Aug 19, 2019

Washington Healthcare Update

This week in Washington: Congress is out for the summer work period. 


House - In Recess

Senate - In Recess


Proposed Regulations/Guidance

Final Guidances/Regulations




House - In Recess

Cummings and Sanders Seek Information About Possible Obstruction of a Congressional Investigation on Generic Drug Prices

On August 14, Rep. Elijah E. Cummings (D-MD), the Chairman of the House Committee on Oversight and Reform, and Sen. Bernie Sanders (I-VT), Ranking Member of the Senate Budget Committee, sent letters to Heritage Pharmaceuticals, Mylan N.V., and Teva Pharmaceutical Industries, Ltd. renewing a 2014 document request about the companies’ pricing of generic drugs.

Cummings and Sanders also requested information regarding the companies’ apparent efforts to stonewall the 2014 investigation, in order to obtain a more detailed understanding of what specific actions took place to impede efforts, thwart the ability of Congress to enact legislative reform, and jeopardize patients access to generic drugs.

Senate - In Recess

Grassley Urges HHS, FDA to Implement Unannounced Inspections of Foreign Drug Manufacturing Facilities

On Aug. 6, Senate Finance Committee Chairman Chuck Grassley (R-IA) sent a letter to Department of Health and Human Services (HHS) Secretary Alex Azar, and Food and Drug Administration (FDA) Acting Commissioner Norman Sharpless urging them to reinstate unannounced inspections of prescription drug manufacturing facilities in foreign countries.  The reason for the request is the Trump administration’s new “Safe Importation Action Plan” as well as the fact that these facilities provide most of the ingredients for production inside the United States. 

Grassley Asks Novartis For Information on Zolgensma

Senate Finance Committee Chair Chuck Grassley (R-IA) sent a letter to Novartis AG requesting information by Aug. 23 regarding the manufacturer’s knowledge of data manipulation during the approval process for its $2.1 million gene therapy Zolgensma.

Blackburn Introduces Three Bills on Rural Health

On Aug. 1, Sen. Marsha Blackburn (R-TN) introduced a rural health package that includes three bills. The first bill, the Rural America Health Corps Act is cosponsored by Sens. Durbin, Kevin Cramer (R-ND), Doug Jones (D-AL) and Lisa Murkowski (R-AK). It gives a two-year forgiveness period for the existing National Health Services Corp, which provides $50,000 a year to repay student loans for primary care doctors, behavioral health clinics, nurse practitioners and physician assistants who serve in “health professional shortage areas.”

The second bill, the Rural Health Innovations Act, co-sponsored by Murkowski, authorizes the Health Resources and Services Administration’s Community-Based Division to create two five-year grant programs. The first grant program allows existing federally qualified health centers (FQHCs) and rural health clinics (RHC), as well as start-up clinics, to expand their services to be able to triage and stabilize patients in emergencies, including increasing the availability of lab and x-ray equipment. The bill grants $500,000 for existing facilities and $750,000 for start-up facilities.

The third bill, the Telemedicine Across State Lines Act, instructs the HHS to write a rule on best practices for providing telehealth across state lines with input from stakeholders. Regular reports to Congress on the HHS’ progress would be required.


CMS: Exchange Plans Will Display Quality Ratings for Plan Year 2020

On Aug. 15, the Centers for Medicare and Medicaid Services (CMS) announced that health insurance exchanges nationwide would be required to display where qualified health plans stand on a 5-star quality rating system for the 2020 plan year. CMS added that 95% of the 175 plans eligible for scoring in the 2019 plan year had a rating of 3 stars or more but only 19% (36) had a 5-star rating. 

HHS Withdraws OIG’s Old Proposed Penalty, Safe Harbor Rules

On Aug. 1, the Department of Health and Human Service (HHS) withdrew rules proposed decades ago by the HHS Office of Inspector General (OIG). One of the rules, proposed in 1994, would have codified OIG’s authority to levy civil monetary penalties when a hospital knowingly makes incentive payments to physicians as a way to have them reduce services for Medicare or Medicaid beneficiaries. The second withdrawn rule, proposed in 2002, would have expanded an anti-kickback statute safe harbor to include waivers for Part A and B cost sharing for beneficiaries with Medicare SELECT policies, a type of Medigap plan.

The rules were pulled because of President Trump’s executive order requiring agencies to identify regulations that need to be repealed, replaced or modified, including those that are outdated or ineffective. That order is aimed at implementing a separate executive order that said two regulations must be eliminated for every new regulation introduced.

Proposed Regulations/Guidance

CMS: CY 2020 Medicare Hospital Outpatient Prospective Payment System and Ambulatory Surgical Center Payment System Proposed Rule

On July 29, the Centers for Medicare and Medicaid Services (CMS) proposed policies that follow directives in President Trump’s executive order entitled “Improving Price and Quality Transparency in American Healthcare to Put Patients First.” The proposed rule requires hospitals to not only publish their gross charges, or list prices, but also the negotiated price by specific payer and plan for a set of “shoppable” services. Those services could include anything that can be scheduled by a patient in advance, such as an MRI or hip replacement.

The rule also encourages site-neutral payment between certain Medicare sites of services, and proposes updates and policy changes under the Medicare Hospital Outpatient Prospective Payment System (OPPS) and Ambulatory Surgical Center (ASC) Payment System. The proposal includes the continuation of policy reducing reimbursement by nearly 30 percent for Part B drugs that hospitals buy through 340B. The policy is budget-neutral, so payment cuts are redistributed equally among hospitals.

Find the proposed rule here. The rule will be published on Aug. 8, 2019, and public comments are due on Sept. 27, 2019.

CMS: Proposed Radiation Oncology (RO) Model

On July 10, the Centers for Medicare and Medicaid Services (CMS) proposed a Radiation Oncology (RO) Model as a payment model that tests if site-neutral payments, in which providers are paid the same rate no matter the care setting, for a 90-day episode of care, can improve the quality of treatment and save Medicare money. The experiment targets radiation treatment for 17 different types of cancer. Payment will be based on proposed national base rates and trend factors and will be adjusted for geography and the mix of patients the provider treats.

Participants in the model could earn back a share of dollars that are withheld based on the quality of care and patient experience. The model is scheduled to begin next year and end in December 2024.

Find the proposed rule here.

FDA: New Required Health Warnings with Color Images for Cigarette Packages and Advertisements to Promote Greater Public Understanding of Negative Health Consequences of Smoking

On Aug. 15, the Food and Drug Administration (FDA) proposed a rule to require new health warnings on cigarette packages and in advertisements to promote greater public understanding of the negative health consequences of smoking. The proposed warnings feature photo-realistic color images depicting the health risks of cigarette smoking. When finalized, this rule would fulfill a requirement in the Family Smoking Prevention and Tobacco Control Act.

The new warnings would appear prominently on cigarette packages and in advertisements, occupying the top 50% of the area of the front and rear panels of cigarette packages and at least 20% of the area at the top of cigarette advertisements. The warnings would be required to appear on packages and in advertisements 15 months after a final rule is issued.

Find the proposed rule here.

Public comments must be submitted by Oct. 15, 2019.

FDA: General Clinical Pharmacology Considerations for Neonatal Studies for Drugs and Biological Products

On July 31, the Food and Drug Administration (FDA) released a draft guidance regarding clinical trial design for newborns. The neonatal period is defined as the day of birth plus 27 days for full-term infants and as the day of birth through the expected date of delivery plus 27 days for preterm infants. The draft guidance provides the FDA’s current thinking on clinical pharmacology considerations for neonatal studies for drugs and biological products. It discusses neonatal subgroup classification, dose selection and study design and analysis considerations for the conduct of neonatal clinical pharmacology studies.

The guidance encourages the design of studies using input from a multidisciplinary team involved in neonatal care, including parents. The guidance also recommends that sponsors should use “innovative quantitative approaches” to study data gathered from adult, preclinical, animal, in vitro or other pediatric studies to predict the doses and clinical trial designs best suited for newborns.

Find the draft guidance here.

Public comments must be submitted by Sept. 30, 2019.

FDA: Harmonizing Compendial Standards with Drug Application Approval Using the USP Pending Monograph Process

On July 10, the Food and Drug Administration (FDA) released a draft guidance meant to speed up the generic drug approval process. The guidance explains how drug manufacturers should use the United States Pharmacopeia (USP) Pending Monograph Process (USP-PMP) to combine USP’s process for allowing revisions to compendial standards with the FDA’s approved quality and labeling requirements for drug product applications.

Find the draft guidance here.

Public comments must be submitted by Sept. 10, 2019.

FDA: Using the Inactive Ingredient Database

On July 10, the Food and Drug Administration (FDA) released a draft guidance that explains how drug manufacturers can better use the Inactive Ingredient Database (IID) in drug development, including to evaluate the safety of inactive ingredients, also known as excipients. The guidance discusses how the IID is structured; the data regarding excipients in the IID; and how nomenclature, maximum potency levels and units of measure are presented in the IID.

Find the draft guidance here.

Public comments must be submitted by Sept. 10, 2019.

FDA: Treatment for Heart Failure—Endpoints for Drug Development

On June 28, the Food and Drug Administration (FDA) released draft guidance seeking to clarify that an effect on symptoms or physical function, without a favorable effect on survival or risk of hospitalization, can be a basis for approving drugs to treat heart failure. The guidance also provides recommendations to sponsors on the need to assess mortality effects of drugs under development to treat heart failure.

Find the draft guidance here. Public comments are due by Aug. 28, 2019.

FDA: Biologics License Applications and Master Files

On June 28, the Food and Drug Administration (FDA) proposed a rule that allows biologic products to continue to include certain information, by reference, in drug master files even after having completed the transition from being regulated as drugs to being licensed as biologics. The goal of the proposal is to avoid disruptions and potential shortages. This includes insulin, which has been historically regulated as a drug and not a biologic. The proposed rule also codifies the FDA’s practice of allowing applications for biologics submitted under the Public Health Service Act (PHSA) to incorporate, by reference, certain information in master files, except for information related to the drug substance, drug substance intermediate or drug product.

Find the FDA press release here.

Find the proposed rule here. Public comments are due on Aug. 27, 2019

FDA Considering New Incentives for Safer Pain, Addiction Therapies

On June 20, the Food and Drug Administration (FDA) released a draft guidance weighing broader public health effects as it reviews proposed opioids that could be safer pain and addiction therapies, as well as any comparative advantage the proposed product would have over currently approved analgesics. The FDA also announced a public hearing for Sept. 17 to discuss the FDA’s benefit-risk assessment of opioid analgesics, including the manner in which risks of misuse and abuse of these products factor into the benefit-risk assessment.

Find the draft guidance, “Opioid Analgesic Drugs: Considerations for Benefit-Risk Assessment Framework,” here.

Public comments are due by Aug. 20, 2019.

FDA Approves New Drugs

The FDA approved several drugs the week of August 12. The agency approved Roche Holdings’ AG personalized cancer drugs Rozlytrek which targets tumors depending on their specific genetic mutations, not where in the body they appear. The FDA also approved a new tuberculosis drug developed by the Global Alliance for TB Drug Development Inc., a nonprofit group. The drug, Pretomanid, shortens and enhances treatment for drug-resistant strains of TB for use alongside two other treatments.

Final Guidances/Regulations

USCIS: Final Rule on Public Charge Ground of Inadmissibility

On Aug. 12, the U.S. Citizenship and Immigration Service (USCIS) and the Department of Homeland Security (DHS) finalized a rule that allows the withholding of green cards for those who have used certain government programs in the past, including Medicaid. The final rule changes the definitions for public charge and public benefits, and changes the standard that DHS uses when determining whether an immigrant is likely to become a “public charge” at any time in the future and is therefore inadmissible and ineligible for admission or adjustment of status. 

In limited circumstances, and in USCIS’ discretion, an immigrant who wants to adjust their status may post a bond and obtain adjustment of status, despite being determined inadmissible on public charge grounds. The final rule sets the minimum bond amount at $8,100; the actual bond amount would be dependent on the immigrant’s circumstances. In addition, in certain circumstances, an immigrant may obtain a waiver of the public charge ground of inadmissibility.

The rule also makes nonimmigrants who have received, since obtaining the nonimmigrant status they are seeking to extend or from which they are seeking to change, designated public benefits for more than 12 months in the aggregate within any 36-month period generally ineligible for change of status and extension of stay. The rule will go into effect Oct. 15, 2019. 

CMS: Fiscal Year 2020 Payment and Policy Changes for Medicare Inpatient Rehabilitation Facilities

On July 31, the Centers for Medicare and Medicaid Services (CMS) issued a final rule that updates Medicare payment policies and rates for facilities under the Inpatient Rehabilitation Facility Prospective Payment System (IRF PPS) and the Inpatient Rehabilitation Quality Reporting Program (IRF QRP) for fiscal year (FY) 2020. This final rule moves CMS closer to unified post-acute care payment and updates IRF payment rates as required by statute. 

FDA Updates Guidance on Rare Pediatric Disease PRVs

On July 29, the Food and Drug Administration (FDA) released a revised draft guidance on rare pediatric disease priority review vouchers (PRVS), which are awarded to companies developing certain rare pediatric disease treatments and can then be sold. The revisions to the FDA’s guidance include a new definition for rare pediatric disease, as created by the Advancing Hope Act of 2016, which amends section 529 of the FD&C Act to define the pediatric population as from birth through 18 years. The FDA previously considered the pediatric population as from birth to 16 years.

The FDA revisions explains how the rare pediatric disease PRV program sunsets. After Sept. 30, 2020, the FDA may only award a voucher if the drug has rare pediatric disease designation and that designation was granted by Sept. 30, 2020. The FDA also includes revisions in the draft based on FDA’s experience with implementing the rare pediatric disease PRV program, including voucher request procedures. 


Appeals Court Sides with CMS in Ruling That Limits DSH Payments

On Aug. 13, the U.S. Court of Appeals for the District of Columbia reversed a lower court’s ruling and sided with the Centers for Medicare and Medicaid Services (CMS) in regards to disproportionate share hospital (DSH) payments to hospitals. The decision in Children’s Hospital Association of Texas v. Azar, supports a CMS rule from 2017 that stated that a hospital’s Medicaid shortfall includes the uncompensated care costs that remain after accounting for payments from Medicare or private plans that help pay for Medicaid-eligible patients’ services, as well as pay from Medicaid and the uninsured. Because of the ruling, hospitals will not receive Medicaid DSH payments to cover costs for which they have already been compensated by private insurers or Medicare.


GAO: Social Security and Medicare – Improved Schedule Management Needed for More Timely Trust Fund Reports

On Aug. 14, the Government Accountability Office (GAO) released a report on the Security and Medicare trust funds that workers and employers pay into, which pay out to current beneficiaries. Federal law requires the trust fund boards of trustees to report fund financial outlook to Congress each year by April 1. The GAO found the trustees have missed the deadline in 17 of the last 25 years, and were over 2 months late in six of the last 10 years.

The GAO recommends:

  • The Secretary of the Treasury, as Chairperson of the Boards of Trustees, work with the other trustees to take steps—in consultation with the chief actuaries of the Social Security Administration (SSA) and the Centers for Medicare and Medicaid Services (CMS)—to improve the management of the report development schedule in order to provide the Trustees reports to Congress by the statutory deadline. These steps could include regularly updating the schedule using actual progress and archiving the final iteration of the schedules.
  • The Secretary of the Treasury, as Chairperson of the Boards of Trustees, work with the other trustees to establish a policy to inform Congressional committees of jurisdiction when the trustees determine that the reports are expected to miss the issuance deadline. This outreach should include 1) the factors that are contributing to delays, and 2) the reports' expected issuance dates.

GAO: Medicare Part D - Use of Pharmacy Benefit Managers and Efforts to Manage Drug Expenditures and Utilization

On Aug. 13, the Government Accountability Office (GAO) released a report on pharmacy benefit manager (PBMs) working with plan sponsors, private companies contracted to the government to provide Medicare Part D prescription drug coverage, to negotiate drug price rebates for Medicare. The GAO found that in 2016, these rebates offset Part D spending by 20%, from $145 billion to $116 billion. The GAO also found that PBMs’compensation for working with plan sponsors primarily consisted of fees from plan sponsors, rather than being allowed to keep a portion of the rebates they negotiated, and that plan sponsors used these PBMs to provide about three-quarters of Part D prescription drug services. 

GAO: Medicaid Payment – CMS Has Not Overseen States’ Implementation of Changes to Third-Party Liability

On Aug. 9, the Government Accountability Office (GAO) released a report on the third-party coverage to Medicaid beneficiaries. For some claims where a third party might pay—including prenatal care and preventive care for children—state Medicaid agencies are now required to use new payment procedures, which could help ensure Medicaid does not pay more than it should. The GAO found that the Centers for Medicare and Medicaid Services (CMS), which oversees states’ Medicaid plans, does not know if states are using the new procedures.

The GAO recommends:

  • The Administrator of CMS the agency's Medicaid third-party liability guidance is consistent with federal law related to:
    • the requirement for states to apply cost avoidance procedures to claims for labor, delivery, and postpartum care services,
    • the requirement for states to make payments without regard to potential third-party liability for pediatric preventive services unless the state has made a determination related to cost-effectiveness and access to care that warrants cost avoidance for 90 days, and
    • state flexibility to make payments without regard to potential third-party liability for pediatric services provided to child support enforcement beneficiaries.
  • The Administrator of CMS determine the extent to which state Medicaid programs are meeting federal third-party liability requirements and take actions to ensure compliance as appropriate. Such actions can include ensuring that state plans reflect the law. 

GAO: Obesity Drugs - Few Adults Used Prescription Drugs for Weight Loss and Insurance Coverage Varied

On Aug. 9, the Government Accountability Office (GAO) released a report on the nine FDA-approved drugs to help treat obesity and the adults that use there prescription drugs. The GAO found that of an estimated 71.6 million U.S. adults with obesity, an estimated 660,000 per year, on average, used an obesity drug from 2012 through 2016. Among adults who reported trying to lose weight, about 3 percent reported that they took prescription medication for weight loss from 2013 through 2016. This has been determined as relatively few users by the GAO. 

GAO: VA Health Care - Goals and Related Measures Needed to Better Assess the Impact of Same-Day Services

On Aug. 7, the Government Accountability Office (GAO) released a report on the same-day services initiative in primary and mental health care by the Department of Veterans Affairs’ (VA) Veterans Health Administration (VHA). The GAO found that some of VHA's guidance and updated policies were difficult to implement due to long-standing challenges of staffing and space constraints. For example, one medical center official stated that the medical center did not have the appropriate providers readily available to complete the initial mental health assessments of new patients in a timely manner, a new requirement under VHA's updated policies.

The GAO recommends:

  • The Under Secretary for Health document same-day services objectives and develop performance goals and related performance measures to facilitate the periodic assessment of the impact of same-day services on veterans' access to care. 

GAO: Generic Drug Applications – FDA Should Take Additional Steps to Address Facts That May Affect Approval Rates in the First Review Cycle

On Aug. 7, the Government Accountability Office (GAO) released a report on the generic drug market-approval process by the Food and Drug Administration (FDA). The FDA reviews applications from these generic drug companies and may return it with comments. The company can address the comments and resubmit. On average, applications go through three of these review cycles before approval, which could take years.

The GAO found that the FDA approved 12% of generic drug applications in the first cycle in 2015-2017. The GAO also found that the FDA took steps to try to increase first-cycle approvals, but there were cases where the FDA’s comments were unclear and potentially hard to address.

The GAO recommends:

  • The Commissioner of FDA take additional steps to address inconsistency in its written comments to generic drug applicants—including the clarity of writing and the content of comments—among reviewers, such as requiring additional training for reviewers.
  • The Commissioner of FDA assess the extent to which the timing of brand-name drug companies' drug labeling changes affect the approval of generic drug applications in the first review cycle, and take steps, as appropriate, to limit the effect of brand-name drug labeling changes on pending generic drug applications. 

Note:  The next issue of the newsletter will be Sept. 9.     

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

Stephanie Kennan, Senior Vice President
Mariam Eatedali, Research Associate

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