United States: Capitol Hill Healthcare Update - November 6, 2017

December Most Likely Timetable for CHIP Even After House Approval

The House last week voted to renew the Children's Health Insurance Program (CHIP) through 2022, but disagreements over how to pay for the program are likely to delay consideration in the Senate beyond this month.

On a mostly party line 242-174 vote, the House adopted the five-year extension along with a renewal of funding for community health centers. But the pay-fors House Republicans had identified – including tapping money from the Affordable Care Act's (ACA's) prevention fund and means-testing Medicare premiums for wealthy beneficiaries – were non-starters for most Democrats.

The Senate Finance Committee has its own version of CHIP renewal legislation that largely mirrors the House's bill, except the Senate has not identified any offsets.

Procedurally and politically, it would be challenging for Senate Republican leaders to schedule a vote on their own CHIP bill, which needs 60 votes to pass. Despite the outcry from advocacy groups and providers, including children's hospitals, it is not likely that the Senate will consider CHIP legislation this month.

Instead, federal funding for CHIP, which expired September 30, is likely to wait until December, when it could be included in catch-all budget legislation.

Bipartisan Majority Votes to Repeal ACA's Independent Payment Advisory Board (IPAB)

The House last week voted overwhelmingly to repeal a controversial Medicare cost-cutting panel.

The House voted 307-111 to repeal the Independent Payment Advisory Board (IPAB), which was created by the ACA. Joining all Republicans, 76 Democrats voted to kill the board.

The IPAB was never officially constituted because Medicare spending has been below the threshold that would automatically create the panel. But the IPAB has generated widespread opposition, not only from lawmakers but also from an array of healthcare providers because of its sweeping powers to make Medicare spending and reimbursement changes.

A Senate version of the bill also enjoys some Democratic support, including from its author, Sen. Ron Wyden (D-Ore.), the top Democrat on the Senate Finance Committee.

House GOP Tax Bill Would Repeal Orphan Drug Tax Credit

House Republicans' sweeping tax overhaul would repeal a tax credit meant to incentivize pharmaceutical manufacturers to invest in rare disease research.

The tax legislation, which the Ways and Means Committee will begin voting on today, would end the Orphan Drug Tax Credit, which allows pharma companies to offset 50 percent of the costs of clinical trials for diseases that affect fewer than 200,000 people. The tax credit reduces revenue to the government by $54 billion over 10 years, according to Congress' Joint Committee on Taxation.

Smaller patient populations dramatically increase the costs for clinical trials, and before the tax credit was created in 1983, the Food and Drug Administration (FDA) approved fewer than 40 orphan drugs. Since then, more than 600 orphan drugs have won FDA approval.

But amid the politics of drug prices, there are questions about whether the tax credit should be reformed. The Senate's version of the overall tax bill is expected to be released later this week by Finance Committee Chairman Orrin Hatch (R-Utah), who was a principal author of the Orphan Drug Tax Credit. This spring, Hatch asked for a Government Accountability Office analysis of whether manufacturers are in effect gaming the system by using multiple designations to subsidize research costs beyond those targeted for rare disease populations.

Brady Weighs Individual Mandate Repeal in Tax Bill

President Trump and some Senate Republicans are advocating that repeal of the ACA's individual mandate be included in the House GOP's tax overhaul.

The Congressional Budget Office estimated that ending the requirement that most Americans purchase health insurance would save $416 billion over 10 years – money congressional Republicans can use to finance additional tax relief.

But the Senate twice this year failed to demonstrate it had 50 votes to partially repeal and replace the ACA. Injecting healthcare into an issue as thorny and politically delicate as taxes would likely complicate passage, especially in the Senate, where Republicans hold a two-seat majority.

House Ways and Means Committee Chairman Kevin Brady (R-Texas) said last week that Republican leaders were weighing the idea of adding a repeal of the individual mandate. But he also acknowledged the complicated politics of including the healthcare provision.

Brady's bill does not include the repeal of any ACA-created provider tax.

Bipartisan Senate Bill Seeks to Reduce 'Drug Waste'

Senate Judiciary Committee Chairman Check Grassley (R-Iowa) introduced legislation last week that seeks to reduce what he called single-use "drug waste."

Grassley said his legislation is aimed at reducing over-sized doses that cause excess spending. The senator pointed to a media report last month that found some pharmaceutical manufacturers produced eye drops in over-sized doses, in some cases more than twice what the eye can hold. A separate New York Times report last year found Medicare and private payers were reimbursed for cancer drugs distributed in vials that held too much medicine for most patients.

Grassley's bill would require the FDA and the Centers for Medicare and Medicaid Services (CMS) to develop a joint action plan to reduce drug waste and better manage drug vial sizes and other drug delivery systems like eye-drops. Sens. Dick Durbin (D-Ill.) and Jeanne Shaheen (D-N.H.) are co-sponsors of the legislation.

Durbin said the legislation would crack down on drug companies that "insist on selling their products in excessively large, one-size-fits-all vials that contain more medicine than the average patient needs [and is] a colossal and completely preventable waste of taxpayer dollars."

Bill Seeks to Slow 'Revolving Door' Between Pharma, Government

Legislation introduced in the Senate last week would prohibit former FDA and Drug Enforcement Administration officials from assisting pharmaceutical manufacturers in federal lobbying efforts.

Introduced by seven Democratic senators – led by Sen. Tammy Baldwin (D-Wis.) – the bill would establish a two-year "cooling off" period during which former agency officials could not lobby the government or even participate in efforts that would support lobbying.

Baldwin said her bill is designed to prevent potential conflicts of interest.

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