HHS Leadership Upheaval Could Delay Initiatives Impacting Biopharma
Executive Summary
Secretary Price will be succeeded on an acting basis by HHS acting assistant secretary for health Donald Wright, and everything from development of the executive order on drug pricing to pending Medicare reimbursement experiments could see a pause as part of the transition.
A presidential executive order on drug costs and Medicare payment experiments for prescription drugs are a couple of the pending biopharma-related initiatives that now become the responsibility of HHS Acting Secretary Donald Wright with the departure of Tom Price.
The White House announced Price's resignation Sept. 29 and said he will be succeeded on an acting basis by current HHS Acting Assistant Secretary for Health Don Wright.
Price resigned amid intensifying public criticism over his use of taxpayer funded chartered planes while carrying out his duties. His departure also followed repeated failures to move one of the Administration's top priorities – legislation to repeal and replace the Affordable Care Act – in the Senate.
An experienced HHS official, Wright served as HHS principal deputy assistant secretary for health from 2007-2009, under President George W. Bush. He is also currently deputy assistant secretary for health and director of the office of disease prevention and health promotion, a position he has held since 2012.
The change in leadership may slow down some of the activities under HHS' purview that concern biopharma. One of the more anticipated actions is an executive order relating to prescription drug costs. A draft version of the order that made the rounds among policy circles in June indicated the Administration would pursue mainly biopharma-industry policies in addressing high drug costs. (Also see "Trump Exec Order On Drug Costs: Seeking To Balance Access, Innovation" - Pink Sheet, 23 Jun, 2017.)
The order focused on policies in three broad areas: 1) the impact of insurance benefit designs on the net cost of drugs to the patient, 2) increasing competition in the market through faster approvals and 3) reducing regulatory burdens. It did not include any mention of government price controls.
The order also directs HHS and other government agencies, in consultation with stakeholders, to conduct a review of overly burdensome prescription drug regulations and administrative actions that could be revised or withdrawn, in keeping with the Administration's focus on de-regulation.
HHS under Price has welcomed input from industry on key issues. FDA recently issued notices to stakeholders seeking input on how the agency could reduce regulatory burdens. (Also see "FDA Soliciting Broad Range Of Comments From Industry On Regulatory Reform" - Pink Sheet, 7 Sep, 2017.) And Price held a series of listening sessions with stakeholders in the spring to help inform HHS policy on drug pricing. (Also see "HHS Action On Drug Pricing: Here's Who Secretary Price Is Listening To" - Pink Sheet, 25 May, 2017.)
FDA has actively pursued policies aimed at lowering drug costs by increasing competition under Commissioner Scott Gottlieb, who has focused on speeding generic approvals and streamlining innovator development – as well as a host of more prominent, politically-sensitive topics including opioids and disaster relief.
At the Centers for Medicare and Medicaid Services, Administrator Seema Verma is planning to redirect the focus of the Center for Medicare and Medicaid Innovation (CMMI) in a way that reflects the criticisms Price has leveled at Medicare payment experiments initiated by CMMI under the Obama Administration.
As part of that effort, CMS released a request for information Sept. 20 announcing that prescription drugs will be one area of focus for future payment experiments. (Also see "Drug Payment Experiments Coming To Medicare, Medicaid" - Pink Sheet, 20 Sep, 2017.)
Stakeholders are anxiously watching for a proposed rule on Medicare Part D from CMS. Agency officials have not spoken publicly about the proposal, which has prompted widespread speculation about what it will contain. (Also see "CMS Proposal On Part D May Address Drug Costs, But Will It Target Prices?" - Pink Sheet, 31 Aug, 2017.)
CMS is also considering a precedent-setting request from the state of Massachusetts seeking permission to use a closed formulary in its Medicaid program to drive down drug costs. Medicaid programs are currently barred from excluding drugs from coverage as long and manufacturers provide the statutory drug rebates.
The Administration did not announce plans for a permanent successor to Price. However, if the past is a guide, the future nominee is likely to be a politician – several former secretaries have been governors or members of Congress. With Wright appearing to be basically a caretaker, Gottlieb and Verma could take on more prominence in their roles until a new HHS secretary is confirmed.
Meanwhile, other key leadership positions at HHS also need to be filled. President Trump has nominated ViraCyte President and CEO Brett Giroir to become HHS Assistant Secretary for Health (the post Wright had been acting in before becoming acting secretary) and the nomination is awaiting confirmation in the Senate. Democrats have delayed approving the appointment because of comments Giroir made regarding defunding Planned Parenthood during his confirmation hearing before the Senate Health, Education, Labor and Pensions Committee.