Health Policy Report (5/31)

May 31, 2022

Capitol Hill Update

Senate Democrats are reviving their push to clinch a filibuster-proof legislative package for various elements of President Joe Biden’s economic agenda. According to intel from Capitol Hill, Sen. Joe Manchin (D-WV) has been recently engaged in talks with Majority Leader Chuck Schumer (D-NY) over a package of climate, energy, health, and deficit reduction provisions that could potentially clear the upper chamber by a party-line vote ahead of November’s midterm election. Notable policies that have been floated in these discussions include: (1) clean energy tax credits; (2) extending the Affordable Care Act (ACA) premium tax credits; (3) prescription drug pricing policies contained in the House-passed Build Back Better (BBB) Act (H.R. 5376); and (4) additional tax provisions, including money for IRS enforcement and a 15 percent domestic minimum rate. In total, this latest BBB iteration could include close to $800 billion in new spending, coupled with $1.4 trillion in funding offsets.

Discussions between Leader Schumer and Sen. Manchin are expected to continue in the weeks ahead as Democrats look to deliver a legislative win for President Biden — whose approval ratings have been hovering in the low 40s — ahead of the November 8 general election. However, considerable skepticism abounds, and Sen. Manchin, who has been trying to broker a bipartisan deal on clean energy tax credits over the past month, cautioned in an interview with Axios that the revived reconciliation talks could still falter absent buy-in from the totality of the Democratic caucus. This includes some of the House progressives who have pushed for a more ambitious social spending package that mirrors the original BBB legislation, as well as moderate Sen. Kyrsten Sinema (D-AZ), who has previously expressed concerns over some of the tax and drug pricing proposals that have been offered.

Meanwhile, both chambers of Congress have adjourned for a week-long state work period for the Memorial Day holiday, and will return to Capitol Hill the week of June 6. Despite lawmakers being out, negotiations on a potential bipartisan gun safety package are expected to continue among a group of senators following two recent mass shootings in Buffalo, NY and Uvalde, TX. Members on both sides of the aisle are facing increased pressure to address the issue of gun violence, but it is too early to tell whether this bipartisan Senate group can reach a deal that earns 60 votes in the evenly-divided chamber.

Looking ahead to the rest of the summer work period, lawmakers will aim to make significant progress on advancing fiscal year (FY) 2023 spending bills, starting with markups in the House Appropriations Committee next month. While leadership is hopeful that the appropriations process can move swiftly for FY 2023, it remains possible that a short-term funding bill will be needed to give lawmakers more time to address government funding and expiring programs during the “lame duck” session in November and December.

Senate HELP Introduces User Fee Package

On Friday, the Senate Committee on Health, Education, Labor, and Pensions (HELP) Committee unveiledlegislative text (TRP analysis; section-by-section) to reauthorize the Food and Drug Administration (FDA) user fee agreements (UFA). Varying from the discussion draft (press release) offered by the Committee earlier this month, the legislation includes additional provisions related to: (1) the accelerated approval process; (2) therapeutic equivalence; (3) over-the-counter (OTC) hearing aids; and (4) FDA domestic and foreign inspections. Specifically, such additions would allow for the use of real-world evidence (RWE) in certain post-approval studies, provide guidelines for an expedited procedure for withdrawal of an accelerated approval product, and require the Department of Health and Human Services (HHS) to issue guidance on the use of novel endpoints and clinical trial designs in accelerated approval, among other items.

Additionally, the proposed legislation would require the FDA to make timely therapeutic evaluations for follow-on drugs approved through the 505(b)(2) pathway that have similar formulations as other approved products. The current five-year authorization for the UFAs ends on September 30, 2022, which acts as a deadline for current UFA negotiations. As both the House and Senate have formally released their draft legislation for these provisions, the two chambers will work to reconcile differences as committee hearings out of both chambers take place to consider the specifics of the text. Furthermore, additional changes to the text are expected to be made through a managers’ amendment ahead of the Senate HELP Committee’s markup of the bill — rumored to be scheduled for June 8, 2022. 

Democrats Work to Prioritize ACA Premium Credits

Last Monday, Rep. Lauren Underwood (D-IL) spearheaded aletter along with 25 of her Democratic House colleagues to Senate Majority Leader Chuck Schumer (D-NY) and House Speaker Nancy Pelosi (D-CA) calling for the extension of Affordable Care Act (ACA) premium tax credits. The enhanced premium tax credits included in the American Rescue Plan are set to expire at the end of 2022, and the letter requests that a revised Build Back Better (BBB) agenda include an extension of the credits. Without an extension of the ACA credits, enrollees will be notified of increased premiums right around mid-term election season.

This timing does not bode well for the May 23 letter signees, who represent swing districts. A policy to extend the subsidies was included in last year’s House-passed BBB Act, though negotiations over the package stalled. As discussions around a reconciliation package reemerge, Democrats facing uncertain midterm election prospects are hopeful that they can deliver on their legislative agenda and retain their seats in Congress. Sen. Joe Manchin (D-WV) — who has dictated policies to be included in the Democrats’ legislative spending package — has indicated openness to the idea of extending the tax credits, though their ultimate inclusion in final legislative text will depend on broader negotiations. 

No Surprises Act Yields Results

In the first two months of 2022, areport conducted by America’s Health Insurance Plans (AHIP) and the Blue Cross Blue Shield Association (BCBSA) found that implementation of the No Surprises Act (NSA) blocked roughly two million surprise medical bills. The NSA is designed to shield patients from unforeseen medical bills from out-of-network providers operating at in-network facilities. Leading up to its implementation, payers and providers pushed for the NSA to implement an independent dispute resolution (IDR) process that favors their respective interests, and the Centers for Medicare and Medicaid Services (CMS) recently revised its guidance for the IDR process following a federal lawsuit. AHIP and BCBSA reached out to over 80 insurers to complete their report, of which 31 responded. The report predicts that the NSA could prevent over 12 million surprise bills in 2022.

FTC Shifts Focus to PBMs

With Alvaro Bedoya at the helm of the agency, the Federal Trade Commission (FTC) has announced plans to investigate the impact of pharmacy benefit managers (PBM) on drug prices. Back in February, the FTC voted on party lines not to open a probe into PBM practices, but the new chair has decided to open a comment period to collect public input on PBM practices, for which remarks were due May 25. Under its new Democrat-appointed Commissioner, the FTC is expected to re-vote on a measure to investigate PBMs.

Specifically, the investigation would study “the competitive impact of contractual provisions, reimbursement adjustments, and other practices affecting drug prices, including those practices that may disadvantage independent or specialty pharmacies.” Several generic drug makers and numerous patient organizations have been pushing for the FTC to investigate PBMs, though PBM stakeholders note that their industry is only one part of the drug pricing supply chain and urge the FTC to look into all aspects of drug pricing mechanisms.

HCBS Providers Face New Regulations

Last Tuesday, the Centers for Medicare and Medicaid Services (CMS)doubled down on its 2014 home- and community-based services (HCBS) rule requiring that states and HCBS settings comply with regulations by March 17, 2023. Due to the COVID-19 pandemic’s impact on nursing homes, CMS had provided an extra year for providers to come into compliance with the 2014 HCBS rule, but Tuesday’s announcement indicates that providers will not be granted another extension. States must submit their Statewide Transition Plans (STP) to CMS by July 31, 2022 — pending agency approval — in order to continue receiving federal funding for HCBS.

The STP must include an outline of how the state will comply with all HCBS settings criteria that are not directly impacted by the COVID-19 pandemic. Specifically, these provisions include assurances that beneficiaries will have a lease, privacy in their units, full access to food and visitors, and a person-centered service plan, among other provisions. Notably, CMS is allowing states to apply for corrective action plans that would push a state’s compliance date under certain conditions. However, such plans are only viable if a state cannot meet requirements due to a direct impact of the pandemic, such as employment opportunities, access to the community, and options for a private space, among other considerations.

HHS Moves Forward on ARPA-H

Department of Health and Human Services (HHS) Secretary Xavier Becerra announced the creation of the Advanced Research Project Agency for Health (ARPA-H) within the National Institutes of Health (NIH). HHS assured the public that ARPA-H will not be subject to NIH policies and will instead be an independent agency within the NIH. Secretary Becerra also appointed the agency’s first employee, Adam Russell, who will serve as ARPA-H’s acting deputy director. Previously, Russell worked at the Intelligence Advanced Research Projects Activity (IARPA) and at the Defense Advanced Research Projects Agency (DARPA).

Secretary Becerra said that President Biden will appoint an ARPA-H director who will report to HHS. However, the agency only has $1 billion from Congress, which is significantly short of President Biden’s request to find the agency at $6.5 billion. The House Energy and Commerce Committee’s bill (TRP analysis) to reauthorize the Food and Drug Administration’s (FDA) user fee agreements (UFA) includes an additional $500 million per year from 2013 through 2027 for ARPA-H, though the Senate’s companion bill does not currently include provisions for the agency.