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The Medliminal Washington Report 5.16.18

May 16, 2018

Raleigh, North Carolina, USA State Capitol Building.

The president finally delivered his much-anticipated address on prescription drug prices, and released a 44-page blueprint outlining the administration’s strategy and priorities. While the speech was criticized by some for not offering proposals targeting drug makers or health plans, the blueprint envisions future regulatory actions, so this will be an ongoing issue to monitor in the coming months. Meanwhile, addressing the nation’s opioid epidemic remains the dominant health care issue on Capitol Hill. The House Energy and Commerce Committee approved more than two dozen bills last week, and will take up more this week. The Senate health committee chair acknowledged defeat in efforts to stabilize the individual insurance and exchange markets, which is expected to cause premium spikes for 2019. At the state level, Vermont became the first state legislature to approve prescription drug importation and Connecticut joined the growing list of states adopting prescription drug price transparency legislation. We’ve got it all covered in this week’s health care review.

The Administration

President Releases “Blueprint” to Lower Prescription Drug Prices

On May 11, President Trump and Health and Human Services (HHS) Secretary Alex Azar unveiled a 44-page Blueprint to Lower Drug Prices and Reduce Out-of-Pocket Costs, designed to bring “soaring drug prices back down to earth.” The President touted the proposal as the “most sweeping action in history to lower the price of prescription drugs to the American people.”  While the impact on pricing remains to be seen, the blueprint contains more than 50 actions HHS has planned, or are under consideration.

The blueprint lays out the details of four overarching strategies to reduce prescription drug costs:

  • Improved competition
  • Better negotiation
  • Incentives for lower list prices
  • Lowering out-of-pocket costs

Specific proposals to meet these objectives include: instructing CMS to make Medicare and Medicaid prices more transparent, prohibiting Medicare Part D plan contracts from including so-called “gag clauses” that prevent pharmacists from informing patients when they could pay less out-of-pocket; prohibiting Medicare Part D plan contracts from preventing pharmacists from informing patients when they could pay less out-of-pocket; allowing Medicare Part D plans to adjust formularies mid-year if a drug manufacturer increases the price of a drug on the formulary, and reforming how Medicare Part B drugs are priced and potentially allowing Medicare Part D plans to negotiate prices for such drugs. Conspicuously absent was an issue that the president supported as a candidate: allowing the federal government to negotiate drug prices for Medicare beneficiaries.

On Capitol Hill, reaction to the plan fell predictably along partisan lines: Republicans generally praised it, while Democrats criticized it for not going nearly far enough. Although the president described the blueprint as “the most sweeping action in history,” it does not envision much congressional action. Instead, the plan relies mostly on regulatory actions, guidance documents and demonstration projects that HHS, the Food and Drug Administration (FDA) or the Centers for Medicare and Medicaid Services (CMS) could do on its own. Many specific proposals start with “HHS may;” nothing in the blueprint is a straight directive – it is a suggestion for the agency. We will continue to monitor and update as HHS moves forward.

Ahead of the speech, nine House Democrats on the Affordable Prescription Drug Task Force laid out their own drug pricing plan. Their plan includes: Allow Medicare to negotiate prescription drug prices; force drug companies to reveal the true cost of producing their products; end tactics that thwart completion like pay-for-delay deals, and allow the importation of prescription drugs from other countries.

President Calls for $15 Billion Spending Cut; $7 Billion from CHIP Funding

The White House sent a proposal to the House on May 8 to cut federal spending by more than $15 billion, roughly half of which would come from the Children’s Health Insurance Program (CHIP). The plan has drawn widespread condemnation from Democrats, and a number House and Senate Republicans are expressing increasing reservations about the plan.

The White House argues that the rescissions package includes funding previously authorized by congress but not spent, and rescinding the money would send a powerful message to voters that Washington is serious about controlling spending. Administration officials also said taking back the money wouldn’t negatively impact CHIP or the families that rely on it. The Congressional Budget Office (CBO) concluded that the rescissions would not “affect budget outlays, or the number of individuals with insurance coverage.”

However, some Republican lawmakers remain cool to the package, not only because it would target funding from the popular children’s health program but also because they would gain little credit for reducing the deficit. Approving the $15.4 billion rescission proposal would reduce the deficit by only $1.3 billion over 11 years, according to the CBO. In December, Congress reauthorized CHIP funding for another 10 years, so this is an issue that many Republicans would care to not take on again in an election year. The plan is expected to pass the House, but likely will not secure the necessary 60 votes in the Senate to pass.


Senate Health Committee Chair Declares ACA Stabilization Bill Dead

In a speech on the Senate floor, Lamar Alexander (R-TN), chair of the Health, Education Labor and Pensions (HELP) Committee announced that he was throwing in the towel on a bipartisan bill meant to stabilize the individual health insurance and exchange markets, placing the blame on Democrats’ resistance to making changes to the law.

Highly touted in the fall of 2017 after Republican attempts to repeal or restructure the ACA failed, the stabilization measures were ultimately left out of the omnibus federal budget bill in March as the parties disagreed on including language aimed at preventing any funding from being directed towards abortions.

“What Democrats really were saying was we won’t change one sentence of Obamacare, even to parts that obviously are not working, and even when most of their caucus supports the changes,” Alexander said. “Given Democrats’ attitude, I know of nothing that Republicans and Democrats can agree on to stabilize the individual health insurance market.”

Senator Patty Murray (D-WA), ranking member of the HELP Committee and co-sponsor with Senator Alexander, responded to his remarks by saying she wants to continue the work on a stabilization package. “It’s disappointing that instead, they are digging in their heels, doubling down on partisanship, and forcing families to pay the price by allowing insurers to skirt patient protections—but as I’ve said before, Democrats are not walking away from the table even if Republicans are,” she said in a statement.

Senate Republicans in Discussions with CMS to Expedite States’ 1332 Waiver Applications

In a letter to supporters, Senator Alexander said that he and CMS Administrator Seema Verma are discussing making 1332 state innovation waivers easier to obtain by speeding up the waiver application process. Senator Susan Collins (R-ME) is also in discussions with Administrator Verma.

Senators Alexander and Collins spent months trying to pass legislation to fund cost-sharing reduction payments to insurers and a federal reinsurance program, but their bill failed in March during omnibus budget negotiations. After the market stabilization measure failed, several states submitted, or are in the process of submitting, 1332 waivers to CMS aimed at lowering premiums and stabilizing the markets. HHS has told states that it will work to quickly approve their requests before rate filing deadlines.

House Committee Approves More than Two Dozen Opioid Bills

On May 9, the House Energy and Commerce Committee approved more than two dozen opioid-related bills designed to combat the national crisis. The committee will vote on more bills this week, including controversial proposals such as changes to Medicare payments for certain non-opioid painkillers and rules governing patient privacy.

The bills approved last week are fairly narrow, establishing best practices for overdose patients brought into emergency rooms and helping educate pharmacists to detect fraudulent prescriptions. Other provisions would provide FDA with flexibility to promote alternative pain treatments, allow nurse practitioners and physician assistants to prescribe medication-assisted treatments, and establish uniform guidelines for local opioid recovery centers.

Committee Chair Greg Walden (R-OR) is still pushing to have comprehensive legislation ready for a House floor vote before Memorial Day. While that’s still possible, House leadership aides are quietly suggesting that a June vote is more likely.

Health Policy

Exchange Enrollment Expected to Drop Due to Association Health Plan Rule

Exchange enrollment could decline by 3-10 percent due to consumer exodus to Association Health Plans (AHPs) if the administration moves forward with its AHP proposal, according to a May 11 study published by the Society of Actuaries. The study also found that the projected movement from ACA plans to AHPs could vary drastically depending on an enrollee’s coverage status, and how much care they need.

Between 2 and 6 percent of ACA on-exchange customers are expected to switch to AHPs from the individual market if the Trump administration approves its proposed AHP rule, and between 5 and 18 of off-exchange consumers will switch to AHPs. The report finds that individuals leaving the exchanges are expected to be 60 to 70 percent healthier than those who remain on ACA plans. While AHPs will help unsubsidized consumers, they will also lead to increased premium costs for those remaining in the individual market. The actuaries concludes that decreased enrollment will lead to higher-morbidity in the individual market resulting in a 1.4 – 4.4 percent increase in claims costs.

Up to 60 percent of ACA consumers enrolled in catastrophic plans are expected to opt for AHP coverage, since these consumers tend to be younger and healthier. In contrast, just 1 to 3 percent of silver plan enrollees are expected to move to AHPs, as most silver plan consumers receive subsidies.

The proposed rule has been sent to the White House Office of Management and Budget for final review, and is expected to be finalized later this summer.

Workers Prioritizing Retirement Benefits over Healthcare

A new survey of nearly 5,000 U.S. employees released by consulting firm Willis Towers Watson reveals that 66 percent of respondents were willing to have more taken from their pay checks each month to support larger and more generous retirement benefits. In contrast, just 38 percent of respondents were willing to pay more each month for better healthcare benefits.

The study also seems to suggest that most employers are providing adequate health and retirement plans at a reasonable cost for their employees. Sixty-six percent of workers surveyed said that their health plan meets their needs and 59 percent said the same about their retirement plans. Employers could potentially update their benefit packages to attract and retain talented people. The survey found that more than half of employees who believe they have good benefits are “highly engaged” in their jobs.

Americans Less Confident in their Ability to Afford Healthcare

Americans’ confidence in their ability to afford the health care they need continues to decline, according to new findings from the May 10 Commonwealth Fund Affordable Care Act Tracking Survey. In 2018, 62 percent of working-age adults said they were very or somewhat confident they could afford their health care if they became seriously ill, down from a high of nearly 70 percent in 2015. Fourteen percent of adults said that health care was their biggest personal financial concern, after mortgage or rent (23 percent), student loans (17 percent), and retirement (17 percent). Nearly half of working age adults could not pay an unexpected $1,000 medical within 30 days. Those most likely to cite health care as their greatest financial concern were people who could potentially face high out-of-pocket costs because they were uninsured or had high-deductible health plans.

Only half of those with incomes less than 250 percent of poverty ($30,150 for an individual) were confident they could afford care if they were to become very sick, down from 60 percent in 2015 and about 20 percentage points lower than the rate for adults with higher incomes. There were also significant declines in confidence among young adults, those ages 50 to 64, women, and people with health problems.

People in employer plans have the greatest confidence in their insurance; more than half (55 percent) of adults insured through an employer were very confident their coverage would help them afford their care compared to 31 percent of adults with individual insurance coverage and 41 percent of people with Medicaid. The least confident were adults enrolled in Medicare.

In The States

Uninsured Rate Rises in 17 States in 2017

The uninsured rate rose by statistically significant margins in 17 states in 2017, the first time since the full implementation of the major mechanisms of the Affordable Care Act (ACA) in 2014 that any state had a rate increase. Also, for the first time since 2013, no states had a lower uninsured rate than the previous year.

Among the 17 states with meaningful increases, the uninsured rates for four states rose at least three percentage points: West Virginia, New Mexico, Iowa and Hawaii. The remaining states with statistically significant increases were Arizona, Colorado, Florida, Illinois, Indiana, Missouri, New York, North Carolina, South Carolina, Texas, Utah, Washington and Wisconsin.

Nationwide, the uninsured rate climbed to 12.2% by the final quarter of 2017, up 1.3 points since the low point of 10.9% measured in the last quarter of 2016. Since Gallup-Sharecare’s measurement began in 2008, the national uninsured rate reached its highest point in the third quarter of 2013 at 18.0%, and thus the current rate, although up, remains well below this level.

Vermont Legislature Approves Drug Importation Bill

The Vermont General Assembly made history last week, becoming the first state legislature to approve legislation (S. 175) that would allow the importation of prescription drugs from Canada. Governor Phil Scott (R) has not indicated whether he will sign the bill, which would allow the state to enter into a contract with a Canadian prescription drug distributor to import certain medicines. The bill passed the House by a 141-2 vote and the Senate unanimously approved it on May 7.

Even with Scott’s signature, the state would need federal approval to move ahead. Eight other states have proposed similar importation measures this year—Colorado, Louisiana, Montana, New York, Oklahoma, Utah, West Virginia and Wyoming. None of the measures passed, but legislators requested that the executive branch develop a proposal so the legislature could re-introduce a wholesale importation bill in 2019.

Connecticut State Senate Sends Drug-Price Transparency Bill to Governor

On May 8, the Connecticut State Senate voted unanimously to adopt a drug price transparency bill (HB 5384) that will now head to the desk of Governor Dannel Malloy (D), who is expected to sign the bill.

If enacted, the law would take effect on January 1, 2020, and require drug manufacturers, health insurers, and pharmacy benefit managers (PBMs) to disclose a wide range of information to the state. Some of the key provisions include:

  • Drug companies will have to justify increases when a drug’s price jumps more than 20 percent in one year or 50 percent over three years to the new Office of Health Strategy (OHS)
  • Drug companies also will have to report information about drugs going through the FDA’s approval pipeline, such as the estimated year that the drug will enter the market
  • Insurance companies, when filing rate requests for their health plans each spring, will have to tell the state Insurance Department the 25 drugs with the highest cost to the plan; the 25 drugs with the greatest year-over-year price increases; the 25 drugs most frequently prescribed; the premium growth that is attributable to prescription drugs; etc
  • PBMs, will have to report to the insurance department how much they collect in rebates and how much of that they keep. The department will then aggregate that data and find a way to publicly disseminate it
  • Insurers will be required to report to the Insurance Department whether they use the rebates to offset premiums, which they typically do, or pass the money down to residents at the pharmacy counter. The information would be published annually by the insurance department.

The Week Ahead

The U.S. House of Representatives and Senate will be in session the week of May 14–18.

May 16: HHS Secretary Alex Azar will deliver keynote address at the American Enterprise Institute’s “Fixing health care: Driving value through smart purchasing and policy”

May 16: The Senate Appropriations Subcommittee on Homeland Security will hold a hearing on how to stop “the flow of opioids, methamphetamines, and other dangerous drugs” into the U.S.

May 17: The House Energy and Commerce Committee will hold a markup on legislation to combat the opioid crisis