Mar 18, 2019

Washington Healthcare Update

Coming Week’s Highlights: Congress is in recess this week.

Upcoming Hearings








Upcoming Hearings

Tuesday, March 26, 2019

Senate Committee on Health, Education, Labor and Pensions (HELP): “Implementing the 21st Century Cures Act: Making Electronic Health Information Available to Patients and Providers”
The Senate Committee on Health, Education, Labor and Pensions will hold a hearing on making electronic health information available to patients and providers, a provision of the 21st Century Cures Act. Find a link to witness testimonies, member statements and the hearing live feed here.

Wednesday, April 3, 2019

Senate Finance Committee: “TBA Drug Pricing Hearing with PBMs”
The Senate Finance Committee will continue its drug pricing series by inviting pharmacy benefit manager companies (PBMs) to testify before the committee. The invitation was extended on March 12 to Cigna, CVS Caremark and CVS Health, Humana, OptumRx and Prime Therapeutics. The committee has not posted details of the hearing.



House Committee on Energy and Commerce: "The Fiscal Year 2020 HHS Budget"

Tuesday, March 12, 2019: The Health Subcommittee held a hearing with Health and Human Services Secretary (HHS) Alex Azar on President Trump’s budget request related to the U.S. Department of Health and Human Services (HHS) and its agencies for fiscal year (FY) 2020. Find a link to witness testimonies, member statements and the hearing live feed here.

Why this is important: Secretary of HHS, Alex Azar, answered questions from members on health-related proposals from the president’s FY2020 budget for approximately five hours, with one recess. General themes included Democrats concerned about children separated from their families at the border, pre-existing condition protections (Texas ACA case ruling), drug pricing concerns, the opioid epidemic and the lack of transparency by HHS and the administration as a whole. Any mention of Medicare-for-All was noted as “socialist medicine” by members of the minority party, while the majority party reiterated it would not allow this budget to pass.

Secretary Azar began his remarks by announcing the new Acting FDA Commissioner, Ned Sharpless, following the resignation of the former commissioner, Scott Gottlieb, last week. For most of the witness questioning, the majority party expressed concerns of how budget cuts will eliminate Medicare and Medicaid coverage and raise premiums for Americans, and that proposals in the budget, such as block-granting Medicare and bypassing Congress in that implementation process, are deeply concerning. The minority party praised the president and Secretary Azar for the budget, firmly supporting the HHS budget and proposed programs throughout questioning. 

House Committee on Energy and Commerce: "Lowering the Cost of Prescription Drugs: Reducing Barriers to Market Competition"

Wednesday, March 13, 2019: The Health Subcommittee held a hearing on rising prescription drug costs and the obstacles faced by market competition. Find a link to witness testimonies, member statements and the hearing live feed here.

Why this is important: This legislative hearing discussed the introduction of the following seven bills meant to address rising prescription drug costs:

  • H.R. 938, the “Bringing Low-cost Options and Competition while Keeping Incentives for New Generics (BLOCKING) Act of 2019,” introduced by Reps. Schrader (D-OR) and Carter (R-GA), would discourage parking of 180-day exclusivity by a first generic applicant by allowing FDA to approve a subsequent generic application prior to the first applicant’s first date of commercial marketing when the following four conditions have all been met: (1) the subsequent application is ready for full approval; (2) a minimum of 30 months has passed since at least one first applicant submitted their application for the drug; (3) any related patent litigation has been fully resolved; and (4) no first applicant is approved.
  • H.R. 965, the “Creating and Restoring Equal Access to Equivalent Samples (CREATES) Act of 2019,” introduced by Reps. Cicilline (D-RI), Sensenbrenner (R-WI), Nadler (D-NY), Collins (R-GA), Welch (D-VT) and McKinley (R-WV), would establish a process by which generic manufacturers could request that FDA authorize them to obtain sufficient quantities of samples for testing.
  • H.R. 985, the “Fair Access for Safe and Timely (FAST) Generics Act of 2019,” introduced by Reps. Welch, McKinley and Cicilline, establishes an authorization process by which generic manufacturers can gain access to samples of approved drug products that they are trying to genericize. 
  • H.R. 1499the “Protecting Consumer Access to Generic Drugs Act of 2019,” introduced by Rep. Rush (D-IL), would make it illegal for brand-name and generic drug manufacturers to enter into agreements in which the brand-name drug manufacturer pays the generic manufacturer to keep a generic equivalent off the market.
  • H.R. 1503the “Orange Book Transparency Act of 2019,” introduced by Rep. Kelly (D-IL), would help to ensure that the Orange Book is accurate and up-to-date, by requiring manufacturers to share complete and timely information with FDA, as well as ensuring that patents listed in the Orange Book are relevant to the approved drug product. Patents found to be invalid through a court decision or a decision by the Patent Trial and Appeal Board would be required to be removed promptly. 
  • H.R. 1506, the “Fair and Immediate Release (FAIR) of Generic Drugs Act,” introduced by Rep. Barragán (D-CA), would allow any generic filer who wins a patent challenge in court or is not sued for patent infringement by the brand manufacturer to share in the 180-day exclusivity period of first applicants that enter into patent settlements that delay entry.
  • H.R. 1520the “Purple Book Continuity Act of 2019,” introduced by Subcommittee Chair Eshoo (D-CA), would amend the Public Health Service Act to codify publication of approved biological products in the Purple Book in a similar format and with similar requirements to the Orange Book, specify that the Purple Book should be published electronically on FDA’s website and updated routinely, and direct FDA to consider the types of patents that should be listed in the Purple Book.

House Committee on Appropriations: "Department of Health and Human Services Budget Request for FY 2020"

The Subcommittee on Labor, Health and Human Services, Education, and related agencies held a hearing with Health and Human Services Secretary (HHS) Alex Azar on President Trump’s budget request related to the U.S. Department of Health and Human Services (HHS) and its agencies for fiscal year (FY) 2020. Find a link to witness testimonies, member statements and the hearing live feed here.

Why this is important: Members of the subcommittee focused on the zero tolerance policy on family separations at the border, with Secretary Azar reiterating that he was mostly in the dark for the creation of this policy. Later on, Secretary Azar said that the next FDA commissioner must be someone dedicated to cutting back youth’s use of e-cigarettes, a comment he has made throughout a week’s worth of congressional questioning. Secretary Azar also defended the new Title X rules, arguing the rules were in line with congressional intent.

Senate Committee on Finance: "The President’s Fiscal Year 2020 Budget"

Thursday, March 14, 2019: The Senate Committee on Finance held a full committee hearing with Health and Human Services Secretary (HHS) Alex Azar on President Trump’s budget request related to the U.S. Department of Health and Human Services (HHS) and its agencies for fiscal year (FY) 2020. Find a link to witness testimonies, member statements and the hearing live feed here.

Why this is important: Members of the full committee questioned Secretary Azar on health-related proposals in the FY2020 budget in a two-part series held on one day. Azar acknowledged “absurdity” in the Medicare wage index after several senators complained about wide disparities in payments between states. Azar said HHS is seeking comments on a revision to the entire wage index system but cautioned that HHS can change the index only so much on its own. In regard to work requirements, Secretary Azar said that the more than 18,000 Arkansas residents who lost Medicaid coverage after work requirements took effect is a normal level associated with such a change. He also said complying with work requirements is not much to ask in return for health care paid for by taxpayers, a point he also made in an Energy and Commerce, Health Subcommittee hearing earlier in the week.


House Democrats Launch Investigation into Short-Term Health Plans

On March 13, House Democrats launched an investigation into a dozen groups that market or offer short-term, limited-duration health plans. Health subcommittee Chairwoman Anna Eshoo (D-CA), oversight subcommittee Chairwoman Dianna DeGette (D-CO) and full committee Chairman Frank Pallone (D-NJ) sent letters to 12 entities selling short-term plans, including insurers, brokers and agents. The Democrats asked the companies for information on the sale and marketing of the plans as well as information on plan sale commissions, post-claims underwriting and any complaints they have received.

The letters were sent to Agile Health Insurance, Anthem Blue Cross Blue Shield, Arkansas Blue Cross Blue Shield, Blue Cross of Idaho Group, Cambia Health Solutions, eHealth, Everest, Health Insurance Innovations, Healthcare Solutions Team, Independence Holding Company, National General and UnitedHealth Group.


CMS Strengthens Monitoring and Evaluation Expectations for Medicaid 1115 Demonstrations

On March 14, the Centers for Medicare & Medicaid Services (CMS) released new state tools and guidance that provide standard monitoring metrics and recommended research methods for Section 1115 demonstrations. Each tool is meant to help a state comply with federal requirements to submit quarterly and annual monitoring data to the CMS. To get a waiver, states must also tell CMS how they are going to evaluate the demonstration and collect the data.

The new resources include an implementation plan template that provides a framework for the state to document its approach to implementing Continuing Education (CE) policies. It also helps to determine the appropriate information for the state to report to CMS in the quarterly and annual monitoring reports. Another new tool, the monitoring report template, provides the state with a framework for how to report information to CMS on a quarterly and annual basis including quantitative monitoring metrics. In addition, the evaluation design guidance highlights key hypotheses, evaluation questions, measures and evaluation approaches, which states can use to inform the development of an evaluation of Section 1115 demonstrations. This includes guidance specific for states pursuing community engagement demonstrations.

Find details on the new tools and guidance here.

FDA: Modifications to Compliance Policy for Certain Deemed Tobacco Products

On March 13, the Food and Drug Administration proposed an end to current compliance policy as it applies to flavored electronic nicotine delivery system (ENDS) products such as electronic cigarettes (other than tobacco-, mint- and menthol-flavored products), and prioritizing enforcement of such products offered for sale in ways that pose a greater risk for minors to access these tobacco products.

In addition, the FDA expects manufacturers of all flavored ENDS products (other than tobacco-, mint- and menthol-flavored) that remain on the market under these new conditions to submit premarket applications to the agency by Aug. 8, 2021. This application date is one year earlier than the agency previously proposed.

Public release is TBD.

FDA: Device Center’s Total-Life-Cycle Reorganization to Begin March 18

On March 13, the Food and Drug Administration’s (FDA) device center announced it will launch on March 18 its internal reorganization to address total life cycle of products, with an estimated completion by Sept. 20 of this year. The goal of the reorganization is to create a faster and better-integrated organization for dealing with product issues throughout a device’s total product life cycle. Instead of the current system, which runs separate offices for each stage of a product life cycle, the reorganization will integrate premarket and postmarket program functions along product lines.

Monitor the FDA’s progress here.

CMS Updates Drug Dashboards with Prescription Drug Pricing and Spending Data

On March 14, the Centers for Medicare & Medicaid Services (CMS) updated its Drug Spending Dashboards with data for 2017. This version of the drug dashboards, first released in May of last year by the administration, adds information on the manufacturers that are responsible for price increases and includes pricing and spending data for thousands more drugs across Medicare Parts B and D and Medicaid.

The dashboards focus on average spending per dosage unit for prescription drugs paid under Medicare Parts B and D and Medicaid, and track the change in average spending per dosage unit over time. Information is presented in an interactive web-based tool, so researchers and consumers can easily sort the data to identify trends.

NCI Chief Sharpless Named Acting FDA Commissioner

On March 12, it was announced that the National Cancer Institute (NCI) director, Ned Sharpless, will serve as Acting FDA Commissioner, following Scott Gottlieb’s resignation.

President Releases FY2020 Budget (Overview)

On March 11, the White House released the fiscal year 2020 budget proposal. It was largely considered dead on arrival, but serves as a guide to the administration’s thinking and priorities.   

  • According to the Office of Management and Budget (OMB), debt under the president’s budget would fall from 78 percent of Gross Domestic Product (GDP) today to 71 percent of GDP by 2029. Using more realistic assumptions on economic growth, the Committee for a Responsible Federal Budget estimates debt would rise to roughly 87 percent of GDP.
  • The budget claims $2.8 trillion of net deficit reduction over a decade. However, incorporating the $1.1 trillion cost of extending tax cuts and excluding assumed reductions in war spending, actual savings in the budget would total $1.2 trillion.
  • Discretionary proposals in the budget are both misleading and unrealistic. The president proposed $1 trillion of defense hikes, using a special war spending designation to circumvent spending caps in 2020 and 2021. The budget also calls for $1.1 trillion of largely unspecified non-defense cuts, reducing spending to about 60 percent of today’s (inflation-adjusted) levels by 2029.
  • The president’s budget puts forward a number of mandatory spending changes (and a few proposals to increase receipts)—especially changes to Medicare which would reduce spending by about half a trillion dollars, raising concerns with Democrats. 
  • Projections in the president’s budget are heavily influenced by extremely rosy economic assumptions. OMB assumes average real GDP growth of nearly 3 percent per year, while most forecasters project less than 2 percent annual growth.

Restore Sequester and Reduce Non-Defense Discretionary (NDD) Spending with the Two-Penny Plan After 2020 ($1.1 trillion)
The president’s budget would allow non-defense discretionary (NDD) spending to return to the sequester level in 2020, a 9 percent reduction from 2019 levels. Beyond that, the administration calls for a further 2 percent per year reduction (the “two-penny plan”), even as inflation rises by a similar amount. These cuts would result in total NDD appropriation reductions of $1.1 trillion over 10 years and a $235 billion cut in 2029—about 30 percent below baseline and about 40 percent below 2019 inflation-adjusted levels. Among the areas in health care this would impact are public health, veterans’ health, research, and food safety and drug approvals.

Enact Health Reforms ($645 billion)
The budget also proposes $645 billion in health care savings largely from reforming and reducing Medicare provider payments. Specifically, the budget would equalize payments for similar services offered in hospitals and physician’s offices, slow the growth of post-acute care payments and reduce compensation to hospitals for bad debts. In addition, the president’s budget proposes to remove payments for medical residents (graduate medical education) and uncompensated care (disproportionate share hospital payments) out of Medicare and into their own programs while capping their growth. (Note this proposal has led some to wrongly assume nearly $850 billion of Medicare cuts in the budget by counting as savings spending that would be moved from Medicare to another program). The president’s budget also proposes a number of policies designed to reduce spending on prescription drugs by about $70 billon. In addition, the budget includes about $75 billion of assorted Medicaid savings (outside of caps and ACA changes) and estimates about $30 billion of savings from enacting medical malpractice reform. Medical malpractice reform has been a perineal savings item in the budget. Other Medicaid cuts include making it harder for eligible people to obtain coverage by requiring additional documentation of citizenship or immigration status, re-imposing asset tests and making it harder for some seniors and people with disabilities to qualify for Medicaid without selling their homes.

Repeal and Replace the Affordable Care Act and Cap Medicaid ($660 billion)
The president’s budget proposes to repeal and replace the Affordable Care Act (ACA) in a similar manner as the Graham-Cassidy-Heller-Johnson proposal. This would replace the ACA’s premium subsidies and Medicaid expansion with either a flexible state block grant or per-capita cap while also capping the growth of base Medicaid. Growth of both the block grant/cap and Medicaid would be limited to inflation. This would save $660 billion over a decade after program interactions. 

Departs from the Bipartisan Budget Agreement
The president’s budget departs from the most recent bipartisan budget agreement, reached in early 2018. That agreement eliminated the sequestration cuts for 2018 and 2019 in defense and non-defense and added funding for priority investments in both areas, reflecting bipartisan recognition that the BCA’s post-sequestration caps are too low to meet national needs in either area. The additional non-defense discretionary (NDD) funds paid for investments in areas such as child care, infrastructure and opioid addiction prevention and treatment. Even with these new investments, NDD spending in 2019 stands at only 3.2 percent of gross domestic product (GDP), a historically low level. The president’s budget would hold NDD funding to the post-sequestration levels, which Congress rejected for 2018 and 2019 (and, in fact, for every year since the sequestration cuts were first slated to take effect). By 2021, NDD spending under the budget would be lower, as a share of the economy, than in any year since the Hoover administration.

Find the full budget here.

CMS Seeks Recommendations that Allow Americans to Purchase Health Insurance Across State Lines

On March 6, the Centers for Medicare and Medicaid Services (CMS) issued a request for information (RFI) for recommendations on how to eliminate regulatory, operational and financial barriers to enhance issuers’ ability to sell health insurance coverage across state lines. This announcement builds on President Trump’s Oct. 2017 Executive Order, “Promoting Healthcare Choice and Competition across the United States,” which intends to provide Americans relief from rising premiums by increasing consumer choice and competition. 

In particular, CMS requests feedback on how states can take advantage of Section 1333 of the Patient Protection and Affordable Care Act, which provides for the establishment of a regulatory framework that allows two or more states to enter into a Health Care Choice Compact to facilitate the sale of health insurance coverage across state lines. CMS is primarily looking for input on how to expand access to health insurance coverage across state lines, effectively operationalize the sale of health insurance coverage across state lines, and understand the financial impacts of selling health insurance coverage across state lines.

Comment period ends May 6, 2019.

Find the RFI and submit comments here.


DOJ and Issuers Ask Federal Appeals Court to Combine CSR Cases

On March 13, the Department of Justice and the issuers suing the government for cutting off cost-sharing reduction (CSR) payments are both asking the U.S. Court of Appeals for the Federal Circuit to consider the separate cases as companions. The request was made so that the same panel of judges can hear all parties on the same day. The motion was filed unopposed and the court has yet to respond.

Federal Judge Will Rule Soon on Work Requirements in Arkansas, Kentucky

On March 14, federal Judge James Boasberg said he hopes to rule on the legality of Medicaid work requirements in Arkansas and Kentucky by the end of the month after back-to-back hearings on the Trump administration’s provision.

Throughout the hearings, government lawyers defended the Center for Medicare and Medicaid Services’ (CMS) decision to approve 1115 waivers that authorize both states to enact work-requirement programs that affect hundreds of thousands of Medicaid beneficiaries. Lawyers for beneficiaries said the waivers are illegal because they contradict the purpose of Medicaid, and they urged Judge Boasberg to halt the Arkansas program and block the Kentucky program from taking effect.

A key point of contention throughout the hearings was the significance of the more than 18,000 people who lost Medicaid coverage last year in the initial months of the Arkansas program because they failed to show compliance with the work requirements. All of those beneficiaries had the chance to re-enroll in January, but most have not done so. Early this week before a handful of congressional committees, Secretary of HHS, Alex Azar, noted that early data does not yet explain the issues with this implementation.


FDA: Update on Nonproprietary Naming of Biological Products

On March 7, the Food and Drug Administration (FDA) issuing draft guidance that proposes to apply the naming convention only to new originator biologics and interchangeable biosimilars and to exempt currently licensed or approved biologics or products that are in the process of being licensed, including insulin. The draft guidance is a reversal of the FDA’s 2017 decision to require that all biologics follow a nonproprietary naming protocol.

The FDA cited brand-biologic industry concerns that changing the names of older biologics would impose costs on the health care system that could then be passed onto patients, and could create confusion among patients and health care providers.

Comment period ends on May 7, 2019; comments can be submitted here.

Find the draft guidance here.

FDA: Quality Considerations for Continuous Manufacturing

On Feb. 26, the Food and Drug Administration (FDA) released a draft guidance on what factors brand and generic drug manufacturers should consider when setting up and using a continuous manufacturing system to produce their products. The guidance outlines the benefits of continuous manufacturing over traditional batch manufacturing, including the efficiency that comes with continuous manufacturing that could eventually lead to lower drug prices for consumers.

Comment period ends on May 28, 2019; comments can be submitted here.

Find the draft guidance here.

FDA: Competitive Generic Therapies Draft Guidance

On Feb. 19, the Food and Drug Administration (FDA) published a draft guidance on how drug manufacturers can apply for the competitive generic therapy (CGT) pathway, intended for generic versions of drugs that have little-to-no competition in the market. This guidance encourages more generic drug manufacturing and explains how exclusivity would work under the CGT pathway, including exclusivity given to multiple CGT pathway-approved drugs that fit certain criteria.

Comment period ends on April 22, 2019; comments can be submitted here.

Find the draft guidance here.

CMS Updates Overall Hospital Star Ratings, Asks for Feedback

On Feb. 28, the Centers for Medicare and Medicaid Service (CMS) updated the overall hospital star ratings, while announcing that it is looking at possible changes to how ratings are calculated for both the short and long term. Proposed changes help patients make more “like-to-like” comparisons, meaning they could compare similar hospitals. The CMS would accomplish this by placing hospitals into peer groups—meaning small rural hospitals would not be compared to larger, academic hospitals.

Comment period ends on March 29, 2019.

Find the proposed changes and submit comments here.

ONC/CMS: Interoperability; Exceptions to Information Blocking

On Feb. 11, the Centers for Medicare and Medicaid Services (CMS) and the Office of the National Coordinator (ONC) released proposed rules to support secure access, exchange and use of electronic health information. The Interoperability and Patient Access Proposed Rule from CMS outlines opportunities to make patient data more useful and transferable through open, secure, standardized and machine-readable formats while reducing restrictions on health care providers. The ONC rule calls on the health care industry to adopt standardized application programming interfaces (APIs), which will allow individuals to securely and easily access structured electronic health information (EHI) using smartphone applications.

In addition to the policy proposals, CMS released two requests for information (RFIs) to obtain feedback on interoperability and health information technology (health IT) adoption in post-acute care (PAC) settings, and the role of patient matching in interoperability and improved patient care.

Comment period ends on May 3, 2019.

Read the proposed rule and submit comments here.

HHS Proposal Calls for Reforming Drug-Rebate System

Published on Feb. 6, a proposal by the Department of Health and Human Services (HHS) called for a ban on drug rebates, unless shared directly with seniors at the pharmacy counter, significantly lowering out-of-pocket retail drug spending for the minority of seniors on expensive drugs. The proposal would raise premiums for all Medicare beneficiaries. Part of the administration’s plan is set to take effect in a year and an anticipated legal challenge by pharmacy benefit managers (PBMs) could delay implementation.

The proposal cuts rebates tied to a percentage of list price that drug manufacturers pay to Part D plans, Medicaid managed care and PBMs by taking away the long-standing exemption for rebates in anti-kickback law. The administration proposed two new safe harbor protections: one that would allow rebates that are shared with patients at the point of sale and another that would let PBMs charge flat fees for their services.

Comment period ends on April 8, 2019.

Read the proposed rule here.


MedPAC: March 2019 Report to Congress

On March 15, the Medicare Payment Advisory Commission (MedPAC) released its March 2019 Report to Congress: Medicare Payment Policy. The report includes MedPAC’s analyses of payment adequacy in fee-for-service (FFS) Medicare and reviews the status of Medicare Advantage (MA) and the prescription drug benefit, Part D. MedPAC recommends that Congress replace the four current hospital quality payment programs with a single streamlined program—the hospital value incentive program (HVIP). As mandated by Congress, the report includes incentives for prescribing opioid and non-opioid pain treatment under Medicare’s hospital inpatient and outpatient payment systems.

Read the full report to Congress here.

MACPAC: March 2019 Report to Congress

On March 15, the Medicaid and CHIP Payment and Access Commission (MACPAC) released its March 2019 Report to Congress on Medicaid and CHIP. This report addresses Medicaid hospital payment policy, which accounts for one-third of total Medicaid spending in fiscal year (FY) 2017. This year, MACPAC focused on disproportionate share hospital (DSH) and upper payment limit (UPL) supplemental payments.

Read the full report to Congress here.

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

Stephanie Kennan, Senior Vice President
Mariam Eatedali, Research Associate

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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