HealthCare Roundtable e-News – Aug. 4, 2017

Roundtable Advocates for Bill to Protect Generic Drug Development

The Public Sector HealthCare Roundtable wrote to lawmakers to support passage of legislation aimed at preventing brand-name drug manufacturers from engaging in certain practices that block generic competition.

Generic drug manufacturers and supporters of increased use of generics charge that brand-name companies sometimes use risk evaluation and mitigation strategies (REMS) and similar programs that are typically intended to control the distribution of medicines for which there are safety concerns to deny generic firms access to their products. Without such access, generic firms are unable to show the bioequivalence – or, in the case of biologics, biosimilarity – that is needed for approval by the Food and Drug Administration (FDA).

The “Creating and Restoring Equal Access to Equivalent Samples (CREATES) Act,” (H.R. 2212; S. 974) which was introduced by both Republican and Democratic leaders of the House and Senate Judiciary Committees in April, would allow generic companies to bring federal lawsuits and seek damages when brand-name companies improperly withhold their products. (Summary)

“To ensure that generic drug developers are not prevented by a small handful of brand companies from obtaining samples necessary to bring new accessible generic and biosimilar drugs to patients and payors, congressional action is necessary,” the Roundtable wrote in a July 27 letter. “The bipartisan CREATES Act (H.R. 2212) would provide a safe, efficient and targeted pathway to end these abusive, anti-competitive tactics.”

The Ohio Public Employees Retirement System, a Roundtable member, sent a similar letter to lawmakers on the same day.

In April, the Roundtable, along with 17 other groups, signed on to a letter supporting the proposal.

Both the House and Senate bills await committee action.

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Senate Committee Chairman Adopts Bipartisan Approach to Health Care

At least one senior Republican lawmaker has said that he will work with Democrats on health care legislation.

The seven-year GOP goal to repeal and replace the Patient Protection and Affordable Care Act (ACA) seemed likely to be achieved after Donald Trump was elected president and Republicans held on to control of both chambers of Congress last November. Through the first six months of Trump’s term, though, Republicans were never able to agree on a plan, and GOP leaders in the Senate in late July were unable to convince enough members of their own party to support a last-ditch effort simply to keep the process alive. Now a Republican committee chairman in the Senate is not only taking a bipartisan approach to health care, but even hinted that he may break with Trump on a key issue.

Senate Health, Education, Labor and Pensions Committee Chairman Lamar Alexander, R-Tenn., announced that his panel will hold hearings the week of Sept. 4 “on the actions Congress should take to stabilize and strengthen the individual health insurance market.” What made the announcement especially notable was that Alexander indicated that he would be working with the committee’s Democratic leader, Patty Murray of Washington, and Senate Finance Committee Ranking Democrat Ron Wyden of Oregon, as well as, not unexpectedly, Finance Committee Chairman Orrin Hatch, R-Utah.

“I am consulting with Senator Murray to make these hearings bipartisan and to involve as many members of the committee as possible, all who want to can be involved,” Alexander said. “I’ll be consulting with Senator Hatch and Senator Wyden so that the Finance Committee is aware of any matters we discuss that might be within its jurisdiction.”

People without access to affordable group coverage generally can buy health insurance in the state-level exchanges that were created by the ACA and began operating in 2014, often by using income-dependent tax credits. Those exchanges, however, have been troubled by rising premiums and decreasing plan options. While Republicans have long argued that this is one reason that the ACA should be repealed, Alexander is now focused on developing a “stabilization plan.”

Further, Alexander “urged” Trump to have the federal government continue making cost-sharing reduction payments until Congress passes legislation appropriating funds for them.

The ACA provides for cost-sharing reduction payments to be made to insurers each year. Those payments, about $7 billion this year that reduce costs for some beneficiaries, are in legal limbo, but, under Trump, the government has, nevertheless, been making them as usual. Since the GOP’s repeal and replace effort collapsed, however, Trump has hinted that he may stop the payments to speed the collapse of the system created by the ACA. Alexander warned, though, that, “Without payment of these cost-sharing reductions, Americans will be hurt.”

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Congress Passes Legislation to Promote Generic Drug Competition

Congress has passed a Food and Drug Administration (FDA) funding bill that includes a provision aimed at enhancing generic drug competition.

President Donald Trump is expected to sign the “FDA Reauthorization Act” (H.R. 2430), which reauthorizes user fee programs for brand-name prescription drugs, generic drugs, biosimilars, and medical devices. User fees account for about one-fourth of the FDA’s total budget, including two-thirds of its budget for the review of brand-name drugs and 58 percent of its budget for the review of generic drugs.

The House passed the bill by a voice vote in July, and the Senate approved it by a 94-1 vote on Aug. 3.

The legislation includes several provisions aimed at promoting the development of generic drugs, including one that would direct the FDA to prioritize the review of applications for generics when there are not already more than three competing drugs, or when a drug is on the shortage list. The agency would have eight months to make a decision on such an application. (Summary)

“Drug companies should not be able to increase their prices dramatically by thousands of percent overnight without any justification or development of the drug to improve its effectiveness, for example,” Sen. Susan Collins, R-Maine said on the Senate floor. Collins wrote the generic drug language with Sen. Claire McCaskill, D-Mo. “Our legislation will help to foster a much healthier and more competitive marketplace as the best defense against such exploitation. I am pleased that our bipartisan plan will increase generic competition, which is so important to American families and particularly our seniors, who take a disproportionate number of the prescription drugs that are prescribed in this country.”

Senate Health, Education, Labor and Pensions Committee Chairman Lamar Alexander, R-Tenn., lauded the bipartisan process that produced the bill and moved it through Congress.

“This is a bill that’s been done the right way,” Alexander said. “It’s an example of the way the Senate is supposed to work.”

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Continuing Cost-Sharing Reduction Payments ‘Imperative,’ Business, Health Care Groups Say

Organizations from both the business and health care sectors are urging the federal government to continue to make payments that reduce out-of-pocket costs for people with individual insurance coverage.

The Patient Protection and Affordable Care Act (ACA) provides for federal cost-sharing reduction payments to insurers to lower expenses for some consumers in the state-level exchanges that were created by the ACA. (The payments total about $7 billion this year.) In 2016, a federal judge ruled, in a case filed by House Republicans, that the Obama administration’s payment of the subsidies was unconstitutional because, although they were included in the ACA, the GOP-controlled Congress had not appropriated the funds for the payments. The judge who issued the ruling, though, put it in abeyance, pending an appeal. Under Trump, the government has been making the payments as usual, but has not decided whether to appeal. In May, in a joint filing with congressional Republicans,┬áthe administration asked the U.S. Court of Appeals for the District of Columbia Circuit to delay the implementation of last year’s ruling for at least 90 more days.

After the Republican effort to repeal and replace the ACA failed in late July, Trump indicated that he may stop the payments to try to bring about the failure of the exchanges. He tweeted, “If a new HealthCare Bill is not approved quickly, BAILOUTS for Insurance Companies and BAILOUTS for Members of Congress will end very soon!”

An Aug. 2 statement from the U.S. Chamber of Commerce, the American Medical Association, America’s Health Insurance Plans and five other groups said it is “imperative” that the payments continue, warning that, “Without these funds, consumers’ access to care is jeopardized, their premiums will increase dramatically, and they will be left with even fewer coverage options.”

“These benefits are essential to making coverage and care affordable for American families who receive them,” the groups stated. “Clarity and commitment to this funding is needed to eliminate confusion and anxiety for consumers.”

Insurers are submitting their 2018 rates to state regulators, and uncertainty over the status of the cost-sharing reductions has led to fears of premium spikes in the exchanges. Modern Healthcare reported that officials with the California exchange, for example, said that, if the government makes the payments, premiums for its plans will increase an average of 12.5 percent next year, but if the payments are not made, the average increase would roughly double. At least for silver-level plans, since those are the only plans for which the cost-sharing reduction payments reduce expenses for beneficiaries. (Other plan levels include the more robust platinum and gold, and the less generous bronze.)

This limited application of cost-sharing reductions could lead to some unexpected results if the government ceases payments. Most exchange consumers receive tax credits to help cover the cost of their premiums, and the tax credit amount is based on an individual’s income and on the average price of the second-lowest cost silver plan in the exchange. So if insurers raise silver premiums in the absence of cost-sharing payments, the tax credits paid by the federal government will increase. In fact, the Kaiser Family Foundation estimated in April that not making the cost-sharing reduction payments in 2018 would actually cost the federal government $2.3 billion more because of the additional cost of tax credits.

Oliver Wyman concluded in an Aug. 3 update to a May report that, as a result, “the structure of the premium subsidies would translate to very low-cost or no-cost plans for most low- and middle-income consumers.”

Exchange consumers with incomes of more than 400 percent of the federal poverty level are not eligible for tax credits, though, so they would not benefit from this shift and could end up paying higher costs. Also, the absence of payments could lead to some insurers leaving the exchanges altogether.

Some state officials have indicated that they may take legal action if the federal government stops making the payments.

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