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Frank Pallone's Busy, Busy Spring

By John Reichard, CQ HealthBeat Editor

April 20, 2007 -- With a fine spring day in the offing, New Jersey House Democrat Frank Pallone began his remarks to executives at an industry conference Friday morning by joking they all ought to really be outside rather than meeting in a dimly lit conference room.

But given the busy legislative schedule he outlined, the House Energy and Commerce Health Subcommittee chairman may soon find himself repeatedly daydreaming about a soothing outdoor break, especially since the schedule may mean knocking heads with many of the industry's most powerful lobbies.

Pallone emphasized the need to mark up two measures by early summer that would expand coverage of uninsured children and improve drug safety. But the plan puts Pallone and his fellow House Democrats on a collision course with not only America's Health Insurance Plans and the Blue Cross-Blue Shield Association of America, but also possibly with the Biotechnology Industry Association—and perhaps other lobbies as well—in light of the concerns those groups have relating to the bills.

To reauthorize the State Children's Health Insurance Program (SCHIP), Democrats will need to come up with $50 billion over five years to meet their goal of covering millions more uninsured children. In an interview Friday, Pallone said he'd like to have a plan for coming up with the $50 billion in time for his panel's SCHIP mark up.

Pallone said at the American Clinical Lab Association industry conference that he doesn't expect Medicare cuts to the clinical lab sector will be part of that plan. The prime target, he suggested, are payments to the private health plans in the Medicare Advantage program.

But there are growing signs that Democrats will be able to save much less than they hope to that way, which suggests that they'll have to trim Medicare payments to other health care sectors as well to meet their $50 billion goal.

The Bush administration has proposed cutting Medicare payments to hospitals, another possible source of SCHIP funding, although the White House proposed to do so for deficit reduction, not to expand SCHIP. And the Medicare Payment Advisory Commission has recommended payment cuts to home health agencies and skilled nursing facilities, among other sectors.

But Medicare cuts typically occur in the crush of legislative business at the end of the year when they are more difficult to block. Specifying what those cuts are early in the year gives health care sectors plenty of time to mobilize lobbying campaigns to kill them.

Preparing a package of planned cuts in time for the SCHIP markup may prove too difficult—and may not be necessary. An aide to Pallone said Friday that procedurally, the panel doesn't have to come up with a payment plan at the time of the markup.

Pallone and his fellow Democrats also must find a way to come up with another $20 billion or more to prevent cuts in Medicare payments to doctors next year. But Pallone said that won't be part of the SCHIP reauthorization. Measures that have to be reauthorized by October, including SCHIP and a drug safety plan (which also includes user fees for FDA review of marketing applications) take precedence, Pallone said.

Following an April 25 hearing in Pallone's subcommittee highlighting state efforts to cover the uninsured, Pallone said his panel will hold a hearing in early May on easing the market entry of cheaper generic versions of biotech drugs.

Pallone said he may try to include, within his prescription drug safety and user fee plan, a provision that would ease marketing of generic biotech drugs. "We want to have our hearing... and look at it and make a decision."

But even if the delicate matter of negotiating a compromise between the biotech and generic drug industry over the terms of market entry isn't a part of the larger prescription drug safety and user fee package, Pallone and his committee will have their hands full with the latter proposal.

Drug companies are making the argument that new drug safety measures favored by Democrats not only will slow down drug approvals, but also so choke the Food and Drug Administration with paperwork that it would act slower to protect the public against the hazards of marketed drugs.

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