WASHINGTON WIRE

In this issue, you'll find:

• Finance Committee Questions Administration's Medicaid Proposals
• Administration, Grassley Discuss Drug Safety Initiatives
• HELP Committee Examines Reimportation
• Genetic Nondiscrimination Legislation Passed by Senate
• Congress in Recess Until March 1, 2005

Top Story

Finance Committee Questions Administration's Medicaid Proposals

During a Senate Finance Hearing on February 16, 2005, Health and Human Services (HHS) Secretary, Mike Leavitt, faced tough questions from Senators on the details of the Administration's Medicaid reform proposals.

The President's FY 2006 budget proposal, release on Monday, February 7, 2005, recommends cuts of $60 billion in federal Medicaid spending over the next ten years.

In response to the Senators concerns over the Medicaid reductions, Leavitt explained that there were three main areas of "inappropriate" spending that the budget cuts would target - overpayment for prescription drugs, asset transfers by individuals (mostly elderly) seeking to secure their eligibility under Medicaid, and "abuse" of intergovernmental transfers (IGTs) and other accounting measures employed by states to draw down more federal money. Secretary Leavitt went on to state that the cuts would essentially close loopholes and would not affect services.

Many observers disagree with Mr. Leavitt's assessment of the budget proposals, arguing several recommendations would shift costs to the states, if not generate cuts in services. For example, establishing a 50 percent federal matching rate for targeted case management services would force states with higher federal matching rates to cover a greater percentage of the costs for these services.

During Wednesday's hearing, Secretary Leavitt repeatedly stressed the Administration's interest in greater flexibility for states to provide services to more individuals in a budget neutral manner. While several Committee members questioned the feasibility of this type of proposal, Secretary Leavitt explained that he was currently meeting with state governors to craft a viable proposal.

Health Care News

Administration, Grassley Discuss Drug Safety Initiatives

On Tuesday, February 15, 2005, HHS Secretary Michael Leavitt announced that the Food and Drug Administration (FDA) would be creating an independent oversight board to handle drug safety.

President Bush's pick for FDA chief and current Acting Commissioner, Lester Crawford, stated that the board would be charged with securing new "communication channels" to improve the dissemination of information to the public. The board would consist of FDA and other HHS officials as well as members of other relevant government agencies.

Senate Finance Chairman, Charles Grassley (R-IA) stated this week that he would be introducing legislation in early March aimed at creating an independent drug safety office within the FDA. Despite the seeming overlap in jurisdiction of the two entities, Chairman Grassley has stated that it is "always better to have more watchdogs."

These two announcements come during a week of testimony before an FDA risk management advisory committee regarding the safety of painkillers known as COX-2 inhibitors. Vioxx, a widely used COX-2 inhibitor, was pulled from the market in September, 2004 after studies showed increased risk of cardiovascular problems among consumers.

HELP Committee Examines Reimportation

The Senate Health, Education, Labor and Pensions (HELP) Committee met Wednesday and Thursday to discuss the pros and cons of legislation that would allow Americans to reimport prescription drugs from other countries. Chairman Michael Enzi (R-WY) said that it would be possible to develop a bill allowing for reimportation provided the bill maintained current US standards of drug safety and effectiveness.

The hearing focused on a report issued by the HHS Task Force last December, which concluded that the cost of a reimportation plan would exceed savings for consumers and could limit future medicinal developments. The Undersecretary for International Trade Administration at the Commerce Department, Grant Aldonas, testified on the negative impact of reimportation, claiming it would affect the US’s ability to negotiate trade agreements. He also agreed with the Task Force’s report, citing that price controls would decrease funds that pharmaceutical companies use for research and development of new medicines, thereby resulting in fewer new drugs each year.

Genetic Nondiscrimination Legislation Passed by Senate

On Thursday, February 17, 2005 the Senate passed the Genetic Information Nondiscrimination Act of 2005 (S. 306). The legislation would establish guidelines for health insurers and employers around genetic information and disclosure.

Currently, most states have their own guidelines for the use of genetic information, however, they differ significantly from state to state. With the passage of this federal legislation, the Senate hopes to establish consistent and, therefore, more effective rules.

Upcoming Events

Congress in Recess Until March 1, 2005

For More Information

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