Health Policy Report (4/25)

April 25, 2022

Congress is set to begin a new legislative work period this week, with the Senate returning first, later today, and the House tomorrow. Upon their return to Capitol Hill, lawmakers will look to pass $10 billion in supplemental funding to address health-related pandemic response efforts, as well as roughly $50 billion for restaurants and other “hard hit” small businesses. Disagreements over immigration, funding offsets, and global health will need to be navigated before a clear path forward emerges for the COVID-19 funding bill. Meanwhile, Congress will also be ramping up its appropriations activities for fiscal year (FY) 2023, with several cabinet officials — including Health and Human Services (HHS) Secretary Xavier Becerra, Food and Drug Administration (FDA) Commissioner Robert Califf, and Commerce Secretary Gina Raimondo, among others — set to testify on the President’s budget request for their respective agencies this week.

White House ONDCP Releases National Drug Control Strategy

On Thursday, the White House Office of National Drug Control Policy (ONDCP) formally submitted its inaugural report on the National Drug Control Strategy (Strategy) to Congress, outlining the Biden administration’s goals and objectives to combat drug use (press release; fact sheet). Specifically, the Strategy calls for policies aimed at harm reduction, intervention, treatment, and recovery efforts, as well as mechanisms to reduce the flow of illicit drugs whilst addressing criminal justice and public safety. To improve the development of effective drug policy, the Strategy employs evidence-based approaches through increased drug research and data collection efforts. 

Chapters within the strategy outline various policy recommendations pertaining to: (1) substance use disorder (SUD) treatment; (2) prevention, early intervention, and harm reduction; (3) data systems and research; and (4) criminal justice and public safety. The report also touches on the need to “obstruct and disrupt” the financial activities of drug traffickers, as well as strengthen public-private partnership frameworks with digital partners. In an accompanying press release, President Biden highlighted that “this Strategy goes after two big drivers of the opioid epidemic: untreated addiction and drug trafficking.”  

Orphan Drug Case May be Caught in SCOTUS Crosshairs

A lower court ruled that the Food and Drug Administration (FDA) illegally approved a drug to treat children with Lambert-Eaton Myasthenic Syndrome, since a drug to treat the adult population was still under orphan drug exclusivity protections. In 2018, FDA approved Firdapse, developed by Catalyst Pharmaceuticals, to treat Lambert-Eaton Myasthenic Syndrome in adults. One year later, the agency approved Ruzurgi, from Jacobus Pharmaceuticals, to treat children with the same condition. Catalyst sued and won, leading FDA to rescind Ruzurgi’s approval.

The court found that orphan drug exclusivity laws dictate that FDA cannot approve another drug designated for the same condition, regardless of the second drug’s indication within the condition. Now, Jacobus is asking the U.S. Supreme Court (USSC) to hear the case, asserting that the case’s ruling differs from precedent. FDA has until May 11 to back Jacobus’ USSC request. In previous instances of challenging orphan drug protections, FDA proposed a legislative fix, which may occur again.

HHS Allocates $90 Million Towards Health Disparity Data

Health Resources and Services Administration (HRSA) — a subagency of the Department of Health and Human Services (HHS) —announced that it set aside $90 million from the American Rescue Plan Act (ARPA) for the agency’s new data collection and reporting program. The Uniform Data System Patient-Level Submission (UDS+) initiative is intended to help health centers improve health outcomes and equity by having visibility into their patients’ needs and social determinants of health (SDOH). Health care facilities can use the funding for COVID-19 related improvements, expanding services through health IT, data collection efforts, and staff training.

HHS intends for the program to enable patient-level reporting, identify disparities, and have better visibility into health care outcome trends based on race, ethnicity, and other SDOH. HRSA’s plan is underway as HHS works health equity into many of its subagencies, including efforts to improve access to care, conduct more thorough outreach to patients, and uplift safety net providers. Notably, HRSA supports health centers that cater to underserved and medically marginalized populations, for which the COVID-19 pandemic has had a disproportionate impact.

Post-Midterms, GOP to Focus on Tax Credits to Lower Health Care Costs

Last week, Republicansreleased a series of bills aimed at signaling that under a GOP-controlled House, the focus of drug pricing policy will shift from Department of Health and Human Services (HHS) Medicare price negotiation to tax incentives for manufacturers. Representatives Vern Buchanan (R-FL), Brad Wenstrup (R-OH), and Mike Kelly (R-PA) — all of whom reside on the House Ways and Means Committee — introduced a series of bills last Monday providing new incentives for business and manufactures. The Republican trio outlined five bills: (1) the American Innovation Act (H. R. 7503); (2) the Start-Ups for Cures Act (H.R. 7504); (3) the More Cures Act (H.R. 7505); (4) the American Made Medicine Act (H. R. 7410); and (5) the Infectious Disease Therapies Research and Innovation Act (H. R. 7515).

The American Innovation Act would support the creation of new drug companies, while the Start-Ups for Cures Act would work to create incentives for small, infectious disease-focused biotechnology companies. The More Cures Act would also create tax incentives for infectious disease research, and the Infections Disease Therapies Research and Innovation Act encourages private investor funding for small firms at earlier stages. The American-Made Medicine Act aims to bolster domestic drug manufacturing, as well as the tools and equipment needed for these developments, through tax credits.

CMS Proposes FY 2023 Payment Rates for Inpatient, Long-Term Care Hospitals

Last Monday, the Centers for Medicare and Medicaid Services (CMS) issued aproposed rule (TRP analysis; fact sheetpress release) pertaining to Medicare payment policies and rates for the Hospital Inpatient and Long-Term Care Hospital (LTCH) Prospective Payment Systems (PPS), critical access hospitals (CAH), and non-qualified deferred compensation plans (NQDC) for fiscal year (FY) 2023.

CMS issues payment rules for each of its PPS on an annual basis. Payment rules update payment methodologies for each PPS, and the agency often packages policy changes in along with the updates. Through this proposed rule, the agency sets base payment rates prospectively for inpatient hospital stays based on the patient’s diagnosis and severity of illness. Subject to certain adjustments, a hospital receives a single payment for the case based on the payment classification assigned at discharge. 

Under the proposed rule, hospital payments are expected to increase by $1.6 billion in FY 2023, though CMS projects that Medicare disproportionate share hospital (DSH) and uncompensated care payments would decrease by a combined $.08 billion in FY 2023 as compared to the year prior. Additionally, CMS expects LTCH PPS payment rates to increase by roughly $25 million in FY 2023.