Health Care Week in Review: CMS Released Initial IRA Drug Price Negotiation Guidance

Below is Alston & Bird’s Health Care Week in Review, which provides a synopsis of the latest news in health care regulations, notices, and guidance; federal legislation and congressional committee action; reports, studies, and analyses; and other health policy news.

Week in Review Highlight of the Week:

This week, CMS released initial guidance for the Medicare Drug Price Negotiation Program authorized by the IRA and identified the first 27 drugs that will be subject to inflationary rebates. Read more about these actions and other news below.

I. Regulations, Notices & Guidance

• On March 13, 2023, the National Institutes of Health (NIH) issued a notice entitled, Office of the Secretary, Muscular Dystrophy Coordinating Committee Call for Committee Membership Nominations. NIH is seeking nominations for three individuals to serve as non-federal public members on the Muscular Dystrophy Coordinating Committee (MDCC). Nominations are encouraged for new individuals or reappointment of non-federal public members who can provide public and/or patient perspectives to discussions of issues considered by the Committee. Nominations will be accepted until 5:00 pm EDT on April 28, 2023.
• On March 14, 2023, the Centers for Disease Control and Prevention (CDC) issued a notice entitled, Solicitation of Nominations for Appointment to the Board of Scientific Counselors, Deputy Director for Infectious Diseases. CDC is seeking nominations for membership on the Board of Scientific Counselors, Deputy Director for Infectious Diseases (BSC, DDID). The BSC, DDID consists of 17 experts from authorities knowledgeable in the fields relevant to the issues addressed by CDC’s infectious disease national centers. Nominations are sought for individuals who have the expertise and qualifications necessary to contribute to the accomplishment of the objectives of the BSC, DDID. Nominees will be selected based on expertise in the fields of infectious diseases and related specialties.
• On March 15, 2023, the Food and Drug Administration (FDA) issued final guidance entitled, Definitions of Suspect Product and Illegitimate Product for Verification Obligations Under the Drug Supply Chain Security Act; Guidance for Industry; Availability. The guidance is intended to help industry better understand the definitions of “suspect” and “illegitimate” products as defined in the Drug Supply Chain Security Act (DSCSA). The guidance lays out FDA’s current understanding of the following key terms used to define “suspect” and “illegitimate” products: “counterfeit,” “diverted,” “stolen,” “fraudulent transaction,” and “unfit for distribution.” The guidance finalizes draft guidance previously issued on June 4, 2021.
• On March 15, 2023, FDA issued draft guidance entitled, Development of Local Anesthetic Drug Products With Prolonged Duration of Effect; Draft Guidance for Industry; Availability. The draft guidance reflects FDA’s current recommendations regarding drug development and trial design issues relevant to the study of local anesthetic drug products with prolonged duration of effect for which submission of a new drug application (NDA) is planned. The recommendations in the guidance are intended to assist developers in generating the data necessary to support different indications and labeling claims for these drugs.
• On March 15, 2023, FDA announced draft guidance entitled, Electronic Systems, Electronic Records, and Electronic Signatures in Clinical Investigations: Questions and Answers; Draft Guidance for Industry; Availability. The draft guidance provides information for sponsors, clinical investigators, institutional review boards (IRBs), contract research organizations (CROs), and other interested parties on the use of electronic systems, electronic records, and electronic signatures in clinical investigations of foods, medical products, tobacco products, and new animal drugs under FDA regulations.
• On March 15, 2023, FDA issued a notice entitled, Request for Nominations from Industry Organizations Interested in Participating in the Selection Process for Nonvoting Industry Representatives and Request for Nominations for Nonvoting Industry Representatives on the Blood Products Advisory Committee. FDA is requesting that any industry organizations interested in participating in the selection of a nonvoting industry representative to serve on the Blood Products Advisory Committee (BPAC) for the Center for Biologics Evaluation and Research (CBER) notify FDA in writing. BPAC reviews and evaluates available data concerning the safety, effectiveness, and appropriate use of blood products derived from blood and serum or biotechnology that are intended for use in the diagnosis, prevention, or treatment of human diseases, and as required, any other product for which FDA has regulatory responsibility. A nominee may either be self-nominated or nominated by an organization to serve as a nonvoting industry representative.
• On March 15, 2023, the Centers for Medicare & Medicaid Services (CMS) issued program guidance entitled, Inflation Reduction Act (IRA) Initial Program Guidance; Comment Request. CMS announced an opportunity for the public to comment on CMS’ initial guidance for the Medicare Drug Price Negotiation Program implemented under the Inflation Reduction Act (IRA). CMS specifically provided detail on how it intends to identify selected drugs for negotiation, assess factors it will consider in the negotiation process, and establish requirements for manufacturers of selected drugs. CMS said that in order to identify negotiation-eligible drugs for the first round of negotiations, it will use data on total expenditures under Medicare Part D collected between June 1, 2022, and May 31, 2023, while still accounting for exceptions for certain orphan and low-spending Medicare drugs. The guidance also details how CMS will develop its initial offer to drug manufacturers by identifying if there are therapeutic alternatives to the selected drug, assessing the drug’s clinical benefit in comparison to alternatives, and establishing a starting point for an offer using the Part D net price for any Part D alternatives or the Part B average sales price (ASP) for Part B alternatives. CMS clarified that initial offers will be based on the single price for a 30-day supply of the selected drug, rather than on a per-drug unit or other measurement. CMS also specified that it plans to respond to counteroffers made by drug manufacturers, but that only one written counteroffer will be accepted at first, although the Agency will allow for up to three in-person or virtual meetings if further conversations are needed.
• On March 17, 2023, CDC issued a notice entitled, Solicitation for Nominations for Appointment to the Board of Scientific Counselors, National Institute for Occupational Safety and Health. CDC is seeking nominations for membership on the Board of Scientific Counselors, National Institute for Occupational Safety and Health (BSC, NIOSH). The BSC, NIOSH consists of 15 experts in fields associated with occupational safety and health. Members may be invited to serve for up to four-year terms. Selection of members is based on candidates’ qualifications to contribute to the accomplishment of BSC, NIOSH objectives.
• On March 17, 2023, FDA issued draft guidance entitled, Pharmacogenomic Data Submissions; Draft Guidance for Industry; Availability. This draft guidance is intended to facilitate progress in the field of pharmacogenomics and the use of pharmacogenomic data in drug development. This draft guidance is also intended to clarify the contexts in which pharmacogenomic study findings and data must be included in submissions related to investigational new drug applications (INDs), NDAs, and biologics license applications (BLAs) based on FDA’s regulations. In addition, this document provides recommendations to sponsors and applicants on the format and content of the pharmacogenomic data submissions.

Event Notices

• April 6-7, 2023: NIH announced a public meeting of the National Heart, Lung, and Blood Institute (NHLBI) Sleep Disorders Research Advisory Board (SDRAB). The meeting agenda will include an update to SDRAB and public stakeholders on the progress of sleep and circadian research activities across NIH, and on the activities of federal stakeholders and interested organizations.
• April 11, 2023: NIH announced a public meeting of the MDCC. The purpose of this meeting is to bring together committee members, representing government agencies, patient advocacy groups, other voluntary health organizations, and patients and their families to update one another on progress relevant to the Action Plan for the Muscular Dystrophies and to coordinate activities and discuss gaps and opportunities leading to better understanding of the muscular dystrophies, advances in treatments, and improvements in patients' and their families' lives.
• April 12-13, 2023: CDC announced a public meeting of the Clinical Laboratory Improvement Advisory Committee (CLIAC). The agenda will include agency updates from CDC, CMS, and FDA. Presentations and CLIAC discussions will focus on reports from two CLIAC workgroups: the CLIA Regulations Assessment Workgroup and the Clinical Laboratory Improvement Amendment (CLIA) Certificate of Waiver and Certificate for Provider-performed Microscopy Procedures Workgroup, and on the laboratory’s role in advancing health equity.
• April 25, 2023: The Substance Abuse and Mental Health Services Administration (SAMHSA) announced a public meeting of the Tribal Technical Advisory Committee (TTAC). The meeting agenda will include remarks from the Assistant Secretary for Mental Health and Substance Use; updates on SAMHSA priorities; follow up on topics related to the previous TTAC meetings; and council discussions.
• April 25, 2023: SAMHSA announced a public meeting of the Advisory Committee for Women’s Services (ACWS). The meeting will include discussions on assessing SAMHSA’s current strategies, including the mental health and substance use needs of the women and girls’ population. Additionally, the ACWS will be addressing priorities regarding the impact of COVID-19 on the behavioral health needs of women and children, as well as discussions around behavioral health services and access for women and children.
• April 25, 2023: SAMHSA announced a public meeting of the Center for Mental Health Services National Advisory Council (CMHS NAC). The meeting agenda will include consideration of the meeting minutes from the August 18, 2022, SAMHSA, CMHS NAC meeting; updates from the CMHS Director; a discussion with SAMHSA’s Assistant Secretary; a discussion on Certified Community Behavioral Health Clinics (CCBHCs); a discussion on school-based mental health services; a discussion on the SAMHSA Mental Health Block Grant; a discussion on Black youth suicide prevention activities; and a discussion on the CMHS/SAMHSA response to disasters.
• May 3-4, 2023: CDC announced a public meeting of the Board of Scientific Counselors, National Center for Injury Prevention and Control (BSC, NCIPC). The open session of the meeting will include discussions on improving the quality and reach of extramural research notices of funding opportunity; updating and expanding CDC guidance for the identification and response of suicide clusters; developing a cascade of care framework and surveillance indicators to measure linkage and retention to care for substance use disorders (SUDS); and moving science and data to violence prevention action.
• May 4, 2023: The Department of Health and Human Services (HHS) announced a meeting of the Administration for Strategic Preparedness and Response (ASPR) National Biodefense Science Board (NBSB). The NBSB, managed and operated by ASPR, provides expert advice and guidance to the Secretary of HHS regarding current and future chemical, biological, radiological, and nuclear threats, and other disaster preparedness and response matters.

II. Hearings & Markups

U.S. Senate

• On March 15, 2023, the Senate Committee on the Budget held a hearing entitled, The President's Fiscal Year 2024 Budget Proposal. The Committee heard testimony from the Honorable Shalanda D. Young, Director, Office of Management and Budget (OMB).
• On March 16, 2023, the Senate Committee on Homeland Security and Governmental Affairs (HSGAC) held a hearing entitled, In Need of a Checkup: Examining the Cybersecurity Risks to the Healthcare Sector. Witnesses present included: Scott Dresen, Senior Vice President, Information Security & Chief Information Security Officer, Corewell Health; Kate Pierce, Senior Virtual Information Security Officer, Fortified Health Security; Greg Garcia, Executive Director, Cyber Security, Healthcare and Public Health Sector Coordinating Council; and Stirling Martin, Senior Vice President & Chief Privacy and Security Officer, Epic Systems.

III. Reports, Studies & Analyses

• On March 14, 2023, the Kaiser Family Foundation (KFF) published a report entitled, The Estimated Value of Tax Exemption for Nonprofit Hospitals Was Nearly $28 Billion in 2020. The purpose of the report was to estimate the value of the tax-exempt status for non-profit hospitals. KFF estimated that the total estimated value of tax exemption for nonprofit hospitals was nearly $28 billion in 2020, representing approximately 43 percent of net income earned by non-profit hospitals in that year. Of the $28 billion, 52 percent of the total value is derived from the hospital’s federal tax-exempt status, while 48 percent is derived from the hospital’s state and local tax-exempt status. For comparison, the $28 billion in value is similar to the $31.9 billion in total value generated by Medicare and Medicaid disproportionate share hospital (DSH) payments in 2020. Further, KFF found that the estimated value of hospitals’ tax-exempt status grew from around $20 billion in 2011 to about $28 billion in 2020, representing a 41 percent increase. KFF questioned whether non-profit hospitals provide sufficient benefit to their communities to justify their tax-exempt status based on this study. The authors estimated that the total value of tax exemption (about $28 billion) exceeded total charity care costs (about $16 billion) among non-profit hospitals in 2020. The report reviewed potential policy proposals that would, among other things, increase regulation of community benefits spending for non-profit hospitals.
• On March 15, 2023, the Government Accountability Office (GAO) published a report entitled, Generic Drugs: Stakeholder Views on Improving FDA’s Information on Patents. FDA is required to publish information on patents for approved brand name drugs in a publication known as the Orange Book. In this report, GAO describes stakeholder views on: (1) how the Orange Book patent listings affect the entry of generic drug-device combination products into the market; (2) FDA’s role overseeing the Orange Book; and (3) proposals for improving Orange Book patent listings. GAO found that all 15 stakeholders interviewed agreed that the Orange Book may help generic drug sponsors identify relevant patents when making product development decisions. GAO also found that while some stakeholders believed FDA’s role in overseeing the Orange Book is sufficient, others expressed that FDA should take a more active role in its Orange Book oversight duties. Also, 13 of the 15 stakeholders agreed it would be helpful for FDA to better clarify which device-related patents should be listed in the Orange Book.
• On March 16, 2023, KFF and the Georgetown University Center for Children and Families (CCF) published a report entitled, Medicaid and CHIP Eligibility, Enrollment, and Renewal Policies as States Prepare for the Unwinding of the Pandemic-Era Continuous Enrollment Provision. This report reflects KFF’s and CCF’s findings from their 21^st annual survey of state Medicaid and Children’s Health Insurance Program (CHIP) program officials. The report describes some of the critical issues facing state Medicaid and CHIP officials, including their programs’ plans to prepare for the end of the Medicaid continuous enrollment provision on March 31, 2023. Most Medicaid and CHIP officials reported that their states are waiting until March or April to initiate their unwinding plans and that they plan to spread renewals over 12 to 14 months. Also, approximately half of the state officials said their states have been flagging individuals who may no longer be eligible or who did not respond to renewal requests. Aside from the Medicaid continuous enrollment discussion, the report also highlighted recent changes in state Medicaid and CHIP eligibility policies. For example, South Dakota recently adopted a ballot initiative to adopt Medicaid expansion under the Affordable Care Act (ACA), and more than two-thirds of states (37) have now extended or plan to extend postpartum coverage for a full 12-months post pregnancy.

IV. Other Health Policy News

• On March 13, 2023, the American Medical Association (AMA) published the results of a study asking physicians about their experiences with prior authorization (PA). 33 percent of respondents said that PA has led to a serious adverse health event for a patient in their care. Additionally, the survey found that 94 percent of physicians reported some form of care delays resulting from the PA process, with 42 percent saying PA “often” causes delays in patient care. Also, 80 percent of responding physicians said that issues related to PA can at least sometimes lead patients to abandon their prescribed course of treatment. 89 percent of physicians responded that the PA process has a somewhat or significant negative impact on clinical outcomes for patients whose treatment requires PA. The survey shows that the majority of physicians (86 percent) feel that PA sometimes, often, or always leads to higher overall utilization of healthcare resources.  The survey also explored the administrative burden resulting from PA on physicians, with 35 percent of physicians responding that they have staff that exclusively work on PA. Physicians also said they and their staff spend an average of nearly two business days each week completing PA requests. More information on this survey can be found here.
• On March 15, 2023, Senate Health, Education, Labor, and Pensions (HELP) Committee Chair Bernie Sanders (I-VT), Ranking Member Bill Cassidy (R-LA), and Committee Members Mitt Romney (R-UT) and Bob Casey (D-PA), issued a request for information (RFI) seeking stakeholder input on the reauthorization of the Pandemic and All-Hazards Preparedness Act (PAHPA). PAHPA is designed to help the country prepare for public health and medical responses to emergencies and is currently set to expire on September 30, 2023. In particular, the RFI asks stakeholders to “provide feedback on the effectiveness of existing programs, how to improve the ability of states and localities to respond to public health crises, if there are any gaps in activities or authorities in the PAHPA framework, and ways to bolster partnerships between the federal government, states and localities, the private sector, and non-government stakeholders.” Comments are due by March 29, 2023. More information on this RFI can be found here.
• On March 15, 2023, CMS announced that for the period spanning April 1 to June 30, 2023, 27 Medicare Part B drugs whose prices grew faster than the rate of inflation, will be subject to lower beneficiary co-pays as directed by the IRA. The IRA requires drug manufacturers to pay rebates to Medicare in instances where their prescription drug prices increase faster than the rate of inflation for beneficiaries beginning January 1, 2023. For these certain drugs and biosimilars, the beneficiary coinsurance will be 20 percent of the cost of the drug after being adjusted for inflation, which will typically be lower than what the beneficiary would pay in coinsurance otherwise. Rebate dollars will be deposited in the Medicare Supplementary Medical Insurance (SMI) trust fund, and drug manufacturers that do not pay their rebates will be penalized by at least 125 percent of the original rebate amount. More information on this announcement can be found here.
• On March 16, 2023, HHS announced that it had awarded 15 states each with $1 million, one-year CCBHC planning grants. This announcement marks the first time these planning grants have been available since the program began in 2015. The 15 states selected are Alabama, Delaware, Georgia, Iowa, Kansas, Maine, Mississippi, Montana, North Carolina, New Hampshire, New Mexico, Ohio, Rhode Island, Vermont, West Virginia. In 2024, up to 10 of those states will participate in the CCBHC Medicaid demonstration program and receive enhanced Medicaid reimbursement. The full CCBHC demonstration program provides reimbursement through Medicaid for the full cost of services that CCBHCs provide, at higher and more competitive rates than community mental health centers previously received. Another notice of funding opportunity (NOFO) to award 15 additional states with planning grants is expected to be posted in fiscal year (FY) 2024. More information on this announcement can be found here.

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