September 3, 2024

A full September Congressional agenda includes BIOSECURE Act and rare pediatric disease PRV

As Congress returns from its recess on September 9, members will be under intense pressure to pass several important pieces of legislation, including the BIOSECURE Act and the rare pediatric disease priority review voucher (PRV) reauthorization. The three weeks in September will be the last opportunity for action before the November 5^th elections and Congress’ “lame duck” session, which runs November 12 – December 20 (with a Thanksgiving week break).  Two issues of concern to the life sciences community hang in the balance.  The BIOSECURE Act, which prevents pharmaceutical companies in the U.S. from accessing federal funding for projects if they work with certain China-based contract development and manufacturing organizations that are deemed to have a relationship with the Chinese government, enjoys bipartisan support in both the House and Senate. However, House and Senate committees have passed different versions of the legislation and opposition from Republican Senator Rand Paul (R-KY) could delay or stop passage this month. The bill is among several that the U.S. House will consider during a proposed “China Week” (likely either the week of September 16 or 23). Rare disease advocates and companies that seek to develop therapies for rare diseases are watching the calendar closely as the rare pediatric disease PRV program is set to expire September 30. Opposition from some House Democrats has slowed reauthorization of the program. Some argue the program is a “give away” to biopharmaceutical companies, while advocates call the program pivotal in incentivizing companies to research, develop and market rare disease drugs. If the program is not reauthorized before it expires on September 30, existing PRVs will not be impacted. However, the FDA would be prohibited from issuing new PRVs or considering any requests from companies. The rare disease community continues to lobby hard for action in September, including online appeals from parents of children living with rare and ultrarare diseases.

Congressional threat: Pharmacy benefit manager executives undergo new scrutiny from members of Congress 

After leaders of major PBMs testified in July that they treat affiliated and unaffiliated pharmacies equally in their contracts, the chair of the powerful House Committee on Oversight and Accountability is threatening the leaders of the three largest PBMs in the country with steep fines — or jail time — for allegedly lying in a recent congressional hearing. Chairman James Comer (R-KY) sent letters on August 28 to Patrick Conway, the CEO of UnitedHealth’s Optum Rx; Adam Kautzner, the president of Cigna’s Express Scripts; and David Joyner, the president of CVS’ Caremark arguing that statements they made in a July hearing contradicted committee findings and research by the Federal Trade Commission released this summer.. During the hearing, Conway, Kautzner and Joyner testified that their PBMs treat affiliated and unaffiliated pharmacies equally when setting rates, negotiating contracts and telling patients where to dispense their medications. Those statements were lies, according to Comer. His letter cites committee and FTC evidence to argue that PBMs increase revenue at their own pharmacies at the expense of other businesses. Comer asked the executives to correct their statements by Sept. 11 or face possible legal action — including up to five years in jail, in addition to fines. Representatives from the PBMs have denied Comer’s accusations. The development spotlights increasing frustration that Congress has not been able to pass substantive PBM reform legislation, despite general bipartisan support for action. The House and Senate have different bills pending, but it will be challenging for members to come to consensus given the limited time left in the congressional session.  

Johnson & Johnson picks a new 340B fight with the federal government

If people are aware of the government’s 340B drug discount program at all, they can only agree on a few items.  One, the program is incredibly expensive for biopharmaceutical companies. Two, the program’s administration has lacked clarity, leading to tremendous growth in the program since its creation in 1992. Biopharma companies and other health care entities have long contended that the federal program (which provides steep discounts for safety net hospitals serving vulnerable populations) has radically strayed from its initial purpose. A 2024 Iqvia report documented the year-over-year rapid growth of the program and its extensive price tag. As of 2023, more than 2,300 hospitals participate in the 340B program, but participation is not limited to hospitals. The program utilizes “provider sites” (which can be hospitals or pharmacies at other locations besides hospitals). A 2022 Commonwealth study found that there were 8,100 340B provider sites in 2000, but the number had sky rocked to over 50,000 in 2020. Average 340B drug discounts range from 25-55%. The hospital community argues that facilities serving underserved populations should receive assistance in paying for prescription drugs and that growth of the 340B program is justified since biopharmaceutical companies continue to make profits. Congressional attempts to rein in the program have consistently failed, outside of requiring occasional Government Accountability Office (GAO) reports and some additional transparency from hospitals. As biopharma companies grapple with the growth of the program, creative alternatives arise. In August, Johnson & Johnson announced it was transitioning to a new 340B drug rebate model for paying hospitals instead of upfront payments. In a statement, J&J said it believes some hospitals are exploiting the system and its move away from up front payments will ensure that only the patients who truly need assistance will get it. “The 340B program is not meeting its original goal of allowing safety net providers to obtain discounted medicines for vulnerable patients. Patients are not realizing the full benefit of the 340B program because of rampant abuse and misuse,” J&J said in a statement. It said the rebate model is a “reasonable, standard business practice”. The federal agency operating the 340B program, the Health Resources & Services Administration (HRSA), condemned the move and sent the company a warning letter. The American Hospital Association called on HRSA to immediately stop J&J’s rebate proposal from being implemented. Despite the pushback,  J&J said it will move forward with its program. Some observers expect the Supreme Court’s recent decision to overturn the Chevron precedent to ultimately impact how the 340B program moves forward, arguing that reliance on HRSA’s fluid interpretation of the statute has made the program unsustainable.

2024 Elections: What’s on tap and how will it impact access to innovative medicines? Schedule your presentation now

While many Americans can’t wait for the November elections to be behind us, this election’s ramifications for health care policy, especially for the patient access and the biotech and biopharma communities, will be enormous. With slim majorities in both the House and Senate, and a race for the White House that takes fascinating turns every hour of the day, Gridiron’s crystal ball is somewhat murky (but gaining some clarity) as we exit the summer months. The departure of Biden from the race and the Kamala Harris’ ability to energize the Democratic base has changed the dynamic. However, the candidates’ specific plans and policy visions will come into focus in the last three months and the top-of-the-ticket impact on Senate, House and state legislative races will likely be substantial. It’s important for companies and organizations to prepare for the various scenarios and the issues that will likely be front-and-center if those scenarios become reality. It’ll also be important to absorb and analyze the results after November 5. Book your time for a Gridiron Public Affairs presentation (either before, after or both) on Election 2024 today, before the calendar fills up. Email Greg at greg@gridironpublicaffairs.com for more information.

Gridiron Public Affairs is growing! Please welcome Sheri Billett!

Gridiron Public Affairs welcomes Sheri Billett to the team as a Research Associate. Sheri joins Gridiron after an impactful career as a public school educator in the Pacific Northwest. Prior to her teaching years, Sheri served as executive director of a non-profit organization, a registered lobbyist and a chief of staff to a state legislator—so her public policy roots run deep! Sheri’s addition provides our clients with more resources to ensure our mutual efforts to positively shape the policy environment to meet your organization’s goals succeed.  Sheri can be reached at sheri@gridironpublicaffairs.com.

Health Policy Snippets

1. State Policy Trends – Now that CMS has announced its “maximum fair price” (MFP) for the 10 Medicare Part D drugs selected for negotiation, we’re keeping an eye on what states might do in response. Efforts to link the CMS MFP for drugs to the maximum that any state program or state-regulated payer pays for those drugs continue to be discussed by legislators. A 2023 bill in Nevada seeking to link the CMS MFP to state payment limits was only stopped by a Governor’s veto. The anti-pharma think tank National Association for State Health Policy (NASHP) has released a model bill for legislators to consider, and it was a topic of conversation at the recent National Conference of State Legislators (NCSL) meeting in Louisville.
2. Lack of new COVID Vaccine Enthusiasm – As COVID cases spike, a new poll from the University of Pennsylvania’s Annenberg Public Policy Center found fewer Americans are considering another round of COVID vaccinations.  Even when a COVID vaccine can be combined with a flu and RSV vaccine, about 3 in 10 Americans say they would definitely not consider receiving the vaccine and less than half said they’d even consider it. 22 percent believe it’s safer to get a COVID infection than get the vaccine and 15% of respondents believe the COVID vaccine changes people’s DNA.  The survey results prompted researchers to spotlight the ongoing backlash to the government’s COVID messaging, believing it could jeopardize future preparedness efforts.