Health Policy Report (3/1)

March 1, 2021

Capitol Hill Update

Early Saturday morning, House lawmakers passed (219-210) the $1.9 trillion “American Rescue Plan,” sending it to the Senate for consideration this week. The current version of the measure will be subject to additional changes in the upper chamber after the Senate Parliamentarian ruled last week that the proposed $15 minimum wage increase would violate budget reconciliation rules. As a result of the ruling, Democrats in the Senate are going back to the drawing board with respect to this provision, exploring possible changes to the tax code to incentivize businesses to pay their workers higher wages. House leadership has targeted the week of March 8 to vote on the package again, given the fact Senators will need to make changes to the underlying bill.

In addition to the forthcoming vote on the COVID-19 relief bill, Senators will resume consideration of pending presidential nominations this week. Today, the upper chamber will vote on Miguel Cardona’s nomination to lead the Department of Education. It is also expected that the Senate will take up Gov. Gina Raimondo’s nomination to lead the Department of Commerce at some point this week barring any last-minute hiccups with respect to holds on her nomination. Sen. Ted Cruz (R-TX) had originally placed a hold on Gov. Raimondo’s nomination over his concerns about the Biden administration’s approach to Huawei and Chinese state-run entities.

In the House, lawmakers are scheduled to consider two pieces of legislation that passed the chamber late last year that touch on key Democratic policy priorities. The first is a package of policing reforms that seek to overhaul use of force guidelines, promote more transparency within law enforcement entities, and reform qualified immunity and no-knock warrants, among other things. Members will also take up the Democrats’ For The People Act, which would renew the Voting Rights Act along with a number of reforms that seek to reduce barriers to voting and strengthen ethics rules for public officials.

Biden Directs Review of Pharmaceutical Supply Chain

Last Wednesday, President Joe Biden signed an executive order (EO, fact sheet) directing a review of critical U.S. supply chains, including pharmaceuticals and public health goods and services. The EO directs a 100-day review to identify risks in the supply chain for pharmaceuticals and active pharmaceutical ingredients and the development of recommendations to address any identified risks. It also directs a yearlong review of supply chains for the public health and biological preparedness industrial base. In addition to the pharmaceutical and public health sectors, the EO directs reviews on the supply chains for the communications, transportation, energy, defense, and agriculture sectors.

The 100-day review focuses specifically on active pharmaceutical ingredients, or APIs. The administration notes that in recent decades, more than 70 percent of API production facilitators supplying the U.S. have moved offshore. Under the order, it is required to review goods and materials critical to the supply chain, global risks, the American manufacturing base, and the needs of the U.S. A particular focus is single points of failure in supply chains. While this report will include policy recommendations, more in-depth recommendations are likely to come in the yearlong review. This effort will be spearheaded by the Secretary of Health and Human Services (HHS); Jake Sullivan, the Assistant to the President for National Security Affairs (APSNA); and Brian Deese, the Assistant to the President for Economic Policy (APEP). The APSNA and APEP will ultimately submit the report to the President.

The government review will comprise an in-depth examination of critical goods and services, manufacturing capabilities, global risks, and resiliency. Essentially, it will serve as an end-to-end review of the supply chain for public health and biological preparedness. The review will also include specific policy recommendations for the supply chain, including: (1) reshoring supply chains and developing domestic supplies, cooperating with allies and partners to identify alternative supply chains, building redundancy into domestic supply chains; (2) ensuring and enlarging stockpiles; (3) developing workforce capabilities; (4) enhancing access to financing; (5) expanding research and development to broaden supply chains; (6) addressing risks due to vulnerabilities in digital products relied on by supply chains; and (7) addressing risks posed by climate change. It also will include legislative and regulatory policy changes needed to address identified vulnerabilities. The HHS Secretary will spearhead this effort, with the APSNA and APEP reviewing the report and submitting it to the President.

Senate Finance, HELP Committees Consider HHS Secretary Nominee

California Attorney General Xavier Becerra appeared before the Senate Finance Committee and Health, Education, Labor, and Pensions Committee last week to discuss his nomination to serve as Secretary for the Department of Health and Human Services. Republicans openly opposed his nomination, stating he did not have the necessary experience or skills to take the position on. Ranking Member Richard Burr said that Mr. Becerra lacked the “appropriate respect” for the private sector, innovation, and intellectual property necessary to strike a fair balance in the position. Many found fault with his stance on abortion and religious exemptions, focusing solely on his work as California’s Attorney General on these issues. Democrats explained that Becerra had critical experience working with Congress during his time as a Member and had demonstrated his leadership in fighting for patients as California Attorney General.

Mr. Becerra committed to a federally coordinated COVID-19 response driven by science, as well as to working with partners to ensure states receive vaccine doses as quickly and equitably as possible. He also named tackling drug prices as a top priority and advocated for increased transparency behind pricing decisions across the entire health care system. Addressing concerns from several Republican members, he noted he would work to strengthen the Medicare program and ensure Medicare trust fund solvency does not become an issue. Additionally, the nominee stressed the importance of strengthening the childcare system to ensure families have critical supports to get back to work and enforcing mental health parity laws.

Attorney General Becerra’s appearance before the Senate HELP Committee was a courtesy, and the Senate Finance Committee will ultimately be responsible for sending the Health Secretary’s confirmation to the Senate floor. No vote has yet been scheduled to send Mr. Becerra’s nomination to the Senate floor. However, given the apparently unified Democratic support for the nominee in the Finance Committee, it appears as though Mr. Becerra’s nomination is on track to be considered by the full Senate in March, where it may compete for floor time with reconciliation legislation.

NASEM Report Determines that Discarded Drugs Have ‘Limited Economic Value’

The National Academy of Sciences, Engineering, and Medicine (NASEM) released a Congressionally-mandated study on pharmaceutical vials and discarded drugs (report, press release) last Thursday. The NASEM committee tasked with the study found that leftover product in single-use vials has essentially no economic value and recommended against strategies to seek reimbursements from drug manufacturers for unused product. However, regardless of the economic value of leftover product, the committee called for reducing inefficiencies and waste, in particular by the Food and Drug Administration’s (FDA) requirement that pivotal trials use fixed dosing rather than weight-based dosing unless safety or efficacy would be compromised. The study committee broadly recommended that stakeholders focus on reducing inefficiencies in drug development, delivery, and payment rather than recouping payments for discarded drugs, and made eight specific recommendations. The report includes several recommendations for CMS, FDA, and Congress. These would need to be implemented through legislation, regulation, or through the Center for Medicare and Medicaid Innovation.

The study committee asserts that estimating financial waste on discarded drugs by looking at the unused portion of single-use vials is improper as prices are generally determined based on willingness to pay for therapeutic benefit, not the quantity used. Treating unused portion as rebatable or sharing single-use vials between multiple patients, the committee wrote, would likely lead to higher prices. First, there are costs associated with finding and using a method to safely treat multiple patients with single use vials. Second, more patients would be treated with the same amount of a given product. Since price is determined by willingness to pay, this would create an incentive for manufacturers to raise prices, the study committee found.

Rather than seeking to recoup funds from discarded drugs or find a way to safely use remaining product in a single-use vial, the study committee recommended that FDA require future pivotal trials be based on fixed doses rather than variable doses, except where safety or efficacy would be compromised. Such a move would mean that the entirety of single-dose vials would be used. It also recommended that conflicting guidance on single-use vials from various federal agencies be harmonized. Finally, the committee made broader recommendations on Part B payment, including uncoupling payments for drug administration from average sales price or instituting new models based on treatment episode.

Biden Asks SCOTUS to Drop Medicaid Work Requirement Cases

The Biden administration asked the Supreme Court last Monday to not hear arguments in two cases considering the legality of Medicaid work requirement waivers approved under the Trump Administration. Arguments in the cases from Arkansas and New Hampshire are currently scheduled to be heard March 29, although the Biden administration cited “greatly changed circumstances” as the Centers for Medicare and Medicaid Services took action in February to roll back the waivers. The state of Arkansas immediately opposed dropping the cases, stating that the “central question in these cases — what Medicaid’s objectives are — will likely return” before the highest court and its “pressing” that the cases be decided now. The Department of Justice countered that the COVID-19 pandemic had changed the environment in which Arkansas’ Medicaid work requirements were approved, and the 1115 waiver demonstration is likely to end before the pandemic is over. New Hampshire did not issue a position on removing the arguments from the Supreme Court’s calendar.