TRP Health Policy Report

Both chambers of Congress were in session last week, as lawmakers looked to complete work on several legislative priorities before the upcoming August recess. Last Friday, the House voted 237-173 to pass legislation (H.R. 4935) to overhaul the child tax credit by requiring applicants to provide their Social Security numbers. Separately, the House voted 370-40 to approve a resolution (H.Con.Res.105) requiring Congressional authorization for a sustained presence of combat troops in Iraq.

On Thursday, the House voted 205-207 to narrowly defeat a motion to adopt a Senate-passed VA reform bill (H.R. 3230). That same day, the House voted 227-187 for legislation (H.R. 3393) to provide a tax credit for higher education expenses.  House members also approved a package of bills to combat human trafficking and voted 405-11 to pass student loan counseling legislation (H.R. 4984). Last Wednesday, the House voted 414-0 for legislation (H.R. 3136) to establish a demonstration program for competency-based education.

On Tuesday, the House rejected legislation (H.R. 1022) to create a program within the Department of Energy to research minerals used in manufacturing. The bill would authorize $25 million annually through fiscal 2019 for the Energy Critical Elements Program. It failed to pass under suspension of the rules, which requires a two-thirds majority, on a vote of 260-143. In the Senate, lawmakers voted 93-7 to advance a bill (S. 2569) that would end tax breaks for companies that send jobs overseas and approved a series of Executive Branch nominations. Senate Majority Leader Harry Reid (D-NV) also announced a deal with Republicans that paves the way for a final vote on a bill to fund the Highway Trust Fund through next spring. Following debate on a series of amendments, a final vote on the underlying House bill (H.R. 5021) is expected this week.
 
In notable Affordable Care Act (ACA) implementation news, two U.S. appeals court panels issued conflicting rulings on whether consumers can obtain subsidies for health coverage bought on the federal insurance exchanges. The dispute centers on whether the subsidies may be awarded in states that chose not to set up their own insurance marketplaces and instead left the task to the federal government. If the two courts remain in conflict, it raises the possibility of yet another high-stakes battle over the law playing out before the Supreme Court. Last Thursday, the House Rules Committee approved a resolution to authorize Speaker John Boehner's (R-OH) lawsuit against President Obama over his use of executive power. The panel voted along party lines to move forward with the legal challenge over the President’s delay of the ACA’s employer mandate, which Republicans say exceeded his authority. The House is expected to approve the lawsuit before members adjourn for the August recess.
 
The Week Ahead
 
This week, lawmakers will focus on a border supplemental appropriations bill, highway reauthorization and veterans' legislation before adjourning for their summer break. In the Senate, lawmakers are expected to take up their $3.57 billion fiscal 2014 supplemental bill (S. 2648), with funds to address the border crisis, fight wildfires and strengthen Israel's missile defense system. Senators will also look to take up a House-passed measure (H.R. 5021), to fund infrastructure and transit work through May 2015. Senate Democrats may also try to advance the nomination of Bob McDonald, former CEO of Proctor & Gamble, to be the new secretary of the VA. Senate lawmakers may also seek cloture on a bill (S. 2569) to prohibit companies from moving operations overseas.
 
In the House, members will debate a series of suspension bills before taking up legislation (H.R. 4315) that would make changes to the Endangered Species Act. House members will also consider a resolution (H.Res. 676) to authorize a lawsuit accusing President Obama of using unconstitutional authority in the implementation of provisions of the Affordable Care Act. Elsewhere, the House and Senate may take up compromise legislation (H.R. 3230) that would reduce wait times at Veterans’ Affairs facilities.
 
Off the floor, the House Energy and Commerce Committee will examine ACA plan cancellations at a Tuesday hearing, while the IOM will release its report on graduate medical education. Also that day, the Medicare Trustees are expected to release their annual report on the outlook for that program’s Trust Fund. Wednesday will see a Senate Aging Committee hearing on hospital observation status. On Thursday, the House Energy and Commerce will hold a hearing on implementation of Healthcare.gov and the House Small Business Committee will review telemedicine and small medical practices.
 
Appeals Courts Issue Conflicting Rulings on ACA Subsidies
 
Last Tuesday, two federal appeals courts issued conflicting rulings on whether the federal government can provide subsidies to U.S. residents who purchase coverage through the Affordable Care Act's federal insurance exchanges. In the first decision, the D.C. Circuit Court of Appeals said in a 2-1 ruling in Halbig v. Burwell that the Affordable Care Act (ACA) does not permit the IRS to distribute premium subsidies in the federal insurance exchanges. The plaintiffs argued that the IRS rule should be invalidated because it contradicts what Congress originally intended in the ACA. In the appeals court's ruling, the judges wrote that the ACA "does not authorize the IRS to provide tax credits for insurance purchased on federal exchanges." Instead, the law "plainly makes subsidies available only on exchanges established by states."
 
Hours later, a three-judge panel for the 4th U.S. Circuit Court of Appeals in Richmond in the case King v. Burwell unanimously ruled to uphold the subsidies. In the 4th Circuit Court's ruling, the judges wrote that the IRS rule was "a permissible exercise of the agency's discretion." They noted that the ACA's language is "ambiguous and subject to multiple interpretations" and thus deferred to IRS.
 
The Obama Administration said that the Justice Department will ask for a full appeals court review of the Halbig decision to the full D.C. Circuit, where seven of the 11 judges are Democratic appointees. If the ruling against the subsidies is overturned, the plaintiffs vowed to appeal to the Supreme Court.
 
FDA Begins Approval Process for Biosimilars
 
Last Thursday, the FDA accepted an application from Sandoz seeking approval for an officially approved version of Amgen's biologic Neupogen, marking the first time the agency has agreed to consider approval for a biosimilar. Biologics are developed from living cells, which makes the drugs both expensive to develop and impossible for generic drugmakers to manufacture exact replicas. However, generic drugmakers can develop more affordable ‘biosimilar’ versions of the medications that are close enough to biologics to function in the same manner. To gain FDA approval, generic drugmakers need to prove that their product is "highly similar" to the original medicine and also conduct extensive studies in patients to prove its safety and purity.
 
Last year, Express Scripts, the country's largest prescription benefit manager, estimated that the U.S. could save $250 billion between 2014 and 2024, if biosimilar versions of filgrastim and 10 other likely biosimilar candidates hit the market. However, no biosimilars are currently available on the U.S. market because regulators in the country had not – until last week – finalized an approval process for the medications. The Affordable Care Act included a provision designed to create an approval pathway for biosimilars, and FDA's decision to accept Sandoz's application marks the first step toward putting such products on the U.S. market.
 
IRS Outlines Individual/Employer Mandate Compliance
 
Last Thursday, the IRS announced that financial penalties for U.S. residents who do not comply with the Affordable Care Act's individual mandate this year will be capped at $2,448. The amount is equal to the national average annual premium for a bronze-level health plan. The penalty for the first year starts at $95 per person and can rise to as much as 1 percent of annual income. The latest figure limits what the government can charge people using the personal income computation. The penalties will increase to $325 or 2% in 2015 and $695 or 2.5% in 2016. Individuals with incomes below $10,150 are exempt from the mandate. The federal government estimates that nearly four million people could face the penalties by 2016.
 
Also on Thursday, the IRS posted draft forms that businesses will have to complete in order to comply with the ACA's employer mandate. Final drafts and detailed instructions for the forms are expected to be released in the coming months. Analysts said the forms suggest that the Obama Administration intends to move forward as planned with the employer mandate, which has already been delayed twice. However, there are still reports suggesting that President Obama might delay the mandate for a third time, or extend the time allowed before full compliance is required.
 
Some Democrats are concerned about the political fallout from the mandate and are urging the Administration to consider delaying its implementation. Last Wednesday, Senator Mark Warner (D-VA) sent a letter sent a letter to Treasury Secretary Jack Lew urging to him consider easing the employer mandate’s burden on smaller businesses that might not be prepared for the volume of paperwork they will encounter as they navigate the ACA’s regulations. If the agency can’t lessen the reporting requirement, Warner suggested that the Administration be open to one more year-long extension.  
 
21^st Century Cures Holds Roundtable on Personalized Medicine
 
Last Tuesday, the House Energy and Commerce Committee held another hearing in its 21st Century Cures series, this time a roundtable focusing on personalized medicine. Launched in May by Chairman Fred Upton (R-MI) and Representative Diana DeGette (D-CO), the bipartisan initiative is focused on understanding what steps Congress can take to accelerate the pace of cures in America. Tuesday’s hearing reviewed barriers to evidence development and communication for drugs and devices. Panelists and committee members also spoke about the rising cost of therapies, including treatment for Hepatitis C and ways to dismantle barriers for off-label communication. The discussion also touched on the FDA device approval process, HIPAA impediments and concerns with CMS proposed changes to the Continuing Medical Education exemption from Open Payments reporting.
 
Since its launch, the panel has hosted six hearings and three roundtables focused on a variety of topics including the role of incentives, use of technology, and personalized medicine. On July 11, the House Energy and Commerce Health Subcommittee held a hearing on Incorporating the Patient Perspective. The hearing focused on how to incorporate the perspective of patients in the discovery, development and delivery of treatments and cures. Six days later, the panel’s Health and Commerce subcommittees held a joint hearing entitled 21st Century Technology for 21st Century Cures. Much of the discussion focused on how technological advances like electronic health records and remote patient monitoring devices are transforming the delivery of health care.
 
HHS: Insurers Refund $332M under MLR in 2013
 
Last Thursday, an HHS report found that consumers received more than $332 million in rebates last year under the ACA medical loss ratio (MLR) provision. Under the MLR, insurers must issue refunds to customers if they spend less than 80% of the premiums they collect for plans sold on the individual and small group markets and less than 85% of plan premiums in the large group market on medical care. According to the report, the rebates will go to about 6.8 million people and have a value of about $80 per family. The rebates are to be sent by August 1 either directly to consumers or to the employer providing the health coverage, who is required to pass the savings onto employees. The MLR and other ACA standards have saved enrollees about $9 billion on premiums since the rule was created in 2011, HHS officials said.