Affordable Care Act News Roundup

Senate and House Democrats Introduce Drug Pricing Legislation

NIH Proposal in President’s Budget Faces Tough Politics in Congress

Affordable Care Act News Roundup

With Congress and the administration regrouping on what is next for the Affordable Care Act, AAMS wanted to share some smaller news items that represent the wider landscape:

  • Sens. Lamar Alexander (R-TN) and Bob Corker (R-TN) introduce legislation to address exchange markets with zero insurers.  Under S. 761, the Health Care Options Act of 2017, individuals living in areas with zero insurers participating in exchange markets would be able to use their insurance subsidy to purchase insurance outside of the exchanges (summary).  In addition, they would be exempt from the individual mandate penalty. This issue particularly affects Tennessee, as 34,000 residents in the state will fall in this category in 2018.
  • Anthem reportedly considering leaving exchange markets in 2018. Attributed to concerns over the profitability of its participation in exchange markets, the report of Anthem’s considerations is fuel on the fire for the debate in Congress over whether the ACA is failing. Similarly, Wellmark announced it is withdrawing from the individual market in Iowa.
  • Democratic Leaders in Congress send letter to President Trump requesting he rescind his ACA Executive Order as a condition for bipartisan cooperation on health legislation. The letter, sent by Senate Minority Leader Chuck Schumer (D-NY) and House Minority Leader Nancy Pelosi (D-CA), suggests that rescinding the Executive Order would show the President’s intentions to repair the law rather than push for its failure.  However, doing so would likely be seen as an embarrassment to the President, who hailed the action on his first day in office.  The Executive Order itself only had limited concrete changes and would be unlikely to hinder cooperation moving forward.
  • Kansas Governor Sam Brownback (R-KS) vetoes Medicaid expansion legislation. Last week, the Kansas state legislature sent the Governor a bill to expand Medicaid.  However, the Governor has vetoed it, arguing it would be too costly for the state in the long run and that the Medicaid expansion prioritizes able-bodied individuals over other populations already covered by Medicaid.  The Kansas House failed to override the Governor’s veto.
  • Minnesota to implement exchange market stability reinsurance program. In order to bolster the state market and prevent a sharp increase in premiums, Minnesota Governor Mark Dayton (D-MN) announced he would allow legislation to become law to create a reinsurance program.  The state may pursue further changes from the federal government through a Section 1332 Waiver.  Alaska had previously implemented its own reinsurance program and has been cited as a model for state solutions to exchange market issues.
Senate and House Democrats Introduce Drug Pricing Legislation

On March 29, 2017, Sen. Al Franken (D-MN), along with 15 Democratic cosponsors, introduced S. 771, the Improving Access to Affordable Prescription Drugs Act (section by section). Companion legislation was introduced in the House as H.R. 1776 by Reps. Jan Schakowsky (D-IL), Elijah Cummings (D-MD), Rosa DeLauro (D-CT), and Peter Welch (D-VT). This legislation represents the largest grouping of Senate Democrats to propose drug pricing legislation. The legislation combines in one bill a variety of drug pricing proposals, broken down into four titles each with its own theme and focus that include (among other provisions):

  1. Transparency – Requires drug companies to disclose costs for research and development, marketing, manufacturing, and other costs, and requires independent charity assistance programs to disclose funding from drug manufacturers.
  2. Access and Affordability – Allows drug price negotiation and importation from Canada, caps monthly prescription drug costs in private insurance plans, closes the donut hole in 2018, and imposes an excise tax on unjustified price increases.
  3. Innovation – Shortens the exclusivity period for biologics to seven years, allows the generic drug approval process to start sooner, requires that applications for “New Clinical Investigation Exclusivity” show significant clinical benefit over existing drugs made by the manufacturer, and creates public funding for clinical trials in exchange for non-exclusive licenses.
  4. Choice and Competition – Prohibits “pay-for-delay” agreements between brand-name and generic drug manufacturers, and would no longer allow drug manufacturers to deduct advertising to consumers as expenses for tax purposes.

As the Trump administration seeks a legislative victory after the demise of its health reform legislation, drug pricing is seen as one potential area for bipartisan compromise. Given the President’s past comments on drug pricing, Democrats could potentially provide votes to advance drug pricing legislation over the Senate’s 60 vote threshold. However, President Trump’s nominee for Food and Drug Commissioner, Scott Gottlieb, holds a different perspective than the President on many of these drug pricing issues.

NIH Proposal in President’s Budget Faces Tough Politics in Congress

President Trump’s budget proposal, titled “America First: A Budget Blueprint to Make America Great Again,” proposes a $5.8 billion cut to the National Institutes of Health (NIH) in Fiscal Year 2018. While a more in-depth budget document is expected in May, the NIH proposal is already facing tough politics in Congress.

NIH funding enjoys wide bipartisan support in Congress, buoyed by strong advocacy campaigns by research and patient stakeholder groups. Congress’ concern with this proposal was evident in the recent hearing of the House Appropriations Subcommittee on Labor, Health and Human Services, Education, and Related Agencies that featured testimony from Sec. Tom Price. While Subcommittee Chair Tom Cole (R-OK) described his support for increased funding for the NIH, which Congress has widely supported in recent appropriations bills, Sec. Price defended the cuts by arguing that finding greater efficiency in the agency would still allow it to continue supporting research, but the President’s budget recognizes the tough fiscal climate for the budget. He also noted that the proposal includes separate funding to support implementation of the 21st Century Cures Act, passed by Congress in 2016. Rep. Andy Harris (R-MD) helped bolster the administration’s argument in the hearing, noting that other research grant-making entities such as the American Lung Association, American Heart Association, Alzheimer’s Association, Bill and Melinda Gates Foundation, and the Robert Wood Johnson Foundation either prohibit including funding for indirect costs or only allow indirect costs below 12 percent in their grants; however, the NIH allows up to 30 percent.

A clearer picture on NIH funding will begin to emerge once the Appropriations Committees’ begin their work crafting Fiscal Year 2018 appropriations legislation. But first, Congress faces the hurdle of addressing Fiscal Year 2017 funding by April 28, 2017.