McDermottPlus Check-Up: March 17, 2023

THIS WEEK’S DOSE

The recent bank failures and responses from Congress and the Biden Administration dominated the headlines this week, with most major healthcare issues taking a backseat on Capitol Hill. The House was in recess, and in the Senate, Administration officials began making the rounds to defend the president’s recently released FY 2024 budget request before key committees. Additional budget hearings are expected in the coming months, including those related to the US Department of Health and Human Services (HHS) budget. HHS released information on inflation rebates and Medicare drug pricing negotiation guidance as part of the ongoing implementation of the Inflation Reduction Act (IRA).

CONGRESS

Senate HELP Committee Issues RFI on PAHPA Reauthorization. On March 15, the Senate Health, Education, Labor and Pensions (HELP) Committee issued a request for information (RFI) on the reauthorization of the Pandemic and All-Hazards Preparedness Act (PAHPA).

The RFI seeks stakeholder feedback on policies that the committee should consider during the reauthorization process, focusing on three key areas:

• Specific changes Congress could make to improve the efficiency and effectiveness of current HHS programs and activities
• Current gaps in the PAHPA framework and HHS’s capabilities
• Specific steps Congress could take to improve partnerships with states and localities, community-based organizations, and private sector and nongovernment stakeholders such as hospitals and healthcare providers, on preparedness and response activities.

The HELP Committee is accepting comments through March 29. Comments can be submitted by email to PAHPA2023Comments@help.senate.gov.

This follows the RFI issued several weeks ago by Representatives Anna Eshoo (D-CA) and Richard Hudson (R-NC), who are leading the PAHPA reauthorization effort on the House side. Comments on the House RFI were due March 13.

Senators Introduce Bipartisan Generic Drug Legislation. On March 14, Senators Maggie Hassan (D-NH) and Rand Paul (R-KY) introduced the Increasing Transparency in Generic Drug Applications Act (S. 775), which aims to streamline the approval process for generic drugs.

The bill would require the US Food and Drug Administration (FDA) to more clearly identify specific differences between generic and brand name drugs, with the intention of streamlining the approval process in order to help more generics reach the market faster and lower prescription drug prices for consumers.

ADMINISTRATION

CMS Releases Details on Medicare Part B Prescription Drug Inflation Rebates. On March 15, the Centers for Medicare & Medicaid Services (CMS) announced the first set of Medicare Part B prescription drugs that will be subject to inflation rebates, per policy under the IRA, which was signed into law in 2022.

From April 1 to June 30, 27 Part B drugs will have a reduced coinsurance rate based on the inflation-adjusted payment amount. People with traditional Medicare and Medicare Advantage who use these drugs may, depending on any other health coverage they have, pay a reduced amount for their coinsurance during this quarter. The reductions vary from $2 to $390 per average dose.

The 27 drugs subject to Medicare inflation rebates and the coinsurance adjustment rates are included in this fact sheet. A Q&A fact sheet offers additional details on the program, and CMS’s landing page on prescription drug inflation rebates contains further resources.

CMS Releases Guidance on Medicare Drug Price Negotiation. Also on March 15, CMS released initial guidance regarding implementation of the Medicare Drug Price Negotiation Program, as required under the IRA. The guidance details the requirements and procedures for implementing the new program for the first set of negotiations, which will occur in 2023 and 2024 and will result in prices effective in 2026.

A fact sheet on the guidance provides additional details. Key implementation dates include the following:

• By September 1, 2023, CMS will publish the first 10 Medicare Part D drugs selected for negotiation for the initial price applicability year 2026.
• The negotiated maximum fair prices for these drugs will be published by September 1, 2024, and prices will be in effect starting January 1, 2026.
• In future years, CMS will select for negotiation up to 15 more Part D drugs for 2027, up to 15 more Part B or Part D drugs for 2028, and up to 20 more Part B or Part D drugs for each year after that, as outlined in the IRA.

CMS is seeking comment on most of the policies in the guidance. CMS noted that the policy related to identification of selected drugs for initial price applicability year 2026 is considered final, with the exception of the small biotech exception.

Comments are due by April 14, and CMS anticipates issuing revised guidance this summer for the first year of negotiation.

QUICK HITS

• The Medicaid and CHIP Payment and Access Commission (MACPAC) released its March 2023 Report to Congress. The report has four chapters, covering race and ethnicity data, nursing facility payment policy, drug coverage policies and disproportionate share hospital allotments. MACPAC recommendations are included in the first three chapters.
• The Medicare Payment Advisory Commission (MedPAC) also released its March 2023 Report to Congress. The report’s 12 chapters focus on payments for hospitals, physician and other health professional services, ambulatory surgical centers, outpatient dialysis, skilled nursing facilities, home health, inpatient rehabilitation facilities, hospice, and Medicare Advantage and Part D. An appendix includes a summary of MedPAC recommendations.
• HHS’s Office of the Assistant Secretary for Planning and Evaluation issued a report demonstrating vaccine savings under the IRA. The report showed that 3.4 million Medicare beneficiaries paid $234 million in out-of-pocket costs for recommended vaccines covered under Part D in 2021. Under the IRA, these vaccines are free for Medicare beneficiaries as of January 1, 2023.
• HHS, through the Health Resources and Services Administration, announced the availability of approximately $25 million to expand primary care in schools, including mental health services.
• The US Government Accountability Office (GAO) released a report on the FDA and its efforts to promote advanced manufacturing and encourage innovation. The report recommended that FDA document and finalize performance measures related to its advanced manufacturing program efforts and regularly assess program progress.
• GAO released a report on payment integrity related to advance premium tax credits under the Affordable Care Act. The report found that control activities for preventing improper advance premium tax credit eligibility determinations varied among selected state-based marketplaces, and that CMS did not coordinate with the states to conduct a risk assessment to evaluate the likelihood of improper eligibility determinations when exercising eligibility verification flexibilities.
• The Kaiser Family Foundation released a new analysis on tax exemption for nonprofit hospitals that estimates the total value of tax exemption for nonprofit hospitals at almost $28 billion in 2020, up from $20 billion in 2011.

NEXT WEEK’S DIAGNOSIS

The House and Senate will be in session, and FY 2024 budget hearings are expected to continue, including a March 22 Senate Finance Committee hearing with HHS Secretary Becerra and a March 28 House Energy and Commerce Committee hearing with the Secretary. More hearings are expected to be announced in the coming days.

For more information, contact Debra Curtis, Kristen O’Brien or Erica Stocker.

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