Health Policy Report

The Week in Review
 
Both chambers took on full schedules last week as lawmakers considered measures ranging from a comprehensive energy bill in the Senate to an override of the President’s veto on budget reconciliation legislation in the House. In the upper chamber, Sen. Lisa Murkowski (R-AK) attempted to shepherd energy legislation (S.2012) through the open-amendment process without attracting any controversial add-ons, but her efforts were thwarted over the ongoing water crisis in Flint, Michigan. Democrats have blocked the bill until it includes more federal aid to help Flint remedy its lead-polluted water supply. Last Thursday, a vote to end debate on the measure failed in the Senate on a count of 43 to 54, as a number of Republicans joined their Democratic colleagues in wanting to extend consideration of the bill.

Meanwhile, the House returned from its snow-induced break to tackle a series of bills on housing policy, financial services reform, and the aforementioned attempt to override the President’s veto on an ACA-busting budget reconciliation measure (H.R. 3762). Early in the week, the House passed a measure (H.R. 3700) along partisan lines that would make changes to Section 8 and other housing assistance programs before approving a series of bills related to the Securities and Exchange Commission (SEC) that would create a small business office within the commission (H.R. 3784) and relax rules related to disclosures (H.R. 1675), among other provisions. Finally, a veto-override vote on the budget reconciliation bill that would have gutted the Affordable Care Act (ACA) and ended federal funding of Planned Parenthood failed to reach the necessary two-thirds majority, 241-186, in what may have been the final ACA-repeal vote of President Obama’s second term.  

Last Monday also marked the opening of the 2016 presidential election as Iowans cast their votes in caucuses held around the state. On the Democratic side, a near-tie caused some controversy, but former Secretary of State Hillary Clinton was able to declare a narrow victory. For Republicans, conservative firebrand Sen. Ted Cruz (R-TX) gained a surprise win, beating real estate mogul Donald Trump. However, the biggest winner of the night may have been Sen. Marco Rubio (R-FL), who was able to finish in a respectable third place – importantly separating him from the other so-called ‘establishment’ contenders within the GOP.
 
The Week Ahead
 
A busy week lies ahead on Capitol Hill, with President Obama’s budget request expected and the Senate set to continue wrangling over help for water cleanup in Flint. Majority Leader Mitch McConnell (R-KY) said the Senate will continue its consideration of the energy measure as some lawmakers from both parties hold out for ways to pay for the Flint water assistance. Leader McConnell has also teed up a Wednesday floor vote for a bill (H.R. 757) authorizing the President to apply sanctions to individuals, foreign governments and financial institutions involved in prohibited transactions with North Korea. Consideration of the bill comes after the rogue state launched a satellite over the weekend, in what is seen by analysts as a test of missile technology.
 
In the House, Majority Leader Kevin McCarthy (R-CA) has laid out three measures to be considered this week. Under one bill (H.R. 3293), the National Science Foundation (NSF) would have to publish written justification that a science grant or cooperative agreement is worthy of federal funding and in the national interest when announcing an award. Another measure (H.R. 2017) due this week would have the Food and Drug Administration (FDA) reissue rules requiring restaurants to display nutritional information on menus. Finally, the House will vote on a bill (H.R. 3442) requiring the Treasury secretary to report to Congress a detailed long-term debt-reduction plan whenever the country’s borrowing authority limit is set to be breached.
 
Off the floor, President Obama plans to release his final budget request on Tuesday – a $4 trillion package that requests more funds to research cancer, combat heroin addiction, and bolster the military’s fleets of aircraft and naval vessels. Even before the President’s request lands, key members of the House Freedom Caucus are raising objections to Speaker Paul Ryan’s (R-WI) path toward a fiscal 2017 budget in their demands for spending cuts. Leader McCarthy has said party leadership wants to bring a budget resolution to the floor for a vote in early March, while Speaker Ryan has gone on record saying he would like to pass all 12 appropriations bills by July.
 
Finally, New Hampshire holds its highly anticipated presidential primary election on Wednesday, with Donald Trump and Sen. Bernie Sanders (D-VT) both holding commanding leads in their respective parties.
 
Senators Urge President Obama to Include Drug Price Controls in Upcoming FY17 Budget 
 
On Tuesday, eight Democratic senators wrote a letter to President Obama urging him to include provisions to lower drug costs in his proposed budget for fiscal year 2017. Notably, the letter specifically asks for Medicare to be granted the ability to negotiate drug prices for biologics and other high-cost prescription drugs. Proponents of the idea argue that allowing the Department of Health and Human Services (HHS) to negotiate both the formulary and the price of drugs could enhance the agency’s ability to drive discounts from manufacturers and lead to major cost savings. The senators noted that negotiation could be achieved with a form of arbitration, but that lawmakers would need to select a pricing framework to “guide arbitrators in their decision-making, including how different types of evidence and other considerations ought to inform conclusions on drug price.” However, officials at Pew Charitable Trusts have highlighted additional challenges with the proposal, notably the need for Congress to outline the government’s specific statutory authority and a mechanism for implementing negotiated prices. 
 
The letter also includes a request for a pair of policies that were introduced in the President’s FY 2016 budget. One would require drug manufacturers to provide rebates on prescriptions for Medicare Part D low-income subsidy enrollees in the same way it does for Medicaid recipients, while the other would alter Part B drug reimbursement rates. Finally, the letter suggests that the President should consider testing value-based drug contracts – an initiative that drug maker Eli Lilly and insurer Anthem touted in a memo in late January.
 
HHS Approaches Year-One Value-Based Payment Goals
 
Dr. Patrick Conway, Deputy Administrator and Chief Medical Officer at the Centers for Medicare and Medicaid Services (CMS), said last week that the Obama administration is approaching its year one goal in the push to change the way Medicare providers are paid – shifting to value-based payments rather than focusing on volume. HHS Secretary Sylvia Mathews Burwell announced one year ago that 30 percent of all Medicare payments would be based on value by the end of 2016, up from the current level of about 20 percent. “We think we’ll reach that goal,” Conway said at an event hosted by The Hill on Tuesday.  That 30 percent commitment is among the most dramatic shifts in Medicare payments in the program’s history, and it marks the first time the Obama administration has set a target on value-based payments.
 
The administration is hoping that by 2018, half of all payments in Medicare will be judged on a myriad of quality measures that are designed to evaluate, among other things, whether a patient is actually healthier after they receive treatment. Under the current healthcare system, Medicare reimburses providers on a fee-for-service basis that pays doctors the same amount regardless of patient outcomes. These new types of payments, which take into account new metrics such as patient experience and coordination of care, are known as “alternative payment models.”  Under the new system, Conway emphasized that hospitals have incentives to work with other providers—such as physicians, home health agencies, and nursing facilities—that would otherwise be operating in different spheres.
 
FDA Announces Change to Opioid Approvals; Senators Stand Ground on Blocking FDA Nominee
 
The Food and Drug Administration (FDA) announced plans Thursday to help address the opioid abuse epidemic, but the move may not change the outlook for FDA Commissioner-nominee Robert Califf, whose Senate confirmation has been blocked over concerns the agency has not done enough to combat opioid abuse. Following the announcement, Sen. Edward Markey (D-MA) reaffirmed his intention to block the nomination, even while praising some of the agency’s proposals. Meanwhile, Sen. Joe Manchin (D-WV) said that the FDA’s actions did not go far enough, and that he plans to filibuster the nomination if it comes to floor for a vote. Sen. Kelly Ayotte (R-NH) has also said she would place a hold on Califf’s nomination, which may play an even bigger factor as Majority Leader Mitch McConnell weighs bringing the vote to the Senate floor. In a meeting held Thursday with Califf, McConnell stated that the “FDA must do better to protect our friends and families from unwanted dependence and addiction to prescription opioids.”
 
Among the proposals announced last week, the FDA said it will convene independent advisory committees for new opioid drugs that do not have abuse-deterrent properties – seen as a response to criticism of the agency’s decision last year to forgo advisory committee consideration before approving the use of OxyContin for children. Furthermore, the FDA says it will (1) strengthen its post-market reporting requirements for the companies that make opioids and make changes to its labeling requirements; (2) update its risk evaluation and mitigation strategy program for opioids, with the aim of increasing the number of prescribers who have access to training on pain management and safe prescribing for opioids; (3) issue guidance on approval standards for developing drugs that have abuse-deterrent formulations and examine ways to make it easier to access drugs that can counteract opioid overdoses; and (4) evaluate how it considers risk when reviewing opioid drug applications.
 
House Republicans Continue Planning ACA Replacement 
 
The House Ways and Means Committee is looking to move beyond repealing the Affordable Care Act (ACA) and instead begin crafting a Republican replacement this year; however, details about what that plan would entail, and whether Republicans will try to advance it through Congress, remain unclear. Chairman Kevin Brady (R-TX) previewed the committee’s 2016 agenda last week after its members attended a day-long retreat on Monday to begin coming up with a plan. The ambitious panel agenda approved at the retreat includes replacing the 2010 health care law, overhauling the tax code, and advancing changes to the welfare system. Chairman Brady had previously expressed interest in addressing Medicare plan design and revamping the payment system for hospitals and post-acute care, but stopped short of calling for immediate action on either issue in his announcement on Monday.
 
Assembling a health care proposal that Republicans can all agree upon has so far proven to be a frustrating task for party leadership. In addition to Ways and Means, both the House Energy and Commerce and Education and the Workforce committees will also likely to take roles in establishing a replacement, but neither has made any tangible progress. Having a replacement plan this year could help the party’s eventual nominee for president on the campaign trail and relieve Democratic criticism that Republicans lack a concrete vision for an alternative.
 
A replacement plan may also help build the case for the party’s repeated attempts to repeal the ACA – including last Tuesday when the House fell short of overriding President Obama’s veto of budget reconciliation legislation by a vote of 241 to 186. Though the result was expected, as override votes require a two-thirds majority and therefore would need significant Democratic support to succeed, Republicans praised the vote as showing what could happen next year if their party wins back the White House.
 
House Hearing Takes Aim at Generic Drug Prices, Shkreli Invokes Fifth Amendment
 
The House Committee on Oversight and Government Reform waded into the drug pricing debate last week, holding a hearing to discuss the pricing strategies of two companies, Turing Pharmaceuticals and Valeant Pharmaceuticals. The hearing follows intense media scrutiny on practices by both companies of acquiring generic drugs without any market competitors and then dramatically raising the price of those drugs – practices which drew harsh criticism from lawmakers on both sides of the aisle. While the witness presenting testimony on behalf of Valeant was apologetic, noting the company had made mistakes and would not engage in such practices moving forward, a witness from Turing defended the company’s practices. 
 
Former Turing CEO Martin Shkreli, the notorious 32-year old “pharma bro” who has been outspoken about why his company dramatically raised the price of a generic AIDS drug last year, responded with contempt when questioned at the hearing. Shkreli refused to answer any substantive questions for the committee, instead offering a wry smirk while citing advice of counsel to invoke his constitutional right against self-incrimination. He was soon dismissed by Chairman Jason Chaffetz (R-UT), but the controversial figure made sure to let lawmakers know what he really thought on Twitter: ​ “Hard to accept that these imbeciles represent the people in our government,” he tweeted.
 
​Away from the Shkreli sideshow, Republicans and Democrats split at the hearing over how to address drug price spikes, with Republicans insisting that the Food and Drug Administration (FDA) rectify its approval process to spur competition, while Democrats preferred direct legislative action. The rhetoric at the hearing was particularly strong, with Rep. Elijah Cummings (D-MD) – an outspoken critic of the drug industry – calling the profits from Turing Pharmaceuticals “blood money.”
 
Committee Republicans saved some of their criticisms for other targets, including the FDA and the administration’s health care overhaul. “Unfortunately, under the president’s health care law we’ve seen drug prices spike,” said Rep. Tim Walberg (R-MI), who also criticized the Senate for moving slowly on its version of the House-passed 21st Century Cures Act (H.R. 6).  Janet Woodcock, the Director of the FDA’s Center for Drug Research and Evaluation, defended the agency, saying it is clearing through its approval backlog and that generic drug applications submitted this year are being cleared in 15 months – with a goal to reduce that period to 10 months for fiscal year 2017.