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WEEKLY FEDERAL UPDATE

WEEK OF MONDAY, JANUARY 14, 2018

New Congress Tackling Drug Prices

Two Democrats and an independent introduced bills in the House and Senate to lower the high costs of drugs. Sen. Bernie Sander (I-VT), Rep. Elijah Cummings (D-MD), Rep. Ro Khanna (D-CA) introduced a three-part plan last week that included:

The Prescription Drug Price Relief Act, which would peg the price of prescription drugs in the United States to the median price in five major countries: Canada, the United Kingdom, France, Germany and Japan, click here for the bill, click here for the summary. 
The Medicare Drug Price Negotiation Act, which would direct the Secretary of Health and Human Services (HHS) to negotiate lower prices for prescription drugs under Medicare Part D, click here for the bill, click here for the summary. 
The Affordable and Safe Prescription Drug Importation Act, which would allow patients, pharmacists and wholesalers to import safe, affordable medicine from Canada and other major countries, click here for the bill, click here for the summary. 

The Council for Affordable Health Coverage, a coalition of industry groups including the pharmacy benefit manager Pharmaceutical Care Management Association, CVS Health, brand-drug companies, and insurers were quick to blast the plan (click here) while consumer advocate groups like Families USA praised the legislation (click here). 

Another Drug Company Is Raising Prices

While Congress introduces legislation to lower drug costs, U.S.-based drug giant, Johnson & Johnson, joined many other companies and raised U.S. prices on over 20 of its prescription medicines including psoriasis treatment Stelara, prostate cancer drug Zytiga and blood thinner Xarelto. J&J said the average list price increase on its drugs will be 4.2 percent this year however, it expects the net price it actually receives for its medicines to drop due to the negotiated rebates and discounts off the list price with payers. Pharmaceutical manufacturers began 2019 with U.S. price increases on more than 250 prescription medicines by Jan. 2 which included rises in insulin prices between 4.4 percent and 5.2 percent by Sanofi and 4.9 percent by Novo Nordisk. Click here for more.

VA Planning To Shift Billions of Dollars of Care To Private Providers

The Department of Veterans Affairs is preparing to shift billions of dollars from government-run veterans' hospitals to private health care providers, setting the stage for the biggest transformation of the veterans' medical system in a generation. According to a New York Times report, under proposed guidelines, it would be easier for veterans to receive care in privately run hospitals and have the government pay for it. Veterans would also be allowed access to a system of proposed walk-in clinics, which would serve as a bridge between VA emergency rooms and private providers, and would require co-pays for treatment. Click here for the story.

New Senate Finance Committee Chairman Targets Drug Prices, 340B Program, Rural Health Programs

Newly minted Chairman of the Senate Finance Committee, Chuck Grassley (R-IA), released his priorities for the Committee, including changes in health care politicies. The Chairman details his commitment to "lowering prescription drug prices; increasing access to prescription drugs and addressing shortage issues; strengthening and modernizing Medicare Part D; increasing rural health care access, including addressing health care workforce issues, such as doctor, nurse and other health professional shortages; and ensuring hospital payment programs are effective and eliminating duplicative and ineffective payment incentives, including reforming the 340B drug pricing program." He vowed to conduct more oversight into both public and private health care policies and well as promote accountability and efficiency through legislation. To view his entire plan, click here.

Private Equity Firms Buying Up Physician Practices

Acquisition of physician practices by private equity firms has increased dramatically during the past few years, according to a study published in the Annals of Internal Medicine. Researchers predict that this trend is likely to accelerate over the next few years with a focus on "platform practices" described as large, well-managed practices that are reputable in their communities. Generally, private equity firms invest in private practices using their capital and anticipate average annual returns of 20% or more, then sell the practices after increasing their value by recruiting additional physicians, acquiring smaller practices, increasing revenues by taking steps such as bringing pathology services into a dermatology practice and decreasing costs, such as using more physician assistants, the researchers said. Click here to read the study.

$30 Billion Per Year Spent on Health Care Marketing: Drug Companies Lead

The health care industry spends about $30 billion per year on marketing, up about 70-percent over the past 20-years, according to a new study published in the Journal of the American Medical Association. Marketing to doctors makes up the biggest share of promotional spending, however direct-to-consumer advertising is growing the fastest with pharmaceutical companies by far the biggest spenders. Drug companies spent $20 billion on marketing to health care professionals in 2016, mostly to provide free samples of their products and spent another $6 billion on marketing to consumers. While hospitals, clinics and other health providers spent a total of roughly $3 billion on direct-to-consumer advertising. For more on this in JAMA, click here.

Verma Defends CMS Hospital Price Transparency Rule

In a conference call with media last week, CMS Administrator Seema Verma defended the policy that was finalized in the 2019 Inpatient Payment rule that requires hospitals to publish a list of their standard charges via the Internet, and update this information at least annually. During the call, Verma stated that, "Unlocking cost information is critical to enabling patients to become active consumers so that they can lead the drive towards value." The requirement, effective January 1st, has hospitals nervous but Verma points out that they had ample time to comment during a request for information period in 2018. Click here for more on the conference call, here for the CMS Fact Sheet on the rule, and here for the IPPS final rule.

ACA Legal Fight Stalls Due to Shutdown

An appeals Court Judge has granted a stay in the legal fight over the constitutionality of the Affordable Care Act during the partial government shutdown because  the Justice Department is one of the departments affected. Last Wednesday, the Trump Administration requested a delay in the proceedings due to the lapse in appropriations for the past three weeks with no known end in site. California Attorney General Xavier Becerra, who is defending the law and leading the appeal with 16 other State Attornys General, denounced the request arguing it could jeopardize health care for millions of Americans. However, U.S. Circuit Judge Leslie Southwick sided with the Administration in granting the stay before the Fifth Circuit Court of Appeals in New Orleans, "in light of lapse of appropriations." To view the stay order, click here.

Bi-Partisan Senators Introduce Bill to Repeal ACA Tax on Insurers

Senator John Barrasso (R-WY) was joined by Sen. Cory Gardner (R-CO) and Freshman Sen. Kyrsten Sinema (D-AZ) to reintroduce bipartisan legislation that would repeal the ACA's tax on health insurers, saying it increases premiums and should be eliminated permanently. Insurers have lobbied continuously against the health insurance tax, or "HIT," saying that they must pass the cost along the tax to consumers increasing premiums. Since enactment of the health care law, Congress has repeatedly passed legislation to postpone the tax, which is scheduled to be reinstated in 2020. To view the legislation, click here.

House Committee Voices Concerns Over CMS' Use of Demos to Change Payment Systems

The Chairman and Ranking Member of the Ways and Means Committee sent a letter to CMS Administrator Seema Verma expressing concerns that the Agency is using demonstrations to overhaul Medicare law, and called on the agency to be open about how it creates demonstrations that test new payment models. The letter follows recent statements by CMS Innovation Center Director Adam Boehler and HHS Secretary Alex Azar that a number of demonstrations are currently in the works to be released this year. Chairman Richard Neal (D-MA) and Ranking Member Kevin Brady (R-TX) urged CMS "to increase transparency in the Center for Medicare and Medicaid Innovation (CMMI) and reform its processes to incorporate greater opportunity for public input as models are developed." Click here for the letter.

Drug Overdose Deaths Up 260 Percent for Women

There has been a sharp rise in the drug overdose rate among adult women, with a large percentage stemming from opioid use since 1999, according to the most recent CDC's Morbidity and Mortality Weekly Report. The report showed that the overdose rate rose 260 percent among women aged 30 to 64 years old from 1999 to 2017 and overdose deaths involving any opioid increased 492 percent over that same period. All of the drug categories that CDC examined showed increases in overdose deaths, with the most significant increases tied to synthetic opioids (1,643 percent), heroin (915 percent), and benzodiazepines (830 percent). To read the full report, click here.

Democrat Committee Leaders Question Usage of ACA Fees

A letter sent by Energy and Commerce Chairman Frank Pallone (D-NJ), Ways and Means Chairman Richard Neal (D-MA), Education and Labor Chairman Bobby Scott (D-VA), Senate Finance Ranking Member Ron Wyden (D-OR), and Senate HELP Ranking Member Patty Murray (D-WA) to HHS Secretary Azar and CMS Administrator Verma questions what the Administration is doing with the large amount of money - more than $1 billion per year - collected for administering the ACA exchanges. The funds are generated by HHS/CMS charging states and insurers to use the federal insurance marketplace based on a percentage of premiums.  These funds are collected while the Administration has cut spending on ACA outreach and advertisements by 90 percent - from $100 million to just $10 million. To read the letter, click here.

U.S. Chamber of Commerce Will Fight Single-Payer and Drug Price Controls

U.S. Chamber President and CEO Tom Donohue has pledged to use all of the Chamber's resources to fight single-payer health care proposals and to oppose price controls on pharmaceuticals. The Chamber, one of the most power lobbying groups in Washington, is the world's largest business organization representing the interests of more than 3 million businesses ranging from mom-and-pop shops and local chambers to industry associations and large corporations. The Chamber spent more than $82 million on lobbying in 2017 alone. Click here for the remarks and corresponding blog. 

MA Enrollment and Spending Expected to Surge Over Next Ten Years

Researchers expect Medicare Advantage enrollment and spending to surge over the next decade, until more than 4 in 10 beneficiaries are in the program by 2028, according to a report published in the New England Journal of Medicine. According to the report, MA enrollment looks to grow from 34-percent in 2018 to 42-percent over the next 10 years. The researchers state that beneficiaries have grown fond of MA plans due to their strong financial protections and the extra benefits they provide, such as dental care and gym memberships. Additionally, the study also states insurers such as UnitedHealthcare, Aetna, and Anthem have reported huge windfalls from the program that is government based but by run by private plans. To view the full report, click here.

States Looking at Medicaid Buy-In as Option for Uninsured

While democrats in Congress look at Medicare for All, states are exploring whether to allow residents to pay premiums to "buy in" to Medicaid, according to the Pew Charitable Trusts. Currently, Medicaid recipients pay for their coverage in only a handful of states, and the buy-in plans that 10 states are considering might not offer the full range of benefits available to traditional beneficiaries but could be a viable option when ACA exchange plans are cost prohibitive. Click here for more on the proposed policies.

6.2 to 7.3 Million People Have Had the Flu Since October: CDC

So far this season has seen between 6 and 7 million people come down with the flu between Oct. 1st and Jan. 5th, according to data from the Centers for Disease Control and Prevention. This first in a series of weekly reports from the CDC says up to half of those people have sought medical care for their illness, and between 69,000 and 84,000 people have been hospitalized from flu. CDC's weekly "FluView" will report when and where influenza activity is occurring, which influenza viruses are circulating and reports the impact influenza is having on hospitalizations and deaths in the United States, based on data collected from eight different surveillance systems. To view this first report in the series, click here.

Small Group of Patients Driving Higher Medicare Costs: Study

A new study published in Health Affairs last week shows that persistently high-cost Medicare patients tend to be younger, members of racial or ethnic minority groups, dual-eligible Medicaid patients or suffering from end-stage renal disease (ESRD). Medicare patients in the top 10% of spending each year accounted for almost 20% of Medicare's overall spending during the three-year period covered by the study. Using a 20 percent sample of Medicare fee-for-service beneficiaries in the period 2012–14, the researchers identified the proportion of patients who remained persistently high cost and found that 28.1 percent of patients were high cost for at least 2-years. Click here to view the study.

To see archived weekly federal updates, please click here.

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