Apr 3, 2017
Washington Healthcare Update
This Week: House moderate and conservative Republicans tried talking to each other but are unable to agree on how to raise “repeal and replace” from the ashes… Drug prices begin to take the focus again… Others move on to focusing on CHIP and other health issues.
3. State Activities
4. Regulations Open for Comment
House and Senate Democrats Introduce Legislation to Stop Rising Drug Prices
On March 29, Democrats in the House and Senate introduced companion bills
to address drug prices. The bill was introduced in the Senate by 15
Democrats including Sens. Al Franken (D-MN), Dick Durbin (D-IL) and
Elizabeth Warren (D-MA). Bernie Sanders (I-VT) also signed on. A companion
bill was introduced in the House by Reps. Elijah Cummings (D-MD), Janice
Schakowsky (D-IL), Peter Welch (D-VT) and Rosa DeLauro (D-CT).
The legislation includes a variety of policies from government price
controls, drug rebates, disclosure requirements for drug makers’ research
and marketing spending, cost-sharing caps, exclusivity cuts and drug
Transparency is one of the four titles in the bill. Drug companies would be
forced to report, by product, their costs for research and development,
manufacturing and acquisitions, and HHS would publicly post that
information. Companies would also have to report other information, such as
federal investments and revenues. Another transparency section would
require independent charity assistance programs to disclose the amount of
patient assistance provided for drugs that are donated to those charities.
CMS would be directed to negotiate drug prices, and expensive drugs would
be prioritized. The HHS inspector general would monitor drug prices for
spikes and take steps to prevent price gouging. The bill would also speed
the closing of the Part D coverage gap by two years, and it would let
wholesalers and pharmacies import drugs made at FDA-inspected facilities,
starting in Canada. Drug companies would have to provide rebates on drugs
taken by dual-eligible beneficiaries for which plans receive low-income
The bill would limit how much plans can make individuals shoulder the cost
of drugs. Cost sharing would be capped at $250 a month for each individual
and $500 a month for families in either qualified health plans or employer
To spur the development of antibiotics for difficult-to-treat infections,
the bill would create a $2 billion fund at the National Institutes of
Health for companies that develop antibiotics that treat serious and
life-threatening bacterial infections. To get the reward, companies would
have to sell products at a “reasonable price” and share clinical data.
The bill would publicly fund clinical trials by creating a clinical
research center at NIH, as well.
Lastly, the legislation reduces the exclusivity periods that drug companies
Pence Casts Tie-Breaking Vote to Roll Back Planned Parenthood Protections
On March 30, Vice President Mike Pence broke a 50-50 tie in the Senate to
roll back an Obama administration regulation and allow states to withhold
federal family planning funding from Planned Parenthood and other abortion
Republican Sen. Johnny Isakson (GA), who is recovering from back surgery,
and the vice president were summoned to help pass the measure. All the
Senate Democrats opposed the rollback, along with Republican Sens. Susan
Collins (ME) and Lisa Murkowski (AL), who have long fought against blocking
funding for the family planning organization.
The bill reverses an HHS regulation, finalized by the Obama administration
in December, which prohibited states from restricting Title X family
planning grants to Planned Parenthood and other abortion providers. Title X
grants cover contraception, STD screenings and treatments but cannot be
used to pay for abortion services.
Thirteen Republican-controlled states restricted the family planning grants
to Planned Parenthood before the Obama administration issued the
regulation. Federal funding for abortion is already prohibited under the
Hyde Amendment. Republicans say the bill is not an attack on Planned
Parenthood and is intended to uphold states’ rights.
Republican Sens. Introduce Legislation for Temporary Obamacare Relief
On March 29, Tennessee Sens. Lamar Alexander, chairman of the Senate
Health, Education, Labor and Pension Committee, and Bob Corker
designed to help Obamacare customers who have no insurance plans to choose
from on the health insurance exchanges.
Roughly 40,000 residents of the Knoxville area are in this predicament
after the sole insurer selling exchange plans in that market, Humana,
announced that it is pulling out of the market for 2018. Roughly one-third
of counties nationwide currently have just one insurer selling plans on the
The Alexander-Corker legislation would allow individuals with no exchange
options to use their subsidies to help purchase coverage off of the
exchange—currently, subsidies can only be applied to health plans
purchased through state and federal health insurance marketplaces set up
under the law. It would also waive the individual mandate penalty
for individuals in that situation.
Senate Democrats Ask Trump to Rescind Executive Order for ACA Repeal
On March 29, 44 Senate Democrats
the Trump administration to abandon all efforts to repeal the Affordable
Care Act and withdraw its January 20 executive order to unravel the law.
The letter stated that rescinding the order—in which President Donald Trump
called on his administration to undo as much of the law as possible but
provided few specifics—could serve as a first step toward bipartisanship on
“While we would welcome your sincere interest in bipartisan work to improve
quality, lower costs, and expand coverage, we are concerned by your recent
statement indicating it would be a good thing to make the ACA ‘explode,’
which would hurt millions of Americans,” the Democrats wrote to Trump.
“Instead, we urge you to use your executive authority to support a stable,
competitive insurance marketplace.”
Moderate Democratic Sens. Joe Manchin (WV), Jon Tester (MT) and Heidi
Heitkamp (ND), as well as Independent Angus King (ME), did not sign the
Sen. McCaskill Launches Investigation into Opioid Manufacturers’ Sales
Sen. Claire McCaskill (D-MO) has
launched an investigation
into whether the business practices of the country’s top-five opioid
manufacturers contributed to the overutilization of the drugs and the
resulting addiction epidemic.
McCaskill sent letters to Purdue, Johnson & Johnson, Insys, Mylan and
Depomed on March 28, asking for information related to the sales, marketing
and education strategies these companies used to promote opioid use.
“This epidemic is the direct result of a calculated sales and marketing
strategy major opioid manufacturers have allegedly pursued over the past 20
years to expand their market share and increase dependency on powerful—and
often deadly—painkillers,” McCaskill wrote. Many opioid makers have faced
legal penalties for these actions, but McCaskill is concerned drug
companies are still inappropriately marketing opioids today.
McCaskill is seeking marketing and business plans, including those for
consumer and physician marketing developed since January 2012. She also
wants to know what quotas the companies put in place for sales
representatives who recruited physicians to speak favorably about the
drugs. And she want details on funding the companies contributed to
third-party pain advocacy groups.
The investigation comes as the White House
issued an executive order
that aims to conduct a review of the opioid crisis and take new action to
FDA Nominee to Recuse Himself From Decisions on Certain Companies
President Donald Trump’s nominee to lead the FDA, Scott Gottlieb, will
recuse himself for one year from agency decisions on more than 20
companies, including GlaxoSmithKline and Bristol-Myers Squibb. This
announcement came as the Senate HELP Committee announced it
will hold a hearing
on Gottlieb’s nomination on April 5.
Gottlieb is a board member or adviser to various drug companies, and he
funds the industry through roles at a venture capital firm, New Enterprise
Associates, and an investment bank, T.R Winston & Company. His close
ties to the drug industry will likely draw intense scrutiny during his
confirmation process, particularly from Senate Democrats.
For instance, according to financial disclosures, Gottlieb indicated
GlaxoSmithKline has paid him more than $87,000 for consulting work since
2016. In 2015, he received nearly $200,000 in payments from eight
pharmaceutical companies, according to a federal database tracking
drug industry payments.
Gottlieb earned more than $3 million between 2016 and March 1, according to
disclosure forms filed with the Office of Government Ethics. That includes
a $1.85 million retainer bonus from T.R. Winston. He was also paid $210,916
by the conservative American Enterprise Institute.
White House Executive Order Calls for Agencies to Act on Opioid Crisis
The White House recently released an
establishing “the President’s Commission on Combating Drug Addiction and
the Opioid Crisis.” The order instructs four federal agencies to conduct a
review of the opioid crisis and recommend new action within 90 days.
Under the order, President Donald Trump would create a high-level
commission for “combating opioid abuse, addiction and overdose.” The
commission would include Attorney General Jeff Sessions, HHS Secretary Tom
Price, VA Secretary David Shulkin, Defense Secretary James Mattis and as
many as five other stakeholders who are not federal employees.
New Jersey Gov. Chris Christie, a Trump ally who has made the opioid crisis
a policy priority, will chair the commission.
The draft order calls for the participating agencies to:
- Review the funding and availability of treatment;
- Determine best practices for prevention and recovery;
- Evaluate federal programs and the U.S. health system to identify
regulatory barriers or ineffective initiatives; and
- Recommend changes to federal criminal law or other processes.
The commission would review the agencies’ findings and issue
recommendations to agency heads, who would then issue their own directives.
Trump Administration Lays Out Major Cuts to Health Agencies
Overall, the Trump administration has proposed $18 billion in cuts across
more than 20 federal departments for the current fiscal year,
a proposal sent to appropriators
The proposed NIH cut is one of the three largest reductions to individual
agencies spelled out in the document—but the cuts are unlikely to be
implemented. House appropriators have said that it is too late for the
Trump administration to request drastic cuts to agencies this year.
The proposed reductions would come from long-settled discretionary spending
bills and could prompt a major showdown with only a month left before the
deadline to keep the government funded.
The NIH cuts would include a $1.18 billion reduction in research grants and
the elimination of $50 million in spending on new
Institutional Development Award (IDeA) grants. The White House also would cut more than $300 million from the CDC, with
about $100 million coming from its HIV/AIDS programs and the remainder
coming from various public health research programs, initiatives and
The White House also is calling for a $50 million cut to the Agency for
Healthcare Research and Quality (AHRQ)—roughly 15 percent of the agency’s
budget—by reducing new grants and a $40 million cut to FDA through staffing
The Republican chair of the House Appropriations Labor-HHS subcommittee
said he will not accept the proposed cuts to the NIH and CDC. Chairman Tom
Cole said during a hearing that reducing funding to the NIH and CDC would
leave the nation less secure, and that he will push for major revisions to
the budget plan.
HHS Reportedly Working on Drug Pricing Plan
HHS Secretary Tom Price told House appropriators the agency is partnering
with the White House on a strategy for tackling drug pricing reform,
emphasizing Trump’s commitment to bringing down the cost of
pharmaceuticals. However, he offered no specifics on how the administration
might accomplish that. Price has yet to endorse permitting Medicare to
negotiate drug prices or the importation of medicines from other countries,
two ideas that Trump has floated as potential solutions for bringing prices
CMS Delays Reporting Deadline for New Lab Fee Schedule
CMS delayed by 60 days the deadline for certain laboratories to report
private payer data for the new lab fee schedule, the agency announced March
30. CMS delayed the deadline because many labs won’t be able to give the
agency a complete set of information by March 31. The American Clinical
Laboratory Association is pleased with CMS’s decision.
For more information,
CMS Issues Final Rule on Medicaid Disproportionate Share Hospital (DSH)
On March 30, CMS issued a final rule clarifying federal requirements
regarding the treatment of third-party payers in determining the
hospital-specific Medicaid DSH payment limit, which is set by statute as a
hospital’s “uncompensated costs” incurred in providing hospital services to
Medicaid and uninsured patients. The final rule makes clearer the agency’s
existing policy that uncompensated costs include only those costs for
Medicaid-eligible individuals that remain after accounting for all payments
received by or on behalf of Medicaid-eligible individuals, including
Medicare and other third-party payments. This is consistent with the
statutory requirements governing Medicaid DSH and applicable limits.
To see the final rule,
For more information,
3. State Activities
Arkansas: Lawmakers Vote to Continue Funding Medicaid Expansion Model
Arkansas state lawmakers have voted to keep funding the state’s Medicaid
expansion model after the legislation initially fell short of the necessary
votes in the state House and Senate. The Arkansas Legislature has to
annually appropriate funding for Medicaid expansion with a three-fourths
majority of each chamber. Gov. Asa Hutchinson plans to file a new request
to the federal government to make a handful of conservative changes to its
program, including a work requirement and limiting eligibility to those
with incomes up to the federal poverty line, instead of 138 percent of the
FPL. He will call a special session for lawmakers to consider the proposed
Iowa: New Managed Care Initiative Could Cost Much More Than Expected
Iowa’s decision to help insurance companies stem financial losses from the
state’s new Medicaid managed care program could end up costing the federal
government $225 million, on top of $10 million for the state. The new
managed care initiative, which has been highly contested, began last April.
The managed care companies involved say they have been spending more money
because Medicaid enrollees have utilized more medical services than
expected. Gov. Terry Branstad’s office continues to argue that the shift to
managed care is beneficial to the state both in terms of budget savings and
care for low-income enrollees.
Kansas: Kansas Governor Vetoes Medicaid Expansion
On March 30, Kansas Gov. Sam Brownback vetoed a bill to accept Obamacare’s
Medicaid expansion, saying the legislation “burdens the state budget with
unrestrainable entitlement costs.”
The legislation, guided by GOP legislators, passed the Kansas state House
and Senate by overwhelming margins. But it is not clear whether they can
override Brownback’s veto. The bill was just a few votes short of a
veto-proof majority in each chamber.
Brownback said in a veto message that it was unwise to expand Medicaid when
Republicans are still trying to overhaul Obamacare. He also said he blocked
the legislation because it increased Medicaid funding for Planned
Minnesota: Minnesota Approves Obamacare Stabilization Program
On March 30, the Minnesota legislature passed legislation to set up a
reinsurance program that would spend $271 million each year in 2018 and
2019, similar to what Alaska created last year to prevent its Obamacare
exchange from collapsing. Minnesota’s individual market saw skyrocketing
premiums this year, prompting the state’s Democratic governor to issue a
rare criticism of Obamacare at the height of the presidential campaign.
The new Minnesota program, which would reimburse insurers for their
most expensive patients, would be funded through state dollars and an
existing health care fund. To establish the program, Minnesota would also
need the Trump administration to approve an Obamacare waiver that lets
states enact their own health reforms. If approved, the federal government
would potentially pick up most of the program’s cost.
Gov. Mark Dayton will announce today whether he plans to sign or veto the
legislation. HHS Secretary Tom Price has encouraged states to apply for
1332 waivers to set up reinsurance programs or high-risk pools to stabilize
Nevada: Nevadans Working to Decrease Insulin Prices
Increasing insulin prices have prompted Nevadans to try to take on the drug
industry. Democratic lawmakers, union leaders and other supporters of
Senate Bill 265
want to rein in prices by mandating that pharmaceutical companies reimburse
Nevada patients for insulin costs that go above the highest price paid in
other developed counties and if the price increases are higher than
inflation would warrant. In addition to requiring manufacturers to disclose
the research costs of making drugs for diabetics, it would force them to
give government health agencies and insurers a 90-day notice before
increasing prices above the previous year’s inflation rate.
4. Regulations Open for Comment
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,
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
On March 14, FDA took one of its first actions to begin implementing the
21st Century Cures Act, by
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
outlining how biosimilar sponsors can demonstrate that their products are
interchangeable with other biologics, following extension requests from top
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
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.
CMS Announces Pediatric Care Improvement Request for Information Extension
On March 28, CMS announced that it is extending the deadline for comments
on the request for information (RFI) on approaches to improve pediatric
care announced on Feb. 28, 2017. The deadline for receipt of comments has
been extended to April 7, 2017 at 11:59 p.m.
Through this RFI, CMS is specifically seeking input on approaches 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).
Furthermore, CMS is 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.
Comments and questions can be submitted via email to
by 11:59 p.m. on April 7, 2017.
For additional information about the RFI, please visit the
CMS Innovation Center website.
GAO Releases Review of PPACA’s Financial Statement Audit
On March 31, GAO released its review of the Patient-Centered Outcomes
Research Institute’s (PCORI) fiscal year 2016 financial statement audit.
PCORI was created in 2010 by the Patient Protection and Affordable Care Act
(PPACA) as a federally funded, nonprofit corporation. According to PPACA,
PCORI’s purpose is to assist patients, clinicians, purchasers, and
policymakers in making informed health decisions by advancing the quality
and relevance of evidence concerning the manner in which diseases,
disorders, and other health conditions can effectively and appropriately be
prevented, diagnosed, treated, monitored, and managed through research and
In its review of the financial audit for PCORI’s fiscal year 2016 financial
statements, GAO did not identify any significant issues related to the
audit that it believes require attention. The independent public accounting
firm (IPA) provided an unmodified audit opinion on PCORI’s fiscal years
2016 and 2015 financial statements. Specifically, the IPA found that
PCORI’s financial statements were presented fairly, in all material
respects, in accordance with U.S. generally accepted accounting principles.
Furthermore, for fiscal year 2016, the IPA did not identify any
deficiencies in internal control that it considered to be material
weaknesses or any reportable noncompliance with the selected provisions of
laws, regulations, contracts, and grant agreements it tested. PCORI did not
disagree with the IPA report’s conclusions.
To see the report,
GAO Administers Survey of State Pharmacy Regulatory Bodies on Drug Compounding
As part of its report on drug compounding—Drug Compounding: FDA Has Taken
Steps to Implement Compounding Law, but Some States and Stakeholders
Reported Challenges, GAO—GAO conducted a survey of state pharmacy
regulatory bodies (e.g., boards of pharmacy) in the 50 states, the District
of Columbia, Guam, Puerto Rico, and the U.S. Virgin Islands, and all but 4
states completed the survey.
The Drug Quality and Security Act, enacted in 2013, helped clarify the
FDA’s authority to oversee drug compounding nationally and created a new
category of compounders called outsourcing facilities. Outsourcing
facilities compound sterile drugs and must register with and be inspected
by FDA, among other requirements. In contrast to other drug compounders,
outsourcing facilities are allowed to compound drugs without
patient-specific prescriptions. In general, states oversee drug compounding
as part of their regulation of the practice of pharmacy.
The survey collected information on the following: each state pharmacy
regulatory body and its oversight responsibilities for drug compounding;
pharmacists, pharmacies, and drug compounding in each state; types of state
laws, regulations, and policies related to drug compounding; inspections
and enforcement actions states can take related to drug compounding;
states’ perspectives on communication and interactions with FDA and other
states, and any associated challenges; and states’ perspectives on FDA’s
implementation of section 503A—the section of the Federal Food, Drug, and
Cosmetic Act with requirements for drug compounders that are not
outsourcing facilities—and section 503B—the section of the act that added
outsourcing facilities—including any challenges that states reported on
these efforts; among other things.
GAO administered the survey from February 8, 2016, through April 15, 2016.
For more information,
If you have any questions, contact the following individuals at
Kennan, Senior Vice President
Charlie Iovino, Vice
Caroline Perrin, Research Assistant
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