Health Policy Report (3/14)

March 14, 2022

Capitol Hill Update

Late last week, the Senate passed [68-31] a $1.5 trillion omnibus spending package (text; summary) after reaching an agreement on amendment votes to the underlying legislation prior to final passage. The omnibus now heads to President Biden’s desk for signature, which will likely occur early this week. President Biden signed a brief four-day continuing resolution (CR) head of last Friday’s funding deadline to provide more time for agencies to review the 12-bill omnibus. While the spending package includes the White House’s supplemental funding request to support Ukrainian military and humanitarian efforts, it does not include additional funding for pandemic response efforts due to last-minute disagreements over funding offsets.

With the White House reiterating the need for additional pandemic relief funds, congressional Democrats will try to move a separate standalone measure this week that would provide close to $10 billion for various pandemic-related areas of need. However, the path forward in the 50-50 Senate is unclear due to GOP opposition to additional COVID-19 spending that is not offset. Additionally, the House is also slated to consider a bill that would bar the use of mandatory, pre-dispute arbitration. The Forced Arbitration Injustice Repeal (FAIR) Act (H.R. 963) will likely pass on party-lines in the House and is considered dead-on-arrival in the Senate. Meanwhile, senators are expected to resume consideration of President Biden’s pending nominees this week, starting with Shalanda Young to be Director of the Office of Management and Budget (OMB).

Omnibus Includes 340B, FMAP Provisions

The fiscal year (FY) 2022 omnibus contains53 pages of health provisions (TRP analysis), including numerous policies related to drug programs, Medicaid, Medicare, maternal health, and other provisions, such as expanding the Food and Drug Administration’s (FDA) authority to regulate synthetic nicotine. Notably, the bill would also allow certain 340B entities to remain eligible to participate in the program through December 31, 2022, even if they fail to meet certain requirements as a result of COVID-19.

It would also extend Medicaid federal medical assistance percentage (FMAP) enhancements to U.S. territories until December 13, 2022. Additionally, Congress included several provisions that would expand telehealth flexibilities for Medicare beneficiaries. Finally, maternal health policies are also a focal point for legislators, as many aspects of the bill include maternal health care related grant programs, training programs, and data collection activities. Other significant provisions include a Temporary Assistance for Needy Families (TANF) and fentanyl scheduling extension.

OMB Reviews FDA Rx-to-OTC Rule

On Thursday, the White House Office of Management and Budget (OMB) began reviewing a long-anticipated proposed rule out of the Food and Drug Administration (FDA) that would ease the transition for prescription drugs to over-the-counter (OTC) status. The Department of Health and Human Services (HHS) asserts that the rule would reduce health care costs by allowing manufacturers to sell a drug OTC if they can demonstrate that consumers can effectively select and use the product.

While FDA does not have jurisdiction over drug pricing, HHS is leveraging FDA’s regulatory authorities to make a contribution to the Biden administration’s efforts to lower drug costs. Lawmakers and stakeholders have been looking forward to the next steps on this FDA rule, with the Consumer Healthcare Products Association noting that prescription-to-OTC increases access to safe and efficacious medications. Additionally, lawmakers included language in the fiscal year (FY) 2022 omnibus spending bill encouraging movement on the regulation. They voiced concerns that too few drugs have made the switch from prescription to OTC in the past few years and urged FDA to use its authority and FY 2022 omnibus funding to finalize the rule.

FDA, Industry Agree on MDUFA Deal

On Tuesday, the medical device industry and the Food and Drug Administration (FDA) agreed to send a framework deal to Congress on the fifth rendition of the Medical Device User Fee Agreement (MDUFA). The deal consists of a $1.784 billion package for fiscal years (FY) 2023 through 2027, and includes the opportunity to expand that number to $1.9 billion in total funding. The FDA and industry are expected to send a commitment letter to Congress this week. Throughout the past year, MDUFA negotiations have been fraught with disagreements, leading the deal’s progress to fall behind the other user fee agreement packages. Industry initially came to the table with $1.25 billion in fees, but FDA countered at $2.5 billion.

The agreement includes $115 million for add-on payments if the FDA meets certain goals, enabling the agency to implement additional user fees to improve upon these goals. User fees will also fund FDA’s Total Product Lifecycle Advisory Program (TPLC), a database that integrates pre- and post-market medical device data. The fees will also fund a TPLC Advisory Program (TAP) to scale up the TPLC from 15 products to an eventual 325 by the end of 2027. Additionally, the agreement includes very specific hiring goals for FDA. Many MDUFA IV programs will carry into MDUFA V, such as the Accreditation Scheme for Conformity Assessment (ASCA), initiatives to increase the use of real-world evidence (RWE) in FDA applications, and digital health efforts.

CMS to Announce New Nursing Home Guidance

The Centers for Medicare and Medicaid Services (CMS) signaled that the agency is working to craft updated guidance for nursing homes. The guidance refresh is in line with the Biden administration’s goal to bolster nursing home conditions after the COVID-19 pandemic exposed safety concerns in nursing homes and long-term care (LTC) facilities. CMS’s plan will likely address staffing requirements, facility ownership transparency, overcrowding, the use of antipsychotics, and inspections and enforcement. CMS’s Center of Clinical Standards and Quality said that the agency will prioritize the development of quick-fix regulations while working to identify big-picture, long-term goals for the industry. Nursing home industry stakeholders are anxious to see what CMS has in store, as many are concerned about the feasibility of the regulations. CMS has assured groups that they will have an opportunity to comment on any proposed regulations.