Impeachment, Executive Orders, and Must-Pass Congressional Legislation: A Fall Update

The final quarter of calendar year 2019 has begun, which means Congress and the Trump Administration are hard at work finalizing healthcare initiatives before the year is over. Congress is considering a series of “must-pass” measures affecting federal healthcare programs, which may provide opportunities for provisions of interest to the medtech sector. Likewise, the Administration has also been working on various life science proposals, including a pledge to streamline the approval and coverage of medical technologies, which would reduce obstacles to patient care.

The biggest news coming out of Washington, D.C., recently, however, has been an impeachment inquiry into President Donald Trump. With the investigation and the 2020 election cycle quickly approaching for Congress and the Administration, these factors may affect the interest and timeliness of new healthcare proposals.

EO: Protecting and Improving Medicare
On Oct. 3, President Donald Trump signed an Executive Order (EO) titled, “Protecting and Improving Medicare for Our Nation’s Seniors.” Prior to signing the EO, President Trump delivered remarks on how his Administration has worked to strengthen the Medicare program and how the EO will further advance program goals. In his remarks, President Trump announced his Administration is committed to addressing four critical healthcare issues: (1) protecting vulnerable patients, including those with pre-existing conditions; (2) delivering on affordability; (3) providing patients choices; and (4) ensuring high-quality care. President Trump acknowledged many 2020 Democratic Presidential nominees have supported “Medicare for All” and that his Administration does not believe in government interference in the Medicare program. Instead, his EO intends to strengthen Medicare by: (1) enhancing plan and provider choice; (2) instituting more market-based approaches; (3) reducing provider burdens; and (4) accelerating review, approval, coverage, and coding processes so innovative, new technologies can reach patients quicker.

Streamlining Coverage of New Medical Technologies
Importantly, a core tenant of the EO is to advance regulatory policies that encourage the creation and adoption of innovative medical technologies for patients. Within one year of the EO’s signing, Department of Health and Human Services (HHS) Secretary Alex Azar is required to propose regulatory and sub-regulatory changes that will streamline the approval, coverage, and coding processes for innovative medical products, including U.S. Food and Drug Administration (FDA)—designated Breakthrough devices. To achieve this policy goal, HHS must put forth proposals that will (1) minimize the time between FDA-approval and coverage decisions by the Centers for Medicare and Medicaid Services (CMS); (2) clarify the standards that CMS uses to determine coverage of innovative medical technologies; and (3) identify challenges and propose solutions to the use of Parallel Review—where both FDA and CMS review medical device information concurrently to streamline the review and coverage process.

The policy goals set forth in the EO are significant to the medical technology sector because the U.S. regulatory system is fragmented across agencies and functions, which can add considerable complexity and time to the review, approval, coding, and coverage processes—all of which are critical to ensuring patient access to and utilization of new technologies.

As we wrote about in our September update, the Trump Administration has been reviewing a potential Proposed Rule from CMS titled, “Medicare Coverage of Innovative Medical Technologies,” which would modify the Medicare coverage process to streamline coverage of Breakthrough Technologies that have the potential to improve patient health outcomes and quality of care. Industry groups have supported a transition toward a streamlined review and coverage process as well. It appears the EO will be a continuation of these efforts and has the potential to be very positive for the medical technology industry.

Year-End Congressional Update
As the tumultuous first session of 116th Congress winds down, members of the House and U.S. Senate are focused on getting several “must-pass” provisions across the finish line before the end of the year. The Fiscal Year (FY) 2020 appropriations bills are at the top of the list and are required to keep the federal government operational. The full House has already advanced 10 of the 12 appropriations bills, but the Senate has yet to pass any of the bills on the Senate floor. On Sept. 27, President Trump signed a continuing resolution (CR) to extend government funding until Nov. 21 and avert a government shutdown. Congress now has until Nov. 21, pending another CR, to pass all of the FY 2020 appropriations bills. If government funding is not extended, a shutdown would complicate operations at crucial federal agencies such as FDA, which could potentially affect device approvals and facility inspections.

Furthermore, under a temporary CR, government agencies direct their programs through the funding levels of the previous year (i.e., FY 2019 levels), which would limit FDA’s ability to begin new initiatives. Additionally, there are several health programs such as Community Health Centers, the National Health Service Corps, and the Special Diabetes Program, among others, for which funding will be needed beyond Nov. 21.

Also, a number of temporary tax incentives and credits, known as “tax extenders,” are due to expire. This includes the excise tax on medical devices, which is set to go back into effect on Jan. 1, 2020, unless it is repealed or suspended. Originally enacted as part of the Affordable Care Act (ACA), the tax imposes a 2.3 percent excise tax on the sale of medical devices. Since the medical device tax was first implemented in 2013, Congress has suspended the tax twice, most recently under the Bipartisan Budget Act of 2018. Any tax package or action on the medical device tax would have to be attached to broader legislation such as a potential year-end “omnibus” package, which would include the FY 2020 appropriations bills. These appropriations and tax measures are all subject to negotiations by Democrats and Republicans, who now face a looming deadline to compromise.

On Sept. 16, the U.S. Senate Finance Committee Health Task Force released its summary report on long-term solutions for tax extenders. In its report, the Health Task Force, led by U.S. Senators Pat Toomey (R-PA) and Bob Casey (D-PA), provides background on the medical device tax and stakeholder input regarding its repeal, but does not make a recommendation on next steps. As the future of the medical device tax remains unclear, industry groups have been active in Washington urging for its repeal. On Sept. 24, a coalition of more than 600 stakeholders—led by the Medical Device Manufacturers Association (MDMA), the Advanced Medical Technology Association (AdvaMed), and the Medical Imaging and Technology Alliance (MITA)—sent a letter to Congressional leadership urging for a full repeal of the tax before the suspension expires in 2020. With this impending deadline, it is critical that lawmakers in Congress recognize the burden the tax places on device manufacturers who bring life-changing innovation to patients, as well as support thousands of jobs in a thriving domestic manufacturing industry.

Impeachment and the Election Cycle Impact
On Sept. 25, Speaker of the House Nancy Pelosi (D-CA) announced she would be launching an impeachment inquiry into President Trump. The announcement came after a whistleblower complaint alleged the President called for an investigation into former Vice President Joe Biden on a July 25, 2019, phone call with Ukrainian President Volodymyr Zelensky. At the time of writing, a majority of the House now supports beginning impeachment proceedings, with 227 Democrats and Rep. Justin Amash (I-MI) expressing their support.

The impeachment inquiry could significantly impact how legislative and regulatory proposals advance through Congress and the Administration, respectively. Many members of Congress may be intently focused on the impeachment inquiry, which could increase friction between Democrats and Republicans working on legislation. Impeachment proceedings threaten to derail current bipartisan efforts to lower the cost of prescription drugs, end surprise medical billing practices, pass the United States-Mexico-Canada (USMCA) trade agreement, and repeal the medical device tax. Additionally, the Trump Administration will need to dedicate significant resources to the impeachment inquiry, which may affect workflow in certain policy areas.

Impeachment also threatens to derail efforts to pass the FY 2020 appropriations bills and keep the government open. If Democrats and Republicans cannot agree on an extension, the situation in Washington will get even messier, as the federal government will enter a shutdown after Nov. 21.

With only a year until the 2020 elections, impeachment will continue to complicate President Trump’s re-election campaign. So far, Republicans have mostly united in support behind the President, but mounting pressure could impact several purple-state Republican Senators up for re-election in 2020, including U.S. Senators Cory Gardner (R-CO), Martha McSally (R-AZ), and Susan Collins (R-ME). In the House, impeachment poses a potential quagmire for the 31 Democrats currently representing districts won by President Trump in 2016. Some of these members, such as U.S. Reps. Abigail Spanberger (D-VA) and Elissa Slotkin (D-MI), have already offered their support for the impeachment inquiry, while others, such as U.S. Rep. Jeff Van Drew (D-NJ), have spoken against impeachment. All these developments could change heading into the new year, but what remains is a continued element of uncertainty in Washington for the business and regulatory environments. 

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Jeffrey J. Kimbell, president and founder of Jeffrey J. Kimbell & Associates Inc., represents 45 clients in the life sciences community seeking legislative and policy remedies in Washington. Founded in 1998, the firm provides strategic solutions to hand-selected clients seeking creation, modification, or proper implementation of public law.

David C. Rudloff is a manager of government affairs at Jeffrey J. Kimbell & Associates Inc. He previously worked as a litigation paralegal at Covington & Burling in Washington, D.C. In his two years at Kimbell and Associates, David has worked on a number of issues involving the medical technology sector. David graduated from Davidson College in 2016 with a B.A. in political science.

Caroline P. Tucker is a manager of health policy and reimbursement strategy at Jeffrey J. Kimbell & Associates Inc. She graduated with a B.A. in the history of science and medicine from the Johns Hopkins University and with an M.S. in health policy from the Milken Institute School of Public Health at the George Washington University.