Regulatory Editor

Opening the yearly U.S. spending face-off, President Donald Trump Monday presented Congress with his proposed fiscal 2020 budget, which calls for a 12 percent cut in spending at the Department of Health and Human Services (HHS).

Like the administration's 2019 budget proposal, the 2020 budget calls for an increase at the FDA while making deep cuts at other agencies, including the NIH. The $87.1 billion HHS proposal includes total funding of $6.1 billion for the FDA – up more than 7.5 percent from the $5.67 billion Congress appropriated for the agency in tax dollars and user fees for fiscal 2019. (See BioWorld MedTech, Feb. 13, 2018.)

The 2020 funding includes $55 million to strengthen the FDA's response to the opioid crisis, $55 million to advance digital technology, $13.5 million to ensure that compounded drugs are safe and effective, and $20 million for a pilot program to develop and test technology that could detect pathogens in the blood supply.

Some HHS programs that fund R&D for medical countermeasures also would see a bump in funding under the president's plan. The Strategic National Stockpile, for instance, would see a $10 million hike to enhance medical preparedness for chemical, biological, radiological and nuclear threats, according to the administration budget documents released Monday.

The budget would continue to fund several activities to protect against infectious diseases and calls for a $10 million increase for the CDC's influenza efforts, including support for vaccine effectiveness studies, the expansion of the production capacity of cell-grown vaccine candidates and the modernization of influenza vaccines.

The proposal also doubles, to $100 million, the funding for the CDC's global health security activities that are part of a multiyear global initiative to reduce infectious disease threats by strengthening the capacity of other countries to contain outbreaks at their source.

The NIH, on the other hand, would see nearly a 16 percent reduction in funding from its current historic high of $39.1 billion – if the administration gets its way, which isn't likely. The president's budget proposes $33 billion for the research institutes in fiscal 2020. That's 5 percent less than the president's 2019 ask of $34.8 billion and 11 percent less than what the NIH received in fiscal 2018. (See BioWorld MedTech, April 12, 2018.)

Some of the NIH budget would be dedicated to the R&D of new treatments for childhood cancer. In addition to research, the administration would allocate a portion of the $33 billion to address a backlog of repairs and improvements at NIH facilities.

On the opioid front, the budget maintains ongoing funding for state grants and for activities at several agencies, including more than $1 billion for NIH research on opioids and pain management and $58 million for the CDC to address the infectious disease consequences of the epidemic. It also requests an additional $4 million to increase the number of providers able to prescribe medication-assisted treatment for addiction.

Policy proposals

The budget isn't just about money, though. It includes several health care policy proposals and initiatives, many of which are aimed at lowering costs and improving access to treatments and care. One of those is the multiyear End the HIV Epidemic Initiative, which seeks to reduce new HIV infections in the U.S. by 75 percent within five years and by 90 percent within a decade.

Of the $291 million proposed for the initiative, the CDC would receive $140 million to work with state and local health departments on intensive HIV testing and care referrals in areas where the majority of new infections occur. The Health Resources and Services Administration would receive $120 million to deliver additional care and treatment for people living with HIV through the Ryan White HIV/AIDS Program and to supply testing, evaluation and prophylactic prescriptions for people at risk for HIV infections. The budget also would prioritize reauthorization of the Ryan White program and leverage the NIH's regional Centers for AIDS Research to refine strategies to assure the effectiveness of HIV prevention and treatment.

To increase access to innovative new medical technology, the budget includes administrative actions and a legislative proposal. Together, they are intended to instill greater transparency and consistency in how Medicare covers and pays for innovative technology. One suggestion calls for testing of new ways of covering and paying for certain devices.

Another proposal could provide help for Medicare beneficiaries with diabetes by expanding coverage of disposable devices that substitute for a durable device used in the management and treatment of diabetes. At last week's Senate Special Committee on Aging hearing on drug prices, Michelle Dehetre, a Lewiston, Maine, mother and grandmother living with type 1 diabetes, testified that she couldn't afford to use an insulin pump, even though it gave her better control over her blood sugar levels, because the supplies needed to use the pump are covered as durable medical equipment. (See BioWorld MedTech, March 7, 2019.)

Lowering drug prices

In keeping with the administration's blueprint on lowering drug prices, the 2020 budget proposes several strategies aimed at increasing competition, encouraging better price negotiation, incentivizing lower list prices and reducing out-of-pocket (OOP) costs for Medicare beneficiaries.

At the top of the list is a three-part proposal to modernize Part D by giving plan sponsors more incentives to manage benefits, providing beneficiaries better protection against catastrophic costs and encouraging the use of lower-cost drug alternatives. The proposal would eliminate cost-sharing on generic drugs and biosimilars for low-income beneficiaries, exclude manufacturer discounts from the calculation of beneficiary OOP costs in the coverage gap and set a cap on OOP costs in the catastrophic phase.

Next on the list is modifying Part B coverage for drugs administered by a provider. Steps under this proposal include:

  • moving certain Part B drugs to the Part D program;
  • requiring all drug manufacturers to report average sales price data for Part B drugs and giving HHS the authority to apply civil monetary penalties to manufacturers who don't report the data;
  • establishing an inflation limit for the reimbursement of Part B drugs;
  • reducing the wholesale acquisition cost add-on payment from 6 percent to 3 percent;
  • modifying the payment for drugs hospitals purchase through the 340B discount program and requiring a minimum level of charity care for hospitals to receive a payment adjustment related to uncompensated care;
  • requiring all 340B entities to report how they use their savings;
  • eliminating the pass-through payments for drugs, biologics and biosimilars;
  • reducing the average sales price-based payments when a drug's primary patent expires to increase competition and reduce gaming.

Other budget proposals to contain drug costs include eliminating the Medicaid rebate cap, spurring generics competition by removing loopholes that allow a manufacturer that has been awarded 180-day exclusivity for being the first generic to file to indefinitely "park" its application, granting new chemical entity exclusivity only to drugs that are truly innovative, giving the FDA more authority to address abuse of the petition process and encouraging biosimilar development.

To start the conversation on the president's proposal, HHS Secretary Alex Azar will be testifying before three congressional committees this week.

Delayed a month by the five-week partial government shutdown, the administration's total spending plan is aimed at reducing federal deficits by more than $2.7 trillion over 10 years and balancing the budget by 2034. Although it likely will meet with a prompt congressional checkmate, as have Trump's previous budget plans, the 2020 proposal is the opening play of the funding process. While much of the budget will be a nonstarter in the divided Congress, some of its policy provisions could survive, or be strengthened by, the debate.

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