Health Policy Report (6/22)

June 22, 2020

Capitol Hill Update

This week, House and Senate lawmakers are set to consider the Democratic and Republican visions for comprehensive police reform. After clearing The Justice in Policing Act out of the House Judiciary Committee last week, the lower chamber is eyeing a vote on the Democrats’ bill when lawmakers convene for votes on Thursday and Friday. Senate Republicans, meanwhile, plan to consider their Just and Unifying Solutions to Invigorate Communities Everywhere (JUSTICE) Act. While lawmakers have expressed a sense of urgency with respect to clinching meaningful reform, it remains to be seen whether lawmakers can reach a bipartisan deal. For more on the state of play with respect to these Congressional police reform efforts, click here to read TRP’s comprehensive memo.

In addition to the Democrats’ police reform legislation, House lawmakers have queued up votes on several key legislative items over the course of the next two weeks. These include: (1) a bill that seeks to stabilize the Affordable Care Act (ACA); (2) legislation that would reform the Fair Credit Reporting Act (FCRA) to promote fair and accurate credit reporting; (3) a Senate-passed public lands measure; and (4) a comprehensive package of infrastructure legislation. Following the July 4 district work period, the House is also eyeing action on the fiscal year (FY) 2021 National Defense Authorization Act (NDAA) and appropriations bills.

With respect to the Congressional appropriations process, leadership in both chambers has begun to flesh out a strategy for markup and consideration of FY 2021 spending bills. House Appropriations Chairwoman Nita Lowey (D-NY) announced the lower chamber’s markup schedule for the week of July 6, including consideration of the Labor-HHS-Education bill on Tuesday, July 7. Meanwhile, Senate Chairman Richard Shelby (R-AL) is planning to delay forthcoming markups ahead of the July 4 recess amid partisan disagreements over COVID-19 relief and police reform amendments that Democrats want to offer. When the Senate begins its markup process, appropriators will look to expedite its process by skipping subcommittee markups, going straight to full committee markups instead.

House Democrats Plan Vote on ACA, Drug Pricing Bill

House Democrats are preparing a package of reforms to the Affordable Care Act (ACA) for a vote the week of June 29, likely including expansions of subsidies, restrictions on short-term plans, and a possible boost to Medicaid eligibility. The bill will likely include the Protecting Pre-existing Conditions and Making Health Care More Affordable Act (H.R. 1884, summary). To offset the cost of the legislation, Democratic leaders are looking to include Title I of H.R. 3, the sweeping drug pricing overhaul that passed the House in December of last year. That legislation directs the HHS Secretary to negotiate prices on at least 50, and up to 250, brand-name, single-source drugs, with 120 percent of the average price in a basket of peer countries as an upper limit. While the bill is expected to pass the House, it has no prospects of being taken up by the Senate.

CMS Proposes Best Price, AMP Changes to Encourage Value-Based Payments

Last Wednesday, the Centers for Medicare and Medicaid Services (CMS) proposed a rule (rule, fact sheet, press release) intended to encourage value-based arrangements for prescription drugs between manufacturers and payers. The notice of proposed rulemaking (NPRM) would clarify how value-based payment (VBP) arrangements interact with average manufacturer price (AMP) and best price in the Medicaid Drug Rebate Program (MDRP). Manufacturers have long been wary of entering into VBPs, noting that MDRP rules could require unreasonable rebates or prices, depending on the structure and performance of VBPs. The rule seeks to assuage those concerns through clarifications and new definitions of VBPs, AMP, and best price. The NPRM also includes a potpourri of other Medicaid-related regulatory changes. The rule will be open for comment for 30 days, therefore, the comment period will close at 5 p.m. on July 19, 2020. CMS will then evaluate comments and consider possible changes to the rule in anticipation of potential finalization.

CMS views VBPs as a tool that state Medicaid programs may use to address the high cost of certain treatments. “CMS’ rules for ensuring that Medicaid receives the lowest price available for prescription drugs have not been updated in thirty years and are blocking the opportunity for markets to create innovative payment models,” said CMS Administrator Seema Verma upon the NPRM’s release. “By modernizing our rules, we are creating opportunities for drug manufacturers to have skin in the game through payment arrangements that challenge them to put their money where their mouth is.”

In addition to the changes meant to encourage VBP arrangements, the rule makes several other updates to Medicaid-related regulations. The rule would remove certain maternal care from the list of services for which state Medicaid programs may or must “pay and chase,” rather than engaging in cost-avoidance in the case of third-party liability (TPL). It would also implement opioid-related drug utilization review (DUR) standards that were passed under Section 1004 of the SUPPORT Act and additional standards authorized by Section 1004 of that act. Additionally, the rule implements and clarifies a 2019 law that excludes so-called authorized generics from AMP calculations, and it makes changes to encourage structuring manufacturer patient assistance programs (PAP) with regard to plans’ so-called “accumulators” such that that their benefits accrue to patients.

Federal Appeals Court Upholds Decision to Strike DTC Drug List Price Rule

The United States Court of Appeals for the District of Columbia last Tuesday upheld a lower court decision to strike down the Centers for Medicare & Medicaid Services’ (CMS) rule requiring that drug manufacturers disclose list prices in direct-to-consumer (DTC) television ads. In Merck v. HHS, the court ruled that CMS does not have the authority to require pharmaceutical manufacturers to include the list prices in advertisements, and Judge Millet noted in her opinion that the rule was “largely untethered to the actual administration of the Medicare or Medicaid programs.” She explained that CMS cannot pursue rules that are based on a “hoped-for trickle down effect” to Medicare and Medicaid, and that the rule would confuse beneficiaries who often pay much lower prices that the “dramatically higher” drug list prices. The administration had argued that the list price information would be useful to beneficiaries, whose cost sharing is based on list prices, although Judge Millet recalled that Department of Health and Human Services (HHS) Secretary Alex Azar has noted that high list price information could deter patients from asking their health providers about drugs. Furthermore, Judge Millet stated the rule would regulate advertising directed at the general public and not just Medicare and Medicaid beneficiaries, distancing the rule from the programs it meant to impact.

Bipartisan Senators Call for Permanent Expansion of Telehealth Post-Coronavirus

A group of thirty senators from both sides of the aisle sent a letter to Senate Majority Leader Mitch McConnell (R-KY) and Senate Minority Leader Chuck Schumer (D-NY) urging leadership to make the expansion of telehealth services undertaken during the COVID-19 public health emergency permanent. Last Monday, the bipartisan group called for provisions of the CONNECT for Health Act included in previous coronavirus relief bills be extended after the end of the public health emergency declaration, arguing that Americans have benefited significantly from the expansion and “come to rely on its availability.” The lawmakers, led by Sens. Brian Schatz (D-HI) and Roger Wicker (R-MS), asked that the expanded telehealth services remain an option for all Medicare beneficiaries so that their care will not be interrupted when the pandemic ends, and allow health care providers certainty to make long-term investments in telehealth.

Most Americans Think Drug Manufacturers Will Use COVID-19 to Raise Prices

Polling by West Health and Gallup released last Thursday revealed that 88 percent of Americans are worried about a rise in drug prices related to the coronavirus public health emergency, with 55 percent saying they are “very” concerned and 33 percent saying they are “somewhat concerned.” The researchers surveyed over 1,000 adults in May and found that the level of concern was mostly similar across various demographics, although split along party lines. Additionally, 79 percent of those polled said they were very or somewhat concerned about their health insurance premiums rising and 84 percent stated they were concerned about the general cost of care going up. With support roughly equivalent across party lines, 88 percent of those polled answered they were in support of having the government directly negotiate with pharmaceutical manufacturers on the price of a treatment for coronavirus. Despite this, 34 percent of respondents called the government response to the pandemic “poor.”