Washington Healthcare Update

May 15, 2017

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This Week: FDA administrator confirmed…HELP Committee reports out a User Fee bill…Chronic Care bill hearing coming…Senate Republicans create work group to develop repeal/replace legislation.

1. Congress

House

Senate

2. Administration

3. Courts

4. Other

5. State Activities

6. Regulations Open for Comment

7. Reports

1. Congress

House

NGA Asks Congress to Extend Federal CHIP Funding

Virginia Gov. Terry McAuliffe and Massachusetts Gov. Charlie Baker,co-chairs of the National Governors Association (NGA), wrote in abipartisan letter to leaders of the House Energy andCommerce and Senate Finance committees urging Congress to extend federalfunding for the Children’s Health Insurance Program (CHIP) another fiveyears at current levels. Congress faces a Sept. 30 deadline to extendfunding for the program, which covered roughly 5.6 million children as ofFebruary, according to thelatest CMS data. Without an extension, states will start running out of federal funds inOctober, with the majority of states exhausting their money between Januaryand March, according to the Medicaid and CHIP Payment and AccessCommission. McAuliffe and Baker said states quickly need funding certaintyfor their budgets.

Energy and Commerce Leaders Want Response to Alleged Pill Dumping in West Virginia

On May 9, both Republican and Democratic leaders of the House Energy andCommerce Committee sent letters to the Drug Enforcement Administration(DEA) and distributers regarding reports of unusually large quantities ofopioids being distributed in West Virginia—one of the states hit hardest bythe opioid epidemic.

To see the letters,click here.

Senate

Senate GOP Looks at Medicaid Expansion States in Health Reform

Sen. Rob Portman (R-OH), among those working on the Senate version ofhealth reform, said the group discussed a softer landing for Medicaidexpansion states than that provided by the House bill during a meeting May9 on Medicaid policy.

Senate Majority Leader Mitch McConnell’s (R-KY) select group of lawmakersworking on health reform legislation met to discuss Medicaid policy priorto a meeting that included all the Senate Republicans as well as VicePresident Mike Pence. Majority Whip John Cornyn (R-TX) said Medicaid is anarea where Senate Republicans can negotiate a compromise in order to passtheir own version of the American Health Care Act (AHCA).

Under the House-passed version of the AHCA, increased federal funding forthe Medicaid expansion population would stop by 2020. Should states chooseto continue covering childless adults with annual incomes up to 138 percentof poverty, they would receive only the state’s traditional matching rate.On top of that, the federal contribution would be further limited to thedesignated per-person amount laid out under AHCA’s per-capita caps system.

Medicaid advocates have said that states are unlikely to extend coveragefor that population beyond 2020 because they won’t be able to afford it.Several states have triggers in place to end expansion if federal financingis reduced.

Senate Finance Committee to Hold Hearing on Bipartisan Chronic Care Bill

The Senate Finance Committeeannouncedplans to hold a hearing on Medicare chronic care legislation on May 16.Committee Chair Orrin Hatch (R-UT) has touted the legislation as the firstmajor bipartisan health care bill of this Congress. The committee postponeda hearing on the Children’s Health Insurance Program (CHIP).

The legislation would expand testing of the CMS Innovation Center’sValue-Based Insurance Design model, ease telehealth restrictions and changebeneficiary assignment to accountable care organizations. It would extendthe Independence at Home demonstration for two years and increase the capon the total number of beneficiaries from 10,000 to 15,000. The bill alsowould permanently authorize dual-eligible special needs plans, chroniccondition SNPs and institutional SNPs, if certain requirements are met.

Democrats may use the platform provided by the hearing to talk about AHCA.

Senate Democrats Demand HHS Enforce Obamacare Anti-Discrimination Rules

On May 10, twenty-one Democratic senators wrote to HHS Secretary Tom Pricedemanding that HHS’s Office of Civil Rights continue enforcing Obamacarerequirements that prevent discrimination in health programs, after whatthey describe as troubling signals that HHS will undermine them.

The issue centers on alawsuitbrought last year by several GOP states and provider organizations thatchallenged Section 1557 of the Affordable Care Act, which prohibitsdiscrimination on the basis of race, color, national origin, sex, age ordisability in health care programs.

Under the Obama administration, HHS issued final regulations that preventedinsurers from having blanket bans on coverage for gender reassignmentservices and that forbade providers from refusing care to transgenderpatients, among other protections. But several red states and providergroups argued that the regulation required doctors to perform gendertransition procedures even when doing so is against the physician’s medicaljudgment. A federal judge in late December blocked enforcement nationwideof certain pieces of the Obama-era regulation, and in recentcourt filings, the Trump administration has suggested it may rework it.

Senate Democrats previously wrote HHS protesting Trump’s decision toappoint Roger Severino as the head of the HHS civil rights office.

Senate HELP Committee Advances FDA User Fee Bill

On May 11, the Senate HELP Committee voted 21-2 to advance the FDA user feereauthorization bill out of committee with minimal changes. The markup wasoriginally scheduled for May 10 but was postponed.

The committee agreed by voice vote to add two amendments, including aprovision from Sens. Susan Collins and Al Franken requiring the FDA toreview generic drug applications in about eight months if at least threeversions of the treatment are not already on the market.

The panel also agreed by voice vote to a bipartisan amendment led by Sen.Orrin Hatch that would expand clinical trial criteria to allow sickerpatients to participate. It would also make it easier for patients to usean FDA program to receive unapproved drugs when they don’t qualify fortrials.

The committee voted 13-10 to table an amendment by Sen. Bernie Sanders thatwould have allowed drug importation from Canada. Committee Chairman LamarAlexander described the amendment as controversial and asked to delay avote on it until the bill reaches the floor, to keep the committee processbipartisan.

Sanders and Rand Paul were the only members who voted against the bill.

Sen. Michael Bennet offered but then withdrew an amendment that wouldrequire companies to conduct more clinical trials of cancer medicines inpediatric patients.

Seventeen amendments were filed in advance of the hearing, but most werenot offered, including Democratic amendments that would have tried topreserve key parts of Obamacare. Many Democrats used the hearing to protestthe Senate process for developing a counterpart to the House-passedObamacare repeal bill, calling on committee Republicans to hold hearings.

The committee also advanced by voice vote S. 1028, the RAISE FamilyCaregivers Act, out of committee. It would direct the HHS secretary todevelop a national strategy to support family caregivers.

To see the 17 proposed amendments, clickhere.

Scott Gottlieb Confirmed as FDA Chief

On May 9, the Senate confirmed Scott Gottlieb as FDA commissioner,thrusting the conservative drug industry insider into the heated debateover rising drug costs that President Donald Trump has pledged toaddress.

Gottlieb, a former FDA and CMS official in the George W. Bushadministration, sailed through confirmation on a 57-42 vote. He will lead a15,000-person, $5 billion agency that approves drugs, vaccines and medicaldevices and regulates tobacco, cosmetics and food.

The position will make Gottlieb an important player in the Trumpadministration’s plans to speed up the drug approval process and cut backon regulations and red tape, which the president has argued will bring downdrug prices.

Democrats Agree to Work With GOP on Health Care, But Not Repeal

Senate Democrats are demanding that Republicans have a “bipartisan, openand transparent” debate on health care.

All 48 Senate Democrats—including two independents who caucus with them—ina new letter say they will work on health care legislation as long asRepublicans drop their pledge to repeal Obamacare.

The pitch is unlikely to sway the GOP from their seven-year-long promise todo away with the Affordable Care Act. Now that the House has passed itsrepeal bill, Senate Republicans are starting to figure out how they wouldrepeal and replace the health law.

Republicans are operating under the assumption that no Democrat will crossparty lines to support Obamacare repeal.

“Democrats stand ready—as we always have—to develop legislation withRepublicans that will improve quality, lower costs, and expand coverage forall Americans,” the lawmakers wrote to Majority Leader Mitch McConnell andcommittee chairmen Lamar Alexander and Orrin Hatch. “But Republicans needto set aside their current partisan efforts and work with us to get thisdone.”

Democrats outlined a number of areas of improvement in health care. Theysaid they want to work on reducing drug prices, decreasing premium andout-of-pocket costs, stabilizing the insurance market and increasingcoverage for families and small businesses.

Sen. Wyden Asks FDA to Delay Opioid Workshop Due to Conflicts ofInterest

Democratic Sen. Ron Wyden, concerned about conflicts of interest at an FDAworkshop on opioids last week, asked HHS Secretary Tom Price to delay themeeting until a more thorough review of meeting participants can beconducted. The meeting went on as planned.

In aletter to Price sent May 5, Wyden detailed theconnections to drugmakers of six groups participating in the workshop onMay 9 and 10. The meeting looked at ways to improve health care providertraining in pain management and safe opioid use.

Wyden said the financial relationships between opioid manufacturers and thepain advocacy groups raise “concerns that could undercut efforts to curbover-prescribing.” Pain groups funded by opioid companies “have worked,oftentimes in concert with other industry-funded groups, to steer state andfederal policy toward favoring opioids as a treatment for pain,” Wydensaid.

The letter discusses the drug industry connections of the American Academyof Integrative Pain Management, the American Chronic Pain Association, theAmerican Pain Society, the National Fibromyalgia and Chronic PainAssociation, the Pain Action Alliance to Implement a National Strategy andProject Lazarus.

2. Administration

CMS Releases Checklist for Stakeholders for High-Risk Pool/Section 1332 Waivers

On May 11, CMS and the U.S. Department of the Treasury released a checklistto help states interested in pursuing Section 1332 waivers. CMS believesthis checklist will be particularly helpful for 1332 waivers implementing ahigh-risk pool/state-operated reinsurance program. The agency isencouraging states interested in applying for Section 1332 waivers to reachout promptly for assistance in formulating an approach that meets therequirements of Section 1332.

The final checklist can be foundhere.

Sen. Grassley, Rep. Chaffetz Argue HHS Memo Restricting Staff Communication With Congress Is Illegal

Key GOP lawmakers allege a memo by HHS Secretary Tom Price’s chief of staffrestricting his agency’s communications with Congress is potentiallyillegal and unconstitutional, and they demand HHS quickly make alldepartment staff aware of their right to communicate directly andindependently with Congress. The HHS memo tracks with White Houseregulatory affairs-nominee Neomi Rao’s past calls for all contact betweenlawmakers and agency staff to be documented.

The May 3 memo by Price’s chief of staff, Lance Leggitt, states all HHScommunication with lawmakers and congressional staff needs to go throughthe department’s legislative affairs shop to “help us avoid unnecessaryproblems in our relationships with Congress.”

The memo drew criticism from Senate Judiciary Chair Charles Grassley (R-IA)and House Oversight Chair Jason Chaffetz (R-UT), who ask HHS to promptlyprovide all agency staff with specific, written guidance laying out theirright to communicate with lawmakers. The guidance should inform agencystaff of whistleblower protections and make it clear that the agency won’tretaliate against those who exercise their right to communicate withCongress, the lawmakers say.

“Absent such a clear communication from you, agency management may seek tointimidate whistleblowers from providing information to Congress. We willnot allow that to happen and trust that nor will you. Protectingwhistleblowers is crucial to effective government and the oversightprocess,” Grassley and Chaffetz wrote to Price on May 4.

The lawmakers say the HHS memo would force HHS staff to exposecommunications with Congress to agency management, which would necessarilysubject them to an increased risk of reprisal, and the effect of the memowould be to “substantially chill those communications.” Leggitt states inthe memo, which he says he wrote on behalf of Price, that the restrictionsrestate longstanding department policy.

The lawmakers ask for all documents and communication referring or relatingto the directive no later than May 18.

CMS Issues New Guidance to States and Manufacturers

CMS recently released guidance to states and manufacturers through StateRelease #180 and Manufacturer Release #104 to provide clarification onMedicaid reimbursement and rebates for drugs purchased through the FederalSupply Schedule (FSS).

These releases are now available for downloadhere.

President Trump Announces Four Additional Members of Opioids Commission

On May 10, President Donald Trump officially designated New Jersey Gov.Chris Christie to be head of the White House commission on opioids andnamed four other members to the group:

  • North Carolina Gov. Roy Cooper, a Democrat
  • Massachusetts Gov. Charlie Baker, a Republican
  • Former Democratic Rep. Patrick J. Kennedy, who was addicted to opioids for several years and is now a leader of the Advocates for Opioid Recovery group
  • Bertha Madras, a Harvard biopsychologist and former deputy director in the White House’s Office of National Drug Control Policy

The White House’s commission is poised to play a key role in theadministration’s effort to confront the opioid epidemic. Trump alsoannounced that he would appoint Rich Bagger, a former chief of staff toChristie and an executive at the biopharmaceutical company Celgene, as amember of the Commission on White House Fellowships. Bagger was part ofTrump’s transition team until being dismissed along with Christie inNovember when Vice President Mike Pence took over the effort.

Randy Pate Named Director of CCIIO

Randy Pate is now director of CCIIO, the agency that oversees the Obamacaremarketplaces. Pate previously served as vice president of public policy forHealth Care Service Corporation, which operates Blue Cross Blue Shieldplans in five states, including Texas and Illinois. Prior to that, Pate wasa health policy fellow at the conservative Heritage Foundation.

He replaces Jeff Wu, who had been serving as acting director during thetransition to the Trump administration. The agency spokeswoman did notimmediately respond to a question about Wu’s current duties.

CCIIO is charged with overseeing the Obamacare insurance markets, whichface an uncertain future under unified Republican control of the federalgovernment. The biggest looming question is whether the Trumpadministration will continue paying cost-sharing subsidies, which insurersrely on to reduce costs for their poorest Obamacare customers.

Aetna Withdrawing From Obamacare Marketplaces

Aetna recently announced it will not sell coverage in individualmarketplaces in Nebraska or Delaware, marking the company’s completewithdrawal from the Obamacare exchanges.

Both states will potentially be left with just one remaining insurer in2018. Further, Nebraska’s lone insurer, Medica, has already warned it wouldleave Iowa after becoming the sole option in that state’s marketplace.

Aetna cited losses totaling $700 million in the individual market in thelast three years as the reason for its withdrawal. The company expects tolose an additional $200 million despite shedding almost three-quarters ofits individual market members since last year. The insurer had 255,000individual members at the end of March.

Aetna is now the second-largest national insurer to completely withdrawfrom the exchanges. Humana announced its total exit in February.

Despite the big losses in the Obamacare markets, Aetna continues to seerevenue growth in other government programs, primarily Medicare andMedicaid. Roughly half of its premium revenues came from governmentprograms last year, up from 38 percent prior to full implementation of theAffordable Care Act.

Pence, Price Meet With Biotech Industry at the White House

During a recent meeting with industry representatives, Vice President MikePence, HHS Secretary Tom Price and other administration officials sketchedout how NIH and other agencies can maintain U.S. preeminence inbiotechnology. The White House meeting included: Cori Bargmann, presidentof the Chan Zuckerberg Initiative; Bill Ford, General Atlantic CEO; andCraig Thompson, president and CEO of the Memorial Sloan Kettering CancerCenter. Officials from Celgene, Royalty Pharma, Vertex Pharmaceuticals andRegeneron represented the industry. President Donald Trump later greetedattendees in the Oval Office.

White House press secretary Sean Spicer told reporters that the meetingreinforced the cooperation necessary for the industry to succeed.

MSF Argues Exclusive DOD License for Zika Vaccine Violates Bayh-DoleAct

Doctors Without Borders (MSF) alleges the Department of Defense may haveviolated the Bayh-Dole Act by issuing Sanofi Pasteur an exclusive licenseto a DOD-developed Zika vaccine without ensuring the vaccine is accessibleto patients. However, DOD says the exclusive license is warranted given thecapital needed to bring the drug through FDA approval, and says thedepartment has no means or authority to make determinations on vaccineaffordability or access.

“The deal gives Sanofi a blank check to charge high prices for the vaccineand contains no known guarantee that the vaccine will be developed in atimely and appropriate manner and made available in the US and allcountries where it is needed,” MSFwrites in a press release. Instead, MSF calls on DOD to make the vaccine candidate available for anopen non-exclusive patent license. Such a license, the group says, shouldinclude terms that ensure further development of the vaccine prioritizesall health needs and offers affordable access to any resulting product.

The doctors group says the exclusive license may violate Section 209 of theBayh-Dole Act. The law requires that exclusive licenses be granted by thegovernment only in cases where the exclusivity is a “a reasonable andnecessary incentive to call forth the investment capital needed to bringthe invention to practical application; or otherwise promote theinvention’s utilization by the public,” MSF argued in comments to DOD.

But DOD told MSF that the license is in accordance with federal law, andthat exclusivity is “a reasonable and necessary incentive to call forth thesubstantial investment capital, exercise, and capabilities required tobring our nascent and unproven technology through FDA licensure topractical application for public use.”

Comey Pledged New Approach to Cybersecurity in Hospitals

The FBI needs much deeper collaboration with the private sector to mitigatethe threats posed by criminals and nation-states to hospital networks,then-director James Comey said in a speech to the American HospitalAssociation.

“A vast majority of intrusions are not shared with law enforcement,” Comeysaid, and hospitals hacked with ransomware often pay up and hope thatsolves the problem. “I understand that instinct, but it is horriblyshort-sighted,” he said.

The FBI needs to be more effective at sharing information related tocyber-borne threats, and industry needs to share more. It does not have tobe an onerous process, he said.

Comey also said the FBI needs to recruit more private-sector tech talent,and to practice deterrence against criminals and other malicious actors byarresting them or otherwise disrupting their schemes.

3. Courts

Anthem Appeals $54B Cigna Merger Case to Supreme Court

In a last-ditch effort to save its troubled $54 billion merger with Cigna,Anthem asked the U.S. Supreme Court to review a circuit court ruling sidingwith the government in its challenge to the deal.

The D.C. Circuit in its April 28 split ruling relied on outdated,decades-old case law and the court did not adequately take into accountmore than $2 billion in cost savings the merger would unleash, Anthem said.

“Anthem urges that 1960s-era merger precedents relied upon by the courtsbelow must be updated to reflect the modern understanding of economics andconsumer benefit,” the company said in a statement.

The health insurance giant cited a dissenting opinion penned by CircuitJudge Brett M. Kavanaugh in the case, who said the deal would be beneficialfor the merged company’s customers. The D.C. Circuit’s ruling is evidenceof a circuit split on the question of how merger efficiencies should factorinto an analysis of a transaction’s effects on competition, Anthem said.

The suit presents the high court with the opportunity to take up its firstmerger case in several decades and provide much-needed guidance onefficiencies, Anthem argued in its petition for certiorari. Since 1967’s FTC v. Procter & Gamble Co., when the Supreme Court saideconomies could not be used as a defense against illegality in mergercases, economic thinking in the area has progressed, and courts areconfused on how to interpret that precedent, the company said.

On May 11, a Delaware chancery judge rejected Anthem’s bid for a 60-dayblock on Cigna’s declared intent to terminate the merger of the two healthinsurers, saying Anthem’s prospects for overcoming multiple challenges tothe deal are slim.

4. Other

PhRMA Sheds 22 Companies After Approving New Membership Criteria

05/09/2017 01:33 PM EDT

On May 9, PhRMA said 22 companies are no longer members after the druglobby formally approved new criteria requiring companies to devote aportion of their resources to research and development.

The new requirements may allow one of the most recognizable industrylobbying groups to reduce negative headlines from members’ contributing tothe high cost of prescription drugs.

The list of departing companies includes five that have voluntarily leftthe organization since Jan. 1. That includes Marathon Pharmaceuticals,which was widely criticized for its initial price tag of $89,000 for a drugtreating Duchenne muscular dystrophy.

Fifteen of the companies were associate members, which will still have theopportunity to apply for full membership under the new rules.

PhRMA’s revised membership criteria require companies to spend at least 10percent on research and development based on a three-year average of totalglobal sales. That spending must be at least $200 million per year.

The seven former full members are: AMAG Pharmaceuticals, Horizon Pharma,Jazz Pharmaceuticals, Leadiant Biosciences, Mallinckrodt Pharmaceuticals,Orexigen Therapeutics and The Medicines Company.

The former 15 associate members are: ACADIA Pharmaceuticals, AeriePharmaceuticals, Avanir Pharmaceuticals, BioMarin Pharmaceutical, CSLBehring, Esperion Therapeutics, Ferring Pharmaceuticals, Grifols USA, IpsenBiopharmaceuticals, Marathon Pharmaceuticals, Shionogi Inc., SucampoPharmaceuticals, Theravance Biopharma, Vifor Pharma and VIVUS.

5. State Activities

California: Gov. Brown Releases New Proposed Budget

California Gov. Jerry Brown’srevised 2017-18 budgetcontinues to rely