With House Health Reform Passed, Will Senate be able to finish this year?

Last Saturday, November 7, the House passed its healthcare reform bill HR 3962, the Affordable Health Care for America Act, by a narrow margin of 220-215. Now as we look to next week -- will the Senate be able to build consensus to be able to pass their own bill before the end of the year? The House now holds an upper hand but many still believe that the Senate will in the end develop legislation most likely to build final consensus.

Some key highlights of the House Bill are provided below:

Public Option

• HHS would establish a public health insurance option as one of the available insurance plans in a national Health Insurance Exchange
• HHS would negotiate payment rates for health care items and services, including prescription drugs. Payment rates could not be lower, in the aggregate, than rates under Medicare

Medicare Part D

• The coverage gap (or Part D donut hole) would be phased out by 2019
• While the coverage gap exists, drug manufacturers would be required, as a condition of drug coverage under Part D, to pay a rebate equal to 50% of the negotiated price of the drug. The amount of the rebate would count toward the enrollee's TrOOP.
• Manufacturers would be required to enter into a separate agreement providing for payment to Medicare of rebates on Part D drugs dispensed to full-benefit dual eligibles
  HHS would have explicit authority to negotiate with drug manufacturers the prices, including discounts and rebates, that PDPs may be charged for drugs.

Medicaid Reimbursement and Rebates

• The FUL formula enacted in the DRA (but not yet implemented) would be replaced with a new formula. The new formula --130% of the weighted average of monthly AMPs of the drugs - would replace the DRA-enacted formula of 250% of the lowest AMP among the multiple source drugs
• The minimum rebate for innovator drugs would be increased from the current 15.1% to 23.1% of AMP. The current rebate for non-innovator drugs would remain unchanged at 11% of AMP.
• Medicaid rebates would be imposed on covered outpatient drugs dispensed to enrollees of HMOs, including Medicaid MCOs, unless the drug is subject to discounts under the 340B discount program

340B Drug Discount Program

• The program would be expanded to several additional covered entities, including, among others: free-standing cancer hospitals and children's hospitals that are excluded from Medicare's PPS and that meet disproportionate share requirements; critical access hospitals; community mental health clinics; Medicare-dependant small rural hospitals; sole community hospitals; and rural referral centers. The new covered entities would not be eligible for 340B pricing if they obtain covered outpatient drugs through a GPO. The final bill does not extend the 340B discounts to drugs purchased for inpatient use, a provision that was included in an earlier version of the bill

Biosimilars Pathway

• The bill creates a new pathway for the approval of applications for biological products shown to be biosimilar or interchangeable with a licensed reference product, including provisions to resolve patent disputes. The bill provides for up to 12.5 years of exclusivity (initial 12-year exclusivity period that may be extended by 6 months of pediatric exclusivity).

Excise Tax on Non-Retail Sales of Medical Devices

• A new excise tax equal to 2.5 % of the wholesale price would be imposed on medical device manufacturers for medical devices sold for use in the U.S.

Comparative Effectiveness Research

• A new Center for Comparative Effectiveness Research (CER) would be established within HHS to conduct, support and synthesize CER on health care items, services, and systems, including pharmaceuticals and medical devices.
• The Center would have access to data from any federal agency to conduct its research. An independent CER Commission would be established to recommend priorities, review research conducted by the Center and recommend methods of disseminating results.
• The Center would not be permitted to mandate coverage, reimbursement or other policies for any public or private payer, and its research findings could not be considered mandates for payment, coverage or treatment.