Jon Bigelow, Thayer Pond Solutions

What’s ahead in Biden’s year 2?

By Jon Bigelow • Executive Director of the Coalition for Healthcare Communication

Each new president enters the White House with big dreams and unique challenges. For President Joe Biden, 2021 was dominated by the evolving COVID-19 pandemic, an historically difficult transition of power, and a focus on packing an ambitious combination of economic relief, infrastructure investment, and social spending initiatives into a handful of multi-trillion dollar omnibus bills to push through a tightly-divided Congress.

In Biden’s second year, look for legislation to enhance the Affordable Care Act (ACA), limit prescription drug prices, and reauthorize user fees, and potentially new regulatory initiatives.

The midterms loom large

Hovering over all political calculations, of course, are the midterm elections. The nation is bitterly divided, to the point that Congress – and voters – are locked into inflexible party-line positions even on issues that once would have inspired bipartisan cooperation. Biden’s poll numbers are declining, and Democrat leaders need a few wins to take to the voters in November. Republican leaders won’t help them, sensing an opportunity to win control of both the House and the Senate.

In this dynamic, we’re unlikely to see any new multi-trillion omnibus packages. This year, watch for the opportunities – and risks – for the biopharma and healthcare communications fields to come through more specific legislation and regulatory initiatives.

Build Back Better redux

The biggest unfinished business is the Build Back Better Act, an expansive proposal for $3.5 trillion in spending on climate change, education, child care, housing, and health care measures, to be paid for with tax increases and savings on prescription drug costs. Under the budget reconciliation process it can avoid a filibuster, but, lacking any Republican support, still requires the backing of all 50 Democratic senators (plus Vice President Kamala Harris’s tie-breaking vote) to pass.

We all know how this story played out in late 2021. In attempts to win the votes of Sens. Joe Manchin (D-W.Va.) and Kyrsten Sinema (D-Ariz.), the plan was scaled down to a $1.8 trillion package. Even the smaller version did not pass; Manchin objected to the child tax credit provisions and total cost, while Sinema’s veto of any increase in tax rates thwarted efforts to make the plan budget-neutral. Tempers flared and negotiations broke down.

That was then, this is now. Democratic leaders are working to salvage pieces of the bill that Manchin and Sinema would support. The result will clearly be much smaller, and the legislation may have a new name. The core of whatever comes out of these negotiations likely will be the climate change provisions plus two popular healthcare elements.

One would be to extend the enhanced ACA subsidies that were passed in the American Rescue Act. Those subsidies helped attract a record 14.5 million Americans (including 5.8 million new enrollees) to sign up during this year’s open enrollment period; the Department of Health and Human Services (HHS) also reports that with the increased subsidies the average monthly premium was 23 percent lower than a year earlier. But the enhanced subsidies are scheduled to sunset in December 2022, and without an extension, Americans will face higher ACA premiums in the next open enrollment period, which happens to begin just before Election Day. Democratic leaders are intent on avoiding that outcome.

The other element would impose restrictions on prescription drug costs, including limiting price increases to the rate of inflation, a lower out-of-pocket drug spending cap under Medicare, and provisions for Medicare to negotiate some prices with manufacturers. Both Manchin and Sinema back these limits, and they also help ease Manchin’s objections by reducing the legislation’s cost to the government.

PDUFA and data privacy

Jon Bigelow

Congress will be highly motivated to meet the October 1 deadline for reauthorizing the Prescription Drug User Fee Act and Medical Device User Fee Act, lest user fees – representing about 46% of Food and Drug Administration (FDA) funding – stop flowing. Yet, as of this writing, negotiations among the FDA and other stakeholders face unresolved issues, and House and Senate committee hearings are expected to aggressively challenge FDA leaders on recent approval decisions. Reauthorization may come with unwanted provisions.

Also watch the bipartisan interest in antitrust legislation targeting the large tech companies. While improving competition is the impetus, some provisions could concern data privacy and security. This will not be the comprehensive federal data privacy law that many believe is needed, however.

The regulators are stirring

The regulatory environment during the first Biden year was generally benign for biopharma and healthcare, as key appointees settled into their roles and focused first on the pandemic. Two actions in mid-January suggest 2022 may be different.

The FDA’s controversial approval last summer of Aduhelm for mild cognitive loss in Alzheimer disease patients, paired with the high price set by the drug’s manufacturer, raised fears of a massive financial drain on Medicare. The Center for Medicare and Medicaid Services (CMS) took the highly unusual step of determining that Medicare will cover the cost of Aduhelm only for patients enrolled in clinical trials, not for the millions of patients who might otherwise have been eligible. This action – now the focus of a major lobbying effort – sets a precedent for CMS to take similar action if the FDA approves other pending Alzheimer therapies.

Meanwhile, HHS Secretary Xavier Becerra took the unprecedented step of ordering a midyear review of Medicare premiums. These premiums typically rise in January by small amounts in line with inflation, but for 2022 CMS boosted Medicare premiums by a record 15 percent, primarily due to the potential cost of covering Aduhelm. After the premium increase, the manufacturer cut the drug’s price in half, and at about this time CMS took its action limiting the number of patients. Becerra wants the high Medicare premiums reduced now, not waiting until the next annual cycle.

With a new Commissioner, we may see more FDA regulatory activity as well.

Bottom line: With the midterms looming, lawmakers in Washington have an incentive to focus on specific legislation to win votes and are prioritizing enhanced ACA subsidies and limits on prescription drug prices. And as the Biden administration’s focus turns away from the omnibus legislation of its first year, we may see more regulatory activity. Stay tuned.