House Republicans and life sciences issues to watch in the 118th Congress
House Republicans have assumed their majority in the 118th Congress after a contentious speakership battle to start the year. Their expected focus on oversight of the Biden Administration and Speaker Kevin McCarthy’s (R-CA) razor-thin majority could present challenges for the life science industry. Here are a few items to watch:
A transition away from emergency operations
The Biden Administration has announced its intent to end both the COVID-19 public health emergency (PHE) and related national emergency on May 11, 2023. House Republicans have pushed hard for this move in recent months and recently celebrated House passage of legislation that will end both the PHE and National Emergency upon enactment. Though we do not expect the Democratic Senate majority to take up this legislation, these measures demonstrate a common desire among Republican members to accelerate a return to pre-pandemic federal operations.
House Republicans will be watching closely as the Administration unwinds a web of temporary pandemic policies, among them an end to federally funded COVID-19 vaccines for many Americans and a 20 percent cut to Medicare reimbursement rates hospitals receive for treating COVID patients. The Drug Enforcement Administration (DEA) has proposed to reinstate the pre-pandemic requirement that some controlled substances be prescribed only by in-person physician visits, rather than via telemedicine. Though DEA’s proposal would allow initial prescriptions of certain controlled substances, like buprenorphine, via telemedicine, the proposal has elicited frustration from bipartisan members of Congress and several stakeholder groups who had petitioned the agency for a more fulsome extension of flexibilities.
The loss of supplemental federal funding that kept millions of Americans on Medicaid rolls during the pandemic is also quickly approaching. Once linked to the PHE, Congress chose to decouple the “continuous coverage requirement” in December 2022, designating an April 1, 2023 date after which states can “redetermine” and drop individuals who may no longer qualify for the program. 25 Republican governors petitioned President Joe Biden to end the PHE in April, citing the cost to their Medicaid programs of continuing coverage. Cost-conscious House Republicans opposed to Medicaid expansion could seek to ensure states’ discretion here.
On a related note, Congress will consider the reauthorization of the Pandemics and All-Hazards Preparedness Act (PAHPA), which will expire October 1, 2023.
This 2006 legislation authorized much of the federal government’s public health preparedness and response posture. This includes establishing the Department of Health and Human Services (HHS) Office of the Assistant Secretary for Preparedness and Response (ASPR, now known as the Administration for Strategic Preparedness and Response) and, within it, the Biomedical Advanced Research and Development Agency (BARDA). Subsequent reauthorizations in 2013 (the Pandemic and All-Hazards Preparedness Reauthorization Act) and 2019 (the Pandemic and All-Hazards Preparedness and Advancing Innovation Act) enhanced federal coordination with hospitals and health professionals, augmented medical countermeasure research, development and procurement authorities, and enhanced regulatory review authorities, among other provisions.
Many Republican members have recently advocated for transparent review of enacted COVID-19 preparedness and response funding, rather than appropriating additional funds. Coupled with their intent to limit discretionary appropriations as discussed below, Republicans may prioritize programmatic efficiencies and improvements over increased funding during this year’s PAHPA negotiations.
The Senate Judiciary Committee recently reintroduced and passed out of committee five bills aimed at reforming the existing patent system for prescription drugs. These bills cover a variety of topics from coordination between the Food and Drug Administration and Federal Trade Commission (FTC or Commission), to FTC review of pharmacy benefit managers, to pay-for-delay agreements, to the use of citizen petitions, to limits on manufacturers of biologic drugs during the “patent dance” litigation process. All five bipartisan bills were passed by voice vote out of the Committee during the last Congress and have at least some Senate bipartisan support again in this Congress.
Responding to President Biden’s July 9, 2021 Executive Order on Promoting Competition in the American Economy, the US Patent and Trademark Office issued a request for comment on October 4, 2022 concerning proposals aimed at “bolstering the robustness and reliability of patents.” The questions posed by the agency were not focused on the drug industry per se, but comments received by the February 1, 2023 deadline indicate a notable opposition to the proposals among pharmaceutical manufacturers.
Traditionally sympathetic to industry concerns, House Republicans will likely be forced to engage on each front during the 118th Congress.
In a fiery op-ed published in the Wall Street Journal, FTC Commissioner Christine Wilson announced her resignation from the body. With Republican Commissioner Noah Phillips resigning last year, both Republican slots on the Commission are now vacant. In her announcement, Wilson blamed controversial Chairwoman Lina Khan’s “disregard for the rule of law and due process” and her use of “dishonesty and subterfuge to pursue her agenda.”
While the FTC’s focus has primarily been aimed at big tech, there are substantial implications for healthcare companies as well. Earlier this month, the FTC settled a fine with digital health company GoodRx for sharing consumers’ health data with advertisers. This was the FTC’s first fine issued under its Health Breach Notification Rule implemented in 2009, and FTC observers expect this rule to be utilized more often. The rule requires companies to report unauthorized disclosures of health information. For its part, GoodRx agreed to pay the fine without admitting wrongdoing. The FTC has already initiated an investigation into pharmacy benefit manager practices and has made clear that pharmaceutical companies are in the Commission’s sights as well.
By statute, neither party can have more than three seats on the five-member commission, so President Biden will need to appoint two Republicans to these vacancies. Given Republican reactions to the resignations of Commissioners Wilson and Phillips, the policies of Chairwoman Khan, and the expectation that the President will pick moderates to fill the Republican seats, we anticipate contentious confirmation battles.
Oversight, oversight, oversight
House Republicans, and particularly their newly empowered populist members, are likely to emphasize their oversight prerogative on virtually every committee to highlight key policy and political differences between the parties ahead of the 2024 elections. Pay particular attention to the Oversight and Accountability Select Subcommittee on the Coronavirus Pandemic, the Energy and Commerce Committee, and the Ways and Means Committee as they fill out their agendas.
On the Senate side. Senator Bernie Sanders is taking the HELP Committee chair; there, we can expect hearings and legislation targeting drug prices, perhaps extending beyond Medicare and into the private market. Senate and House Republicans, meanwhile, may attempt to repeal or amend the drug pricing provisions included in the Inflation Reduction Act.
In the meantime, pharmaceutical companies, in particular, should consider engaging with the Administration and Congress at each stage of implementation of the Medicare drug negotiation, inflationary rebate, and Medicare Part D redesign provisions of the Inflation Reduction Act.
Republican changes to the House rules, passed by the House on January 9, 2023 as H. Res. 5, and informal commitments made by Speaker McCarthy may add a new level of scrutiny for legislation during the 118th Congress.
Under H. Res. 5, House Republicans reinstituted a budgetary rule known as CUTGO. This requires any mandatory spending increases over a five- or 10-year budgetary period to be paid for only by equivalent cuts to mandatory spending, rather than the more flexible PAYGO rule that had allowed as offsets either cuts to mandatory spending or tax increases. The rules package also increases the threshold necessary to pass tax increases in the House to a three-fifths vote, rather than by simple majority. This may reduce options available to congressional negotiators seeking to make changes to Medicare, Medicaid, and other mandatory programs in a closely divided chamber.
Speaker McCarthy has informally committed to potentially steep cuts in discretionary spending, to consider each of the 12 appropriations bills separately, and to allow more open amendment of legislation on the floor.
Companies should evaluate their exposure to the substantive and procedural measures discussed above and consider taking steps to mitigate their impact through proactive, targeted advocacy.
To learn more about any of the topics discussed in this publication, please contact the authors.