Democrats fault proposed budget cuts to HHS, calling them 'retreads of bad ideas,' members address Part D drug prices, opioid crisis, Title X Rules, family separations

The House Appropriations Subcommittee on Labor, Health and Human Services, Education, and Related Agencies on Wednesday, March 13 held a hearing on the Trump Administration's fiscal 2020 budget request for the Department of Health and Human Services. The only witness was HHS Secretary Alex Azar. Materials from the hearing were posted here.

In her opening statement, subcommittee Chairman Rosa DeLauro (D-CT) called the budget request "an attack on public health" and said that, while the Administration "is not shy about spending," it "opposes spending when it aids the vulnerable, when it promotes the common good or when it makes opportunity real for people." DeLauro said that, while she was encouraged by the Administration's HIV Initiative and its request for additional HIV funding in the Health Resources and Services Administration (HRSA) and the Centers for Disease Control and Prevention, "at the same time, I strongly oppose the president's proposed cuts to the National Institutes of Health's HIV research portfolio and to PEPFAR and the CDC global AIDS program … . Despite a few areas that appear to be bright spots, including efforts with regards to pediatric cancer, we need to take a hard look at this budget because of its deep cuts. Many of these budget proposals are retreads of bad ideas that Congress has already rejected on a bipartisan basis."

Specifically, DeLauro faulted the president's budget request for proposing to (1) cut HHS agencies under the subcommittee's purview by $12.7 billion, a 14 percent  cut; (2) cut NIH research by $5 billion; (3) cut the CDC by $750 million, including cuts to lead poisoning prevention, food safety and laboratory capacity; and (4) cut $1 billion from HRSA, "including hundreds of millions from programs to train low-income and minority populations for careers in health professions, like nursing." On the mandatory spending side, DeLauro criticized the budget for proposing to cut Medicare by $845 billion; cut the Supplemental Nutrition Assistance Program (SNAP) by more than $20 billion per year; and cut Temporary Assistance for Needy Families (TANF) by more than $2 billion per year. Overall, she said, Congress "will reject these cuts to health programs, medical research, public health, home heating assistance, and so many others; instead, we are going to invest in health, education and protections for the middle class."

DeLauro also devoted time at the beginning of her statement to the issues of separating families at the southern border and the Administration's proposed changes to the Title X family planning rule. "As I have said repeatedly, I believe separating children from their parents is government-sponsored child abuse," she said. "And HHS is complicit. The Memorandum of Agreement between HHS and the Department of Homeland Security (since last April) has turned HHS into a de facto extension of ICE. As a result, children are languishing in custody inflicting mental and physical trauma, all at considerable costs to taxpayers. We know, based on legal precedent, that separation as deterrence policy is illegal. HHS needs to return the Unaccompanied Children program to its core mission of taking care of vulnerable children and placing them with sponsors, rather than being an immigration enforcement agency." On family planning, DeLauro said, "I want to note my strong opposition to the Administration's proposed changes to Title X. That includes the Trump Administration's 'domestic gag rule.' It would ban any health care provider from receiving Title X funding if they even talk about abortion or abortion-related services with their patients."

In his statement, Ranking Member Tom Cole (R-OK) noted that, while HSS accounts for a larger share of federal spending than even the Defense Department, the discretionary elements of that budget are only 8 percent of that, with the rest devoted to mandatory spending: "We simply cannot balance our national budget by chipping away at 8 percent of total spending. We have to look, in my view, for broader entitlement reform to achieve those larger goals." Cole took a dim view of many of the budget's proposed reductions. "The president's suggested domestic cuts to the National Institutes of Health and the Centers for Disease Control and Prevention are shortsighted and counterproductive," he said. "As we have done over the last few years, I believe we must continue to prioritize and sustain generous funding for biomedical research and public health — recognizing that the investment will generate tremendous benefits for society, eventually lessen the strain on taxpayer dollars and ultimately improve the quality of life for every American." Cole said he is particularly concerned about cuts to the CDC's immunization programs and other work, calling them a "risky mistake … . I consider this as every bit as much of a defense budget as anything at DOD … . As I've said before, we're much more likely to die due to a disease outbreak than a terrorist attack." Speaking of the HHs budget broadly, Cole said, "The final result is something I hope this Congress will not adopt."

In his prepared testimony, HHS Secretary Alex Azar highlighted positive health outcomes produced by the Administration in the last year, saying the Affordable Care Act (ACA) exchanges "were stabilized, with the national average benchmark premium on HealthCare.gov dropping for the first time ever." He said Congress had worked with the Administration" to deliver new resources for fighting the opioid crisis, allowing HHS to make more than $2 billion in opioid-related grants to states, territories, tribes and local communities in 2018. Prescriptions for medication-assisted treatment options and naloxone are up, while legal opioid prescribing is down. HHS also worked to bring down prescription drug prices, including by setting another record for most generic drug approvals by FDA in a fiscal year."

On the budget's proposed cuts, Azar said that, with the largest non-defense discretionary appropriation of any cabinet agency in 2019, "HHS must make large reductions in spending in order to stay within Congress' caps, set a prudent fiscal course, and provide for other national priorities." He said the caps forced HHS to make "difficult choices."

Azar said the budget includes proposals to make it easier to open and use Health Savings Accounts and reform the medical liability system to allow providers to focus on patients instead of lawsuits. On prescription drugs, he said the budget would (1) "stop regulatory tactics used by brand manufacturers to impede generic competition; (2) ensure federal and state programs get their fair share of rebates, and enact penalties to prevent the growth of prescription drug prices beyond inflation; (3) improve the Medicare Part D program to lower seniors' out-of-pocket costs, create an out-of-pocket cap for the first time, and end the incentives that reward list price increases; (4) improve transparency and accuracy of payments under Medicare Part B, including imposing payment penalties to discourage pay-for-delay agreements; and (5) build on America's successful generic market with a robust biosimilars agenda, by improving the efficient approval of safe and effective biosimilars."

For Medicare, Azar said the budget supports an expansion of value-based payments in the program, including: (1) "a value-based purchasing program for hospital outpatient departments and ambulatory surgical centers; and (2) a consolidated hospital quality program in Medicare to reduce duplicative requirements and create a focus on driving improvements in patients' health outcomes." Azar said that, in an effort to operate Medicare and Medicaid more efficiently, "HHS is implementing actions such as enhanced provider screening, prior authorization and sophisticated predictive analytics technology, to reduce improper payments in Medicare and Medicaid without increasing burden on providers or delaying Americans' access to care or to critical medications."

On HIV, Azar said the budget aims "to reduce new infections by 90 percent within 10 years, ending the epidemic in America" by "accelerating proven public health strategies." For the FDA, Azar said the budget's $6.1 billion request is an additional $643 million above the FY 2019 Continuing Resolution … . [and] includes resources to promote competition and foster innovation, such as modernizing generic drug review and creating a new medical data enterprise."

QUESTIONS

Opioid crisis. In questions from Ranking Member Cole, Azar said that he was "pleased to report that on basically every leading indicator of the opioid crisis, we are headed in the right direction. The prescribing of legal opioids is down approximately 20 percent since January 2017. I believe the MME, morphine equivalent levels, are down about 26 or 27 percent. Naloxone prescribing is up over 200 percent. MAT capacity is radically increased. And we have seen an actual flattening of the curve of drug overdose deaths. Very far from anything like victory — this will be a long, long campaign — but everything is trending in the right direction."

'Actual cost of care' and kidney care. In her questions, Jaime Herrera Beutler (R-WA) quoted a Wall Street Journal story that said the Administration "is sounding out the medical industry on requiring hospitals, doctors and other health care providers to publicly disclose the secretly negotiated prices they charge insurance companies for services, a move that would expose for the first time the actual cost of care." Unless that cost is known, Herrera Beutler said, "We cannot drive that down … This is something that will probably rock boats on both sides, but it needs to be done." Herrera Beutler also thanked Azar for his "transformative remarks on kidney care," noting that she is a cosponsor of the Living Donor Protection Act (HR 1224) and supports coverage of immunosuppressant drugs. Azar said that "our preliminary Office of the Actuary analysis indicates that the savings generated by averting dialysis would be greater than the cost required to extend coverage for immunosuppressant drugs."

Medicare Part D drug prices. In his questions, Andy Harris (R-MD) said that pharmacy benefit managers (PBMs) under Medicare Part D, "because they negotiate not only for Part D but for non-Part D — about half the population is not in Medicare Part D — … actually negotiate for a pretty large population of patients. So, if you just say, 'Let's let Medicare negotiate,' the fact is the Government rarely negotiates — I'm a physician and I don't negotiate what I get paid for by Medicare. I hate to tell you, but CMS tells me what I'm going to be paid. There's no negotiation that occurs, it's price-fixing. And the result of price-fixing with physicians is that you can't find specialists or sub-specialists who will take care of Medicare patients without limiting the number of Medicare patients they take care of. And this is what I fear will happen if we actually go to price-fixing for drugs. But I will support what you're trying to do with Medicare Part B drugs, because we do have to level the playing field there." Harris asked if there are other programs HHS should start to make Part D "an even better program for seniors."

Azar told Harris that Part D "is a great program — we're securing discounts in most of it comparable to what Europeans get in discounts, through the PBMS. We have parts of the program, though, where we disabled the PBMs from negotiating, and we've proposed ways to free up the plans to negotiate to get commercial-level discounts there. In addition, we would like to have an out-of-pocket cap, the first ever for seniors, so that when they hit catastrophic coverage they would pay nothing out of pocket for their drugs. We would also like out low-income beneficiaries to have free biosimilar and generic drug coverage in the benefit package and require that the drug company payments not be used to progress people rapidly to catastrophic care. And finally, have the PBMs bear more of the share of reinsurance in catastrophic care. Right now, we bear 80 percent of the cost of catastrophic coverage. We'd like the PBMs to be the ones that actually bear that cost. We could bear 20 percent and have the seniors pay zero percent." There are important structural reforms to Part D "whose time we think is due now," Azar said.

NIH, CDC cuts. Both Democrats and Republicans on the subcommittee appeared to agree that the budget's proposed cuts to NIH and CDC are a non-starter, with Ranking Member Cole saying, "A cut of $5 billion would reverse this trend and send the wrong signal to young scientists."

Title X rule. In her questions, full committee Chairman Nita Lowey (D-NY) addressed the Administration's proposed changes to Title X rules for family planning funds, calling them "a political decision." Part of the rule would require a physical and financial separation between Title X services and abortions, disqualifying Planned Parenthood and other clinics that provide abortions from the program. "I want to be very clear that there was no consultation with the public health community, because it seems the Administration didn't care what the experts had to say about what impact this would have on women's health." Lois Frankel (D-FL) said the Administration's intention is "to drive Planned Parenthood out of business." Azar said, "Not at all. Planned Parenthood may comply with these rules," adding that the federal government is "inappropriately subsidizing" the "abortion enterprise" through Title X.

Azar said the rule would accommodate all women who lose access to employer-sponsored contraception coverage if their companies claim religious or moral objections under an exemption offered by the Trump Administration. The final version of the rule, released in February, adds income criteria and gives more discretion for program administrators. For women at those employers, Azar said, "We've actually made them eligible participants in the Title X program for free access to contraception there." If both rules go into effect, Azar said the Administration will "advance simultaneously the goal of access to contraception for women and still respect the right of conscience in health care and employment." Azar said HHS estimates that, "at most, 126,400 women" would lose access to contraception coverage due to the new employer exemptions, saying, "We believe this will have no impact on 99.9 percent of all women."

Family separation policy. In his questions, Mark Pocan (D-WI) asked whether there was any funding in the budget request to address the issue of children separated from families at the southern border. Azar said there is no "ongoing program, other than the normal family separations we have because of child welfare done by" the Department of Homeland Security … "We don't have a bigger issue right now in terms of separation; we receive a relatively small number, which are according to standards … fairly consistent with the longtime history of the program." Azar said there were issues with "information flows … That's the biggest issue. I demanded back in June we put a box on the intake form [for] any indication of separation, so there's an easy way to track that that's happened … We've asked for more information from DHS … on any rationale why there was a separation because that can be useful to us. We don't decide or get to veto a separation but that helps us decide whether there's a reunification or sponsorship issue."

Barbara Lee (D-CA) asked if the Administration had looked into the mental health effects of such separations: "If you understood and this Administration understood the history of what this does to children and families over the years, you never would have done this," Lee said, citing the history of trauma caused by the slave trade. "[Have] any health care professionals … looked into this?" Azar told her, "Let me be very clear: there's no dispute between us that children being away from their parents is a bad thing, that it poses mental health issues … That's why we have encouraged people, do not come across the border illegally." Azar said unaccompanied minors are in the care of HHS for an average of 71 days before being placed with sponsors, and that there are currently 200 separated children in HHS custody, but these are cases where the parents have felonies or are violent.

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