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Mar 20, 2017

Washington Healthcare Update

This Week: Health reform advances haltingly…The president sends a budget to Congress…Secretary Price suggests states look at Section 1332 waivers.

Heath Reform Takeaways

  • CBO score arrived and raised concerns from some members about Medicaid cuts.
  • House conservatives attempt to use their leverage to force changes.
  • Changes being discussed are moving up the Medicaid expansion termination date, work requirements for Medicaid and more robust tax credits for the “54-64” group.
  • More Republican senators make clear they have concerns with the House bill.

1. Congress



2. Administration

3. State Activities

4. Regulations Open for Comment

5. Other

6. Reports

1. Congress


House Budget Committee Sends AHCA Forward, Vote Expected Thursday

By a narrow 19-17 vote, the House Budget Committee sent the bill to repeal and replace the Affordable Care Act (ACA) through the committee March 16, keeping the legislation on track for a floor vote Thursday.

Strong opposition from House conservatives threatened to halt the bill. Ultimately three conservative members of the House Freedom Caucus—Reps. Dave Brat (R-VA), Mark Sanford (R-SC) and Gary Palmer (R-AL)—all voted against the measure for not going far enough to dismantle the Affordable Care Act.

Brat on Wednesday announced his opposition to the bill, while Palmer and Sanford had not previously said how they would vote. Sanford, who originally voted to advance the bill, switched his vote to no when it was clear the bill had enough support to pass.

Conservatives want a quicker phase-out of Medicaid expansion and the imposition of a work requirement for the program’s low-income beneficiaries.

The White House has hinted at compromises that could bring conservatives onboard ahead of a full House vote, including moving up the Medicaid expansion phase out from 2020 to 2019.

Veterans’ Affairs Committee to Hold Hearing on Recruiting, Retaining Quality Providers

On March 22, the House Committee on Veterans’ Affairs will hold a hearing titled “Healthy hiring: Enabling the VA to recruit and retain quality providers.”

To view the hearing, click here.

Appropriations Committee Holds Hearing on Early Childhood Education Programs at HHS

On March 16, the House Committee on Appropriations Subcommittee on Labor, Health and Human Services, Education and Related Agencies held a hearing titled “Investing in the Future- Early Childhood Education Programs at the Department of Health and Human Services.”

The witnesses were as follows:

  • Jeanne Brooks-Gunn, Professor of Child Development and Education, Columbia University
  • Steven Dow, Executive Director, CAP Tulsa
  • Jennifer Garner, Trustee, Save the Children
  • Don Millican, Spokesman, George Kaiser Family Foundation

To view the hearing and read witness testimonies, click here.

Ways and Means Committee Holds Hearing on Maternal, Infant and Early Childhood Home Visiting Program

On March 15, the House Committee on Ways and Means Subcommittee on Human Resources held a hearing titled “Reauthorization of the Maternal, Infant, and Early Childhood Home Visiting (MIECHV) Program.”

The witnesses were as follows:

  • Beth Russell, Nurse Home Visitor, Penn Medicine Lancaster General
  • Rosa Valentin, Client, Penn Medicine Lancaster General
  • Eric Bellamy, Home Visiting Manager, Children’s Trust of South Carolina
  • Diana Rauner, President, The Ounce of Prevention Fund

To view the hearing and read witness testimonies, click here.

House GOP Announces Additional Health Care Reform Legislation

House Majority Leader Kevin McCarthy (R-CA) said the House will consider the following legislation this week to reform America’s health care system:

  • The Competitive Health Insurance Reform Act (H.R. 372): this bill amends the McCarran-Ferguson Act to declare that nothing in that act modifies, impairs or supersedes the operation of antitrust laws with respect to the business of health insurance, including the business of dental insurance. Prohibitions against unfair methods of competition apply to the business of health insurance without regard to whether the business is for profit.
  • The Small Business Health Fairness Act (H.R. 1101): this bill would create an exemption from state regulations so association health plans could work across state lines.
  • The Protecting Access to Care Act (H.R. 1215): this bill would establish provisions governing health care lawsuits where coverage for the care was provided or subsidized by the federal government, including through a subsidy or tax benefit.
  • The Self-Insurance Protection Act (H.R. 1304): this bill amends the Public Health Service Act, the Employee Retirement Income Security Act of 1974 (ERISA) and the Internal Revenue Code to exclude from the definition of “health insurance coverage” a stop-loss policy obtained by a self-insured health plan or a sponsor of a self-insured group health plan to reimburse the plan or sponsor for losses incurred in providing health benefits to plan participants in excess of a level set forth in the stop-loss policy.

The move toward association health plans has been supported by the National Federation of Independent Business, Chamber of Commerce and National Retail Federation (NRF). However, issuers and regulators have raised concerns about association health plans. In a February policy brief, America’s Health Insurance Plans (AHIP) expressed concern that exempting association health plans from state regulation would lead to market instability and higher premiums, eliminate consumer and patient protections and increase the potential for fraud and abuse.

The National Governors Association also previously opposed the idea of association health plans, saying they would raise premiums and threaten consumers. The group currently has no formal position.

Energy and Commerce to Hold Hearing on PDUFA

This Wednesday, the House Energy & Commerce Committee will hold a hearing on reauthorization of the Prescription Drug User Fee Act (PDUFA).

The hearing “on PDUFA will examine how this important user fee program has been implemented since it was reauthorized in 2012 as part of the Food and Drug Administration Safety and Innovation Act (FDASIA),” said E&C Chairman Michael Burgess. “I am encouraged to see that the proposed agreement between FDA and industry builds upon several key provisions in the 21st Century Cures Act, and will further streamline the development and review of innovative new drugs for patients.”

The PDUFA supports the review and regulation of innovative drug products and helps ensure patients receive timely access to safe and effective new therapies. The E&C Health Subcommittee recently held a hearing examining the Generic Drug User Fee Amendments (GDUFA) and the Biosimilar User Fee Act (BsUFA), both of which also expire in September 2017.

For more information, click here.

Senate, House Democrats Raise Concerns About Flu Preparedness

On March 13, a number of House and Senate Democrats wrote a letter to HHS Secretary Tom Price and CDC Acting Director Anne Schuchat regarding a report about a surge in human infections of deadly bird flu in China. The congressmen say several Trump administration actions might harm the country’s preparedness for handling a flu outbreak, including the absence of a nominee for CDC director and other HHS appointees who would handle public health issues.

The letter also raises concerns about President Trump’s questioning of vaccine safety and congressional GOP plans to cut the ACA’s Prevention and Public Health Fund. Congressmen want a series of questions answered by Price and Schuchat by March 27.

To see the letter, click here.


Senate HELP Committee to Hold Hearing on FDA User Fee Agreements

On March 21, the Senate HELP Committee will hold a hearing on FDA user fee agreements with witnesses from the agency’s drug, biologics and device centers. Witnesses will talk about how the user fee agreements benefit patients and how the FDA can continue to improve its performance.

The witnesses are as follows:

  • Janet Woodcock, MD, Director, Center for Drug Evaluation and Research, Food and Drug Administration
  • Peter Marks, PhD, Director, Center for Biologics Evaluation and Research, Food and Drug Administration
  • Jeffrey Shuren, MD, JD, Director, Center for Devices and Radiological Health, Food and Drug Administration

To view the hearing and read witness testimonies, click here.

Special Committee on Aging to Hold Hearing on Raising Grandchildren in the Opioid Crisis

On March 21, the Senate Special Committee on Aging will hold a hearing titled “Raising Grandchildren in the Opioid Crisis and Beyond.”

To view the hearing, click here.

Veterans’ Affairs Committee Holds Hearing on GAO’s High Risk List and the VHA

On March 15, the Senate Committee on Veterans’ Affairs held a hearing titled “GAO’s High Risk List and the Veterans Health Administration.”

The witnesses were as follows:

  • Debra Draper, PhD, Director of Health Care Team, the Government Accountability Office
  • Michael Missal, Inspector General, Department of Veterans Affairs
  • John Daigh, Jr., MD, CPA, Assistant Inspector General for Healthcare Inspections, Office of Inspector General
  • Carolyn Clancy, MD, Deputy Under Secretary for Health for Organizational Excellence, Department of Veterans Affairs
  • Jennifer Lee, MD, Deputy Under Secretary for Health for Policy and Services, Department of Veterans Affairs
  • Amy Parker, Executive Director of Operations, Office of Management, Department of Veterans Affairs

To view the hearing and read witness testimonies, click here.

Top Democrats Criticize HHS Plan to Fast-Track New Medicaid Waivers

Sen. Ron Wyden (D-OR) and Rep. Frank Pallone, Jr. (D-NJ)—ranking members of the Senate Finance Committee and House Energy and Commerce Committee, respectively—wrote a letter to HHS Secretary Tom Price criticizing the HHS plan to fast-track approvals of waivers looking to test different ways of delivering Medicaid funds.

In the letter, the ranking members said HHS must not approve “waivers based on ideological and misguided policies that are not in line with Congress’ longstanding intent for the Medicaid program.” Work requirements and cost-sharing, among other ideological proposals, are counterproductive in the long term and hurt Medicaid families, who generally live on a budget of less than $15,000 per year, the Democrats said.

Instead, waiver proposals must be judged on the Centers for Medicare and Medicaid Services’ stated principles: to strengthen coverage, expand access to providers, improve health outcomes and increase the efficiency and quality of care for individuals, Wyden and Pallone said.

The Democrats wrote the letter after Price and CMS Administrator Seema Verma sent their own letter to state governors, describing the implementation and interpretation of federal rules governing Medicaid as “rigid and outdated” and described some of their plans to change how the federal program works.

Price and Verma said that the states are in the best position to assess the needs of their Medicaid-eligible residents and that the current Medicaid framework often fails to properly account for demographic and geographic considerations, as well as health system variables that differ from state to state.

Sen. Wyden Introduces Drug-Price Transparency Bill

On March 15, Sen. Ron Wyden (D-OR) introduced a drug-price transparency bill that would require pharmacy benefit managers (PBMs) in Medicaid to disclose their aggregate rebates provided by drug manufacturers, as well as the amount of those rebates that are passed on to health plans, therefore lowering prices for people who need prescription drugs.

The bill—the Creating Transparency to Have Drug Rebates Unlocked (C-THRU) Act—would direct CMS to post on its website the aggregate amount of rebates that pharmacy benefit managers receive from drug makers and the proportion of those rebates that go to Medicare Part D beneficiaries. After two years of public reporting, PBMs would have to pass a minimum percentage of rebates and discounts to health plans, which would lower premiums or other beneficiary cost-sharing in Part D.

Under current law, beneficiary cost-sharing is based on drug list prices, which CMS says speeds them into catastrophic coverage, at which point taxpayers pick up 80 percent of the tab. The bill would change that by basing cost-sharing on discounted drug prices.

PBM executives dispute the assertion that plans and PBMs favor high-priced drugs.

Senate Confirms Seema Verma as CMS Administrator

On March 13, the Senate confirmed Seema Verma by a 55-43 vote to lead CMS. As an Indiana-based health consultant, Verma gained national recognition by working with GOP states to add conservative elements to their Obamacare Medicaid expansion programs. Verma worked for then-Gov. Mike Pence when he accepted that major piece of Obamacare with a conservative twist.

Apart from overseeing changes to Obamacare, Verma will be tasked with running Medicare and Medicaid, two health entitlement programs that collectively cover nearly 130 million people. With Verma at the helm, CMS is expected to be much more willing to grant conservative reforms to red states that want to revamp their Medicaid programs. The House ACA repeal bill, if it becomes law, would change Medicaid from an entitlement to a capped federal payment system.

She will also oversee major changes to Medicare payment policy under MACRA, a 2015 law that was passed with strong bipartisan support.

Verma is the first CMS administrator to gain Senate confirmation since Marilyn Tavenner in May 2013. She served about two years and was replaced by Andy Slavitt, who held the position on an acting basis until the end of the Obama administration.

GOP Senate Critics of Obamacare Repeal Bill Visit White House

A group of Senate conservatives visited the White House on March 13 to discuss the Obamacare repeal bill. Members of the Republican Steering Committee, which is chaired by Sen. Mike Lee (UT), discussed Obamacare strategy along with Sens. Rand Paul (KY), James Lankford (OK) and Ted Cruz (TX). Several of them say the bill as written cannot pass the Senate due to concerns over the bill’s tax credits and how quickly the GOP is trying to push the bill through Congress this month.

Congressmen Question FDA’s Approval of Drug to Treat Duchenne Muscular Dystrophy

In a letter to the FDA, Sen. Bernie Sanders (I-VT) and Rep. Elijah Cummings (D-MD)—the House Oversight ranking member—requested details about FDA’s approval of a brand-name version of the more than 20-year-old drug deflazacort. The brand name version—Emflaza—is used to treat patients with Duchenne muscular dystrophy (DMD), a rare genetic disorder that causes progressive muscle deterioration and weakness.

FDA fast-tracked the drug’s approval and gave it orphan drug status. The congressmen asked the agency to explain the unusual circumstances used to approve Emflaza. The manufacturer Marathon Pharmaceuticals announced it will sell the drug for the high price of $89,000 a year.

“The high price was especially troubling in light of the incredibly lucrative benefits FDA has granted to Marathon, and the limited amount of innovative research the company appears to have conducted to develop Emflaza,” Sanders and Cummings wrote to FDA Acting Commissioner Stephen Ostroff.

Marathon delayed the launch in response to outrage from patients and lawmakers over the price. The benefits to Marathon include granting Marathon a monopoly for seven years as an orphan drug. It also received a pediatric priority review voucher that is potentially worth millions of dollars to use or sell to another pharmaceutical company.

For more information, click here.

2. Administration

President Trump Releases First Budget Blueprint

On March 16, President Donald Trump released his first budget blueprint, “America First: A budget blueprint to make America great again.” The plan sets HHS’s budget at $69 billion—a decline of roughly $15 billion from 2017—and proposes cuts across various agencies, including a $6 billion cut to the NIH and a $403 million cut in health workforce training programs. Overall, the blueprint proposes to cut HHS spending by 18 percent for fiscal year 2018.

The budget was panned by most in Congress.

Trump also wants to double the FDA user fees paid by medical industry from $1 billion to $2 billion. To offset that, the budget “includes a package of administrative actions designed to achieve regulatory efficiency and speed the development of safe and effective medical products,” according to the document.

The president’s proposed fiscal 2018 budget calls for eliminating programs that are duplicative or have a limited impact on public health and well-being across HHS, while allowing the agency to continue supporting priority activities. The budget document says this reflects “a new and sustainable approach to long-term fiscal stability across the Federal Government.”

The budget document places Medicare and Medicaid program integrity as a high priority, adding that curbing waste, fraud and abuse in those programs is an urgent public health issue, along with stemming prescription drug overdoses.

Trump’s budget proposes $751 million in discretionary funding in fiscal 2018 for the Health Care Fraud and Abuse Control program—a $70 million increase compared to 2017 funding. The program also receives mandatory funding, but it is not clear from the budget how that would be affected. The budget touts the fraud-control program for helping shift CMS’s program integrity activities away from “pay and chase” toward preventing fraudulent or improper payments. It also highlights the program’s return on investment, stating that $5 has been returned for every $1 spent between 2014 and 2016.

The HHS Office of Inspector General’s annual reviews of the program show the average return on investment decreasing for the last few years, however. The rolling three-year average from 2011-2013 was $8.10 returned for every dollar spent, from 2012-2014 the average return was $7.70 for every dollar spent, and from 2013-2015, the average return was $6.10 for every dollar spent.

In addition, the budget would invest in mental health activities “awarded to high-performing entities” and focus on priority areas such as suicide prevention, serious mental illness and children’s mental health.

Health profession and nurse training programs lose $403 million. The budget says these programs “lack evidence that they significantly improve the Nation’s health workforce.” However, the budget would continue to fund scholarships and loan repayment programs in exchange for work in a health shortage area.

The budget cuts $5.8 billion from the National Institutes of Health. The proposed budget does not address changes to mandatory spending, which the Trump administration plans to include in a more detailed budget plan in May.

President Trump Announces FDA Commissioner Nominee Scott Gottlieb

On March 10, President Donald Trump nominated Scott Gottlieb for FDA commissioner. Trump’s pick did not prompt the strong partisan reactions that was the case with many of his other nominees.

Senate HELP Chairman Lamar Alexander said Gottlieb “has impressive qualifications as both a physician and in his previous roles at FDA,” and that he looks forward to hearing more about Gottlieb’s plans for the agency.

The committee’s ranking member, Patty Murray, said she has some initial concerns about how Gottlieb’s views could impact FDA approval—she has fought to ensure that “medical expertise—not ideology—governs FDA’s decision-making on critical products.” Murray said she will closely review Gottlieb’s relationships with drug companies and investment firms to see whether conflicts of interest could impact his decisions as head of the FDA.

Some players who may be more likely to give Gottlieb a hard time during his confirmation process have not yet weighed in, including Sens. Bernie Sanders and Elizabeth Warren, so it may take a few days before it is clear just how smoothly his confirmation will proceed.

If confirmed, Gottlieb will play a major role in the Trump administration’s efforts to speed up regulatory approval of drugs.

CMS, FDA Ordered to Craft Plans to Improve Efficiency

The White House ordered federal agencies to send reorganization plans within 180 days to the Office of Management and Budget (OMB), which will use them to craft a master plan to reorganize the federal government and scrap unnecessary agencies and functions. The president’s executive order, issued March 13, also comes as FDA and the U.S. Department of Agriculture face renewed pressure from the Government Accountability Office to eliminate duplicative food safety functions.

The executive order also directs the OMB chief to gather public comment for further suggestions. The director is ordered to give the president a plan 180 days after OMB receives agency plans.

Newly confirmed CMS Administrator Seema Verma and FDA Commissioner-nominee Scott Gottlieb, if confirmed, face immediate orders from the White House to craft plans to reorganize their agencies to improve efficiency, shift functions to the state or local governments, and merge or shut down any functions for which costs are not justified by public benefits or are redundant with work of other agencies.

CMS Releases Report on 2017 Enrollment Activity

On March 15, CMS released a report summarizing enrollment activity in the individual marketplaces during the 2017 Open Enrollment Period (2017 OEP) for all 50 states and the District of Columbia. Approximately 12.2 million consumers selected or were automatically re-enrolled in marketplace plans during the 2017 OEP. An accompanying public use file includes detailed state-level data on plan selections as well as demographic characteristics of consumers. The methodology for the report and detailed metric definitions are included in the public use file.

To see the report, click here.

CMS to Host Live Open Payments Q&A Session on the Open Payments Data Correction Period

On April 12, CMS will hold a live Question and Answer (Q&A) session. The event will take place from 1:00 p.m. to 2:00 p.m. (ET). The session will open with a brief presentation. The Open Payments team will then be available to respond to questions about the 2016 Open Payments Program Year.

To ask a question: Go online and register here by 12:45 p.m. (ET).

To listen only: Call 1-844-396-8222 and enter the meeting number (907 076 877) when prompted.

CMS requests that all working press inquiries related to this call and the Open Payments program should be sent to the CMS press office mailbox at

You can submit your questions in an email to the Help Desk at or call 1-855-326-8366, Monday through Friday, from 8:30 a.m. to 7:30 p.m. (ET), excluding federal holidays.

HHS Urges States to Apply for Section 1332 Waivers

On March 13, HHS Secretary Tom Price sent governors a letter promoting Section 1332 waivers, which Obamacare allows to go into effect as early as this year. The letter urges states to apply for the waivers that would allow them to change major parts of the law while meeting requirements on coverage levels and affordability.

In a statement, Price suggested federal officials would be receptive to waiver proposals that set up high-risk pools or state-operated reinsurance programs to improve market stability. An Alaskan proposal along these lines, designed to keep its Obamacare market from collapsing this year, is pending.

Republicans have suggested that under the Trump administration, the waivers may become a tool that allows red states to drastically alter how Obamacare operates. In the letter, however, Price does not suggest HHS will revise guidance from the Obama administration that restricted states’ ability to get such waivers approved.

Thus far, only Hawaii has secured approval for a 1332 waiver that makes minor changes to Obamacare. Alaska’s pending proposal relates to a $55 million fund the state created to prop up its lone Obamacare exchange insurer. The Alaska proposal asks the federal government to cover a significant share of the cost of that program, which is designed to contain premium spikes because of high-cost enrollees.

For more information, click here.

Panel to FDA Determines Risks of Opioid Designed to Reduce Abuse Outweigh Benefits

An independent panel to the FDA concluded on March 14 that the benefits of Endo International Plc’s long-acting opioid painkiller no longer outweigh its risks. The drug, OPANA ER, is an opioid reformulated to deter abuse. At issue during the meeting was whether the drug successfully decreased opioid abuse or actually made matters worse by producing excessively harmful side effects.

Data shows that while nasal abuse has reduced with the reformulation, a shift in patterns of abuse occurred as users increasingly ingest the drug via injection. This has led to reports of HIV transmission and a rare but serious blood disorder that may be caused by the drug’s inactive ingredients.

3. State Activities

Arizona: Medicaid Expansion Suit Dealt Another Blow by the Courts

GOP lawmakers in the Arizona Legislature sued over Medicaid expansion, arguing that the hospital assessment being used to cover the state’s share of cost was illegal because it did not pass with a two-thirds majority—the threshold necessary for tax increases. But the Arizona Court of Appeals ruled last week that the Legislature passed the hospital fee legally.

California: Lt. Gov. Newsom Advocates ‘Healthy San Francisco’ to Preserve Californians’ Access to Care

California Lt. Gov. Gavin Newsom, the frontrunner in the governor’s race, is touting Healthy San Francisco—the universal care program he marshaled into effect when he was the city’s mayor—as a potential solution for California. Newsom has expressed support for a Medicare-for-all system and hopes the 2007 ordinance will serve as a model to try to preserve access to care for the 5 million Californians estimated to lose coverage under the GOP repeal and replace bill. Meanwhile, a bill to create a single payer system was recently introduced in the state Legislature, and Los Angeles is considering how to create its own brand of universal care. The state insurance commissioner, Dave Jones, supports the single payer plan but said it would be tough to develop because of funding.

Florida: Rep. Brodeur Outlines Budget Reductions Affecting Florida Nursing Homes

Florida Rep. Jason Brodeur, chairman of the House Health Care Appropriations Subcommittee on Health and Human Services, outlined potential budget reductions the chamber may consider this session, including a proposed $75 million cut to Florida nursing homes. The Florida Health Care Association, the state’s largest nursing home association, said the proposed cuts are a “significant threat to Florida’s long term care sector.” Although no written details were released, the House also is proposing to reduce general revenue funding to hospitals by as much as $303 million in the coming year.

Minnesota: House and Senate Pass Bills to Create State-Funded Reinsurance Program

The Minnesota House and Senate have passed separate bills that would create a state-funded reinsurance program to stabilize the individual market, similar to what Alaska did last year to prevent its Obamacare exchange from collapsing. The House bill sets up a $380 million fund and the Senate’s program would be $600 million. The bills will need to go to conference because of differences in amounts, as well as how the program would be funded. The legislation also comes as HHS Secretary Tom Price urges states to seek Obamacare waivers that set up reinsurance programs or state-run high risk pools, to help stabilize markets.

New York: State Assembly Proposes Contingency Funding for Planned Parenthood

As Republicans in Washington seek to defund Planned Parenthood, the Democrats who control the New York Assembly are looking to create a rainy day fund for the organization in anticipation of federal cuts. The state Assembly’s one-house budget proposal unveiled last week includes a $20 million contingency appropriation for Planned Parenthood in the event that federal funds run dry.

4. Regulations Open for Comment

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.

CMS Announces RFI for Input on Improving Pediatric Care

CMS announced Feb. 27 a Request for Information (RFI) seeking input on approaches to improve pediatric care, specifically to improve the quality and reduce the cost of care for children and youth enrolled in Medicaid and the Children’s Health Insurance Program (CHIP). CMS is also exploring concepts that encourage pediatric providers to collaborate with health-related social service providers at the state, tribal and local levels and share accountability for health outcomes for children and youth enrolled in Medicaid and CHIP.

CMS is asking stakeholders to submit comments via email to by 11:59 p.m. on March 28, 2017.

For more information about the RFI, visit the CMS Innovation Center website.

CMS Announces RFI for Input on Improving Pediatric Care

CMS announced Feb. 27 a Request for Information (RFI) seeking input on approaches to improve pediatric care, specifically to improve the quality and reduce the cost of care for children and youth enrolled in Medicaid and the Children’s Health Insurance Program (CHIP). CMS is also exploring concepts that encourage pediatric providers to collaborate with health-related social service providers at the state, tribal and local levels and share accountability for health outcomes for children and youth enrolled in Medicaid and CHIP.

CMS is asking stakeholders to submit comments via email to by 11:59 p.m. on March 28, 2017.

For more information about the RFI, visit the CMS Innovation Center website.

FDA Considers Establishing New Office of Patient Affairs

The FDA is considering establishing a new Office of Patient Affairs that would centralize its work on patient involvement in the review and approval of drugs and medical devices, according to a March 14 notice in the Federal Register.

Comments on the new office are due by June 12, 2017.

FDA Proposes 1,000 Medical Devices to Exempt From Premarket Notification

On March 14, FDA took one of its first actions to begin implementing the 21st Century Cures Act, by proposing more than 1,000 medical devices it will exempt or partially exempt from the premarket review process. The devices on the list are sufficiently well understood and do not present risks that require premarket notification to provide a reasonable assurance of safety and effectiveness, FDA said. The agency will finalize the list after a 60-day public comment period. Comments are due by May 15, 2017.

FDA Extends Comment Period on Biosimilar Interchangeability Guidance

FDA is extending the public comment period for its draft guidance outlining how biosimilar sponsors can demonstrate that their products are interchangeable with other biologics, following extension requests from top trade associations.

The agency laid out in a January 2017 draft guidance its first attempt at codifying the requirements that sponsors must satisfy to demonstrate interchangeability. The agency said it would make case-by-case determinations of interchangeability, but indicated it would require studies measuring the impact of switching on clinical pharmacokinetics and pharmacodynamics.

The Biotechnology Innovation Organization (BIO), Pharmaceutical Research and Manufacturers of America and Covington & Burling all requested comment period extensions, according to documents posted on

The comment period, which was set to close on March 20, will be extended 60 days until May 19.

5. Other

Four Former FDA Commissioners Argue Against Drug Importation

On March 16, four former FDA commissioners wrote a letter to Congress arguing that changing U.S. law to allow the importation of medicines from other countries will not address the high prices of pharmaceuticals and is likely to harm patients.

While the bipartisan group acknowledged its internal disagreement about the right way to address drug pricing in the U.S., it does agree that importation is not the answer, arguing the idea “places false hope in measures that will place patients who need treatment at risk and jeopardize public health.”

Permitting importation “could lead to a host of unintended consequences and undesirable effects, including serious harm stemming from the use of adulterated, substandard or counterfeit drugs. It could also undermine American confidence in what has proven to be a highly successful system for assuring drug safety,” Robert Califf, Margaret Hamburg, Mark McClellan and Andrew Von Eschenbach wrote.

Their letter comes a few weeks after House and Senate Democrats proposed new drug importation legislation as a way to address high prescription drug costs. The idea has received support from President Donald Trump and some Republicans.

The FDA lacks the resources needed to oversee a major drug importation program, the commissioners said, adding that there are far more urgent priorities for FDA reform that would offer greater benefits to Americans. Further, studies have estimated that importation would have only a small, incremental effect on cost, and these savings may not be passed on to patients.

In their letter, the commissioners said Congress should consider other approaches to addressing problems with current drug pricing.

Health Nonprofits Announce Merger Plans

The Institute for Healthcare Improvement and the National Patient Safety Foundation will merge effective May 1, with the new combined organization to be led by IHI President and CEO Derek Feeley. Under the planned merger, existing patient safety teams within each organization will be combined and led by NPSF President Tejal Gandhi. The groups also released a new “call to action” paper about the need to have a coordinated public health response to improve patient safety.

For more information, click here.

6. Reports

GAO Examines FDA Oversight on the Use of Antibiotics in Food Animals

On March 16, GAO released a report on FDA’s oversight of antibiotic use in food animals. GAO found gaps in FDA’s oversight and gaps in USDA’s and HHS’s data collection, among other things. For example, they lack farm-specific data, do not have metrics to assess their actions to manage antibiotics use and have not conducted on-farm investigations during foodborne illness outbreaks. GAO made a series of recommendations to address these concerns.

Antibiotic-resistant bacteria are one of the biggest threats to global health, sickening an estimated 2 million people in the U.S. every year. There is strong evidence that some resistance in bacteria is caused by antibiotic use in food animals.

GAO Examines Effectiveness of HHS Efforts to Enhance Use of Electronic Health Records

On March 15, GAO released a report on the effectiveness of HHS efforts to enhance patient access to and use of electronic health records. Health care providers that participated in HHS’s Medicare Electronic Health Record Incentive Program offered almost 9 out of 10 patients the ability to access their health information online.

However, GAO found that few of these patients accessed their records online and that HHS does not know how effective its efforts to increase online access have been. GAO recommended HHS develop performance measures to assess the effectiveness of these efforts.

GAO Releases Testimony on VA’s Limited Progress to Overturn High-Risk Designation

On March 15, GAO released testimony on how the Department of Veterans Affairs remains on its High-Risk List. In 2015, GAO added the VA to the list over concerns about the timeliness, quality and safety of veterans’ health care. The VA has so far partially met two of GAO’s five criteria for getting off the list, and more than 100 recommendations remain open. Those recommendations reflect areas of concern including: ambiguous policies and inconsistent processes; inadequate oversight and accountability; information technology challenges; inadequate training for VA staff; and unclear resource needs and allocation priorities.

CBO Releases Cost Estimate for the American Health Care Act

On March 13, the Congressional Budget Office (CBO) released its estimate that the House GOP Proposal would reduce the deficit by $337 billion by 2026. The largest savings would come from reductions in outlays for Medicaid and from the elimination of the ACA’s subsidies for nongroup health insurance. The largest costs would come from repealing many of the changes the ACA made to the Internal Revenue Code and from the establishment of a new tax credit for health insurance.

However, CBO also estimates about 24 million people would lose coverage over 10 years under the law—with 14 million losing coverage in the next year alone. CBO estimates the bill would cut $880 billion from Medicaid over a decade.

The average subsidy under the GOP plan would be about 60 percent of the average subsidy under the Affordable Care Act.

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

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