Debates, changes ahead for everyone involved in health care arena

Public policies and regulatory issues will be re-examined as a new administration takes charge.

Alan E. Reider

Allison Weber Shuren

With the election concluded, physicians and all health care professionals as well as the pharmaceutical, biotech and medical device industries should prepare for a crowded Washington agenda. The coming weeks will be filled with speculation about who will take on key roles in Congress and the Obama administration, and what topics will rise to the top of the long list of health care priorities. This article highlights just a few of the key public policy and regulatory issues and initiatives that will undoubtedly be the subject of significant activity in the coming year.

General reform of the health care system

Health care reform emerged as a central issue in the legislative arena for the first time in more than a decade. Both candidates in the presidential campaign emphasized the need for reform, and key congressional supporters, including Sen. Max Baucus, D-Mont., and Sen. Edward Kennedy, D-Mass., are laying the groundwork for the significant bills during the 111th Congress. During the campaign, President-elect Barack Obama highlighted a cluster of ideas designed to make health insurance affordable and accessible. The general approach builds on the Massachusetts model of expanded coverage and is less sweeping than that advanced by the Clinton administration 16 years ago.

Comparative effectiveness research

Comparative effectiveness research (CER), in some form, has been embraced by President-elect Obama, by key Congressional leaders and, either vigorously or with reservations, by a broad group of stakeholders in the health policy arena. In the Medicare Improvements for Patients and Providers Act (MIPPA), Congress called for an 18-month study by the Institute of Medicine (IOM) on CER methodologies. Yet CER already has strong support because it is often seen as a way to cut health care spending without sacrificing quality; Congress is thus unlikely to await IOM’s study before pursuing legislation to kick-start CER.

Pay-for-performance and transparency

Paying more to providers for good performance on quality and efficiency has been supported over the last several years by Republican office holders in Congress and the executive branch. The MIPPA indicates that congressional Democrats are prepared to advance these ideas as well. Notwithstanding the technical difficulties associated with implementation, demands to move further in this direction remain strong. Transparency — making available to consumers information about costs and quality — also plays well in the current climate. President-elect Obama, during his campaign, endorsed both requirements for “full” transparency among hospitals and providers and “aligning reimbursement with provision of high quality care.”

Revisiting the SGR

The recurrent problems created by the sustainable growth rate (SGR) formula will forcibly command the attention of Congress and the administration once again. The MIPPA brought 18 months of relief, but physicians face a cut in the vicinity of 20% in payments on Jan. 1, 2010, unless Congress acts before then. The need for a permanent solution to this chronic, relapsing condition is becoming more apparent, but the costs are high — on the order of $250 billion to $300 billion over 10 years.

Sunshine Act

The Physician Payments Sunshine Act, initially introduced in 2007 by Sen. Charles Grassley, R-Iowa, and Sen. Herb Kohl, D-Wis., would require manufacturers to disclose compensation and other payments to health care practitioners. Although Sen. Grassley’s steady release of case studies of industry-physician nondisclosure issues gained considerable traction for this bill, the legislation has its congressional skeptics. Recent Medicare Payment Advisory Commission (MedPAC) recommendations suggest that the legislation might be broadened significantly. Industry support is largely predicated on the inclusion of federal pre-emption, which would provide some relief from the proliferation of state laws with differing, burdensome requirements.

Medicare Advantage

Managed care products within Medicare have had an up-and-down history. Medicare Advantage now accounts for about 20% of Medicare beneficiaries, but the pendulum may be swinging against it. The program has expanded in recent years, helped by Republican-enacted legislation. Since taking control of Congress, Democrats have been critical of the program, and the MedPAC drew headlines early in 2007 with a report that the government pays 12% more for Medicare Advantage enrollees than for comparable beneficiaries in the fee-for-service program. During his campaign, President-elect Obama proposed eliminating “excessive subsidies” to Medicare Advantage plans and paying them the same amounts as under the fee-for-service program.

Drug and device safety

Some in Congress view the U.S. Food and Drug Administration Amendments Act of 2007 (FDAAA) as a first step rather than a solution to what they perceive to be inadequate FDA oversight. The FDA has already internalized the message, as evidenced by the recent spate of missed approval deadlines mandated by the Prescription Drug User Fee Act. But it is likely that basic assumptions about drug and device approval and clearance processes will be called into question in the future, including closer consideration of existing approved therapies as part of new drug approval; a renewed look at the rigor of the 510(k) device clearance pathway; and the vigorous use of new authorities relating to post-approval studies, labeling changes, and risk evaluation and mitigation strategies. Manufacturers should continue to see close congressional oversight of drug and device safety issues, as well as a renewed look at proposals that fell by the wayside in the development of the FDAAA. Although the user fee frameworks for drug and device review processes will likely survive out of necessity, they will continue to face intense scrutiny and criticism, and it will be some time before the pendulum of public concern swings back to emphasizing expeditious approvals of new treatments.

Advertising and promotion

First Amendment constraints will remain a countervailing factor in attempt to further regulate drug and device promotion. However, manufacturers should expect vigorous regulatory and legislative efforts in this area, particularly with respect to direct-to-consumer advertising. In addition to proposals to deter such advertising through eliminating tax deductions, there will undoubtedly be renewed proposals for moratoria on post-approval direct-to-consumer advertising and other limits on marketing tied to product safety concerns. The FDA will likely also seek to reinvigorate its efforts to address product marketing through increased enforcement. Although the primacy of the FDA in this area has in many ways been lost to the U.S. Department of Justice, the Office of Inspector General of the U.S. Department of Health and Human Services and the state attorneys general, the agency will play a more important role by directly addressing advertising and marketing through actions based on the Federal Food, Drug, and Cosmetic Act, including testing new civil penalty authorities. The FDA is also highly likely to reconsider efforts to carve out spheres of “scientific exchange” in drug and device manufacturer communications, such as the dissemination of reprints and reference materials.

Nearly 40 issues are discussed in a more comprehensive look of what is likely to be in store for health care professionals, Medicare and the FDA in our complete review, which can be found at www.arnoldporter.com/resources/documents/CA-MEMO_WhatsComingIn09ForDrugs-Devices&Healthcare_111209.pdf.

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