HRI regulatory center

Regulatory and legislative updates and analysis


Trump administration: Latest regulatory and legislative news and analysis

Weekly insights from Capitol Hill

Highlights – May 18, 2018

White House takes aim at drug pricing

The Trump administration issued a new drug pricing plan last week that aims to reduce drug costs by encouraging new competition, seeking to reduce list prices and letting government payers better negotiate with pharmaceutical companies. The plan includes proposals to require pharmaceutical companies to put their drugs’ list prices in their advertising, prohibit so-called “gag clauses” that prevent pharmacists from discussing cheaper options with consumers, prohibit the use of FDA risk control schemes to delay competition, allow Medicare Part D plans to adjust their formularies midyear, incorporate rebates into Average Manufacturer Price determinations, and establish demonstration projects to encourage value-based care. The plan doesn’t include some measures adopted by President Trump’s campaign platform, including allowing unified negotiating for Medicare Part D or reimporting drugs from Canada.

HRI impact analysis: Many of the drug pricing plan proposals are in the early stages and some will require congressional action. Others may be disrupted by legal challenges. For example, the FDA has lost several cases in recent years over its authority to regulate pharmaceutical advertising. Requiring pharmaceutical companies to include their list prices in advertising may hasten legal challenges to the FDA’s oversight and potentially lead to a Supreme Court challenge. While the plan may lead to modest drug pricing changes, no single component seems likely to massively disrupt how products are priced. Pharmaceutical companies should determine which proposals are likely to be enacted and how those may affect their lines of business.

White House releases spring 2018 unified agenda

The Trump administration’s latest list of regulations it plans to release, known as the Unified Agenda, contains 148 healthcare regulations under HHS. Among the newly proposed rules are CMS proposals permitting states to charge premiums and cost-sharing payments to Medicaid beneficiaries, allowing states to charge civil money penalties to nursing home staff or volunteers who commit crimes against residents, and making programmatic changes to Medicare Advantage and prescription drug benefit programs. The FDA has proposed establishing new limits on toxicants in e-cigarette liquids, harmonizing domestic and international medical device standards, and enhancing new drug application investigation regulations to better protect patient data.

HRI impact analysis: The White House projects the rules will lead to $687 million in annual federal savings. The newly proposed regulations generally support existing state and federal efforts, such as CMS’ support of allowing states to charge premiums to Medicaid beneficiaries. Four states (Arkansas, Indiana, Maine and Wisconsin) have sought to couple new premiums with work requirements for beneficiaries; CMS’ proposed rule signals they are open to the idea. CMS has already issued guidance for states to begin testing work requirements.

Highlights – May 11, 2018

House expands SNAP work requirements

The House’s draft Agriculture and Nutrition Act of 2018 expands work requirements for Supplemental Nutrition Assistance Program (SNAP) beneficiaries as part of the Trump administration’s push to tie benefits to work-related activity. Current law requires adults aged 18 to 49 without dependents to work 80 hours a month to receive SNAP benefits; under the proposed bill, beneficiaries aged 18 to 59 without a dependent younger than 6 would be required to work 20 hours a week. The so-called “Farm Bill” is reauthorized every four to five years and provides funding for many of the nation’s agriculture and rural development programs. It was last authorized in 2014; programs are set to begin expiring Sep. 30.

HRI impact analysis: More than 1 million SNAP beneficiaries—including 744,000 families with children—could lose benefits by 2028, according to an analysis by the Congressional Budget Office. Whether the change will lead to an increase in working beneficiaries is unclear; some research indicates similar work requirements enacted as part of the Personal Responsibility and Work Opportunity Reconciliation Act of 1996 did modestly increase employment for prior welfare recipients. The SNAP work requirement expansion dovetails with recent moves by states to tie work requirements to Medicaid benefits, which CMS has encouraged and enabled. Since January, four states have won CMS approval for Section 1115 waivers to add work requirements for Medicaid beneficiaries, each with a unique set of requirements and exemptions for beneficiaries to navigate. For instance, Indiana, Arkansas and New Hampshire will all consider beneficiaries in substance abuse programs exempt from work requirements, whereas Kentucky and the expanded SNAP requirements will not.

FDA: Time to update generic drug label process

Generic drug companies could find it easier to update their product labels thanks to an updated process the FDA is developing. Currently, generic drug labels must match reference drugs’ labels, which means label changes must be made in concert with generic and brand manufacturers. But if the original drug has been taken off the market—for example, if the original company has gone bankrupt—generic drugmakers can find it impossible to update the label even if they know of new safety issues that warrant an update. Testifying before the House Subcommittee on Agriculture, Rural Development, Food and Drug Administration, and Related Agencies, FDA Commissioner Scott Gottlieb said more than 1,100 generics are affected by this situation. “If we incorporate into generic drug labels all of the current information about their safe and effective use, it could promote more prescribing of generic drugs, reducing overall healthcare costs,” he said.

HRI impact analysis: The FDA has long tried to improve its system for updating generic drug labeling, but the generics industry has at times been against such policies. Under recent Supreme Court rulings, the generics industry is nearly immune to product safety liability lawsuits because they can’t unilaterally update their labels. Some companies want to do so, but that could expose them to greater legal liability. In that case, the companies would have to take these risks into consideration when pricing their products, which could potentially raise costs.

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Payers: Trump administration briefs

Ten states are seeking to change eligibility standards for Medicaid by instituting community engagement components, requiring beneficiaries to maintain regular employment, job seeking, educational enrollment, or community service in order to continue to receive benefits. HRI’s analysis of state waivers found potentially millions of beneficiaries and billions of dollars associated with these requirements.

Read HRI’s regulatory insight: Medicaid work requirements could affect millions of beneficiaries and billions in spending (April 2018)

 

While the Obama administration championed value-based care, the Trump administration has taken a more measured approach, slowing or eliminating some programs while expanding and creating others. Value-based care will continue to drive provider and payer decision-making, though the pace of change is likely to be moderate. The Trump administration is likely to focus on reforms that prioritize voluntary participation and minimize reporting requirements.

Read HRI’s insight: The Trump administration’s slower, more voluntary value-based care (February 2018)

 

After President Donald Trump and Republican leaders canceled a vote on the American Health Care Act (AHCA), the world became more complicated for health industry leaders and their consumers. Amid the multiple unknowns, health leaders may be tempted to wait for clarity. But in this atmosphere, it is even more important for organizations to lean into the unknowns and build resiliency. Healthcare companies can make some “no regrets” moves to build resilience amid periods of change and uncertainty.

Read HRI’s spotlight, What’s next for health reform? (April  2017)

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Providers: Trump administration briefs

Ten states are seeking to change eligibility standards for Medicaid by instituting community engagement components, requiring beneficiaries to maintain regular employment, job seeking, educational enrollment, or community service in order to continue to receive benefits. HRI’s analysis of state waivers found potentially millions of beneficiaries and billions of dollars associated with these requirements.

Read HRI’s regulatory insight: Medicaid work requirements could affect millions of beneficiaries and billions in spending (April 2018)

 

While the Obama administration championed value-based care, the Trump administration has taken a more measured approach, slowing or eliminating some programs while expanding and creating others. Value-based care will continue to drive provider and payer decision-making, though the pace of change is likely to be moderate. The Trump administration is likely to focus on reforms that prioritize voluntary participation and minimize reporting requirements.

Read HRI’s insight: The Trump administration’s slower, more voluntary value-based care (February 2018)

 

The Medicare Access and CHIP Reauthorization Act of 2015 (MACRA) is transforming the way physicians are paid for Medicare services. But the law also could have profound effects on hospitals and health systems, potentially hitting their bottom lines, changing the way they evaluate consolidation and how they design provider networks. For hospitals and health systems, MACRA is a strategic puzzle to solve, requiring greater enterprise resilience in these times of change and uncertainty.

Read HRI’s spotlight, MACRA is a strategic puzzle that requires greater resilience (September 2017)

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Pharma and life sciences companies: Trump administration briefs

In its first year under the Trump administration, the Food and Drug Administration (FDA) has sharply cut back on the issuance of new regulations and warning letters while approving record-setting numbers of new drugs, generic drugs and drugs for orphan diseases; the FDA has carried on with long-running trends in enforcement, facility inspections, the issuance of guidance documents and policy, and crackdowns on drug quality; and the pharmaceutical industry, the FDA under Gottlieb’s tenure has been predictable, stable and consistent. Learn what this means for 2018.

Read HRI’s insights: Continue to take as prescribed - The FDA under the Trump administration  (February 2018)

 

The pharmaceutical industry is facing a growing threat from safety data on the drugs it produces. The FDA has fostered unprecedented transparency on drug safety data, forcing companies to manage novel challenges from parties already busy mining those data: regulators, the public and data analytics firms. In this climate, pharmaceutical companies have the opportunity to find ways to mitigate risks, unlock savings, make new discoveries and create competitive advantages.

Read HRI’s spotlight: Pharmaceutical companies face the changing future of pharmacovigilance (September 2017)

 

The FDA’s new commissioner, Dr. Scott Gottlieb, has extensively argued that the agency is in need of regulatory reform meant to get critical medical products to patients more quickly and efficiently. Gottlieb’s previous statements signal a greater likelihood of significant change at the FDA, which has been given new authority – both statutory and executive – by legislators and President Donald Trump to streamline and accelerate the way it regulates. As change takes place, life science companies may benefit and find reasons to celebrate – but so, too, will their competitors. 

Read HRI's spotlight, The FDA leans forward: Dr. Scott Gottlieb’s opportunity to reshape the agency (July 2017)

 

After President Donald Trump and Republican leaders canceled a vote on the American Health Care Act (AHCA), the world became more complicated for health industry leaders and their consumers. Amid the multiple unknowns, health leaders may be tempted to wait for clarity. But in this atmosphere, it is even more important for organizations to lean into the unknowns and build resiliency. Healthcare companies can make some “no regrets” moves to build resilience amid periods of change and uncertainty.

Read HRI’s spotlight, What’s next for health reform? (April 2017)

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Health industry strategy: Trump administration briefs

The Tax Cuts and Jobs Act (TCJA) will likely affect the US health industry unevenly; many for-profit organizations will gain billions in tax dollars and repatriated funds, whereas their tax-exempt peers will face increased costs. The law will affect tax-exempt organizations’ executive compensation, employee benefits and unrelated business taxable income. Providers could see an uptick in uninsured patients.

Read HRI’s insight: Tax reform imposes costs on tax-exempt healthcare organizations as for-profit peers weigh benefits (February 2018)

 

Healthcare reform efforts by Congress will create challenges and opportunities that may require changes in operating models across the US healthcare industry. As the legislation undergoes debate and negotiation in Congress, healthcare organizations face considerable uncertainty. Organizations that have developed enterprise resilience—the ability to adapt the business model to change, anticipate disruption and recognize opportunities to generate a competitive advantage—may be best positioned to survive and thrive in these conditions.

Read HRI’s spotlight, Developing enterprise resilience in the face of health reform (March 2017)

 

Months and even years after the winds subside and the floodwaters recede, hospitals and health systems in regions battered by a hurricane will still be dealing with the financial, physical and reputational wreckage caused the storm. Hospitals face closure, chaotic revenue cycle operations, disrupted supply chains, possible credit downgrades, destroyed and damaged physical assets and displaced workforces and patients. Partner institutions, such as long-term care facilities and retail pharmacies, may temporarily, or permanently, operate at diminished capacities. To survive such an event, hospitals and health systems should plan for the complex challenges left in the wake of a hurricane or other natural disaster.

Read HRI 's report, Hospitals and health systems feel the impact of hurricanes long after the floodwaters recede (September 2017)

 

The death of health reform has been greatly exaggerated. Though Congress was unable to pass a comprehensive national health reform bill in 2017, many other reforms are playing out in Congress, regulatory agencies and state capitals that could profoundly impact the healthcare landscape over the next year and beyond. 

These changes include efforts by Congress to reform the federal tax code; by HHS to reshape how the Affordable Care Act (ACA) is administered and how government pays for value over volume; and by states to control Medicaid and drug spending. These efforts make it clear that this is no time for companies to take a relaxed or reactive posture. On the contrary, they should act now to anticipate which changes are most likely to occur and how those changes might affect their business operations, then decide what they’re going to do about it. 

Payers, providers, life sciences companies and employers no longer have just one high-profile reform effort to monitor, but dozens. There are several that require their immediate attention. 

Read HRI and Strategy&'s report, Health reform 3.0: Thriving in a permanent state of policy disruption (November 2017)

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About the center

As the US healthcare system continues to undergo transformation, health industries are confronted with an evolving and complicated regulatory environment. With an eye towards how public policy impacts the business of healthcare, the HRI regulatory center serves as a vital resource for executive decision makers who must navigate the changes that lie ahead.

HRI's regulatory center is a group of seasoned professionals that analyze legislative and regulatory policy in Washington and in key states. The group, which focuses on all health sectors, publishes a weekly newsletter and more focused reports that detail the interconnection between Washington and healthcare. The HRI regulatory center calls upon key contacts in government and industry to develop a point of view that is both informative and actionable for health industry leaders.

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Benjamin Isgur
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Trine K. Tsouderos
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Alexander Gaffney
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Jason Ranville
Senior Manager, PwC Health Research Institute
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