The Legislative Update is brought to us by Liz Powell, Esq., MPH, Founder of G2G. Liz is an attorney with 20 years government experience, including as Legislative Director on Capitol Hill. She leads a team of bipartisan professionals that has raised over $50M, run advocacy campaigns and shaped CMS reimbursement for clients.
We wanted to share with you an update on what is happening in Washington, D.C. While all the focus is on the Mueller report, there are many other interesting activities involving health, defense, STEM, economic development and funding. See below for details and please let us know any questions.
Throughout March, the House and Senate were actively focused on the budget and appropriations hearings for FY2020 as well as the start of work on the annual National Defense Authorization Act. Congress started recess April 11 and returns April 29. With the Justice Department releasing Special Counsel Robert Mueller’s 448-page report (12% of which is redacted) on April 18 during this recess, lawmakers and staff are reading through and responding. Judiciary Committee Chairman Nadler (D-NY) issued a subpoena for an unredacted version. Meanwhile, the House and Senate have completed almost all of their budget hearings with secretaries of departments and several directors of agencies have testified explaining President Trump’s budget and stating priorities. Other issues on the horizon include a major transportation and infrastructure bill, immigration, cyber, health insurance and drug pricing, and a new bipartisan deal raising the current budget caps.
Although the President’s FY2020 budget proposal would cut $4.5 billion from NIH to go from $38 billion to $33.5 billion, in both the House and Senate LHHS Appropriations hearings the Members of Congress clearly stated that NIH would not be cut. Markup of the appropriations bill for NIH, CDC and other health programs is expected to start in May in the House.
Both the House and Senate committees of jurisdiction held hearings calling on key pharmaceutical companies to explain their drug pricing practices and to tackle ways to bring them down. Witnesses included Cigna Vice President and Chief Clinical Officer Steve Miller; CVS Health Executive Vice President Derica Rice; Humana Health Care Services President William Fleming; OptumRx CEO John Prince; and Prime Therapeutics Interim President & CEO Mike Kolar. A common theme is the PBMs are collecting rebates and not passing on the savings, effectively requiring the drug companies to raise their prices. Senator Leahy (D-VT) and Rep. Cicilline (D-RI) took the lead in introducing the CREATES Act to promote competition in the market for drugs and biological products by facilitating the timely entry of lower-cost generic and biosimilar versions of those drugs and biological products. The House Energy and Commerce Committee passed the CREATES Act unanimously. Also, House Ways and Means Chairman Neal (D-MA) introduced the Prescription Drug Sunshine, Transparency, Accountability and Reporting Act (STAR Act) and passed it unanimously before the recess to call manufacturers to account for dramatic increases in drug prices. Meanwhile the House Energy and Commerce Committee marked up even more bills, including:
- BLOCKING Act: to stop generic drug companies from sitting on the 180-day exclusivity period awarded to the first generic manufacturer that challenges a brand-name company’s patent and keeping other competitors off the market. Has bipartisan support.
- Protecting Consumer Access to Generic Drugs Act: to prohibit “pay-for-delay” patent settlements, in which a brand name company pays the generic manufacturer to stay off the market for a certain period of time. This is led by Democrats with limited Republican support. Has bipartisan support.
- Purple Book Continuity Act: to provide generic and biosimilar makers more information about the patents on branded products. Does not have bipartisan support and is led by Democrats.
- Orange Book Transparency Act: to require FDA to disclose additional patent information when listing but not any patent claims on a device that is used for the delivery of the drug and to require patent holders to notify HHS if the Patent Trial and Appeals Board issues a decision that a listed drug patent is invalid. Does not have bipartisan support and is led by Democrats.
- Payment Commission Data Act: to provide MedPAC and MACPAC with access to drug pricing and rebate data, to help Congress better understand the cost of prescription drugs. Has bipartisan support.
The self-imposed deadline for drug companies to voluntarily put cost information in their television has ads arrived, as the White House reviews a rule to make prices a mandatory element in TV drug ads. Back in October major drug companies including Eli Lilly, Novartis, Allergan, and Johnson & Johnson’s Janssen promised to provide some type of information about drug costs in their direct-to-consumer ads by April 15. The voluntary move was an effort to satisfy the desire of President Trump and Congress for more transparency about pharmaceutical prices and to head off regulations making list price disclosures in ads mandatory.
Affordable Care Act
Since Trump has entered the White House, the uninsured rate has increased by 1.4 million people – uninsured Americans under age 65 rose from 27.5 million in 2016 to 28.9 million in 2018, according to the Congressional Budget Office. During this time, Republicans in Congress and the White House enacted changes to ACA that included allowing groups of small businesses to form health insurance plans for their employees, expanding short-term limited-duration insurance plans, and reducing to zero the penalty for individuals who lack health coverage. The Trump administration also allowed states to implement laws requiring Medicaid enrollees to work in exchange for benefits, leading to over 18,000 people being dropped from the Medicaid rolls in Arkansas in 2018, for example. Since 2013 when ACA began, more than 20 million people have gained insurance coverage, nearly 13 million of whom became covered as a result of the ACA’s Medicaid expansion, not exchanges.
President Trump is continuing to argue against ACA and is now pursuing its complete elimination. However, if repealed it would remove a key component regarding rising drug prices. The Biologics Price Competition and Innovation Act, which was included in the 900+ page ACA allows pharmaceutical companies to submit drug applications for products that mimic biologics without having to jump through all the costly hoops, i.e. clinical trials, associated with getting a novel medicine approved by the FDA. If ACA ends so does this program.
In Congress, ACA reform efforts are also underway. The House Energy and Commerce Committee considered six bills before the recess aiming to tackle ACA and health care costs. They mirror many of the House Democratic leadership plan to expand Obamacare’s benefits while reversing Trump administration policies, which means none are bipartisan:
- State Allowance for a Variety of Exchanges Act (SAVE Act): to give states $200 million annually in federal funding to establish state-based marketplaces.
- State Health Care Premium Reduction Act: to give states $10 billion each year for a reinsurance program, or to reduce out-of-pocket costs of individuals in qualified health plans.
- Short-Term, Limited Duration Insurance: to reverse the Trump administration’s expansion of short-term health plans.
- Protecting Americans with Preexisting Conditions Act: to reverse Trump administration policies that weaken protections for patients with pre-existing conditions.
- Marketing and Outreach Restoration to Empower Health Education Act (MORE Health Education Act: to restore ACA outreach and enrollment funding that was cut by the White House.
- Expand Navigators’ Resources for Outreach, Learning, and Longevity Act (ENROLL Act): to provide $100 million to the Federal-Facilitated Marketplace Navigator program and make other changes to navigator requirements.
American Cures Act and American Innovation Act
Senator Durbin (D-IL) and Reps. Foster (D-IL) and Underwood (D-IL) teamed up announce the introduction of the American Cures Act and the American Innovation Act, which would create a mandatory fund to provide steady, predictable funding for breakthrough research at America’s top research agencies. This steady, long-term investment would allow the agencies to plan and manage strategic growth while maximizing efficiencies.
The American Cures Act would provide annual budget increases of five percent plus inflation at America’s top four biomedical research agencies: the National Institutes of Health, the Centers for Disease Control and Prevention, the Department of Defense Health Program, and the Veterans Medical and Prosthetics Research Program.
The American Innovation Act would provide annual budget increases of five percent for cutting edge research at five important federal research agencies: The National Science Foundation, the Department of Energy Office of Science, the Department of Defense Science and Technology Programs, the National Institute of Standards and Technology Scientific and Technical Research, and the National Aeronautics and Space Administration Science Directorate.
Medicare Drug Spending
The cost for 22 drugs shot up more than 500 percent per dose from 2013 through 2017, according to a Bloomberg Law analysis of Medicare Part D data. The median increase among drugs offered through Medicare’s primary prescription plan was 28 percent from 2013 to 2017, but some medications went up in price more than others. The median is the midpoint of the spending-change distribution, meaning that the same number of drugs changed in price more and less than 28 percent. Overall, Medicare spent about $154.8 billion on 42.7 million Americans with Part D coverage in 2017. In March, CMS reported an average annual spending increase of 10.6 percent from 2013 through 2017.
NIH Funding Cliff
A funding cliff written into the 21st Century Cures Act that was enacted at the end of the Obama administration could hamper two major NIH projects: personalized medicine and new cancer therapies. The 2016 bipartisan law created a 10-year innovation fund to accelerate special projects in four areas, including precision medicine and President Barack Obama’s Cancer Moonshot initiative to double the rate of new cancer treatments and prevention therapies. Due to the challenge of paying for this new fund, which provided $4.8 billion to NIH and $500 million to FDA, through offsets and budget work-arounds, a funding cliff does loom ahead. One offset included a cap on Medicaid reimbursement for durable medical equipment at equivalent Medicare pay rates and a draw down from the Strategic Petroleum Reserve with funding staggered based on how the savings that offset the bill are implemented.
Rare Disease Drug Guidance
The FDA issued a new rare disease guidance on how to incorporate natural history studies, which follow how a disease progresses to understand how to treat it, into the development of rare disease drugs. This is welcomed by orphan drug companies aiming to treat rare conditions that affect just 200,000 or fewer people and can be extremely expensive to develop and market. The draft guidance describes the broad potential uses of a natural history study in all phases of drug development for rare diseases. It also examines the strengths and weaknesses of various types of natural history studies, data elements and research plans, and provides practical framework for the conduct of a natural history study.
SCIENCE & STEM
Science Budget Proposals
The House and Senate Appropriations Committees are ramping up the pace of their hearings on President Trump’s FY2020 budget request, which proposes across-the-board cuts to science programs, including:
- NSF: Cut $1 billion, or 12 percent, compared to FY2019 under the proposal, with cuts spread relatively evenly across the agency’s research directorates.
- DOE: Cut the Office of Science budget by 16 percent to just above FY2017 levels and slash funding for the department’s applied energy offices.
- NOAA: Cut NOAA’s weather, climate, and oceans research programs by 40 percent to $335 million.
- NASA: Cut NASA’s Science Mission Directorate by 9 percent with the cuts falling hardest on the Astrophysics and Earth Science Divisions.
NASA to the Moon
Since 1969, 12 men have walked on the moon’s surface, leaving boot prints in the fine slate dust. Since the last lunar mission in 1972, president after president has promised to put an American astronaut back on the moon. With the 50th anniversary of the first moon landing on the horizon, the Trump administration is in a frenzy to actually achieve that elusive goal. NASA has said that it wants to put a human back on the moon by 2028, and unlike the Apollo program, this won’t be an in-house effort. NASA has asked American aerospace companies to submit designs for transportation systems that could be launched and tested, without a crew, as early as 2024. Applications were due in late March, and the winners stand to receive contracts worth from $300,000 to $9 million. Potential participants include longtime NASA contractors such as Boeing, Lockheed Martin, and Northrop Grumman; the quirky-billionaire-owned SpaceX and Blue Origin; and smaller, more obscure companies.
The VA could spend $10 billion in FY2020 to implement a new veterans’ health care program without it counting against a statutory budget cap under a key amendment to House Democrats’ spending plan offered by Rep. Lee (D-CA). It would allow a $10 billion cap adjustment in FY2020 and a $12 billion adjustment in FY2021 to fund the VA MISSION Act. House Budget Chairman Yarmuth (D-KY) supports the amendment. The VA MISSION Act, which President Trump signed into law in June 2018, helps improve veterans’ flexibility to seek care outside VA facilities and shifted the program’s funding from mandatory to the discretionary spending, where it would count against the spending limits created under the Budget Control Act. Lee’s amendment would free the VA MISSION funds from that constraint, up to the $10 billion and $12 billion limits.
Support Startup Jobs, Innovation and Small Businesses
Senators Murphy (D-CT) and Toomey (R-PA) announced the introduction of the Helping Angels Lead Our Startups (HALOS) Act, legislation that would support small businesses by removing burdensome restrictions from individuals who want to invest in startups and help create jobs. In order to secure capital to grow their businesses, entrepreneurs commonly attend “demo days” or conferences that allow them to showcase their business in front of angel investors and venture capitalists. It is estimated that angel investors provide 90 percent of outside equity to help grow these startups. Due to recent burdensome regulations, angel investors have been deterred from attending demo days, which harms economic growth. The HALOS Act would preserve important investor vetting processes without forcing startups to jump through unnecessary hoops to get the investments they need to grow and create new jobs.
BUDGET & APPROPRIATIONS
G2G attended appropriations hearings in Congress, tracking the LHHS and DoD budget hearings in particular in the House and Senate. A range of issues were covered but it is clear that NIH Director Collins is very committed to increasing his budget and being able to make more NIH awards. He and several Members of Congress spoke about the importance of young investigators and building the pipeline of future research. While Director Collins stated the NIH does not develop drugs, it plays an essential role and through NCATS can partner with industry to accelerate development. Both he and Chairwoman DeLauro (D-CT) agreed that NIH must step in when the market won’t to address neglected diseases, such as rare cancers. Within the Defense hearings ranging from F-35s to Defense Health Agency, the DoD is equally forthcoming on the need for increased spending and has put a renewed focus on R&D to deploy modern technologies for the warfighter. All of this points to the need for a new budget caps agreement to avoid sequestration by year’s end.
Despite no new deal and a failed attempt to pass a budget raising the caps in the House, the House appropriators are forging ahead drafting appropriations bills during the recess, abiding the budget legislation that passed committee. House Budget Chairman John Yarmuth’s (D-KY) bill, H.R. 2021, passed committee along party lines and aims to increase the caps under the Budget Control Act for FY2020-21 by raising nondefense cap for FY2020 to $631 billion (+$34 billion or +5.7% over FY2019) and the defense cap for FY2020 to $664 billion (+$33 billion, or +2.6% over FY2019). Before the recess, the House adopted a rule to provide consideration of Chairman Yarmuth’s bill and establish a budget for FY2020, which automatically allowed House appropriators to allocate $1.3 trillion in base discretionary spending, without specifying for defense and nondefense programs. This allows appropriations bills to be drafted during the recess so we expect markups of the 12 appropriations bills to begin in May in the House.
President’s Budget Proposal
Space exploration, disease research and affordable housing programs are among dozens of suggested cuts in the President’s FY2020 budget request released in March. It calls for a 9 percent cut to non-defense discretionary spending, including:
- NASA: Cut $198 million from NASA’s Space Launch System, funding Block 1 but deferring funding for the upgraded, more expensive Block 1B. Eliminate NASA’s Office of STEM Engagement, cutting $110 million.
- NIH: Cut $4.5 billion from NIH to go from $38 billion to $33.5 billion.
- National Cancer Institute (NCI): Cut funding from $6.2 billion to $5.2 billion, but include a new $50 million per year pediatric cancer research program.
- Foreign Aid: Eliminate funding for the State Department’s $3 billion Development Assistance account and the $760 million Assistance for Europe, Eurasia and Central Asia account, which would be covered by a consolidated Economic Support and Development Fund.
- UN Climate Efforts: Give $6.4 million to the United Nations Framework Convention on Climate Change set up in 1992 to oversee talks toward a global climate accord and coordinate the global response to the issue, but zero funding for the Green Climate Fund, which was zeroed out during Trump’s first year in office.
- Export-Import Bank: Cut the Export-Import Bank’s administrative budget from $110 million to $96 million.
- Interior Department: Cut $178 million to five discretionary programs, including grants for abandoned mine reclamation and an Indian loans program.
- FCC: Cut 1 percent to $335.7 million, although it would support agency efforts to expand internet access to underserved parts of the country, promote new technologies and services, protect consumers, and reform agency processes.
Before the April recess, the House passed the rule for consideration of H.R. 2021, Chairman Yarmuth’s (D-KY) bill to raise the spending caps, but it has not passed the actual bill yet due to battles over levels of increased funding for defense and nondefense programs. However, the adoption of that rule has led to committees moving forward with $733 billion for defense spending and $639 billion for nondefense spending in FY2020. The House Armed Services Committee Chairman Smith (D-WA) said he will authorize $733 billion in the National Defense Authorization Act (NDAA), following the lead of the Budget Committee. Meanwhile, in the Senate, Republicans may choose a higher defense figure. Senate Armed Services Committee Chairman Inhofe (R-OK) wants to use the $750 billion number instead. The Senate Appropriations Chairman Richard Shelby (R-AL) said he too favors the $750 billion requested by President Trump in his budget proposal.
Both the House and Senate committees of jurisdiction have held numerous hearings with Acting Secretary of Defense Shanahan, leadership from each of the services and the Defense Health Agency that is in the midst of taking over all healthcare and research for the military due to previous NDAA requirements. Chairman Inhofe (R-OK) and others have expressed concern about filling the Secretary of Defense position as well as others that have remained open for months. In addition, acquisition and procurement reform measures remain a top priority of Ranking Rep. Thornberry (R-CA) who lead initiatives in this area in last year’s NDAA when he was chairman. The HASC is expected to finish hearings in May and markup the NDAA in June and the Senate is close on their heels. Both chambers aim to complete the NDAA before the end of the fiscal year on September 30.
The Trump administration is asking for $592 million to fund U.S. Cyber Command in the next fiscal year—a decrease from the roughly $610 million Cyber Command and what NSA Chief Army Gen. Paul Nakasone previously testified the organization is expected to spend in FY2019. It is around 6 percent of $9.6 billion the administration wants for Pentagon cyber operations. Another $1.9 billion would go to support Cyber Command operations across four military locations in Georgia, Hawaii, Texas and Washington, D.C. Also, the Navy wants to add a new assistant secretary to shore up cybersecurity following an assessment last month that found widespread vulnerabilities throughout the service. Navy Secretary Richard Spencer said he is sending a legislative proposal to Congress asking lawmakers to add a fifth assistant secretary position. He also said other cybersecurity measures are in the pipeline, especially for contractors. Finally, the first established Democratic presidential candidate out of the gate is also the first candidate to offer a cybersecurity policy proposal. Former Maryland Congressman Delaney is proposing the creation of a Department of Cybersecurity to centralize all cyber activities. The idea of a Cabinet-level cybersecurity department has divided security experts. Some, such as former CIA Director David Petraeus, have embraced it, but others, such as former DHS cyber chief Suzanne Spaulding, have rejected it because it would set the U.S. government back on its cyber progress thus far.
G2G (Government to Growth Consulting), LLC is a consulting firm specializing in assisting businesses and non-profit organizations. G2G provides comprehensive consultation in the fields of government affairs, economic development, grant writing, public relations, and event planning. G2G also has extensive experience in the areas of lobbying, advocacy, fundraising and grassroots organizing.