Health Policy Report

December 14, 2015

The Week in Review

The government was set to shut down last Friday, but the passage of a very short-term continuing resolution bought Congress five more days to resolve differences over issues ranging from taxes to Syrian refugees that stand in the way of funding the government through next September. The measure (H.R. 2250), which will keep the government funded through December 16, was the result of House and Senate appropriators failing to come to agreement on the policy riders that will accompany the must-pass omnibus bill. While the list of potential riders has been whittled down considerably, Congress will have only a few days to make the final tweaks before recessing for the winter holidays.

In the Senate last week, the conference report to a long-negotiated replacement of the George W. Bush-era No Child Left Behind Law was passed by a vote of 85 to 12. The measure (S. 1177) reauthorizes elementary and secondary education programs and provides more authority to states in setting educational priorities. Specifically, the bill bars the federal government from forcing or coercing states to adopt Common Core education standards or similar systems, while allowing states greater flexibility in setting their own standards and assessments. Senate passage sent the bill to the President, who promptly signed it into law on Thursday.

Meanwhile in the House, Members passed a conference report to a bill (H.R. 644) revising customs procedures and duty laws, sending it to the president’s desk on a vote of 256-158. The bill’s revised language would make permanent an existing moratorium on the taxing of Internet access at the state and municipal levels, and also includes a provision that would require the Obama Administration to take actions against a country that fails to adopt policies to correct currency manipulation. Finally, the House also passed a bill (H.R. 2130) that would settle a long-standing land dispute along the Texas-Oklahoma border by directing the Bureau of Land Management (BLM) to dispose of about 30,000 acres of federal land along the disputed area. The contested land has been the subject of litigation against the BLM, and the White House has threatened to veto the bill because it would “transfer lands out of federal ownership without ensuring a fair return to the taxpayer.”

The Week Ahead

Senate Majority Whip John Cornyn (R-TX) said the text of a broader omnibus spending bill may be filed this morning and that both chambers could vote Wednesday on the $1.1 trillion legislation.  Lawmakers are also considering whether or not to include a series of tax breaks as a part of the must-pass legislation. Senate negotiators say that the ‘extenders’ package would make several important tax breaks open-ended and place a moratorium on implementation of the Affordable Care Act’s (ACA) ‘Cadillac’ and medical device taxes. However, no decision has yet been reached on whether the tax extenders measures and the omnibus will pass as a single legislative vehicle or whether they will be considered as separate bills. With Congress scheduled to be in session only through the end of the week, passing a combined omnibus and tax package will need to be on an expedited timeline. Should Congress fail to reach an agreement by Wednesday, a third short-term continuing resolution will be needed to push debate later into the week, or possibly even to kick the issue into 2016. 

While the omnibus and tax extenders negotiations will be the priority, both chambers have other unfinished business to tackle next week before trying to wrap up work for the year. The House could take up budget reconciliation legislation (H.R. 3762) that would undercut President Obama’s signature health-care law and deny federal funding to the women’s health organization Planned Parenthood. The Senate may clear House-passed legislation authorizing Coast Guard programs and funding, and move on to consider a measure reauthorizing intelligence programs. Senate leaders will also continue their work on a long-negotiated measure that would encourage businesses to share more cyber-security data with the government. Although House and Senate proponents of the bill will be working on a tight deadline, Senate Intelligence Committee Chairman Richard Burr (R-NC) said that he believes Congress is “on track to have a cyber-bill out and on the president’s desk [on the] first of the year.”

 Omnibus Extenders Negotiations Stall; Funding Deadline Wednesday  

A continuing resolution (H.R. 2250) to keep the federal government running until this Wednesday passed through both chambers of Congress last week, allowing for additional negotiations to resolve differences over which policy riders will be included in the omnibus spending bill. Congressional leaders had hoped to pass a $1.15 trillion bill funding the full 2016 fiscal year by Friday to get home for the holidays, but Democrats, whose votes will be needed to pass the bill in both chambers, have objected to items on the Republican wish list to be included in the must-pass measure. Among the most contentious are lifting a 40-year-old ban on oil exports, rolling back some of the Obama administration’s environmental and financial regulations, and making it more difficult for Syrian refugees to be admitted into the U.S. while the administration overhauls the refugee-vetting process.

Along with the omnibus, congressional leaders have suggested that a ‘tax extenders’ package will also be passed, making permanent certain tax credits and extending others for two years. Notably, this would include a two-year moratorium on the collection of the Affordable Care Act’s (ACA) ‘Cadillac’ and medical device excise taxes. Although the President has opposed changes to the ACA funding measures, repeals of the taxes have garnered bipartisan support in both chambers. Of the two, the medical device tax delay appears less certain, with some analysts saying its inclusion could hinge on whether Congress decides to include the extenders package with the omnibus. Sources also say a one-year suspension of the Health Insurance Tax, also known as the “premium tax,” could be in the mix as some Republican senators have previously expressed reluctance to give Democrats their request for a two-year delay in the Cadillac tax without extracting concessions in return. 

With the holiday recess and Wednesday’s deadline looming, lawmakers will need to work quickly on the package once it is introduced. An introduction of the bill today would likely result in House floor consideration Wednesday, as House Speaker Paul Ryan (R-WI) has said he will not waive a House rule that requires legislation to be posted two days before the chamber votes on it. This would set up Senate consideration of the bill against the funding deadline later that afternoon. Senate Majority Leader Mitch McConnell (R-KY) would then need to work the bill through the Senate in less than a day, but Senate leaders are hopeful that their colleagues will play along in order to get home for the holidays.

Senate Committee Examines High Drug Prices

During a hearing on drug pricing last Wednesday, both Republicans and Democrats of the Senate Aging Committee criticized recent price hikes on generic drugs. For Republicans, the tone of the hearing marked a significant departure from the party’s usual silence on the issue, despite growing popular concern related to drug prices ahead of the 2016 general election. Most of the criticism during the hearing was focused on the few pharmaceutical companies—including Turing, Valeant Pharmaceuticals, Retrophin, and Rodelis Therapeutics—who have come under scrutiny for purchasing certain drugs that lack competitors and then sharply raising the price for consumers. Committee Chairwoman Susan Collins (R-ME) called Turing’s actions “egregious,” despite her typical position that drug prices need to be sufficiently high for companies to recoup the cost of investment and be incentivized to innovate.

No representatives from the companies in question were at the hearing, but witnesses included doctors who gave heartfelt testimony on grappling with the real-world impact of high prices, and offered several suggestions to increase competition – some of which the senators on the panel embraced. Among the measures that received some support was tracking off-patent drugs that are at risk of being purchased by hedge funds and developing a new, expedited approval pathway at the Food and Drug Administration (FDA) specific to drugs at risk of monopolies. While the committee’s investigation is intended to bring attention to the issue of high drug prices, it is not yet clear whether Congress intends to produce any legislation on the issue.

Republicans Press CMS for More Oversight of ACA Marketplaces 

Last Tuesday, the House Energy and Commerce Oversight and Investigations Subcommittee held a hearing to examine the Affordable Care Act’s (ACA) state-based exchanges with the Centers for Medicare and Medicaid Services (CMS) Acting Administrator Andy Slavitt testifying. House Republicans used the opportunity to press Slavitt on what the agency is doing to hold states accountable on the programs and what efforts can be taken to recover misspent federal dollars. Slavitt reported that CMS is working hard to gain back the money loaned, and said more than $200 million of the original grants for the state exchanges has already been returned. He also said that no new money is being given or has been given to fix IT problems in the five states that have moved over to the federal exchange known as 

Among those who grilled Slavitt was Rep. Bill Flores (R-TX), who pushed the CMS Administrator on how many more state-operated exchanges he expects to fail, and whether self-sustainability is going to be a “serious problem.” Slavitt answered that he would not classify any state as a failure, as they have all reduced the number of uninsured citizens, and that he can’t predict which states will join the federal exchange because that depends on policymaking at the state level. Rep. David McKinley (R-WV) asked whether CMS has held specific people accountable for committing fraud through the criminal process, with Slavitt answering that such action would be beyond CMS’ purview. He noted that in many cases, those who may have committed fraud did so unknowingly, and that some have lost their jobs over simple exchange issues.

Lastly, Rep. Tim Murphy (R-PA), chairman of the subcommittee, questioned Slavitt on whether it is appropriate for any state to transition to the federal exchange after spending taxpayer dollars on its own exchange – implying that there should be other consequences for states to abandon their own efforts. Slavitt defended the states, saying that they have the right under the ACA to elect a state-based or federal exchange, and that any misspent money on a change from one to the other is typically recovered.

PhRMA Supports FDA Plan For Unique Biosimilars Names, But Insists on Meaningful Suffixes

The Pharmaceutical Research and Manufacturers of America (PhRMA) recently backed the FDA’s decision to create distinctive names for biosimilars and their reference products by attaching a suffix, but the industry group also urged the agency to produce meaningful suffixes related to the drug’s name rather than the random suffixes currently envisioned under the agency’s plan. In addition, PhRMA expressed concern over the 90-day compliance date, stating that it does not provide enough time to adjust to the naming policy. Instead, they asked the FDA to delay when the change would go into effect and also add a separate compliance date for any final rule. 

The industry organization also advocated for a litany of other changes related to the rule, including for the FDA to issue a final version of the draft guidance before applying the naming policy to any specific biologics through rulemaking. Furthermore, they suggested that the suffixes be unique to the license holder and generally shared across all of the license holder's newly approved products. PhRMA also asked that the FDA create a formal process through which each license holder may propose a suffix for their product, and for that proposal to be unconstrained by deadlines. While the recommendations focus exclusively on biosimilars, PhRMA’s announcement comes on the heels of an Avalere report saying that originator biologics would feel the greatest impact of FDA's proposal.