Health Policy Report

The Week in Review

House lawmakers passed a sweeping ethics, campaign finance, and voting rights reform bill (H.R. 1) to finish out their legislative work week. The bill includes provisions that aim to expand voting rights by creating an automatic voter registration system and making Election Day a national holiday for federal workers. It would also reform the nation’s campaign finance system by increasing transparency in campaign donations and prohibiting coordination between super PACs and candidates. While the measure passed in the lower chamber, it’s considered dead-on-arrival in the GOP-controlled Senate as Majority Leader Mitch McConnell (R-KY) does not plan to give the bill floor time.

Additionally, Congressional Democrats are making another push to reverse the Federal Communications Commission (FCC) repeal of net neutrality rules. Democrats in both chambers introduced a three-page bill that would codify the FCC’s since-repealed 2015 Open Internet Order. According to Speaker Nancy Pelosi (D-CA), the House will likely pass the bill “in a matter of weeks.” However, much like the attempt Democrats made in 2018 to preserve the order using the Congressional Review Act (CRA), it’s unlikely that the bill will have enough support to clear the GOP-controlled Senate. To that end. Senate Commerce Committee Chairman Roger Wicker (R-MS) — who has jurisdiction over net neutrality legislation — stated two weeks ago that net neutrality legislation would not be a priority for his Committee this year. 

Elsewhere, the Senate cleared a host of presidential nominees prior to adjourning for the week. Senators voted to confirm the nominations of Eric Murphy to be a Circuit Judge for the Sixth Circuit, Allison Jones Rushing to be a Circuit Judge for the Fourth Circuit, and former Rep. John Fleming (R-LA) to be Assistant Secretary of Commerce for Economic Development. The upper chamber also cleared the nomination of Chad Readler to be a Circuit Judge for the Sixth Circuit despite opposition from Democrats and Sen. Susan Collins (R-ME) over a brief he filed last year that supports a lawsuit led by GOP state officials against the Affordable Care Act (ACA). 

The Week Ahead

President Trump’s budget is expected to be released early this week as the fiscal year (FY) 2020 appropriations process ramps up. Treasury Secretary Steven Mnuchin, Health and Human Services (HHS) Secretary Alex Azar, and Acting Office of Management and Budget Director (OMB) Russell Vought will be making Capitol Hill Committee appearances this week to justify the President’s request ­— which is expected to include a five percent cut across the board to all non-military departments. The budget request also includes $8.6 billion for the President’s border wall priority — a move that could fuel the contentious debate that ultimately led to a 35-day partial government shutdown.

Meanwhile, the Senate will return to action this afternoon. The upper chamber is expected to take up more nominations this week, as well as a resolution of disapproval (H.J.Res 46) that would overturn President Trump's national emergency declaration. Leader McConnell stated last week that he expects the resolution to pass after Sen. Rand Paul (R-KY) joined three other Senate Republicans — including Sens. Susan Collins (R-ME), Lisa Murkowski (R-AK) and Thom Tillis (R-NC) — in announcing he would support the Democratic measure, while roughly a dozen GOP Senators remain undecided. Democrats appear to have the 51 votes they need to secure passage in the Senate, which would force President Trump to issue the first veto of his presidency. The President’s forthcoming veto would likely survive an override attempt, as overturning the emergency declaration does not have the support of a two-thirds majority in the House. 

In the House, lawmakers will resume legislative business this afternoon. For the balance of this week, the lower chamber will consider 13 bills under suspension of the rules. House lawmakers will also consider a resolution (H.Res. 24) out of the Judiciary Committee expressing the sense of Congress that the report of Special Counsel Robert Mueller should be made available to the public and to Congress.

FDA Commissioner Scott Gottlieb, M.D. Announces Resignation

On Tuesday, Scott Gottlieb, the leader of the Food & Drug Administration (FDA), announced he will be resigning his position effective next month. In a note to FDA staff, Gottlieb said he was leaving to spend more time with his family in Connecticut. His resignation took Washington by complete surprise, as he recently hired senior staff and tweeted only two months ago, in response to rumors of his departure: “I want to be very clear – I’m not leaving… [w]e’ve got a lot important policy we’ll advance this year."

Gottlieb, a physician and cancer survivor, was considered one of President Trump’s more admired appointees, and was broadly respected by both Democrats and Republicans in Congress. Since being confirmed to the role of agency head in May 2017, Gottlieb led the FDA on an aggressive agenda to take on a number of hot button issues including drug pricing, e-cigarette enforcement, and the opioid crisis. Gottlieb also made it an agency priority to speed up approvals for generic drugs. "There's nothing that could pull me away from this role other than the challenge of being apart from my family for these past two years and missing my wife and two young children," he wrote.  

CMS Asks for Feedback on Selling Insurance Across State Lines

The Centers for Medicare and Medicaid Services (CMS) announced last week that it is seeking input from stakeholders regarding the elimination of barriers to the selling of health insurance across state lines. The Request for Information (RFI) was issued in furtherance of the Trump Administration’s Executive Order from October 2017. CMS stated its desire to learn how states could best utilize the Affordable Care Act’s Section 1333, which gives states the authority to create Health Care Choice Compacts to facilitate sales across state lines.

Republicans have generally seen the selling of insurance across states lines as a boon to competition and access, but both consumer advocates and the insurance industry itself have generally opposed the concept. Indeed, CMS notes in the RFI that although nine state passed laws authorizing Health Care Choice Compacts, none have yet to set them up. Consumer groups, in particular, have criticized the idea for creating a “race to bottom” that encourages issuers to create and offer plans from states with the most lax regulations.

FDA Issues New Draft Guidance on Biosimilars Naming Convention

On Thursday, FDA Commissioner Scott Gottlieb, M.D. issued a statement announcing a surprise shift in the agency’s views on the naming convention for biosimilars, saying, “We strongly believe in the ability of biosimilars to promote competition, lower prices and foster greater access. And we’re fully committed to the suite of announced and upcoming policies to help advance the goal of a robust, high-quality, competitive market for biosimilar products. But I do not believe that the naming convention should be used to advance these goals if it could come at the expense of the ability to ensure patient safety. Nor do I believe the inclusion of a suffix will frustrate the broader aim of inspiring strong biosimilar competition.”

The decision frustrated proponents of biosimilars, who reacted with disappointment that the naming disparity will support the impression that reference biologics are deserving of separate, preferred treatment. The Biosimilars Forum, for one, released a statement in which they called Gottlieb’s announcement “a direct blow to biosimilars uptake in the U.S.” The Forum statement continued that: “The decision abandons the retrospective addition of a suffix to originator biologics, leading to an unsubstantiated notion that strict pharmacovigilance is only essential for biosimilars. This decision will disincentivize biosimilar uptake at a time when the government should be implementing policies that incentivize the use of biosimilars, as they are one solution to help attack rising healthcare costs.”

FDA’s updated draft guidance explains that:

1. The FDA no longer intends to modify the proper names of biological products that have already been licensed or approved under the PHSA without an FDA-designated suffix in their proper names;
2. The FDA does not intend to apply the naming convention to the proper names of transition biological products; and
3. Going forward, for interchangeable biosimilars, the FDA intends to designate a proper name that is a combination of the core name and a distinguishing suffix that is devoid of meaning and composed of four lowercase letters.

MedPAC Wades into Controversial Drug Pricing Policies: Reference Pricing and Binding Arbitration

On Thursday, Congressional Medicare advisers at MedPAC discussed the merits of two leading drug-pricing policy topics: reference pricing and binding arbitration. A recent Trump administration proposal to incorporate international reference pricing into Medicare Part B and congressional Democrats’ new-found interest in mandating arbitration as a tool to lower drug prices in Medicare loomed large in the debate’s background. “I think it is really important for us to be as thorough as possible in fleshing out these two options because they are both under serious consideration,” observed Medicare Payment Advisory Commissioner Kathy Buto.

While the administration’s International Pricing Index (IPI) proposal seeks to tie U.S. drug prices to those that exist abroad, MedPAC mostly addressed referencing prices within Medicare. During the discussion, some commissioners expressed interest in a version of reference pricing that would place biosimilars and their reference biologics in the same billing codes and to mandate maximum reimbursement amounts based on a median price within the codes.

With regard to the arbitration conversation, Commissioners addressed the difference between binding arbitration and direct negotiation as mechanisms for controlling launch prices for high-cost drugs given the limited competition in Part B. MedPAC staff suggested a “final offer” arbitration model, in which a neutral arbiter decides between Medicare’s offer or the drug maker’s offer.

HHS Secretary Critiques Medicare Kidney Care Policies, Proposes New Models of Payment

On March 4, HHS Secretary Alex Azar announced that the agency is developing new models to better focus Medicare kidney care payments on improving outcomes, including greater reliance on home dialysis, expanding incentives and access to organs for kidney transplantation, and encouraging earlier detection and treatment of kidney disease. According to his remarks at The National Kidney Foundation’s Annual Kidney Patient Summit, Azar stated that Medicare’s ESRD Program is “outdated” and “has some of the worst incentives in American health care.” Although Medicare covers most patients with kidney failure, “we don’t begin spending a great deal on these patients until they’re already sick. It is the epitome of a system that pays for sickness rather than health, and this administration is intent on shifting these priorities,” Azar said.

More than 30 million Americans have kidney disease and Medicare spends around $79 billion to cover people with kidney disease in addition to $34 billion on patients with end stage renal disease (ESRD). If HHS can figure out how to better incentivize pre-dialysis care, Azar suggested that care givers will “have more time to educate patients, help them make informed choices about their treatment options, and prepare them for treating kidney failure as they wish — if and when that becomes necessary.”

House Panel to Initiate its Drug Pricing Legislative Process This Week

House Democrats will begin their formal consideration of legislation to lower drug prices at a hearing of the House Energy and Commerce Committee this week, moving forward on one of their top legislative priorities. The initial measures to be considered by the committee are expected to be relatively small-scale bills that could generate bipartisan support, such as the CREATES Act and “pay for delay” legislation, both of which aim to limit certain legal tactics some drug companies have used to delay the introduction of cheaper generic drugs.

The strategy Democrats are expected to employ is to start with so-called “low hanging fruit” before turning to more ambitious proposals such as allowing Medicare to directly negotiate drug prices. Committees in both the House and Senate have already held numerous hearings on the issue of drug prices this year, but the upcoming Energy and Commerce hearing will be the first one to consider a specific bill. In the Senate, Sen. Chuck Grassley (R-IA), the chairman of the Finance Committee, also supports the CREATES Act and “pay for delay” legislation, raising a strong likelihood that those bills could make it to the desk of President Trump.