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July 2, 2007

Washington Health Policy Week in Review Archive e47d30dc-a56b-4685-8c6e-33448abf3453

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Broad Changes to FDA in House Package

By Drew Armstrong, CQ Staff

June 25, 2007 -- Democrats sent to the House floor last week a package of FDA and drug policy legislation containing the most sweeping safety and regulatory changes to the agency in years, despite a number of compromises during the committee process that moderated parts of the bill.

The measure, still in draft form, would reauthorize the Food and Drug Administration's programs to speed approval of drugs and medical devices. It would also add new surveillance and safety regulations for drugs after they had been approved, as well as larger fines for companies that violated the new regulations.

Before voting 30–9 to combine the package of nine draft bills into a single omnibus measure and send it to the floor, members also voted to reduce fines on drug companies set by the subcommittee as part of the "Risk Evaluation and Mitigation Strategies" section of the bill, also known as REMS.

The REMS section would create a new program within the FDA to monitor the safety of drugs after they came to market. The drug safety programs would be funded largely by $225 million in new user fees assessed to drugmakers.

In the version of the bill approved by the panel's Health Subcommittee, drug or device companies would have been subject to a $20 million maximum fine for a single violation and a $100 million maximum fine for several violations. Those fines were reduced to $250,000 maximum per violation and $1 million maximum for several violations. If companies were notified of violations and they continued, the fines could go to $10 million for one violation, $50 million for several.

Under the safety sections of the bill, newly approved drugs could be subject to follow-up studies after they went to market, and the FDA would be required to revisit the drugs several years later for further analysis. In the case of some riskier drugs, there would be regulation limiting prescribing authority to trained physicians. Exceptions would be made in the case of a public health emergency.

The full committee took at least a philosophical step toward reducing the reliance on drug industry money, which funds much of the FDA's drug regulation activities.

Under a bipartisan amendment, adopted by voice vote, a mechanism would be created so that if appropriators decided to fund the drug safety program, the amount assessed to manufacturers for safety would be cut by an equal amount. The drug approval process would still be funded largely by user fees, and committee members made no promises that appropriators would provide more funds for the drug safety program.

"It's not an insignificant figure, obviously," said subcommittee ranking Republican Nathan Deal of Georgia.

Critics of the FDA's drug approval programs say the agency's reliance on drug company fees to pay for the programs undermines public confidence in the process.

Approaching Deadline
Funding for the current authorizations of the drug and device approval programs will expire on Oct. 1 of this year.

But the deadline for Congress to reauthorize them actually falls earlier than that. If the reauthorization is not signed into law 60 days before the programs expire, the FDA has to send out "reduction in force" notifications to staff, cutting its workforce in anticipation of the programs' expiration.

The House is expected to take up the legislation on the floor in July. To avoid FDA layoffs, Congress will need to send the legislation to the president before the August recess. The Senate passed a companion bill (S 1082) on May 9 with somewhat weaker regulations than many in the House package, including smaller fines and fewer limits on FDA advisory panel conflicts of interest.

Trimming and Tweaking
While committee members from both sides hailed the bipartisan effort in creating the bill, Health Subcommittee Chairman Frank Pallone Jr., D-N.J., watched his draft language be substantially revised several times during the markup in his panel June 19 and in the full committee June 21.

During the full committee markup, a group of Democrats amended the portion of the bill dealing with medical device approval over his objections. Jay Inslee, D-Wash., offered an amendment, adopted by voice vote, to strike a limit on the number of times a private inspector could be hired by the same company, a safeguard that Pallone said would prevent inspectors from returning positive inspections to get repeat business.

The subcommittee markup offered a similar result, as Republicans joined with a splintering of Democrats led by Edolphus Towns of New York to gut the bill's regulations on direct-to-consumer drug ads.

The restrictions would have given the Food and Drug Administration discretion to ban direct-to-consumer ads for a new drug for up to three years. They were largely written by California Democrat Henry A. Waxman, with Pallone's support.

Three New York lawmakers—Towns, who offered the amendment, Anthony Weiner and Eliot L. Engel—were joined by six other Democrats and voted with Republicans, 23-9, to adopt a less restrictive amendment relying on fines and voluntary ad review by the FDA.

Much of the rhetoric centered on First Amendment concerns, but the New Yorkers also had other priorities.

"These things are very important for the New York economy, quite frankly," Engel said of the television and print ads that Pallone's substitute amendment targeted. "The networks are all located in New York, the advertisers are all located in New York. It's a big hometown industry."

Under the amendment, the government would have no authority to require changes to the ads. For "false or misleading ads," there would be a maximum penalty of $250,000 for the first offense and $500,000 per day for subsequent offenses.

State–Federal Relationship
Working with Pallone, subcommittee members also decided to remove language that would have forbidden federal pre-emption of state drug law and regulation, which Republicans said would create a slew of state-level lawsuits against drugmakers and undermine the FDA's authority.

Before it was removed, the pre-emption language threatened to derail industry support for the bill. "It's extremely troubling from our perspective," said Christopher White, general counsel for AdvaMed, the industry's lobbying group.

Republicans also slammed the provisions, before they were removed. "It is a gift, if you like, to file suit in state courts," said Michael C. Burgess of Texas.

The language was initially included at the request of the American Association for Justice, a trial lawyers' lobbying group, the consumer advocacy group Public Citizen and several other groups, according to Gerie Voss, regulatory counsel for the lawyers' association.

Conflicts over the pre-emption language and several other sections delayed the subcommittee markup from its original June 14 date after Energy and Commerce ranking Republican Joe L. Barton of Texas requested postponement in a meeting with Chairman John D. Dingell, D-Mich., Pallone and Deal.

The committee also took a step to track the safety of medical devices. A manager's amendment, adopted by voice vote, would create a "unique identifier number" for all devices, allowing the FDA and providers to better track individual devices for malfunctions and safety.

While the omnibus package covers a wide range of drug policy items, House lawmakers decided in the markup to come back later in the year and revisit the issue of counterfeit drugs entering the country from abroad.

Dingell promised to work with Steve Buyer, R-Ind., on legislation to give the FDA the authority to destroy counterfeit drugs intercepted during shipment. According to Dingell and Buyer, at present many of the counterfeit drugs are simply returned to the point of origin, after which they reappear in another shipment. Buyer had originally offered an amendment on the issue at the committee markup, but withdrew it after Dingell's promise.

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HELP Panel Approves Health Information Technology Grant and Loan Programs

By Colby Itkowitz, CQ Staff

June 27, 2007 -- A Senate panel approved by voice vote a bill that would create grant and loan programs to help health care providers buy and adopt new information technology products.

The bill (S 1693) would require government purchases of health IT to meet basic standards on information exchange. A panel of government and private-sector stakeholders would set the standards.

Both the Senate and House passed similar bills in the 109th Congress, but a conference never was scheduled to work out differences.

Th Senate bill would authorize a total of $278 million in fiscal years 2008 and 2009 for competitive matching grants to regional and local health IT networks. The regional networks are designed to unite insurers, doctors, hospitals and other health care providers into a single IT network that can share information. The grants would be available for five years.

Eager to wrap up the meeting before a floor vote on immigration legislation, Edward M. Kennedy, D-Mass., chairman of the Health, Education, Labor and Pensions Committee, urged members to reserve amendments for the floor.

"We have a responsibility to make the miracles of modern medicine available to every American," Kennedy said in a statement when the bill was introduced. "However, in our health care system, medical errors are all too common and coordination of care is often poor."

According to the statement, the federal government estimates the nation could save $140 billion each year from better IT use. Those savings could cut the cost of a family's health insurance by over $700 a year, it says.

"Health IT is about bringing safety and efficiency to our health care system," said Bill Novelli, chief executive officer of AARP, which supports the bill. "People seeking treatment have enough to worry about; if we can alleviate the fear that an error will occur, we need to try to do that."

Privacy advocates are concerned that digitizing health records would leave patients open to privacy violations and identity theft. The legislation would bring health IT databases under the protections of existing patient privacy law (PL 104-191).

The committee approved without objection a manager's package that included a provision to preserve an individual's ability to control the acquisition, uses and disclosure of individually identifiable information.

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House Dems Expect Fight 'Every Step of The Way' on Medicare/SCHIP Package

By Mary Agnes Carey and John Reichard

June 29, 2007 -- When Congress returns from the July 4 recess, House Democratic leaders of the Ways and Means and Energy and Commerce committees are promising to renew and expand the State Children's Health Insurance Program (SCHIP), prevent a scheduled 10 percent cut in Medicare physician payments, and improve Medicare reimbursements for rural physicians, hospitals and other providers.

The comprehensive package "we hope will be the signature Democratic health achievement of the 110th Congress," the committee chairmen said in a nine-page memo distributed to Democratic members. "It is vital that we present a united front on this legislation. The Administration will battle us every step of the way, and we cannot count on any votes from the other side of the aisle."

Charles B. Rangel of New York, chairman of the Ways and Means Committee, and John D. Dingell of Michigan, chairman of the Energy and Commerce Committee, along with Rangel's Health Subcommittee Chairman Pete Stark of California and Frank Pallone Jr. of New Jersey, who is Health subcommittee chairman for Dingell's panel, asked Democrats to work with them to find payment offsets. "We are committed to working within our means," they wrote. "That means tough choices will be necessary."

Health care sources say Democrats aim to spend $50 billion over five years for SCHIP and some $30 billion for the two-year doctor payment fix. Adding in the cost of the rural health care provisions, the provisions for low-income Medicare beneficiaries, and several other provisions would bring the price tag for the entire package to around $100 billion. To help cover that cost, Democrats may pursue a tobacco tax increase to raise $35 billion. Assuming they could raise another $35 billion with cuts to Medicare Advantage plans, Democrats would still face the need to cut payments to other providers, including hospitals, and perhaps to trim spending for erythropoietin, a drug used to treat anemia in dialysis patients.

Democrats are eyeing an ambitious timetable for markups next month in the Senate Finance Committee and the House Committees on Ways and Means and Energy and Commerce, as well as floor action in both chambers.

Concerning Medicare physician payments, the House Democrats said their legislation would "implement an interim (payment) policy the next two to three years to prevent the impending cuts and assure stability in reimbursements." The measure would also lay out steps for a long-term change to the Medicare physician payment system "to better promote quality of care while also maximizing efficiency," the memo states. "We are working with the physician community to develop this policy and expect to have their enthusiastic support."

For Medicare providers in rural areas, the measure would extend rural payment provisions in the Medicare drug law (PL 108-173) that have expired, or soon will. They include provisions to equalize payments between rural and urban physicians and provide bonuses to encourage and reward doctors who practice in areas where there are shortages of physicians. Additional elements of the package would help rural home health agencies and ambulance services and help certain rural hospitals cover their lab costs.

The package also would seek to equalize payments between Medicare Advantage (MA) plans and Medicare's fee-for-service program.

"Rural beneficiaries and providers face real problems with Medicare Advantage plans," often being paid at rates far lower than traditional Medicare, the memo states. "Rural providers fear that the lower reimbursement from MA private plans will undermine the rural health safety net." The legislation would also enhance and simplify eligibility and enrollment for two Medicare programs that provide financial assistance with cost-sharing for regular Medicare services and for the Medicare drug benefit.

Increasing the amount of assets that beneficiaries are allowed to have as well as streamlining the asset test process that beneficiaries must complete to qualify for the low-income drug benefit are key changes, the memo states.

On SCHIP, the Democrats said they have three goals: protect coverage for six million children now covered by the program, which expires Sept. 30; give states the tools and incentives to find and enroll children who are eligible but not yet enrolled in SCHIP or Medicaid; and ensure that states have "the resources and flexibility to cover additional groups of vulnerable children," such as those who are too old for SCHIP coverage and Medicaid but are still in school or no longer quality for coverage under their parents' insurance. These individuals would be allowed to keep their coverage until they are no longer income-eligible because of finding a job. Children of legal immigrants and pregnant women also would be covered, and SCHIP application and enrollment processes would be streamlined to ease enrollment.

"With strong public support, we will present a bill the Administration and vulnerable Republicans cannot afford to block," the Democrats wrote. "To paraphrase from our past, failure is not an option."

If Democrats can pull it off, the strategy would enlist the powerful American Medical Association as an ally, as well as bring in Blue Dog Democrats representing rural areas. But Democrats would have little margin for error given the likelihood that their legislative package would attract little or no Republican support. And they could face powerful opposition from the hospital industry and from well-heeled companies such Amgen, the maker of erythropoietin.

In addition, Democrats in the Pacific Northwest may be cool to cuts to Medicare Advantage plans, given the large size of those plans in that part of the country and their relatively low reimbursement rates. Similarly, Democrats representing tobacco states could be opposed to a tax increase. And Democrats could face pressure from groups representing African Americans, who are disproportionately represented in the dialysis population and may resist cuts in payments for erythropoietin. The National Association for the Advancement of Colored People has already expressed opposition to cuts to Medicare Advantage plans, which pitch themselves as offering lower-income Americans access to lower-cost benefits.

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Senate Votes to Extend Health Coverage Plan for Poor Families

By Kathleen Hunter, CQ Staff

June 27, 2007 -- The Senate on Wednesday passed a three-month extension of a program that prevents the sudden loss of health coverage for poor families as their incomes increase.

The bill (S 1701), passed by voice vote, would extend until Sept. 30 the Temporary Medical Assistance program. A Senate aide said the House is likely to follow suit before the July Fourth recess.

The program, set to expire June 30, is designed to ease the transition from welfare to work by allowing families to continue their Medicaid coverage for up to four months as their income levels rise above the normal qualification ceilings.

The idea is to plug a potential hole in health care coverage that families could face as they start earning more money.

An estimated 2 million Americans rely on the program for health coverage.

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Study: Paying for Performance No Simple Matter

By Susannah Crepet, CQ Staff

June 29, 2007 -- Good communication between health plans and doctors is critical to ensuring the success of payment for performance programs, a study by Mathematica Policy Research shows. The study, posted on the Web by the journal Health Affairs, focused on a demonstration project that involved seven California Medicaid managed care plans operating in different regions. Five of the plans implemented various new incentives for physicians and other primary care providers, while two did not.

The study examined how well five Medicaid-focused health plans improved the timeliness of well-baby care. The goal was to make sure providers did six well-baby checkups in the first fifteen months of life. Size varied among the plans; the smallest plan had 72 primary care doctors while the largest had more than 2,000. The demonstration project began in 2002.

Only one plan, called "Plan D," was successful in significantly improving its Health Plan Employer Data and Information Set (HEDIS) score for well-baby visits as a direct result of pay-for-performance. Researchers suggested that Plan D succeeded because its new pay-for-performance incentives were an extension of pre-existing incentives. As a result, Plan D's doctors had more to gain financially per child than doctors in other plans. In addition, Plan D's providers were already accustomed to keeping track of well-baby visits, while providers contracted by other plans were largely unprepared to do so.

The relatively small effect pay-for-performance had on the other four plans was in part due to insufficient communication between plans and their providers, researchers said. Some doctors were frustrated by their plans' failure to communicate how the incentives worked, researchers found. Others were unable to interpret the feedback they received from their plans.

Some doctors did not have enough staff members or other resources to support outreach and reminder calls to patients in need of well-baby visits. Other providers worked primarily as walk-in clinics and were not accustomed to scheduling appointments at all, according to researchers. Some providers simply lacked the technology or technical know-how to keep track of their well-baby visits. When they turned to their health plans for patient information, it was often outdated.

Researchers concluded that plans need to take into account the feasibility of implementing pay-for-performance while designing a way to distribute incentives, otherwise providers may not consider participating in pay-for-performance to be an efficient use of their time and resources.

But even if communication between the plans and their providers had been flawless, pay-for-performance incentives might not have had the desired effect on HEDIS measures because of certain characteristics of the targeted population. For example, providers noted that low-income parents need to focus on economic subsistence and as a result often are unable to keep to a visit schedule. Lack of transportation, frequent change of address, and tendency to switch care providers often were other characteristics that thwarted providers' efforts.

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Wennberg Steps Down at Dartmouth

By John Reichard, CQ HealthBeat Editor

June 29, 2007 -- Just as his decades-long research has reached its pinnacle of prominence in the health care debate, John E. Wennberg is stepping down as director of the center at Dartmouth College where he did his pioneering work relating geography and health care. Wennberg isn't ending his affiliation with the center, however.

Dartmouth announced Friday that the 73-year-old Wennberg has stepped down as director of its Center for the Evaluative Clinical Sciences (CECS), after a research career of more than 40 years in which he demonstrated that where one lives is key in determining how much health care one gets—and that regions of the country with more health care have lower, not higher, quality of care.

Congressional Budget Office Director Peter R. Orszag recently testified that Wennberg's work offers the nation a way out of the fiscal crisis it faces because of unsustainable health care spending increases, in that it suggests spending growth can be cut without sacrificing quality.

The Dartmouth Atlas of Health Care developed by Wennberg shows sharp regional differences in the amount of care patients receive and in its resulting costs. The research compendium "has revealed consistently that more medical spending and more health care services are not associated with better outcomes for patients," the center said in a press release announcing Wennberg's departure as director. "In fact, patients in high-care, high-cost areas fare worse than those living in areas where more conservative care is the norm." Were high-cost areas to adopt more conservative practices, "the Medicare system could reduce spending by at least 30 percent while improving the medical care of the most severely ill Americans," Wennberg and his colleagues say in the most recent issue of the Atlas.

Succeeding Wennberg as director is James N. Weinstein, who has worked with Wennberg at the center since 1996. Weinstein also is the chairman of the department of orthopedic surgery at Dartmouth Medical School. With Weinstein taking over, the center will be renamed the Institute for Health Policy and Clinical Practice as of Aug. 1. Under Wennberg, "CECS has transformed not just our understanding of the problems within our health care system, but the manner in which we practice medicine, train effective health care leaders and physicians, and approach the tough questions around variations in the provision of care," said Stephen P. Spielberg, dean of the Dartmouth Medical School. "With a new, unique institute dedicated to these efforts, Jim Weinstein will continue and expand on this critical work."

Wennberg praised the choice of Weinstein as his successor. "More than anyone, he understands how our research can be applied in the real world to improve patient care, reform our health care system and produce a new kind of health care leader," Wennberg said. An aide to Wennberg said he will continue to work on the Atlas as emeritus center director. "He's going to be involved," she said. "He's just getting out of the administrative side."

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