National Legislative Update for February 2019

February 18, 2019

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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 $159M, run advocacy campaigns and shaped CMS reimbursement for clients.

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OVERVIEW

The record 35-day shutdown that started the 116th Congress ended with Congress passing and President Trump signing virtually the same Continuing Resolution initially agreed to in December in the 115th Congress. And then Congress and the President agreed to a border security deal that funded the remaining seven appropriations bills. Although in recess for one week, Congress is now beginning the FY2020 process for which the President’s Budget is delayed until March 11 for a “skinny budget” and March 18 for a complete budget proposal.

CONGRESS

Forecasting 2019

G2G was on Capitol Hill almost every day the past five weeks, gaining insights on FY2019 and FY2020. We also attended a private Bloomberg forum with Rep. John Yarmuth (D-KY), Chairman of the Budget Committee and Senator Mike Rounds (R-SD), Chairman of the Senate Armed Services Committee’s (SASC) Subcommittee on Cybersecurity. Chairman Yarmuth said there is no way to have a balanced budget in the next ten years and their goal is to hold the line on deficits. He hinted Democrats might remove the corporate tax cuts enacted in 2017 since several loopholes weren’t closed. He also said House Majority Leader Hoyer wants the House to write and pass all appropriations bills by June. However, with the late start to the FY2020 process and upcoming battles over the debt ceiling and possible sequestration (due to the Budget Control Act caps enacted in 2011 for which the Democrats and Republicans must craft a new agreement to raise those caps), this is unlikely. Chairman Yarmuth is expected to hold hearings on the fiscal impact of Medicare for All, immigration, workforce development, infrastructure and the on-going Pentagon audit. Both Senator Rounds and Chairman Yarmuth discussed infrastructure, showing support of many Members of Congress for a transportation bill. Chairman Rounds also talked about domestic cybersecurity deficiencies and his support for a major investment in the Pentagon’s cyber defense.

Congressional Organization

For the first time many freshmen are chairing committees or subcommittees. Freshmen now hold four of the five subcommittee chairmanships on the Small Business; Veterans’ Affairs; and Science, Space and Technology committees. The fifth subcommittee gavel on Science-Space went to Rep. Conor Lamb (D-Pa.), who took office last March after winning a special election before getting re-elected in November to a new district. Also, the Homeland Security and Natural Resources committees each have two freshmen in charge. Rep. Elaine Luria (D-VA) has the biggest percentage of military veterans of any House constituency, so she now chairs the Veterans Affairs’ Disability Assistance and Memorial Affairs Subcommittee. Also, some Democratic candidates in swing districts who distanced themselves from Pelosi got chairmanships, including Reps. Jason Crow (D-CO), Jared Golden (D-ME), Max Rose (D-NY), Mikie Sherrill (D-NJ) and Abigail Spanberger (D-VA).

The Democrats now have 38-seat advantage in the House of Representatives. On February 10th, Rep. Walter Jones (R-NC) passed away, changing the balance of power in the House to 235 Democrats and 197 Republicans. There are two other vacant seats after no winner was declared in the 9th District of North Carolina and Rep. Tom Marino (R-PA) resigned on January 17 due to controversy surrounding pharmaceutical companies manufacturing opioids. In 2017, Marino was President Trump’s pick for drug czar, but withdrew his nomination following a Washington Post/60 Minutes report about his opioid bill hindered the Drug Enforcement Administration’s efforts to fight opioid abuse. The dynamics of Congress will continue to shift as two in the Senate and two in the House (all Republican) have already said they are retiring in 2020.

HEALTH

Fostering Innovation

The Fostering Innovation Act was introduced by Senators Gary Peters (D-MI), Thom Tillis (R-NC), David Perdue (R-GA), and Kyrsten Sinema (D-AZ) to build on the success of the JOBS Act by extending the exemption from Sarbanes-Oxley Section 404(b) for an additional five years for pre-revenue biotech companies. It would allow biotech companies without an FDA approved product on the market to avoid the costly compliance related disclosures required of established organizations. More than 300 biotech companies have gone public since passage of the JOBS Act in 2012, a 270 percent increase over the same period prior to its enactment, according to BIO. Despite this growth, biotech startups spend 10-15 years in the lab or clinic developing potentially life-saving medical innovations before obtaining FDA approval and would otherwise spend upwards of $1 million per year on the 404(b) audit and other financial disclosure obligations that do not benefit their investors.

Healthcare Deregulation

The Trump administration estimates its deregulatory agenda for health care will provide a value of $453 billion to the economy over next decade based on a White House Council of Economic Advisers report on the effects of allowing groups of small businesses to form health insurance plans for their employees, expanding short-term limited-duration insurance plans, and moving the individual mandate penalty to zero. However, the House Democrats seek to reverse what they describe as the Trump administration’s sabotage of Obamacare and see their wins in the midterm elections as a mandate to uphold the Affordable Care Act. Several hearings are planned in the House oversight committees to address this issue.

Prescription Drug Pricing

Lawmakers looking to curb rising costs consumers pay for prescription drugs want the industry to explain its pricing but are finding pharmaceutical companies reluctant to reveal their secrets. Several congressional committee leaders have opened investigations into how drug makers price their products. Two House panels have sent letters to some of the country’s largest drug makers asking for information about how they set prices and how they negotiate with industry middlemen on the sticker price for their medicines and the Senate Finance Committee invited seven leading pharmaceutical CEOs to testify, signaling the time has come to hold them publicly accountable for rising prices. The companies invited include AbbVie, AstraZeneca, Bristol-Myers Squibb, Johnson & Johnson, Merck & Co., Pfizer and Sanofi.

FDA Guidance for Medical Device Approval

On February 5, the FDA released a new guidance document replacing the 2002 Least Burdensome Guidance. The guidance states, “The statutory updates in FDASIA and the Cures Act clarified the original least burdensome provisions and further recognized the role of post-market activities as they relate to premarket decisions. FDA believes, as a matter of policy, that least burdensome principles should be consistently and widely applied to all medical device regulatory activities in the premarket and post-market settings to remove or reduce unnecessary burdens so that patients can have earlier and continued access to high quality, safe and effective devices.” FDA believes that least burdensome principles should be applied throughout the medical device total product lifecycle and is based on sound science, the intent of the law, the use of alternative approaches, and the efficient use of resources to effectively address regulatory issues. FDA’s guidance documents do not establish legally enforceable responsibilities but are merely recommendations.

Opioids

The number of people who die each year from an opioid overdose will increase to 81,700 a year by 2025—a 72 percent jump—without more treatment-based interventions, according to a medical journal article released in early February. A team of a dozen researchers used mathematical models to project opioid overdose deaths from 2016 to 2025 and assess the impact of opioid prescription control policies in turning around what’s largely considered the nation’s most pressing public health crisis. They found those steps alone will barely make a dent. However, we are not hearing any plan from Congress to enact additional opioid legislation following up on the Comprehensive Addiction and Recovery Act. We do expect significant increases in funding for NIH and many public health accounts by the House Labor, Health and Human Services Subcommittee for FY2020.

Environmental Health

The Environmental Protection Agency (EPA) said recently it will start work by the end of the year on a long-awaited plan to set national drinking-water limits for two harmful chemicals linked to cancer, low infant birth weight and other health issues. While environmentalists and Democrats criticized the plan as delaying desperately needed regulation on a public health threat from chemicals that are commonly used in cookware, pizza boxes, stain repellents and fire retardants, EPA described their proposal as the “first-ever nationwide action plan” to address the health effects of human-made chemicals known as poly- and perfluoroalkyl substances, or PFASs. Currently, there are no federal regulations on the production or monitoring of that class of about 5,000 chemicals, which are manufactured and used in many industries and products even though studies show they can linger in the human body for years, causing harmful health effects.

Veterans’ Health

Senate appropriators are reviewing the Department of Veterans’ Affairs effort to revamp its electronic health records system with the Military Construction, Veterans Affairs Subcommittee holding a hearing last week. The modernization project, which is estimated to cost $16 billion over 10 years, was criticized by lawmakers over a lack of details from agency officials. Also, the DoD and VA are considering merging parts of their two health care programs, which could alter how about 19 million military personnel, retirees, dependents and veterans receive care. On January 31, the Defense Health Agency said an initiative known as DoD VA Health Care Staffing Services is designed to merge the delivery of health care using facilities run by both agencies to serve the two populations of beneficiaries in a combined fashion. The two health care systems serve populations of roughly similar numbers, but they deliver care differently and serve a different clientele: the VA on average treats an older population, while DoD deals more with younger individuals and families. This is a major decision that will take years to examine and plan so we expect Congress to move slowly.

Long-term Care

Dr. Teresa Boyd, Assistant Deputy Under Secretary for Health for Clinical Operations, Veterans Health Administration testified last week about multiple chronic conditions, life limiting illness, frailty, or disability associated with chronic disease, aging, or injury. She said approximately 80 percent of veterans will develop the need for long-term healthcare services and support as they age. The VA financial obligations for nursing home care in FY2017 reached $5.7 billion and the number of veterans with service-connected disabilities rated 70 percent or more, for whom VA is required to pay for nursing home care when indicated, is projected to double from 500,000 to one million veterans 2014-2024. The cost for providing nursing home care for enrolled veterans can conservatively be estimated to reach more than $10 billion within the next decade. There are currently 156 veteran’s homes in America.

STEM & INNOVATION

New Leadership

Rep. Eddie Bernice Johnson (D-TX) has taken the reigns of the House Science, Space and Technology Committee, where she is planning more in-depth hearings on major NASA programs like plans to construct a lunar outpost orbiting the moon. She plans to hear from more rank and file officials at NASA to get a better picture of agency operations. Her Ranking Member on the Committee is Rep. Frank Lucas (R-OK), who is also new to this leadership position as the former chairman retired. Meanwhile, in the other chamber, Senator Roger Wicker (R-MS) is the new chair of the Senate Commerce, Science, and Transportation Committee, taking over from Senator John Thune (R-SD), who is now Senate Majority Whip. Senator Maria Cantwell (D-WA) succeeds Senator Bill Nelson (D-FL), who lost his seat in the November election. Chairman Wicker said he plans to advance bills to update policies governing NASA and commercial space activities. Both of these committees oversee several science agencies, including NASA, the National Science Foundation (NSF), National Institute of Standards and Technology (NIST), National Oceanic and Atmospheric Administration (NOAA), and the White House Office of Science and Technology Policy (OSTP).

White House Science Priorities

Protecting U.S. research and innovations from scientific espionage and intellectual property theft are top priorities of the new Director of OSTP, Dr. Kelvin K. Droegemeier. He spoke to the American Association for the Advance of Science’s annual meeting last week, his first public address since becoming director on February 11 (a position that was left open a record 712 days). His focus on securing U.S. scientific labs from IP theft aligns with the Department of Justice’s work in pursuing hackers associated with the Chinese Ministry of State in global campaigns targeting confidential business information. Droegemeier said despite nearly two years without a leader, his role in the Trump administration is supported by people working hard on important things and making a difference at the White House.

NASA

Contract obligations at NASA have increased each year since FY2015. NASA is the federal government’s second-largest research and development spender since FY2014. The DoD is the only agency with more R&D obligations, but NASA’s R&D spending surpasses that of all individual DoD bureaus. Even though the NASA FY2019 budget request sought about $1.1 billion less than it did in FY2018, contract spending keeps climbing, especially at the end of the year. In fiscal 2017 and 2018, 32 percent of contract obligations at NASA were made in the third quarter, more than in any other. NASA spending to date is higher so far in FY2019 than it was at the same point in FY2018: $5.5 billion to date compared with $5.3 billion. NASA’s top five contractors won 44 percent of the agency’s FY2018 contract obligations. Small businesses, on the other hand, won just 16 percent of NASA’s obligations during the same period.

Education

Public schools serving low-income students could see a $100 billion boost in funding for buildings and technology infrastructure via legislation (H.R. 865) introduced by 152 Democratic lawmakers in the House and Senate. Infrastructure is also a top priority for Speaker Nancy Pelosi (D-CA) and House Education and Labor Chairman Bobby Scott (D-VA) said any such package needed to include funding for schools. While Democrats see infrastructure as an issue that can gain bipartisan support, most Republican lawmakers say states and localities should be responsible for financing the upkeep of school buildings. When Scott introduced a similar bill in 2017, it failed to attract any Republican co-sponsors. Chairman Scott has also championed STEM education and teacher training and will lead efforts to reauthorize the Higher Education Act throughout the year stretching into 2020.

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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.