CBO Releases Budgetary Reports for Legislation on Drug Pricing, Expects $2.5 Billion in Deficit Reduction
The Congressional Budget Office (CBO) released three separate reports on June 6, 2022. Each report estimates the budgetary effects for specific legislation in the Senate related to drug pricing. CBO estimated the three bills would reduce the deficit by a combined $1.9 billion over a decade. CBO also estimates House user fee legislation would cut the deficit by $598 million with measures to speed generic competition. These expected savings are a fraction of the White House’s initial $100 billion savings estimate.
CBO released a report on S. 1435, the Affordable Prescriptions for Patients Act of 2021. This bill would establish a statutory framework for the Federal Trade Commission (FTC) to undertake litigation against manufacturers that engage in “product hopping” and limit the number of patents that could be included in infringement claims for biological products. In addition, CBO released a report on S. 1428, the Preserve Access to Affordable Generics and Biosimilars Act. Under the proposed legislation, certain agreements that are used to settle claims of patent infringement between sponsors of brand-name, generics, or biosimilar drugs, and relating to the sale of a drug or biological product would presumptively be considered illegal under anti-trust law. CBO also released a report on S. 1425, the Stop Significant and Time-Wasting Abuse Limiting Legitimate Innovation of New Generics (Stop STALLING) Act. The bill would authorize the FTC to take civil action against individuals or entities involved in submitting certain petitions to the Food and Drug Administration (FDA).
Northside Hospitals Fined Over $1 Million for Failure to Share Medical Prices
The Centers for Medicaid and Medicare Services (CMS) fined two Northside Hospitals in Georgia more than $1 million for not complying with the Hospital Price Transparency Law. Enacted last year, the law requires cash prices and insurance plan negotiated rates for services to be listed online. This information is meant to make it easier for consumers to shop and compare prices across hospitals and estimate the cost of care before going to the hospital. Northside Hospital in Atlanta was fined $883,180 and the Northside Cherokee Hospital in Canton was fined $214,320. According to Secretary of Health and Human Services (HHS) Xavier Becerra, hundreds of hospitals have received warning letters ahead of issuing fines, as reported by NBC News.
- The Centers for Medicare and Medicaid Services (CMS) released a blog post regarding the National Quality Strategy to reach their goals of providing quality care, improving health equity, and improve with the evolving nature of the American health care system. This strategy focuses on a person-centric approach from birth to death across the continuum of care, and across payer types, including Traditional Medicare, Medicare Advantage, Medicaid and Children’s Health Insurance Program coverage, and Marketplace plans. CMS outlined the 8 goals at the center of their strategic plan which include embedding quality into the care journey, advancing health equity, promoting safety, fostering engagement, strengthening resiliency, embracing the digital age, incentivizing innovation and technology adoption, and increasing alignment. CMS ends the post with a focus towards the implementation phase of the strategy, and call up on federal affiliates, stakeholders, payers, states, and others to assist in implementing the goals of the strategy.
- The Federal Trade Commission announced that it will launch an investigation into the prescription drug middlemen industry on June 7, 2022. The inquiry requires the six largest pharmacy benefit managers (PBMs) to provide information and records regarding their business practices. It will examine PBMs’ role in the U.S. pharmaceutical industry and scrutinize the impact of vertically integrated PBMs on the access and affordability of prescription drugs. The inquiry is designed to shed light on the PBM practices of charging fees to unaffiliated pharmacies, steering patients towards PBM-owned pharmacies, unfair audits, complicated methods of reimbursement, the use of specialty drug lists, and the impact of rebates and fees from drug manufacturers. The FTC voted 5-0 in favor of issuing the inquiry under Section 6(b) of the FTC, which authorizes the Commission to conduct studies without a specific law enforcement purpose. The FTC will send compulsory orders to CVS Caremark; Express Scripts, Inc.; OptumRx, Inc., Humana Inc.; Prime Therapeutics LLC; and MedImpact Healthcare Systems, Inc.
- The U.S. Department of Health and Human Services (HHS) announced nearly $15 million in funding for 29 grantee organizations in rural communities to prevent and treat stimulant misuse and overdose deaths. This is part of a larger, $400 million, multi-year Rural Communities Opioid Response Program (RCORP) initiative in support of President Biden’s National Drug Control Strategy. Psychostimulants include methamphetamine and other illegal drugs, such as cocaine and ecstasy, as well as prescription stimulants for conditions such as attention deficit hyperactivity disorder or depression. The HHS Overdose Prevention Strategy notes that the overdose crisis has evolved over time and is now largely characterized by deaths involving illicitly manufactured synthetic opioids, including fentanyl, and, increasingly, psychostimulants.
- The Centers for Medicare and Medicaid Services (CMS), in support of President Biden’s Cancer Moonshot initiative, announced the first-year funding awards of $215 million for 86 recipients as part of a 5-year, $1.1 Billion investment into The National Breast and Cervical Cancer Early Detection Program (NBCCEDP), The National Comprehensive Cancer Control Program (NCCCP), and The National Program of Cancer Registries (NPCR). These funds build on CDC’s 30-year work in coordinated cancer prevention, with the new funding supporting the goals of reducing preventable cancers, ensuring all people get the right screening at the right time, and improving health and wellness for cancer survivors. The recipients of the funding have developed plans for how they will achieve these goals through screening services, cancer control plan implementation (by coalitions), and cancer data collection.
- CBO released a report on the budgetary effects of S. 1435, the Affordable Prescriptions for Patients Act of 2021. The bill would establish a statutory framework for the Federal Trade Commission (FTC) to undertake litigation against manufacturers that engage in “product hopping” and limit the number of patents that could be included in infringement claims for biological products. In the report, CBO concludes that more generic or biosimilar drugs would enter the market earlier if S. 1435 were to be enacted. This would lower federal spending on prescription drugs and health insurance subsidies. Based on their analysis, CBO estimates the cost of the private-sector mandate limiting patents in infringement claims would not exceed the threshold for private-sector mandates established in URMA.
- CBO released a report on the budgetary effects of S. 1428, the Preserve Access to Affordable Generics and Biosimilars Act. Under the proposed legislation, certain agreements that are used to settle claims of patent infringement between sponsors of brand-name, generics, or biosimilar drugs, and relating to the sale of a drug or biological product, so-called “pay for delay” deals, would presumptively be considered illegal under antitrust law. CBO concluded the bill would accelerate the availability of lower-priced generic or biosimilar drugs that would be affected by agreements under the bill. As well, the proposed legislation would reduce the average prices for drugs that are paid by federal health programs that purchase or provide health insurance that covers drugs. CBO estimates the cost of the private-sector mandate to enhance the authority of the FTC to restrict certain agreements would not exceed the threshold for private-sector mandates established in URMA.
- CBO released a report on the budgetary effects of S. 1425, the Stop Significant and Time-Wasting Abuse Limiting Legitimate Innovation of New Generics (Stop STALLING) Act. The bill would authorize the FTC to take civil action against individuals or entities involved in submitting citizen petitions to the Food and Drug Administration (FDA) to extend the market exclusivity of a product. Based on their analysis, CBO concludes the threat of substantial penalties under the bill would deter some parties from submitting petitions that would otherwise delay the marketing of lower-priced drugs. The estimated budgetary effects would stem from more generic or biosimilar drugs entering the market earlier, resulting in lower federal spending on prescription drugs and health insurance subsidies.
- Senator Tim Kaine (D-VA) introduced S. 4303, the Interchangeable Biologics Clarity Act, which aims to strengthen the Food and Drug Administration (FDA) approval process pipeline and increase transparency for critical medicines, lowering costs and increasing availability of key medications. Specifically, the bill would make improvements to the FDA review process for interchangeable biosimilars. The legislation also provides greater clarity around exclusivity periods for interchangeable biologic products, making it easier for those drugs to enter the market sooner and treat the same conditions. Senators Susan Collins (R-ME) and Maggie Hassan (D-NH) co-sponsored the bill, which was referred to the Committee on Health, Education, Labor, and Pensions (HELP).
- Senator Time Kaine (D-VA) introduced S. 4302, the Biologics Market Transparency Act of 2022, which aims to increase transparency in the drug market by requiring manufacturers to share information with the FDA regarding when their biologic drugs are coming off the market. This would give physicians and patients critical information to inform treatment decisions and help plan for potential drug shortages. Senators Marshall Roger (R-KS), Maggie Hassan (D-NH), and Bill Cassidy (R-LA) co-sponsored the bill, which was referred to the Committee on Health, Education, Labor, and Pensions (HELP).
- Senator Joe Manchin (D-WV) re-emphasized his support for drug pricing reform as a standalone if the Senate is unable to agree on the proposed climate and energy policies in a reconciliation package. However, Senator Manchin remained non-committal on extending the Affordable Care Act tax credit. In an interview with CNN, Manchin stated that fellow Democrats have not included him in discussions about the enhanced ACA tax credits enacted under the American Rescue Plan in a reconciliation package. Manchin explained a cap on prescription drug pricing is feasible since there is consensus among the Democratic Party on the issue.
- The House Appropriations Committee Democrats released the spending bill markup schedule, in an effort to get as many bills through as possible before the August recess. The full list of dates and times for each meeting can be found here. The notable health hearings are the Labor-HHS-Education Subcommittee meeting on Thursday, June 23rd, at 5:30pm and a full committee meeting Thursday, June 30th, at 10:00am. The full Appropriations Committee meeting will vote to adopt its subcommittee funding allocations at the June 22nd and June 30th sessions. The House, on Wednesday, adopted H Res 1151 that would set a discretionary limit of nearly $1.6 trillion, with some smaller “cap adjustments” for the additional spending. That would in turn let the House Appropriations Committee divide up the funding among the 12 appropriations bills, allowing the spending levels to be enforced when the bills go to the floor.
- The House of Representatives passed a package that reauthorizes FDA user fees and includes numerous bipartisan provisions. The provisions include efforts to increase generic drug competition, enhance clinical trial diversity, give FDA more inspection authority, reform the agency’s accelerate approval pathway, and require medical device makers to include cybersecurity in their device design. This package sets a $1.15 billion base fee amount for human prescription drugmakers for FY 2023. The bill would also revamp FDA’s accelerated approval pathway, improve diversity in clinical trials, and give FDA authority to remove drugs from the market that obtained accelerated approval if they fail to show a clinical benefit.
- Sen. Ron Wyden (D-OR), Chair of the Senate Finance Committee, hopes (subscription required) to include mental health reform in the developing Senate legislation on gun control. The legislation is still being negotiated after a wave of mass shootings has prompted policymakers and healthcare professionals to advocate for stricter gun regulations. Sen. Wyden does not expect a complete mental health package to be included, but believes that mental health challenges should be addressed in the bill. Earlier this year, Wyden broke bipartisan subcommittee leaders into workgroups to craft the Senate Finance Committee’s mental health package, focusing on telehealth, integrating primary and mental health care, enforcing parity laws, and increasing children’s access to behavior health care. The telehealth work group released a draft bill in May, with drafts from other committees expected soon.
Last week, the peer-reviewed health policy journal JAMA published findings that CMS has spent nearly $68 billion on drugs that received accelerated approval from the Food & Drug Administration (FDA) between 2012 and 2017, many of which lacked standard approval. FDA grants accelerated approval for drugs based on clinical trials using surrogate end points to estimate clinical benefit. Post approval trials are required to confirm benefits beyond the surrogate end point. The result of JAMA’s study is that substantial CMS spending on drugs was allocated to prescriptions which lacked evidence of clinical benefit in the long-term. Automatic coverage mandates led to substantial CMS spending during this period for drugs with unproven long-term clinical benefits.
Last Friday, Health Affairs released a report discussing behavioral health care for older adults. Loss of social support, increased illness burden from chronic conditions, and functional decline all contribute to potentially life-threatening mental conditions like depression. Seniors aged 85 and over are at the highest risk for depression of any age group. The key challenges providers are facing include inadequate numbers of geriatric professionals in the behavioral health space, fragmented and low-quality care delivery, and barriers to access such as stigma and public ignorance. In order to overcome these barriers, providers should strive to broadly integrate care services, increase accountability mechanisms, improve telemedicine infrastructure, and develop creative workforce solutions.