Health Policy Report

November 23, 2015

The Week in Review

After the shocking terrorist attacks in Paris, political discourse in Washington centered on crafting an appropriate response and whether any policy changes should be made regarding the Syrian refugees already set to come to the United States. Many Republicans, joined by some Democrats, expressed fear that members of the Islamic State in Iraq and Syria (ISIS) would use the refugee program as cover for entry into the United States, leading the House to pass legislation (H.R. 4038) on Thursday that would require an extraordinarily high level of vetting for every refugee entering the US from Iraq or Syria. The bill, and the general calls from Republicans for the US to reverse its refugee program, was fiercely rebuked by President Obama, who has already issued a veto threat on the measure. Nonetheless, the bill passed by a margin of 289-137, with dozens of Democrats facing public pressure to clamp down on the refugee program, voting in favor. 

Other action in the House included the passage of a series of financial services reform bills, including a measure (H.R. 3189) that would force the Fed to implement a rules-based approach to interest rate decisions, require audits of Fed functions related to monetary policy, and place restrictions on the institution’s emergency lending powers. Another bill (H.R. 1737) targets the Consumer Financial Protection Bureau (CFPB), specifically eliminating the agency’s guidance on compliance by indirect auto lenders with fair lending requirements. Finally, the House also passed a bill (H.R. 1210) altering the CFPB’s rules regarding the disclosure of mortgage borrowing obligations and its definition of a “qualified mortgage.” All of the bills passed along largely partisan lines, with one (H.R. 3189) already garnering a veto threat from the White House.

The Senate, meanwhile, voted to send a bill (S.1177) that would reauthorize elementary and secondary education programs to conference with the House. The bill is seen as a replacement to the George W. Bush-era “No Child Left Behind” law, but this version would give more responsibility to the states for setting educational standards. Finally, to avoid a November 20 deadline, both the Senate and House passed a two-week patch in highway funding authorization to allow for negotiators to iron out differences on H.R. 22 and enact the first multi-year highway authorization since 2012. The patch was quickly signed by the president, and the highway bill is likely to be among the first issues dealt with by Congress after the Thanksgiving break.    

The Week Ahead

The House and Senate went on recess starting Friday, allowing for Members to head home for a week-long recess in observance of the Thanksgiving holiday. Both chambers are scheduled to return to Washington on Tuesday, December 1. 

UnitedHealth Report Stirs Alarm about ACA Exchanges 

In an announcement that surprised stakeholders, UnitedHealth declared on Thursday that it may leave the Affordable Care Act (ACA) exchange market within two years. United – one of the nation’s largest health insurers – said it has been losing substantial profits due to lower-than-expected enrollment and consumers adding and dropping plans in search of the lowest premium. United’s announcement was particularly shocking given that the insurer had stated just last month that it would expand its exchange footprint in 2016. In his statement, United CEO Stephen Hemsley made sure to mention the failure of many consumer operated and oriented health plans (co-ops), which might explain why United has had a change of heart. The failure of the co-ops has been interpreted as a signal of widespread profit challenges, and United’s potential exit from the market makes things much more difficult for insurance companies remaining in the market. 

The Obama administration quickly moved to downplay United’s announcement, saying that the “marketplace is entering its third year and continues to grow.” Nevertheless, United’s exit may spur other exchange issuers to follow suit, especially considering that expected growth in the market has not come about. Aetna, which last month announced it would scale back its exchange offerings in 2016, has also voiced concerns, saying that it, too, has seen an increased number of enrollees entering and exiting its plans, especially through the special enrollment periods. This could become a major issue for the White House as President Obama looks to secure his signature legislative achievement before leaving office in January 2017.  

Some Republicans Considering Acting on Prescription Drug Costs

A handful of Republican lawmakers have signaled that they are ready to start working on legislative action to combat rising drug costs amidst growing voter concerns on the issue. While most Republicans have generally tried to avoid the drug pricing debate, the House Oversight Committee decided last week to give in to Democratic demands and hold a hearing on controversial drug pricing practices early next year. This follows an announcement from Senate Aging Committee Chairman Susan Collins (R-ME) earlier this month that the panel is opening a bipartisan probe into the issue of high-cost pharmaceuticals. 

Sens. Lisa Murkowski (R-AK) and John McCain (R-AZ) have also elected to wade into the drug pricing debate. In an interview last week, Sen. Murkowski responded to a question on whether Congress should address rising drug costs, saying, “I recognize that it’s expensive to bring new prescription drugs online, but you’ve got to figure out a way that allows these treatments to be affordable.” Meanwhile, Sen. McCain, who has been a long-time supporter of allowing drugs to be imported from Canada, suggested shortening patent length, among other reforms directed towards lowering prices. “I think there’s a variety of ways to address it,” he said. “But I think Americans are right. They’re way too expensive.”

The changing positions of some Republicans are likely stemming from changes in public opinion on the matter. An August Kaiser poll found that large majorities of Americans support popular cost control policies; 86 percent favor requirements that drug companies release information on how they set drug prices, 83 percent support allowing Medicare to negotiate drug prices, 76 percent support limiting how much companies can charge for high-cost drugs, and 72 percent support allowing Americans to buy drugs imported from Canada.

Nonetheless, while some Republican lawmakers are open to congressional involvement in making drug pricing policy, many are not, including the influential chairman of the Senate Finance Committee, Sen. Orrin Hatch (R-UT), which is causing a rift between Republicans on the issue. Those who continue to remain silent on the issue are wary of government intrusion into marketplaces and believe that high costs are justified by the need to fund the research and development of new and innovative drugs.

Senators Question FDA Nominee on High Drug Prices 

Tuesday, the Senate HELP Committee questioned Robert Califf, Duke University cardiologist and President Barack Obama’s nominee to lead the Food and Drug Administration (FDA), on rising prescription drug prices, slow approval times for new drugs, and his ties to the pharmaceutical industry. During the hearing, Califf said that the FDA does not police the price of medicines but can influence cost by ensuring that products are safe and effective. Critics of the nominee include Democratic presidential candidate Sen. Bernie Sanders, (I-VT), who grilled Califf over why the United States cannot import prescription drugs from Canada. In response to Sanders, Califf echoed past concerns from FDA officials, saying monitoring the safety and effectiveness of drugs imported from nations where they are sold for less would pose a challenge for the agency and require proper funding.

Despite the intense questioning from the Vermont senator, many members of the Health, Education, Labor, and Pensions (HELP) Committee were supportive of Califf’s nomination, including the committee’s top Democrat Sen. Patty Murray (D-WA), and committee Chairman Lamar Alexander (R-TN), who implied through his questions that the FDA is not required to worry about the price of drugs.

Other questions raised during the hearing included whether Califf’s previous ties to pharmaceutical companies could bias his decisions as a regulator of those same firms, whether Califf agreed with the pharmaceutical industry that the FDA is “too tough” and that standards should be lower, and why, despite $1 billion in funding from a generic drug user fee authorized in 2012, the review time for generics has slipped from 30 months to 48 months. Califf assured the panel that his previous work at Duke’s Clinical Trial Research Institute required industries that funded the studies to sign “an ironclad contract” guaranteeing the independence of the researchers and would not influence his decisions as head of the FDA. On standards, he said, “I’ve never been a proponent of lowering standards. If anything, I’ve argued for raising standards for better studies that show the full gamut of risk and benefit,” adding that the FDA could potentially be quicker. And finally, he explained that the review backlog for generics developed before the new funding, and it has taken time to clear through it. He further assured the panel that “as that backlog is cleared, the new applications will be going through very quickly.”

Some senators have opposed Califf’s confirmation for other reasons, including Sen. Ben Sasse (R-NE), who has vowed to block all of President Obama’s health-related nominees until he gets answers about the failure of nonprofit health co-ops created under the health care overhaul.  In part due to this opposition, the panel has not yet said when it will vote on Califf's nomination.

AMA Urges Ban on Direct-To-Consumer Drug Ads

Tuesday, the American Medical Association (AMA) – the county’s largest physician group – voted to oppose direct-to-consumer advertising of prescription drugs and medical devices, deciding that ads likely drive up prescription drug costs. The group also plans to launch a campaign to keep drug makers from influencing patent and exclusivity protections to block generic competition. At a policy meeting in Atlanta, physicians said that the proliferation of ads is influencing people to seek expensive treatments when cheaper and possibly better alternatives exist. AMA plans to convene a physician panel on drug affordability and push for “greater transparency in prescription drug prices and costs.” In addition, the group plans to examine patent reform as a way to control drug prices.

Drug makers say they already release data on aggregate research and development spending, and that research spending on a single drug should not be isolated because most drugs require research and never reach the market. The Pharmaceutical Research and Manufacturers of America (PhRMA) also countered by saying that high co-pays have as much to do with making drugs unaffordable as drug prices themselves.

Brady Takes Ways and Means Gavel; Tiberi to Chair Health Subcommittee

After a tight election in the Republican conference, Rep. Kevin Brady (R-TX), was selected as chairman of the powerful House Ways and Means Committee. He replaces Speaker Paul Ryan, who left the post vacant when he replaced John Boehner (R-OH) as Speaker of the House. Rep. Pat Tiberi (R-OH), who ran against Brady for Ways and Means chairman, replaced the Texan as chairman of the Health Subcommittee. Tiberi was quick to say that the subcommittee will continue to seek ways to roll back the ACA; however, Brady has made it clear that healthcare reform will likely be at the bottom of his priority list for the committee.