Healthcare Roundup: May 11, 2023

On the Hill

Senate Health, Education, Labor, and Pensions (HELP) Committee marked up and approved several drug-pricing legislation, including the Pharmacy Benefit Manager Reform Act, a draft bill to increase transparency in the operations of pharmacy benefit managers (PBMs). The bill would also require PBMs to pass through any drugmaker rebates to the health plan or employer and restrict "spread pricing", in which a PBM charges a health plan higher prices for drugs than what is paid to the pharmacy. The committee also approved:

the Ensuring Timely Access to Generics Act of 2023, legislation sponsored by Sens. Jeanne Shaheen (D-NH) and Susan Collins (R-ME) aimed at increasing competition through better oversight and enforcement of the Food and Drug Administration’s (FDA) citizen petition process, which allows interested stakeholders, including drug companies, to bring concerns to the FDA’s attention regarding pending applications but has been used by 'bad actors' to delay the approval of generic competitors and extend their patent protections;
the Expanding Access to Low-Cost Generics Act of 2023, legislation sponsored by Sens. Tina Smith (D-MN) and Mike Braun (R-IN) to address the anti-competitive practice of "parking" – when a brand name manufacturer agrees not to sue the first company that submits an application to create a generic version as long as the generic company agrees to delay bringing that generic drug to market – by overhauling the 180 days of marketing exclusivity granted to the first generic drugmaker that files an application on a brand name product;
the Retaining Access and Restoring Exclusivity (RARE) Act, legislation sponsored by Sen. Tammy Baldwin (D-WI) that would codify the FDA’s longstanding interpretation of the Orphan Drug Act of 1983 to ensure that the scope of the orphan drug exclusivity is clarified to apply only to the same approved use or indication within such rare disease or condition instead of the same disease or condition.

Senate HELP Committee will hold a field roundtable on Friday, May 12, at Morehouse School of Medicine in Atlanta with leaders from Historically Black Colleges and Universities (HBCU) medical schools and other health care experts to discuss how to address the health care workforce crisis, raise the number of Black Americans in the medical field, increase access to primary care, and improve health outcomes for Black Americans.

As part of Senate Finance Committee's hearing today, entitled "Cross-border Rx: Pharmaceutical Manufacturers and U.S. International Tax Policy", Democratic committee staff released a memorandum finding that pharmaceutical companies' average tax rate fell by more than 40 percent in the years after enactment of the 2017 Republican tax law, the Tax Cuts and Jobs Act. Specifically, the memorandum charged that:

from 2014 to 2016, the industry paid an effective tax rate of 19.6 percent on average. In 2019 and 2020, it paid just 11.6 percent;
the drug industry reported 75 percent of its taxable income in foreign subsidiaries in which share of offshore income far surpassed both non-manufacturing companies (22 percent) and manufacturers outside of the pharmaceutical industry (45 percent);
billions of dollars in U.S. sales of blockbuster drugs are taxed as offshore income; and
despite challenges from the Internal Revenue Service (IRS) with regards to pharmaceutical companies' profit shifting structures, the structure remains in place today.

Sens. Debbie Stabenow (D-MI), a member of the Senate Finance Committee, and Tina Smith (D-MN), along with House Oversight Committee Ranking Member Jamie Raskin (D-MD), introduced the Pharmaceutical Research Transparency Act, legislation aimed at increasing transparency by requiring drug companies disclose their research and development expenses. The lawmakers cited a recently-released Government Accountability Office (GAO) report that found the "amount of taxpayer contributions to pharmaceutical research and development has frequently been underreported in patent filings, while pharmaceutical companies continue to cite R&D expenditures as justification for raising drug prices." Specifically, the GAO report found that of more than 19,000 patents filed between 2012-2021 that relied on research funded by the National Institutes of Health (NIH), nearly 15% failed to properly disclose and explain the support received from federally funded research. NIH generally requires an NIH-funded clinical trial to be registered within 21 days of enrolling the first participant and results to be reported within one year of the trial's completion. NIH officials stated the agency has been taking additional actions since October 2021 to address noncompliance with these requirements, including automated checks for noncompliance and the monitoring of noncompliance rates by analyzing ClinicalTrials.gov data. GAO recommended that NIH guidance clarify that awardees should name NIH and include the NIH award number when disclosing the agency's support in patent applications.

House Energy and Commerce Oversight and Investigations Subcommittee is holding a hearing today, entitled “Examining the Root Causes of Drug Shortages: Challenges in Pharmaceutical Drug Supply Chains”, to examine the root causes of shortages, as well as supply chain vulnerabilities in the pharmaceutical industry. In his opening statement, subcommittee Chairman Morgan Griffith (R-VA) charged that "the root cause of drug shortages is a profound market failure caused by economic forces unique to the drug market." He accused pharmaceutical benefit managers (PBMs) or group purchasing organizations (GPOs) of not addressing shortages by "prioritizing generic drugs availability and quality."

House Energy and Commerce Health Subcommittee is holding a hearing today, entitled “Preparing for and Responding to Future Public Health Security Threats”, to discuss reauthorization of the Pandemic and All-Hazards Preparedness Act (PAHPA). In her testimony, Dr. Mary Denigan-Macauley, Ph.D., Director of Health Care at the Government Accountability Office (GAO), said that GAO has found persistent deficiencies in the Department of Health and Human Services' (HHS) ability to lead and coordinate the nation's preparedness for, and response to, public health emergencies. Specifically, HHS has consistently fallen short in five areas of an effective national response:

establishing clear roles and responsibilities for the wide range of key federal, state, local, tribal, territorial, and nongovernmental partners;
collecting and analyzing complete and consistent data to inform decision-making as well as future preparedness;
providing clear, consistent communication to key partners and the public;
establishing transparency and accountability to help ensure program integrity and build public trust; and
understanding key partners' capabilities and limitations.

GAO noted that of the 155 recommendations the agency has made to HHS to improve its leadership and coordination of public health emergency preparedness and response efforts, 91 of these recommendations remain unimplemented.

House Ways and Means Committee will hold a hearing next Tuesday, May 16, to examine how a lack of transparency in America’s health care system increases costs and prevents patients from being effective health care shoppers.

House Ways and Means Health Subcommittee will hold a hearing next Wednesday, May 17, to examine how anticompetitive practices and consolidation negatively affect patient cost and access to health care

Senate Homeland Security and Governmental Affairs Permanent Subcommittee on Investigations will hold a hearing next Wednesday, May 17, to examine health care denials and delays in Medicare Advantage.

At the Agencies

The Department of Health and Human Services (HHS) issued a Fact Sheet with an update on current flexibilities enabled by the COVID-19 public health emergency (PHE) declaration and how they will be impacted with the expiration of the declaration today, May 11. In a separate Fact Sheet, HHS provided "clarity regarding the future of federal flexibilities related to telehealth and tele prescribing to ensure that patients may continue to access and receive the care that they need."

The Drug Enforcement Administration (DEA) and the Substance Abuse and Mental Health Services Administration (SAMHSA) issued a temporary rule extending temporary COVID-19 telemedicine flexibilities for prescription of controlled medications as part of an effort to avoid lapses in care for patients. In response to the COVID-19 public health emergency (PHE), the DEA granted temporary exceptions to the the Ryan Haight Online Pharmacy Consumer Protection Act of 2008, in which a prescribing practitioner may prescribe controlled medications to a patient only after conducting an in-person evaluation of that patient. The telemedicine flexibilities authorized practitioners to prescribe schedule II-V controlled medications via audio-video telemedicine encounters, including schedule III-V narcotic controlled medications approved by the Food and Drug Administration (FDA) for maintenance and withdrawal management treatment of opioid use disorder via audio-only telemedicine encounters, without requiring an in-person medical evaluation, provided that such prescriptions otherwise comply with the requirements outlined in DEA guidance documents, DEA regulations, and applicable Federal and State law. The flexibilities were set to end with the expiration of PHE declaration today. However, under the temporary rule, health care providers can prescribe controlled substances online through November 11, 2023, while practitioners who establish relationships with patients on or prior to that date can continue to prescribe controlled substances for an additional year. DEA noted that it is continuing to evaluate the more than 38,000 comments received on its March 2023 proposed rules expanding patient access to prescriptions for controlled medications via telemedicine encounters "relative to the pre-COVID-19 PHE landscape." – while making "permanent some of the telemedicine flexibilities established during the COVID-19 PHE in order to facilitate patient access to controlled medications via telemedicine when consistent with public health and safety, while maintaining effective controls against diversion."

The Office of Inspector General for Health and Human Services (OIG-HHS) issued a report finding that providers did not meet Medicare requirements and guidance when billing for some psychotherapy services, including services provided via telehealth. Of the 216 sampled enrollee days that the OIG reviewed, providers did not meet Medicare requirements – such as psychotherapy time was not documented – for 128 sampled enrollee days. In addition, for 54 sampled enrollee days, providers did not meet Medicare guidance, such as providers' signatures were missing). In response to the COVID-19 public health emergency (PHE), the Centers for Medicare and Medicaid Services (CMS) temporarily expanded access to health services provided via telehealth. Based on the sample results, the OIG estimated that of the $1 billion that Medicare paid for psychotherapy services, providers received $580 million in improper payments for services that did not comply with Medicare requirements, consisting of $348 million for telehealth services and $232 million for non-telehealth services. The OIG recommend that CMS: (1) work with Medicare contractors to recover $35,560 in improper payments for the sampled enrollee days, (2) implement system edits for psychotherapy services to prevent payments for incorrectly billed services, and (3) strengthen educational efforts to make providers aware of educational materials on meeting requirements and guidance for psychotherapy services.

In the News

Wall Street Journal:  Something Congress Might Agree On: Tackling Drug Costs

New York Times:  Corporate Giants Buy Up Primary Care Practices at Rapid Pace

KFF Health News:  PBMs, the Brokers Who Control Drug Prices, Finally Get Washington’s Attention

The Hill:  Insulin companies, PBMs pass the blame as they face bipartisan ire on pricing;  Khanna, Sanders to call for action aimed at easing burden of medical debt