Health Policy Snapshot: May 2024

Greg Chesmore
May 06, 2024

Biosecure Act to receive vote in House committee; Biopharma and biotech companies scramble to assess potential impact

The House Oversight Committee will mark up a far-reaching bill on May 15 that, if passed, could force many US biopharma companies to cut ties with WuXi and several other Chinese life sciences contractors over concerns that the contractors share information with China’s communist government. The markup signals building, bipartisan momentum on the closely watched bill that could have wide-ranging implications for dozens of companies. A similar bill passed out of the Homeland Security and Governmental Affairs Committee earlier this spring and a Senate version has already cleared committee.  The bill’s main sponsor, Rep. Mike Gallagher (R-WI), departed Congress last week, but the bill quickly received two new legislative champions, Rep. Brad Wenstrup (R-OH) and Rep. Raja Krishnamoorthi (D-IL). Specifically, the legislation could force US companies to cut ties with WuXi and its subsidiaries as well as other China-based companies like BGI, MGI and Complete Genomics. Many companies are disclosing that they’re assessing their supply chain options and planning for a potential disruption. The bill, known as the Biosecure Act (click here to read latest version), originated in the House Select Committee on the Chinese Communist Party and follows concerns that China-based companies could be sharing sensitive US genomics and other patient data with the Chinese government. The legislation could affect many large and small pharma companies as well as academic institutions that work with the companies named in the bill, sometimes exclusively. In response, a host of pharma companies and biotechs have begun lobbying on the legislation, expressing concern about potential disruptions and logistical issues, yet walking a fine line between full-fledged opposition to a bill that enjoys bipartisan support (a rarity on Capitol Hill these days). Supporters of the legislation are eyeing potential larger legislative vehicles to attach the Biosecure Act language, including the National Defense Reauthorization Act. We’ll keep a close eye on the legislation as it moves forward, since some changes to the bill are likely.

Key U.S. House Committee to grill Food & Drug Administration (FDA) center directors

The House Energy & Commerce Committee announced today that they’ll call key FDA leaders to appear in front of the E&C Health Subcommittee on May 22. Patrizia Cavazzoni, M.D., Director, Center for Drug Evaluation and Research (CDER), Peter Marks, M.D., Ph.D., Director, Center for Biologics Evaluation and Research (CBER) and Jeffrey Shuren, M.D., J.D., Director, Center for Devices and Radiological Health (CDRH) will appear before the subcommittee. “Given the increased funding provided in the most recent user fee reauthorization, it’s important that we engage regularly with key FDA officials to better understand what’s working well at the FDA and what challenges persist. Continuing to rebuild public trust in government health agencies is critical and will require more transparency from agencies like the FDA,” E&C Chair Cathy McMorris Rodgers (R-WA) and Brett Guthrie (R-KY) announced in the May 6 press release. Critics of the FDA, including some in the rare disease community, claim the agency is not moving fast enough to review new drug applications or requiring unrealistic and untenable clinical trial designs not suitable for small patient populations. We’ll monitor the hearing, as well as information shared prior to the hearing, to determine any potential themes or major discussion points.

As IRA lawsuits stumble, HHS advances more implementation guidance on Medicare Drug Negotiation Program

Opponents of the Inflation Reduction Act’s drug pricing reforms continue to have a difficult time in court. On April 29, a New Jersey district court rejected cases filed by Johnson & Johnson and Bristol Myers Squibb, who alleged that the IRA’s drug price negotiation authority violates the Constitution’s free speech and taking clauses.  It’s the fourth time a court has ruled in favor of the federal government (in short, the industry is currently 0-4 in its challenges).  Undaunted, both companies immediately appealed the ruling. There are still five separate cases pending across the country and one appeal in Texas. On May 1, a judge in the Fifth Circuit Court of Appeals provided the industry with a glimmer of hope. During a hearing related to the whether certain plaintiffs had standing to challenge the law, one judge on the panel expressed concern about the IRA’s drug price setting power. “It’s price setting, using a regulatory arm on top of the monopsony power to tie other products. How would this at all be lawful in any way…?”  The Fifth Circuit Court of Appeals is considered one of the nation’s most conservative panels, with 19 of the 26 judges appointed by Republicans. Drug price control advocates attacked PhRMA and other entities for their ongoing challenges to the law, claiming the appeals are based on greed.  “Big PhRMA is begging any court that will them to block Medicare from negotiating prices with drug makers…It’s a case study in corporate greed…” said Tony Carrk of Accountable US.  Meanwhile, HHS moved forward with its second round of guidance for the Medicare drug price negotiation program. On May 3, the Centers for Medicare & Medicaid Services (CMS) issued draft guidance for public comment that details requirements and parameters for the second cycle of negotiations, along with additional information to ensure that the CMS-determined “maximum fair prices” for all negotiated medicines will be in effect in 2026 and 2027. CMS continues to publish multiple fact sheets to help stakeholders follow their implementation process including this fact sheet outlining its new draft guidance on the second round of negotiations.

Health Policy Snippets:

  • Major move on marijuana. The Biden Administration made headlines last week when it released its proposal to “reclassify” marijuana from a Schedule I drug to a Schedule III drug. While advocates call it a “landmark” proposal, it does not legalize marijuana for recreational use; however, it will likely make it easier to use marijuana to treat certain medical conditions. The proposal, however, is just that: a proposal. Many steps now need to be taken to finalize the guidance, including review by the Office of Management and Budget (OMB), a public comment period and review by an administrative law judge (ALJ). Critics of the Administration’s action believe it’s nothing more than an election year ploy to win over certain voters (such as young people) who appear to be less than enthusiastic about voting for Biden in November, while advocates believe the move is common-sense and will lead to more reasonable policy development surround the substance. 
  • Prescription Drug Affordability Board bills run into roadblocks. After Virginia Governor Glenn Youngkin (R) vetoed legislation to create a PDAB in that state in April, fast-moving legislation in Rhode Island and Connecticut has stalled due to opposition from patient and provider groups. In Rhode Island, the cystic fibrosis community rallied against the bill, citing concerns that it would limit access to innovative drugs. In Connecticut, the state’s Oncology Association published an op-ed in the Connecticut Mirror, calling SB 8 an “egregious” proposal that would harm patients. Rhode Island’s legislative session runs through June. Connecticut is scheduled to adjourn this week.