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Feb 6, 2017

Washington Healthcare Update

This Week: More discussion on what a replacement plan might look like…Senate fireworks on getting cabinet secretaries confirmed…Energy and Commerce Committee to markup drug bill…Sen. Wyden introduces bill to weaken IPAB…OMB withdraws pending regulation on 340B.

Health Reform Takeaway

  • Rep. Tom Price clears the Finance Committee so his nomination to secretary of HHS moves forward for consideration by the full Senate.
  • Energy and Commerce subcommittees hold hearings and float drafts of bills related to Medicaid reform (previously passed in last Congress) and of bills to “stabilize” the insurance market for replacement purposes.

1. Congress



2. Administration

3. Courts

4. State Activities

5. Other

6. Regulations Open for Comment

7. Reports

1. Congress


Republican Members at Hearing Suggest States Opt Out of Medicaid Drug Formulary

Republican members of the House Energy & Commerce Committee at a Feb. 1 health subcommittee hearing asked witnesses whether state Medicaid programs would be better off if they could opt out of the current Medicaid drug formulary and related rebate framework, which includes all FDA-approved drugs. Reps. Tim Murphy (R-PA) and Buddy Carter (R-GA) suggested formularies hurt state budgets when Medicaid programs are forced to cover high-priced drugs.

The National Association of Medicaid Directors listed a retooling of the Medicaid drug formulary framework as one of their policy priorities for the Trump administration’s first 100 days, and said Medicaid directors need greater authority to exclude some FDA-approved drugs from the formulary list.

Prescription drugs are optional under Medicaid statute, but all states offer coverage through the Medicaid drug rebate program, which sets rebates at 23.1 percent for brand drugs and 13 percent for generics. But the mandates that come with the rebate program cripple states’ abilities to fight the rising cost of prescription drugs, Medicaid directors said in their open letter.

John McCarthy, Ohio’s former Medicaid director who implemented Medicaid expansion under Republican Gov. John Kasich, testified at the hearing and said in answer to questions from Carter that he would advocate for states’ ability to opt out of the formulary.

McCarthy said states—particularly large states—might have the leverage with drug companies to get prices even lower than they are through the rebate program if they were able to put drug contracts up for bidding, something he said would have helped him when his budget was hit by Sovaldi, the hepatitis C drug that Medicaid programs had to cover.

He said smaller states with fewer people on Medicaid would have less negotiating power than large states with more crowded beneficiary pools, but the key is that states should have a choice to do what is best for their program’s sustainability.

Other lawmakers and patient advocates are split on whether government programs should negotiate with drug makers.

House Energy and Commerce Delays Taking Up Drug Pricing Bill This Week

The House Energy and Commerce Committee had scheduled a markup this week to consider legislation to increase competition for generic drugs to prevent pharmaceutical companies from increasing prices of old medicines. However, at the request of one of the co-sponsors and Democratic Leadership of the committee, the markup has been delayed to allow for more vetting of the legislation.

The Lower Drug Costs Through Competition Act, introduced last week by Reps. Gus Bilirakis (R-FL) and Kurt Schrader (D-OR), would incentivize drug companies to develop generic drugs amid shortages or absence of competition.

The bill is aimed at high-priced older drugs that have lost patent protection—like Daraprim, the drug Martin Shkreli infamously raised the price of by more than 50-fold—and would not affect the cost of innovative new drugs. Branded drug makers are unlikely to oppose the bill, making it more politically feasible for Republicans to support it as President Donald Trump targets high drug prices. Companies that apply to make a generic drug meeting the bill’s standards would get a six-month FDA review and a priority review voucher for a six-month review of another generic drug application. The bill would also increase transparency around FDA’s generic drug backlog and would require a study on drug safety programs, known as REMS, to understand whether brand companies use the program to impede generic competition.

FDA already committed to reviewing within eight months the first generic drug application that would compete with a branded product.

Sen. Susan Collins (R-ME) introduced a similar bill in the last Congress.


Price and Mnuchin Nominees Move to the Floor

On Jan. 31, Senate Finance Committee Democrats boycotted the vote for Treasury nominee Steven Mnuchin and Health and Human Services nominee Rep Tom Price (R-GA). The boycott meant there was not a quorum and the committee could not vote. On Feb. 1, Republicans voted to suspend the committee rules and vote the nominees out of committee so they could be advanced for consideration by the Senate. No Democrats attended the Feb. 1 committee meeting either.

Democrats said they were boycotting the confirmation proceedings because of concerns that Price and Mnuchin had misled the committee, and that the nominees needed to provide more information. Democrats said in a letter to Hatch that they wanted more information on Price’s privileged and discounted access to stocks and answers from Mnuchin on “robo-signing” and foreclosures by the bank he once led, OneWest.

Republicans slammed Democrats as being obstructionists and downplayed their concerns with the nominees. Both Mnuchin and Price are expected to be confirmed because of broad Republican support

Wyden Introduces Legislation to Weaken IPAB

Sen. Ron Wyden (D-OR) introduced a bill to weaken the controversial Independent Payment Advisory Board due to fear that President Donald Trump might use the board to cut Medicare payments. The Affordable Care Act created the Independent Payment Advisory Board as a backstop to other measures in the law that aim to curb rising health care costs. The board has yet to be triggered, but Medicare trustees stated last year that the growth in health care spending is expected to trigger IPAB this year.

The president appoints IPAB’s 15 members, with the advice and consent of the Senate. Although the ACA became law in 2010, the law states that legislation to strip the board’s powers may be introduced only this year, and no later than Feb. 1. Wyden introduced both a resolution, as prescribed by statute, and a bill to unwind IPAB. The resolution takes advantage of a one-time opportunity to discontinue the process, whereas the bill repeals IPAB in full.

Although legislation to repeal the automatic implementation of the board’s recommendations had to be introduced by Feb. 1, Congress may repeal the board any time. However, the latter has not happened even though the Democrats who championed the board are gone from office. The two parties came close to repealing IPAB in 2012, but Democrats dropped their support when Republicans insisted on offsetting the then-$3.1 billion cost of repealing the board with a medical malpractice measure that saved $45.5 billion. Also, Republicans excluded repeal of IPAB from the budget reconciliation bill that Congress passed in December 2015 and that is expected to be a template for this year’s reconciliation bill to repeal large portions of the Affordable Care Act.

Dozens Arrested in Capitol Sit-in Over HHS Nominee

Dozens of protestors were arrested Jan. 31 during a rowdy demonstration in front of Senate Finance Chairman Orrin Hatch’s office. They were protesting Obamacare repeal and the anticipated confirmation of Rep. Tom Price (R-GA) as HHS secretary.

About 70 demonstrators, comprising health care workers and patients from the Save My Care coalition, descended on the first floor of the Senate Hart Office Building and held a sit-in, chanting “What’s your plan for health care? What’s your plan for us?” A spokesperson for the group said individuals were charged with unlawful crowding and obstruction.

The protest came just hours after Hatch’s committee was scheduled to vote on Price’s nomination to lead HHS. Senate Democrats on the panel staged a surprise walkout, demanding more details about Price’s trades in health care stocks. The boycott and lack of a quorum also delayed a vote on Treasury nominee Steven Mnuchin.

Hatch blasted the decision, saying he was very disappointed with his Democratic colleagues. The Save My Care coalition is backed by the Service Employees International Union.

Senate Dems Send Letter to FDA on Hiring Freeze

Senate Democrats are worried that President Donald Trump’s federal workforce hiring freeze will do significant damage to the FDA’s ability to carry out its core mission and possibly conflict with a new biomedical research law.

Eight HELP Committee Democrats said the directive Trump issued Jan. 25 could limit reviews of new drugs and medical devices and do damage to bipartisan efforts to fill vacant positions at the agency.

The letter, sent Jan. 30 to Acting FDA Commissioner Stephen Ostroff, says the hiring freeze would conflict with the new authorities Congress gave FDA in the 21st Century Cures Act to “attract and retain outstanding talent to help the agency meet the next generation of scientific challenges.”

The hiring freeze could also conflict with new drug, medical device, biosimilar and generic user fee agreements Congress is expected to reauthorize later this year. The pacts would provide industry funding for the FDA to hire more staff, the lawmakers added.

The lawmakers ask the FDA to provide detail about how the freeze will affect the agency’s ability to meet its user-fee commitments with industry and how it could affect FDA’s ability to implement provisions of the Cures Act. They also want to know how many and which positions may be exempt from the hiring freeze.

2. Administration

Trump Administration Sends Rule to OMB on Stabilizing Markets

On Feb. 2, the Trump administration submitted a proposed rule to the Office of Management and Budget. The rule is described as aimed at stabilizing the Obamacare markets.

No details are yet publicly available on what’s in the CMS proposal. Some have suggested the rule may deal with three areas: further restricting special enrollment periods, tightening oversight of enrollees’ coverage eligibility and limiting the grace period for people who stop paying their premiums.

NIH Funds Recruitment for Precision Medicine Initiative

The NIH will provide up to $5 million annually over the next three years to fund outreach and recruitment for the All of Us Research Program, an effort to get a representative sample of the country into studies conducted under the Precision Medicine Initiative.

NIH is asking universities and community groups to recruit at least 1 million people. Data and biospecimens collected from volunteers over many years will be used in studies covering wide areas of health. NIH wants to get participation from racial and ethnic groups underrepresented in past research, but community groups often lack resources to run enrollment campaigns.

Eligible organizations include nonprofits, community- and faith-based organizations, minority-serving institutions and local governments. Applications are due March 24 and the first awards should be issued in May.

For more information, click here.

President Trump Holds Meeting with Drug Manufacturers

In a meeting with pharmaceutical companies Jan. 31 President Donald Trump called for lowering drug prices in Medicare and Medicaid, increasing competition and bidding, reforming FDA to accelerate drug approvals, letting terminally ill patients get treatments and ending foreign freeloading of U.S.-made drugs. Trump also asked the pharmaceutical industry to bring manufacturing jobs back to the United States, prompting pledges from several companies to do so.

There was no specific mention of Medicare Part D drug negotiation, leading some to question whether Trump is still advocating the highly controversial policy.

In its post-meeting statement, the Pharmaceutical Research and Manufacturers of America also called for reforming laws and regulations that prevent private companies from negotiating better deals and paying for medicines based on the value they provide to the health care system. But that most likely does not include Part D negotiation, which the industry has opposed. On its website, PhRMA advocates changing rules and laws so that drug companies can share information with insurers in advance of FDA drug approvals. PhRMA also advocates changing the way Medicare Part B and Medicaid prices are calculated so that indication-based pricing or outcomes-based arrangements can be factored in.

The White House meeting included Robert Bradway of Amgen, Joaquin Duato of Johnson & Johnson, Kenneth Frazier of Merck, Robert Hugin of Celgene, Joseph Jimenez of Novartis, David Ricks of Eli Lilly, Stephen Ubl of PhRMA and House Energy and Commerce Chairman Greg Walden (R-OR).

Walden said the meeting focused on several paths to bring down drug costs, including reforming FDA, increasing competition and lowering costs for patients who can’t afford medications.

OMB Withdraws Major Update to 340B Drug Program

The Office of Management and Budget withdrew a pending regulation for the 340B drug program that would have tightened controls on which patients, drugs and providers qualify for steep discounts on prescription medicines.

The decision will likely be viewed negatively by drug makers, who have argued that the 340B program has become too expansive in recent years—growing even as more Americans obtained insurance. The program mandates steep discounts on drugs to safety net providers who treat a disproportionate share of low-income patients.

Hospitals praised the Trump administration’s decision to withdraw the guidelines, saying it would have limited access to affordable drugs had it taken effect.

The draft of the rules known as the “mega-guidance” released in August 2015 aimed to strengthen requirements on the relationships between hospitals and other “covered entities” participating in the 340B program. The proposal also called for increased documentation from hospitals and said that eligibility for discounts would be evaluated on a “prescription-by-prescription basis” rather than per individual patients.

CMS Announces DMEPOS Competitive Bidding Round 2019

On Jan. 31, CMS announced plans to consolidate all rounds and areas included in the Medicare Durable Medical Equipment, Prosthetics, Orthotics and Supplies (DMEPOS) Competitive Bidding Program into a single round of competition—Round 2019.

The DMEPOS Competitive Bidding Program, mandated by Congress through the Medicare Prescription Drug, Improvement, and Modernization Act of 2003 (MMA), changes the amount Medicare pays for certain equipment like walkers and wheelchairs, using market-based prices, while maintaining beneficiary access to items, services and quality of care. The program replaces the outdated, inflated fee-schedule prices Medicare paid for these items with lower, more accurate prices to help Medicare and its beneficiaries save money while ensuring access to quality equipment, supplies and services. The program also helps limit fraud and abuse in Medicare.

CMS is required by the Social Security Act to recompete contracts under the DMEPOS Competitive Bidding Program at least once every three years. Suppliers must then compete to become a Medicare contract supplier by submitting bids to provide certain items in CBAs.

CMS also announced several updates to the DMEPOS Competitive Bidding Program for Round 2019. For example, CMS is adding insulin pumps and supplies as a product category to be bid in the national CBA. CMS is also adding 10 new CBAs to the program for the Continuous Positive Airway Pressure (CPAP) devices and related accessories product category only. In five of these ten new CBAs, payment for the CPAP device, related accessories and services will be made on a bundled, non-capped monthly rental basis, while payment in the other five CBAs will be made on a capped monthly rental basis like all other existing CBAs.

CMS is also including a lead item bidding methodology for certain items in Round 2019 in which suppliers will bid for a lead item within a grouping of similar equipment that takes into account the costs of furnishing all of the equipment in the grouping. The single payment amount for the other items within the grouping will be based on their relative differences in fees when compared to the lead item.

Round 2019 bidders must also obtain a $50,000 bid surety bond for each CBA in which it submits a bid, as required by the Medicare Access and CHIP Reauthorization Act of 2015. Bid surety bonds will be forfeited for bidders who do not accept a contract for a competition (CBA and product category combination) in which the bidder’s composite bid for the competition is at or below the median composite bid rate for all bidding entities included in the calculation of the single payment amounts within the competition.

For more information, click here.

FTC Probing Mylan Over EpiPen

The FTC is probing whether Mylan illegally blocked competition to its life-saving EpiPen, the company said Jan. 30.

The FTC is investigating whether Mylan made small changes to the allergy treatment to effectively shield it from cheaper rivals. The FTC is also looking at whether Mylan entered into any agreements that delayed cheaper versions of the EpiPen from coming to market.

Mylan denied any wrongdoing. “Mylan received an information request from the FTC months ago as part of a preliminary investigation,” the company said in a statement. “Any suggestion that Mylan took any inappropriate or unlawful actions to prevent generic competition is without merit.”

The company, which has faced backlash for repeatedly raising EpiPen prices, claims its treatment has always faced competition. It also said Teva has patent licenses that will allow the company to launch a generic alternative years before the EpiPen’s patents expire.

3. Courts

Former Tenet Executive Indicted for Defrauding Medicare, Medicaid

John Holland, a former senior vice president of operations for Tenet Healthcare Corporation’s southern states region, was indicted on four counts for his alleged role in a $400 million scheme to defraud Medicare and Medicaid, the Justice Department said Feb. 1.

Holland allegedly paid bribes and kickbacks for patient referrals over a 13-year period from about 2000 to 2013, and concealed the activity by circumventing internal accounting controls and falsifying company books and records. The kickbacks and bribes helped Tenet bill the Georgia and South Carolina Medicaid programs for more than $400 million, and Tenet obtained more than $149 million in Medicaid and Medicare funds based on the patient referrals, the indictment alleges.

Holland also falsely certified to HHS that Tenet was complying with terms of participation in Medicare and Medicaid and with a corporate integrity agreement. Tenet received more than $10 billion in payments from federal health care programs during the four years the agreement was in effect, the Justice Department said.

4. State Activities

California: Workers Air Concerns Over Rising Health Care Costs

More than 1,000 workers and union leaders attended a meeting Feb. 1 in San Francisco with officials from the Department of Managed Health Care to air their concerns about rising health care costs. The meeting was the first annual public meeting mandated by a 2015 state law that requires health plans to publicly explain how they set premiums. Rate review already exists in the small group and individual markets, but California regulators have no authority to reject rate hikes.

Meanwhile, California lawmakers are trying to keep the pressure on drugmakers. Democrat Jim Wood, chairman of the Assembly health committee, introduced a bill, AB 265, which would prohibit the use of coupons for pharmaceutical drugs when other FDA-approved options are cheaper. Medicare and Medicaid already prohibit the use of coupons. Massachusetts banned their use in 2012, and there is similar legislation in New Jersey. The head of California’s Senate health committee, Sen. Ed Hernandez, has already reintroduced a version of his drug-pricing transparency bill that was shelved last year.

Florida: Gov. Scott Proposes Cuts to Hospitals’ Medicaid Payments

Florida Gov. Rick Scott has proposed deep cuts to hospitals’ Medicaid payments in his $83 billion budget released last week. Scott, a former hospital executive, has proposed changing the state’s Medicaid law to lower the minimum and maximum amounts an HMO must pay a hospital to participate in its network. Scott’s proposed changes would generate $581 million in Medicaid savings.

Hawaii: Lawmakers Attempt to Save Major Parts of ACA

Hawaii lawmakers are already trying to save major parts of the ACA. Bills introduced in the House and Senate include an individual mandate and consumer protections, including the prohibition on insurers denying coverage based on pre-existing conditions and lifetime maximums for coverage. The bill also allows young adults up to age 26 to stay on their parents’ health insurance and ensures that women are not charged more than men for insurance.

Texas: Officials Requesting Continued Funding for 1115 Waiver

Texas officials have asked CMS to keep funding the state’s Medicaid 1115 waiver—which spends billions of dollars to cover hospitals’ uncompensated care costs and delivery system reform efforts—through September 2019. Under the extension, those programs would both be funded at $3.1 billion for 2018 and then prorated for eight months after that. The Texas waiver is now set to expire at the end of the year.

In arguing for the extension, state officials say providers “require a level of financial and operational security” to keep serving Medicaid enrollees and the uninsured while Republicans in Washington work through Obamacare repeal and develop new policies for 1115 waivers. But the Obama administration sought to clamp down on these types of waiver requests from states, arguing that supplemental funding for hospitals should not pay for expenses that would otherwise be covered through Medicaid expansion.

Nevada: Gov. Sandoval Proposes $20 Million Cut in Mental Health Funding

Nevada Gov. Brian Sandoval has proposed to cut $20 million in state mental health funding, including eliminating 112 jobs across the state, arguing that the Medicaid expansion has insured more people and decreased demand for services. The proposal is part of his budget blueprint for next year. The budget does include a $173 million boost for Medicaid, which may include mental health services. Health officials say since Nevada expanded Medicaid, fewer people are seeking state-provided mental health services.

New Jersey: State Legislature to Vote on Drug Addiction Reform Bill This Week

The New Jersey Legislature will vote on a bill this week to implement parts of a drug addiction reform plan that Gov. Chris Christie proposed last month. The bill would mandate insurers cover 28 days of inpatient treatment without prior authorization or medical necessity review. Christie says it will be the “most aggressive law in the country in terms of providing access to care.” However, once passed, it would only apply to state-regulated health insurance plans, which account for around 30 percent of the total market. Two other states—New York and Massachusetts—require state-regulated health plans to cover 14 days of treatment. The same bill also limits initial opioid prescriptions for acute pain to a five-day supply.

5. Other

Biden Foundation Established to Champion Equal Rights

Former Vice President Joe Biden and former second lady Jill Biden announced Feb. 1 that they would be launching a foundation to champion equal rights for all people.

The Biden Foundation will advance issues important to the former vice president, such as supporting the Cancer Moonshot Initiative, the Violence Against Women Act, the U.S. Military, equal rights and affordable education, focusing on community colleges.

“The Biden Foundation is an educational foundation dedicated to exploring the ways that everyone — no matter their income level, race, gender, age or sexuality — can expect to be treated with dignity and to receive a fair shot at achieving the American dream,” the announcement read.

In a video announcing the foundation, Biden said he was “more optimistic” than he had ever been, praising the millennial generation as “the most open, most tolerant, most generous generation in American history.” He discussed the societal evolution on gay marriage as an example of how societal shifts are possible.

The foundation’s board will include longtime Biden adviser and former Sen. Ted Kaufman, Valerie Biden Owens, the vice president’s sister and other former Biden aides and supporters.

6. Regulations Open for Comment

CMS Releases Proposed Notice With Changes to Medicaid National Drug Rebate Agreement

On Nov. 7, CMS issued a proposed notice announcing changes that would be made to the Medicaid National Drug Rebate Agreement (NDRA) for use by the Secretary of the Department of Health and Human Services and manufacturers under the Medicaid Drug Rebate Program. The NDRA is being updated to incorporate legislative and regulatory changes that have occurred since the agreement was published in February 1991, as well as to make editorial and structural revisions, such as references to the updated Office of Management and Budget (OMB)-approved data collection forms and electronic data reporting. There is a 90-day comment period for this proposed notice that will end on Feb. 7, 2017.

For more information, click here.

CMS Announces PACE Innovation Act Request for Information

On Jan. 4, CMS released a Request for Information (RFI) seeking public input on potential adaptations of the model of care employed by the Program of All-Inclusive Care for the Elderly (PACE) for new populations, including individuals with physical disabilities, under the authority provided by the PACE Innovation Act. The PACE Innovation Act of 2015 (PIA) provides authority to test application of PACE-like models for additional populations, including populations under the age of 55 and those who do not qualify for a nursing home level of care, under Section 1115A of the Social Security Act.

The RFI includes two parts:

  • In the first part, CMS seeks comment on potential elements of a five-year PACE-like model test for individuals dually eligible for Medicare and Medicaid, age 21 and older, with disabilities that impair their mobility and who are assessed as requiring a nursing home level of care, among other eligibility criteria. We have provisionally named this model “Person Centered Community Care” or P3C. This potential model is designed to meet the requirements of a model test under Section 1115A of the Social Security Act and to adapt the PACE model of care for one population of focus. In addition to feedback on the potential elements of the P3C model described in the RFI, CMS seeks comment on the types of technical assistance that potential P3C organizations and states would require to participate in the model test.
  • In the second part of the RFI, CMS seeks information on additional specific populations whose health outcomes could benefit from enrollment in PACE-like models, and how the PACE model of care could be adapted to better serve the needs of these populations and the currently eligible population.

CMS is accepting feedback on this RFI until 5 p.m. EST on Feb. 10, 2017. Comments should be submitted electronically in PDF form to with the organization or individual submitting comments on the title of the document.

CMS Proposes Rule for Prosthetics and Orthotics Suppliers

On Jan. 11, CMS issued a proposed rule that would implement statutory requirements and specify: the qualifications needed for practitioners to furnish and fabricate prosthetics and custom-fabricated orthotics, and for qualified suppliers to fabricate prosthetics and custom-fabricated orthotics; accreditation requirements that qualified suppliers must meet in order to bill for prosthetics and custom‑fabricated orthotics; requirements that an organization must meet in order to accredit qualified suppliers to bill for prosthetics and custom-fabricated orthotics; and a timeframe by which qualified practitioners and qualified suppliers must meet the applicable licensure, certification and accreditation requirements. This rule would also remove the exemption from quality standards and accreditation that is currently in place in accordance with Section 1834(a)(20) of the Act for certain practitioners and suppliers who furnish or fabricate prosthetics and custom‑fabricated orthotics. In addition, this rule also includes authority for the Centers for Medicare & Medicaid Services (CMS) to revoke the Medicare enrollment of Durable Medical Equipment, Prosthetics, Orthotics and Supplies (DMEPOS) suppliers that submit claims for items that do not meet the requirements of the statute and this proposed rule.

Only qualified practitioners who furnish or fabricate prosthetics and custom‑fabricated orthotics and qualified suppliers that fabricate or bill for prosthetics and custom‑fabricated orthotics would be subject to these requirements.

CMS will accept comments on the proposed rule until March 13, 2017, and will respond to comments in a final rule.

To see the proposed rule, click here.

FDA Releases Draft Guidance for Interchangeable Biosimilars

On Jan. 17, FDA outlined the criteria companies must meet to get a copycat biologic deemed interchangeable with its branded counterpart, a certification that paves the way for the cheaper products to be automatically substituted at the pharmacy level under state laws.

To get this designation, a biosimilar sponsor must show that its product can be expected to produce the same clinical result as the branded biologic in any given patient, for all of the drug’s approved uses, and that there are no risks if a patient is switched back and forth between the interchangeable biosimilar and the branded biologic, per draft guidance released by FDA.

Interchangeable biosimilars are expected to offer greater savings to the health system than biosimilars that lack this designation. Without the interchangeability designation a doctor must proactively write a prescription for the biosimilar.

The guidance outlines the types of studies and scientific data that companies will need to submit to FDA to get an interchangeable designation. When companies seek that designation, FDA recommends they seek approval for all of the branded biologic approved uses.

FDA is requesting comments on the draft guidance as well as a number of questions outlined in a Federal Register notice. FDA wants to know how it should regulate manufacturing changes of interchangeable products that occur after approval. The agency also wants to know how it should handle interchangeable designations if a branded biologic gets another use approved for the drug, after the interchangeable biosimilar is cleared by FDA.

FDA Releases Draft Guidance on Off-Label Drug Communication

On Jan. 17, FDA issued draft guidance that gives drug and device companies more flexibility to communicate off-label information about their products and avoid charges of misbranding. The new policy allows companies to promote a drug or device with information not on the agency-approved label as long as that information is truthful and non-misleading and is consistent with FDA-approved labeling.

Companies have asked FDA for clarity on marketing policies after a 2012 U.S. Court of Appeals decision ruled that under the First Amendment the government could not prohibit and criminalize the truthful off-label promotion of FDA-approved drugs.

The guidance outlines how FDA will determine whether a company’s communication is consistent with FDA’s required labeling. For example, companies will not be permitted to communicate information about the drug or device related to a use that has not yet been approved by FDA. They also can’t promote a patient population for the drug or device that has not been cleared by the agency.

The agency offers some examples of information companies could communicate that could be consistent with its FDA-required labels. For example, FDA said companies can promote testimony of patients who used the drug for its FDA-approved uses, such as the product’s effect on patients’ daily activities. Companies could also communicate long-term safety and efficacy information about products that were approved for chronic use based on a six-month trial, if the company now has data on the drug lasting a couple of years, FDA added.

The guidance also outlines the type of scientific data companies need to support their off-label claims. Comments on the draft are due in 60 days.

CMS Proposes Average 0.25 Percent Hike for Medicare Advantage Plans

On Feb. 1, the Trump administration issued guidance that proposes updates to the methodologies used to pay Medicare Advantage plans and Part D sponsors. The guidance calls for raising Medicare Advantage payments an average of 0.25 percent.

Health plans take in roughly $200 billion a year from the government to provide care for seniors enrolled in private Medicare plans. There are currently more than 18 million people enrolled in Medicare Advantage, accounting for roughly a third of all of the program’s beneficiaries. More than 1 million seniors have been added to private Medicare plans in the past year, continuing a trend of robust growth that goes back a decade.

“These proposals will continue to keep Medicare Advantage strong and stable and provide high quality, affordable care to seniors and people living with disabilities,” said Patrick Conway, acting administrator of the Centers for Medicare and Medicaid Services.

Obamacare included major cuts to Medicare Advantage—America’s Health Insurance Plans puts the total figure at $200 billion—that were designed to bring payments more in line with traditional government-run Medicare. Last year, the federal government paid private plans an average of 102 percent of traditional fee-for-service costs per member.

UnitedHealth Group and Humana are the biggest national players, accounting for roughly 40 percent of the Medicare Advantage market in 2015.

CMS will accept comments until March 3 and the final notice will be posted on April 3.

To read a fact sheet on the rate proposal, click here.

7. Reports

Heritage Foundation Highlights Decrease in Competition, Choice in Obamacare Exchanges

In a new paper, the Heritage Foundation found that exchange customers in nearly 70 percent of U.S. counties have two or fewer insurers to choose from. That is up from just 36 percent of counties last year, mostly a consequence of larger insurers’ leaving the market. The authors, Edmund Haislmaier and Alyene Senger, suggest the reduction does not bode well for competition in 2018 and both advocate for Obamacare’s full repeal. “Given that proponents of the law expected it to increase insurer competition, diminishing consumer choice and insurer competition can be added to the list of ACA failures,” they wrote.

For the full paper, click here.

GAO Identifies Ways to Reduce Improper Medicaid Payments

In new testimony, GAO identifies some ways to reduce improper payments in the Medicaid program, such as by confirming that Medicaid’s participants and health care providers meet eligibility requirements, effectively overseeing managed care organizations and ensuring that participants don’t have duplicate coverage through private insurance. According to GAO, CMS has taken steps to address some of these issues, but more work is needed—at both the state and federal levels.

Medicaid has an estimated $36 billion in improper payments in fiscal year 2016.

GAO Discusses Prior Work on Patient Protection and Affordable Care Act

In new testimony, GAO discusses prior work regarding the Patient Protection and Affordable Care Act. The act changed many aspects of the private health insurance markets, including establishing health insurance exchanges in each state beginning in 2014—intended to allow consumers to compare and select health plans.

GAO discusses prior work that found:

  • enrollment in health plans was concentrated among a small number of health insurance issuers;
  • consumers in the individual market had access to more plans in 2015 than 2014, with varying premiums; and
  • enrollees who obtained exchange coverage were generally satisfied with their plans, with affordability still a concern for some.

For more information, click here.

GAO Reports on Gambling Disorders in DOD and Coast Guard

In a new report, GAO reviewed gambling among members of the armed forces. The report (1) describes what is known about the prevalence of gambling disorder among servicemembers in DOD and the Coast Guard; (2) assesses DOD’s and the CG’s approaches to diagnosing and treating servicemembers for the disorder; and (3) evaluates the extent to which guidance at both facilities addresses gambling disorder prevalence.

GAO made several recommendations, including that DOD incorporate gambling disorder questions in a systematic screening process and that DOD and the CG update guidance to include gambling disorder. DOD concurred with five recommendations focused on updating guidance, but did not concur with incorporating gambling questions into a screening process due to the disorder’s low prevalence. GAO maintained that this recommendation is still valid because, among other things, DOD’s prevalence data is limited. The CG concurred with the two recommendations focused on updating guidance.

To see the report, click here.

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

Stephanie Kennan, Senior Vice President
Charlie Iovino, Vice President
Caroline Perrin, Research Assistant

Founded in 1998, McGuireWoods Consulting LLC (MWC) is a full-service public affairs firm offering infrastructure and economic development, strategic communications & grassroots, and government relations services. McGuireWoods Consulting is a subsidiary of the McGuireWoods LLP law firm and has been named in The National Law Journal's special annual report, "The Influence 50," for the past several years. In the most recent report, McGuireWoods Consulting was ranked 15th of the 1,900 government relations firms in Washington, D.C.

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