Life Science Compliance Update

July 11, 2017

Some Programs Entirely Eliminated Under Trump Budget Proposal

Budget-cuts

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 07, 2017

President’s Opioid Commission Held First Meeting

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On June 16, 2017, the President’s Commission on Combating Drug Addiction and Opioid Crisis held its first meeting to discuss ways in which to curb the current opioid epidemic through best practices of prevention and treatment. During the meeting, Commission members and panelists discussed the challenges of effectively addressing the opioid crisis through means of both prevention and treatment. The meeting also concentrated on the importance of a collaborated effort between agencies to implement comprehensive solutions. The administration reiterated their commitment to the issue, and stated that the President “cares deeply and personally about this issue.”

Opening Statements

Chairman Chris Christie, the Governor of New Jersey, began the meeting by stating the necessity of addressing this issue and that the administration is committed to finding effective solutions to the opioid crisis. The Chairman outlined the goals of the Commission and welcomed the testimony of the witnesses as a first step in dealing with this issue.

Governor Charlie Baker praised the creation of the Commission and stated that his state (Massachusetts) has been dealing with the opioid crisis since he took office, but the adverse effects of this issue have been persistent. The Governor expressed hope that the Commission would be able to form lasting solutions to this pervasive issue.

Governor Roy Cooper similarly emphasized the importance of the Commission to find consensus on effective solutions to the crisis. The Governor, former Attorney General of North Carolina, stated that “we cannot arrest our way out of this problem.” He expressed a need for treatment and prevention and said that any health care bill must address both treatment and prevention in the Medicaid area to attack this problem. The Governor also urged the Commission to examine the pharmaceutical industry’s role in this crisis, and call on the industry to produce less severely addicting drugs and create more tamper-resistant drugs.

Representative Patrick Kennedy discussed mental health and its connection to the opioid epidemic. Kennedy also emphasized the importance of holding insurance agencies accountable so the public sector does not have to “pick up the tab.” He went on to say that Medicaid is the largest provider of insurance, so any repeal of Medicaid is a repeal of coverage. Kennedy said that this issue is personal to him since he has struggled with opioid addiction in the past, and urged the Commission “not to step back when we need to step forward.”

Dr. Bertha Madras stated that as a neurologist and educator, she understands the severity of the crisis. She expanded by saying that while challenging issue, “it is a human problem with a human solution” and that Office of National Drug Control Policy (ONDCP) is committed to the issue.

Important Takeaways

Panelists noted that evidence-based practices have already been researched, but government at all levels must implement the most effective solutions. For example, one expert emphasized that evidence backs medication-assisted treatment for opioid addiction, and the federal government should permanently authorize physician assistants and nurse practitioners to prescribe buprenorphine to help treat opioid addiction.

Additionally, several panelists said that insurers do not typically obey the federal parity requirement — that mental health and substance use benefits be on par with physical health benefits. Panelists further noted the significant role of Medicaid in paying for addiction and mental health treatments, citing proposed Medicaid cuts in the American Health Care Act (AHCA).

June 13, 2017

President Trump’s Budget Proposal: Renegotiation of FDA User Fees?

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President Donald Trump’s FY 2018 budget proposal seeks a renegotiation of user fee deals made over the last two years to make up for roughly a 30% decrease in the United States Food and Drug Administration (FDA) budget.

The budget, which calls for more than $1 billion in new user fees to replace appropriations, comes while both the House and Senate have advanced their individual versions of the user fees reauthorization legislation with the previously negotiated user fee levels agreed to between the FDA and the pharmaceutical, medical device, generic drug, and biosimilar industries.

Current user fees cover an average of 60% of FDA premarket review costs, ranging from 30% for animal drug review to 70% for prescription drugs. Under the budget plan, all of those costs would fall on industry. Scott Gottlieb, the recently confirmed FDA commissioner, echoes the calls for these cuts, as does HHS Secretary Tom Price.

For the FDA, the proposed budget would increase user fees by $1.306 billion or 68% from FY 2017, to $3.223 billion, accounting for nearly two-thirds of the agency’s total budget, up from 42.5% in FY 2016.

Prescription drug developers would face $508 million in new fees, which would rise from $755 million to $1.262 billion. Medical device user fees—a category that includes diagnostics—would more than triple, from $126 million to $429 million.

FDA’s total program-level spending would rise by $456 million or nearly 10%, to $5.116 billion, mostly due to increases in salaries and expenses; spending on programs affecting human drugs would see the largest increase of $287 million, up to $1.612 billion.

However, representatives from BIO, AdvaMed, and AAM all spoke with the Senate HELP committee in April, reiterating what FDA officials told the House Energy & Commerce Committee in March, that a failure to act on the already agreed to reauthorizations would be devastating. The Alliance for a Stronger FDA also noted that this supposed modest increase in budget for FDA is actually a large budget cut for the Agency.

Troy Zimmerman, Alliance President, said in a statement on Tuesday: "We are especially concerned because the Congress has made clear that these additional user fees will not be adopted ... Thus, the Administration has not proposed a viable pathway for the agency to avoid a 31% cut in FDA’s BA [taxpayer-funded budget authority] appropriation."

Higher user fees are likely not to come into effect this year. Senator Lamar Alexander, Chairman of the United States Senate’s Committee on Health, Education, Labor, and Pensions, told HHS Secretary Tom Price in a letter that the user fee hikes were “an interesting proposal” but “way too late to have an impact on this year's agreements, which have been negotiated over the last 2 years” with biopharma and other FDA-regulated industries.”

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