Weekly Healthcare Update for March 12, 2012

Special March Madness Edition

Last Week in Congress

Last week, two House committees passed a bill to repeal the Independent Payment Advisory Board (IPAB), clearing the way for an upcoming floor vote. The Energy and Commerce Committee approved Rep. Phil Roe's (R-TN) IPAB repeal bill by voice vote last Tuesday; the Ways and Means Committee did the same on Thursday.

In other healthcare news, HHS Secretary Sebelius was back on the Hill last Tuesday to discuss her department's budget request with members of the House Appropriations Committee. The Senate Appropriations Health subcommittee held a hearing on the HHS budget proposal last Wednesday. The House Energy and Commerce Committee held a hearing on FDA user-fees last Thursday which included a review of pharmaceutical supply-chain issues.

In floor activity, the Senate took up its long-delayed two-year surface transportation bill, setting up a final passage vote this week. The Senate also approved two of President Obama's judicial nominations. On the House side, lawmakers approved the GOP's Jumpstart Our Business Startups (JOBS) act, a package of six job creation bills. The House also cleared a bill easing hydropower development rules in western states and a measure to strengthen duties against countries with undervalued currencies.

Off the Hill, the White House marked the launch of National Consumer Protection Week with a renewed push to highlight provisions of the Affordable Care Act. The push coincided with the second anniversary of the healthcare reform law and oral arguments before the Supreme Court at the end of the month.

The Week at a Glance

The House is out all week and returns next Monday. The Senate is in session and will look to complete debate on their two-year, $109 billion highway bill.

The House will return next week to consider the Senate highway bill. The chamber will also take up IPAB repeal legislation, which House GOP leaders plan to tie to another bill placing hard caps on medical liability lawsuits. The Senate's near-term agenda includes completion of the STOCK Act, postal reform and cybersecurity legislation.

In budget news, the CBO will release the March baseline Tuesday and the re-estimate of the President's budget later this week. The House will mark-up their budget in committee the week of March 19th and will debate the budget on the House floor the week of March 26th.

HHS Issues Final Rule on Health Insurance Exchanges

Today, HHS issued a final rule to implement state health insurance exchange provisions of the Affordable Care Act. The 644-page final rule outlines details of the exchanges, or insurance marketplaces, which are scheduled to launch Jan. 1, 2014. They will offer insurance plan options for individuals and small businesses, as well as federal subsidies for premiums.

The final rule outlined the minimum standards states must meet in establishing and operating their exchanges, such as individual and employer eligibility for enrollment. The rule also outlines minimum standards that health insurers must meet to participate in an exchange and the standards employers must meet to participate in the exchange. The regulation says it aims to offer states "substantial discretion" in both the design and operation of their exchanges.

The health law requires states to "demonstrate complete readiness" by Jan. 1, 2013, in order to guarantee they'll be operational 12 months later. In states that don't meet the deadline, a federal exchange will take over. The rule, however, allows for "conditional approval" if a state is "advanced in its preparation" by Jan. 1, 2013. In addition, states that aren't deemed ready for 2014 can apply to operate their own exchange in 2015 or any subsequent year.

The rule is effective 60 days after publication in Federal Register, although HHS will continue to accept comments for some sections of the regulation. A PDF of the rule can be found here.

Industry Alliance Pushes Lot-Level Drug Tracing System

The Pharmaceutical Distribution Security Alliance (PDSA), a group of drug companies and other supply chain stakeholders, is pushing a legislative proposal that outlines a drug tracing system with a tiered system of implementation, according to a draft released last week. The proposal also requires supply chain stakeholders to trace drugs at the lot level, serialize individual products, and identify the source of the product as well as the next recipient.

Supply chain issues were discussed at a House Energy and Commerce health subcommittee last hearing Thursday on the FDA's Prescription Drug User Fee Act (PDUFA) reauthorization legislation. PDUFA must be reauthorized by Sept. 30 and the vehicle is being eyed for several reform measures, including supply chain safety.

The FDA was charged with formulating track and trace standards under the FDA Amendments Act and held a public workshop last year. Supply chain stakeholders have been working toward a consensus, and industry sources say the PDSA proposal represents a good starting point.

FDA Considers Fast-Track Approval for 'Limited-Use' Drugs

Last week, the FDA announced that it is considering a new approval pathway for antibiotics, weight loss drugs, and other medications, to come to the market much faster, without the traditional expensive and lengthy clinical trials.

But drugs approved through the new pathway would contain highly restrictive labels and be restricted to a pre-identified, narrow population.

Dr. Janet Woodcock, head of the FDA's Center for Drug Evaluation and Research (CDER) explained the idea during last Thursday's Energy and Commerce hearing on FDA user fees. She said CDER has been in talks with the industry groups with the aim of finding a new approval pathway for antimicrobial agents.

The need for novel antibiotics is partly what spurred the FDA to consider a new pathway for drug approvals, Woodcock said. She said a hypothetical new antibiotic approved through the limited-use pathway would carry a bold label that says it should only be used in patients with serious and specific infections, and that it should not be used to treat infections caused by other organisms.

The idea differs from the Orphan Drug Pathway, under which the FDA grants approval for drugs to treat rare diseases affecting fewer than 200,000 people. But under the new proposal, the diseases would be common -- pneumonia or obesity, for example -- but not many patients would fit into the specific subset of patients for which the drug would be intended. Woodcock said the pathway would likely have to be approved by Congress, and then the FDA would issue a regulation and request public comment.

Lawmakers Seek Details of 340B Discount Drug Program

Last Monday, Rep. Joe Pitts (R-PA) and Sen. Chuck Grassley (R-IA), Michael Enzi (R-WY), and Sen. Orrin Hatch (R-UT) asked a range of stakeholders for a detailed accounting of how they operate the 340B program, a discount drug program that's meant to supply federally funded grantees and other safety net health care providers. A June 2011 HHS Inspector General report raised questions about the program's integrity noting the lack of federal oversight. Likewise, a September 2011 GAO said oversight of the program is "inadequate" to ensure that covered entities and manufacturers are in compliance with program requirements.

"The problems identified by the GAO as it relates to the oversight responsibilities of each party and the expansion of the program need resolution," the members wrote. Pitts, Grassley, Enzi, and Hatch wrote to the Pharmaceutical Research and Manufacturers of America; the Biotechnology Industry Organization; Apexus, Inc.; and the Safety Net Hospitals for Pharmaceutical Access.

Two House Panels Approve IPAB Repeal Bills

Last Thursday, the Ways and Means Committee voted to repeal the Independent Payment Advisory Board (IPAB), a 15-member panel tasked with cutting Medicare payments. The Energy and Commerce Committee passed the same repeal bill on Tuesday. GOP leaders hope to have the IPAB repeal bill on the House floor next week. The White House has aggressively defended the IPAB, saying it's one of the most important cost-control features in the health law.

In related news, the CBO said Thursday that IPAB repeal would add $3.1 billion to the deficit over 10 years. The CBO report can be found here.

Republicans Float Dueling Medicaid Reform Bills

Last week, House Republicans floated dueling Medicaid reform bills as Budget Committee Chairman Paul Ryan (R-WI) prepares to unveil his own proposal in the coming weeks. On Wednesday, leaders of the Republican Study Committee introduced the "State Health Flexibility Act" which would combine Medicaid and the Children's Health Insurance Program (CHIP) into a single block grant, while reducing federal spending on the two programs by $1.8 trillion over 10 years by freezing spending at current levels.

Separately, Energy and Commerce member Bill Cassidy (R-LA) is touting his own Medicaid reform proposal, which would replace the current open-ended federal matching rate system for states with a per-patient, per-month budget depending on the characteristics of each state's patient population. Unlike the RSC bill, Cassidy's proposal would have federal Medicaid money follow patients so that states would not be penalized if their populations change.

Many Republican governors have been calling for block grants so they can take over their Medicaid programs. Ryan's budget last year called for turning Medicaid into a block grant while cutting federal spending on the program by about $750 billion over 10 years; the budget proposal however only changed the financing mechanism for Medicaid, leaving the details of how much flexibility to give to states to authorizing committees.

MedPAC Mulls Out-of-Pocket Cost Hikes

Under a proposal floated by the 17-member Medicare Payment Advisory Commission (MedPAC) last week, the average Medicare beneficiary would pay up to $240 more each year for a traditional Medicare plan. MedPAC says they want to rework cost-sharing to provide "better protection against high out-of-pocket spending and to create incentives for beneficiaries to make better decisions about their use of health care."

MedPAC commissioners said that shifting more costs onto beneficiaries may be one of the only policy tools available for reining in Medicare spending. At the Thursday-Friday conference, the group discussed six specific changes to the current Medicare fee-for-service plans, including placing an out-of-pocket maximum on plans. The combination of co-pay changes, insurance surcharges and other MedPAC-suggested changes would add up to between $220 and $240 in additional annual costs for the average beneficiary.

If the commission votes to endorse the recommendations next month, they would be included in its June report to Congress. MedPAC will present one of its two major annual reports to Congress this week, focusing on payment recommendations.