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November 9, 2015

Washington Health Policy Week in Review Archive 6cf3ceb4-c79b-4621-9856-6da1e8d214aa

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Drug Price Hearing Set as Lawmakers Weigh Prescription Costs

By Andrew Siddons, CQ Roll Call

November 4, 2015 -- Lawmakers on both sides of the Capitol Wednesday criticized the rising cost of prescription drug prices, an issue that is resonating on the campaign trail.

The Senate Special Committee on Aging will hold a Dec. 9 hearing on the tactics some drugmakers take in jacking up the price of drugs, its top members announced Wednesday.

Susan Collins, R-Maine, the committee's chairwoman, and ranking member Claire McCaskill, D-Mo., wrote to four companies that recently hiked prices for decades-old drugs. The companies include Valeant Pharmaceuticals, which increased the cost of one drug by almost 3,000 percent, and Turing Pharmaceuticals, which boosted the price of a treatment by more than 5,400 percent.

"Given the potential harm to patients across our country who rely on these drugs for critical care and treatment, the Senate Special Committee on Aging considers these massive price increases worthy of a serious, bipartisan investigation into the causes, impacts, and potential solutions," Collins said in a press release.

The committee's investigation will examine price increases on newly acquired drugs that were created years ago and have lost their patent protection. The senators also will look into mergers within the industry and the Food and Drug Administration's generic drug approval process.

Turing Pharmaceuticals has been under fire ever since it raised the price of a drug from $13.50 a pill to more than $700 a pill. Valeant Pharmaceuticals has similarly come under scrutiny for its business model of acquiring drugs that don't have much competition and pushing up their prices. 

The Senate hearing will amount to the most significant congressional action so far on the issue of rising drug prices, which affects the finances of federal health programs such as Medicare and the cost of private insurance.

A Kaiser Family Foundation poll found that 77 percent of Americans believe the president and Congress should ensure "high-cost drugs for chronic conditions" are "affordable to those who need them."

Drug prices have become an issue for presidential campaigns of both parties, including Democratic candidates Hillary Rodham Clinton and Sen. Bernard Sanders, a Vermont independent, as well as Ben Carson and Sen. Marco Rubio, R-Fla.

"There is no question that some people go overboard when it comes to trying to make profits, and they don't take into consideration the American people," said Carson, who currently leads in some polls.

House Democrats' Criticism

Also on Wednesday, Democratic House members accused the majority party of ignoring the issue.

"Republicans have repeatedly refused our requests to do anything about this issue," said Elijah E. Cummings, D-Md., ranking member of the House Committee on Oversight and Government reform. "Not a single letter. Not a single hearing."

Cummings and other House Democrats announced the creation of a drug price task force. Noting how pharmaceutical costs are frequently cited by their constituents, the Democrats described the actions they are taking to solve what Rep. Lloyd Doggett, D-Texas, called a "systemic problem that involves a wide range of manufacturers."

The Biotechnology Industry Organization said Democrats overlook the need to provide funds for further research and development.

"We hope that this newly formed task force organized by a small group of House Democrats will take a balanced approach and focus not only on the question of affordability of medicines, but also on the equally critical need to sustain continued medical innovation for the patients," spokesman Kenneth Lisaius said in a statement.

Cummings and other oversight panel Democrats sent a letter Wednesday to the committee's chairman, Jason Chaffetz of Utah, asking for a hearing to grill executives of pharmaceutical companies they say engage in "price gouging."

Democrats said that in late September they requested a hearing with Valeant Pharmaceuticals CEO J. Michael Pearson and Turing Pharmaceuticals CEO Martin Shkreli. Chaffetz hasn't replied.

"It suggests that you believe this issue is not worth the Committee's time," said the letter.

Committee Democrats also asked for a Nov. 17 meeting to vote on subpoenas to compel documents from Pearson and Shkreli.

Other Democrats speaking Wednesday called for changes in the Medicare Part D drug program to allow the Health and Human Services secretary to negotiate directly with companies on prices.

"Change that ability for the secretary to negotiate [and] we could bring the prices down," said Jim McDermott, D-Wash.

Push for Public Shaming

The Democrats have begun a letter-writing campaign to the leaders of committees and subcommittees on which they serve.

Sander M. Levin, D-Mich., the Ways and Means Committee ranking member, said Democrats would send a letter to its new chairman–either Kevin Brady of Texas or Pat Tiberi of Ohio, whoever succeeds Speaker Paul D. Ryan of Wisconsin– seeking a hearing on prices.

Rosa DeLauro, D-Conn., said she and Nita M. Lowey, D-N.Y., the top Democratic House appropriator, similarly wrote to Tom Cole, R-Okla., who leads the appropriations subcommittee overseeing health care. DeLauro noted the impact on Medicare, Medicaid and the AIDS drug assistance program.

Marcy Kaptur, D-Ohio, pointed to a bipartisan amendment in the House Labor-HHS-Education appropriations bill that directs the HHS and Veterans Affairs departments to analyze pharmaceutical price increases and compare the domestic prices of the most expensive drugs to prices in Canada and elsewhere.

"The analysis can be used to identify possible cost savings," she said.

Earlier this year, Cummings introduced with Sanders several bills to address rising prices. One bill (S 1364, HR 2391) would make companies pay a rebate to Medicaid, the federal-state health program for the poor, when a drug's price rises faster than inflation. Another (S 2023 , HR 3513) would allow the importation of lower-priced drugs from Canada and require reporting on how much is spent on research and development.

HHS also will hold a day-long forum on Nov. 20 about drug costs.

Democrats hope one other tactic will affect pricing.

"Shaming is important," said Jan Schakowsky, D-Ill. "This is going to resonate with the American people, and I think drug companies will be shamed into responding."

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Democrats Offer Lukewarm Defense of Health Co-ops

November 5, 2015 -- Congressional Democrats are showing limited support for the struggling nonprofit insurance cooperatives that sprung from the Affordable Care Act, even with Republicans targeting these businesses to further their attacks on the law.

At least 13 of the two dozen health co-ops funded by the law have failed, including a Vermont project that state regulators never allowed to begin selling insurance. A House Ways and Means panel delved into these issues Tuesday. The co-ops were meant to lower prices in the health insurance market by challenging the dominance of giants in the industry.

"I don't want to sound like an apologist for the co-ops. I was never a fan," said the No. 2 Democrat on the House Ways and Means Health Subcommittee, Mike Thompson of California, at the hearing. "What most of us wanted was the public option. That would have provided the competition needed."

The co-ops were included in the law as an intraparty compromise among Democrats after it was clear that supporters of a government-run health insurer would not prevail.

Last month, the Centers for Medicare and Medicaid Services (CMS) announced a $2.5 billion shortfall in the program and a subsequent 87 percent reduction in expected payments. At least eight co-ops announced plans to close following the CMS announcement.

Thompson and other Democrats put the blame for these collapses on GOP bids to undermine the co-ops. Jim McDermott of Washington, the ranking Democrat on the House Ways and Means health panel, said at the hearing that the co-ops' failures were a direct consequence of Republican sabotage. Democrats noted the David-Goliath nature of the challenges for co-ops attempting to compete with well-established firms. Funding for the co-op program had been dramatically whittled from the $6 billion initially provided for the program, and marketing restrictions put in place that led to the shortfall in so-called risk corridor payments, Democrats say.

"When you take the money out to make the fallback work, it seems near impossible," Thompson said. "I am surprised that any of them are still going."

The co-ops were welcomed warmly by some consumers, who had favored the concept of an insurer that would funnel any gains back to their customers. "Think locally owned credit union versus large national bank," explained the web site of Consumers Mutual, a Michigan health co-op that is one of the most recent co-ops to fail. Consumers Mutual and state regulators announced this week a plan to wind down the business.

Rep. Tom Price, R-Ga., a critic of the co-ops, took exception to Democratic comments that he said boiled down to "it's those nasty Republicans who removed all of that money" from the co-op program and caused them to fail, Instead, there was strong bipartisan support for each of three bills that stripped these funds, with Democrats crucial to the passage of each measure, he said at the hearing.

"They weren't sticking up for them either," he told CQ HealthBeat afterward.

Cuts to Co-ops

A fiscal 2011 spending package (PL 112-10) included language stripping $2.2 billion from the co-op program. That law cleared with the Senate votes of 48 Democrats and independent Joseph I. Lieberman of Connecticut, and 32 Republicans. House Democrats split 81–108, with a narrow majority rejecting the overall measure. It passed with the support of 179 Republicans.

Then Congress took $400 million from the co-op program in a fiscal 2012 spending package (PL 112-74). The Senate cleared this measure with the votes of 50 Democrats and Lieberman and 16 Republicans. In the House, it drew 149 Democratic and 147 Republican votes.

In 2013, Congress eliminated most of the remaining funds as part of a tax law (PL 112-240), leaving only about 10 percent of unobligated funds for oversight and assistance. This measure passed in the House with 172 Democratic and 85 Republican votes. In the Senate, it drew the votes of 47 Democrats, and independents Bernie Sanders of Vermont and Lieberman. Forty Republicans voted for it.

Even greatly diminished, the co-op program remains a target for GOP, while seemingly getting little Democratic support.

Both the House and Senate versions of the fiscal 2016 spending bills (HR 3020, S 1695) seeks to strip $18 million from the co-op account, likely consuming much or all of what remains. Democratic appropriators have let this proposed rescission go largely unnoticed, while fighting hard to reverse other spending cuts for other programs, such as the Title X family planning funds.

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Medicare, a Long-Term Patient, Gets More Treatment in Budget Law

By Kerry Young, CQ Roll Call

November 5, 2015 -- Medicare, the federal program at the heart of the nation's fiscal anxieties, played a supporting role in the budget agreement President Barack Obama signed into law Monday.

Medicare, starting in 2017, will have to clamp down on hospitals' payments to recently acquired physicians' practices. The practices for the most part will no longer qualify for higher rates of Medicare reimbursement than independent physicians do. Hospitals have in recent years been using the acquisition strategy to expand the more lucrative area of Medicare services.

The budget law is only the latest example of Medicare on the legislative stage. Legislators and policymakers twiddle with the dials of Medicare, the biggest single purchaser of health care in the United States with $613 billion in expenses in 2014, so regularly that it's easy to lose sight of longer-term changes.

But government and the health care industry, thanks partly to the 2010 health care law, have made progress in taming the growth in the program. The trust fund for Medicare's hospital expenses, a barometer for the program's funding, is projected to be depleted by 2030. In 2009, the year before the health care overhaul was enacted, depletion was foreseen by 2017, according to a 2009 trustees report.

Lawmakers and health officials want to continue the momentum as aging baby boomers tax the nation's coffers. Despite recent success at containing costs, the long-term projections still look expensive.

"That means fighting for reforms that keep Medicare solvent, as we did in the Affordable Care Act, where we extended Medicare's solvency by more than a decade," said Sen. Barbara A. Mikulski, D-Md., in a July floor speech celebrating the program's 50th year.

Medicare growth rates began slowing before Congress passed the law known as Obamacare.

There's been "striking" deceleration since 2009, said Chapin White, a researcher at the RAND Corp. in a January paper. Medicare's spending per beneficiary traditionally has grown at an annual rate between 2 percent and 8 percent, White wrote. Prices were stable in 2010 and 2011 and they fell from 2012 through 2014, White said.

Two uncertainties about the slowdown justify skepticism about political arguments over health care cost management. One is uncertainty about how much credit the health care law deserves and the other is uncertainty about how long the slowdown in cost growth will continue.

"Experts are very divided on this point," said Tricia Neuman, director of the Kaiser Family Foundation's program on Medicare policy. "Some really believe this slowdown can be sustained."

Neuman said some experts see the changes in Medicare triggered by the 2010 law as a "ticket to success." But she added that other researchers have doubts. "They think that there is a cycle in spending and health care spending will start to rise again, as will Medicare spending."

The public tends to see the 2010 law as the vehicle that created health exchanges and insurance mandates. But it also provided $10 billion for a Center for Medicare and Medicaid Innovation to test ways to overhaul the nation's health care.

Shift in Practice

The center's work is a key part of federal officials' bid to shift away from the current fee-for-service approach that rewards doctors and hospitals for more tests and procedures without considering the benefits for patients and toward a system that pegs payment to the outcomes. Such a change would be a fundamental reorientation of medical practice.

The health care overhaul also reduced Medicare payments for many services, including hospital and home health care, as well as payments for insurers that act as middlemen in administering benefits through so-called Medicare Advantage plans. Lobbying groups are working hard to reverse or soften those reductions.

The Congressional Budget Office has estimated that a repeal of the law would increase Medicare expenses by $802 billion over a decade.

The reduced payments and the lobbying effort to restore them is part of the perpetual tussle between federal officials, including lawmakers, and the health care industry over Medicare.

"It has been an ongoing struggle and it likely will continue to be an ongoing struggle to some extent," Neuman said. "Whether or not the slowdown can be sustained depends on future policy choices."

Medicare's hospital trust fund may have found 13 extra years of solvency. But the program's fiscal future is far from secure, Neuman said.

Enrollment is expected grow by about a third, to 74 million in 2025 and to 114 million in 2080 from about 56 million now, according to Medicare trustees.

Many of the enrolled are expected to survive well into their 80s and to be battling multiple chronic diseases.

The cost of caring for them is the main source of anxiety about the sustainability of Medicare.

The Government Accountability Office has estimated that Medicare expenses will require $28 trillion more over 75 years than current sources of revenue would provide. By comparison, the Social Security gap is $13 trillion.

Social Security payment also can be more easily estimated, as they reflect static payouts and known population estimates. Medicare's costs aren't so easy to forecast.

"Medicare covers whatever health care is needed by the senior population, which could vary drastically," said Loren Alder, research director for the nonprofit Committee for a Responsible Federal Budget.

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Discount Drug Program May Factor in Medicare Changes

By Kerry Young, CQ Roll Call

November 6, 2015 -- Congressional advisers are looking to keep Medicare's drug spending in check, with the nation's single largest purchaser of health care already spending more than $100 billion a year on medications.

The Medicare Payment Advisory Commission (MedPAC) is in the early stage of crafting its next set of annual recommendations to Congress, due for release next year. Its focus includes a close examination of the effects of the government's 340B discount program.

"We are quite concerned about the recent escalation of pharmaceutical costs and its impact on the Treasury and on beneficiaries," Francis J. Crosson, the chairman of MedPAC, said at a recent meeting as he outlined the panel's top goals for the months ahead. "We believe that improvement in pharmaceutical affordability in the United States is needed."

MedPAC's 2016 reports likely will help shape the growing debate about how Americans pay for medicines. Democratic and Republican presidential candidates have criticized the rising costs of certain medicines in recent weeks. And many Democrats are pushing for a major overhaul of Medicare's biggest drug purchasing program, the insurer-run Part D plans that may buy more than $90 billion worth of medicines this year. At least three separate sets of House-Senate companions bills, including one from Democratic presidential candidate Sen. Bernie Sanders, I-Vt., seek direct Medicare negotiations on the prices of Part D drugs.

At a Thursday meeting, MedPAC members and staff addressed much less radical options. Still, the possible changes could reduce financial gains that insurers and certain hospitals have booked through Medicare payments for drugs.

In addition to Part D, Medicare spent more than $20 billion last year on drugs administered in physicians' office and covered by the programs Part B rules.

About $3.8 billion of these Part B drugs were administered last year by hospitals that qualify for the 340B discount program, a marked increase from the $500 million spent on such drugs in 2004, according to MedPAC.

The rate of growth of the 340B program has spurred concerns about the incentive it can create for doctors to prescribe more medicines for patients, and more expensive medicines when cheaper ones would work. Hospitals using the discount had an estimated $1 billion last year in savings from Part B drugs given to Medicare patents, MedPAC said. Medicare does not share in these savings.

The 340B program was created in the 1990s with the intention of preserving a path for discounted medicines to flow to hospitals that serve many people living in poverty. The program allows hospitals to retain savings, with the expectation that they will be used to bolster the services offered to the local community. But, there are no specific requirements on how savings are applied.

The 340B savings have not been particularly well targeted, said Katherine Baicker, a Harvard health policy researcher and MedPAC member.

"It makes it clear to me that something needs to be done," she said.

MedPAC members on Thursday didn't attempt to reach a firm consensus on changes needed for the 340B program. Among the options discussed was reducing by 10 percent the average sales price used to set payments for Part B drugs when a hospital gets the 340B discount. The savings could then be shared between Medicare and the people enrolled in it who received these treatments.

Medicare doesn't directly negotiate with drug makers on prices. For Part B drugs, it weighs reported data on the costs of these drugs and then uses estimated average sales prices for drugs and adds a roughly 4 percent premium on top of that. With Part D, Medicare relies on insurers to use their bargaining strategies to lower drug prices.

Program Changes

MedPAC members on Thursday also discussed whether changes may be needed to the risk-management programs for Part D insurers. There are concerns that these substantial safety-net protections may be dulling the incentive to negotiate the best deals.

In Congress, Democrats continue to press to have Medicare leverage its clout as a major purchaser of drugs to drive bigger discounts on Part D medicines. At least three sets of companions bills have been introduced, without attracting a single Republican backer.

Bills from Rep. Peter Welch, D-Vt., and Sen. Amy Klobuchar, D-Minn., would direct the Department of Health and Human Services (HHS) to negotiate prices with drugmakers for the Part D plans, although the department wouldn't be authorized to establish lists of approved drugs, known as formularies. There would be no restriction against the operators of Part D plans from getting a discount to the drug negotiated by HHS.

Welch has drawn 19 Democratic cosponsors for his bill (HR 3061). Klobuchar has the backing of six Democrats and independents Sanders and Angus King of Maine for her bill (S 31).

Bills from Sanders, an independent from Vermont, and Rep Elijah Cummings, D-Md., also would authorize HHS to negotiate directly with drugmakers on prices for medicines sold in Part D plans. And, there would be no authorization for HHS to establish a formulary. Sanders bill (S 2023) has one Democratic cosponsor. Cummings has five Democratic backers for his bill (HR 3513).

Rep. Jan Schakowsky and Sen. Richard J. Durbin, both Illinois Democrats, take a different tack. They would create Medicare-operated drug plans. HHS would negotiate directly prices with drug companies and a formulary would be created, with the help of the Agency for Healthcare Research and Quality. Schakowsky has eight Democratic cosponsors for her bill. (HR 3261). Durbin's bill has five Democratic cosponsors and the backing of independent King on the bill (S 1884).

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Supreme Court to Consider Health Care Law Contraception Mandate

By Todd Ruger, CQ Roll Call

November 6, 2015 -- The Supreme Court agreed Friday to decide another case about the contraception mandate in the health care overhaul law, this time involving a group of seven cases from Little Sisters of the Poor and other religious nonprofit groups.

The justices will hear the groups' challenge that the Obama administration violates the Religious Freedom Restoration Act with its "accommodation" procedure for groups that have religious objections to some contraceptive methods.

The cases bring the health care law before the high court for the third term in a row. In the 2014 decision in Burwell v. Hobby Lobby, the court ruled 5-4 that closely held corporations did not need to comply with the mandate.

The law (PL 111-148, PL 111-152) requires group health plans to provide coverage for contraceptives, but exempts some religious employers and small businesses. The government accommodation allows the religious nonprofit groups to shift that burden to their insurance company.

But the groups object to the government's requirement that they self-certify that they are a religious employer and have religious objections to providing some contraceptive methods. Failure to comply can mean millions of dollars in fines.

"These organizations do not merely object to paying for or being the direct provider of contraceptive coverage; they object to facilitating, or being complicit in, access to contraceptives; to paving the way for contraceptives to be provided under their plans; and to directly transferring their own obligations onto others," the petition from the Little Sisters states.

"Being forced to 'comply' with the mandate via the regulatory 'accommodation' is no more compatible with their religious beliefs than being forced to comply with that mandate directly," the petition states.

The Supreme Court will hear arguments and decide the case before the end of June. The decision is likely to be controversial and would come amid the 2016 presidential campaign.

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White House Responds to GOP Gains

By John T. Bennett

November 4, 2015 -- Shifting demographics and Republican turnout fueled another victorious election night for Republican candidates, the White House contends, not the president or his health care law.

The morning after a Republican won the Kentucky governor's race and a year after another GOP success in the midterms, reporters pushed Press Secretary Josh Earnest Wednesday on whether President Barack Obama is to blame for Republican gains in Congress and at the state level since he took office.

Republicans also won races in Mississippi and Virginia, and GOP officials said those victories show the party has momentum headed into 2016.

"A year after historic midterm victories and 90 days before the Iowa caucuses, Democrats were defeated in races across the country," Republican National Committee Chairman Reince Priebus touted in a statement.

Earnest pinned Republicans' success Tuesday and in recent elections on changes in both demographics and congressional district lines.

"Observations have been made by some about the strategy that Republicans have focused on redistricting efforts, and that has recently started to bear fruit for them," Earnest said. "You know, in other cases, it's just that—particularly in off-year elections—that Republicans have been more effective in turning out their vote."

In the Bluegrass State, Obama's health care law was a major issue in the gubernatorial race. Republican Matt Bevin vowed to target both the Obama law and Medicaid once in office and often cast the health overhaul as "a disaster for Kentucky taxpayers."

When asked about the law's role in the Kentucky contest, Earnest acknowledged the outcome is the latest example that "vowing to repeal the Affordable Care Act, in some cases, has been used as an effective political strategy that's not a terribly effective governing strategy."

He went on to describe the law and Medicaid as too important and effective to cut.

"Since Medicaid was expanded in Kentucky, more than a half a million Kentuckians have gotten … health care coverage through Medicaid or CHIP," he said, referring to a health insurance program for kids from low-income families.

"That's why the uninsured rate across the country is at all-time lows," Earnest said, "and even the uninsured rate in Kentucky has been cut in half since the Affordable Care Act went into effect."

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