This Week: Congress averts government shutdown by passing two-week extension for Continuing Resolution, pushing the funding issues to Dec. 21.


Bipartisan, Bicameral Legislators Unveil FDA-Inspired Bill Regulating Diagnostic Tests

On Dec. 6, bipartisan House and Senate members released draft legislation for the Food and Drug Administration (FDA) to regulate in vitro clinical tests, including test kits and laboratory-developed tests (LDTs). The draft legislation resembles a legislative proposal put forward by the FDA in August.

The bill establishes a precertification program for lower-risk tests, where the FDA could establish standard validity requirements for non-novel, lower-risk tests. Reps. Larry Bucshon (R-IN) and Diana DeGette (D-CO) and Sens. Michael Bennet (D-CO) and Orrin Hatch (R-UT) introduced the bill, prioritizing the legislation in the 116th Congress.


Grassley, Wyden Introduce “The Right Rebate Act”

On Dec. 4, the incoming Senate Finance Committee chair Chuck Grassley (R-IA) and Ranking Member Ron Wyden (D-OR) introduced “The Right Rebate Act of 2018,” a bill to recoup Medicaid rebates from drug companies that misclassify drugs. Grassley and Wyden’s new bill would give HHS more power to recoup the full amount lost if companies misclassify their products in the future. It also would give HHS the ability to directly modify a drug’s classification, which HHS cannot currently do. The legislation is based on recent events related to the misclassification of a popular anti-allergy medicine as a generic instead of a brand-name product. That incorrect classification allowed the manufacturer to pay smaller rebates to states and government programs.

The bill also would let the government fine companies up to twice the amount in rebates they avoid by misclassifying brand drugs as generics, allow the Centers for Medicare and Medicaid Services (CMS) to suspend Medicaid coverage of drugs that companies refuse to reclassify and give the CMS power to force classification changes.

Read more about healthcare policy on the McGuireWoods Consulting website.

This Week: Congress focuses on organizing for the next Congress and the continuing resolution; previews of drug pricing legislation for the next Congress; CMS issues controversial guidance concerning how states can use subsidies.


Incoming House chairmen Ask Trump Officials for Documentation on Plan for Bypassing Key Requirements of the ACA
Reps. Pallone (D-NJ) and Richard Neal (D-MA), incoming chairmen of the House Energy and Commerce and House Ways and Means Committee, respectively, have asked Trump officials to provide documents and answers to questions about a plan, for which additional guidance was released on Nov. 30, to give states more options to bypass key requirements of the Affordable Care Act. States would be permitted to use subsidies for plans other than those that meet ACA requirements.


Senators Ask CMS to Move on Direct-to-Consumer Advertising by End of Year
On Nov. 16, incoming Senate Finance Committee Chairman Charles Grassley (R-IA) and Senate Democratic Whip Sen. Dick Durbin (D-IL) asked the Trump administration to finalize a proposal requiring drug manufacturers to disclose list prices in direct-to-consumer advertising, by the end of the year. The senators also called on the Department of Health & Human Services (HHS) and the Centers for Medicare & Medicaid Services (CMS) to adopt additional drug-price disclosure measures.

Sanders, Khanna Release Drug-Pricing Bill Blending Republican and Democratic Ideas
On Nov. 20, Sen. Bernard Sanders (I-VT) and Rep. Ro Khanna (D-CA) unveiled a prescription drug-pricing bill that mixes Republican and Democratic proposals. The proposal expands the Trump administration’s international reference pricing concept to span the entire U.S. drug market and includes a Democratic proposal to give the government power to invalidate brand-drug manufacturers’ exclusivity if their drug prices are deemed excessively high. Sanders and Khanna plan to introduce the bill in the next session of Congress.

Sen. Merkley Proposes Bill to Sell Drugs at Reference Price
On Nov 29, Sen. Jeff Merkley (D-OR) proposed a bill to force prescription drug manufacturers to set prices at or below an international reference price based on 11 other countries, or get kicked out of Medicare, Medicaid and Affordable Care Act exchanges. The Department of Health & Human Services’s (HHS) secretary would determine reference prices for both brand and generic drugs.


Read more about healthcare policy on the McGuireWoods Consulting website.

House Ways and Means Chairman Kevin Brady announced plans to expand health savings accounts (HSAs) via a standalone bill, apart from the Tax Reform 2.0 effort.

The new HSA legislation will build off on changes passed by the House last year, allowing HSA funds to be used to purchase over-the-counter medicine. The package may include policies to expand Consumer Directed Health Plans and raise contribution limits.

Brady’s decision to move the HSA bill separately may signal a more bipartisan approach. Though, during last week’s health subcommittee hearings, several Democrats expressed skepticism that expanding HSAs would help drive down healthcare costs for consumers.

On April 17, Acting IRS Commissioner David Kautter said the agency would continue to enforce the Affordable Care Act’s (ACA) employer mandate. At a House Oversight Subcommittee hearing, Kautter explained that it is still the law, and the agency is therefore required to implement it. The IRS has sent nearly 10,000 enforcement letters since last fall, though a majority of these cases have been resolved without companies paying anything, after negotiations with the agency.

Several Republicans have argued that President Trump’s executive order directing federal agencies to take all actions consistent with the law to minimize the economic and regulatory burdens of the ACA includes ceasing to enforce the mandate.

Democrats and the IRS maintain that, absent repeal, there is a constitutional obligation to enforce the mandate.

On Feb. 22, the IRS issued final rules to define which entities are required to pay the health insurance providers fee under the Affordable Care Act (ACA), also known as the health insurance tax (HIT). The ACA imposed an annual fee on certain health insurance providers beginning in 2014. Congress temporarily suspended the HIT until 2020.

The final regulations (T.D. 9830) adopt the proposed version without any changes. The IRS initially published temporary and proposed regulations in Feb. 2015. The rules will continue to allow certain entities, such as nonprofits or employers with self-insured plans, to be exempt from the tax.

Critics of the HIT continue to advocate for its permanent repeal, noting that it increases premiums for consumers. Given that the tax faces bipartisan opposition, it may be a prime candidate for further postponement or repeal.