President-elect Donald Trump has offered two nominees for positions in his administration, naming Rep. Tom Price (R-Georgia) as the nominee for Secretary of Health and Human Services. Price's support of a repeal of the medical device tax is a matter of record, but there is little to indicate whether Price is on board with Trump's stated willingness to require that Medicare negotiate prices with drug makers.
For the CMS administrator's post, Trump nominated Seema Verma, president and founder of SVC Inc., a health care consultancy in Indianapolis. According to the SVC website, Verma has consulted with several states to overhaul Medicaid programs, including Indiana, the home state of vice president-elect Mike Pence. Verma's work on Indiana's Healthy Indiana Plan commenced while Mitch Daniels still occupied the governor's mansion, but she also advised on an updated version of the plan during Pence's soon-to-end term as governor. There is little available information to indicate how Verma might manage the Medicare program, however.
Price's confirmation process is sure to generate the greater amount of fireworks in Senate confirmation hearings, given his advocacy of repeal of the Affordable Care Act, but it may be of interest to note that any problems with Verma's nomination might be managed by naming her or someone else as the acting CMS administrator, which has frequently been the practice in the years since Tom Scully stepped down from the job in 2003.
Price, formerly a practicing orthopedist, was the author of the Empowering Patients First Act of 2015, which would have repealed the Affordable Care Act (ACA) and replaced it with a program that offered refundable tax credits for health insurance coverage. The bill would also have provided states with grants for high-risk pools and reinsurance pools, and would have banned the use of comparative effectiveness research to deny coverage of a drug or device.
Perhaps of greater interest to industry is that Price blasted the medical device tax and has voted to repeal the tax. Price was one of several members of the House of Representatives who penned a letter to the Centers for Medicare & Medicaid Services urging the agency to suspend the pilot program for Medicare Part B drugs that would reduce physician payment for drugs from the average sales price plus six percent to the average sales price plus 2.5 percent, topped off with a flat fee of slightly less than $17.
On the other hand, President-elect Trump has said that he favors direct price negotiations between CMS and drugmakers, an issue about which Price has said little.
Paul Ginsburg, director of the Center for Health Policy at the Brookings Institution, told Medical Device Daily, "everybody's waiting to see what the current CMS administrator will do" with the proposed Part B drug pilot. He said he sees little reason to believe that opposition to the pilot necessarily translates into opposition to Medicare price negotiations with drug makers. Nonetheless, Ginsburg remarked that providers believe drug prices are too high and would support legislation to reduce those prices.
"I don't see a policy initiative coming in 2017 – if ever – from the Trump administration" on drug price negotiations, Ginsburg said. He commented that the repeal-and-replace question will command a lot of attention in 2017 and that Trump gave voice to a number of policy issues during the campaign. Such negotiations were "a long shot anyway. I don't see them getting to it quickly, if at all," Ginsburg shrugged.
Regarding Verna as the CMS administrator, Ginsburg said, "I would think Medicaid reform will be very important in this administration," pointing out that any loss of the expanded Medicaid rolls means the loss of coverage for many people of middling health in their 50s, which generate substantial demand for health care products.
"I think the position of the [health] insurance industry is they would like the ACA to continue," Ginsburg said, stating that insurers "would be willing to work under a Republican plan in theory." He said that any substantial delay in replacing a repealed ACA "is likely to lead to many of [insurers] dropping out" of the exchanges.
Alice Rivlin, who co-chairs the deficit reduction task force at the Bipartisan Policy Center, said the device tax is not necessarily dead even in a repeal-and-replace scenario. She acknowledged that the ACA's projected impact on the demand for devices was perhaps optimistic, but added that whether the device tax would still be in play "depends on what the replacement plan is. If you are subsidizing people to buy insurance ... you still have an argument for a device tax."
Rivlin told Medical Device Daily that Verma is "clearly a Pence pick, and must also be acceptable to Price" or Trump would not have nominated her. Rivlin said the selection of Verma sends a signal to Capitol Hill that the incoming administration has picked, "an experienced person who knows the Medicaid law and is an experienced health administrator."
Rivlin added, however, that these two nominees both demonstrate a strong conservative bent. "The encouraging thing is you have two people who know a lot about health care," Rivlin mused, although she added that Senate Democrats "see two people who are very state-oriented," which is not a popular point of orientation among Democrats generally.
Rivlin noted that Trump had said "he didn't want a hiatus between repeal and replace," and thus there is little concern that a repeal would not be quickly followed by replacement legislation. However, Rivlin indicated a preference for repeal of the entire ACA in one sweep, rather than breaking the task up between routine legislative procedures requiring 60 votes and simple majority votes based on budget reconciliation rules.
"I've come around to the view that using reconciliation to repeal the parts you don't like is a recipe for disaster," Rivlin said, stating, "they have to figure out how they're going to replace this law at the same time they repeal it."
Rivlin also noted that full Republican support for repeal of the ACA might not be automatic. "Many Republican senators also come from states that did expand Medicaid," she said, observing that Senators and member of the House from these states "aren't going to want to see their state lose all that money."