Health Policy Report

October 3, 2016

The Week in Review  

A bipartisan deal ensuring that funding for Flint, Michigan’s water crisis will be handled during the lame duck session allowed lawmakers to quickly approve a continuing resolution (CR) last week maintaining current levels of government funding through Dec. 9, plus packages to provide Zika virus response and flood aid to Louisiana and other states affected by natural disasters. Some Democrats continued to object that the Flint crisis should be handled in the CR, but most were assured that the Michigan city would ultimately receive at least $170 million in federal aid through the Water Development Resources Act. The Senate passed the bill (H.R. 5325) 72-26 before the House sent the measure to the president’s desk on a 342-85 vote. The remaining holdouts mostly consisted of conservative lawmakers who had wanted a longer-term CR to avoid negotiating an omnibus in the lame-duck session.

Most of the package had been hammered out before the Flint deal was struck, notably including language to provide $1.1 billion in the fight against Zika and leaving other contentious riders such as prohibiting the Obama Administration from completing an internet oversight transition plan. However, both sides scored minor victories, with Democrats ensuring that Zika funding could go to Planned Parenthood clinics and Republicans inserting an extension of statutory language preventing the Securities and Exchange Commission (SEC) from completing a rule requiring corporations to disclose their political spending. Most importantly, the smooth passage through both chambers ensured that the government avoided a shutdown at the end of last week.

House and Senate lawmakers also made headlines last week for completing the first veto override of the Obama presidency on legislation (S. 2040) that would allow victims of the Sept. 11 attacks to sue the Saudi Arabian government. Both chambers easily cleared the two-thirds hurdle required to override a presidential veto, with the Senate voting 97-1 and the House 348-77. The bill will now become law and lawmakers are now hoping that White House fears of legal retaliation against U.S. soldiers and diplomats are overblown.

Passing the stopgap spending bill marks the last legislative work either chamber will do before Election Day. Lawmakers have headed to their home districts to campaign for the next five weeks ahead of Election Day on Nov. 8.

Lame Duck Preview

With Congress officially out of session until Nov. 14, policymakers are looking ahead to the legislative action that will unfold after the dust settles from Election Day. The recently-passed continuing resolution (CR) (H.R. 5325) expires on Dec. 9, meaning that lawmakers will need to either pass eleven appropriations bills, an omnibus combining those eleven measures, or a series of “minibuses” that bloc certain combinations of spending bills to make them more palatable to members.

Senate Leader Mitch McConnell (R-KY) has suggested Republicans will prioritize work on appropriations bills for the 2017 fiscal year and a legislative package promoting biomedical innovation during the lame duck session. The Majority Leader also indicated that two high-profile items – approving the Trans-Pacific Partnership (TPP) and confirming Merrick Garland to serve on the U.S. Supreme Court – will not be on the upper chamber’s agenda. Meanwhile, House Speaker Paul Ryan (R-WI) has been pushing to include criminal justice reform in lame duck considerations, but expectations for that effort have been tempered by Leadership in the upper chamber.

A spending package is the only true “must-pass” item on Congress agenda for the lame duck session, and lawmakers are sure to be negotiating various policy riders to be included in the final version. While the CR included the full-year Military Construction-Veterans Affairs appropriation measure, both Leader McConnell and Speaker Ryan have voiced their preference for two or more “minibus” vehicles to fund the government for the remainder of the 2017 fiscal year. Aside from riders, House Appropriations Committee Chairman Hal Rogers (R-KY) said that a key problem will be dealing with a House plan to shift $18 billion in war funds into the base budget, a strategy designed to force a supplemental spending bill for defense next spring. Democrats in both chambers have strongly opposed a defense spending increase unless it is matched by a commensurate increase for domestic programs.

While less pressing, a biomedical innovation package – also known as 21st Century Cures – is high on the priority list for Leader McConnell, given that leaders of both parties and President Obama have warmed to the bill (more on that in our next entry).

GOP Leaders Target 'Cures' Bill as Lame-Duck Priority

Congressional leaders last week reaffirmed their commitment to passing a version of the 21st Century Cures Act – wide ranging legislation aimed at speeding the development of medical cures – before the end of the year. Both Senate Majority Leader Mitch McConnell (R-KY) and House Speaker Paul Ryan (R-WI) said their respective chambers were committed to passing a version of medical innovation legislation during the lame duck session after the elections. Given the confluence of interest from Republican leaders, President Obama, Vice President Biden, and the biopharmaceutical industry, the odds are as favorable as ever that a year-long impasse over the legislation could finally be broken during the lame duck session.

The House overwhelmingly passed a version of the bill (H.R. 6) last year, but negotiations stalled in the Senate, where the Health, Education, Labor, and Pensions (HELP) Committee underwent their own deliberative process on a complementary package of policies. Among the major provisions in the House-passed legislation, it would overhaul the drug, biologic, and device approval pathways at the Food and Drug Administration (FDA), and provide additional resources for President Obama’s Precision Medicine Initiative and Vice-President Biden’s “Cancer Moonshot” plans. Earlier this year, the Senate HELP Committee passed 19 bills of its own, many of which address the same issues as the House-passed bill. As of now, it’s uncertain which provisions from the House or Senate bills would be included in a final legislative package.

A key sticking point for passage of the overarching legislation has been finding pay-fors to offset additional funding for the National Institutes of Health (NIH) – a key demand among Democrats. Further complicating passage, many offsets for the House’s original version of the bill have since been used to pay for other bills. Party leaders and industry stakeholders have reportedly been engaged in robust negotiations over a pay-for that would prevent brand pharmaceutical companies from barring generic makers' access to samples of drugs. The proposal, which would rewrite legislation (S. 3056) from Sen. Patrick Leahy (D-VT) known as the CREATES Act, would require generic companies to purchase insurance protection in order to obtain samples, and could limit the legal action the industry can take should brand-name pharmaceutical companies decline to provide them. The bill is intended to address complaints from generic drug makers that brand drug manufacturers are using safety measures known as Risk Evaluation and Mitigation Strategies (REMS) as a way to avoid providing the samples necessary to create the cheaper, generic versions of approved medications.

Given the commitment from Leader McConnell and Speaker Ryan to offer floor time to the legislation during the lame duck, we think the chances of a version of the 21st Century Cures Act being signed into law in November or December are favorable. As term-limited Energy and Commerce Committee Chairman Fred Upton looks to cement his legacy, he will be aggressively negotiating in the coming weeks to grease the wheels for the bill to move when Congress returns. And if Upton and other Congressional leaders are able to secure buy-in from stakeholders across the pharmaceutical industry – particularly on the offsets – it’s likely that the legislation will pass.

Clinton Touts Ideas for ACA Improvements in JAMA Article

Democratic presidential nominee Hillary Clinton touted her ideas for improving the Affordable Care Act and warned against repealing it in an article published last week in the New England Journal of Medicine. The prestigious medical journal invited both major-party presidential nominees to write articles laying out their health ideas. The journal said Republican nominee Donald Trump did not respond.

Clinton, as she has previously stated, calls for adding to President Obama’s signature healthcare law. The Democratic nominee wants to provide a new tax credit of up to $5,000 to help people pay for high out-of-pocket healthcare costs. She also calls for boosting outreach efforts to get more people signed up and creating a government-run “public option” health insurer to increase competition on the ACA’s marketplaces. While acknowledging that out-of-pocket health costs and reduced competition are areas that need to be addressed, Clinton also warns against repealing the law, as Trump has proposed. Many of Clinton’s ideas for improving the healthcare law would have little chance of passing Congress, given that Republicans are expected to control at least the House. President Obama has proposed similar ideas, but they have not been implemented because Congress would not approve them.

Clinton also puts a focus on fighting high drug prices, an area that has grown in prominence with uproar over the price of products like the EpiPen allergy medication. She wants to improve drug competition by streamlining the approval process for cheaper generic drugs, an area that could provide room to work with Republicans. She also proposes ideas that are more exclusively in the domain of Democrats, like allowing Medicare to negotiate drug prices.

White House Renews Efforts to Entice Millennial Obamacare Enrollment

Last week, the Obama Administration announced new efforts to increase outreach to young adults in an attempt to improve the criticized stability of the Affordable Care Act’s (ACA) health insurance marketplaces. Officials are hoping that an influx of healthy young adults could offset the high enrollment of older and sicker individuals that have caused some insurance providers to back out of the exchanges.  Outreach efforts to increase the number of young adults during enrollment last year were not particularly successful, as the percentage of enrollees aged 18 to 34 remained flat at 28 percent. Analysts have predicted that the pool of enrollees ages 18 to 34 must rise to 40 percent in order to improve the stability of the marketplaces and assure insurance providers.

The administration is embracing novel approaches, such as utilizing social media platforms including Facebook, Snapchat, Twitter, and Tumblr in order to convince young adults to sign up on the exchanges. Additionally, the mobile phone website for the Obamacare marketplace is being updated to improve the ability to compare plans and shop for coverage. The White house has also involved college campuses by starting the Health Campus Challenge, which encourages college campuses to hold enrollment events and send students targeted emails in order to compete for a special event at the White House. The announcements were coupled with an open forum held Tuesday to discuss ideas to improve outreach to young people before open enrollment for the healthcare law’s fourth year, which begins on November 1st.

GAO Says HHS Illegally Prioritized ACA Reinsurance Payments to Insurers

In response to a request by Congressional Republicans, the Government Accountability Office (GAO) issued a legal opinion Thursday concluding that the Department of Health and Human Services (HHS) illegally prioritized Affordable Care Act (ACA) reinsurance payments to insurers. At issue is the ACA's temporary reinsurance program that was created to help mitigate premiums by shielding issuers from extremely high cost patients in the initial years of the newly reformed marketplace. Lawmakers intended HHS to collect $20 billion for the insurance pool and another $5 billion to be sent to the Treasury over a three- year period. However, HHS sent no money to the Treasury for the 2014 policy year. This is because in a little-noticed rule out in 2014, the agency decided that it would send funds to issuers over the Treasury if it failed to collect the full amount set out in the statute. After looking into the matter, the GAO announced Thursday that HHS overstepped its authority by sending the bulk of the ACA's reinsurance fund to exchange issuers instead of compensating the U.S. Treasury.

HHS immediately denounced the GAO’s findings, noting that it formulated the reinsurance policy in a transparent and legal manner. Meanwhile, Republican lawmakers who queried the GAO touted its findings, and said they expect the Administration to comply with the agency’s recommendations and “stop illegally diverting billions of taxpayer dollars to insurance companies.”  The controversy   could likely lead to yet another House Republican lawsuit against the Obama administration over aspects of ACA implementation, though any action likely would depend on how a new administration addresses the conflict.

House Republicans Urge CMMI to Halt Mandatory Demonstrations

A significant contingent of the House Republican caucus has sent a letter to the Centers for Medicare and Medicaid Innovation (CMMI) calling on the agency to halt all current and future mandatory initiatives. The letter, led by Reps. Tom Price (R-GA), Charles Boustany (R-LA) and Erik Paulsen (R-MN), was signed by 179 House Republicans. Citing three recent demonstrations – the Comprehensive Care Joint Replacement (CJR) Model, the Part B Drug Payment Model, and the Cardiac Bundled Payment Model – the letter notes that “until recently, the tests and models developed by CMMI were implemented, as intended, on a voluntary, limited-scale basis.” The letter says that the mandatory demonstration could have “potentially negative effects on patients, especially our vulnerable seniors.”

Among their primary concerns, the Members discuss the limited opportunities for stakeholder feedback, the nationwide scope of the “experiments,” and the potential to foster access issues for beneficiaries and consolidation among providers.  “Accordingly,” the letter states, “we insist CMMI stop experimenting with Americans' health, and cease all current and future planned mandatory initiatives within the CMMI.” Notably absent from the letter are over 60 Members of Congress – including some Democrats – who signed Rep. Price’s May 2016 letter to CMS asking the agency to withdraw the Part B Drug Model. Twenty-two House members, including two Democrats, have signed onto legislation that would prohibit the agency from moving forward with the Part B demo.

Under Veto Threat, House Passes Exemption From Health Insurance Mandate

The House passed legislation (H.R. 954) last week that would temporarily exempt individuals from tax penalties if his or her insurance coverage ended mid-year because of a Consumer Operated and Oriented Plan (CO-OP) closure. House Republicans defied unified Democrats in passing the bill by a 258-165 vote, as Democrats and the Obama Administration said the bill would undermine the Affordable Care Act’s (ACA) individual mandate, which requires most individuals to maintain health insurance coverage or pay a fine. The bill would exempt individuals from penalties for the remainder of the calendar year in which their co-op plan coverage ended, and the exemption would be retroactive, applicable to penalties for months after December 31, 2013.

Republicans called the bill “short, simple, with a basic premise” as they reasoned that individual’s whose plans were terminated mid-year by the CO-OP failure should not be liable for the individual mandate for the remainder of that calendar year. Meanwhile, Democrats and the Obama administration have said there are already programs in place to help individuals when their insurer stops offering coverage during the year, including special enrollment periods, consumer outreach, and an exemption for individuals who can’t afford coverage or who face a hardship. In a veto threat from the White House, the Obama Administration expressed that it is “willing to work with the Congress on fiscally responsible ways to further improve health care affordability and the Affordable Care Act,” but that the bill “would be a step in the wrong direction, because it would create a precedent that undermines a key part of the law and would do nothing to help middle-class families obtain affordable health care.”