October 2, 2024
Congress leaves D.C. without acting on major health care legislation; Post-election lame duck session could be impactful
Congress left town last week after passing a two month stop-gap funding bill that keeps the government funded through December 20. First, the good news: The bill included temporary reauthorization of the rare pediatric disease Priority Review Voucher (PRV) program, which was set to expire on September 30. Democrats on the House Energy & Commerce Committee dropped their opposition to reauthorization after Republicans agreed to include language requiring the Government Accountability Office (GAO) to perform a study analyzing the effectiveness of the PRV program in bringing new treatments to rare disease patients. The House and Senate will need pass full reauthorization bills (which extend the program for five years) during the upcoming lame duck session of Congress, which begins on November 12. Advocates are confident that the program will be reauthorized in this timeframe. The situation for other health care priorities is murkier:
- Telehealth: Two key House committees advancing two-year extensions of Medicare telehealth rules must reconcile their differences and potential differences with the Senate, which hasn’t yet advanced a telehealth extension. Congress is unlikely to let the rules totally expire at the end of the year, given their popularity and broad bipartisan support, but progress must happen quickly. The issue? Funding…and even a two-year extension would be expensive. Leaders are working with the Congressional Budget Office (CBO) to address fiscal concerns before the rules expire at the end of the year.
- PBM Reform: There is bipartisan momentum to clamp down on pharmacy benefit managers, which manage drug benefits for health plans, but consensus on what reform looks like remains elusive in Congress. The House passed its Lower Costs, More Transparency Act overwhelmingly last year, but PBM reform language hasn’t been attached to any moving legislative vehicles. The House and Senate are going to have to hammer out differences, which means substantial reform is unlikely.
- BIOSECURE: The House passed the BIOSECURE Act, which would effectively bar Chinese biotechs from doing business in the U.S., in a 306-81 vote in September. Almost all opposing votes came from Democrats. As of now, Democrats control the Senate, so there may be some friction on whether the bill is prioritized during the lame duck session.
- Physician Medicare Payment Cut: Physician groups (and physician members of Congress) were furious that Congress didn’t act to avert more Medicare payment cuts for doctors before heading home to campaign. If Congress doesn’t act during lame duck, it would be the fifth consecutive year physicians face a reduction in Medicare payment rates.
Pharmacy Benefit Managers continue to dodge bullets at federal and state levels: California Governor Newsom vetoes another reform bill
While lawmakers on both sides of the political aisle express support for pharmacy benefit manager reform, substantial reform simply hasn’t happened. At the federal level, PBM leaders have been threatened with jail time by Congressional leaders for allegedly lying during congressional testimony, but there still isn’t consensus on what meaningful policy reforms should look like. At the state level, even bipartisan bills are sputtering. On September 29, California Governor Gavin Newsom (D) vetoed a PBM reform bill that had passed the legislature virtually unanimously. The bill would have required PBMs to obtain state licenses, required more transparency on how much PBMs pay drug manufacturers and prohibited health insurers from charging more than the price that they paid for the drug. Newsom said that he remains unconvinced that the reforms are necessary and directed state agencies to gather more data. Major PBMs, including CVS Health, applauded the governor for “his throughout approach to better understand the drug supply chain before implementing legislation”, the state pharmacists association and patient groups said the veto was a “victory for predatory middlemen and corporate profits”. Newsom also vetoed another PBM reform bill in 2021. That legislation would have restricted health plans from steering patients to specific pharmacies.
Johnson & Johnson drops 340B rebate model after U.S. government threatens to boot the company from program
The war between a major biopharma company and the U.S. Health Resources & Services Administration (HRSA) temporarily ended on October 1 with Johnson & Johnson withdrawing its proposal. 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”. HRSA condemned the move and sent the company a warning letter. In follow up, HRSA ultimately threatened J&J with termination from the 340B program along with monetary penalties. “Due to HRSA’s unwarranted threats of excessive and unlawful penalties, J&J has no choice but to forgo implementation of the rebate model pending resolution of these issues,” a J&J spokesman said, claiming the HRSA position was “detrimental to patients, unlawful and punitive.”
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 inch closer to Election Day. 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 are coming more into focus 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 Sheri at sheri@gridironpublicaffairs.com for more information.
Health Policy Snippets
- Medicaid expansion (in a variety of forms) is all the rage. Even amidst concern that post-pandemic redeterminations would drive many Americans from the Medicaid program due to eligibility issues, states continued to expand Medicaid in other ways in 2024. Some examples: North Carolina and D.C. expanded Medicaid eligibility to include adults with incomes up to 138% of the federal poverty level (about $21,000 for an individual). In North Carolina alone, this resulted in 500,000 more North Carolinians gaining Medicaid coverage. After passage of a ballot initiative, South Dakota added 22,000 people to its Medicaid rolls. In June, five states (Illinois, Kentucky, Oregon, Utah and Vermont) extended Medicaid coverage to incarcerated people up to 90 days before their release. Several states also expanded eligibility to pregnant women, bringing the number to 46 states and D.C. that now offer one year of postpartum coverage.