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Health WrapUp – 4.8.19 – 4.12.19 Prepared by Van Scoyoc Associates

4.8.19 – 4.12.19 Health Wrap Up

Please find below a summary of the latest major health policy developments in Washington this week. Please let us know if you have any questions.

Scheduling note: both chambers will be on recess for the next two weeks.  Unless activity warrants, we will send the next wrap up on May 3.

FY20 Appropriations

On Tuesday, the House adopted a measure 219-201 setting an overall funding limit of $1.295 trillion to allow appropriators to start writing FY20 spending bills. The “deeming” resolution serves as a fallback plan after resistance from progressive Democrats derailed the underlying bill which would have increased spending caps by about $88 billion in fiscal 2020 over limits for both defense and non-defense spending.

While the deeming resolution does not specify how much would go to defense and nondefense spending, on Wednesday House Appropriations Committee Chairwoman Nita Lowey (D-NY) announced that her committee would be assuming a total of $733 billion in defense spending and $631 billion in non-defense spending as they markup their FY20 spending bills, about a 2 percent increase above current spending limits for defense programs and a nearly 6 percent increase for non-defense.

In the Senate, Appropriations Chairman Richard Shelby (R-AL) has said he would consider marking up his panel’s FY20 bills under the same defense and nondefense caps that are in place for the current fiscal year, but he said Wednesday he hasn’t settled on a particular strategy yet.

The House Appropriations Committee plans to start markups when Congress returns from recess the week of April 29. While Lowey has not said which bill will go first or divulge specific markup dates, Rep. Tom Cole (R-OK) said this week that the Labor HHS Subcommittee will markup their bill on April 30, with a full committee markup tentatively planned for May 8.

All this being said, while the deeming resolution allows fiscal 2020 appropriations bills to move forward in the House, the House and Senate will still need to revisit the debate of spending caps before the FY20 appropriations process can be finished since the statutory spending caps imposed in 2011 still need to be raised through legislation signed by the president to avoid the across-the-board cuts (sequester) put in place by the 2011 Budget Control Act.

On Tuesday Senate Majority Leader Mitch McConnell (R-KY) said that he and House Speaker Nancy Pelosi (D-CA) have agreed to kick off negotiations on a two-year deal to avoid the sequestration cuts in fiscal years 2020 and 2021.  McConnell told reporters that President Trump also supported the idea in a meeting last week, but a senior administration official said Tuesday that Trump is content with the cuts that would take place without a budget deal and on Thursday Trump said on Twitter that a budget deal with Congress is “not happening!”

Senate NIH Hearing

On Thursday, the Senate Labor HHS Appropriations Subcommittee held a hearing on the Fiscal Year 2020 NIH budget request. NIH Director Dr. Francis Collins’ opening statement and a webcast of the hearing can be found here. Witnesses included:

  • Dr. Francis Collins, Director NIH
  • Dr. Douglas Lowy, Acting Director, National Cancer Institute
  • Dr. Griffin P. Rodgers, Director, National Institute of Diabetes and Digestive and Kidney Diseases
  • Dr. Anthony S. Fauci, Director, National Institute of Allergy and Infectious Diseases
  • Dr. Jon Lorsch, Director, National Institute of General Medical Sciences
  • Dr. Richard Hodes, Director, National Institute on Aging
  • Dr. Nora Volkow, Director, National Institute on Drug Abuse

During the hearing, both full committee chairman Richard Shelby (R-AL) and subcommittee chairman Roy Blunt (R-MO) said they will reject President Trump’s proposal to cut NIH’s budget 13 percent and instead hope to increase funding for the research agency.  Blunt called the proposal “disappointing” and said he’s confident the committee will reject it. A full summary of the hearing is attached.


Affordable Care Act Stabilization Legislation

On Wednesday, the House Education and Labor Committee approved on a party-line vote of 26 – 19 HR 1010.  HR 1010 would overturn the Administration’ 2018 rule that expanded the sale of short-term health plans, which Democrats call “junk health insurance.”

The House Energy and Commerce Committee, which shares jurisdiction over the legislation, approved HR 1010 last week along with several other bills aimed at stabilizing the health exchange marketplace.  The full House is expected to consider the stabilization bills, along with bills addressing drug pricing, later this spring. However, while there has been bipartisan support for the drug pricing bills, support for the stabilization bills breaks along party lines and the prospects for Senate consideration may be low.

HHS Prescription Drug Reforms

On Tuesday, the House Ways and Means Committee passed the Prescription Drug Sunshine, Transparency, Accountability, and Reporting Act, or “Prescription Drug STAR Act” sponsored by Chairman Richie Neal (D-MA) and cosponsor Ranking Member Kevin Brady (R-TX).  The bill is designed to fix several broken elements of the prescription drug system designed to limit prices to consumers.  Some of the key provisions include:

  • Requires drug makers to justify to HHS and the public any instance when their product increases by 10% or more in a given year.  That justification would include details about costs on production, marketing, research, profits, and other elements to give the public a complete picture what is driving the increase.  Penalties for not disclosing the information required would impose a $10,000 fine per day.
  • Requires drug makers to report to HHS the quantity of free samples they provide to providers, as well as the aggregate cost of those free samples.
  • Requires HHS to undertake a comprehensive examination of drug prices under Medicare Part A.  HHS must examine the trends of inpatient drugs, including costs, shortages, and comparisons between different classifications and sizes of the hospital in question.
  • Requires pharmacy benefit managers to publicly disclose the aggregate rebates, discounts, and other price concessions achieved by pharmaceutical benefits managers on a public website, so consumers, employers, and other payers can understand and compare the discounts PBMs receive.
  • Requires all drug manufacturers to submit information to the Secretary on the average sales price (ASP) for physician-administered drugs covered under Medicare Part B.

The bill was adopted by a vote of 40-0.

Pharmacy Benefit Managers

On Tuesday, the Senate Finance Committee held its third in a series of hearings inquiring about the rising cost of prescription drugs.  This hearing focused on the role of pharmacy benefit managers (PBMs) in the industry.  Both Chairman Chuck Grassley (R-IA) and Ranking Member Ron Wyden (D-OR) indicated that PBMs are probably the least understood element of the prescription drug supply chain, and oversight into them is long overdue.  Chairman Grassley was mostly concerned by PBM merges and integration with insurers, and asked the FTC to monitor the industry.  Ranking Member Wyden was the most critical of the PBMs, claiming there is no evidence PBMs save customers any money.  There was near unanimous support by Republican and Democratic senators for increased transparency of PBMs.

The PBM witnesses described their efforts to provide “the right drug to the right patient at the right time at the lowest price.”  Each PBM described their efforts to deliver 100% of the rebates and discounts to the patients directly.  The companies generally denied most of the well-publicized reports of business practices which discourage lowering list prices by drug makers.  For example, they denied writing contracts which harm drug companies who reduce list prices below the prices set in their bid.  Instead, they claim the bidding process to determine rebates occurs more than a year out, so their contracts are designed to provide price stability for the bids.  PBMs also promoted their transparency efforts, include customer and provider tools to improve the ability to identify out of pocket costs at the point of prescription and the point of purchase.  The one element of transparency they do not support is public disclosure of negotiated rates on each drugs, which they worry would hurt their leverage to obtain the best deal.  Previously, when the Senate Finance Committee examined pharmaceutical company CEOs, the CEOs consistently described PBMs as the biggest factor into rising prescription drug costs.  Not surprisingly, the PBMs described the pharmaceutical manufacturers as the biggest factors, citing flaws in the patent system, anti-competitive behavior such as “pay for delay” and “evergreening patents”, and few restrictions on price increases.  Their solution, among other things, is to assist in the expeditious delivery of generic drugs to the market to compete with the branded drugs.

Several Democrats expressed concern that the Trump Administration’s proposed Prescription Drug Rebate Rule would place new restrictions on PBMs but would place no restrictions on the pharmaceutical industry.  Senator Sheldon Whitehouse (D-RI) even called the pharmaceutical manufacturers “jiu jitsu” to turn PBMs into the bad guys when it is the drug makers that set the prices.

Senate NIH hearing April 11

Katie Weyforth Vanlandingham

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