Health Policy Report

May 28, 2019

The Week in Review

Senators broke a months-long impasse on disaster relief aid by passing (85-8) a $19.1 billion measure prior to leaving Washington. Congressional negotiators clinched a deal on a final package that would provide: (1) $3 billion for farm disaster assistance; (2) $2.4 billion for Community Block Development Grants; and (3) $3.25 billion for Army Corps of Engineers flood control and storm damage mitigation projects. Meanwhile, the bill does not include a deal on President Donald Trump’s border security request and also omits other rumored policy riders such as Harbor Maintenance Trust Fund reform and Violence Against Women Act reauthorization.

Meanwhile, Rep. Chip Roy (R-TX) objected to the disaster relief bill’s passage by unanimous consent (UC) during last Friday’s informal “pro forma” session in the House. Prior to gaveling out for the day, Rep. Donna E. Shalala (D-FL) said that Democrats plan to bring the disaster aid bill back up on Tuesday at 2 p.m. when the House meets for another pro forma session. If the disaster relief bill cannot be cleared by UC, it will likely be taken up for a roll call vote as soon as lawmakers return on June 3

Elsewhere in the House, lawmakers cleared nine suspension bills out of the House Committee on Veterans’ Affairs. Among the bills that were passed include: (1) a measure (H.R. 1200) that seeks to boost compensation rates for veterans with service-connected disabilities; (2) a bill (H.R. 2374) that would assess the quality of suicide prevention efforts and mental health services offered by the VA; and (3) an act (H.R. 2045) establishing a new Veterans Economic Opportunity and Transition Administration. Additionally, the House passed a bipartisan retirement savings package (H.R. 1994) and legislation (H.R. 1500) that would roll back some policy changes at the Consumer Financial Protection Bureau (CFPB) implemented under former Acting Director Mick Mulvaney.

The Week Ahead

Lawmakers have left Washington for a Memorial Day district work period. Congress will resume legislative business on Monday, June 3.

HELP Committee Releases Legislation Addressing Drug Prices, Surprise Billing, and More

Last Thursday, bipartisan leaders of the Senate Health, Education, Labor, and Pensions (HELP) Committee released a discussion draft of sweeping legislation to end surprise medical billing, increase transparency throughout the healthcare industry, and bring down drug costs. The Lower Health Care Costs Act is a collection of bipartisan proposals, including modified versions of measures that are already receiving Committee consideration, such as legislation to end surprise medical billing. It also includes legislation that has been foreshadowed in the drug pricing debate, such as measures to require pharmacy benefit managers (PBMs) to pass 100 percent of their negotiated rebates to plan sponsors and new provider education initiatives on biosimilars. The package represents the beginning of a process for the HELP Committee, and, given the absence of certain provisions that the Committee has been debating — such as reforms to the 340B program — additional legislation may be forthcoming.

The bipartisan bill has a number of measures in common with legislation already passed by the House of Representatives, including a provision to modernize the Orange Book and Purple Book — which respectively include patent and exclusivity information for drugs and biologics — along with a measure to address exclusivity periods for first-to-file generics to prevent “parking” of that exclusivity. Additionally, a bipartisan working group helmed by Sens. Bill Cassidy (R-LA) and Maggie Hassan (D-NH), both of whom sit on the HELP Committee, released draft legislation to address surprise billing recently. Instead of including the bill verbatim in this package, Chairman Alexander and Ranking Member Murray chose to include multiple options for resolving payment disputes between payers and providers.

In a press release, Chairman Alexander said that the Committee plans to mark up the legislation by the end of June. At the same time, the Committee will mark up the Prescription Drug Rebates Reform Act and the FAIR Act. This legislation represents a step in the process of coming to a bicameral agreement on a variety of bills, including surprise billing, although it is unclear which proposals, if any, will ultimately receive floor votes in both chambers. The Committee is requesting comments on the discussion draft by June 5.

House Committee Leaders Release Legislation to Cap Part D Out-of-Pocket Drug Costs

Bipartisan leaders of the House Ways & Means and Energy & Commerce Committees are soliciting feedback on draft legislation to cap out-of-pocket (OOP) costs under Medicare Part D. The bill from Chairmen Frank Pallone (D-NJ) and Richard Neal (D-MA) and Ranking Members Greg Walden (R-OR) and Kevin Brady (R-TX) would create the out-of-pocket cap on prescription drug costs at the catastrophic threshold (currently $8,140). Additionally, the four-page measure would reduce the government’s share of the catastrophic coverage from 80 percent to 20 percent over four years — ostensibly encouraging Part D plans to better manage costs by increasing their share of payments for high-cost drugs.

Placing a hard cap on Medicare patients’ OOP costs could ultimately be the cornerstone of a major drug pricing package later this year. Thursday’s release is potentially a landmark moment in this year’s drug pricing debate, as the bill represents the most substantial policy change that has been floated with robust bipartisan support. As long as Republicans control the Senate, any major drug pricing idea that is signed into law will have to be bipartisan. So, when Finance Committee Chairman Chuck Grassley (R-IA) took to the Senate floor Wednesday to call Medicare price negotiation ‘a bad dose of policy medicine,’ he was sending a signal to Speaker Nancy Pelosi (D-CA) and House Democrats. That message stands in stark contrast to last Thursday’s proposal to cap patients’ out-of-pocket drug costs. With top Republicans and Democrats on the key health committees throwing their weight behind the idea, its bipartisan support immediately boosts in chances of passage in the Senate. 

This proposal also mirrors one in President Donald Trump's 2020 budget request, which is estimated to cost $14 billion over 10 years. Lawmakers have reportedly floated delaying the Trump administration’s rebate rule — which is estimated to cost $177 billion over 10 years — to offset the cost of this and other drug pricing measures.

The Chairmen and Ranking Members are asking for feedback on the draft legislation as well as comments on additional changes that could be made “to better align the Part D program’s incentives and improve the structure and benefits.” They’ve requested that stakeholders weigh in on how Congress could address the Part D coverage gap, the catastrophic threshold, liability in the catastrophic tier, promotion of lower-cost generic alternatives, improvements to the low-income subsidy program, and premium considerations.

Administration Releases Spring 2019 Unified Regulatory Agenda for HHS

The federal Office of Management and Budget (OMB) has released its Spring Unified Agenda of Regulatory and Deregulatory Actions (Unified Agenda), including new information on forthcoming rules from the Department of Health and Human Services. The Trump Administration noted that agencies continue to identify ineffective regulations for revision or repeal, saying that actions identified in the Unified Agenda will continue to streamline federal programs and actions. OMB generally releases the Unified Agenda in the Spring and Fall. The timelines included in the Unified Agenda tend to be aspirational but demonstrate the administration’s priorities.

Notably, the Unified Agenda revealed that two of the administration’s most controversial drug pricing policies are set to be released later than anticipated. A proposed rule to advance the administration’s International Pricing Index model is now set to be released in August, while a rule finalizing a Medicare drug rebate overhaul is scheduled for a November release date. Both rules were originally anticipated to be released this spring. The administration also indicated plans to release proposed rules on the Stark Law and anti-kickback statute this summer, following up on goals to modernize fraud and abuse regulations outlined by HHS’ “Regulatory Sprint to Coordinated Care” plan announced last year.

OMB also released an updated list of HHS regulatory actions considered “long-term.” These actions now include regulations to streamline and establish the Medical Device De Novo Classification Process, the repeal of a prohibition of the use of pre-dispute, binding arbitration agreements at long-term care facilities, and regulatory provisions to reduce burdens on Medicare and Medicaid providers and suppliers. Additionally, OMB listed a final rule to lower drug prices and reduce out of pocket expenses through Medicare Parts C and D and a final rule to streamline the Medicare claims appeals process and reduce associated burden as long-term actions.

CMS Confirms Part D Rebate Rule will not be Issued Before June 3

The Centers for Medicare & Medicaid Services (CMS) released additional guidance for Medicare Part D insurers last Monday clarifying that the rule addressing safe harbors for drug rebates will not be published before Part D bids are due on June 3. The agency explained they will not change anything about the Part D bid process “unless and until” HHS issues the final rebate regulation, including bid, formulary, total beneficiary cost requirements, and other benefit information requirements. CMS also clarified that nothing in the pending rebate rule would change the authority for Part D plans to utilize the co-pay tier structure.

In conjunction with the rebate rule, in April, CMS Administrator Seema Verma issued guidance advising that Part D plans should not modify their bids in anticipation of changes to the safe harbor treatment of rebates. She also announced the agency plans to offer a voluntary demonstration in calendar years (CY) 2020 and 2021, on the condition there was a change in the safe harbor rules, effective in 2020. CMS intends for the demonstration to mitigate the potential increase in beneficiary premiums, which health policy experts have cited as a likely outcome from the rebate rule. CMS explained that the demonstration would narrow Part D risk corridors from five percent to 0.5 percent — meaning insurers would be responsible for 0.5 percent of the cost of underestimating premiums and Medicare would cover 95 percent of any additional cost.

In the May 20th memo, CMS clarified that the demonstration would only be available if the changes to the safe harbor treatment for rebates are finalized for any part of calendar year 2020. This memo also discusses the types of plans that would (PACE, 1876 Cost Plans, Medicare-Medicaid Plans) and would not (Employer Group Waiver Plans, private fee-for-service) be eligible to participate in the demonstration. According to its updated regulatory agenda, the Administration now expects to publish a final rule with changes to the safe harbor treatment of rebates in November 2019. If this timeline holds, CMS would likely move swiftly to issue updated guidance about the voluntary demonstration. The Administration may also anticipate how to address the impact of the rebate rule and the demonstration if these are rolled out during the Part D open enrollment period. The delayed timeline also means this issue could play into ongoing Congressional negotiations over drug pricing issues.

Sparring at ‘Medicare for All’ Hearing Highlights Partisan Fracture on Health Reform

In the second hearing on single-payer healthcare reforms held by the Democratic House of Representatives, members of the House Budget Committee traded partisan barbs as witnesses from the Congressional Budget Office (CBO) gave analytical testimony on potential changes. The hearing focused on the CBO’s report on the impact of a potential transition to a single-payer system, a document that described the choices and tradeoffs that would await lawmakers if they choose to pursue such reforms. While the proposals discussed in the hearings have no chance of becoming law this Congress, they provide an important guide to how Democrats and Republicans will treat proposals to reform the healthcare system going forward.

Republicans seized on Democrats’ refusal to seek a score any given single-payer proposal, pointing to third-party analyses that showed the costs of Medicare for All — Rep. Pramila Jayapal’s (D-WA) bill in particular — exceeding $30 trillion over ten years. GOP members of the Committee also highlighted possible restrictions on access to new or expensive medicines that could arise under a single-payer system, noting the existence of such policies abroad. For their part, Democrats used their platform to advocate their chosen proposals to arrive at universal health care, whether Medicare for All or a more modest piece of legislation.

CMS Delays CAR-T Cancer Therapy Coverage Decision

The Centers for Medicare and Medicaid Services (CMS) recently postposed a decision — originally due May 17 — on whether to cover breakthrough CAR-T cancer treatment. CMS Administrator Seema Verma explained last Wednesday that her agency is taking its time to determine the national Medicare coverage policy for chimeric antigen receptor T-cell (CAR-T) therapy because the decision will impact the coverage of other highly-expensive, innovative new therapies. She noted that it wasn’t only new technology for the entire medical community, but also new ground for the agency. The CMS Administrator reported that she is concerned about how state Medicaid programs will pay for increasingly expensive but potentially curative therapies and said she will reach out to health experts and researchers to help develop potential federal payment policies. Companies have been meeting with CMS to discuss value-based payment and paying for drugs over time, according to Administrator Verma, although she said there were pros and cons to both approaches. Furthermore, Verma reiterated that the agency would not pursue government negotiation for Part D drugs.