House Energy and Commerce Committee Reviews Bill to Incentivize Generic Drug Development
On March 2, the House Energy and Commerce Committee reviewed the “Lower Drug Costs through Competition Act,” a bill aimed at incentivizing generic development. The bill, sponsored by Reps. Kurt Schrader (D-OR) and Gus Bilirakis (R-FL), aims to tackle drug pricing by increasing generic drug availability through the creation of a new generic priority review voucher.
During the hearing, FDA drug center chief Janet Woodcock told congressmen that more than 180 off-patent drugs are currently without generic competition. She did caution, however, that the review times mandated by the bill—H.R. 749—could be impossible for the FDA to meet. Stakeholders also criticized the bill for mandating a study on the abuses of the Risk Evaluation and Mitigation Strategies (REMS) system, which they say could discourage more sweeping reforms of the system.
Woodcock also cautioned at the hearing that there are a number of drugs for which a generic is the sole source, because the brand drug has been withdrawn from the market. “There may well be other generics that are sole source where the innovator has withdrawn. Because right now there are 546 drugs where the brand name has withdrawn from the market and some of those may only have one generic,” Woodcock said.
Energy & Commerce Committee Chairman Greg Walden (R-OR) praised the bill at the hearing, which he previously tried to push through without a markup.
Theatrics Highlight Lack of Transparency Regarding ACA Bill
On March 2, Sen. Rand Paul (R-KY) demanded to be shown the House GOP’s updated draft bill to repeal and replace parts of the Affordable Care Act. Paul criticized the earlier leaked draft because of its inclusion of refundable tax credits. House Energy & Commerce ranking Democrat Frank Pallone (NJ) also tried to find the updated draft and slammed the GOP for lack of transparency, but House Energy and Commerce Committee Chair Greg Walden (R-OR) said committee Republicans and staff were continuing to refine the draft and it wasn’t ready to be distributed.
While standing outside a room where the bill allegedly was being kept, Paul held an impromptu press conference in which he slammed House Republicans for not letting him see the updated draft and said he would continue pressing to see it. He also expressed frustration about the prospect of the Senate having to accept the House version.
Pallone also attempted to find the bill at a room in the Capitol and then went to Walden’s office looking for it. He complained about the lack of transparency while searching for the bill and stressed that Democrats gave Republicans 30 days to review the Affordable Care Act while it was under consideration.
Rep. Paul Tonko (D-NY) also attempted to enter the room where the draft bill reportedly was housed and was told the bill was not in there. He said a markup is expected to be held March 8 where the bill would be read, but said there has been no official notice. Tonko specifically stressed that he wanted to see the Medicaid reform portion of the bill.
Walden issued a statement saying the process wasn’t irregular. “Reports that the Energy and Commerce Committee is doing anything other than the regular process of keeping its members up to speed on latest developments in its jurisdictions are false,” Walden said.
“We are continuing to work on drafting and refining legislative language to provide relief from a failing law. Part of that process is giving committee members and staff the opportunity to work closely together to draft a bill that reflects the concerns of our constituents and reflects our mandate from voters to repeal and replace Obamacare. Simply put, Energy and Commerce majority members and staff are continuing to discuss and refine draft legislative language on issues under our committee’s jurisdiction,” Walden added.
Senate Finance Committee Approves Verma’s Nomination for CMS Administrator
On March 2, the Senate Finance Committee advanced Seema Verma’s nomination to lead CMS in a 13-12 vote along party lines.
Verma will play a key role in shaping Republicans’ Obamacare replacement plan and overhauling Medicaid. Verma has worked with several Republican governors to adopt conservative reforms in their Medicaid programs, including cost-sharing and work incentives.
The committee originally convened on March 1 to vote on the nomination but had delayed a final vote because there weren’t enough Republicans present. Verma is expected to be confirmed on the Senate floor.
In a question and answer document from the Senate Finance Committee, CMS Administrator-nominee Seema Verma deferred to Congress on a vast majority of questions from members.
Verma gave longer answers to questions about Medicaid waivers compared to most of her other responses to Senate Finance Committee members’ questions, and she emphasized giving states the flexibility to alter their programs more than she emphasized giving state residents the opportunity to weigh in on those changes.
House Republicans’ designs for a Medicaid financing overhaul do not sit well with some Senate Republicans because they do not want their states to lose the high federal match rate for residents who are covered under Medicaid expansions, and some Republican governors in states that expanded Medicaid also are apprehensive about capping federal funding of their Medicaid programs.
Nevada expanded Medicaid, and Sen. Dean Heller (R-NV) asked written questions of CMS Administrator-nominee Seema Verma about the prospect of capping Medicaid funding, Nevadans losing exchange-plan subsidies and women losing birth control and preventive services. Verma’s written response states that she is open to block grants, per-beneficiary caps and “other innovative ideas,” but she said Medicaid reform is up to Congress and that CMS would merely offer technical assistance.
Verma helped several states obtain Medicaid waivers, and throughout her responses to the many questions about Medicaid waivers and financing reforms she stressed that innovation starts locally.
Verma said making the process of getting waivers transparent and consistent would be one of her top priorities. Most Republicans, including Sen. John Cornyn (R-TX) asked how Verma plans to make it easier for states to secure waivers. Cornyn said some states have been operating under waivers for decades and that one-third of Medicaid spending goes to Medicaid programs operating under waivers.
Democrats were more concerned about public transparency and enabling input from beneficiaries. Sen. Ron Wyden (OR), the ranking Finance Committee Democrat, asked Verma if she supports making states disclose waiver requests prior to submitting them to CMS and requiring that states respond to public input. Verma said stakeholders must have a chance to provide input, but she said states should not be mired in paperwork.
Republican Senators Concerned About Medicaid Expansion Repeal
Sen. Shelley Moore Capito (R-WV) is the latest Republican senator to express strong resistance to repealing Obamacare’s Medicaid expansion, putting repeal of the provision in serious doubt.
As of now, the House legislation would repeal the Medicaid expansion. But Capito, whose home state of West Virginia expanded Medicaid, is just the latest Republican senator to express concern with repealing it.
Sen. Lisa Murkowski (R-AK) said recently that she would not vote to eliminate the expansion if her legislature wants it kept in place. Sen. Susan Collins (R-ME) has expressed the same concerns. Republicans can only afford to lose two votes to pass a bill through reconciliation in the Senate.
Insurers Write CMS to Express Support for Medicare Advantage Program
The largest insurance companies in the country are worried about the future of the Medicare Advantage program. There are currently 19.6 million private Medicare enrollees—nearly twice the number of individuals who signed up for coverage through Obamacare exchange markets for this year. That translates to roughly $200 billion in annual revenue for insurers.
Those figures have been on an upward spiral for some time. The number of private Medicare customers increased by 7.6 percent over the last year and has more than doubled during the past decade.
On Feb. 28, a letter expressing support for the program sent to acting CMS Administrator Patrick Conway garnered more than 200 signatures from members of both political parties and across the ideological spectrum.
This year’s proposed payment rule was released at the beginning of February and it included no significant changes. However, insurers still see a cause for concern in the rule, which is that payment levels aren’t keeping up with expected cost increases. Thus the industry is pushing for changes when the final payment notice is released at the beginning of April.
Many health plans would like to fix a problem in the cap on Medicare Advantage payments. Under current rules, plans that qualify for quality bonus payments under the star rating system don’t always get all of the money that they are entitled to. This is because bonus payments are counted against the payment cap.
For Humana alone, the cap cost $200 million in bonus payments last year. But many smaller plans are affected financially too. Insurers stress that beneficiaries are the ones getting shortchanged; the bonus payments cover the cost of additional benefits insurers add to enhance the quality of their MA plans, such as dental and vision coverage, which not all policies offer.
Health plans are also seeking to unlink performance audits, which track access to medical care and contract compliance, from quality star ratings. Both Cigna and Humana have seen major downgrades in their star ratings for this year stemming from problems uncovered through audits. Insurers argue that plans are being penalized twice and that the issues uncovered through audits do not necessarily affect quality.
Another area of concern for insurers is the use of “encounter data”—paid claims data—used in the funding formula to determine how much insurers are paid per beneficiary. They argue that the data does not provide an accurate assessment of their enrollees’ medical needs and results in lower payments.
HRSA Delays Implementation of 340B Rule
The Health Resources and Services Administration (HRSA) delayed implementation of the 340B ceiling price and manufacturer civil monetary penalties rule until March 21, in line with the regulatory freeze President Donald Trump implemented shortly after taking office. The regulation was originally set to go into effect on March 6.
The rule deals with setting prices under the 340B drug discount program. It finalized the so-called “penny-pricing policy” that drug makers oppose and laid out a formula for drug manufacturers to use when estimating the 340B price of new drugs.
“The temporary delay in the effective date of this final rule is necessary to give Department officials the opportunity for further review and consideration of new regulations, consistent with the Assistant to the President and Chief of Staff’s memorandum,” the Federal Register notice says.
The notice also says that although the rule will be effective March 21, “HHS recognizes that the effective date falls in the middle of a quarter. As such, HHS plans to begin enforcing the requirements of this final rule at the start of the next quarter, which begins April 1, 2017.”
The White House’s regulatory freeze put a 60-day hold on regulations that had been finished but not implemented when Trump took office. CMS also delayed the cardiac care bundle rule until March 21.
U.S. and EU Finalize Agreement on Pharmaceutical Inspections
On March 2, the United States and the European Union finalized an agreement to recognize each other’s pharmaceutical good manufacturing practices inspections—a move FDA officials say will let the agency focus its limited foreign inspection resources on areas like China and India where drug manufacturing has greatly increased. The effort—known as the Mutual Reliance Initiative (MRI)—was launched in May 2014 to increase FDA’s collaboration with Europe on drug quality efforts.
FDA said the agreement will help prevent duplication of drug inspections, lower inspection costs and “enable regulators to devote more resources to other parts of the world where they may be a greater risk.”
The document, “Amended Sectoral Annex for Pharmaceutical Good Manufacturing Practices (GMPs),” explains that a joint sectoral committee will be set up to monitor activities performed under the annex. The committee will be charged with developing and updating a list of recognized authorities, providing a forum to discuss issues related to the annex, considering the status and taking decisions on inclusions products listed in the annex, and adopting appropriate complementary technical and administrative arrangement to effectively implement the annex.
“The Committee shall be co-chaired by a representative of the FDA for the United States and a representative of the EU who each shall have one vote in the Joint Sectoral Committee. The Joint Sectoral Committee shall make its decision by unanimous consent. The Joint Sectoral Committee shall determine its own rules and procedures,” the document says.
The annex also says that all parties should maintain an alert system so that other parties can be made aware of defects, recalls, counterfeit or falsified products, or shortages and other quality or non-compliance issues.
For a related press release, click here.
FDA Report Shows Generic Drug Approvals at Record High
According to a new FDA report out Feb. 24, generic drug approvals are at a record high. More than 800 generic drugs were approved in 2016, up from 726 the previous year. Seventy-three of those approvals were the first generic version of a drug to reach the U.S. market. First-time generics, in particular, help reduce the cost of high-priced branded drugs, FDA’s generic drug office head Kathleen Uhl wrote in an accompanying blog post. Although 2016 was a productive year for the FDA, it was not the agency’s most prolific with regard to first-time generic approvals—FDA signed off on 90 first generics in 2015, 17 more than in 2016.
To see the report, click here.
Rare Disease Group Issues Statement on President Trump’s Address to Congress
The country’s main advocacy group representing rare disease patients contradicted President Donald Trump’s claim in his State of the Union address that a “slow and burdensome” FDA approval process is slowing down medical advances.
“We agree that FDA review processes can be improved upon to expedite the development and review of orphan drugs,” the National Organization for Rare Disorders (NORD) said in a March 1 statement. “Yet we disagree with the President that restraints must be slashed, or that the approval process at the FDA is preventing advances from reaching those in need.”
NORD cautioned against Trump’s calls for loosening FDA requirements, warning that lower safety and efficacy standards will just threaten the population with unsafe, ineffective therapies.
NORD added that FDA already shows “an incredible amount of flexibility” in approving treatments for rare diseases. Between 2008 and 2013, 87 percent of applications for rare disease treatments received an expedited FDA review compared to only 35 percent of treatments for common diseases.
The group also emphasized that fully staffing and funding the FDA would allow the agency to get drugs to patients faster. It is still unclear how Trump’s executive order calling for a hiring freeze will affect the agency, which has hundreds of vacant positions. Trump’s budget proposal would also require substantial cuts to most domestic programs like FDA.
3. State Activities
Arkansas: Arkansas House Approves Bill to Freeze Enrollment in Medicaid Expansion
The Arkansas House has approved legislation that would freeze enrollment in the state’s Medicaid expansion program. Under the bill, Arkansas would not approve any new enrollment after July 1. However, it is not likely to become law because Gov. Asa Hutchinson opposes it. Enrollment in Arkansas’s Medicaid expansion has gone beyond initial estimates, causing concerns from Arkansas Republicans that the state will not be able to cover its share of costs starting this year.
Florida: Safety Net Hospitals Ask for Increase in Supplemental Medicaid Money
Florida’s safety net hospitals are pushing for a $1 billion increase in supplemental Medicaid money the state receives from the federal government to cover the health care costs of low-income and uninsured residents. Tony Carvalho, president of the Safety Net Hospital Alliance of Florida, recently said that Florida should receive at minimum $1.6 billion in supplemental payments, known as low income pool (LIP) funding, up from the $608 million that Florida now receives. The association met with the Florida congressional delegation earlier this week to express their support as the state negotiates a new Medicaid 1115 waiver with the Trump administration. The current waiver, which includes LIP funding, expires June 30.
Montana: Bill to Make “Death With Dignity” Practice Illegal Dies in the House
A bill that would have made it illegal for terminally ill patients to obtain life-ending medication from a physician didn’t clear final passage in the Montana House. The legislation said the “death with dignity” practice goes against public policy, and physicians who help terminally ill patients end their lives with medication wouldn’t have been protected from homicide charges. The Montana Supreme Court ruled in 2009 that allowing terminally ill patients to receive life-ending medications was not against public policy and it protected physicians from prosecution.
New Jersey: Gov. Christie Wants Health Insurer to Help Pay for Drug Addiction Reform Plan
New Jersey Gov. Chris Christie made an odd request during his annual budget address last week: singling out Horizon Blue Cross Blue Shield of New Jersey, Christie attempted to pressure the state’s largest insurer into establishing a “permanent fund” from its surplus to support health care for the state’s poorest residents. The governor did not specify a funding amount. However, he said the fund, which he wants set up by June 30, could help pay for his drug addiction reform plan, including inpatient and outpatient rehab for both uninsured residents and low-income Medicaid enrollees.
North Carolina: Gov. Cooper Includes Medicaid Expansion Funding in Budget Plan
North Carolina Gov. Roy Cooper’s first budget plan includes Medicaid expansion funding, although Republicans who control the state Legislature are unlikely to support the proposal. One of Cooper’s first actions as governor was to try to expand Medicaid, but statehouse Republicans sued the Democratic governor to block it. Federal officials agreed to not act on Cooper’s request for roughly another two months.
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 HealthyChildrenandYouth@cms.hhs.gov by 11:59 p.m. on March 28, 2017.
For more information about the RFI, visit the CMS Innovation Center website.
Express Scripts Report Finds Drug Spending in Obamacare Markets Outpaced Employer Plans
According to a new report, drug spending growth in Obamacare’s health insurance marketplaces greatly outpaced employer plans Medicare and Medicaid last year.
Drug spending in the exchanges rose 14 percent in 2016 after accounting for rebates and discounts provided by drug companies, according to new data released by Express Scripts on Feb. 28. That increase was mostly due to a 7.8 percent increase in drug costs, while utilization rose 6.2 percent, the country’s largest pharmacy benefits manager said.
By comparison, there was just a 5.5 percent increase in per-member drug spending in Medicaid, a 4.1 percent increase in Medicare and a 3.8 percent increase in employer plans. Medicare last year spent about three times more per patient for drugs than any other health program, or nearly $3,700 per patient.
Seniors enrolled in private Medicare plans had lower drug spending on average than those enrolled in the prescription drug program. The average Medicare Advantage patient spent just over $2,600 on drugs, while Part D plan members spent more than double that, or nearly $5,500.
Express Scripts argues Medicare’s protected classes of drugs, which require health plans to cover all medicines for certain diseases like cancer and HIV, make it difficult for insurers to drive down costs. For example, they say cancer drugs for Medicare beneficiaries cost on average $875 more per prescription than those for commercial health plans.
GAO Finds Drug Companies Need More Guidance for Developing Antibiotics
GAO recently released a report finding that drug companies need more information on how to use incentives to develop new antibiotics. Each year, more than 2 million Americans get sick from bacterial infections that are resistant to antibiotics, and at least 23,000 die as a result. There has also been a steady decline in the development of new antibiotics since the 1980s—raising concerns that there may not be enough new antibiotics to replace those that have become ineffective.
In response, FDA has encouraged drug companies to develop new antibiotics, through incentives such as expediting its review of these drug applications. However, GAO found that FDA needs to clarify the role of draft guidance and develop qualified infectious disease product guidance, and recommended that the agency provide it.
GAO Recommends Improvements to Information Exchange in Post-Acute Care Settings
In a new report, GAO recommended that HHS comprehensively plan its efforts to increase the electronic exchange of health information in post-acute care settings, and evaluate these efforts.
Many patients who leave hospitals receive continuing care from places like rehab facilities (called post-acute care settings). When patients leave the hospitals and move to post-acute care settings, electronic health records can help providers know what the patient needs and better coordinate care. However, GAO found that issues like increased costs and a lack of access to technology deter the use of electronic health records in these settings.
To see the report, click here.
GAO Recommends Actions to Ensure VHA Facilities Follow Inspection Procedures
In new testimony, GAO recounts how it found that some Veterans Health Administration (VHA) facilities did not conduct all monthly inspections or follow all required inspection procedures. GAO recommended in its report (on which this testimony is based) that VHA ensure that its inspection programs are in line with its policy, and establish procedures to prevent missed inspections.
VHA requires that each of its medical facilities have an inspection program to monitor how staff dispenses controlled substances. Inspectors check, for example, that opioids that are dispensed from machines have a valid doctor’s order and are administered to patients.