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Health industry scores big wins in Capitol Hill year-end spending package

Lawmakers will nix three Affordable Care Act taxes as part of the year-end spending agreement and are setting aside measures to lower prescription drug prices and end surprise medical bills, giving the healthcare industry a major victory.

Congress has until the end of the day Dec. 20 to adopt the spending package and get it to the White House or the federal government will shut down.

The bill includes a single measure to lower drug prices — the CREATES Act — but not industry-opposed provisions from a large package worked out Dec. 9 by the heads of the Senate Health, Education, Labor and Pensions Committee and the House Energy and Commerce Committee to reduce medicine costs and end surprise medical bills, according to details provided to S&P Global Market Intelligence by a senior House Democratic aide.

The CREATES Act would make it easier and faster for generic-drug companies to sue brand-name biopharmaceutical makers when those manufacturers withhold samples of their medicines that their competitors need to conduct required studies for U.S. approval. But it does not contain provisions that would lower brand-name prices.

House Republicans had included the CREATES Act as part of their drug pricing package to rival Speaker Nancy Pelosi's legislation, which was adopted Dec. 12. The House rejected the Republican substitution package.

Extenders

The House and Senate spending deal seeks to extend certain health programs through May 22 — a timeline lawmakers plan to use to set up additional talks between now and then for legislative actions on surprise medical bills and drug prices as part of a must-pass package in the spring for the extenders, the Democratic aide said.

That schedule would also give industry lobbyists more time to persuade lawmakers not to pass such legislation.

Sens. Chuck Grassley, R-Iowa, chairman of the Senate Finance Committee, and Ron Wyden, D-Ore., the panel's ranking member, planned to use the must-pass extenders as a way to get their colleagues on Capitol Hill on board with their drug pricing package, saying they could use the $100 billion projected savings generated from the legislation to fund those programs.

One of those programs, the Patient-Centered Outcomes Research Institute, or PCORI, would be extended for 10 years under the spending deal, the House Democratic aide said.

PCORI was created by the ACA to fund research testing the effectiveness of various medical treatments.

ACA taxes

Various sectors of the healthcare industry have pleaded with Capitol Hill for years to repeal the ACA's medical device excise tax, the annual health insurance fee and the so-called Cadillac tax, which have yet to be implemented.

Some Democrats joined Republicans in calling for terminating the 2.3% excise tax on medical devices, which has been delayed under a temporary moratorium through 2020. The tax on imported and domestically made medical devices was enacted to help pay for the ACA's health reform measures.

Losing the tax is estimated to cost the U.S. government over $20 billion.

Lobbyists for the medical device industry said the tax would result in companies moving their manufacturing overseas, eliminating thousands of jobs — claims the nonpartisan Center on Budget and Policy Priorities said were not backed up by evidence.

The Cadillac tax is a 40% excise fee on employer-sponsored health insurance plans that cost more than $11,200 per year for an individual or $30,150 for family coverage. It was intended to limit the amount of untaxed health benefits companies provide to their employees and to slow the growth in overall healthcare spending.

The tax was set to take effect in 2018, but Congress delayed it until 2022.

The ACA's health insurance tax is an annual fee imposed on insurers that offer full coverage in the individual market, the group market or public programs. It, too, was delayed.

Other provisions

Among the other healthcare-related agreements in the spending deal is a provision to raise the age from 18 to 21 years for buying tobacco products in the U.S. — a measure Senate Majority Leader Mitch McConnell, R-Ky., sponsored with Sen. Tim Kaine, D-Va.

Rep. Rosa DeLauro, D-Conn., said she was able to secure $25 million in the funding bill for evidence-based research on preventing gun violence.

The spending package also includes a funding increase for Medicaid programs in Puerto Rico and U.S. territories for two years, though that is short of what other bills on Capitol Hill have proposed.

The Medicaid funding will be available at a federal match rate of 76% for Puerto Rico and 83% for the other territories, the Democratic aide said.

Another measure would block the Trump administration from terminating auto-enrollment of the ACA marketplace plans. It would also stop the administration from attempting to end so-called silver-loading — a practice in which insurers have shifted all of their premium increases in the ACA marketplace to silver plans, which are the most popular of the four metal-themed insurance policy categories.