Whither healthcare if (or, rather, when) the federal government shuts down?

As most readers know, House Republicans are at an impasse about funding the federal government, which is very likely to lead it to a shutdown starting Sunday (ie, start of fiscal year [FY] 2024) until the funding questions can be resolved. If Congress does not intervene, Sunday would be the first government shutdown since late December 2018. That partial lapse in funding lasted over 30 days, the longest in the modern era.

Which leads (for us) to the million-dollar question: How will a federal government shutdown affect the Department of Health and Human Services (HHS) and its various agencies? A new HHS contingency plan stated that roughly 42% of HHS staff would be furloughed on the second day of a shutdown. The contingency plan also includes specific details regarding which activities will continue or not continue during a lapse in appropriation. We have summarized several below.

Medicare
The Medicare Program will continue during a lapse in appropriations, as will Center for Medicare & Medicaid Innovation (CMMI) activities. Medicare and Social Security are mandatory entitlement programs funded by taxes and premiums, so they are not dependent on Congress.

Medicaid
The Centers for Medicare & Medicaid Services (CMS) will have sufficient funding for Medicaid to fund the first quarter of FY 2024, based on the advance appropriation provided for in the FY 2023 appropriation. Beyond that, it is not exactly clear what the impact would be, since such a situation has not happened before. CMS will maintain the staff necessary to make payments to eligible states for the Children's Health Insurance Program (CHIP).

Food and Drug Administration (FDA)
The FDA will continue drug and medical device reviews, because those are funded by industry-paid user fees. Agency reserves can continue to be used for user fee activities such as approving new products, reviewing clinical research, and publishing guidances. FDA, however, cannot accept any new user fees during a government shutdown.

National Institutes of Health
A shutdown would halt funds for new clinical trials, though ongoing clinical trials would not be affected.

A prolonged shutdown would have unknown consequences, as HHS has never been out of funding for an extended period of time. Not discussed is the length of time it will take for government agencies to ramp up activities once a shutdown ends; most government programs cannot be immediately restarted, as 20% to 40% of workers may be facing quite the full inbox when they return.

Legislative bytes

Is ICER beginning a new chapter with its updated framework and the return of Dan Ollendorf?

On Monday, the Institute for Clinical and Economic Review (ICER) published its updated Value Assessment Framework (VAF), which provides detailed information about the technical methods and assessment process ICER uses to inform its Evidence Reports. The updated VAF will inform ICER’s Evidence Reports launched after October 2023.

ICER also published the public comments it received from 32 stakeholder organizations on its proposed changes and its response to public comments. This is a marked drop from the number of comments ICER received for its 2020 VAF update when the input period was longer and consisted of 2 phases. While there were fewer comments across all stakeholder groups, feedback from patient groups fell the most dramatically, from 21 groups in the prior update to 8 in the current iteration.

Although the updated framework largely resembles ICER’s previous 2020-2023 VAF, ICER made a few notable changes, including minor changes to its comparative effectiveness analyses and long-term cost-effectiveness analyses, along with changes to its assessment process: 

Changes to ICER’s comparative effectiveness analyses:

Understanding ICER’s updated VAF, and the resultant implications for ICER’s future product assessments, is key for manufacturers as they plan their future ICER engagement strategies. Cencora experts are here to help! We can provide guidance to help organizations understand ICER’s updated methods and the implications for patients, payers, and life sciences companies. If you need assistance with all things value assessment or ICER-related, please contact Kimberly Westrich. 

On Monday, ICER also published its Draft Evidence Report assessing the comparative effectiveness and value of sotatercept for the treatment of pulmonary arterial hypertension (PAH). ICER issued a B+ evidence rating for sotatercept when added to background therapy, concluding that there is moderate certainty of a small to substantial net health benefit, with a high certainty of at least a small net health benefit. Using a placeholder price of $400,000 per year, ICER’s preliminary cost-effectiveness analyses estimated sotatercept added to background therapy to be $1,805,000 per evLY gained and $2,380,000 per QALY gained, exceeding commonly cited thresholds of cost-effectiveness. However, ICER noted that the actual cost-effectiveness of sotatercept will depend on its price. ICER is accepting stakeholder feedback on these preliminary findings through October 23, 2023. 

ICER also announced this week that Daniel Ollendorf, PhD, MPH, will return to ICER in November 2023 as Chief Scientific Officer (CSO) and Director of Health Technology Assessment (HTA) Methods and Engagement. Dr. Ollendorf previously served as ICER’s CSO from 2007-2018 and is currently the Director of Value Measurement & Global Health Initiatives at the Center for the Evaluation of Value and Risk in Health (CEVR) at Tufts Medical Center, where he focuses on value assessment methods, drug pricing policy, and building international capacity for and interest in HTA. In addition to his new role at ICER, Dr. Ollendorf will maintain a faculty appointment at CEVR and will continue to participate in ongoing research.

Erratum: Last week’s Value Corner erroneously identified Fiona McElwee, rather than Fred McElwee, as a co-author on one of the Innovation and Value Initiative’s Valuing Innovation Project award-winning papers. We regret the error and apologize for the confusion that ran rampant through the value assessment community and the McElwee family!

When will “340B” stand for $340 billion? The program reaches a record $53.7 billion in discounted purchases in 2022 

Not surprisingly, the 340B Drug Pricing Program saw significant growth in 2022. According to information obtained by Drug Channels, the program reached a record $53.7 billion in discounted purchases this past year, not including sales made directly from the manufacturer or sales by specialty distributors. This amount places 340B as the second-largest government pharmaceutical program, based on net drug spending, behind only CMS. The 340B program saw an increase of 22.3% ($9.8 billion) from 2021; however, the trend of increasing 340B purchases is not new. Since 2015, annual 340B purchases have exhibited a compound annual growth rate of 23.6%.

The tremendous growth of the 340B program is not without concern, as several recent reports have highlighted hospitals’ inappropriate utilization of the program (The Wall Street Journal 2022, The New York Times 2022, Center for Medicine in the Public Interest 2022) and, in May 2023, the Government Accountability Office (GAO) reported that 14 out of the 30 hospitals it assessed did not provide discounts to low-income or uninsured patients at their facilities’ contract pharmacies. This persistent abuse and misuse is especially problematic, since 340B lacks a regulatory infrastructure with well-developed administrative controls and clear legislation to guide the program.

The widening gap between the wholesale acquisition cost and the 340B purchasing total has also generated some controversy. Without the 340B program, acquisition of the same medications through standard channels would have cost $106 billion in 2022. Some point to the increase in brand-name drug costs as the underlying factor in the gap. Others observe that drug costs have only risen by an average annual rate of 3.6% and, therefore, are most likely not the main contributor to this gap, which accounts for more than 16% of pharmaceutical manufacturers’ total gross sale of brand-name drugs at list prices (excluding COVID-19 vaccines). Furthermore, there have been claims that manufacturers are resisting the program’s benefits through restrictions with pharmacy contracts; however, the Health Resources and Services Administration estimates that these restrictions only reduced 340B purchases by $470 million, or less than 1% of 2022’s total 340B purchases.

Overall, the 340B Drug Pricing Program has experienced remarkable growth, raising questions about its sustainability and the need for potential reforms to ensure it effectively serves its intended purpose of providing affordable drugs to eligible healthcare entities and, ultimately, making medications more accessible to low-income or uninsured patients.

CMS projects MA and Part D programs prices and offerings to remain stable in 2024

On Tuesday, CMS announced in a press release that Medicare Advantage (MA) and Part D premiums, plan choices, and benefits will remain “stable” in 2024 for covered beneficiaries. CMS attributes this stability to improvements adopted under the 2024 Rate Announcement and 2024 MA and Part D Final Rule, such as increased protections around prior authorization policies and marketing rules and increased access to behavioral health. Further stability stems from IRA-related price limits on insulin (capped at a $35 monthly cost-sharing limit), no-cost adult vaccines, and additional Part D drug savings.

CMS projected that in 2024, 73% of MA beneficiaries will see no premium increase, and among those who do, calculated that increases bordered on miniscule: on average, a $0.64 increase, from $17.86 to $18.50. It previously announced that Part D-covered beneficiaries would see slight decreases, on average, in monthly premiums, down to $55.20 in 2024 vs $56.49 in 2023, a 1.8% decrease. CMS noted that plan choice “is increasing” and that MA supplemental benefit offerings will “increase slightly,” although the press release did not include specific numbers or estimates on these topics.  

The press release also noted that 1,500 MA plans will participate in the Value-Based Insurance Design (VBID) model in 2024, which aims to test person-centered innovative benefits, such as food and nutrition benefits, to an estimated 8.7 million low-income people and patients with chronic conditions. See the accompanying fact sheet for further details. 

Information buffet (AKA, other stuff that caught our attention)