Health Policy Report (3/16)

March 19, 2020

The Week in Review

House lawmakers overwhelmingly passed legislation that seeks to bolster the response efforts to the novel coronavirus (COVID-19) outbreak. After days of negotiations between Speaker Nancy Pelosi (D-CA) and Treasury Secretary Steven Mnuchin, an agreement was reached that would provide free diagnostic testing, boost funding for food assistance, and extend paid sick leave. Despite his pleas for a payroll tax cut and other tax credit relief, President Donald Trump announced that he will swiftly sign the measure into law once it hits his desk.

Meanwhile, President Trump declared a national emergency in response to the COVID-19 outbreak on Friday, invoking the Stafford Act that allows the administration to provide more federal aid for states and municipalities. This declaration would allow the states to request a 75 percent federal cost-share from the Federal Emergency Management Agency (FEMA) for expenses related to the outbreak, including medical tests and supplies, vaccinations, emergency workers, etc. The national emergency declaration will also allow the Centers for Medicare and Medicaid Services (CMS)to utilize Section 1135 waivers to provide flexibility to health care providers and state agencies during the outbreak.

Additionally, the federal response to COVID-19 continued to intensify over the weekend as various agencies took steps to bolster response affords and shield the economy. The Centers for Disease Control and Prevention (CDC) updated its guidance recommending that Americans cancel or postpone gatherings of 50 more people for the next eight weeks. The Federal Reserve also announced plans to slash interest rates to a range of 0-0.25 percent, and will buy hundreds of billions of dollars in bonds in an effort to stave off economic hardships.

The Week Ahead

Senators will reconvene for legislative business later today after cancelling its previously scheduled district work period. While the schedule for this week remains in flux amid an increasing number of COVID-19 reported cases on Capitol Hill, Senate Majority Leader Mitch McConnell (R-KY) plans to call up the House-passed Families First Coronavirus Response Act as lawmakers look to amplify response efforts. According to recent reports, the Senate plans to make several technical corrections that would fix drafting errors in the lower chamber’s bill. The House would then need to pass the bill again, and is expected to do so via voice vote during an informal “pro forma” session shortly after Senate passage. Senators are also expected to address the expiring Foreign Intelligence Surveillance Act (FISA) with a vote on the House-passed FISA reauthorization law.

While Congress’ schedule for the foreseeable future remains unclear, lawmakers are already turning their attention to formulating a third COVID-19 response package aimed at addressing issues that didn’t make the cut in the first two measures. The deal — which is still in its infancy — would likely seek to address the economic burdens for certain sectors that have been adversely impacted by the outbreak, particularly in the hospitality, airline, cruise line, and energy industries. Recent reports also indicate that the White House budget office is preparing another funding request for Congress that would boost money for response efforts from the Departments of Defense, Homeland Security, and Veterans’ Affairs.

Congress Frustrated Over Lack of Accessible Testing for COVID-19

Although the administration maintained last week that tests for the novel Coronavirus, COVID-19, were widely available and accessible, Members of Congress overwhelmingly reported constituent difficulty obtaining them. Administration officials stated that over four million tests would be distributed by the end of last week, and President Trump declared publicly to reporters on March 6 that “anybody that wants a test can get a test.” However, last week, members of the House Oversight Committee disputed the availability at a hearing on the federal response to Coronavirus, indicating that even individuals presenting COVID-19 symptoms and seeking testing through a health professional — per Centers for Disease Control and Prevention (CDC) guidelines for testing — were unable to get tested. Dr. Robert Redfield, Director of the CDC, explained that the administration had created smaller-scale testing initially, and given commercial laboratories the technology to develop for larger-scale testing. He indicated that it was now the responsibility of the commercial market to develop, distribute, and carry out testing for the larger population. Dr. Anthony Fauci, Director of the National Institute of Allergy and Infectious Diseases at the NIH, cautioned that the U.S. did not have the capability to carry out public surveillance testing similar to South Korea.

Responding to congressional and public criticism, the administration announced several efforts to increase testing capabilities in the U.S. last Friday. President Trump announced that Dr. Brett Giroir, the Assistant Secretary for Health at HHS, would serve as the new “testing czar” for the federal government’s task force on COVID-19. Additionally, the administration plans to partner with the private sector to set up “drive-through” testing sites to boost accessibility. Both New York And Colorado have already partnered with testing companies to open “drive-through” testing sites for individuals with a doctor’s note. Other efforts announced Friday include the creation of a 24-hour emergency FDA hotline for laboratories having difficulty getting materials or other impediments to running tests, $1.3 million in funding for two companies attempting to develop rapid COVID-19 tests, as well as emergency FDA approval for an automated Coronavirus test developed by Roche. According to reports from senior officials, the administration is also starting to collect data from private laboratories on the number of tests performed daily.

CMS, ONC Finalize Interoperability and Data Blocking Rules

Last Monday, the Centers for Medicare and Medicaid Services (CMS) and the Office of the National Coordinator for Health Information Technology (ONC) finalized long-awaited rules on health information blocking and interoperability. While much of the two rules was finalized as proposed or with minor modifications, CMS backed away from a requirement that health plans regulated by the agency participate in a trusted exchange network that is able to securely transmit protected health information (PHI), including with electronic health record (EHR) systems. While those requirements were not adopted, ONC head Don Rucker promised that more information about the Trusted Exchange Framework and Common Agreement (TEFCA) was forthcoming.

Health and Human Services (HHS) officials highlighted the rules’ requirements that health data, including claims data, be available through an application programming interface (API) to third-party app developers. “Patients should have control of their records, period. Now that’s becoming a reality,” said HHS Secretary Alex Azar. “These rules are the start of a new chapter in how patients experience American healthcare, opening up countless new opportunities for them to improve their own health, find the providers that meet their needs, and drive quality through greater coordination.” “A core part of the rule is patients’ control of their electronic health information which will drive a growing patient-facing healthcare IT economy and allow apps to provide patient-specific price and product transparency,” added ONC head Don Rucker.

Rulemaking is still forthcoming regarding civil monetary penalties for information blocking, ONC officials confirmed on a call with reporters. Additionally, with the jettisoning of the requirement for CMS-regulated plans to participate in a trusted exchange framework, stakeholders will be watching for whether similar rulemaking will emerge in the future. CMS had indicated that TEFCA would be the basis for such a network, and in the final rule, the agency said that the requirement was not finalized due to TEFCA not being mature enough.

CMS Announces Part D Model to Lower Out-of-Pocket Insulin Costs; President Sends Drug Pricing Principles to Capitol Hill

The Centers for Medicare & Medicaid Services announced last Wednesday a new Part D model designed to help seniors lower out of-pocket (OOP) costs for insulin. CMS noted that the Part D Senior Savings model follows up on President Trump’s promise to lower drug prices and will provide Medicare beneficiaries with new Part D plan options that offer insulin at “an affordable and predictable cost.” The plans will offer thirty-day supplies of a broad set of plan-formulary insulin costing no more than $35 out-of-pocket under the voluntary model, according to the administration. A corresponding Request for Application (RFA) process for participation from eligible pharmaceutical manufacturers and Part D sponsors in all states and territories was also released.

President Trump also transmitted his “principles” for drug pricing reform to Capitol Hill last week, claiming that the policies already have bipartisan support and would bring relief for America’s seniors. The White House called on Congress to pass legislation that would: (1) cap Part D annual OOP pharmacy expenses; (2) provide an option to cap Part D monthly OOP costs; (3) offer protection for seniors against the OOP “cliff created by the Affordable Care Act;” (4) give insurance companies incentives to negotiate better prices for costly drugs; and (5) limit drugmakers’ price increases. In a nod to the essential role the pharmaceutical industry is playing in the current Coronavirus crisis, the White house acknowledged the importance of pharmaceutical innovation and asserted that its goal is to help patients afford the drugs they need and not destroy the “vital” industry.

With regard to insulin, CMS noted that the new voluntary model will test the impact of offering beneficiaries an increased choice of alternative Part D plan options that offer lower out-of-pocket costs. CMS will test a change to the Manufacturer Coverage Gap Discount Program to allow Part D sponsors, through eligible enhanced alternative plans, to offer a Part D benefit design that includes predictable copays in the deductible, initial coverage, and coverage gap phases by offering supplemental benefits that apply after manufacturers provide a discounted price for a broad range of insulins included in the model. The model will allow plans to waive the current programmatic disincentive for plan sponsors to design prescription drug plans that offer supplemental benefits to lower beneficiary cost sharing in the coverage gap phase of the Part D benefit for insulin.

The administration explained that the model aims to reduce Medicare expenditures while preserving or enhancing quality of care for beneficiaries. The voluntary model will be offered through the Center for Medicare and Medicaid Innovation (CMMI) beginning January 1, 2021. Participating pharmaceutical manufacturers will pay the 70 percent discount in the coverage gap for insulins included in the model, but CMS noted that those manufacturer discount payments would now be calculated before the application of supplemental benefits under the model. CMS estimates that beneficiaries enrolled in the model should save an average of $446 in annual OOP costs on insulin — over 66 percent relative to average cost-sharing currently.

HHS Exempts Manufacturers from Liability for COVID-19 Measures

Last Thursday, HHS issued a declaration under the Public Readiness and Emergency Preparedness (PREP) Act to limit the liability of manufacturers and distributors of products made to combat COVID-19. Covered countermeasures for which manufacturers may be immune from liability include drugs, biologics, vaccines, devices, and diagnostics used to treat, diagnose, cure, prevent, or mitigate COVID-19. Any such covered countermeasure must be authorized for investigational or emergency use. In addition to manufacturers and distributors, any person who is authorized to prescribe, administer, deliver, distribute or dispense a covered countermeasure is immune from liability. Liability due to “willful misconduct” is not waived. Liability immunity may extend through October 1, 2024.

The PREP Act was signed into law by President George W. Bush in 2005. It was intended to remove a financial risk from manufacturers that rapidly create new products to respond to a crisis. Since its enactment, the PREP Act has been used a handful of times to shield manufacturers from potential liability arising from the development and use of products to combat an epidemic. Most recently, it was used to respond to the Zika and Ebola viruses. It was also used to respond to the 2009 H1N1, or “swine flu,” epidemic.

During a House Oversight Hearing last week on the federal Coronavirus response, Dr. Anthony Fauci, Director of the National Institute of Allergy and Infectious Diseases at the National Institutes of Health, indicated that the administration is working with the pharmaceutical industry and researchers to develop therapies and vaccines in record time. He reported that phase one clinical trials will start for a COVID-19 vaccine within the next four weeks and said there were around ten potential candidates. He said this was the fastest timeline in the history of vaccinology and reported that phase one will take about three months to determine safety. Next, the vaccine would move to phase two to determine if the vaccine works, but he cautioned this could take longer. He noted that candidate therapies are being tested on those sick with COVID-19 currently and that there are ongoing trials in China and the U.S. He said the administration would know if they work within the next several months.