Life Science Compliance Update

July 18, 2017

United States House of Representatives Passes PDUFA


On Wednesday, July 12, 2017, the United States House of Representatives passed a bill via voice vote to reauthorize the prescription drug, generic drug, medical device and biosimilar user fee programs through 2022.

The current user fee programs expire September 30th, though the United States Food and Drug Administration (FDA) has said that if the reauthorization bill is not signed by President Donald Trump before August 1st, the FDA will be forced to send out layoff notices to about 5,000 employees.

“This legislation will save lives,” Representative Greg Walden said on the House floor, noting he thinks the Senate will adopt the bill, as well.

In addition to reauthorizing the user fee programs, the bill contains several new directives for the FDA, including provisions requiring quicker reviews of some generic drugs and changes in how the agency will conduct medical device inspections. The FDA will also be instructed to work on expanding clinical trial criteria so more patients can be eligible for experimental medicines. The bill is expected to cut the time it takes the agency to approve new treatments.

The House added more than a dozen new sections to the bill ahead of the vote, including sections aimed at curbing abuse of the orphan drug designation and policies designed to speed generic drug approvals. Most of the new elements of the House bill were added to align the chamber's legislation with the version passed out of the Senate HELP Committee. The House bill added a new title focused on pediatric drugs and devices that would allow the FDA to require adult cancer drugs that share a common target with a pediatric cancer to be studied in children starting in 2020. Other new elements of the bill clarify when pediatric information can be left off a drug's label to speed access to generic medicines, and new sections mandating that FDA review generic drug applications within eight months if the brand drug patents have expired and the treatment has three or fewer approved competitors on the market.

Several sections of the bill were removed ahead of the vote, including provisions altering the notification requirements for FDA related to laboratory developed tests, requiring FDA to issue guidance on how to demonstrate bioequivalence to a reference drug to facilitate generic development, a section on information technology contracting, and legislation designed by industry and the FDA to create an over-the-counter monograph.

Senate Reaction

The Senate has yet to schedule a floor debate and vote on its version of the user fee bill. Senate Lamar Alexander said Wednesday that it's now time for the full Senate to consider these bipartisan user fee agreements.

Senate Majority Leader Mitch McConnell (R-KY) has stated, “It’s an extremely important bill that I think we’ll be able to move on a bipartisan basis.” And ranking member Patty Murray (D-WA) pledged a “bipartisan and non-controversial” user fee bill, highlighting the necessity of similar legislation.

However, Senator Ron Johnson also said Wednesday that he will try to delay the bill unless it includes language related to the “Right-to-Try” legislation, which undercuts FDA and has been sweeping across states. A nonpartisan report issued Tuesday notes that issues with expanded access are not linked to FDA regulations.

The Congressional Budget Office says it expects the FDA to collect roughly $9 billion in fees—$8 billion for drugs and $1 billion for devices—between 2018 and 2022, based on the fee level set in the Senate bill.

Industry Reaction

FDA Commissioner Scott Gottlieb, MD, praised the passage of the bill in the House on Twitter:


Pharmaceutical Research and Manufacturers of America (PhRMA) president and CEO Stephen J. Ubl issued the following statement,

Timely reauthorization of the Prescription Drug, Biosimilar and Generic Drug User Fee Acts is crucial to patients in need of life-saving treatments and enhancing the competitive market in biopharmaceutical innovation. The House took an important step in reauthorizing the user fee programs and we look forward to swift action in the Senate on behalf of America’s patients.

July 11, 2017

Some Programs Entirely Eliminated Under Trump Budget Proposal


Many highly criticize President Trump’s fiscal year 2018 budget, for a variety of reasons. Many are opining that the projected spending cuts across the government would be dramatic, including cuts to “Obamacare” outlays by $1.25 trillion, through the American Health Care Act’s program amendments. Health care is implicated further, as the proposed budget would cut Medicaid spending by $610 billion and cut the Children's Health Insurance Program (CHIP) by $5.8 billion, while extending it through 2019.

Medicaid would be cut even beyond proposed reductions in the AHCA bill, by increasing the stringency of per capita cap and block grant reductions. CHIP funding would be cut by eliminating the twenty-three percent increased federal funding match added by the Affordable Care Act (ACA) and by no longer providing federal CHIP dollars for children from families with incomes above 250% of the federal poverty level.

Health and Human Services

The HHS budget promises a lot, including funding efficient operations and necessary activities to provide a stable transition from the ACA to a “patient-centered health care system.” The budget allows for $471 million for the ACA exchanges in 2017, $453 million of which is to go to program operations such as eligibility, call center operations, and information technology. The 2018 HHS budget projects $28 million in expenditures for rate review grants and $59 million in state exchange grants that remains unspent from previous appropriations. The budget also proposes abolishing the Independent Payment Advisory Board, saving money in the short run ($16 million in 2018) but actually costing $7.6 billion over the course of ten years.

Programs Eliminated Entirely

Under the Health and Human Services agency umbrella, the proposed budget entirely eliminates four programs, for a total savings of roughly $4.834 billion. The four programs are: the Agency for Healthcare Research and Quality (expected to be folded into the National Institutes of Health, which also sees funding slashed under the proposal); the Community Services Block Grant; Health Professions and Nursing Training Programs; and Low Income Home Energy Assistance Program.

According to the Administration, the Budget eliminates the Community Services Block Grant (CSBG) because it constitutes a small portion of the funding these grantees receive, and funds are not directly tied to performance. CSBG also funds some services that are duplicative, such as emergency food assistance funded through the Department of Agriculture's Emergency Food Assistance Program (TEFAP) and workforce programs funded through the Departments of Education and Labor.

The Budget also eliminates health professions and nursing training programs that lack evidence of significantly improving the Nation's health workforce. The Budget does fund health workforce activities that provide scholarships and loan repayments in exchange for service in areas of the United States where there is a shortage of health professionals.

The Budget further proposes to eliminate the Low Income Home Energy Assistance Program (LIHEAP) in order to reduce the size and scope of the Federal Government and better target resources within the Department of Health and Human Services' Administration for Children and Families.

Food and Drug Administration

As we noted previously, the budget would cut funding for the Food and Drug Administration (FDA) for 2018 by over $850 million, but increase user fees by $1.3 billion, resulting in an estimated program increase of $450 million.

Medical Liability Reforms

The budget also proposes a number of medical liability reforms, that would generally limit access to the courts as well as limit damages recoverable by individuals who are injured by medical negligence. HHS Secretary Tom Price has been a champion of this idea, and the budget projects that the proposed changes would save HHS programs $32 billion over the course of ten years and the federal government $55 billion.

July 06, 2017

Comparison of House v. Senate Health Care Draft Bills


A topic of much discussion, but few solutions, has been healthcare in America. President Donald Trump was supposedly elected, in part, because of his promises to “Repeal and Replace” the Affordable Care Act, aka “Obamacare.” Many politicians and reporters were talking about passing the replacement bill prior to the summer Congressional recess. We are currently in that recess, and clearly, no such bill has been passed.

In today’s hyper-partisan world, it is tough to get all senators or representatives from one side of the political aisle to vote for something together; the idea that senators or representatives from the other party may vote in tandem on such a hot-button issue is almost impossible.

Right now, the House of Representatives has passed a bill, the American Health Care Act (AHCA), while the Senate has introduced a discussion draft. It is highly unlikely that Senators will vote on a health care bill during the week they return from recess. Currently, Senate Majority Leader Mitch McConnell is sending several proposals and basic outlines to the Congressional Budget Office for scoring.

In the meantime, below is a side by side comparison of the House-passed AHCA with the Senate discussion draft bill. It is important to remember that this is not a comparison of two bills that have been passed and now must be reconciled – instead, it is more of a guideline to show where one side of the Legislature stands on the issues as compared to the other side of the Legislature.

Repeal of Medicaid Expansion

House-Passed AHCA

Provides the enhanced matching rate only for expansion-eligible individuals already enrolled in Medicaid as of Dec. 31, 2019 and do not have a break in eligibility for more than one month after that date. Those newly eligible or reenrolling could only do so at a state’s regular match rate.

Senate-Introduced Draft

Phases-down enhanced FMAP over three years beginning in 2021 for newly eligible beneficiaries (85% in CY 2021, 80% in CY 2022, and 75% in CY 2023), using regular match if higher. States implementing expansion after Feb. 28, 2017, not eligible for newly eligible match rate.

Incentives for Increased Eligibility Redeterminations

House-Passed AHCA

Requires States with Medicaid expansion populations to re-determine expansion enrollees’ eligibility every six months. Provides a temporary five percent FMAP increase to States for activities directly related to complying with this section. Effective Oct. 1, 2017.

Senate-Introduced Draft

Same as the AHCA, but it permits – not requires – it and allows for more frequent re-determinations.

Work Requirements

House-Passed AHCA

Allows states to apply optional work requirements for non-disabled, nonelderly, non-pregnant Medicaid beneficiaries beginning in FY 2018. Includes increased match for implementation activities.

Senate-Introduced Draft

Same as the ACHA, with parallel exceptions.

Patient and State Stability Fund

House-Passed AHCA

Provides for a fund to reduce costs for patients and to stabilize State markets. The fund:

  • Provides $15 billion in 2018 and 2019 and $10 billion annually for 2020 through 2026.
  • Adds via amendments $8 billion to assist those affected by health status underwriting in waiver states and $15 billion for maternity, newborn, mental health, and substance abuse care.
  • Adds $15 billion for a federal “invisible high-risk pool” to offset high-cost patients’ expenses through reinsurance.

Senate-Introduced Draft

Establishes two funds, short term and long term:

  • Short term: appropriates $15 billion for CY 2018 and 2019 and $10 billion for years 2020 and 2021 to help issuers deal with market disruption.
  • Long term: provides $62 billion over 10 years for high risk program; premium stabilization; provider payments; cost sharing assistance. States must pay match starting CY 2022.

Continuous Health Insurance Incentive

House-Passed AHCA

For Benefit Year 2019, implements a 12-month lookback period to assess whether an applicant went without coverage for greater than 63 days and assesses a 30 percent premium surcharge for one year.

Senate-Introduced Draft

The current draft does not include any incentives for patients having continuous health insurance throughout the year.

State Waivers

House-Passed AHCA

Allows states to seek waivers of certain federal requirements. States may:

  • Waive federal age-rating requirements and allow wider age bands;
  • Waive federal essential health benefit requirements (EHBs) and define their own;
  • Waive the ban on health status rating. Instead of imposing the AHCA’s one-year 30 percent premium surcharge for not maintaining continuous coverage, insurers would be permitted to charge higher premiums to those with preexisting conditions for a one-year period if they do not maintain continuous coverage. States must set up a high risk pool to elect this option.

Requires states to attest that their purpose is reducing premiums. Automatically approves waivers in 60 days for up to 10 years unless HHS intervenes to deny.

Senate-Introduced Draft

Provides $2 billion in grant funding through 2019, to incentivize states to apply for section 1332 waivers established by the ACA, under which a variety of requirements may be waived, including EHBs and regulations prohibiting subsidies off-Exchange. Does not permit waivers of community rating.  It also removes requirements that 1332 waivers be budget neutral or achieve the same coverage rates as would otherwise be attained under Federal law.  Further, it permits the use of State Innovation and Stability fund allotments to carry out waiver implementation.

Medical Device Excise Tax

House-Passed AHCA

Repeals the 2.3 percent excise tax on medical devices beginning in 2017 (when it is already suspended).

Senate-Introduced Draft

Repeals the tax beginning in 2018 (when it would otherwise have taken effect again).

Tax on Prescription Medication

House-Passed AHCA

Repeals the ACA pharmaceutical tax in 2017.

Senate-Introduced Draft

Repeals the tax one year later, in 2018.

Opioid Funding

House-Passed AHCA

Provides $45 billion in opioid funding over ten years.

Senate-Introduced Draft

Provides $2 billion in state grant funding for opioid efforts, in FY 2018.


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