Health Policy Report

The Week in Review

A severe snowstorm struck Washington last weekend, disrupting the schedules of both chambers. The House elected to delay all legislative business due to the weather, in part because Democrats were already scheduled to head to Baltimore for an issues conference on Wednesday and Thursday. The snow only held off the Senate until Wednesday, when the upper chamber started work on a wide-ranging energy bill. Sen. Lisa Murkowski (R-AK), Chairwoman of the Senate Energy and Natural Resources Committee, has labored to ensure the bill moves forward in a bipartisan fashion and the Senate will likely finish their consideration of the measure this week. The legislation (S. 2012) is designed to boost energy efficiency, speed construction of electric transmission lines, and streamline permitting for natural gas exports. Specific provisions of the bill include strengthening building codes, increasing cybersecurity protections for the electricity grid, and expediting the licensing process for hydropower projects. 

In Baltimore, House Democrats heard from both President Obama and Vice President Joe Biden on issues ranging from the Trans-Pacific Partnership (TPP) to criminal justice reform. The White House has been engaged in a prolonged lobbying effort to sell House Democrats on the landmark trade deal, with the President hoping it passes Congress before he leaves office next year.
 
The Week Ahead
 
The Senate returns this week to continue working on energy legislation, while House members return after a week off to take up an Iran sanctions measure. The challenge for Murkowski this week will be to avoid partisan or unrelated amendments that could ultimately kill the legislation. In private discussions last week, Senate Republican leadership expressed expectations that the energy bill will be finished by Friday with bipartisan support. Moreover, they noted that the Senate plans to move next to either a North Korea sanctions bill (H.R. 757) or a measure to bolster the nation’s customs enforcement efforts. The House-passed customs measure (H.R. 644) would reauthorize and modernize the U.S. Customs and Border Protection agency, streamline rules to stop importers from skirting U.S. antidumping and countervailing duties, add new protections for intellectual property, and provide more tools to crack down on currency manipulation.
 
Among House business delayed due to last week’s snow break and expected this week is a do-over of legislation (H.R. 3662) to curb the easing of economic sanctions that had been imposed on Iran before it signed the nuclear deal. The measure would require that before lifting sanctions, the president certify that targeted Iranian individuals or companies were no longer helping the state’s weapons development or terrorist organizations. Although the House originally passed the sanctions measure on Jan. 13, almost a third of lawmakers didn’t vote because of the 15-minute time limit being enforced by Speaker Paul Ryan (R-WI). The White House opposes the bill and has threatened a veto due to concerns that it would undermine the comprehensive nuclear agreement reached last year. Also on the House’s snow-delayed agenda: a vote to override a veto of budget reconciliation legislation (H.R. 3762) aimed at gutting key provisions of the Affordable Care Act (ACA) and banning federal funding for Planned Parenthood.
 
Today also marks the opening of the 2016 presidential election as the first votes will be cast in Iowa’s presidential caucuses for both parties. In the crowded Republican field, celebrity real estate mogul Donald Trump has a slight polling advantage over his closest competitor, Sen. Ted Cruz (R-TX), according to the most recent reports. Sen. Marco Rubio (R-FL) is well positioned for a third place finish, which could potentially vault him to the top of a competitive race to corral votes among GOP “establishment” voters. Meanwhile, a trio of Republican governors—Jeb Bush (R-FL), Chris Christie (R-NJ), and John Kasich (R-OH)—are pinning their hopes on the Feb. 9 New Hampshire primary to take the mantle of the GOP’s establishment favorite. On the Democratic side, former Secretary of State Hillary Clinton and Sen. Bernie Sanders (I-VT) are running neck-and-neck in Iowa, where most recent polls are within the margin of error. Secretary Clinton’s campaign is hoping that a win in Iowa will prevent Sen. Sanders from gaining national momentum, as the self-described “democratic socialist” is polling well ahead of Clinton on friendly turf in New Hampshire.
 
Senate Lawmakers Disagree on FDA Role in Drug Prices
 
Senate lawmakers appeared to be split over the Food and Drug Administration’s (FDA) role in drug pricing at a hearing of the Senate Committee on Health, Education, Labor, and Pensions (HELP) on Thursday. In considering the renewal of the user fee program – which provides the FDA with $1.5 billion and set to expire in 2017 – lawmakers used the opportunity to examine the agency’s role in lowering prescription drug prices.
 
Republicans on the panel suggested quicker FDA approvals of generic drugs would help keep costs down, arguing that faster approvals would lead to lower prices by allowing additional competition to enter the market. The FDA has long been targeted by Republicans for the backlog of generic drug applications that has built up since it received new fee collection authority in 2012. Democrats remain unconvinced that the backlog is a major factor in high drug prices, although ranking member Patty Murray (D-WA) asserted during the hearing that the FDA needs additional resources to fulfill its generic drug approval mission.
  
Janet Woodcock, the Director of the Center for Drug Evaluation and Research (CDER) at the FDA, was the sole witness at Thursday’s hearing and told senators that the only way the agency would be able to factor in drug pricing spikes when examining generic drugs is if the Department of Health and Human Services (HHS) defined a price spike definitively.  According to Woodcock, the FDA does not currently expedite reviews of applications based on price spikes because a clear definition of the phrase has not yet been decided. She noted that HHS is better positioned to define the phrase, as the FDA is more scientifically – rather than economically – oriented. 
 
Senate Judiciary Committee Holds Hearing on Opioid Bill; Califf Confirmation Delayed
 
The Senate Judiciary Committee held a hearing last Wednesday to discuss ways to improve the federal response to the heroin and prescription drug abuse problem in the United States. During the hearing, senators on both sides of the aisle expressed support for the Comprehensive Addiction and Recovery Act (CARA) (S. 524), a bill which would: (1) expand educational and prevention efforts, (2) increase access to drugs that can reverse the effects of overdoses, (3) launch evidence-based treatment and intervention programs, and (4) give states incentives to strengthen prescription drug-monitoring programs, which can help track at-risk individuals and track prescription drug diversion.
 
While bipartisan support for the legislation emerged during Wednesday’s hearing, there were notable differences among Democrats and Republicans on which issues should be prioritized. For example, Sen. John Cornyn (R-TX) emphasized strengthening law enforcement policies to “cut off” the supply from Mexico. Meanwhile, ranking member Sen. Patrick Leahy (D-VT) stressed that policies need to aim at preventing the “demand” in the U.S., noting that restricting the supply from Mexico would only offer a temporary solution and that “as long as we have demand in this country it will come from somewhere else.”
 
The hearing also bodes well for the prospects of the bill moving forward, with Chairman Chuck Grassley (R-IA) expressing optimism that the bill, which has 22 cosponsors, could advance out of the panel this year. However, Grassley delayed a vote on CARA until this week, noting that “we’re not there yet, but we are working hard.” Moreover, with respect to potential floor consideration this year, Senate Majority Leader Mitch McConnell (R-KY) noted Tuesday that Republicans discussed the opioid crisis at length during their weekly caucus meeting, and are hoping to act on the measure by the end of the year. And adding to the impetus for action this year, the bill is being spearheaded by a pair of incumbent senators facing some of the most difficult reelection campaigns this fall – Sens. Rob Portman (R-OH) and Kelly Ayotte (R-NH).
 
Meanwhile, opioid policy is threatening to stall Robert Califf’s nomination to lead the Food and Drug Administration (FDA). Last Monday, Senator Edward Markey (D-MA) said he would put a hold on the nomination until the agency vows to commit to overhauling the way it approves opioid painkillers. After the FDA approved oxycodone for children without convening an independent advisory committee last summer, Sen. Markey stressed that he would keep his hold until the FDA commits to: (1) convening advisory committees for any opioid approvals, (2) rescinding the use of OxyContin for kids, and (3) considering addiction and drug abuse when it evaluating the safety of a drug.
 
Eli Lilly, Anthem Advocate Reforms to Foster Value-Based Drug Contracts
 
Drug maker Eli Lilly and national insurer Anthem released a joint memo on Friday asking Congress to “create a policy environment conducive to allowing health plans and manufacturers enter into a variety of value-based contracting arrangements.” Specifically, the companies cited the burdens of anti-kickback laws and Medicaid’s ‘best price’ policy as preventing them from entering such value-based contracts for drugs. Anthem and Lilly are hoping that federal regulators would be able to outline the parameters of such contracts and allow for value-based pricing to be excluded from some reporting requirements.
 
The announcement comes as companies position themselves for the change to value-based payment systems, and the Centers for Medicare and Medicaid Services (CMS) has previously reached out to drug manufacturers to discuss the challenges the industry faces in offering value-based arrangements to state Medicaid agencies. A spokesperson for America’s Health Insurance Plans (AHIP) called the contracts a “significant focus for plans” in the wake of the companies’ announcement and the companies’ memo argues that clearer safe harbors could help promote value-based payment models. However, a consensus on moving to a pay-for-performance system in drug contracts has yet to emerge in either the drug or insurance industry as the two have traditionally disagreed on which of the sectors is more responsible for high drug costs.
 
CBO Projects Slow Economic Growth, Increased Medicare Spending, and Fewer ACA Sign-Ups
 
The Congressional Budget Office (CBO) released its “Budget and Economic Outlook: 2016-2026” report last Tuesday and revealed several key findings, including that: (1) economic growth is expected to lag in the long-term due to the omnibus-tax extenders law, (2) Medicare spending is expected to grow despite the fact that Congress has taken measures to control Medicare spending, and (3) the Affordable Care Act (ACA) is estimated to enroll fewer people than expected this upcoming year.
 
On economic growth, the CBO said the omnibus-tax extenders package (H.R. 2029) and other legislation passed last year are expected to provide an immediate economic boost but will cause net harm over the next decade. Specifically, the agency estimated that the laws would boost GDP growth by 0.4 percentage points in 2016 and then dampen GDP growth in 2017 and 2018 by 0.2 percentage points each year. Moreover, on Medicare spending, CBO reported that spending increased by seven percent ($34 billion) in 2015, marking “the fastest rate of growth recorded for the program since 2009.” And on exchange enrollment, CBO lowered its projection for 2016 enrollment to an average of 13 million, a 40 percent decline from last year’s enrollment prediction of about 20 million people. 
 
Budget Resolution, Reconciliation is Likely in Senate
 
Senate Republicans last week sent the first signals that they intend to use the expedited process of budget reconciliation again this year in order to pass a Republican-backed tax and spending framework. Sen. Roy Blunt (R-MO), vice-chairman of the Senate Republican Conference, said last week that he anticipates using the filibuster-busting budget process, and Sen. Chuck Grassley (R-IA), a senior member of the Budget Committee, was reported saying, “I think that if you’re going to do a budget then you’ve got to shed the political blood it takes to get a partisan budget through. Most budgets, you know, are partisan. You might as well have the process of reconciliation.” It’s also been suggested that Republicans will try to move a budget resolution through both chambers, but Senate Majority Leader Mitch McConnell (R-KY) and Senate Budget Chairman Michael B. Enzi (R-WY) have yet to comment on whether the budget resolution should include reconciliation instructions.