Full steam ahead for Obamacare, but gridlock isn't going anywhere

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Full steam ahead for Obamacare, but gridlock isn't going anywhere
Full steam ahead for Obamacare, but gridlock isn't going anywhere
In securing reelection, President Obama also cemented his greatest legislative achievement, the Affordable Care Act – the main part of which is slated to go take effect little over a year from now.
 
How that happens and the exact shape of the law have yet to be determined, as do other matters of import to pharmas in Washington, and with the balance of power pretty much as it was before the election, gridlock is sure to continue. Some outstanding questions:
 
1.)    Will the “Sequester” decimate FDA funding? Last year's standoff between the White House and Congressional Republicans over the “debt ceiling” was resolved, in classic Washington fashion, by kicking the can down the road a bit, but with a twist – if the two sides couldn't agree on painful cost-savings by January 2, a legislative “trigger” would be tripped prompting brutally deep cuts (of $1.2 trillion over nine years) to both defense and social spending. Medicare is largely exempted from the cuts – limited to 2% of its budget – and Medicaid and CHIP are completely off-limits. FDA, however, would be fair game and would face deep cuts – projected at $318 million -- that would slow approvals and rules-making, according to the Office of Management and Budget, and effectively freeze PDUFA. NIH would lose a whopping $2.5 billion and the CDC $490 million, according to White House estimates. That's if Congress and the President, by virtue of inaction, pull the trigger – a scenario that could push the country back into recession, and which many Washingtonians think exceedingly unlikely. The President said in the second debate last month that the sequester “Will not happen.” However, going by the past couple years'-worth of gridlock, we wouldn't be too sure of that, and the two sides have mere weeks to come to a consensus.
2.)    Will states continue to sit out the ACA's Medicaid expansion? The answer to that question will determine how much pharmas stand to benefit from a bump in drug sales, as the Medicaid expansion accounts for fully half of the projected rise in the number of insured people. The deal offered by the feds is a pretty sweet one – to start with, at least, as massive federal subsidies for the expansion would decline over time, leaving states to carry more of the burden of covering more of their poor through the program. That's the argument conservative governors – including Florida's Rick Scott and Texas' Rick Perry -- have made in opposing it, and the Supreme Court's decision that the administration couldn't mandate such an expansion freed them up to keep on doing so. However, with the election over, so is much of the political incentive to block it, and hospitals, a powerful lobby in many states that would stand to gain greatly from Medicaid expansion, are pushing hard for it.
3.)    How will IPAB cut spending, and who will sit on it? More than nudging the country towards insurance universality, the guts of the ACA are comprised largely of deeply wonky schemes to try and “bend the curve” of healthcare spending. And then there's the Independent Payment Advisory Board, a scheme with teeth. Nobody's sure exactly how this broadly-drawn entity will operate, but the 15-member board -- for which members must be nominated by the President, in consultation with both parties' Congressional leaders, and approved by the Senate -- will have the power to impose spending cuts on Medicare when the program's spending outpaces projected growth and when Congress fails to pass cuts to offset those increases. Initial cuts will fall on doctors and pharmas, with hospitals and hospices coming in for cuts later on. Critics fear it will evolve into a federal formulary-setting body like the UK's NICE, restricting access to drugs deemed more costly than they're worth (fun fact: Sarah Palin called it “Death Panel-like). The legislation contains language specifically prohibiting the board from rationing care or limiting benefits, but opponents argue it will result in de facto rationing.  Republicans are fiercely opposed, along with enough Democrats that repeal is a real possibility, say some Congress-watchers. The board is scheduled to issue its first report in January, 2014, so nominations should be forthcoming soon.
4.)    How will CMS reset perverse incentives for provision of medical services? One of the main goals of the ACA as to shift the US healthcare system away from an incentive structure that rewards quantity – of diagnostic tests and procedures and products, via reimbursement – and towards one that rewards quality, of health outcomes, patient feedback, etc. One way to do that could be through a UK-style comparative effectiveness regime of the sort that industry advocates feared PCORI (the Patient Centered Outcomes Research Institute) would become (early indications are that PCORI will be operating at a much more macro level than ‘Prescribe this, not this'). Another might be a risk-sharing scheme (AKA “Expanded Access”) in which pharmas and federal programs establish a measure of success for a therapy and companies reimburse the government when their products fail to meet that standard. In other words, will we measure for clinical effectiveness or for cost-effectiveness? 
5.)    What will the particulars of the Physician Payment Sunshine Act legislation that got rolled into the ACA look like? The Centers for Medicare and Medicaid Services blew past its initial October 2011 deadline to issue guidelines on data collection, having bigger fish to fry – like setting up Obamacare's health exchanges. CMS then pushed back the start date for mandatory data collection to January, 2013. A final rule is expected by the end of the year, but nothing says CMS couldn't hit snooze again. The big question is preemption – will the ACA trump state laws, and if so, will it favor the more lax or the more draconian among them? Also, will the law require health insurers (including government) to report payments to physicians for things like academic detailing and switching patients to generics?
6.)    Will Democrats get anywhere in their efforts to limit biologics exclusivity to seven years? The White House dearly wanted biologics exclusivity limited to seven years. The Administration got rolled by biopharmas, which succeeded in getting it set at 12 years, but the White House never stopped pushing to dial it back. With a fiscal reckoning fast approaching, everything is on the table, and the biopharma lobbies will be playing some serious defense.
7.)    How about that non-interference clause?  Vice President Biden, in his debate with Rep. Paul Ryan, suggested he wouldn't mind another bite at a provision in the Medicare Part D prescription drug benefit law explicitly prohibiting the government from butting into negotiations between companies and private plans that administer the benefit. “If they allow Medicare to bargain for the cost of drugs like Medicaid can, that would save $156 billion right off the bat,” said Biden, whose party's left flank has tried and failed repeatedly to dislodge the clause. Given solid Republican control of the House, it seems unlikely that they might succeed now, but again, everything is on the table, and the politics of prescription drug prices are ever tricky.
8.)    Peggy Hamburg: will she stay or will she go? FDA is part of Washington's permanent bureaucracy. It doesn't change that much based on the party in power. But agency leadership can determine how well FDA functions and how it fares in its dealings with Congress. Hamburg has hit her stride as FDA commissioner, and it's a steep learning curve. Ditto for HHS Secretary Kathleen Sebelius.
9.)    Will the health insurance exchanges work? Many state governments put off figuring out how they might run their own exchanges – basically statewide insurance marketplaces designed to promote price transparency and make it easier for consumers to choose a plan -- in hopes that Congress or the Supreme Court or President Romney would void the law before they came online in 2014. Now the deadline for those slacker states to make a decision has arrived, and it seems sure that some will opt to let the feds run exchanges for their states instead. But if CMS can't issue Sunshine guidelines, can it handle the onerous task of setting up a couple dozen exchanges?
10.)    Will Congress and the White House curb the use of data collected online for marketing purposes? Senate Commerce Committee chairman Jay Rockefeller (D-WV) has been an avid proponent of explicit limits and opt-out rules, and his “Do Not Track” bill would impose some sharp restrictions on online marketing.

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