Health Policy Report (7/18)

July 18, 2022

Senate Democrats are zeroing in on a health-focused reconciliation effort after Sen. Joe Manchin (D-WV) expressed opposition to climate and tax-related policies within the filibuster-proof bill. In a statement on Friday, President Joe Biden endorsed the strategy that would couple policies from the latest Senate drug pricing title with an extension of the Affordable Care Act (ACA) premium subsides. Process wise, the health care language still needs to go through the “Byrd bath” process with the Senate Parliamentarian to ensure compliance with the chamber’s reconciliation rules. Once this arcane process is complete, Leader Chuck Schumer (D-NY) will likely move to get the updated reconciliation bill on the floor as soon as possible and vote to send it to the House before August recess.

Meanwhile, the Senate is readying action on legislation that would provide billions in new subsidies toward domestic semiconductor production. Specifically, the CHIPS Act allocates roughly $54 billion for various manufacturing and innovation initiatives, as well as incentives for investment in domestic chip production. Notably, GOP Senators appear poised to support this legislation after Sen. Manchin backed away from the climate and tax reconciliation policies due to concerns over inflation. According to Sen. John Cornyn (R-TX), Sen. Manchin’s position will “green light” action on the CHIPS Act this week after Republican disagreements on reconciliation left the USICA conference committee negotiations at a standstill. The first procedural vote is expected to get filed when the Senate meets this afternoon, and final passage could be quick should leadership reach a time agreement to expedite the process.

In the House, lawmakers are poised to consider the first appropriations “minibus” package for fiscal year (FY) 2023. The six-bill package includes the funding bills for Transportation-HUD (T-HUD); Agriculture-FDAEnergy-Water Development; Financial Services and General Government (FSGG); Interior-Environment; and Military Construction-VA (MilCon-VA). Hundreds of amendments have been submitted to the underlying package, and the House Rules Committee will meet Monday to decide which ones get floor time. Meanwhile, Appropriations Chair Rosa DeLauro (D-CT) has expressed optimism that each of the 12 House spending bills can pass the chamber prior to August. However, rumors out of Capitol Hill suggest that policy disagreements could delay action on several key bills, including the Homeland Security, Commerce-Justice-Science (CJS), and Defense bills. 

CBO Scores Senate Insulin Bill

Last week, the Congressional Budget Office (CBO)scored the Improving Needed Safeguards for Users of Lifesaving Insulin Now (INSULIN) Act (text; one-pager) — introduced by Sens. Jeanne Shaheen (D-H) and Susan Collins (R-ME) — estimating that it would cost the federal government $23 billion over ten years. Notably, this figure is significantly higher than the House insulin bill, the Affordable Insulin Now Act (H.R. 6833). Both bills would effectively cap the cost of insulin at $35. The Shaheen-Collins Senate legislation would limit list prices to Medicare part D net price levels. It would also disallow pharmacy benefit managers (PBM) and insurers from collecting rebates on these products. PBMs would also be required to put insulin products on formularies without and use management tools, such as prior authorization. Notably, the Senate bill’s higher price tag stems from a provision that would lower list prices for those without insurance — who represent roughly five percent of diabetics — which makes up roughly $11.5 billion of the CBO’s cost estimate.

House VA Committee Examines Community Care

On Thursday, the House Committee on Veterans’ Affairs Subcommittee on Health held ahearing (TRP summary) to examine the Department of Veteran Affairs’ (VA) community care access, utilization, and expenditures. This hearing featured two panels of witnesses, with the first being leaders in the VA’s Veteran Health Administration (VHA) and the second being from Forge Health, a private community care provider that is partnering with the VA to provide outpatient behavioral health services to veterans. Throughout the hearing, members on both sides of the aisle pressed the VA witnesses about the administrative issues of the VA community care referral process and the VA’s high expenditures on community care compared to spending for care provided directly by staff at VA medical facilities.

Members also inquired about the VA’s use of telehealth services when providing community care. During the second panel, members addressed the VA’s administrative issues from a provider’s perspective and inquired about ways to reduce costs, ensure care reimbursement, and streamline the referral process. Additionally, members raised interest in the implementation of the VA Maintaining Internal Systems and Strengthening Integrated Outside Networks (MISSION) Act passed in 2018, which expands VA care by establishing a Veterans Community Care (VCC) Program providing hospital care, medical services, and extended care services to eligible veterans through non-VA health care providers. Lawmakers were also interested in the timeline for implementation of the new VA Office of Integrated Veteran Care.

House Republicans Outline Affordable Health Care Policies

Last week, the House Republicans’ “Healthy Futures Task Force” Subcommittee on Affordability released its priorities (press release; op-ed) for the 118th Congress. The Subcommittee is focused on improving health savings accounts (HSA). Specifically, the Subcommittee’s recent op-ed — authored by Reps. Kevin Hern (R-OK), Rick Allen (R-GA), and Victoria Spartz (R-IN) — suggests the elimination of burdensome paperwork requirements and allowing smaller businesses to form associations in an effort to increase their purchasing power. The Republican lawmakers assert that quality would be a top priority by, for example, standing up centers of excellence for employees with diabetes. Addressing and eliminating payment incentives and billing methods that encourage consolidation is also a chief concern for the Subcommittee and Republicans promised to prioritize repealing laws that disallow providers from opening new facilities.

Rural Hospital Program Faces Hurdles, Administrators Say

The Rural Emergency Hospital program is set to go into effect in January of 2023 and is designed to pay smaller hospitals experiencing difficulties with maintaining their inpatient beds to focus solely on outpatient and emergency care. Despite support from Senate Finance Committee Chair Ron Wyden (D-OR), hospital administrators are skeptical. The Rural Emergency Hospital program would increase Medicare payments for hospitals and tack on a flat “facility payment.” The exact payments are unclear, though, despite the Centers for Medicare and Medicaid Services (CMS) proposing a rule that is expected to be finalized this fall.

The model for the Rural Emergency Hospital program adds to Medicare’s critical access hospital designation which enables Medicare to enhance funding for small, rural hospitals. Rural health care providers estimate that hospitals would need roughly $2 to $3 million per year for the program to be effective, but lawmakers’ concerns regarding spending during inflation and mid-term elections could hinder the feasibility of this level of financial support. Amongst their concerns, rural health care stakeholders have been inquiring about facility payment amounts, participation in the 340B drug discount program, and skilled nursing care. Additionally, advocates are looking to include behavioral health care needs and telehealth into funding for outpatient services.

Supreme Court May Take On Pharma Patent Case

Within the next few weeks, the U.S. Supreme Court (USSC) will decide whether or not to take on a major pharmaceutical patent case. The Solicitor General is currently reviewing evidence from pharmaceutical companies relating to functional claims in a patent filing. Solicitor General Elizabeth Barchas Prelogar will recommend if the USSC should take the case. During the past ten years, federal appeals courts have been partial to higher standards for patent filings, especial for monoclonal antibody treatments and chimeric antigen receptor T-cell (CAR-T) therapies. These treatments are often blockbuster drug products, though recent rulings have resulted in invalidating patents.

Specifically, Amgen and Bristol Myers Squibb asked the USSC to consider rulings that overturned some of the companies’ patents. Existing law dictates patent claims must include a functional claim, which includes a written description of the product and its purpose. Functional claims are also required to include information sufficient for others to create and utilize the invention. The gray area emerges when an applicant files an expansive functional claim that lacks detail and would result in “undue experimentation” to remake the product, according to appeals courts. However, Amgen and Bristol Myers Squibb argue that such rulings create confusion surrounding patent rights.