Washington Watch for the Week of May 13, 2021

Biden Delivers First Address to Congress, Unveils American Families Plan
In his first address to a joint session of Congress, President Joe Biden struck a positive tone in outlining a vision for the nation’s recovery from the COVID-19 pandemic. While health care issues were not a focus of the speech, the President encouraged Americans to get vaccinated and stated that the U.S. “will become an arsenal of vaccines for other countries” as the nation’s own vaccine supply grows to meet domestic demand. The President discussed drug pricing, expressing support for direct negotiation in the Medicare program and urging Congress to act to cut drug prices this year. He suggested that savings could be put toward strengthening the Affordable Care Act (ACA) without spending additional taxpayer money. He also endorsed the creation of the Advanced Research Projects Agency for Health (ARPA-H) during his speech. The agency would be housed within the National Institutes of Health (NIH) and charged with developing breakthrough treatments to prevent, detect, and treat diseases such as Alzheimer’s, diabetes, and cancer. President Biden went on to unveil his $1.8 trillion American Families Plan during his address on Wednesday night. The antipoverty package, which combines $1 trillion in spending with $800 billion in tax cuts and credits for middle- and lower-income families, would be funded in part by tax increases on wealthy Americans. It is focused on education, support for children and families, and tax reform, but also contains several health care-related provisions.

The American Families Plan would create a $225 billion national paid family and medical leave program and make permanent ACA premium reductions passed through the American Rescue Plan. It would also make investments in maternal health and veteran health care services. The administration notes in its fact sheet that the President has a plan to further build on the ACA and lower prescription drug costs through Medicare price negotiation, the creation of a public option, allowing Medicare enrollment at age 60, and closing the Medicaid coverage gap. These provisions, however, are expected to be advanced separately from the American Families Plan. While progressive Democrats continue to push for Congress to add drug pricing and Medicare-related provisions to the final bill, this could be difficult given Democrats’ narrow margins in each chamber and no signs that Republicans will support the initiative.

CMS Proposed Payment Rule Includes Added GME Slots
The Centers for Medicare and Medicaid Services (CMS) released its fiscal year (FY) 2022 hospital inpatient prospective payment system proposed rule last week. The regulation would provide acute-care hospitals with a 2.8% increase in Medicare reimbursements and long-term care hospitals with a 1.4% bump. The rule would also implement the distribution of 1,000 more residency slots to qualifying hospitals in rural and underserved areas over the next five years – a provision enacted as part of the Consolidated Appropriations Act, 2021. CMS estimates that these additional graduate medical education (GME) slots will cost approximately $300 million a year.

HELP Announces Effort to Improve Preparedness System
Senate Health, Education, Labor, and Pensions (HELP) Committee Chair Patty Murray (D-Wash.) and Ranking Member Richard Burr (R-N.C.) have sent a Dear Colleague letter detailing their plans to revamp the nation’s pandemic preparedness system. The lawmakers outlined their intention to work on bipartisan, consensus legislative proposals including:

• Strategies for strengthening and modernizing federal public health and medical preparedness and response systems and programs to better support states, localities, and Tribes;
• Ensuring sufficient public health and medical capacity to continue providing critical services to at-risk populations;
• Strengthening readiness within the medical countermeasure enterprise to ensure that countermeasures can be rapidly identified and advanced through clinical development and manufacturing and appropriately deployed and distributed when a new public health threat is identified;
• Modernizing the development of medical countermeasures to address public health threats; and
• Improving and securing the supply chain for the U.S.’s critical medical supplies needed to swiftly address public health threats.

Lawmakers Unveil Major Drug Pricing Proposals
Democrats in the House of Representatives have reintroduced their sweeping drug pricing legislation (H.R. 3). The Elijah E. Cummings Lower Drug Costs Now Act, which was previously passed by the House in 2019, would permit Medicare to directly negotiate the cost of prescription drugs and biologics that lack competition by referencing prices in certain other countries and penalize manufacturers whose prices rise faster than the rate of inflation. In the last Congress, the Congressional Budget Office estimated that the bill would result in approximately $456 billion in savings over the next decade; some of the savings would be used for capping Medicare beneficiaries’ out-of-pocket spending on prescription drugs at $2,000 per year. The House Energy and Commerce Committee is expected to schedule a hearing on the legislation in early May.

House Republicans, led by Energy and Commerce Ranking Member Cathy McMorris Rodgers (R Wash.), Ways and Means Ranking Member Kevin Brady (R-Texas), and Education and Labor Ranking Member Virginia Foxx (R-N.C.), released the GOP’s drug pricing proposal last week. The Lower Costs, More Cures Act (H.R. 19) aims to lower out-of-pocket health care costs for patients without negatively impacting innovation. Amongst the bill’s provisions, H.R. 19 would provide an out-of- pocket cap of $3,100 on annual drug spending for seniors and cap the out-of pocket cost of insulin for seniors in Medicare Part D.

Congress Considers Extension of Fentanyl Ban
The Senate and House of Representatives are working to advance competing proposals to extend the current ban on fentanyl analogues that is scheduled to expire on May 6. The House passed a six-month extension of the ban (H.R. 2630) by voice vote on Wednesday, and the Senate is scheduled to debate a bill (S. 1216) that would extend the ban until July 6, 2022. An extension would allow the government to continue to classify fentanyl-like substances as Schedule I controlled substances. Neither solution has widespread support – with many Republicans calling for the classification to be made permanent and many Democrats highlighting the civil rights implications of the policy, arguing that it is an extension of the war on drugs. In related news, the Senate passed the DUMP Opioids Act (S. 957) by unanimous consent last week. The bill would direct the Department of Veterans Affairs to ensure that certain medical facilities have locations to dispose of controlled substance medications.