Alston & Bird Healthcare Week in Review, March 17, 2017

I. Regulations, Notices, & Guidance

• On March 13, 2017, the Food and Drug Administration (FDA) issued a final order entitled, Medical Devices; Clinical Chemistry and Clinical Toxicology Devices; Classification of the Continuous Glucose Monitor Secondary Display. The final order states that the FDA is classifying the continuous glucose monitor secondary display into class II (special controls). The special controls that will apply to the device are identified in this order and will be part of the codified language for the continuous glucose monitor secondary display’s classification. The FDA is classifying the device into class II (special controls) in order to provide a reasonable assurance of safety and effectiveness of the device. The final order is effective on March 14, 2017.
• On March 13, 2017, the FDA issued a final order entitled, Medical Devices; Clinical Chemistry and Clinical Toxicology Devices; Classification of the High Throughput Genomic Sequence Analyzer for Clinical Use. The final order states that the FDA is classifying the high throughput genomic sequence analyzer for clinical use into class II (special controls). The special controls that will apply to the device are identified in this order and will be part of the codified language for the classification of the high throughput genomic sequence analyzer for clinical use device. The FDA is classifying the device into class II (special controls) in order to provide a reasonable assurance of safety and effectiveness of the device. The final order is effective on March 14, 2017.
• On March 13, 2017, the FDA issued a final order entitled, Medical Devices; Neurological Devices, Classification of the Vibratory Counter-Stimulation Device. The final order states that the FDA is classifying the vibratory counter stimulation device into class II (special controls). The special controls that will apply to the device are identified in this order and will be part of the codified language for the vibratory counter-stimulation device’s classification. The FDA is classifying the device into class II (special controls) in order to provide a reasonable assurance of safety and effectiveness of the device. The final order is effective on March 14, 2017.
• On March 13, 2017, the FDA issued a notice entitled, Enhancing Patient Engagement Efforts Across the Food and Drug Administration. The notice announces that the FDA is establishing a public docket to solicit input on ongoing efforts to enhance mechanisms for patient engagement at the FDA. Additionally, the notice outlines the FDA’s proposal for the future of patient engagement at the FDA so that, according to the FDA, the perspective of patient communities can be better captured. Comments are due by June 12, 2017.
• On March 13, 2017, the FDA issued a notice entitled, Medical Devices; Exemptions From Premarket Notification: Class II Devices. The notice announces that the FDA has identified a list of class II devices that, when finalized, will be exempt from premarket notification requirements, subject to certain limitations. The FDA is publishing this notice of that determination and requesting public comment. Comments are due by May 15, 2017.
• On March 14, 2017, the Office of Management and Budget (OMB) received a proposed rule from the Centers for Medicare & Medicaid Services (CMS) entitled, FY 2018 Prospective Payment System and Consolidated Billing for Skilled Nursing Facilities (SNFs). The proposed rule would update the SNF prospective payment rates as required under the Social Security Act (the Act). The Act requires the Secretary to provide, before the August 1 that precedes the start of each FY, the unadjusted federal per diem rates, the case-mix classification system, and the factors to be applied in making the area wage adjustment.                                                                           
• On March 15, 2017, the FDA issued a draft guidance on generic rifaximin oral tablets entitled, Draft Guidance on Rifaximin. The revised draft guidance, when finalized, will provide product-specific recommendations on, among other things, the design of bioequivalence (BE) studies to support abbreviated new drug applications (ANDAs) for rifaximin oral tablets. Comments are due by May 15, 2017.
• On March 16, 2017, the FDA issued a final rule; technical amendments entitled, Presiding Officer for an Appeal and Informal Hearing; Technical Amendments. The final rule is making revisions to Chapter I of the FDA’s regulations. According to the FDA, the revisions are necessary to reflect changes to the FDA’s organizational structure, including the dissolution of the Regional Food and Drug Director position. The revisions replace references to the Regional Food and Drug Director, who is designated to preside over administrative appeals and at informal hearings on appeal, with references to Office of Regulatory Affairs Program Directors. The rule does not impose any new regulatory requirements on affected parties. The rule is effective on March 17, 2017.
• On March 17, 2017, the Health Resources and Services Administration issued an interim final rule entitled, 340B Drug Pricing Program Ceiling Price and Manufacturer Civil Monetary Penalties Regulation. The interim final rule delays the effective date of the Ceiling Price/CMP final rule (82 FR 1210, (January 5, 2017)) to May 22, 2017. Commenters are also invited to provide their views on whether a longer delay of the effective date to October 1, 2017, would be more appropriate.
• On March 17, 2017, the FDA issued a final rule entitled, Clarification of When Products Made or Derived From Tobacco Are Regulated as Drugs, Devices, or Combination Products; Amendments to Regulations Regarding “Intended Uses”; Further Delayed Effective Date. The final rule is further delaying the effective date of a final rule published in the Federal Register of January 9, 2017. In the Federal Register of February 7, 2017, the FDA delayed until March 21, 2017, the effective date of the final rule. This final rule further delays the effective date of the rule until March 19, 2018. Comments are due by May 19, 2017.

• March 29, 2017: The FDA announced a public advisory committee meeting of the Oncologic Drugs Advisory Committee. During the morning session, the Committee will discuss biologics license application (BLA) 761064, rituximab/hyaluronidase injection for subcutaneous use, submitted by Genentech, Inc. During the afternoon session, the Committee will discuss new drug application (NDA) 209099, for binimetinib, submitted by Array BioPharma Inc. Comments are due by March 28, 2017.
• April 5, 2017: The FDA announced a joint meeting of the Anesthetic and Analgesic Drug Products Advisory Committee and the Drug Safety and Risk Management Advisory Committee. The committees will discuss new drug application (NDA) 209777, for oxycodone hydrochloride immediate-release oral tablets, submitted by Inspirion Delivery Sciences, LLC., with the proposed indication of management of moderate to severe pain where the use of an opioid analgesic is appropriate. The committees will be asked to discuss the overall risk-benefit profile of the product, and whether the applicant has demonstrated abuse-deterrent properties for their product that would support labeling.

II. Congressional Legislation & Committee Action

• On March 15, 2017, the Senate Veterans’ Affairs Committee held a hearing entitled, GAO’s High Risk List and the Veterans Health Administration. The witnesses included Dr. Debra Draper, Director of Health Care Team, the Government Accountability Office (GAO); Michael J. Missal, Inspector General, VA; John Daigh, Assistant Inspector General for Healthcare Inspections, Office of Inspector General (OIG); Carolyn Clancy, Deputy Under Secretary for Health for Organizational Excellence, VA; Jennifer Lee, Deputy Under Secretary for Health for Policy and Services, VA; and Amy Parker, Executive Director of Operations, Office of Management, VA.

• On March 16, 2017, the House Budget Committee convened a markup of legislation to repeal and replace the Affordable Care Act (ACA), the American Health Care Act (AHCA).  While the rules of reconciliation prohibited the Committee from making substantive amendments to the bill, the Committee did take up 11 motions after voting the bill favorably out of Committee by a vote of 19-17.  Three Republicans voted against the bill: Mark Sanford (R-SC); Dave Brat (R-VA); and Gary Palmer (R-AL).  Seven Democratic motions failed; four Republican motions were agreed to: (1) supporting state flexibility in the design of their Medicaid programs; (2) opposing policies that encourage Medicaid enrollment; (3) encouraging able-bodied, working age adults, without dependents, to meet a work requirement while enrolled in Medicaid; and (4) supporting policies that ensure the personal tax credits are afforded to the population they are intended to serve.

Upcoming Congressional Floor and Committee Action

U.S. Senate

• On March 21, 2017, the Senate Health, Education, Labor and Pensions Committee will hold a hearing entitled, FDA Use Fee Agreements: Improving Medical Product Regulation and Innovation for Patients Part 1. The hearing will take place at 10:00 a.m. in 430 Dirksen. The witnesses include Janet Woodcock, Director of the FDA’s Center for Drug Evaluation and Research; Peter Marks, Director of the FDA’s Center for Biologics Evaluation and Research; and Jeffrey Shuren, Director of the FDA’s Center for Devices and Radiological Health.
• On March 21, 2017, the Senate Special Aging Committee will hold a hearing on raising grandchildren in the opioid crisis and beyond. The hearing will take place at 2:30 p.m. in 562 Dirksen. The witnesses include Jaia Peterson Lent, Deputy Executive Director of Generations United; Megan Dolbin-MacNab, Associate Professor of the Department of Human Development and Director of the Marriage and Family Therapy Doctoral Program at Virginia Tech University; and Sharon McDaniel, Founder, President and CEO of A Second Chance Inc.

• On March 21, 2017, the House Appropriations Labor, health and Human Services, Education, and Related Agencies Subcommittee will hold a budget hearing on the National Institutes of Health (NIH). The meeting will take place at 10:00 a.m. in 2358-C Rayburn. The witnesses include Francis Collins, Director of the NIH; Anthony Fauci, Director of the National Institute of Allergy and Infectious Diseases; Gary Gibbons, Director of the National Heart, Lung and Blood Institute; Joshua Gordon, Director of the National Institute of Mental Health; Doug Lowry, Director of the National Cancer Institute; and Nora Volkow, Director of the National Institute of Drug Abuse.
• On March 21, 2017, the House Energy and Commerce Oversight and Investigations Subcommittee will hold a hearing entitled, Fentanyl: The Next Wave of the Opioid Crisis. The hearing will take place at 10:15 a.m. in 2123 Rayburn. The witnesses include Mathew Allen, Assistant Director of homeland security investigative programs and homeland security investigations for Immigration and Customs Enforcement; Kemp Chester, Acting Deputy Director of the Office of National Drug Control Policy; Wilson Compton, Deputy Director of the NIH’s National Institute on Drug Abuse; Debra Houry, Director of the Centers for Disease Control and Prevention's National Center for Injury Prevention and Control; and Louis Milione, Assistant Administrator in the Drug Enforcement Administration’s Diversion Control Division.
• On March 22, 2017, the House Energy and Commerce Health Subcommittee will hold a hearing on examining the FDA’s Prescription Drug User Fee Program. The hearing will take place at 10:15 a.m. in 2322 Rayburn. The witnesses are TBD.
• On March 22, 2017, the House Oversight and Government Reform Health Care, Benefits and Administrative Rules Subcommittee will hold a hearing on examining the impact of Voluntary Restricted Distribution Systems in the pharmaceutical supply chain. The hearing will take place at 2:00 p.m. in 2154 Rayburn. The witnesses are TBD.
• On March 22, 2017, the House Veterans’ Affairs Health Subcommittee will hold a hearing entitled, Healthy Hiring: Enabling VA to Recruit and Retain Quality Providers. The hearing will take place at 2:00 p.m. in 334 Cannon. The witnesses are TBD.

• On March 13, 2017, the Congressional Budget Office (CBO) released a report entitled, American Health Care Act. The report found that enacting the American Health Care Act would reduce federal deficits by $337 billion over the coming decade and increase the number of people who are uninsured by 24 million in 2026 relative to current law.
• On March 14, 2017, the OIG released a report entitled, Hospitals Nationwide Generally Did Not Comply With Medicare Requirements for Billing Outpatients Right Heart Catheterizations With Heart Biopsies. The report found that hospitals nationwide complied with the Medicare requirements for billing outpatient right heart cauterizations (RHCs) and heart biopsies provided during the same patient encounter for 8 of the 100 sampled line items. However, the OIG found that hospitals did not comply with the Medicare requirements for 92 of the 100 sampled line items. Specifically, the hospitals incorrectly appended modifier -59 to the HCPCS code, representing that the RHCs were separate and distinct procedures from the heart biopsies even though the medical record documentation did not support the use of the modifier. On the basis of our sample results, we estimated that hospitals nationwide received overpayments totaling $7.6 million for the audit period.
• On March 14, 2017, the OIG released a report entitled, Public Summary Report: Information Technology Control Weaknesses Found at the Commonwealth of Massachusetts’ Medicaid Management Information System. The report found that the Massachusetts Medicaid program (MassHealth) did not safeguard Medicaid Management Information System (MMIS) data and supporting systems in accordance with Federal requirements. Specifically, MassHealth had vulnerabilities related to security management, configuration management, system software controls, and Web site and database vulnerability scans.
• On March 15, 2017, the GAO released a report entitled, Health Information Technology: HHS Should Assess the Effectiveness of Its Efforts to Enhance Patient Access to and Use of Electronic Health Information. The report found that data from the 2015 Medicare Electronic Health Record Incentive Program (EHR Program) show that relatively few patients electronically access their health information when offered the ability to do so. Patients the GAO interviewed described primarily accessing health information before or after a health care encounter, such as reviewing the results of a laboratory test or sharing information with another provider.
• On March 15, 2017, the GAO released a report entitled, Veterans’ Health Care: Limited Progress Made to Address Concerns That Led to High-Risk Designation. The report found that The Department of Veterans Affairs (VA) has taken action to partially meet two of the five criteria the GAO uses to assess removal from the High-Risk List (leadership commitment and an action plan), but it has not met the other three (agency capacity, monitoring efforts, and demonstrated progress). Specifically, the VA officials have taken leadership actions such as establishing a task force, working groups, and a governance structure for addressing the issues that led to the high-risk designation. The VA provided the GAO with an action plan in August 2016 that acknowledged the deep-rooted nature of the five areas of concern the GAO identified: (1) ambiguous policies and inconsistent processes; (2) inadequate oversight and accountability; (3) information technology challenges; (4) inadequate training for VA staff; and (5) unclear resource needs and allocation priorities. Although the VA's action plan outlined some steps the VA plans to take over the next several years, several sections were missing analyses of the root causes of the issues, resources needed, and clear metrics to measure progress.
• On March 15, 2016, CMS released a report entitled, Health Insurance Marketplaces 2017 Open Enrollment Period Final Enrollment Report: November 1, 2017 – January 31, 2017. The report summarizes enrollment activity in the individual Marketplaces during the 2017 Open Enrollment Period (2017 OEP) for all 50 states and the District of Columbia. The report found that approximately 12.2 million consumers selected or were automatically re-enrolled in Marketplace plans during the 2017 OEP.
• On March 17, 2017, the OIG released a report entitled, Data Inadequacies Undermine CMS’ Oversight of the Inconsistency Resolution Process for the Federal Marketplace. The report found that the Federal Marketplace is unable to calculate the total number of applicants with inconsistencies during the first open enrollment period because the data cannot uniquely identify an individual seeking to enroll in a qualified health plan (QHP). According to the OIG, these shortcomings in the data also created additional work for CMS because it had to resolve duplicate inconsistencies and increased the burden to applicants with redundant requests for information. CMS officials stated that the improvements to Healthcare.gov and the use of a data manipulation process would help eliminate duplicate inconsistencies.

IV. Other Health Policy News

• On March 13, 2017, the White House issued an executive order entitled, Comprehensive Plan for Reorganizing the Executive Branch. According to the White House, the executive order is intended to improve the efficiency, effectiveness, and accountability of the executive branch by directing the Director of the Office of Management and Budget (Director) to propose a plan to reorganize governmental functions and eliminate unnecessary agencies (as defined in section 551(1) of title 5, United States Code), components of agencies, and agency programs.
• On March 14, 2017, the Department of Health and Human Services (HHS) Secretary, Tom Price and CMS Administrator, Seema Verma issued a joint letter to nation’s governors affirming HHS’ intent to work with state to improve the Medicaid program.
• On March 15, 2017, CMS introduced Connected Care, an educational initiative to raise awareness of the benefits of chronic care management (CCM) services for Medicare beneficiaries with multiple chronic conditions and to provide health care professionals with support to implement CCM programs. Connected Care is a nationwide effort within fee-for-service Medicare that includes a focus on racial and ethnic minorities as well as rural populations, who tend to have higher rates of chronic disease.
• On March 15, 2017, Senate Finance Committee Ranking Member Ron Wyden (D-OR) introduced the Creating Transparency to Have Drug Rebates Unlocked (C-THRU) Act. The legislation would require Pharmacy Benefit Managers (PBMs) in Medicare to disclose their aggregate rebates provided by drug manufacturers, as well as the amount of those rebates that are passed on to health plans, therefore lowering prices for people who need prescription drugs.

V. ACA Repeal News

• On March 16, 2017, the House Budget Committee convened a markup of a markup of legislation to repeal and replace the ACA, the AHCA. While the rules of reconciliation prohibited the Committee from making substantive amendments to the bill, the Committee did take up 11 motions after voting the bill favorably out of Committee by a vote of 19-17.  Three Republicans voted against the bill: Mark Sanford (R-SC); Dave Brat (R-VA); and Gary Palmer (R-AL).  Seven Democratic motions failed; four Republican motions were agreed to: (1) supporting state flexibility in the design of their Medicaid programs; (2) opposing policies that encourage Medicaid enrollment; (3) encouraging able-bodied, working age adults, without dependents, to meet a work requirement while enrolled in Medicaid; and (4) supporting policies that ensure the personal tax credits are afforded to the population they are intended to serve.
• Members of the House Freedom Caucus want the AHCA, set for a floor vote March 23, to include language that would lead to the elimination of the ACA’s essential health benefits rules, which require insurance plans to include a wide range of benefits.