Health Policy Report (6/13)

June 13, 2022

Capitol Hill Update

A bipartisan group of senators reached an agreement over the weekend on a policy framework that seeks to bolster gun safety and improve access to mental health resources. While legislative text was absent from the Senate group’s announcement, proposed policies within the agreement include:

  • A national expansion of Certified Community Behavioral Health Clinics (CCBHC);
  • Funding for school-based mental health, supportive services, and safety resources;
  • Investments in tele-mental health services for youth and families;
  • Incentives for states to establish “red flag” procedures;
  • New penalties for straw purchasing and trafficking firearms;
  • Clarifying the definition of a federally-licensed firearms dealer;
  • Protections for victims of domestic violence; and
  • An “enhanced” review process for buyers under the age of 21.

The statement was notably signed by ten GOP senators, suggesting that a potential bill could have the necessary support to defeat a filibuster in the evenly-divided Senate. However, details within the legislative text will be crucial, as some of these principles could be dropped if there is not complete buy-in from the group. President Joe Biden offered support for the framework shortly after it was announced, and Senate Majority Leader Chuck Schumer (D-NY) has pledged to place the measure on the floor for consideration as soon as the text is finalized.

Meanwhile, both chambers are set to resume legislative business later today. In the House, lawmakers are poised to clear a Senate-passed bill that would implement a series of reforms to ocean shipping policies, including addressing issues pertaining to supply chain logjams and retaliatory practices. Additionally, House Democratic leadership has scheduled votes on: (1) a bill out of the Financial Services Committee that seeks to promote racial equity and add additional demographic reporting requirements at the Federal Reserve; (2) legislation that aims to address inflation in food, fuel, and agricultural products; and (3) a measure that would provide states, territories, and tribes with new funding opportunities to address wildlife and habitat conservation. In the upper chamber, senators are set to resume consideration of a House-passed bill that seeks to improve health care and benefits for veterans who were exposed to toxic substances during military service. 

House Passes FDA User Fee Bill, Senate HELP Releases Updated Bill Ahead of Markup

House lawmakers cleared a bill that would reauthorize several user fee agreements at the Food and Drug Administration (FDA) as both chambers look to mobilize on a final deal ahead of the September 30 deadline. The Food and Drug Amendments Act (TRP analysis) — which would update the Prescription Drug User Fee Act (PDUFA VII), Generic Drug User Fee Amendments (GDUFA III), Biosimilar User Fee Act (BsUFA III), and the Medical Device User Fee Amendments (MDUFA V) to continue authorization of these user fee programs — passed [392-28] on Wednesday with strong bipartisan support. Meanwhile, the Senate Committee on Health, Education, Labor and Pensions (HELP) will hold an executive session on Tuesday to markup the Food and Drug Administration (FDA) Safety and Landmark Advancements (FDASLA) Act (TRP analysis). The Committee released the latest version of the FDASLA yesterday, along with an updated section-by-section summary and redlined versions that show changes to the original bill and relative to current law. The Senate’s FDA user fee reauthorization measure is expected to clear the Committee with support on both sides of the aisle, but a timeline for floor action is unclear at the moment.

CBO Estimates Billions in Cost Savings from Drug Pricing Bills

Last week, the Congressional Budget Office (CBO) released scores for three major drug pricing reform bills, as well as the budgetary effects of the House user fee legislations for 2023 through 2027. The three drug pricing bills would reduce the federal deficit by a combined $1.9 billion over ten years. The largest savings would come from the Affordable Prescriptions for Patients Act (S. 1435, CBO analysis), which would reduce the deficit by a projected $1.1 billion over ten years. The bill would, among other things, allow the Federal Trade Commission (FTC) to sue manufacturers that engage in “product hopping,” a reformulation practice that allows for extended market exclusivity. CBO also scored the Preserve Access to Affordable Generics and Biosimilars Act (S. 1428; CBO analysis), which would allow FTC to crack down on so-called “pay-for-delay” agreements between branded drug manufactures and generic manufacturers that delay market entry for generic drugs. This bill would reduce the deficit by $685 million.

The last of the three bills is the Stop Significant and Time-wasting Abuse Limiting Legitimate Innovation of New Generics (STALLING) Act (S. 1425; CBO analysis), which was determined to reduce the federal deficit by $117 million. The bill would punish branded drug manufacturers for leveraging citizen petitions to delay market entry of competing generics and biosimilars. Additionally, CBO scored the Food and Drug Amendments of 2022 Act (H.R. 7667; CBO analysis), which CBO predicts would reduce the deficit by $598 million due to measures that would encourage generic competition.

FTC to Launch Probe Into PBMs

Last Thursday, the Federal Trade Commission (FTC)announced that it will conduct an investigation into pharmacy benefit managers (PBMs) by requiring the six largest PBMs to share records and information regarding their business operations. The Commission will examine PBMs’ role in the U.S. drug pricing system, as well as the impact of vertically integrated PBMs on access to medications. The investigation comes as lawmakers on both sides of the aisle look towards curbing PBM practices as a driver of high drug prices. While Democrats have more ambitious drug pricing control strategies that target the pharmaceutical industry, attacking PBMs can be fertile ground for both Republicans and Democrats. The inquiry is intended to build on the FTC’s request for information (RFI) from February, which garnered thousands of comments.

Lawmakers Put Pressure on Patent Office to Restrict Patent Thickets

A bipartisan group of six senators — Sens. Patrick Leahy (D-VT), John Cornyn (R-TX), Richard Blumenthal (D-CT), Susan Collins (R-ME), Amy Klobuchar (D-MN) and Mike Braun (R-IN) — sent aletter to the U.S. Patent and Trademark Office (USPTO) requesting that Director Kathi Vidal work to prevent patent thickets before they happen. “Patent thickets” refer to situations in which a large number of patents, such as continuation patents, cover a single drug and “stifle competition,” as the letter characterizes the practice. The senators explain that patent thickets can delay generic competition and note that continuation applications are generally granted at higher rates than original patent applications. Additionally, the letter focuses on “terminal disclaimers,” which can enable patents that are variations of each other and extend exclusivity periods. The Senators requested that USPTO begin crafting new regulations for patent examinations during the pre-issuance stage by September 1, 2022 with a 60-day comment period.

House Democratic Leadership Calls for Action on ACA Subsidies, Medicaid Gap

On Tuesday, House Majority Leader Steny Hoyer (D-MD) and Majority Whip James Clyburn (D-SC)published an opinion piece in The Hill urging that the Democrats’ reconciliation package should include an extension of Affordable Care Act (ACA) premium subsidies and a remedy for the Medicaid coverage gap. The American Rescue Plan (ARP) Act had implemented subsidies for Marketplace health insurance plans, though the subsidies are set to expire after the 2022 plan year. Leader Hoyer and Whip Clyburn then shifted their focus towards Medicaid expansion efforts. In their open letter, they explain that a myriad of Americans are stuck in what is known as the “coverage gap,” which refers to individuals in non-expansion states whose income makes them too wealthy for Medicaid but not eligible for Marketplace subsidies. The lawmakers asserted that extending premium tax credits would reach those in the coverage gap.

Many policies for inclusion in a reconciliation bill hinge on Sen. Joe Manchin (D-WV), who recently noted that he was receptive to ACA subsidy provisions. Nevertheless, the window for implementing a premium tax credit extension is narrowing. Insurers and state and federal regulators have to prepare for the next enrollment period, and members of Congress assert that a final reconciliation bill would need to pass by July 4, 2022, in order for insurance stakeholders to implement premium tax credit changes for the 2023 plan year. Should Congress pass ACA reforms by July 4, beneficiaries would see the effects weeks before mid-term elections. 

Senate Budget Debates Social Security Benefits

On Thursday, the Senate Budget Committee held ahearing (TRP summary) to discuss the Social Security Board of Trustees’ annual report (summary) on the actuarial status of the Old-Age and Survivors Insurance (OASI) and Disability Insurance (DI) Trust Funds. The report projected a 2035 reserve depletion date for the combined OASDI trust funds, which is one year later than what was reported in last year’s report.

During the hearing, senators heard from industry stakeholders and the Chief Actuary at the Social Security Administration (SSA) Mr. Stephen C. Goss. Democrats advocated for the Social Security Expansion Act (text), which would increase Social Security benefits and raise Social Security taxes for billionaires, while they characterized Republicans’ policy proposals as a way to cut Social Security benefits. On the other hand, Republicans supported the Time to Rescue United States’ Trusts (TRUST) Act (S. 1295), which would create a pathway to identify legislation that would improve Social Security solvency and provide an expedited voting process for such legislation.