Capitol Hill Healthcare Update

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ACA TAXES ON CHOPPING BLOCK IN YEAR-END BUDGET DEAL

Congressional leaders are poised to announce an agreement today that would permanently repeal the Affordable Care Act (ACA) taxes on medical device manufacturers, insurers and high-cost health plans as part of a spending package that would avoid a government shutdown later this week.

If the tax provisions are repealed, it would represent an enormous victory for the healthcare industry, which has been lobbying against the taxes since the ACA was enacted nearly a decade ago.

Congressional budget forecasters estimate the medical device tax would generate more than $20 billion over 10 years, while the so-called Cadillac tax on pricey health plans was expected to generate $200 billion. The tax on insurers was similarly projected to raise tens of billions of dollars annually.

Congress was not expected to offset the loss of revenue from those taxes.

Another healthcare provision that could be included in the year-end budget bill would raise the legal age for buying tobacco products to 21. Legislation aiming to end surprise medical bills – which has sharply divided lawmakers struggling to negotiate a solution – was not expected to be included.

House leaders expect to vote on the spending and tax package as soon as Tuesday before moving it to the Senate, where a final vote would send the package to the White House for President Donald Trump’s expected signature.

DRUG PRICE LEGISLATION IN 2020?

Pharmaceutical manufacturers dodged a bullet in Congress this year as lawmakers were unable to reach consensus on comprehensive drug pricing legislation.

A year-end bill to fund the government into 2020 is expected to include language making it easier for generics manufacturers to gain access to REMS-protected drugs for bioequivalency testing. But the most adverse provisions pushed by Democrats and Republicans – requiring the government to negotiate prices and limiting annual price increases – will not become law.

The House last week approved Speaker Nancy Pelosi’s proposal to lower prescription drug prices – the Lower Drug Costs Now Act. The sweeping legislation includes as its centerpiece a requirement that pharmaceutical manufacturers negotiate prices with the government on several hundred of the most expensive drugs; it also would apply those negotiated prices to private health plans nationwide.

Yet the industry and its allies succeeded in ensuring passage nearly along party lines, as only two Republicans joined all House Democrats in voting for the legislation.

Senate Finance Committee leaders, including Chairman Chuck Grassley, R-Iowa, and ranking Democrat Ron Wyden, D-Ore., updated their committee-passed drug pricing bill earlier this month. But they failed to address Republicans’ concerns with the proposal and it remains largely stalled.

Despite widespread bipartisan interest in reducing drug prices and pressure from the White House, chances for significant legislation continue to dim as the calendar moves toward 2020.

Still, pharma isn’t popping the champagne heading into the holidays. The industry is still smarting from a White House decision this month to drop exclusivity language for biologics from the U.S.-Mexico-Canada trade agreement. The Trump administration also is likely to announce executive orders approving Florida’s plan to import prescription drugs from Canada as well as a proposal that would tie drug prices for physician-administered drugs to an index of prices paid in countries where governments set drug prices.

UNCERTAIN PATH FORWARD ON SURPRISE MEDICAL BILLS AMID COMPETING PLANS

Republicans and Democrats on Capitol Hill agree on the need to address unexpected bills for out-of-network medical care, and President Donald Trump also urged action. But an agreement on a solution remains elusive.

Last weekend, leaders of the Senate HELP Committee and House Energy and Commerce Committee announced an agreement on a legislative solution. But leaders on the House Ways and Means Committee – including Chairman Richard Neal, D-Mass., and ranking Republican Kevin Brady, R-Texas –released their own strategy for addressing surprise bills. The committee proposal would rely on an independent arbitration to resolve payments. The proposal from the Senate HELP and House Energy and Commerce committees would set a benchmark payment rate.

Tempers flared on Capitol Hill over the legislative perceived turf war. Reps. Frank Pallone, D-N.J., and Greg Walden, R-Ore., and Sen. Lamar Alexander, R-Tenn., believe they have a proposal that can become law before the end of this year and that Neal has upended that progress. But hospitals and doctors oppose the bicameral proposal and have said it could jeopardize patients’ access to care.

Despite bipartisan agreement on the importance of the issue, a solution will now almost certainly have to wait until 2020, if it happens at all.

WORRIES CONTINUE OVER PHARMACEUTICAL INGREDIENTS FROM CHINA

Senate Minority Leader Chuck Schumer, D-N.Y., is the latest lawmaker to express concerns over the safety and security of active pharmaceutical ingredients from China.

In a letter to Comptroller General Gene Dodaro, Schumer requested that the Government Accountability Office “investigate the capability of the United States to manufacture finished pharmaceutical products and active pharmaceutical ingredients.”

Concern grew on Capitol Hill after the 2019 annual report from the U.S.-China Economic and Security Review Commission highlighted American reliance on pharmaceuticals and active pharmaceutical ingredients from China as a key concern. The commission found that “U.S. consumers may be unknowingly accepting risks associated with drugs originating from China” because of ineffective regulation in China and that China could use U.S. reliance on its products as an economic weapon.

Earlier this month, a bipartisan group of senators wrote to Defense Secretary Mark Esper requesting a staff briefing to address several questions regarding national security risks posed by reliance on Chinese products. The House Energy and Commerce Committee has taken an active interest as well, with recent hearings in both its health and oversight subcommittees on the security of the pharmaceutical supply chain.

COMMITTEES PRESS CMS ON MEDICARE PLAN FINDER

The bipartisan leadership of the two principal House committees with jurisdiction on health policy wrote to Centers for Medicare & Medicaid (CMS) Administrator Seema Verma last week regarding their concerns with the Medicare Plan Finder that seniors use to evaluate insurance options.

Reps. Frank Pallone, D-N.J., Greg Walden, R-Ore., Richard Neal, D-Mass., and Kevin Brady, R-Texas, highlighted recent reports from consumer advocates and counselors who help seniors shop for Medicare plans. According to the lawmakers, concerns emerged during the recent open enrollment period that an updated Medicare Plan Finder website “was confusing, generated incorrect results, and inadvertently led beneficiaries to select plans with lower premiums but higher overall costs.”

The committee leaders requested a staff briefing and written responses regarding the problems with the Plan Finder and efforts to correct those errors. Because Medicare Open Enrollment closed Dec. 7, they also urged CMS to hold a Special Enrollment Period for beneficiaries who may have been subjected to problems when selecting their plans.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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