TRP Health Policy Report (2/18)

The Week in Review

Sen. Bernie Sanders (I-VT) secured a key victory in last week’s New Hampshire Democratic primary, narrowly edging out former South Bend, IN Mayor Pete Buttigieg in the “first-in-the-nation” contest. As a result of Sen. Sanders’ 1.3 percent popular vote victory, both he and Mayor Buttigieg have each been awarded the nine of the Granite State’s 24 delegates, with Sen. Amy Klobuchar (D-MN) earning six following a strong third place showing. The race for the Democratic presidential nomination will now shift to the Nevada caucuses on Feb. 22, followed by the South Carolina primary on Feb. 29.

Back in Washington, the House cleared a measure (text; amendments) seeking to bolster federal protections for public lands. The package of bills out of the Natural Resources Committee would designate roughly 1.4 million square miles of new wilderness areas throughout the U.S., providing federal protections to thousands of acres in Colorado, Washington, and California. The Trump administration pushed back against the legislation in a veto threat last week, arguing that the new wilderness designations would “greatly reduce opportunities for multiple uses on these public lands.” As such, the bill is not expected to be taken up in the GOP-controlled Senate.

House lawmakers closed out their work week with a resolution that would eliminate the deadline for ratification of a Constitutional amendment that would prohibit gender-based discrimination. Ratified by both chambers of Congress in the 1970s, the Equal Rights Amendment fell three states short of the 38-state threshold for enactment prior to the 1982 deadline. However, three states legislatures — Nevada, Illinois, and Virginia — have ratified the amendment within the past three years, thus providing it with the necessary support for enactment should Congress vote to remove the deadline. While the measure did earn some bipartisan support in final passage Thursday, a path forward for the resolution remains difficult due to opposition from the White House and a slew of GOP state attorneys.  

Meanwhile, the Senate took up a “War Powers” resolution that would require President Donald Trump to withdraw any troops from military hostilities against Iran within 30 days. The resolution passed after several GOP Senators — including Sens. Susan Collins (R-ME), Mike Lee (R-UT), Rand Paul (R-KY), and Todd Young (R-IN) — voted for the measure. President Trump announced last week that he would swiftly veto the measure, and the effort is not expected to earn enough support in Congress to override his action. Senators also resumed consideration of pending presidential nominations.

The Week Ahead

Congress stands adjourned for its week-long Presidents’ Day district work period after completing legislative business last week. The Senate will return on Monday, Feb. 24, with the House returning a day later on Tuesday, Feb. 25. 

Trump Administration Releases 2021 Budget Proposal

Last Monday, the Trump administration released its proposed $4.8 trillion fiscal year 2021 budget, offering significant nondefense discretionary cuts including a nine percent cut to the Department of Health and Human Services, to $96.4 billion. The budget, which serves largely as an outline for the President’s spending priorities, includes a request for $6.2 billion in funding for FDA, including $3.3 billion in discretionary budget authority and $2.9 billion in user fees. In contrast to previous years, the administration does not offer detailed drug pricing plans or a defined plan to repeal and replace the Affordable Care Act (ACA). Instead, it includes projected savings for potential legislation. Additionally, the administration is proposing hundreds of billions of dollars in spending reductions over the next ten years through reforms such as universal work requirements in Medicaid, site-neutral payments in Medicare, and drug pricing reforms such as those sought by Sens. Grassley and Wyden.

The budget also includes two major “allowances” for policy changes sought by the administration: one is in support of President Trump’s “health reform vision,” projected to save $844 billion over ten years, while the other is focused on drug pricing reforms, projected to save $135 billion. The health reform vision covers a number of initiatives including ending surprise medical bills, increasing program integrity in Medicare and Medicaid, and shifting Medicaid dollars away from the expansion population.

HHS Sec. Azar Testifies on President’s Budget Before Senate Finance Committee

The Senate Judiciary Committee held a hearing last Thursday to discuss President Trump’s fiscal year (FY) 2021 proposed budget with Department of Health and Human Services (HHS) Secretary Alex Azar. Sec. Azar was quick to point to the administration’s past health care successes and noted that the “tight” budget would shift funding from programs that are not working efficiently to those that are, including an increased focused on maternal and rural health. Although Republicans were more supportive of the overall budget for FY 2021, members from both sides questioned the spending priorities of the administration and asked for Sec. Azar to work with Congress to advance their legislative priorities.

House Committees Advance Surprise Billing Proposals

Last week, both the House Ways & Means and Education & Labor Committees advanced legislation targeting surprise billing. The House Committee on Education & Labor marked up the Ban Surprise Billing Act (H.R. 5800), which would implement “rate setting” for services under $750. Chairman Bobby Scott (D-VA) and Ranking Member Virginia Foxx (R-NC) presented a united front in favor of the legislation, calling it a good-faith compromise. Concerns with the legislation also proved bipartisan, however, with Reps. Donna Shalala (D-FL), Joe Morelle (D-NY), Phil Roe (R-TN), and Kim Schrier (D-WA) offering to change the legislation and speaking most frequently to criticize it. Rep. Schrier was the only of those four who ultimately voted to advance the bill. Additionally, some Democratic members called for jettisoning arbitration and using only an in-network median benchmark to resolve payment disputes. Final passage was opposed by only two Democrats: Reps. Shalala and Morelle. Eleven Republicans voted against advancing the bill, including six freshmen members.

In its separate markup, the House Committee on Ways & Means voted to advance the Consumer Protections Against Surprise Medical Bills Act (H.R. 5826) to the House floor. In an unusually cordial markup, the Committee presented a united front on surprise bills, nearly uniformly speaking in favor of the approach of using arbitration as a mechanism to resolve billing disputes, as evidenced by a voice vote advancing the bill. Reps. Suzan DelBene (D-WA) and Mike Kelly (R-PA), as well as Chairman Richard Neal (D-MA), signaled that they hope to address additional issues with prior authorization in the future. Those issues could include retrospective denial of services covered by a prior authorization and new standards for electronic prior authorization.

Eyes are now on the Energy & Commerce Committee to advance its deal with the Senate Health, Education, Labor, and Pensions Committee. The competing House committees have a number of differences to resolve in their proposals, most notably the mechanism for resolving disputed out-of-network bills. The Energy & Commerce and Education & Labor bills both use an in-network median rate benchmark to resolve many charges.

White House Releases Report Criticizing Prescription Drug Underpricing Abroad

Last Thursday, the White House Council of Economic Advisors issued a report entitled “Funding the Global Benefits to Biopharmaceutical Innovation,” finding that “for the past 15 years, stringent government underpricing in foreign countries has substantially increased foreign free-riding on the United States.” The report concludes that reducing price controls in foreign countries “would increase profits and innovation, thereby leading to greater competition and lower prices for U.S. patients.”

The U.S. Embassy in the Netherlands also recently criticized Dutch policy on compulsory licensing for some pharmaceutical products, effectively breaking patents to introduce generic competition. This focus on criticizing the policies of foreign countries is consistent with the President’s rhetoric regarding “favored nation”-style policies to reduce the discrepancy between drug prices in the U.S. and elsewhere. It is important to note, however, that nearly all references to specific drug pricing policies were excluded from the White House’s fiscal year 2021 budget released earlier this week.

Members from both sides of the aisle praised the administration for supporting quick Congressional action on drug pricing and including a $135 billion placeholder for a legislative solution. Chairman Chuck Grassley (R-IA) and Ranking Member Ron Wyden (D-OR) pointed their own proposal as the best possible solution, and Sec. Azar offered his support for their “reasonable” package of the “best reforms.” He also advocated for solutions targeting patent gaming. A White House representative clarified after the hearing that the president has not backed any specific bill, saying that “endorsing a particular bill can tie your hands” and “what matters is what’s in the budget.” Democrats were fiercely critical of the president’s proposal to cut funding for both Medicare and Medicaid, as well as the administration’s actions against the Affordable Care Act (ACA). Several

Democrats presented pictures of constituents whose health care was dependent on the ACA or Medicaid and asked the Secretary to confirm that these individuals could be guaranteed access to affordable health care. They noted that the health care for millions was in jeopardy due to the cuts and legal uncertainty around the ACA and asked why the administration is stalling in proposing an alternative to the ACA. Sec. Azar explained that the funding cuts to Medicare and Medicaid are designed to slow the growth of spending on the programs and to refocus resources on original Medicaid populations. Additionally, he noted that the legal dispute over the ACA will be lengthy before a final decision was reached and that the president has promised not to advance any health care reform without robust protections for pre-existing conditions.