Mar 9, 2015

Washington Healthcare Update

This Week: House Republican Working Group Outlines King v. Burwell “Off-Ramp” Plan... FDA Approves First Biosimilar Product... CMS Approves NH Medicaid Expansion Waiver

1. Congress

House of Representatives


2. Administration

3. State Activities

4. Regulations Open for Comment

5. Reports

1. Congress


House Republican Working Group Outlines King v. Burwell “Off-Ramp” Plan

The House Republican Health Care Working Group has released an outline of policies they would support if the Supreme Court rules this summer that subsidies provided to individuals in federally facilitated health insurance marketplaces are illegal. The outline centers on allowing states to “opt-out” of many of the ACA’s requirements. However, the plan would retain several popular components of the ACA, including protections for individuals with pre-existing conditions, and extending dependent coverage to children up to age 26. In addition, the outline contains traditional Republican policies, such as allowing for purchase of health insurance across state lines, expansion of health savings accounts (HSAs), permitting small businesses and other groups to band together to increase their bargaining power with insurers, and bolstering the use of high-risk insurance pools for individuals with costly medical conditions.

House Appropriations Subcommittee Holds Hearing on FDA Budget

On March 4 the House Appropriations Subcommittee on Agriculture, Rural Development, Food and Drug Administration, and Related Agencies held a hearing to discuss funding priorities within the President’s FY 2016 budget for the Food and Drug Administration (FDA). The Obama administration’s budget proposal, released Feb. 2, seeks $2.7 billion in budget authority and $4.9 billion in total resources for the FDA. The overall FY 2016 request is $425 million, or 9 percent, above the FY 2015 levels, according to the proposal. This increase consists of $148 million in budget authority and $277 million in user fees. Appropriations Committee Chairman Hal Rogers (R-KY) said the President’s ask for a nearly $150 million increase in budget authority for FDA “will be tough to swallow.” Most of the President’s request for additional FDA funding is slated to go toward food safety as the agency gears up to begin implementing and enforcing the 2011 Food Safety Modernization Act (FSMA), with $109.5 million in budget authority and $191.8 million in requested new food user fees allocated for food safety efforts. Outgoing FDA Commissioner Margaret Hamburg made her last appearance before the committee since she announced she was stepping down from her position at the end of the month. Other topics touched on during the hearing were the recommendations of the 2015 Dietary Guidelines Advisory Committee and a discussion of whether FDA should be given the authority to evaluate dietary supplements at a higher standard due to concerns about contaminants and false and misleading claims.


Dr. Margaret Hamburg
Commissioner, Food and Drug Administration

Jay Tyler
Chief Financial Officer, Food and Drug Administration

Norris Cochran
Director, Office of Budget
Assistant Secretary for Financial Resources

For more information or to watch the hearing, please visit


Bipartisan Legislation Introduced to End Surprise Charges for Medicare Beneficiary Colonoscopies

Sens. Sherrod Brown (D-OH), Roger Wicker (R-MS), Ben Cardin (D-MD) and Susan Collins (R-ME) introduced legislation March 3 that would remove barriers to lifesaving colorectal cancer screenings and treatment. The Removing Barriers to Colorectal Cancer Screening Act, S.624, would revise a Medicare policy that currently charges seniors for colonoscopies when a polyp is removed even though cancer screenings are promoted as a free service under Medicare. The bill would eliminate cost-sharing under Medicare for preventive screening colonoscopies, even if a polyp or tissue is removed. As two-thirds of colorectal cancers occur in Medicare-aged individuals, reducing barriers to screenings will improve care and health outcomes while saving money for both seniors and the Medicare program. “Preventive care like colonoscopies helps save lives and keep Americans healthy — so we must do everything possible to encourage patients to take advantage of these procedures,” said Sen. Brown in a press release. “Unfortunately, under current policy — Medicare beneficiaries can be surprised by added costs following a colonoscopy. With a quick fix to current law, we can make sure seniors have truly free access to life-saving colorectal cancer screenings.” U.S. Reps. Charlie Dent (R-15-PA), Donald M. Payne, Jr. (D-NJ), Michael Fitzpatrick (R-PA) and Joe Courtney (D-CT) also introduced a companion bill, H.R.1220, in the House of Representatives.

Bipartisan Bill Introduced to Require Part D Plans to Include Six Protected Categories of Drugs

Sens. Chuck Grassley (R-IA) and Sherrod Brown (D-OH) introduced legislation March 5 to require that Medicare prescription drug plans, Part D, carry six categories of prescription drugs offered to participating beneficiaries. The legislation comes after the Centers for Medicare and Medicaid Services (CMS) tried to limit the categories by regulation. The Grassley-Brown legislation would require that Medicare Part D sponsors include all covered drugs in six protected categories and classes in their plan formularies: Anticonvulsants, antidepressants, antineoplastics, antipsychotics, antiretrovirals and immunosuppressants for the treatment of transplant rejection. The legislation would allow the Secretary of Health and Human Services (HHS) to use the formal regulatory process, including public notice and a comment period, to establish exceptions that would allow Part D plan sponsors to exclude a drug in one of the six protected classes or to limit access to a protected drug through utilization controls such as requiring prior authorization. The legislation would take effect beginning in plan year 2015. In January 2014, CMS issued proposed rules that would have narrowed the protected classes to anticonvulsants, antiretrovirals and antineoplastics, beginning in plan year 2015. Antipsychotic drugs would have continued to be treated as a class of clinical concern in 2015 and until CMS determined that it was appropriate to change the criteria for these products. In May 2014, CMS announced it would not finalize the proposed regulations relating to the six protected classes.

More information on the legislation can be found in the accompanying press release .

Upcoming: HELP Committee Hearing on Medical Innovation for Patients

On March 10, the Senate HELP Committee will hold a hearing entitled “Continuing America’s Leadership in Medical Innovation for Patients.” The hearing will represent the committee’s first official action on its version of the House Energy and Commerce Committee’s “21st Century Cures” initiative. HELP Committee Chairman Alexander (R-TN), along with Sen. Burr (R-NC) released a white paper earlier this year seeking feedback from stakeholders on ways to speed up drug and medical device development, possibly by revamping FDA’s clinical trial and review policies. HELP Committee Ranking Democrat Patty Murray (WA) is working with Alexander on the effort.


Francis Collins, M.D., Ph.D.
National Institutes of Health (NIH)

Margaret Hamburg, M.D.
Food and Drug Administration (FDA)

For more information, or to view the hearing, please visit

2. Administration

FDA Updates Guidance Agenda to Include Generic Opioids

In an updated draft guidance agenda document released Feb. 27, the Food and Drug Administration’s (FDA) Center for Drug Evaluation and Research (CDER) announced its intention to include a generic drug guidance document for evaluating abuse-deterrent properties of generic opioid drug products on its roster list for 2015. FDA last month testified before congressional appropriators that it is working on testing protocols and evaluation standards for generic opioids with abuse-deterrent properties, and plans to publish guidance in the near future. As it currently stands, after an opioid is approved, its manufacturer often works to improve its abuse-deterrent qualities to make it harder to misuse and abuse. However, these new qualities do not necessarily extend the original drug’s patent protection or marketing exclusivity. As a result, FDA may subsequently approve drugs generic to the original, i.e., a non-abuse-deterrent opioid drug. FDA has defended this practice by saying it is up to manufacturers to prove that their new abuse-resistance measures actually live up to their claims and deter abuse, and that without such data it is under no obligation to prevent generic competition. “Thus far, four opioid product labels have been approved with abuse deterrence claims consistent with the 2013 draft guidance. FDA is in the process of revising and finalizing this guidance. However, the fact that this guidance is not yet final has not and will not prevent FDA from evaluating proposals to include abuse-deterrence language in the labeling of specific products,” said the agency in its 2016 budget justification document. A date for the release of the guidance document was not provided.

FDA Approves First Biosimilar Product

On March 6, the Food and Drug Administration (FDA) announced the approval of Zarxio (filgrastim-sndz), the first biosimilar product approved in the United States. A biosimilar product is a biological product that is approved based on a showing that it is highly similar to an already-approved biological product, known as a reference product. Only minor differences in clinically inactive components are allowable in biosimilar products. A biosimilar product can be approved by the FDA only if it has the same mechanism(s) of action, route(s) of administration, dosage form(s) and strength(s) as the reference product, and only for the indication(s) and condition(s) of use that have been approved for the reference product. Sandoz, Inc.’s Zarxio is biosimilar to Amgen Inc.’s Neupogen (filgrastim), which was originally licensed in 1991. Zarxio is approved for the same indications as Neupogen, and can be prescribed by a provider for patients with cancer receiving myelosuppressive chemotherapy, patients with acute myeloid leukemia receiving induction or consolidation chemotherapy, patients with cancer undergoing bone marrow transplantation, patients undergoing autologous peripheral blood progenitor cell collection and therapy, and patients with severe chronic neutropenia. “Biosimilars will provide access to important therapies for patients who need them,” said FDA Commissioner Margaret A. Hamburg, M.D. “Patients and the health care community can be confident that biosimilar products approved by the FDA meet the agency’s rigorous safety, efficacy and quality standards.” FDA’s approval comes five years after the Biologics Price Competition and Innovation Act became law as part of the Affordable Care Act (ACA), ushering in a pathway for the FDA to review applications from drugmakers to sell biosimilars.

FDA Launches Drug Shortages Mobile App

On March 4, the U.S. Food and Drug Administration (FDA) launched the agency’s first mobile application (app) specifically designed to speed public access to valuable information about drug shortages. The app identifies current drug shortages, resolved shortages and discontinuations of drug products. Drugs in short supply can delay or deny needed care for patients. Drug shortages may also lead health care professionals to rely on alternative drug products, which may be less effective or associated with higher risks than the drug in shortage. “The FDA understands that health care professionals and pharmacists need real-time information about drug shortages to make treatment decisions,” said Valerie Jensen, associate director of the Drug Shortage Staff in the FDA’s Center for Drug Evaluation and Research. “The new mobile app is an innovative tool that will offer easier and faster access to important drug shortage information.” App users can search or browse by a drug’s generic name or active ingredient, and browse by therapeutic category. The app can also be used to report a suspected drug shortage or supply issue to the FDA.

CMS Announces Release of 2015 Impact Assessment of Quality Measures Report

On March 2, CMS released the 2015 National Impact Assessment of Quality Measures Report (2015 Impact Report). The 2015 Impact Report demonstrates that the nation has made clear progress in improving the health care delivery system to achieve the three aims of better care, smarter spending and healthier people. This report is a comprehensive assessment of quality measures used by CMS. The report summarizes key findings from CMS quality measurement efforts and recommended next steps to improve on these efforts. Specifically, the report outlines the performance on quality measures over time and improvements achieved. Findings from the report include research on 25 CMS quality programs and hundreds of quality measures from 2006 to 2013 and builds on the prior 2012 Impact Assessment Report. Many of these measures are also included in incentive programs that link payment to quality performance.

MedPAC March 2015 Public Meeting

On March 5 and 6, the Medicare Payment Advisory Commission (MedPAC) met to discuss Medicare payment policy issues, including upcoming recommendations the commission will issue to Congress later in March. While no recommendations were made on the 340B Outpatient Drug Program, the Commission recommended with regard to the hospital short-stay program that Congress revise the SNF eligibility requirement for formally admitted patients, so that time spent in outpatient observation status also counts as part of their three-day prior hospitalization requirement; require that all acute-care hospitals notify Medicare beneficiaries in outpatient observation status for more than 24 hours that being under observation may impact their cost-sharing for their current hospital visit as well as their eligibility for SNF coverage; and include payment for self-administered drugs for patients under observation on a budget-neutral basis within the hospital outpatient prospective payment system. A full list of topics covered by the meeting includes:

  • Hospital short-stay policy issues
  • Part B drug payment policy issues
  • Synchronizing Medicare policy across payment models for determining beneficiary premiums
  • Generic prices and the role of non-preferred generic tiers in Part D
  • Risk sharing in Medicare Part D

For more information, please visit

CDC Announces New Director of Public Health Preparedness and Response

Last week, CDC named Stephen C. Redd, M.D., the new director of CDC’s Office of Public Health Preparedness and Response (OPHPR). Dr. Redd is a Rear Admiral and Assistant to the Surgeon General in the United States Public Health Service. He comes to OPHPR from CDC’s Influenza Coordination Division and brings with him the expertise and experience of working at CDC for nearly 30 years and serving 29 years in the U.S. Public Health Service Commissioned Corps. In his new role, Dr. Redd will be leading OPHPR, which is CDC’s principle coordinator of all preparedness and response activities. OPHPR provides strategic direction, support and coordination for activities across CDC and with local, state, tribal, national, territorial and international public health partners.

3. State Activities

CMS Approves NH Medicaid Expansion Waiver

On March 5, New Hampshire has become the sixth state to get permission to implement its own style of Medicaid expansion after the Centers for Medicare & Medicaid Services (CMS) approved the state’s Medicaid expansion waiver. The waiver allows the state to buy private insurance for residents with incomes up to 138 percent of the federal poverty level, or about $15,900. Gov. Maggie Hassan (D) last year signed into law a bill that expanded Medicaid and created a temporary bridge program that allowed beneficiaries to go into the state’s managed Medicaid plans. Under state law, had the mandatory premium assistance program waiver not been approved by March 31 the managed care “bridge program” would have ended. With the new waiver, the state will begin purchasing private insurance for individuals or subsidizing existing employer coverage once the next open enrollment period begins Nov. 15, 2015, with coverage kicking in Jan. 1, 2016. “Federal approval of this waiver is another important step forward for the New Hampshire Health Protection Program, which will help it increase the positive impact that it is already having on our people and our economy,” said Governor Hassan in a press release. “Our bipartisan health care expansion plan is a uniquely New Hampshire solution that continues to make progress, and I look forward to continuing to work with the legislature to maintain our commitment to our people, businesses, and the future of our economy through this critical program.” As of March 3, 36,404 people had enrolled as part of expansion, according to the state.

Utah Legislature Sends ‘Right-to-Try’ Bill to Governor

A bill to allow terminally ill patients to use experimental drugs and devices that have yet to receive full approval from regulators is on its way to Gov. Gary Herbert for his signature. The House voted 69-3 on Monday to approve Senate amendments to HB 94, providing final approval by lawmakers. The Senate earlier approved it 26-0, and the House also had earlier endorsed it on a 72-1 vote. The bill by Rep. Gage Froerer, R-Huntsville, would allow patients, in partnership with their doctors, to approach drug companies directly and request treatments that have passed the first phase of the Food and Drug Administration’s (FDA) approval process, showing they are safe for human trials. Patients may face paying the full cost of the drug.

4. Regulations Open for Comment

FDA Solicits Comments on New Methodologies for Generic Drug Clinical Studies

In a notice released March 5 by the Federal Register, the Food and Drug Administration (FDA) is seeking feedback from stakeholders on possible new methodologies for generic drug clinical studies and ways to demonstrate bioequivalence as part of its regulatory science priorities for 2016 under Generic Drug User Fee Amendments (GDUFA). FDA noted it will take feedback from stakeholders into account when creating next year’s regulatory science plan for generic drugs. A public hearing has been scheduled for June 5, where FDA plans to hear from stakeholders on six specific areas including scientific or technical advancements that would help that currently limit generics’ availability, innovative approaches to preapproval development of generic drugs, advancements in scientific approaches to evaluate therapeutic equivalence of generic drugs through later stages of their lifecycle. The agency’s efforts come as House and Senate lawmakers are also looking at ways to revamp clinical trial design, though up to now they haven’t focused on generic drug-specific issues, and identification of high-impact public health issues involving generic drugs, among others. The notice comes as the House of Representatives 21st Century Cures discussion legislative draft also seeks to revamp clinical trials by allowing trial sponsors to propose incorporating adaptive trial designs for alternative statistical methods into proposed clinical trials and streamlining the institutional review board.

FDA Reopens Comment Period for Generic Drug Labeling Rule

In an announcement Feb. 17, the Food and Drug Administration (FDA) revealed that it has formally re-opened the comment period for a controversial generic drug labeling proposed rule and will hold a public meeting next month to address concerns with the rule and possible alternatives. The rule, which FDA proposed in 2013, would allow generic drugmakers to unilaterally update safety information and would require generic drugmakers to modify their labels independently of their brand-name counterparts, something that only brand-name drugmakers can currently do before receiving agency permission. The FDA proposed the rule in response to a 2011 U.S. Supreme Court decision that federal law does not permit generic drugmakers to make such changes independently and, therefore, they should not be held accountable for a failure to warn against a risk. Stakeholders will have until April 27 to comment on the proposed rule; the agency’s public hearing to receive more input from stakeholders will be held on March 27 from 8 a.m. to 5 p.m. at FDA’s White Oak campus.

FDA Releases Five Draft Guidance Documents on Drug Compounding

On Feb. 13, U.S. Food and Drug Administration (FDA) issued five draft guidance documents related to drug compounding and repackaging that will help entities comply with important public health provisions; guidance will be applicable to pharmacies, federal facilities, outsourcing facilities and physicians and comes as an outcrop of the Drug Quality and Security Act (DQSA), enacted by Congress in November 2013, in response to a deadly fungal meningitis outbreak that was linked to contaminated sterile compounded drug products. Specifically, the documents include potential direction on outsourcing facility registration, outsourcing facility adverse event reporting, drug repackaging, mixing, diluting and repackaging biological products, and a draft Memorandum of Understanding (MOU) with the states. The draft guidance documents are available for public comment until May 14, while draft comment for the draft MOU is open until June 13.

FDA Releases Draft to Streamline Experimental Drug Applications

On Feb. 4, the Food and Drug Administration (FDA) released draft guidance, entitled Individual Patient Expanded Access Applications: Form 3926, for a new, shorter application for patient access to experimental drugs. The draft comes in response to concerns that the existing process for “compassionate use” for experimental drug applications was too arduous. In the guidance, FDA says the newly proposed form would take doctors 45 minutes to complete whereas the existing form is estimated to take 100 minutes. Under the old system, FDA required that a “cover sheet” be included with any IND submission, known as Form 1571. However, that form was originally intended to be used by companies involved in drug development, not physicians, who submit the vast majority of expanded access requests. FDA said it was “concerned” that some physicians might not understand how to complete that cover sheet “and associated documents because it is not tailored to requests for individual patient expanded access.” Peter Laurie, FDA’s associate commissioner for public health strategy and analysis, said the changes would greatly simplify the compassionate use process. The old form “called for 26 separate types of information and seven attachments,” he noted. “The new form calls for a small fraction of that. The new draft form, when finalized, will require only eight elements of information and a single attachment.” The changes announced by the agency are expected to affect a significant number of patients each year; in 2014, FDA processed 1,758 single patient investigational new drug applications and emergency investigational new drug applications—97 percent of all expanded access requests. Comments and suggestions for the draft document should be submitted by April 13, 2015.

FDA Reopens Comment Period for Certain Provisions within Generic Drug User Fee Amendments

On Feb. 6, the Food and Drug Administration (FDA) posted a Federal Register notice reopening the public docket to solicit comments on certain topics related to Generic Drug User Fee Amendments of 2012 (GDUFA) implementation and the GDUFA Commitment Letter that accompanies the legislation. FDA will reopen the comment period to the public docket associated with the Sept. 17, 2014, GDUFA Public Hearing on Policy Development for an additional 30 days. Specifically, the agency has requested public input on the five draft guidance documents that were issued to facilitate implementation of GDUFA and on future policy priorities including recommendations for additional guidance topics to facilitate GDUFA implementation. FDA also requested feedback on issues that may arise in consideration of 180-day exclusivity provided for by paragraph IV patent certifications. Finally, FDA requested feedback on the specific criteria FDA should apply to identify an abbreviated new drug application (ANDA) as a first generic eligible for expedited ANDA review. FDA will take the information presented at the public hearing and in comments to the docket into account when developing the fiscal year 2015 GDUFA priorities. Interested persons may submit either electronic comments regarding this document to or written comments to the Division of Dockets Management by close of business March 9.

5. Reports CMS Has Taken Steps to Address Problems, But Needs to Further Implement Systems’ Development Best Practices

According to a GAO report released March 4, several problems with the initial development and deployment of and its supporting systems led to consumers’ encountering widespread performance issues when trying to create accounts and enroll in health plans:

  • Inadequate capacity planning: The Centers for Medicare & Medicaid Services (CMS) did not plan for adequate capacity to support and its supporting systems.
  • Software coding errors: CMS and its contractors identified errors in the software code for and its supporting systems, but did not adequately correct them prior to launch.
  • Lack of functionality: CMS had not implemented all planned functionality prior to the initial launch of and its supporting systems.

Since the initial launch, CMS has taken steps to address these problems, including increasing capacity, requiring additional software quality reviews and awarding a new contract to complete development and improve the functionality of key systems. After it took these actions, performance issues affecting and its supporting systems were significantly reduced. In addition, CMS did not consistently apply recognized best practices for system development, which contributed to the problems with the initial launch of and its supporting systems. GAO recommends that CMS take seven actions to implement improvements in its requirements management, system testing and project oversight, and that HHS improve its oversight of the effort. HHS concurred with all of the recommendations.

Drug Shortages: Better Management of the Quota Process for Controlled Substances Needed; Coordination Between DEA and FDA Should Be Improved

According to a GAO report released March 4, the Drug Enforcement Administration (DEA), an agency within the Department of Justice (DOJ), has not effectively administered the quota process that limits the amount of controlled substances available for use in the United States. Each year, manufacturers apply to DEA for quota needed to make their drugs. DEA, however, has not responded to them within the time frames required by its regulations for any year from 2001 through 2014. DEA officials attributed this lack of compliance to inadequate staffing. Manufacturers who reported quota-related shortages cited late quota decisions as causing or exacerbating shortages of their drugs. Additionally, DEA’s weak internal controls jeopardize the agency’s ability to effectively manage the quota process. For instance, agency officials said that DEA does not conduct quality checks to ensure the accuracy of the data in its Year-End Reporting and Quota Management System (YERS/QMS). GAO estimates that 44 percent of YERS/QMS records in 2011 and 10 percent in 2012 had errors. DEA officials said that 2011 was the first year manufacturers applied for quota electronically and they expected data from 2012 and beyond to be more accurate. Moreover, DEA does not have reasonable assurance that the quotas it sets are in accordance with its requirements and cannot ensure continuity of its operations, as it does not have protocols, policies, training materials or other documentation to manage the quota process. GAO recommends DEA take five actions to improve its management of the quota process; DEA and FDA should quickly update their MOU and agree on steps each will take regarding drug shortages. HHS agreed with the applicable recommendations. DEA neither agreed nor disagreed, but raised multiple objections to this report.

If you have any questions, contact the following individuals at McGuireWoods Consulting:

Stephanie Kennan, Senior Vice President
Charlyn Iovino, Vice President
Brian Looser, Assistant Vice President
Amanda Anderson, Research Assistant

Founded in 1998, McGuireWoods Consulting LLC (MWC) is a full-service public affairs firm offering state and federal government relations, national/multistate strategies, infrastructure and economic development, strategic communications and grassroots issue management services. McGuireWoods Consulting is a subsidiary of the McGuireWoods LLP law firm and in 2010 was ranked in the Top 20 of The National Law Journal's "The Influence 50," an annual report of the top public affairs firms in Washington, D.C.

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