HRI regulatory center

Regulatory and legislative updates and analysis


Trump administration: Latest regulatory and legislative news and analysis

Weekly insights from Capitol Hill

Highlights – June 15, 2018

FDA: 2017 generic approvals have saved billions

American drug buyers saved $8.8 billion in pharmacy acquisition costs in 2017 thanks to generic drugs approved by the FDA that year, according to an agency report published last week. Pharmacy acquisition costs do not include any discounts, rebates or other off-invoice adjustments. Despite the savings, generic competition overall won’t affect 41 percent of the top 100 drugs by anticipated revenue, according to a new report on generic drugs by PwC’s Health Research Institute (HRI). That’s because many of the top 100 drugs are biologics without biosimilar competitors. Also, just 15 blockbuster drugs will go off-patent from 2018 to 2021. CMS’ Office of the Actuary expects US retail drug spending to reach $360 billion in 2018.

HRI impact analysis: In testimony before Congress this week, HHS Secretary Alex Azar said the administration’s drug pricing plan, announced in May, could save Americans billions of dollars through existing and new authority. The plan contains dozens of ongoing and proposed ways to address drug pricing, including increasing generic competition and allowing Medicare Part D to negotiate prices for Medicare Part B. Azar also said the administration was considering defining rebates paid to pharmacy benefits managers as kickbacks under federal anti-kickback statutes, which would prevent their use in Medicaid and Medicare. Congressional Democrats criticized the plan this week in a letter to Azar, saying it didn’t go far enough.

DOJ declines to defend ACA provisions in Texas v. US

In a legal brief and letters to congressional leaders, US Attorney General Jeff Sessions announced that the US Department of Justice won’t defend Affordable Care Act (ACA) provisions addressing guaranteed issue and community rating in the civil case Texas v. United States, filed in US District Court by Texas and 19 other states in February.

In their complaint, Texas and its fellow plaintiffs argue that, at bottom, the ACA is unconstitutional because the individual mandate penalty will be reduced to $0 on Jan. 1. The individual mandate, they argue, is so central to the law that once it’s rendered moot, the whole law is no longer constitutional.

Even if the courts fail to strike down the entire law, the plaintiffs argue, they should invalidate provisions regarding guaranteed issue and community rating because they are inextricably tied to the individual mandate. The ACA’s guaranteed issue provision requires insurers to cover eligible consumers without considering their health status. Its community rating provision prohibits insurers from charging individuals more based on their health status, gender and other factors.

The DOJ supports the plaintiffs’ argument and won’t defend these ACA provisions’ constitutionality. In April, attorney generals from at least 15 other states and the District of Columbia, including California, Massachusetts, Connecticut and North Carolina, filed a motion to intervene, so these provisions likely won’t go undefended. This week, the American Medical Association (AMA), American College of Physicians, American Academy of Family Physicians, American Academy of Pediatrics, and the American Academy of Child and Adolescent Psychiatry filed an amicus brief in defense of the law and the pair of provisions.

HRI impact analysis: HRI analyses of lawmakers’ 2017 attempts to repeal and replace the ACA found likely outcomes to be increases in the number of uninsured and underinsured Americans, and increases in bad debt and uncompensated care for providers. Though lawmakers failed to repeal and replace the law, the Trump administration has succeeded in chipping away at the ACA through legislative, regulatory and budgetary actions. The Tax Cuts and Jobs Act of 2017 zeroed out the individual mandate penalty effective Jan. 1, 2019. Various state agencies are finalizing rules that would allow insurers to sell coverage that sidesteps many ACA provisions. (Note: HRI will publish a paper examining these rules this summer.) The federal government stopped paying cost-sharing reduction payments to insurers.

In this case, the DOJ is stepping back from defending key provisions that are popular with consumers. In a statement, AMA President Dr. Barbara McAneny said that “an unfavorable decision in this case would create further disruption, generate uncertainty, spark additional premium increases and cause declines in coverage.” The Trump administration has argued that the ACA represents an overreach of the federal government into people’s lives and the free market.

Highlights – June 8, 2018

FDA: Shorter review times on the horizon

The FDA will give drug companies more feedback earlier in the process and make other changes meant to shorten and streamline the approvals process, according to a June 2 speech given by agency chief Dr. Scott Gottlieb at the American Society of Clinical Oncology's annual meeting in Chicago. The FDA Center for Drug Evaluation and Research will update its product-specific guidance, provide preliminary review and feedback on sponsor trial design and engage researchers, disease specialists and regulatory counterparts at other agencies.

HRI impact analysis: By some measurements, the FDA is already the quickest reviewer on the planet. Gottlieb’s announcements reflect his regulatory philosophy that the speed of regulatory approvals should be increased and the cost of development contained. The FDA already is approving a record number of new drugs, counting 46 in 2017, including 16 new oncology and hematology drug and biologic applications. Faster reviews mean drug companies could spend less money on research and development, while earlier feedback should increase the review success rate. Faster review times also benefit the sponsors and potential patients of the 1,120 cancer medicines and vaccines reported to be in development by pharmaceutical companies.

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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
Health Research Institute Leader
Tel: +1 (214) 754 5091
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Trine K. Tsouderos
HRI Regulatory Center Leader, PwC US
Tel: +1 (312) 241 3824
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Alexander Gaffney
Senior Manager, PwC Health Research Institute, PwC US
Tel: +1 (202) 414 4309
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Jason Ranville
Senior Manager, PwC Health Research Institute
Tel: +1 (312) 298 5558
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