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Monthly Legislative Newsletter June 2021 President Biden’s 2021 Budget On May 28, 2021, President Biden released his Fiscal Year 2022 Budget. The budget, which is largely a messaging document, included a number of investments related to public health. Additionally, the foundations of the President’s budget are both the American Jobs Plan and the American Families Plan, which are both pieces of legislation that President Biden introduced in order to get America back on track as the tide turns on the pandemic. President Biden’s budget includes: • Extending the expanded health insurance tax credits that were included in the American Rescue Plan o These credits lower premiums by an average of $50 per person and making them permanent will allow upwards of 4 million uninsured people to get coverage • $131.7 billion for HHS o $25 billion increase from Fiscal Year 2021 • A total of $51 billion for NIH o $9 billion increase from Fiscal Year 2021 • Launches the Advanced Research Projects Agency for Health (ARPA-H) o The budget provides $6.5 billion to launch ARPA-H o Will initially focus on research and development spending on cancer and other diseases such as diabetes and Alzheimer’s o Goal would be to speed up health breakthroughs • $7.6 billion for NCI o Includes $50 million for the Childhood Cancer Data Initiative as well as Cancer Moonshot funding • $8.7 billion in discretionary funding for CDC in order to better prepare for the next pandemic You can view the full fact sheet HERE. What Does the Biden Budget Mean for Congress? While the President’s budget is largely a messaging document, its release officially kicks the congressional appropriations process into high gear. Over the coming weeks and months, congressional committees of jurisdiction will hold hearings to examine the President’s budget in order to develop their own spending proposals. On the House of Representatives side, these hearings have been going on for a number of weeks now in order to get a jump start on the process. The Senate however, has been slower to start the process with only a few budget hearings scheduled before the release of the Biden budget. On Wednesday, May 26, 2021, the Senate Appropriations Committee, Subcommittee on Labor, Health and Human Services, Education and Related Agencies met to examine the National Institutes of Health’s FY22 Budget and the State of Medical Research. Relevant topics discussed are detailed in the congressional hearings section of the newsletter. PRG will continue to provide updates on relevant congressional hearings as necessary. Is H.R. 3 Dead? On May 11, 2021, 10 moderate House Democrats indicated that they could potentially be in opposition to H.R. 3, the House’s sweeping drug pricing legislation. Recently, there has been talk that any large-scale infrastructure bill using reconciliation would include H.R. 3, despite President Biden not including drug pricing reform in either the American Jobs Plan or the American Families Plan. However, should moderate Democrats officially voice their opposition and state that they are unwilling to vote for a package that includes H.R. 3, Speaker of the House Nancy Pelosi (D-CA) could be forced to drop any sort of drug pricing reforms. The group of 10 Democrats called for a smaller, more modest plan that would “preserve our invaluable innovation ecosystem.” Additionally, conservative organizations and the drug lobby are spending millions in order to influence moderate Democrat opposition. In their targeted ads, they state that H.R. 3 is a “socialist prescription drug takeover” and will send drug innovation overseas. However, it is important to note that many Democrats want to pass H.R. 3 in order to put pressure on Senate Democrats to include comprehensive drug pricing legislation in their own negotiated infrastructure package. Due to the Democrats’ slim control of the House, Speaker Pelosi can only afford to lose 2 Democrats should the package go forward requiring a party line vote. A quick refresher as to what is included in H.R. 3. H.R. 3- Elijah E. Cummings Lower Drug Costs Now Act (Reintroduced on April 27, 2021 with slight adjustments) The Five Titles in the bill are: • Lowering Prices Through Fair Drug Price Negotiation • Prescription Drug Inflation Rebates • Part D Improvements and Maximum Out-of-Pocket Cap for Medicare Beneficiaries • Drug Price Transparency • NIH, FDA, and Opioids Funding What does the bill do? -2- • The legislation has the Health and Human Services Department (HHS) directly negotiate the prices of the most expensive drugs, biological products, and insulin. • The measure would cap the prices of the selected drugs at 120 percent the average price in Australia, Canada, France, Germany, Japan, and the United Kingdom. For reference, President Trump proposed a slightly less stringent price cap of 126 percent. • The bill would require drug manufacturers to pay rebates to Medicare for drug price increases that exceed inflation. • The legislation would create a $2,000 out-of-pocket cap for Medicare prescription drug plan beneficiaries. How would price negotiations work? • HHS would establish a Fair Price Negotiation Program that identifies “negotiation eligible drugs.” • In 2023, the first year of the plan, HHS would publish a list of 25 drugs and biological products, along with insulin, that will be subject to negotiations. • From 2024 onward, HHS will have to select at least 50 drugs to negotiate. • HHS would select drugs with the greatest potential to result in savings for the government or individuals. It would do this by comparing the drug’s price in the US versus its average international price. • Drugs subject to negotiation would be selected from a list of 125 drugs with the greatest net spending under Medicare Advantage, Medicare Part D, and an additional list of 125 drugs with the greatest overall spending in the US. • HHS would then negotiate a “maximum fair price,” which is not to exceed 120 percent of the average international price. The maximum fair price would consider the manufacturer’s research and development (R&D) costs, unit costs of production and distribution, and comparison to existing therapeutic alternatives. • If a drug lacks international price information, the maximum fair price would be capped at no more than 85 percent of the average manufacturer price. • If a manufacturer sells above the maximum fair price, it would be subject to a civil monetary penalty equal to ten times the difference between the price they charged and the maximum fair price amount. Additionally, each violation of a fair price agreement could be subject to a civil penalty not to exceed $1 million. • If manufacturers do not enter an agreement with HHS, H.R. 3 would impose a non- deductible excise tax on the company for the days they sell the selected drug outside of an agreement. How does this affect brain tumor drugs? The bill would cap the prices of the most expensive drugs sold in the US. To the extent that brain tumor drugs qualify as such, then H.R. 3 would reduce their prices. The bill applies to Medicare plans, which cover cancers drugs through parts B and D—both would be subject to negotiation. Drug manufacturers will argue that lower drug prices will undermine the innovation necessary to find new breakthrough drugs to treat conditions like brain cancer. Consumer advocates will say that the bill increases access to life-saving medicine. With regard to the claim that the bill -3- would hurt new drug development, the legislation contains provisions that account for R&D costs and innovation when negotiating the maximum fair price. This combined with the fact that manufacturers sell the same drug for less abroad undermines the claim that high prices are necessary for innovative drug development. Consequently, do not expect research into brain tumor drugs to suffer as a result of lower drug prices. The Congressional Budget Office estimated that the 116th Congress plan would lower spending by $456 billion over ten years with the inflation rebates saving another $36 billion. But it would also result in eight fewer new drugs being introduced to the US market over that same period. CBO has yet to score the 117th Congress legislation. President Biden Finally Gets His CMS Pick On May 27, 2021, Secretary of Health and Human Services Xavier Becerra officially swore in Chiquita Brooks-LaSure as Administrator of the Centers for Medicare and Medicaid Services after the Senate confirmed her nomination on May 25, 2021 with a vote of 55-44. This comes after over a month of delay due to Senate Republicans holding up her confirmation vote because of the Biden administration’s decision to withdraw Texas’s Medicaid waiver on the grounds that the Trump administration did not hold a public comment period before approving the waiver in January of 2021. Senator John Cornyn (R-TX) used a parliamentary procedure to put a hold on Brooks-LaSure’s nomination until a solution to the waiver issue could be reached with the Biden administration. Brooks-LaSure is an Obama administration veteran and with her confirmation, becomes the first Black woman to lead CMS. Telehealth Update On May 25, 2021, Senators Tom Carper (D-DE) and John Cornyn (R-TX) introduced legislation that would help states expand telehealth options for low-income Americans called the Telehealth Improvement for Kids’ Essential Services (TIKES) Act of 2021. The legislation would provide federal guidance on how to integrate telehealth services into states’ Medicaid and Children’s Health Insurance Program. Additionally, the legislation would research how telehealth expansion can impact health care access, utilization, and cost. This legislation comes as telehealth expansion continues to be a popular subject in Congress after its effective expansion and use during the pandemic.

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