

Mayhew’s appointment comes as the Trump Administration is working to advance reforms such as work requirements in the Medicaid program. Under Mayhew’s leadership, Maine DHHS developed an 1115 waiver application that, among other things, would impose work requirements, asset limitations, missed appointment penalties, and, in some cases, premiums on Medicaid recipients. Under the waiver, which is still pending at CMS, Maine would also be permitted to eliminate hospital presumptive eligibility. Mayhew, who took third in the Republican primary for governor in Maine this year, vociferously opposed Maine’s Medicaid expansion in her campaign.

As the midterms approach and Executive Branch appointees think about potential professional moves, Mayhew’s appointment may be instructive for the direction the Trump Administration will set for new hires. Mayhew’s work at CMCS will likely be informed by her time as a state official pushing the envelope on Medicaid reforms. We would expect that any further staffing changes at CMS would follow the pattern of Mayhew and current CMS Chief of Staff and Principal Deputy Administrator Paul Mango, who mounted an unsuccessful run for the Republican nomination for Governor in Pennsylvania this cycle. Mango is a public proponent of changing Medicaid to a block grant from its current state as an entitlement.

CMS May Be Moving Forward with Point-of-Sale Rebate Model

The Centers for Medicare and Medicaid (CMS) has submited a ‘prerule’ to the Office of Management and Budget (OMB) that could potentially require Medicare Part D plans to pass through a certain proportion of rebates to beneficiaries through lowered prices for drugs at the point of sale (i.e. when the pharmacy dispenses the drug). The prerule, entitled ‘Medicare Program; Indexed Price Concession Model,’ could mandate that Part D plans pass through some percentage of rebates at the point of sale rather than withholding them (which is currently commonplace in an effort to keep premiums low). An official publication is likely take the form of an Advance Notice of Proposed Rulemaking (ANPR).

While it's still unclear what specific policy direction CMS intends to pursue, the agency could theoretically mandate that Part D plans pass through some “indexed” percentage of manufacturer rebates at the point of sale. In their RFI, CMS solicited stakeholder input on how to design a policy to require Part D plans to pass through manufacturer rebates, which comprise the largest share of price concessions received by plans. Specifically, CMS considered a requirement that Part D plans pass through a specified minimum percentage of the cost-weighted average of rebates provided by drug manufacturers for covered Part D drugs in the same therapeutic category or class. CMS also contemplated whether that that minimum percentage should be updated — or “indexed” — by the agency, and the effect that any such minimum percentage would have on the competition for rebates negotiated by plans and pharmacy benefit managers (PBMs)

FDA Announces Significant Efforts in Medical Device Cybersecurity Action Plan

Last week, the Food and Drug Administration (FDA) released additional details for actions it is taking to strengthen cybersecurity in medical devices. Tuesday, the FDA announced a formal agreement to work with the Department of Homeland Security (DHS) on a new framework to coordinate efforts on medical device cybersecurity. Additionally, Wednesday the FDA released draft guidance on premarket submissions for management of cybersecurity in medical devices, which aims to update recommendations for device design, labeling, and documentation to be included in premarket submissions for devices with cybersecurity risks.

The announcements are consistent with the Medical Device Safety Action Plan the FDA launched in July and were previewed by FDA Commissioner Scott Gottlieb earlier this month when the agency released its cybersecurity “playbook” for health care delivery organizations, as well as two memoranda of understanding to bring together stakeholders to facilitate information-sharing and transparency around cybersecurity risks. FDA’s efforts also coincide with a growing interest among key congressional committees around cybersecurity generally and health-related cybersecurity issues more specifically.

Additionally, the Department of Health and Human Services’ (HHS) Office of Civil Rights, Tuesday announced it had reached a settlement with a major insurer pertaining to a cyberattack the company faced in 2015. OCR noted that at $16 million, this was its largest ever settlement. As the Administration strengthens its cybersecurity policies, the settlement may signal a concerted effort by OCR to focus on data breaches.