United States: Capitol Hill Healthcare Update - November 13, 2017


The year-end schedules of the Senate HELP and Finance committees just became more clogged, as the two panels will lead the review of President Trump's nominee to be Health & Human Services (HHS) secretary.

Trump announced this morning that he selected former HHS official Alex Azar as his choice to succeed former Secretary Tom Price. "Happy to announce, I am nominating Alex Azar to be the next HHS Secretary," Trump tweeted this morning while still in Asia. "He will be a star for better healthcare and lower drug prices!"

Azar previously served at HHS during the George W. Bush administration as deputy secretary and general counsel. Most recently, he was a senior executive for Eli Lilly.

The committees have not announced the confirmation hearing schedule for Azar, but there is a desire to fill the slot quickly. Still, both committees' bandwidth will be taxed, as they also are focused on an array of near-term policy deadlines, including relating to the Affordable Care Act (ACA), the Children's Health Insurance Program, Medicare, and budget and tax issues.

Azar enjoys widespread support among Republican senators. But Democrats are expected to use Azar's hearings to criticize what they say is Trump's lack of action on drug prices despite the president's frequent criticism of the industry. Azar's experience with the pharmaceutical industry also is expected to be a point of contention for Democrats.


Sweeping tax bills scheduled for separate House and Senate votes this week are not expected to include provisions repealing the ACA's individual mandate.

But as Republicans hash out their competing tax plans, overturning of the mandate could be added later, lawmakers said. The Congressional Budget Office updated its estimate that repealing the individual mandate would reduce government spending by $338 billion over 10 years.

Repealing the mandate could help GOP leaders make their tax bill more attractive to lawmakers concerned that it could add to the budget deficit. But injecting ACA policy into the Republicans' tax debate also could create a tricky new political dynamic, particularly in the Senate, where GOP lawmakers have failed twice this year to replace the ACA.

The House is scheduled to vote on its tax bill later this week. The Senate Finance Committee is scheduled to begin voting this afternoon on its version of the tax legislation.


Tax legislation that the Senate Finance Committee is expected to begin debating today would maintain but modify the orphan drug tax credit, which reimburses drug developers for research costs on treatments for rare diseases and conditions.

Under the plan advanced by committee Chairman Orrin Hatch, R-Utah, the tax credit would be limited to the qualified clinical testing expenses that exceed 50 percent of the average of such expenses for the preceding three taxable years. If a drug company had no previous clinical testing expenditures, the credit would be 17.5 percent of expenses for that year.

The Senate bill also would eliminate the tax credit for drugs with multiple indications where the patient population is greater than 200,000, which is the orphan drug threshold established in the 1983 law that created the tax credit.

The House's version of the tax bill – expected to be approved later this week – would eliminate the orphan drug tax credit, saving the government $54 billion over 10 years.

The National Organization for Rare Disorders and other patient groups have criticized the House and Senate language as undermining incentives pharmaceutical manufacturers need in order to invest in research for treatments targeted at smaller patient populations.


The Senate HELP Committee on Tuesday will hold a hearing on the impact of gene-editing technology.

Witnesses include Jeffrey Kahn, director of the Johns Hopkins Berman Institute of Bioethics; Matthew Porteus, associate professor of pediatrics at Stanford University; and Katrine Bosley, CEO of Editas Medicine, a leading genome-editing company.

While the technology is still developing and scientists hail the potential of cut-and-paste technology to eliminate DNA-based diseases, Congress has taken a measured approach amid ethical concerns over "designer babies" and the ability to select desirable traits along with eliminating a genetic predisposition to a disease. Two years ago, lawmakers prohibited the Food and Drug Administration (FDA) from approving any germline gene modification in human embryos.

Separately, Surgeon General Jerome Adams is scheduled to testify before the committee Wednesday on his perspectives on "encouraging healthy communities."


House Ways and Means Committee Chairman Kevin Brady, R-Texas, announced last week that he is working with the panel's top Democrat on an agreement to suspend or even repeal some of the provider taxes included in the ACA.

Brady specifically singled out the 2.3 percent excise tax on medical device manufacturers, the tax on health insurers and the tax on over-the-counter medicines. He said he has been working with Rep. Richard Neal, D-Mass., on a package for several weeks.

Brady said he hopes to reach a bipartisan agreement with Neal after the House completes action on Republicans' tax reform legislation later this week. Rather than repealing the taxes, Brady and Neal appear to be readying legislation to suspend them, according to committee staff.

The medical device tax is nearing the end of the two-year suspension and is scheduled to snap back into effect Jan. 1. Device companies already are gearing up for the tax; initial payments would be due by Jan. 15.


Senate Judiciary Committee Chairman Chuck Grassley, R-Iowa, last week called on the Centers for Medicare & Medicaid Services (CMS) to clarify its position on including on Medicare claims forms information related to unique device identifiers (UDIs).

Grassley and Sen. Elizabeth Warren, D-Mass., have long advocated that CMS support the move, citing an HHS inspector general's recommendation earlier this year that Medicare include the data to better track the performance of medical devices.

"It is essential that the Medicare system support the post-market surveillance of risky medical devices, both to improve patient care and to support program integrity," Grassley and Warren wrote to CMS Administrator Seema Verma. The senators asked her to respond on the agency's position by Dec. 1.

The device industry has been generally cool to adding UDIs to claims forms, saying the data would be at best misleading and not an accurate representation of the device's efficacy. The data wouldn't take into consideration other factors that could contribute to a device failing, including the skills of the physician implanting the device, follow-up care of the hospital and comorbidities of the patient, industry has argued.


The bipartisan leaders of the House Energy and Commerce Committee last week called on the Government Accountability Office (GAO) to survey federal agencies about their understanding of the epidemiology of bacteria that are resistant to multiple antibiotics.

Committee Chairman Greg Walden, R-Ore., and top committee Democrat Frank Pallone, D-N.J., asked the GAO to identify scientific and technical gaps at key federal agencies regarding detection, characterization and reporting of antibiotic-resistant bacteria. The lawmakers also asked the GAO to survey the research that has been done to evaluate barriers to developing new antibiotics and how the government could address those barriers.

Legislation to incentivize pharmaceutical manufacturers to conduct research into treatments for drug-resistant infections stalled in Congress in recent years. Lawmakers had proposed removing qualified antibiotics from hospitals' bundled payments and providing hospitals with a new add-on payment. Other proposals included allowing for approval of new antibiotics based on clinical trials in smaller patient populations rather than standard requirements for clinical trials.


Lawmakers resolved a controversial effort that would have allowed the Department of Defense to approve prescription drugs and medical devices for use by military personnel, and instead reaffirmed the FDA's role in approving medical treatments.

The dispute had threatened to delay passage of annual defense policy legislation. Leaders of the House Armed Services Committee defended allowing the Pentagon to approve drugs and devices used by soldiers, saying, for example, that the FDA had blocked the battlefield use of freeze-dried plasma for years.

Under a compromise engineered by leaders of the committees with legislative jurisdiction over the FDA – the House Energy and Commerce Committee and the Senate HELP Committee – the new defense policy language would require the FDA to expedite reviews of Pentagon requests but still give the agency final approval over drugs and devices.


A coalition of patient groups, provider organizations, employers and payers is calling on Congress to approve telehealth legislation before the end of the year.

Health IT Now, which advocates for the rapid deployment of health information technology to improve quality, outcomes and patient safety, says the telehealth provisions should be included in any year-end Medicare legislation that Congress considers.

Specifically, the group wants action on legislation that would allow Medicare Advantage plans to utilize telehealth services, legislation that would improve access to home dialysis therapy and legislation that would enable stroke victims to access telehealth services.

Congress will vote on several must-pass healthcare bills before the end of the year, including renewing the Children's Health Insurance Program and a package of expiring Medicare programs.

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