Life Science Compliance Update

February 28, 2017

Trump Executive Order Targets Regulations

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On one of his first few days on the job, President Donald Trump signed an executive order that would require all government agencies to eliminate two regulations for every one new regulation instituted.

The order was characterized by the Administration as a plan to help benefit small businesses. However, it is likely to have an impact on the United States Food and Drug Administration (FDA) as it applies to every agency (other than those related to military or national security), or any other agencies exempted by the Office of Management and Budget (OMB).

How this plan will work for an agency like the FDA is hard to comprehend: most of the regulations are intertwined with one another. As the EO is written, if the agency needed to put in place a new regulation, it would then have to presumably cut out two other, unrelated regulations that are linked to public health.

Another problem is that, according to the text of the EO, the directions apply to FDA guidance documents as well. This will be a large problem for pharmaceutical and medical device companies that rely on such guidances to understand FDA’s interpretations of the law. The EO defines the term ‘regulation’ or ‘rule’ to mean “an agency statement of general or particular applicability and future effect designed to implement, interpret, or prescribe law or policy or to describe the procedure or practice requirements of an agency.

The way this EO is implemented across the federal government is going to come largely from the OMB director, who will provide the heads of agencies with guidance addressing, among other things, “processes for standardizing the measurement and estimation of regulatory costs; standards for determining what qualifies as new and offsetting regulations; standards for determining the costs of existing regulations that are considered for elimination; processes for accounting for costs in different fiscal years; methods to oversee the issuance of rules with costs offset by savings at different times or different agencies; and emergencies and other circumstances that might justify individual waivers of the requirements.” 

Prior to releasing this EO, President Trump said, “This will be the biggest such act that our country has ever seen. There will be regulation. There will be control. But it will be normalized control where you can open your business and expand your business easily.”

"If you have a regulation you want, No. 1, we're not going to approve it because it's already been approved, probably, in 17 different forms," Trump said from the White House. "But if we do, the only way you have a chance is we have to knock out two regulations for every new regulation."

Although many of Trump's other executive orders have been met with criticism, this latest policy is not unfounded. Back in 2010, the United Kingdom adopted a similar policy, though its implementation did not apply to taxes, certain European Union legislation, non-business regulations and "regulation for civil emergencies," according to the U.K. government.

OMB Issues Guidance

On February 2, 2017, the OMB did issue guidance to the Agencies, highlighting what to expect and how to handle this executive order. The Q&A offers some clarity and boundaries for the EO signed last Monday, noting: “The EO’s requirements for Fiscal Year 2017 apply only to those significant regulatory actions, as defined in Section 3(f) of Executive Order 12866, an agency issues between noon on January 20 and September 30, 2017.”

But the OMB guidance does offer some wiggle room for FDA in terms of issuing draft or final guidance (2017 guidance plans for FDA's Center for Drug Evaluation and Research are here) noting that “significant guidance or interpretive documents will be addressed on a case-by-case basis.”

As far as what existing regulations if repealed would be considered part of the “two out” part of the EO, OMB notes, “Any existing regulatory action that imposes costs and the repeal or revision of which will produce verifiable savings may qualify.”

The guidance also offers FDA, which is an agency that deals with public health and safety, some ways to waive the “two out, one in” requirements of the EO. “Emergencies addressing critical health, safety, or financial matters, or for some other compelling reason, may qualify for a waiver from some or all of the requirements of Section 2,” the guidance notes.

But if a new regulation is implementing a new law from Congress (for instance, with FDA’s pending implementation of the 21st Century Cures Act), OMB clarifies that agencies should still “identify additional regulatory actions to be repealed in order to offset the cost of the new significant regulatory action, even if such action is required by law.”

January 03, 2017

Trump CMS Administrator Has Work Cut Out for Her

Verma

As we previously announced, President Elect Donald Trump plans to nominate Seema Verma, a private health policy consultant, to head the Centers for Medicare and Medicaid Services (CMS). While Ms. Verma likely has a few ideas of her own that should be instituted rather quickly, current CMS acting administrator Andy Slavitt believes that “[t]he person sitting in my chair next isn’t going to have a choice but to make this one of their top two or three priorities,” discussing drug pricing.

Slavitt continued, noting that CMS will need to create partnerships with members of the Medicare Part D community in order to be successful. He believes that the current dialogue on prescription drug pricing is set up between whether to have innovative, expensive drugs, or to have less expensive treatments. Slavitt believes boiling it down to simple terms creates a false choice and is not productive for anyone, least of all patients.

Slavitt compared the current pharmaceutical spending debate to conversations several years ago about rising hospital costs. He noted that we now know how to have treatments that are both innovative and less expensive, and that several years ago, frameworks were created to help make hospital care more affordable. He believes similar frameworks can be created for pharmaceuticals.

Slavitt also expressed his hopes that the new political climate in Washington, DC will not reverse the progress made over the last eight years, including the Affordable Care Act (ACA) and implementation of the Medicare Access and CHIP Reauthorization Act of 2015 (MACRA), which is set to change how clinicians get reimbursed under Medicare.

Slavitt cited the following statistics, in support of not only his reign over the past few years, but over the past eight years under President Obama:

  • Today, 30% of fee-for-service Medicare payments flow through alternative payment models, up from essentially none in 2010. And, millions more are covered through innovative Medicare Advantage programs.
  • Quality and safety have improved with the rate of hospital-acquired conditions declining by 17%, which has prevented an estimated 87,000 deaths over 4 years. The rate at which Medicare patients are readmitted to the hospital within 30 days after discharge has decreased sharply, resulting in 565,000 fewer total readmissions.
  • Medicare provides more access with new prescription benefits and, thanks to the Affordable Care Act (ACA), we’ve closed the Medicare donut hole and with that, 11 million beneficiaries have saved an average of more than $2,000.
  • The CMS Innovation Center, which the ACA created, takes best practices from the clinical field and has developed over 30 alternative payment models and initiatives, serving millions of Medicare beneficiaries. The CBO expects the Innovation Center to reduce federal spending by about $34 billion over the next 10 years as we find new and better ways to care of people.
  • And, with all of this, we have been spending tax payer resources more wisely with extended record low medical inflation. The ACA extended the life of the Medicare trust fund and has helped deliver $473 billion in savings.

MACRA is not likely to go anywhere with the new administration, but the ACA is under extreme attack. Slavitt noted that he hopes Ms. Verma “build[s] from a foundation of progress, not head backwards. There can be no delivery system reform without building on the foundation of reaching universal coverage.”

Slavitt believes that the CMS Innovation Center, created by the ACA to take best practices and develop alternative payment models and initiatives, is crucial to the success of MACRA, stating, “I’ll say this bluntly: MACRA can’t work as well without a CMS Innovation Center that can move quickly to develop and expand new approaches to paying for care.”

Slavitt ended his talk reminding attendees that “people are the heart of every policy made,” and that “[w]e are on a journey as a nation towards better health for all. Patients. Care givers. Consumers. You know them better than anyone because you care for them. View MACRA as a step in the journey to develop care together.”

December 08, 2016

21st Century Bill Headed to President Obama’s Desk

President-obama-desk

Nearly three years after its initial introduction, the 21st Century Cures Act has finally passed both houses of the Congress, and is expected to be signed by President Obama relatively quickly. This bill represents one of the few truly bipartisan efforts undertaken by this Congress.

We have previously written about some of the items included (and excluded) in the bill. The bill gives the health institutes the authority to finance high-risk, high-reward research using special procurement procedures, as opposed to more conventional grants and contracts. It also requires the agency’s director to establish “Eureka prize” competitions to advance biomedical research and improve treatments for serious illnesses. The bill also creates a new assistant secretary for mental health and substance use, to be appointed by the president, thereby raising the status of mental health issues throughout the country.

Further, the bill directs federal agencies to step up their enforcement of laws that require equal insurance coverage for mental and physical illnesses. Federal laws and rules requiring mental health parity have been adopted with bipartisan support over the last twenty years, but a White House task force recently found that compliance with those laws has been lagging.

Political Reactions

The bill includes $500 million a year to help states prevent opioid misuse and get better treatment for addicts. "These additional resources are particularly critical in rural areas, where rates of opioid misuse and overdose are high, access to treatment is limited, and patients who seek treatment are often met with waitlists that can mean the difference between life and death," said Agriculture Secretary Tom Vilsack.

In a statement made by President Obama shortly after passage of the bill, “We are now one step closer to ending cancer as we know it, unlocking cures for diseases like Alzheimer’s, and helping people seeking treatment for opioid addiction finally get the help they need.”

Obama also noted, “This is a reminder of what we can do when we look out for one another. Like Joe Biden and so many other Americans, I’ve lost people I love deeply to cancer. I’ve heard often from those whose loved ones are suffering from Alzheimer’s, addiction and other debilitating diseases. Their heartbreak is real, and so we have a responsibility to respond with real solutions. This bill will make a big difference, and I look forward to signing it as soon as it reaches my desk.”

Senator Susan Collins (R-ME) stated, “I doubt that there is a family in America who will not be touched by this important legislation.” Representative Steve Cohen (D-TN) was also pleased with the passage, saying, “I don’t think there is enough money that we can put into the N.I.H., because it is important and affects all Americans independent of political party, race, sexual orientation – you name it.”

Medical and Industry Reactions

"The remarkable bipartisan, bicameral support for the 21st Century Cures Act proves that congressional lawmakers are serious about the need for scientific research, effective care-delivery, and the removal of barriers to scientific progress," said Dr. Daniel Hayes, president of the American Society of Clinical Oncology.

"This legislation will improve the lives and health of countless Americans," said American Psychological Association President Susan McDaniel. "It will increase access to effective, evidence-based care, particularly for those with serious mental illness."

In a Statement from Sharad Lakhanpal, MBBS, MD; President of the American College of Rheumatology, he noted,  "While we are pleased that the 21st Century Cures Act will infuse additional, much-needed funding to the NIH to support medical research across the healthcare spectrum, we also know that more can and should be done to help Americans who are disproportionately impacted by arthritis and other rheumatic diseases. Today, arthritis is the leading cause of disability among U.S. veterans and the second most common reason for medical discharge from the U.S. Army. One in three veterans is diagnosed with arthritis, compared with one in five members of the general U.S. population.

As Congressional leaders turn their attention to budget appropriations for the upcoming fiscal year, we urge them to prioritize the creation of a dedicated $20 million arthritis research program at the Department of Defense so that we can better meet the care needs of the thousands of active duty and veteran members of our Armed Forces who live with arthritis.”

Conclusion

Once the bill is signed by President Obama, it will be up to the Food and Drug Administration (FDA) to implement many portions of the law, which could take years. Funding may be immediate, but the actions the FDA and other federal agencies are responsible for may still be quite a bit away. We will all have to stay tuned as this bill, and its effects, continue to progress.

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