United States: Capitol Hill Healthcare Update - November 12, 2018

Below is this week's "Capitol Hill Healthcare Update," which is posted on Mondays when Congress is in session. Highlights this week: Democrats' takeover of the House will yield big changes for healthcare policy in 2019; several GOP lawmakers active in healthcare policy are defeated; pharma pushes for Part D changes in the lame duck; and more.

DEMOCRATS WIN HOUSE MAJORITY, OUTLINE HEALTH POLICY PRIORITIES

Democrats captured the House majority in last week's midterm elections, ushering in new healthcare priorities and pledging new oversight for industry stakeholders beginning next year.

Republicans' efforts to repeal and replace the Affordable Care Act (ACA) will itself be replaced by House Democrats efforts to strengthen the ACA and investigate the Trump administration's efforts to roll back the law's patient protections. Democrats will push for an early House vote next year to protect patients with pre-existing conditions – a political issue Democrats used against Republicans in the elections with deadly effect.

Incoming House Speaker Nancy Pelosi, D-Calif., pledged that legislation to lower prescription drug prices will be at the top of Democrats' legislative agenda in early 2019. Rep. Lloyd Doggett, D-Texas, is among Congress' loudest critics of the pharma industry, and he's likely to be chairman of the Ways and Means Health Subcommittee. The panel has jurisdiction over how Medicare reimburses hospitals and physician-administered drugs.

Doggett this summer introduced legislation that would allow Medicare to negotiate prices directly with manufacturers – and if the companies refused to negotiate, HHS could invalidate patents and grant competitive licenses to other manufacturers. Doggett is expected to push for the legislation – which currently has 100 Democrats as co-sponsors – in the opening weeks of the new Congress, including holding hearings in his subcommittee.

Doggett's bill may not win House approval and likely wouldn't pass in the Senate. But it underscores the ferocity with which Democrats are expected to target pharma and drug prices.

In addition to drug prices, incoming Energy and Commerce Committee Chairman Frank Pallone, D-N.J., is expected to target the $84 billion cosmetics market, including examining whether to require Food and Drug Administration approval of products before they could be sold to consumers. The committee also wants to give the FDA the statutory authority to regulate lab-developed tests and speed approvals of biosimilars.

DEMOCRATS WILL MOUNT AGGRESSIVE HEALTHCARE OVERSIGHT AGENDA

In addition to advancing healthcare policy priorities, Democrats will use their House committee chairmanships to launch a sweeping oversight agenda, investigating the Trump administration's regulatory efforts to unwind the Affordable Care Act.

HHS' headquarters on Independence Avenue is only one block from Capitol Hill, which will be convenient for House Democrats who are planning to send the department a blizzard of letters requesting – and, if necessary, subpoenas demanding – officials' emails, phone logs and calendars, as well as documents and records.

The private sector will be in Democrats' oversight crosshairs, too, especially pharmaceutical manufacturers. Democrats will be looking at drug manufacturers' expenses for research, marketing and executives' salaries. Even before the election, Rep. Jan Schakowsky, D-Ill., a senior member of the Energy and Commerce Health Subcommittee, sent letters to five drugmakers demanding to know how they used savings from the 2017 tax reform law and publicly funded research even as they raised drug prices.

It is likely industry executives will be called to testify publicly at committee hearings – perhaps under threat of subpoena. Although Rep. Frank Pallone, D-N.J., the incoming chairman of the Energy and Commerce Committee, said subpoenas should be a last resort, his panel is readying massive oversight scrutiny of the healthcare sector – especially pharma.

The real oversight fireworks may come from the committee that lacks legislative authority over healthcare policy. But the Oversight and Government Reform Committee – of which Rep. Elijah Cummings, D-Md., will become chairman – can probe any aspect of the executive branch or private sector, including issuing subpoenas to compel executives to testify in public hearings. Cummings is a long-time drug industry critic and had meetings in 2017 with President Donald Trump to discuss legislation to lower drug prices.

In addition to pharma industry activities, Pallone will be targeting the FDA's accelerated approval pathways for drug and medical device manufacturers as well as relaxed post-market study requirements. The committee will also examine the FDA's approval of opioids and opioid manufacturers' activities before the crisis gripped the nation.

PHARMA INDUSTRY TO PUSH PART D FIX IN LAME DUCK

Trade groups representing pharmaceutical manufacturers will push a lame-duck effort for changes to the coverage gap in the Medicare Part D prescription drug program.

Before the election, Republican House leaders had been working to correct a Congressional Budget Office fiscal forecast that led lawmakers in February to vote to increase from 50 percent to 70 percent the discount manufacturers provide for brand-name drugs in the Part D donut hole. That change actually reduced costs for insurers offering Part D plans and pharmacy benefit managers.

Some lawmakers had wanted to couple language lowering the industry's donut hole contribution to 63 percent with separate legislation to prevent manufacturers from delaying generic drug companies' access to drugs protected by the FDA's REMS safety program. That REMS language would lower federal healthcare spending by $3.3 billion over a decade, according to a Congressional Budget Office analysis.

Disagreements among House and Senate Republicans and the White House plus opposition from leading Democrats stalled the effort before the election. Sen. Ron Wyden, D-Ore., the ranking Democrat on the Finance Committee, said before the election that Republicans' effort to aid "price-gouging pharmaceutical manufacturers [was] unconscionable."

With Democrats set to take over the House in January, they seemingly would have even more leverage in the lame duck session to block efforts to aid pharma companies – or extract more concessions to allow it to go through in December.

FATE OF MEDICAL DEVICE TAX REPEAL UNCERTAIN IN LAME DUCK

Although the medical technology industry is gearing up to push for a vote next month to repeal the medical device tax, the midterm elections upended the fate of the tax in the lame duck.

Congress earlier this year suspended the device tax until 2020. But industry advocates want to permanently kill the 2.3 percent excise tax, saying it siphons funds from growing medical technology companies and burdens innovation and job creation.

Advocates hope to attach a repeal bill to other must-pass legislation next month. But it's not clear – and probably won't be for weeks – what appetite lawmakers will have for a larger lame duck agenda that could include device tax repeal.

Congress' most important legislative decisions center on the unfinished fiscal 2019 spending bills, including funding for the Department of Homeland Security. Funding expires Dec. 7, and President Donald Trump wants billions of dollars in new funding for a wall along the U.S.-Mexico border. It's possible a standoff could provoke a partial government shutdown next month.

How the border wall and other funding issues are resolved could determine whether additional items like device tax repeal would be added to must-pass legislation.

RE-ELECTION LOSSES, RETIREMENTS PROMPT GOP HEALTH BRAIN DRAIN

Retirements and midterm election losses will significantly thin the ranks of Republican lawmakers with years of legislative prowess in healthcare policy.

Senate Finance Committee Chairman Orrin Hatch, R-Utah, did not seek re-election this year after first being elected in 1976. He is the longest-serving Republican senator in history.

Hatch's most lasting healthcare policy legacy is the 1984 law that's informally named after him: the Hatch-Waxman Act, which established the legal framework for the development of the modern generic drug industry while also preserving incentives for innovative pharmaceutical development.

Hatch authored the 1994 law that effectively established the dietary supplement industry with limited FDA oversight. Hatch in 1997 teamed up with Sen. Ted Kennedy, D-Mass., to enact the Children's Health Insurance Program, which today provides low-cost health coverage to nearly 10 million children in families that earn too much money to qualify for Medicaid but not enough to buy private insurance.

The senator in 1990 was one of the principal authors of the Americans with Disabilities Act. While he attended some bipartisan Senate meetings in 2009 about what later became the Affordable Care Act, Hatch became an outspoken critic of the law. In 2017 he oversaw the passage of the Tax Cut and Jobs Act, which repealed the ACA's individual-mandate tax. He also was a champion for the medical technology industry, which has a strong footprint in Utah, and regularly advocated for the repeal of the ACA's medical device tax.

Lawmakers who were defeated last week include Rep. Peter Roskam, R-Ill., who served as chairman of the Ways and Means Health Subcommittee, which overseas CMS and Medicare Part A; Rep. Erik Paulsen, R-Minn., who for several years has been the medical device industry's No. 1 champion in Congress and is the author of legislation to repeal the medical device tax; and Rep. Leonard Lance, R-N.J., a senior member of the Energy and Commerce Health Subcommittee, which has jurisdiction over the FDA and Medicare Part D.

RESEARCH GROUPS HOST CELL THERAPY BRIEFING FOR HILL STAFF

The Lymphoma Research Foundation and the National Comprehensive Cancer Network this week will host a congressional staff briefing on CAR T-cell therapy, including the current federal regulatory and reimbursement landscape.

While transformative immunotherapies have recently won FDA approval to treat blood cancers, Medicare's reimbursement for bundled inpatient services doesn't adequately cover those treatments, even with separate approval of new technology add-on payments. Medicare's physician-administered reimbursement structure also isn't equipped to handle the cost of revolutionary, one-time therapies that may move from inpatient to Part B.

Last month, Reps. Erik Paulsen, R-Minn., and Suzan DelBene, D-Wash., sent a letter to Center for Medicare and Medicaid Services Administrator Seema Verma, urging her agency to develop appropriate payment options within the inpatient setting for CAR T therapies.

NOTE TO READERS: After this week, Congress will recess for the Thanksgiving holiday. The "Capitol Hill Healthcare Update" will next publish Dec. 3, as lawmakers reconvene for the lame duck voting session. But check back here to the Ohio Clock blog for any healthcare policy developments or other news from Capitol Hill.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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