Life Science Compliance Update

July 12, 2017

Prices Testifies On Proposed Budget Cuts


We continue to follow the President’s budgets with potential cuts to the NIH and possible legislation to address drug prices. With that in mind, HHS Secretary Tom Price’s testimony in front of a House appropriations subcommittee is particularly relevant. The head of HHS reiterated his support for the President’s cuts to NIH and noted that he is working on a plan to lower the cost of drugs in the United States. Chairman Tom Cole’s (R-Okla.) remarks before Price’s testimony can be found here.

Price’s testimony

The Secretary faced a number of questions regarding the promotion of Obamacare plans along with drug prices and NIH funding. On the funding of the NIH, Price argued the agency could be trimmed by cutting “inefficiencies,” such as overhead payments. As has been reported, “About 30% of the grant money that goes out is used for indirect expenses, which as you know means that money goes for something other than the research that's being done,” Price said. The Trump budget, he explained, is “trying to … be the first step in this process” of getting “a bigger bang for our buck.”

In 2016, NIH paid $6.4 billion in overhead costs on top of the $16.9 billion in extramural funds to support the direct costs of research projects and other awards. Price’s comments were echoed by Representative Andy Harris (R–MD), who noted that many private foundations limit overhead payments to grantees to 10%, whereas others, such as the American Lung Association, pay nothing. “It’s very interesting that the private sector doesn’t hold these indirect costs to be so valuable as to pay them,” Harris said.

Rep. Tom Cole, who chairs the appropriations subcommittee that oversees HHS, told Price that current levels of proposed cuts to the NIH and CDC are highly unlikely to be supported by Congress. He said NIH and the Centers for Disease Control and Prevention are every bit as important as national defense. "Frankly, you're much more likely to die in a pandemic than you are in a terrorist attack," said Cole, adding: "I'd rather fight Ebola (the deadly virus) in West Africa than in West Dallas."

Regarding drug prices, Regulatory Focus described Price’s reference to President Trump’s planned “bidding” system, although he did not elaborate on Trump’s call to double user feeds in an effort to offset budget cuts to the FDA.

Price also critiqued the structure of the current Medicaid program during the hearing, calling the system "broken" because it focuses too much on funding and not enough on ensuring beneficiaries achieve better health outcomes. It has been previously noted that Price has expressed support in the past for requiring Medicaid beneficiaries to pay premiums in exchange for program participation and lowering those premiums depending on beneficiaries meeting healthy behavior requirements, such as getting physicals.

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 07, 2017

President’s Opioid Commission Held First Meeting


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).


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