US Elections - Recent Development, Challenges and Opportunities

US Elections – Recent Developments, Challenges and Opportunities

Contents Introduction

3

Capitol Hill Riot Draws Manufacturing Group’s Call For Trump’s Removal

4

Biden’s FDA Commissioner Playbook: Build On COVID Innovations To Modernize Agency

7

FDA Faces Succession Questions As Hahn’s Departure Nears

10

With US Senate Wins In Georgia, Democrats Gain Path For Rx Price Reform, But It May Be Lower Priority

12

US FDA Faces Succession Questions As Hahn’s Departure Nears

15

Medicare Payment Model Experimentation Under Biden Administration ‘Pretty Wide Open’

18

Biden Regulatory Freeze May Pause Sunset Rule, Medicare Rebate, Medicaid Line Extension Regs

21

2 / January 2021

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Introduction Stay informed of the latest news and developments from the US election and understand how the shift in administration and power from Trump to Biden will affect pharma regulatory and policy both within the United States and abroad.

Pink Sheet takes you behind the US election headlines for analysis of the political developments and their impact on global pharma regulations and the approval processes of products, with comprehensive regulatory coverage.

Sample our regulatory news coverage on some of the latest developments from the US Elections in this eBook.

3 / January 2021

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Capitol Hill Riot Draws Manufacturing Group’s Call For Trump’s Removal

BY DERRICK GINGERY Executive Summary PhRMA and BIO are members of the National Association of Manufacturers, which made the statement urging the 25th amendment be invoked.

The riot at the US Capitol seems to be the unfortunate culmination and hopefully the end of the radical politicization of business and government indicative of the Trump Administration.

A 6 January protest by Trump supporters who believe his baseless claims that the November 2020 general election was fraudulent and that his loss should be overturned escalated into a violent storming of the building as rioters broke windows, entered the Senate chamber, and disrupted the Electoral College vote counting.

Not surprisingly, pharma industry and other business groups joined the overwhelming majority condemning the riot.

The National Association of Manufacturers, which includes the Pharmaceutical Research and Manufacturers of America and Biotechnology Innovation Organization as members, went a step

4 / January 2021

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further, calling for Trump to be removed from office. NAM President and CEO Jay Timmons said in a statement that the day’s events constituted “sedition,” charging that Trump “incited violence in an attempt to retain power.”

“Vice President Pence, who was evacuated from the Capitol, should seriously consider working with the cabinet to invoke the 25th amendment to preserve democracy,” Timmons said.

Any elected leader defending Trump “is violating their oath to the Constitution and rejecting democracy in favor of anarchy,” he said. “Anyone indulging conspiracy theories to raise campaign dollars is complicit.”

Removal seems unlikely with only two weeks until President-elect Joe Biden’s inauguration. But business thrives on certainty and consistency.

Advocating for an outcome that could create fear and uncertainty underscores the escalating concerns in the waning days of the Trump administration.

“This is not the vision of America that manufacturers believe in and work so hard to defend,” Timmons said in the statement. “Across America today, millions of manufacturing workers are helping our nation fight the deadly pandemic that has already taken hundreds of thousands of lives. We are trying to rebuild an economy and save and rebuild lives. But none of that will matter if our leaders refuse to fend off this attack on America and our democracy, because our very system of government, which underpins our very way of life, will crumble.”

Indeed, pharma also likely is anticipating the end of the Trump Administration. In milder statements, industry leaders also called for the country to accept the election results and move on to the Biden Administration.

5 / January 2021

PhRMA CEO Stephen Ubl denounced the events at the Capitol as “appalling,” saying in a two-tweet statement that they “violate the better values of our nation.”

“It’s time for a peaceful transition of power our Constitution requires and the mob standing in the way must be condemned,” Ubl tweeted. “The American people have spoken and now more than ever we must stand together.”

BIO President and CEO Michelle McMurry-Heath called the riot “simply unconscionable.”

“As we are staring down a global pandemic, it is now more critical than ever for Congress to return to their important work and join together in a unified front to fight the disease and not each other,” she said in a statement. “The time has come for leaders of both political parties to collectively say enough is enough and return our country to civility and the rule of law.”

The riot, which many observers feel was encouraged by Trump at a rally earlier in the morning, seems in a way a microcosm of his presidency, which began with the possibility of upending the political order in a populist fashion but in the end seemed to only increase division and tensions.

Trump swept into office promising to lower drug prices and made several attempts through law and executive action, including a system that would benchmark US prices based on those of other countries. (Also see “Trump’s Drug Pricing Plan: The Headlines Are The Goal – But Also A Threat” - Pink Sheet, 15 Sep, 2020.)

And while these promises came mostly to naught, they forced pharma on defensive for most of his presidency. Whether industry can keep its winning streak up with Democrats in control of the White House and Congress remains to be seen.

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Faced with the pricing challenge, pharma effectively shifted the debate to PBMs and other “middlemen” in the system. But industry did have to confront Trump directly at times, such as after he excoriated sponsors and the FDA for not making a coronavirus vaccine available before the election, saying the delays were purely political.

Sponsors chose the high road, saying they were only following the science. (Also see “Moderna CEO Pushes Back On Trump Debate Comments On COVID Vaccine, Offers Own Timeline” - Pink

6 / January 2021

Sheet, 30 Sep, 2020.)

For the country as a whole, the central question after the Trump presidency will be how will government function; for pharma, it will be how to prevent price control legislation; and for FDA it will be assessing how much the president’s criticism of and interference in its operations has damaged the agency’s reputation. (Also see “US FDA Finds There’s No Vaccine Against Politics” - Pink Sheet, 13 Dec, 2020.)

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Biden’s FDA Commissioner Playbook: Build On COVID Innovations To Modernize Agency

BY NANCY BRADISH MYERS Executive Summary Unintended silver lining of pandemic-generated innovation has brought the agency to an opportunistic fork in the road, and the commissioner choice will be consequential in determining the path forward.

7 / January 2021

As stakeholders await the nomination of the next US Food and Drug Administration commissioner, the incoming Biden administration has a unique opportunity to choose a leader with the skills and vision to build boldly upon the innovations of the agency’s COVID-19 response in order to advance a comprehensive modernization of the agency.

To date, FDA has laudably risen to the challenge of the pandemic by rapidly empowering its public health experts to find novel and streamlined ways to fulfill its mission.

A few of these innovations include initiatives to facilitate the identification of COVID vaccine and treatment candidates, allow for the rapid recruitment of clinical trial participants for COVID-related clinical trials, and incorporate new tools such as telemedicine, digital health and real-world data to keep ongoing clinical studies moving forward. The agency also has adopted improved internal and

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external communication methods to speed the advancement of new ideas and practices.

This unintended silver lining of pandemicgenerated innovation has brought the agency to an opportunistic fork in the road, and the commissioner choice will be consequential in determining the path forward.

The FDA needs a leader who will not only hit the ground running to meet the continued demands of the pandemic, but also seize the opportunity to leverage the agency’s COVID innovations to meet the challenges of 21st century health care.

The goal should not be just to adopt certain COVID programs in a piecemeal fashion. Rather, the FDA should set out to harness the learnings of the de facto pilots and new processes necessitated by COVID and weave them together to chart a new course of dramatic reform that will lead to the rapid but safe advancement of new technologies and, in the process, burnish the FDA’s gold standard reputation.

Moving in this direction will not be easy and will require a very talented leader who will bring to bear certain key skills and characteristics. For example, the commissioner nominee should be: • A seasoned executive who has built and managed a large and evolving organization. The 17,000-person-plus FDA workforce has been put through the wringer in 2020. Isolated at home and juggling family/community responsibilities, many FDAers have worked tirelessly to meet the multifaceted challenges of the pandemic. The agency workforce needs a leader who can find ways to permit the staff recharge without losing the momentum that COVID and other regulatory priorities demand; • An innovative leader who can balance both immediate management needs with a nextgeneration vision for the future that encourages the development and implementation of

8 / January 2021

significant new processes and organizational shifts to address changing scientific demands and environments; • A trustworthy and collaborative scientist and physician who without effort conveys both competence and empathy. The importance of credibility and willingness to work collaboratively with all relevant parties cannot be understated; • An FDA supporter who is already intimately familiar with the workings of the agency, its broad portfolio and associated stakeholders, and its critical leadership role not only in the US but throughout the world. This time around, there will be little time for on-the-job training; • A leader with a strong global reputation. With a worldwide pandemic raging, international cooperation is essential because the interactions that accompany global travel, commerce and aid programs mean that the US is only as safe as the least protected country. TheFDA also needs a commissioner who can assure its international regulatory partners that it is focused on following the science and has not weakened its standards; • A skilled and trusted communicator. The next FDA commissioner must be able to communicate comfortably and persuasively both internally with staff and externally using all tools available, including social media; • A person who is politic but not necessarily political. The FDA will need a commissioner who can share the agency’s stories and effectively describe its direction and champion its resource needs. The nominee will need to be able to credibly engage and work productively with a bipartisan group of Senate and House members, including agency friends and critics, as well as an new administration that may be highly critical of key industries the agency regulates due to access and affordability issues.

• Someone with the fortitude to fearlessly juggle chainsaws with a smile but also the willingness to take the time to thoughtfully reach out to the FDA’s wide range of stakeholders – especially

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patient, consumer, and scientific organizations – to build and maintain relationships and engender trust.

FDA has a shining opportunity to make some bold reforms that will prepare it for the future of medicine. Leveraging its COVID-inspired pilots and re-envisioned processes could leapfrog the development and regulation of medical products and foods into a new era. Hopefully, Presidentelect Biden will choose a candidate who can carry the agency into an era of renewed credibility and regulatory innovation.

9 / January 2021

Biden and his team also need to be mindful of the stakes at hand in choosing a confirmable FDA commissioner. A speedy nomination and confirmation will be important to reassure internal and external stakeholders, as will fresh ideas and impeccable credentials.

Let’s hope we hear from the Biden team soon because the challenges and silver-lining opportunities generated by COVID-19 are not going to wait.

Nancy Bradish Myers is president and CEO of Catalyst Healthcare Consulting.

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FDA Faces Succession Questions As Hahn’s Departure Nears

BY DERRICK GINGERY Executive Summary Plan specifying the acting head of the US FDA until new commissioner is confirmed references senior positions that no longer exist.

Commissioner Stephen Hahn plans to leave US Food and Drug Administration when President-elect Joe Biden is inaugurated, but the choice of a temporary replacement is not clear – in part because agency succession plans are outdated.

As is tradition, political appointments offer their resignation when a new administration takes office. The incoming president can ask them to stay in their positions, but often they are let go.

Hahn is expected to be among the many Trump administration agency heads and other officials that will depart. The agency confirmed that he plans to serve the remainder of his term, which will expire at 12:01 p.m. on 20 January.

10 / January 2021

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But the FDA was not forthcoming on who will be Hahn’s replacement until a new commissioner is confirmed by the Senate. An agency spokesperson said there was no information to share and the Department of Health and Human Services, the overseer of the FDA, did not respond to questions about Hahn’s replacement.

The FDA’s succession plan also does not appear to offer much help. The agency Staff Manual Guide states that when a commissioner leaves office as described in the Vacancies Reform Act and the president does not appoint someone, the deputy commissioner for Foods and Veterinary Medicine becomes the acting commissioner.

Currently there is no one at the agency with that title. The Staff Manual Guide was last updated in 2016 and the agency senior leadership has been reorganized since then.

Former commissioner Scott Gottlieb eliminated the deputy commissioner for foods and veterinary medicine and other directorate layer positions just before his departure in 2019. The White House avoided the succession planning problem when Gottlieb left, naming National Cancer Institute director Norman Sharpless as acting commissioner.

Biden also could appoint a temporary commissioner upon taking office. A similar approach was used at the beginning of the Obama administration, when Josh Sharfstein was tapped to be principal deputy commissioner and acting head of the agency while Margaret Hamburg awaited confirmation.

Whatever approach is used, extended uncertainty at the top of FDA would be concerning, especially as the agency continues juggling its response to the coronavirus pandemic with its many other regulatory duties.

11 / January 2021

Abernethy, Other FDA Officials Could Take Over Several career and other senior leaders at the agency could take charge at the FDA until a commissioner nominated and confirmed.

The agency’s second in command, principal deputy commissioner Amy Abernethy, may be the most obvious choice to take over. As a career employee, Abernethy is planning to stay at the FDA after the administration changes. Gottlieb hired Abernethy and she was thought to be a potential commissioner-in-waiting.

The position closest to the description in the succession plan is deputy commissioner for food policy and response, which is currently filled by Frank Yiannas.

Deputy commissioner for Medical Products and Tobacco, another eliminated position, is listed in the succession plan as the second choice when the commissioner is absent or otherwise unable to perform their duties and the Vacancies Reform Act does not apply.

That is followed by the FDA chief of staff, which is currently filled by Keagan Lenihan. However, the position is considered a noncareer appointment, which means Lenihan can be removed at any time, such as because of a change in policy or loss of confidence, without a right to appeal.

After chief of staff is the deputy commissioner for operations and chief operating officer, which is currently filled by James Sigg.

The FDA invoked its succession plan when commissioner Robert Califf resigned at the end of the Obama administration. Then deputy commissioner for Foods and Veterinary Medicine Stephen Ostroff became acting commissioner until Gottlieb was confirmed.

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With US Senate Wins In Georgia, Democrats Gain Path For Rx Price Reform, But It May Be Lower Priority

BY CATHY KELLY Executive Summary Razor-thin majorities in both chambers of Congress mean Democrats can’t enact a bold agenda, and the pandemic and attendant recession mean that the initial legislative focus won’t be on Rx issues.

Jon Ossoff and Raphael Warnock have won their Senate runoff races in Georgia, and that means the pharma industry lose when it comes to drug pricing legislation – if Democrats can contain their infighting, resolve the pandemic, and restore the economy first.

With Joe Biden heading to the White House and Democrats controlling the US Senate as well as the House, the stage may set for reforms to the prescription drug pricing system in the US. But razor thin margins that Democrats have in both chambers suggests that legislation – if there is any at all – will likely be limited in scope.

The Senate Republican majority that has reliably protected biopharma from government price controls is gone, which is bound to make industry nervous. Although Republicans in Congress will probably revert to more traditional pro-pharma positions in the post-Trump era, they will no longer be in charge.

12 / January 2021

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But the economic recession caused by the pandemic has reordered policy priorities. Instead of drug pricing or health care more broadly, front burner issues will include another COVID relief package and Biden’s ambitious Build Back Better infrastructure plan.

There’s Still HR 3 To Reckon With The Democratic sweep raises the possibility that the Senate would take up HR 3, the draconian drug pricing bill championed by House Speaker Nancy Pelosi, D-CA, and passed by the full House in December 2019.

Health care issues may resurface with the Supreme Court’s decision on the future of the Affordable Care Act, expected in the spring. But it’s unclear when drug pricing reform will be taken up again in a major way.

Assuming that the diminished House majority could pass it again, the bill would set up a federal “negotiation” process requiring a drug’s price to be set between the lowest price in six high income countries and 120% of the average price across those countries. The resulting price would apply to Medicare and the private market. (Also see “House Price ‘Negotiation’ Plan: It Is Even Worse Than It Sounds” - Pink Sheet, 24 Sep, 2019.)

If and when it does become the drug industry’s turn in the spotlight, there are several legislative possibilities: • The Senate Finance bill, which had bipartisan support, although whether that is retained in the new Congress remains an open question.

Most worrisome for industry are the price inflation rebates that would be created for Medicare. (Also see “Medicare Could Save More than $80bn With Price Inflation Rebates – CBO Score of Senate Bill” - Pink Sheet, 17 Mar, 2020.)

• A redesign of Part D to cap out of pocket costs might also advance as a separate bill (it’s in the Finance bill too) but how much industry might have to pay for what has been one of its favorite talking points and is the major complication.

(Also see “Part D Redesign: MedPAC Finalizes Recommendations To Congress But COVID-19 Will Get In The Way” - Pink Sheet, 9 Apr, 2020.)

• Medicare Part B might see reforms that eschew international comparisons, which invite charges of socialist price controls, and instead revive the competitive acquisition program. CAP uses a third party vendor to negotiate prices and was implemented in 2006 but pulled in 2009 because there was too little participation by vendors or physicians.

As hard as some of those changes may be to swallow, they might actually be good for industry compared to the alternatives.

13 / January 2021

Up to 250 high-cost drugs without price competition would be targeted annually.

Companies that decline to negotiate or fail to reach a pricing agreement would be subject to an excise tax that starts at 65% of sales in the US and rises quickly to 95%. The bill would also establish price inflation rebates in Medicare.

The Congressional Budget Office estimated in a final score released in December 2019 that HR 3 would reduce federal spending by about $456bn over the 2020-2029 period, mainly in Medicare.

It would also lead to eight fewer drugs being developed during that time and 30 fewer drugs over the subsequent decade, CBO predicted.

In a preliminary version of the score issued in October 2019, CBO had projected the bill would result in a reduction in pharmaceutical industry revenues of $500bn to $1tn over 10 years. The final score omits the eye popping $1tn projection but biopharma will no doubt continue to quote that figure as it marshals opposition to the bill.

Will Biden Push Bill In More Moderate Direction?

President-elect Joe Biden endorses a number

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of the drug pricing policies that align with HR 3. They include removing the legal prohibition that prevents the Health and Human Services Department from negotiating drug prices in Medicare Part D, international reference pricing and price inflation penalties.

But assuming the country and world moves on from COVID-19 thanks to swiftly developed vaccines, industry’s innovation argument against the bill may carry more weight. And Biden could chart a more moderate course on drug pricing and work with Congress on less extreme measures than HR 3 in its current form.

For example, Biden recently signaled support for another approach to drug price negotiation that is based on an independent assessment of comparative effectiveness data, as is done in Germany. (Also see “Biden, Germany And Bringing A National Drug Pricing Negotiation Process To US” - Pink Sheet, 22 Oct, 2020.)

Launched in 2011, the German approach is based

14 / January 2021

on a centralized assessment of manufacturer dossiers and other information on new drugs, a determination of how much added benefit they offer, and negotiation on a national price.

The process is overseen by a legal public entity known as the Joint Federal Committee, which governs physicians, providers and health insurance funds in Germany. The committee contracts with the non-governmental Institute for Quality and Efficiency in Health Care, known as IQWiG, for the dossier review and then makes a determination of value based on IQWiG’s assessment.

If a drug is shown to offer added value, the national organization representing insurers negotiates with manufacturers on a price. If no value is demonstrated, the drug’s price is capped at what is being charged for comparable drugs.

The pharma industry believes that criteria for demonstrating value in the German system is too restrictive. But it may not look so bad compared to HR 3.

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US FDA Faces Succession Questions As Hahn’s Departure Nears

BY DERRICK GINGERY Executive Summary Plan specifying the acting head of FDA until new commissioner is confirmed references senior positions that no longer exist.

Commissioner Stephen Hahn plans to leave US Food and Drug Administration when President-Elect Joe Biden is inaugurated, but the choice of a temporary replacement is not clear – in part because agency succession plans are outdated.

As is tradition, political appointments offer their resignation when a new administration takes office. The incoming president can ask them to stay in their positions, but often they are let go.

Hahn is expected to be among the many Trump Administration agency heads and other officials that will depart. The agency confirmed that he plans to serve the remainder of his term, which will expire at 12:01 p.m. on 20 January.

But the FDA was not forthcoming on who will be Hahn’s replacement until a new commissioner is confirmed by the Senate. An agency

15 / January 2021

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spokesperson said there was no information to share and the Health and Human Services Department did not respond to questions about Hahn’s replacement.

at the top of FDA would be concerning, especially as the agency continues juggling its response to the coronavirus pandemic with its many other regulatory duties.

The FDA’s succession plan also does not appear to offer much help. The agency Staff Manual Guide states that when a commissioner leaves office as described in the Vacancies Reform Act and the president does not appoint someone, the Deputy Commissioner for Foods and Veterinary Medicine becomes the acting commissioner.

Abernethy, Other FDA Officials Could Take Over Several career and other senior leaders at the agency could take charge at the FDA until a commissioner nominated and confirmed.

Currently there is no one at the agency with that title. The Staff Manual Guide was last updated in 2016 and the agency senior leadership has been reorganized since then.

Former Commissioner Scott Gottlieb eliminated the deputy commissioner for foods and veterinary medicine and other directorate layer positions just before his departure in 2019. (Also see “US FDA Reorg: Defining The “Central” Purpose Of A Commissioner” - Pink Sheet, 22 Mar, 2019.)

The White House avoided the succession planning problem when Gottlieb left, naming National Cancer Institute Director Norman Sharpless as acting commissioner. (Also see “Sharpless Calls For A Nimble, Flexible, More Efficient US FDA” Pink Sheet, 2 May, 2019.)

Biden also could appoint a temporary commissioner upon taking office. A similar approach was used at the beginning of the Obama administration, when Josh Sharfstein was tapped to be principal deputy commissioner and acting head of the agency while Margaret Hamburg awaited confirmation. (Also see “Hamburg, Sharfstein Appointments To FDA Shift Focus To Future Plans Of Career Officials” - Pink Sheet, 14 Mar, 2009.)

Whatever approach is used, extended uncertainty

16 / January 2021

The agency’s second in command, Principal Deputy Commissioner Amy Abernethy, may be the most obvious choice to take over. As a career employee, Abernethy is planning to stay at the FDA after the administration changes. Gottlieb hired Abernethy and she was thought to be a potential commissioner-in-waiting. (Also see “Commissioner Succession Plan? Abernethy As Gottlieb’s Number Two Offers One Option” - Pink Sheet, 17 Dec, 2018.)

The position closest to the description in the succession plan is deputy commissioner for food policy and response, which is currently filled by Frank Yiannas.

Deputy Commissioner for Medical Products and Tobacco, another eliminated position, is listed in the succession plan as the second choice when the commissioner is absent or otherwise unable to perform their duties and the Vacancies Reform Act does not apply.

That is followed by the FDA Chief of Staff, which is currently filled by Keagan Lenihan. However, the position is considered a noncareer appointment, which means Lenihan can be removed at any time, such as because of a change in policy or loss of confidence, without a right to appeal.

After chief of staff is the deputy commissioner for operations and chief operating officer, which is currently filled by James Sigg.

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The FDA invoked its succession plan when Commissioner Robert Califf resigned at the end of the Obama Administration. Then Deputy Commissioner for Foods and Veterinary Medicine Stephen Ostroff became acting commissioner until Gottlieb was confirmed. (Also see “US FDA Might Be Temporarily Headed By Ostroff As Califf Sets His Departure” - Pink Sheet, 5 Jan, 2017.)

Woodcock Gains Another Title At FDA Janet Woodcock also has a new role at the FDA, in addition to her ongoing detail to Operation Warp Speed.

Hahn recently named Woodcock principal medical advisor to the commissioner. The agency said Woodcock will work with Deputy Commissioner for Medical and Scientific Affairs Anand Shah “to advance the FDA’s COVID-19 Pandemic Recovery Preparedness Plan.”

Woodcock also will retain her role at Operation Warp Speed, where she is in charge of coronavirus therapeutic development. As is the case with her OWS duties, Woodcock also will be “recused from participating in any regulatory decisionmaking regarding specific COVID-19 therapeutics, including decision-making about therapeutics within the FDA’s Coronavirus Treatment Acceleration Program.”

17 / January 2021

Patrizia Cavazzoni remains acting Center for Drug Evaluation and Research Director, but the agency spokesperson said there was no additional information to share on whether or when Woodcock would return as CDER director.

Upon taking the OWS position in May 2020, Woodcock temporarily moved to the FDA Commissioner’s office to ensure her attention was focused on that role. Cavazzoni was named acting CDER director at that time.

In an interview during the December 2020 FDACMS Summit, Cavazzoni said Woodcock’s return to CDER will depend on how her work at OWS progresses and when she can move out of the role. Cavazzoni said she chats with Woodcock on occasion, although discussion topics are limited.

Center for Biologics Evaluation and Research Director Peter Marks also was given an OWS position overseeing vaccine development, but he quickly returned to CBER to focus on the assessment of vaccine applications and avoid perceived conflicts of interest. (Also see “COVID-19 Staff Shakeup: Woodcock Moves to Commissioner’s Office As Marks Drops Out Of ‘Warp’” - Pink Sheet, 22 May, 2020.)

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Medicare Payment Model Experimentation Under Biden Administration ‘Pretty Wide Open’

BY CATHY KELLY Executive Summary Former CMS acting administrator Andy Slavitt says agency’s direction during Biden administration depends on nominee, but trust fund’s looming insolvency will be ‘an issue you can’t avoid.’ The president’s priorities around health equity, racial justice and mental health will make their way into CMS policy and demonstration models, Slavitt suggests.

18 / January 2021

President-elect Joe Biden’s selections to head the Centers for Medicare and Medicaid Services and CMS’ Center for Medicare and Medicaid Innovation may have fairly wide latitude in selecting what Medicare payment demonstrations to advance, according to former CMS Acting Administrator Andy Slavitt.

“The White House will have a set of policy views and whatever they don’t have specific views on, those are the things that are left up to the department and the agency people,” Slavitt told the J.P. Morgan annual health care conference on 12 January. He is now general partner with the venture capital firm Town Hall Ventures.

“It’s not clear whether or not there will be particularly strong views emanating from Biden himself about bundled payments and so forth,” he pointed out. “What that implies to me is that we should watch closely who gets picked to run CMS, who gets picked to run

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CMMI because if I’m correct, they will have a little more latitude in what actually the programs are.”

the agency and hopefully has some experience with the agency.”

Slavitt said “there is no question” that the new Administration will be “supportive” of CMMI. Because of the narrow margins in the House and Senate, Biden is expected to rely on administrative and regulatory actions to advance his health care agenda, and demonstrations testing new payment models under the auspices of CMMI are a likely forum. (Also see “Biden’s Drug Pricing Administrative Actions Could Focus On Medicare Demos” - Pink Sheet, 23 Sep, 2020.)

His co-panelist Cindy Mann, a former CMS deputy administrator and director of the Center for Medicaid, added that “traditionally, the CMS administrator has been Medicare focused but that was not necessarily the case with the Trump Administration, where the CMS administrator [Seems Verma] was very Medicaid focused.” Mann is now a partner with Manatt Health.

But as to what models his Administration will pursue, the CMS and CMMI leadership, “if they’re doing it right, will do a bit of a listening tour and prioritization,” Slavitt predicted. Potentially, Biden’s priorities around health equity, racial justice and mental health may make their way into health care policies and different models, he suggested. Those “are areas I might look for. But it’s pretty wide open.”

CMS Administrator Nominee Unlikely To Bring ‘Major Agenda’ Biden’s selection of a new CMS administrator will probably come after the commissioner of the Food and Drug Administration is selected, he predicted. There is a “handful” of people being considered, Slavitt said, adding “there is no shortage of good choices.” There are “more health care [experts] on the Democratic side than you can possibly imagine. It’s almost like wading through the J.P. Morgan crowd in San Francisco.”

During a policy discussion hosted by national insurer Centene in mid-December, Slavitt suggested the CMS nominee will probably not be “someone who brings a major agenda. “I suspect it will be someone who brings a real love for these programs and the ability to run those programs and someone who’s smart and knows how to run

19 / January 2021

Nevertheless, “the two things that are going to be important right off the bat is whether they can be effective in helping on the COVID response,” she pointed out. “Everything at least in the short term is going to be COVID, COVID, COVID. The other thing [the Biden team] is really focused on is racial equity issues, so whether it’s a person of color running [CMS] or someone who is going to be sensitive to the issues of disparities will be high on their list.”

Medicare Parts B and D Price Reforms Slavitt acknowledged that Biden will be left with two Trump-era drug pricing reform policies in Medicare – the “most favored nation” international reference pricing demonstration in Part B, and the rebate reform rule, which aims to lower drug prices in Medicare Part D. Drug pricing reforms in Parts B and D “will happen eventually,” Slavitt predicted. “Whether it happens now is hard to know.”

He also pointed out that the Medicare Trust Fund is projected to become insolvent in 2024, in part due to lost tax revenues as a result of the pandemic. “That’s an issue you can’t avoid,” he said. “If you have the Medicare Trust Fund expiring in your term, you’re going to have to do something.” But “whether they can do something without Congress or whether they need Congress will be interesting.”

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Still, Biden is not coming to office with broad health care reform as a major priority, Slavitt emphasized. “For the first time in three presidencies we have someone who is not going to make major health care transformation a part of his goals.”

“Even if he had 58 votes in the Senate, heath care can suck the oxygen out of the first two years of any administration and Joe Biden has decided

20 / January 2021

that’s not where he’s going to spend his chips in Congress….He ran on being a unifier. He did not run on creating difficult, lightening rod issues, which [health care coverage expansion] has been for the last two presidents.”

As far as the Affordable Care Act goes, Biden will “try to build back some of the things that help gird the ACA that Trump reversed,” mainly through administrative action, Slavitt suggested.

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Biden Regulatory Freeze May Pause Sunset Rule, Medicare Rebate, Medicaid Line Extension Regs

BY CATHY KELLY Executive Summary Tactic aims to allow incoming Administration to scrutinize so-called ‘midnight rules’ issued in the final days of the Trump Administration before they take effect. Regulators may also solicit stakeholder comments on delayed rules.

The incoming Biden Administration is following tradition by announcing a regulatory freeze on Inauguration Day to pause action on recent Trump Administration regulations in order to consider withdrawing or revising them.

White House Chief of Staff Ron Klain sent a regulatory freeze memo to the heads of executive departments and agencies on 20 January requesting that they “consider” suspending action on any new regulations that the Trump Administration tried to finalize in its last days and confer with the director of the Office of Management and Budget before renewing any regulatory activity.

This action will allow the Biden Administration to prevent any detrimental so-called ‘midnight regulations’ from taking effect, while ensuring that urgent measures in the public’s interest can proceed.

21 / January 2021

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The tactic impacts rules that have been sent to the Federal Register but are not yet published and rules that have published but are not yet in effect.

Those not yet published will be immediately withdrawn and the effective date of ones that have published will be delayed for 60 days.

During the period of delay, Klain suggests departments and agencies also “consider opening a 30-day comment period to allow interested parties to provide comments about issues of fact, law, and policy raised by those rules, and consider pending petitions for reconsideration involving such rules.” As appropriate and where necessary, “consider further delaying … such rules beyond the 60-day period,” the memo adds.

Important rules issued by the Health and Human Services Department and its agencies that will be affected by the freeze includes the HHS Sunset (Securing Updated and Necessary Statutory Evaluations Timely) rule. Opposed by biopharma, the rule requires that regulations be regularly assessed to determine whether they remain relevant and need updating. It was published in the Federal Register 19 January and is scheduled to go into effect 22 March.

Under the rule, all new regulations will expire 10 years after they are issued and after every subsequent 10 years unless they are reviewed. All regulations already in effect longer than 10 years will expire five years after the retrospective review rule takes effect if not reviewed and retained.

(Also see “Some Long-Standing FDA Regs Face Mandatory Review Or Rescission Under New HHS Rule” - Pink Sheet, 8 Jan, 2021.)

Critics have argued it would overburden HHS and create regulatory uncertainty for regulated industry. It could affect regulations governing the toll-free number for reporting adverse events on human drug product labeling, as well as requirements for foreign and domestic facility

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registration and listing for human drugs, biologics and animal drugs.

Another potential reg that could impact FDA is a rule announced on 15 January that would subject policy directors in HHS agencies to five-year terms.

Among others, FDA center directors, CDC center directors, and CMS deputy directors would have an automatic review every five years, and while they couldn’t be fired, they could be reassigned at the discretion of the HHS Secretary. The rule has not been published, and may never be if the Biden administration decides it could hurt agency performance.

A rule designed to reform the rebate system in Medicare Part D is also expected to be subject to the freeze. Promulgated by the HHS Office of Inspector General, the controversial rule is supported by biopharma but had a rocky path to release because it was opposed by some in the Trump White House as potentially too costly for the Medicare program and beneficiaries.

The final rule was pulled from the regulatory queue in July of 2019 prior to release and then was issued on 30 November in a last-minute flurry of drug pricing actions. (Also see “Medicare Part D Drug Rebate Rule Finally Sees Light Of Day: Now What?” - Pink Sheet, 22 Nov, 2020.)

The rule would eliminate the current anti-kickback safe harbor for prescription drug rebates and create two new safe harbors protecting pointof-sale reductions in drug prices and certain PBM service fees. The change to the definition of the safe harbor for discounts has an effective date of 1 January 2022 and the rest of the rule is scheduled to be effective 29 January 2021.

If the rule is not withdrawn by the Biden Administration it might be invalidated, or at least delayed, in court. The Pharmaceutical Care Management Association, which represents

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pharmacy benefit managers, filed a lawsuit in federal district court 12 January seeking to overturn the rule because, the group says, it was released in violation of the Administrative Procedures Act. The rule also could be rescinded

by Congress.

Medicaid Price Inflation Rebates For Line Extensions The broad Medicaid final rule establishing a process for reporting multiple ‘best prices’ as a way to support value-based contracting, among several other provisions, will also likely be subject to the freeze. Published on 31 December, the final rule pushes the effective date of the new definition of best price until 1 January 2022 to allow for additional guidance to be developed on several lingering questions. (Also see “Value-Based Contracting: CMS Final Rule Leaves ‘Multiple Best Price’ Questioned Unresolved” - Pink Sheet, 4 Jan, 2021.) The rest of the rule is scheduled to go into effect on 1 March.

The rule also addresses changes to Medicaid rebate rules for line extensions, which could have a much more significant impact on manufacturers than the value-based contract provisions because it identifies what types of products will become subject to price inflation rebates in the program.

(Also see “New Combo Products Exempt From

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Medicaid Rule Applying Price Inflation Rebates To Line Extensions” - Pink Sheet, 4 Jan, 2021.)

In addition, the rule would require manufacturers to exclude copay assistance amounts provided in commercial insurance when reporting best prices for Medicaid unless they have ensured the full value of the assistance is passed on to the consumer. The effective date of that change is 1 January 2023.

A final rule directing federally qualified health center participating in the 340B program to pass through discounts received on EpiPens and insulin to consumers at the point of sale could be subject to review as well. The rule, which carries out an Executive Order by former President Trump, was published on 23 December and is scheduled to go into effect on 22 January.

And a final rule on policy and technical changes in Medicare that allows Part D plans to establish preferred and non-preferred formulary tiers for specialty drugs, among other changes, may also be paused. The rule was published in the Federal Register 19 January and is scheduled to become effective on 22 March. (Also see “Two-Tier Specialty Drug Policy: Part D Plans Gain Formulary Flexibility But Impact May Be Limited” - Pink Sheet, 20 Jan, 2021.)

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HHS ‘Midnight Rules’ Likely Subject To Regulatory Freeze List includes important rules that were published before the Trump Administration left but have not yet become effective.

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