Healthcare Roundup: April 27, 2023

In the Lede

The House passed, in a 217-215 vote, the Limit, Save, Grow Act of 2023 (H.R. 2811), legislation that would raise the debt limit by $1.5 trillion or until March 31, 2024 – whichever comes first – while reducing FY 2024 non-defense discretionary spending to FY 2022 levels, among other provisions aimed at reducing federal spending. Every Democrat voted against the bill, while four Republicans – Reps. Andy Biggs (R-AZ), Ken Buck (R-CO), Tim Burchett (R-TN), and Matt Gaetz (R-FL) – also rejected the proposal. The House Republican debt ceiling proposal would require that certain Medicaid beneficiaries participate in a work program or volunteer for at least 80 hours per month. According to the cost estimate from the Congressional Budget Office (CBO), establishing Medicaid community engagement – or work requirement – for able-bodied adults ages 19-55 without dependents would decrease federal spending by about $109 billion over the 2023-2033 period. CBO estimated that about 15 million people could be subject to the Medicaid community engagement requirement each year, although many of those people would qualify for an exemption. The bill is unlikely to be considered by the Senate – much less pass the upper chamber as Senate Majority Leader Chuck Schumer (D-NY) called for House Speaker Kevin McCarthy (R-CA) to "drop the brinkmanship, drop the hostage taking, come to the table with Democrats, pass a clean bill to avoid default."

The Department of Health and Human Services (HHS), meanwhile, released an analysis showing that approximately 21 million Americans’ health coverage and access to care would be at risk if the Medicaid work reporting requirements proposed by congressional Republicans were implemented. The analysis only included states that have expanded Medicaid coverage under the Affordable Care Act since the proposed policy would likely affect much smaller numbers of people in non-expansion states. Noting that the "vast majority" of working-age Medicaid enrollees are already employed, have a disability, and/or are parents, the administrative burden for enrollees to report adherence to or exemption from Medicaid work requirements could put 21 million Medicaid beneficiaries in this age group at risk of coverage loss. According to the HHS analysis, administrative churning is a "significant issue with Medicaid eligibility redeterminations, and new reporting requirements will compound this problem."

The House debt ceiling proposal would also rescind about $72 billion in unspent COVID-19 relief funding provided under six COVID relief laws, including about $17 billion allocated to HHS. According to an analysis from House Appropriations Ranking Member Rosa DeLauro (D-CT), the rescission would cut about $3 billion in Provider Relief Fund for rural and safety net hospitals, nursing homes, and health care providers for expenses or lost revenues attributable to the pandemic. Another $5 billion would be cut for advanced research and development of vaccines and therapeutics to combat future COVID variants, including intranasal vaccines that could prevent new respiratory infections and “universal” vaccines that could provide protection against all coronaviruses.

On the Hill

Senate Health, Education, Labor, and Pensions (HELP) Committee Chairman Bernie Sanders (I-VT) announced a bipartisan deal on several legislation aimed at lowering prescription drug prices, including the Pharmacy Benefit Manager Reform Act, a draft bill to increase transparency in the operations of pharmacy benefit managers (PBMs). The bill would also require PBMs to pass through any drugmaker rebates to the health plan or employer and restrict "spread pricing", in which a PBM charges a health plan higher prices for drugs than what is paid to the pharmacy. In addition to the PBM bill, the Committee will markup next Tuesday, May 2, the following bills:

the Ensuring Timely Access to Generics Act of 2023, legislation sponsored by Sens. Jeanne Shaheen (D-NH) and Susan Collins (R-ME) aimed at increasing competition through better oversight and enforcement of the Food and Drug Administration’s (FDA) citizen petition process, which allows interested stakeholders, including drug companies, to bring concerns to the FDA’s attention regarding pending applications but has been used by 'bad actors' to delay the approval of generic competitors and extend their patent protections;
the Expanding Access to Low-Cost Generics Act of 2023, legislation sponsored by Sens. Tina Smith (D-MN) and Mike Braun (R-IN) to address the anti-competitive practice of "parking" – when a brand name manufacturer agrees not to sue the first company that submits an application to create a generic version as long as the generic company agrees to delay bringing that generic drug to market – by overhauling the 180 days of marketing exclusivity granted to the first generic drugmaker that files an application on a brand name product;
the Retaining Access and Restoring Exclusivity (RARE) Act, legislation sponsored by Sen. Tammy Baldwin (D-WI) that would codify the FDA’s longstanding interpretation of the Orphan Drug Act of 1983 to ensure that the scope of the orphan drug exclusivity is clarified to apply only to the same approved use or indication within such rare disease or condition instead of the same disease or condition.

The HELP Committee will also hold a hearing on Wednesday, May, 10, entitled "The Need to Make Insulin Affordable for All Americans", with CEOs from the major insulin manufacturers and executives from the major pharmacy benefit managers (PBMs) scheduled to testify. In announcing the hearing, HELP Committee Chairman Bernie Sanders (I-VT) stated that "the United States cannot continue to pay, by far, the highest prices in the world for prescription drugs while drug companies and PBMs make billions in profits." While the insulin manufacturers have announced they would cut the prices of the most popular insulins by 70 percent or more, Sen. Sanders and Rep. Cori Bush (D-MO) have introduced legislation that would cap the list price of insulin at no more than $20 per vial.

Separately, Sens. Jeanne Shaheen (D-NH) and Susan Collins (R-ME), co-chairs of the Senate Diabetes Caucus, introduced the Improving Needed Safeguards for Users of Lifesaving Insulin Now (INSULIN) Act of 2023, legislation the lawmakers touted would address the the skyrocketing costs of insulin, while extending vital patient protections, fostering competition and broadening access to needed insulin products. The INSULIN Act would:

Limit out-of-pocket costs for patients with diabetes by ensuring that group and individual market health plans must waive any deductible and limit cost-sharing to no more than $35 or 25% of list price per month for at least one insulin of each type and dosage form.
Prohibit pharmacy benefit managers (PBMs) from placing utilization management tools – prior authorization, step therapy, etc. – on products with capped out-of-pocket costs.
Mandate PBMs pass through 100% of insulin rebates and other discounts received from manufacturers to plan sponsors, reducing perverse incentives in the insulin market that encourage high list prices and helping patients in the form of reduced premiums.
Promote generic and biosimilar competition to lower costs to patients by:

Creating a new expedited FDA approval pathway for biologic drugs lacking adequate biosimilar competition, similar to FDA’s current Competitive Generic Therapies pathway. This will improve the timeliness of resolving regulatory barriers slowing down market entry of lower cost products;
Ensuring adequate oversight of the Food and Drug Administration’s (FDA) citizen petition process, easing approval of generic and biosimilar drugs;
Allowing Medicare Part D plans to place biosimilar drugs on formulary immediately after entering the market, identical to other generic drugs; and,
Requiring a report to Congress on issues and market dynamics delaying or restricting biosimilar insulin competition.

Last month, Sens. Raphael Warnock (D-GA) and John Kennedy (R-LA) introduced the Affordable Insulin Now Act of 2023 that would cap the out-of-pocket cost of insulin at $35 a month for insured and uninsured insulin users.

Sen. Elizabeth Warren (D-MA) and Rep. Pramila Jayapal (D-WA) sent a letter to the U.S. Patent and Trademark Office (USPTO) calling on the agency to exercise its existing administrative authorities to hold pharmaceutical companies accountable for "anti-competitive business practices" and help lower drug prices, encourage competition, and increase innovation. Among the lawmakers' recommendations for USPTO include:

revising the agency's practice of granting obvious patents that have allowed pharmaceutical companies to sue would-be competitors for violating patents and reach settlements that have delayed the market entry of biosimilars;
requiring that all related patents that are chained together by a terminal disclaimer be invalidated if one patent in the chain is successfully challenged by a competing company;
raising filing fees and limiting the number and time period for continuation applications to discourage "obviousness-type double patents";
requiring applicants to disclose at the time of filing whether the drug compound covered by the patent application is in clinical trials, then accordingly assign more examiners and apply a more intensive examination;
reversing policies that have led to an increase in discretionary denials of petitions filed through inter partes review (IPR) process; and
establishing an office dedicated to building public transparency, serving the public interest, and strengthening interagency communication.

In February, the Pharmaceutical Research and Manufacturers of America (PhRMA), in a letter to USPTO, argued that "continuation patents are essential to ongoing biopharmaceutical research and development."

Reps. Adrian Smith (R-NE) and Debbie Dingell (D-MI) introduced legislation, the Expanding Care in the Home Act, to modernize Medicare reimbursement and increase patient access for home-based health services. Specifically, the bill would:

Improve the feasibility for primary care doctors to deliver home-based care, bringing house calls back to Medicare beneficiaries.
Create a personal care services benefit in Medicare to fill the gap for beneficiaries unable to afford to pay out of pocket yet do not qualify for home care services by Medicaid.
Bolster the accessibility and affordability of home dialysis for kidney patients.
Increase access to preventative screening by allowing beneficiaries to receive in-home lab testing.
Fix outdated policies to better enable the delivery of advanced diagnostic imaging in the home.
Expand access to home infusion services by addressing fragmentation and affordability.
Build up the next generation of the home-based care workforce, including physicians, nurses, and emergency medical service providers.

At the Agencies

As part of its testimony before the House Ways and Means Oversight Subcommittee hearing on tax-exempt hospitals, the Government Accountability Office (GAO) released a report noting that hospital community benefits – part of a set of requirements for nonprofit hospitals to obtain and maintain tax exemption – is not defined in law. According to GAO, while the legal requirements – such as setting billing and collection limits – are easy for the Internal Revenue Service (IRS) to confirm a hospital's tax exempt status, it's more difficult to verify community benefits because the law isn't specific about which services qualify. In 1969, the IRS identified factors that can demonstrate community benefits, but they are not requirements, GAO noted. IRS does not have authority to specify activities hospitals must undertake and makes determinations based on facts and circumstances, according to the GAO report. As a result, tax-exempt hospitals have broad latitude to determine the community benefits they provide, but the lack of clarity creates challenges for IRS in administering tax law. The GAO stated that revising tax forms so hospitals can better share such information may help justify exemptions. In a September 2020 report, GAO recommended that Congress consider clarifying the law and recommended ways to improve IRS oversight.

The Centers for Medicare and Medicaid Services (CMS) released an update on the agency's efforts to increase compliance with the hospital price transparency requirements. The Hospital Price Transparency regulation requires hospitals to make public the standard charges they have established. Under the current enforcement process, CMS noted that the case cycle consists first of a warning notice with instructions to correct the deficiencies within 90 days. If a hospital has not come into compliance after 90 days, CMS issues a corrective action plan (CAP) request with a 45-day deadline for hospitals to submit a CAP. Hospitals are then required to propose a completion date for CMS approval, which has ranged from 30 to 90 days on average. For hospitals that have not completed the necessary steps and come into compliance, CMS issues a civil monetary penalty (CMP). To date, the average time to complete a case cycle is 195 to 220 days. CMS touted that by using automation to group complaints based on file types and hospital systems, CMS has increased the number of comprehensive reviews conducted from 30-40 per month to over 200 comprehensive reviews per month. As of April 2023, CMS has issued more than 730 warning notices and 269 requests for CAPs. CMS has imposed CMPs on four hospitals for noncompliance, which are posted and made publicly available on the CMS website. Every other hospital that was reviewed through a comprehensive compliance review has corrected its deficiencies or is in the process of doing so, according to CMS. CMS also announced that it is updating the enforcement process, with respect to areas that do not require rulemaking, with the following changes:

Requiring hospitals to be in full compliance with the hospital price transparency regulation within 90 days from when CMS issues the CAP request, rather than allowing hospitals to propose a completion date for CMS approval which can vary. This change will standardize and streamline the timeframe and promote compliance at earlier dates.
Imposing a CMP on hospitals that fail to submit a CAP at the end of the 45-day CAP submission deadline. Before imposing the CMP, CMS will re-review the hospital's files to determine whether any of the violations cited in the CAP request continue to exist and, if violations are found, impose a CMP.
Streamlining the compliance process by no longer issuing a warning notice to the hospital and will instead immediately request that the hospital submit a CAP

CMS Administrator Chiquita Brooks-LaSure, testifying before the House Energy and Commerce Health Subcommittee's hearing on transparency and competition in health care, said that the agency would welcome additional authority to enforce hospital price transparency. Committee Chair Cathy McMorris Rodgers (R-WA) said she doesn’t believe CMS is doing enough with its current authority around price transparency and there hasn’t been enough enforcement. In its Fact Sheet update, CMS indicated that it "continues to explore additional ways to ensure that hospitals fully comply with the hospital price transparency requirements, including whether to propose additional changes through rulemaking."

In the News

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