A federal judge in Texas ruled the ACA is invalid in the closing hours of open enrollment.

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Dec. 21, 2018


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Editor’s Note: We love what we do, really. But it’s been a bit crazy this year with all the policy releases, and we need a BREAK. So our next issue will publish January 4. Plus, let’s be honest—most of you aren’t around next week. See you in 2019.


Happy Festivus: Texas Judge Airs His ACA Grievances


Late last Friday, the Affordable Care Act (ACA) gained another interesting twist in its history when a federal judge in Texas invalidated the entire law during the closing hours of 2019 healthcare marketplace (exchange) open enrollment. The invalidation includes Medicaid expansion, maintaining kids on their parents’ insurance until age 26, coverage gap payments by pharmaceutical manufacturers, the existence of the Center for Medicare and Medicaid Innovation (CMMI), etc.

The plaintiffs, which included 20 Republican state attorneys general, had been hoping to strike down most of the law while the Trump Administration had been looking to eliminate some patient protections such as pre-existing conditions.

The ACA, for now, stays intact. The ruling was a declaratory judgment and not an injunction to halt the ACA. The next stop for the ruling is the US Court of Appeals for the 5th Circuit where, if affirmed, will likely put the decision in the hands of the Supreme Court (probably in 2020).

The crux of the decision comes from last year’s legislation, Tax Cuts and Jobs Act of 2017, that eliminated the financial penalty associated with the individual mandate. The Texas ruling says that if there is no “tax” then the mandate is no longer within Congress’ taxing power, and because the mandate is a cornerstone of the ACA, without the mandate—there is no ACA.

In related news, earlier this week, President Trump sent the following tweet:

He is not wrong that the deductibles for the exchange plans are high and, even with these high deductibles, premiums are still substantial for many. That was the actuarial trade-off made by then-President Obama and the Democratic-controlled Congress: higher deductibles, many preventive services covered for free, lower premiums (than could have been), and an annual out-of-pocket cap on spending ($7,900/individual in 2019). Interestingly, there is no current Plan B for Congress and, with years to come up with a replacement, there has been little progress. The hope for many members of Congress is that this gets resolved through the courts and the ACA remains (largely) intact.


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HPW Rebuild


Let Them Bring Us Silver and Gold? Public Manufacture of Generics


On Monday, Sen. Elizabeth Warren (D-MA) and Rep. Janice Schakowsky (D-IL) introduced the Affordable Drug Manufacturing Act that would establish an Office of Drug Manufacturing (ODM) tasked with the public manufacture of generic drugs.

As a response to concerns over pricing and what she sees as an anti-competitive market, Sen. Warren said, “This crisis calls for action. That is why I’m introducing legislation to authorize the public manufacture of generic drugs.”

Under the authority of the Department of Health and Human Services (HHS), the ODM would produce generics if:

  • No company is manufacturing the drug
  • 2 or fewer companies produce the drug and the price has spiked or the drug is in shortage
  • 2 or fewer companies produce the drug and the price is a barrier to patient access
  • The drug is listed as an “essential medicine” by the World Health Organization

The Act would also authorize the ODM to manufacture any drug the federal government has licensed, including under existing compulsory licensing authorities.

Additionally, the ODM would be authorized to:

  • Begin production of generic insulin within 1 year of enactment
  • Sell publicly produced drugs at a “fair price”
  • Sell manufacturing rights to any company agreeing to prices set by the ODM

The Act comes on the heels of new allegations over price-fixing by 16 generic manufacturers, and, on Monday, Sen. Warren called for the 3 Senate committees with jurisdiction over drug pricing to open investigations.

Passage of the proposed Act through the Senate is extremely unlikely; however, it does offer insights into a possible future Administration’s plans for the generic drug market.


Legislative Byte

  • Reps. Rosa DeLauro (D-CT) and Jan Schakowsky (D-IL) introduced the Medicare for America Act of 2018 that would allow Americans to purchase Medicare plans. Employers could provide comparable health coverage to workers under the system, but they would have the option of funding Medicare plans for employees.

HPW Rebuild


CMS Cuddly as a Cactus Releasing ACO Rule Before Break


This morning, the Centers for Medicare & Medicaid Services (CMS) released its final rule that overhauls the Medicare Shared Savings Program, which governs providers of services and suppliers that participate in an accountable care organization (ACO). CMS has dubbed this rule “Pathways to Success” to emphasize how it “dramatically redesigns and sets a new direction” for the program. With 10.4 million beneficiaries enrolled in ACOs (out of 38 million), the final rule will affect more than 25% of the fee-for-service (FFS) Medicare population.

In an accompanying blog post, CMS Administrator Seema Verma explained the overhaul by mentioning how CMS has garnered insights from the 6 years the Shared Savings Program has been operating. One critical observation has been that ACOs taking accountability for costs perform better than those that do not.

As a result, one of the most impactful changes in the final rule is it reduces the amount of time an ACO can remain in the program without taking accountability for healthcare spending from 6 years to 2 years for new ACOs and 3 years for new “low-revenue” (physician-led) ACOs, including some rural ACOs. In the vernacular from the earlier days of the Shared Savings Program, ACOs no longer have 6 years to transition from a 1-sided model to a 2-sided model; they must now be responsible for downside risk within 2 or 3 years.

Other material changes in Pathways to Success:

  • Strengthens incentives by providing higher shared savings rates as ACOs transition and accept greater levels of risk
  • Expands access to telehealth services, including those provided at a patient’s place of residence
  • Allows ACOs to offer new incentive payments to beneficiaries for taking steps to achieve good health, such as obtaining primary care services and necessary follow-up care
  • Requires ACOs to provide beneficiaries with a written explanation, in person or via email or patient portal, of what it means to be in an ACO
  • Incorporates factors from regional Medicare spending to establish an ACO’s benchmark during all agreement periods

With being responsible for more than a quarter of FFS Medicare beneficiaries, ACOs have the potential to be a driving force in the move to transform the healthcare system from volume to value. The Obama Administration ushered Medicare into a value-based environment, and this is one more example of the Trump Administration carrying that torch forward.

See the fact sheet for a detailed summary of Pathways to Success.


But as for Me and Grandpa, We (and CMS) Believe…HA Is a Drug


This week, the Food and Drug Administration (FDA) released a notice of its intent to reclassify hyaluronic acid (HA) intra-articular products indicated to treat knee pain related to osteoarthritis as a drug instead of a device.

Previously, HA intra-articular products were considered to be medical devices, as it was thought the HA helped with pain through mechanical effects (eg, shock absorption) being injected intra-articularly into the synovial fluid of a patient’s joint. However, current research indicates HA may actually work through more of a chemical mechanism of action to achieve its anti-inflammatory, analgesic, and chrondroprotective effects.

Combined with a prolonged duration of action, where patients are still experiencing relief after the HA is thought to already be cleared from the body, it is now thought HA may fall under the “drug” definition instead of “device.” Per the Food and Drug Cosmetic Act, devices are those which, among other things, “[do] not achieve its primary intended purposes through chemical action within or on the body.”

The FDA encourages manufacturers of HA products to first obtain a classification or jurisdictional determination, either by a pre-request for designation or request for designation, before a premarket approval application (PMA) or PMA supplement to change the indication for use, formulation, or route of administration of the HA product. However, if desired, manufacturers can still provide evidence that the HA product meets the medical device definition in either their pre-RFD or RFD. That being said, submitting pre-RFDs and RFDs prior to PMAs is voluntary, so it will be interesting to see how this new decision will affect such submissions.

It is doubtful a reclassification to a drug would affect Medicare coverage or payment since, for reimbursement purposes, CMS treats HA intra-articular products as drugs.


Go Tell It on the Mountain: ASCO and ESMO VAFs Compare Well


On Monday, the American Society of Clinical Oncology (ASCO) and the European Society for Medical Oncology (ESMO) published a paper comparing the performance of their respective value assessment frameworks, the ASCO Value Framework Net Health Benefit score version 2 (ASCO-NHB v2) and the ESMO Magnitude of Clinical Benefit Scale version 1.1 (ESMO-MCBS v1.1). The 2 organizations conducted a joint assessment to evaluate the concordance between the frameworks when used to assess the clinical benefit of new therapies.

The ESMO and ASCO researchers scored 102 randomized clinical trials using the ESMO-MCBS v1.1 and the ASCO-NHB v2, and they found that the value assessment tools produced comparable measures of the clinical benefit of new therapies in approximately two-thirds of the treatment comparisons that were evaluated. Among studies where there was a difference, the main factors that contributed were varying approaches in: 1) evaluating relative and absolute gain for overall survival and progression-free survival; 2) crediting tail of the curve gains; and 3) assessing toxicity.

To improve convergence of the 2 frameworks, the authors suggested the following:

  1. Revisit the weights given to absolute and relative gains in survival
  2. Ensure that the limitations of using progression-free survival as a surrogate for improved overall survival are expressed
  3. Revisit the methodology and terminology used to reward long-term gains in survival
  4. Consider refinements to the scoring of toxicity

As value assessment frameworks continue to gain influence in stakeholder decision-making, it will become increasingly important for the outputs to align across assessment tools. Collaborations such as this one between ASCO and ESMO could be an important step to encourage value-based decision-making.


But If There Is No Home for Christmas—Social Determinants of Health


In a joint effort, the Association for Community Affiliated Plans (ACAP) and the Center for Health Care Strategies (CHCS) conducted a study to identify common themes among state approaches to incentivizing and requiring activities related to addressing the social determinants of health (SDOH) such as housing, employment, and education.

The partnership offered the following recommendations to CMS:

  1. Make it easier for vulnerable populations to access needed services and care coordination by reducing eligibility churn and improving member engagement
  2. Enhance agency collaboration at the federal level by, for example, targeting federal partnerships and cross-agency councils such as the United States Interagency Council on Homelessness
  3. Provide additional guidance on addressing SDOH such as ways to use in lieu of services and value-added services, addressing premium slide concerns, and how states can direct plans to test effective SDOH strategies
  4. Approve Section 1115 demonstrations that test strategies to address SDOH
  5. Support outcomes-based payment for SDOH interventions

SDOH disproportionately affect low-income individuals, many of whom are served by Medicaid. Consequently, as states and Medicaid health plans recognize the importance of SDOH as key drivers to patients’ health status and healthcare costs, the more effectively they can use their influence and flexibility to meet their members’ needs.


Information Buffet (AKA, Other Stuff That Caught Our Attention)


We kept running into stories we wanted to bring to your attention, so here’s a quick hit list of other news we thought you should know:

  • CMS released the first part of its proposed 2020 payment policies for Medicare Advantage. The proposals include congressionally mandated changes to the program, spreading financial risk among insurers to account for the number of individual beneficiaries’ medical conditions.
  • The Medicaid and CHIP Payment and Access Commission (MACPAC) released the December 2018 edition of the MACStats: Medicaid and CHIP Data book.
  • Cigna completed its acquisition of Express Scripts. The insurer-pharmacy benefit manager (PBM) combination, which generated more than $141 billion in revenues last year, joins Aetna/CVS Health, UnitedHealthcare/OptumRx, Blue Cross Blue Shield/Prime Therapeutics, and Humana (which operates its own PBM) as vertically integrated healthcare powerhouses.
  • In an interview with The Financial Times, Novartis CEO Vas Narasimhan discussed having reinsurance underwrite its cell and gene therapies. Under such an arrangement, he said, the reinsurer would cover “the catastrophic case of a child having” a rare disease treatable or curable by expensive pharmaceuticals.
  • Celltrion and Teva announced that the FDA approved HERZUMA (trastuzumab-pkrb), a biosimilar to Genentech’s HERCEPTIN. HERZUMA is the 16th biosimilar approved, with 6 available on the market.
  • The Institute for Clinical and Economic Review (ICER) announced the following actions:
    • Plans to assess the comparative clinical effectiveness and value of 2 exon-skipping therapies for Duchenne muscular dystrophy (DMD): EXONDYS 51 (eteplirsen) and golodirsen
    • Releases final evidence report, Biologic Therapies for Treatment of Asthma Associated with Type 2 Inflammation: Effectiveness, Value, and Value-Based Price Benchmarks, reviewing XOLAIR (omalizumab), NUCALA (mepolizumab), CINQAIR (reslizumab), FASENRA (benralizumab), and DUPIXENT (dupilumab)
    • Releases draft evidence report, SPINRAZA (nusinersen) and ZOLGENSMA (onasemnogene abeparvovec) for Spinal Muscular Atrophy: Effectiveness and Value


It’s that time again...open enrollment for the insurance exchanges. As we have done each year, we will compare weekly enrollment in the current and previous years for the 39 exchanges that use the HealthCare.gov platform for the 2019 benefit year, including the federally facilitated exchanges, state partnership exchanges, and some state-based exchanges.

Comparison of 2018 and 2019 Weekly Cumulative Open Enrollment Snapshots for HealthCare.gov





“This is most likely the largest cartel in the history of the United States.”

– Joseph Nielsen, an assistant attorney general and antitrust investigator in Connecticut who is helping lead a lawsuit of alleged price-fixing involving at least 16 companies and 300 generic drugs

Source: “Investigation of generic ‘cartel’ expands to 300 drugs,” The Washington Post, December 9



4,655 | 16,000


Arkansas removed another 4,655 Medicaid enrollees from the program this month for failing to meet the state’s work requirement. More than 16,000 low-income adults have now been removed from Medicaid enrollment during the past 4 months in Arkansas, the only state where work requirements have been approved.

Source: “Arkansas Works Program—November 2018 Report,” Arkansas Department of Human Services, December 17


Count on Health Policy Weekly for an at-a-glance view of legislative and regulatory developments and news that impacts the healthcare industry.


Jennifer Snow
Vice President,
Reimbursement and
Policy Insights,

Scott Shields
Associate Director,
Health Policy



Amy Grogg, PharmD
Senior Vice President | Commercialization Solutions | AmerisourceBergen Corporation

Kristine Flemister, PharmD
President | Xcenda

Tommy Bramley, PhD, RPh
President | Lash Group

Stacie Heller
Vice President | Government Policy | AmerisourceBergen Corporation

Rita Norton
Senior Vice President | Government and Public Policy | AmerisourceBergen Corporation

Ana Stojanovska
Vice President | Commercial Consulting | Xcenda


Isabell Kang | Stew Kaufman | Scott Shields | Jennifer Snow | Linnea Tennant | Stephen Wilson


Laurie Kozbelt | Ellen Olson | Tia O’Brien


Dec. 21, 2018


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