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FDA Hiring Freeze No Problem for Trump’s Nominees

February 1, 2017

Consumer Power Report #533

Here’s a chill pill for the not-so-merry band of alarmists worrying how the U.S. Food and Drug Administration (FDA) can possibly function with reduced regulatory power and under the federal hiring freeze instated by President Donald Trump’s executive orders on January 30 and January 23, respectively. In addition to ignoring the hiring freeze’s exemption for situations agency heads “deem necessary to ensure national security and public safety,” the alarmists forget something: An FDA staffed to less than full capacity is a problem only if Trump intends FDA to remain the leviathan agency it has become in recent decades.

Trump’s press conference on January 31 made it abundantly clear he has better plans for FDA. Regarding the FDA’s obstruction of last-chance efforts by terminally ill patients to save their lives with experimental drugs, Trump said, “We’re going to get the approvals much faster. … So we’re going to be changing a lot of the rules.”

One of the fastest ways to make drug approval easier is to reduce FDA’s regulatory footprint. All signs point to forthcoming FDA shrinkage, so freezing hiring at this agency makes sense, for five reasons. The most obvious is FDA is unlikely to accomplish anything earth-shattering until it has a new commissioner-one appointed by Trump and confirmed by the U.S. Senate.

It is inconceivable FDA will do much more than writhe and slither until it finds its head - a head carrying orders from Trump to make drastic improvements upon the status quo. Former Commissioner Robert Califf left his position when former president Barack Obama, who appointed Califf, left his. Califf’s stand-in, Acting Commissioner of Food and Drugs Dr. Stephen Ostroff, formerly deputy commissioner for foods and veterinary medicine, also joined FDA during the Obama years.

Fun though it is to imagine FDA as a racing yacht needing all hands on deck, the reality is FDA is a barge in port and blocking passersby. It has been for years. Delays aren’t Trump’s fault; he just got there.

There are other reasons a temporary freeze on FDA hiring makes sense considering FDA’s impending shrinkage. Four of those reasons are candidates on Trump’s short list for FDA commissioner: Dr. Joseph Gulfo, Balaji Srinivasan, Jim O’Neill, and Dr. Scott Gottlieb.

All four candidates have voiced profound dissatisfaction with FDA as we know it. Each is likely to reduce FDA’s regulatory footprint in the drug approval game if given the chance. They would probably do this not by merely accelerating FDA’s current approval processes, as the bipartisan 21st Century Cures Act signed by Obama calls for, but by scooting FDA out of the way.

Gulfo, the most recent flavor of the week, is a senior fellow at the Progressive Policy Institute and former CEO at the medical device developer Breakthrough Medical Innovations. He earned the nickname “the Antonin Scalia of the life sciences” from the Boston Business Journal due to his 2016 paper The Proper Role of the FDA for the 21st Century, published by the Mercatus Center at George Mason University. The abstract identifies FDA as derailed by mission creep and charts a path home for FDA:

The FDA’s mission is to permit safe and effective new drugs, biologics, and devices onto the market in an efficient and timely manner. But fear of being blamed for the failings of approved products has caused the FDA to become too restrictive. The FDA has strayed from the safety and effectiveness standards that are set out in the law. … The FDA must return to its role as gatekeeper of safe and effective drugs and devices, and refrain from attempting to anticipate the future judgments of physicians and patients regarding benefits and risks.

Gulfo’s insistence FDA snap back to its lawful scope of practice is redolent of the originalism of strict constructionist Scalia, the late associate justice of the United States Supreme Court. Gulfo reportedly met twice with Trump’s transition team in January.

The other contenders seem to have even less love for FDA as it now stands, and they have ideas for improving quality and lowering costs of new drugs for patients. For example, Srinivasan, who supposedly “hates the FDA,” has suggested crowd-sourced review systems like Yelp and crowd-sourced provider systems like Uber or Airbnb could serve patients better than FDA, tech news site Recorder reported in January. Srinivasan leads 21.co, a company developing technology for using the digital currency bitcoin. He is also chief technology officer for Counsyl, a DNA screening biotechnology company.

O’Neill, a Silicon Valley investor, says FDA should approve drugs based on evidence of their safety. As banal as this sounds, it terrifies alarmists who want FDA to base approval on a drug’s proven effectiveness. “We should reform FDA so there is approving drugs after their sponsors have demonstrated safety-at their own risk, but not much risk of safety,” O’Neill said in a 2014 speech at the Rejuvenation Biotechnology Conference. “Let’s prove efficacy after they’ve been legalized.”

The fourth contender is Gottlieb, a resident fellow at the American Enterprise Institute and former FDA deputy commissioner for medical and scientific affairs. According to Devon Herrick, a senior fellow at the National Center for Policy Analysis and author of the 2017 paper “How to Make New Drugs More Affordable,” Gottlieb has a “long history of advocating for changing the risk-averse culture at the agency and reducing its bureaucracy.”

Except for needing one of these candidates as commissioner and a few likeminded lieutenants, FDA shouldn’t be hiring. In this new era of reduced regulation, however, there is one directive FDA can start following even without its new commissioner: Retreat.

- Michael T. Hamilton (mhamilton@heartland.org, @MikeFreeMarket) is a Heartland Institute research fellow and managing editor of Health Care News, author of the weekly Consumer Power Report, and host of the Health Care News Podcast.


IN THIS ISSUE:


TUESDAY NIGHT WAS DEADLINE FOR OBAMACARE ENROLLMENT

Overnight Tuesday [was] the deadline to sign up for coverage under the federal health care law. Even if the ultimate fate of “Obamacare” is uncertain, there’s been no change for this year. About 11.5 million people had enrolled as of Dec. 24.

The deadline [was] midnight Pacific time in the 39 states served by HealthCare.gov, the government said. States with their own insurance websites may have different deadlines.

Although premiums are up significantly this year, more than 8 in 10 customers get subsidies, and more than half qualify for extra help with deductibles and copays.

President Donald Trump and congressional Republicans have promised to repeal and replace the Obama-era law, but without creating disruptions for millions already covered. …

SOURCE: Associated Press


GOVERNMENT SHOULD LET NURSE PRACTITIONERS DO MORE

For several years now the country has been arguing over Obamacare, which sought to fix just about everything that’s wrong with health care all at once. To put it gently, the effort failed. In the meantime, the nation has missed opportunities to make changes that are smaller-and better. …

Advanced-practice nurses have master’s degrees or doctorates and advanced training in diagnosis and treatment. But their “scope of practice” is limited, and in many states-including Virginia-they are forbidden to practice medicine independently. In those states APRNs can practice only under the supervision of a doctor who will periodically check behind them, review charts, and so on.

Doctors tend to like this arrangement, for the obvious reason: It limits competition-especially because, while nurses are required to collaborate with a doctor, a doctor is not required to collaborate with nurse practitioners. If too few doctors in a given area care to collaborate with APRNs, well, tough luck. …

SOURCE: A. Barton Hinkle, Reason


STATES PULL PLANS TO COVER PRISONERS, IMMIGRANTS THROUGH MEDICAID

New York officials have withdrawn a request to use Medicaid funding to cover healthcare services for prison inmates and expedite access to HIV treatment. Earlier this week, California officials chose to withdraw their 1332 state innovation waiver request to offer undocumented residents unsubsidized coverage through the state marketplace.

Officials in both states said they weren’t sure their requests would be approved by the Trump administration, which has signaled cuts to Medicaid. …

Medicaid patients lose coverage if they enter prison. A provision covers inpatient treatment provided by a medical facility not associated with the prison. That scenario happens if a prison inmate goes to a hospital and remains there for over 24 hours.

A separate waiver aimed to expand a New York City effort that places newly diagnosed HIV patients on treatment with no wait time was also withdrawn.

New York state officials formally submitted the incarceration waiver in October and the HIV waiver last month. They say they might resubmit.

“We want to allow time for the state to have conversations with the new administration and to see where we may align on these issues,” said a spokesperson for the New York Department of Health. …

SOURCE: Virgil Dickson, Modern Healthcare


4 WAYS PRICE’S ‘PATIENT FREEDOM ACT’ IS WORSE THAN OBAMACARE

Last week, I wrote about how the Patient Freedom Act-introduced by senators Bill Cassidy (R-LA) and Susan Collins (R-ME)-would dramatically expand taxpayer funding of abortions, even when compared to Obamacare.

But that’s not the only way in which their bill (S. 191) exceeds Obamacare’s standards for government intervention. Other details of their legislation reveal why its short title serves as a misnomer.

1. It Has More Spending Than Obamacare

The PFA … (text available here, and a summary available here) gives states a choice of three options regarding the health care system within their borders. They can either 1) essentially keep Obamacare in place; 2) use an allotment, based on 95 percent of a state’s Obamacare spending, to create their own insurance regime (albeit with several federal mandates remaining); or 3) go out on their own and not receive any federal funds.

Section 104 of the bill contains a complicated formula to determine state allotments for option two-the default option for states under the PFA. Section 104(b)(2) provides that states that did not expand Medicaid under Obamacare will receive 95 percent of the amount they would have received had they accepted the Medicaid expansion.

In other words, rather than reducing Obamacare’s spending, the Patient Freedom Act could well increase it-by giving new Medicaid funds to states that declined to expand. …

2. It Repeals Health Savings Accounts (Not Obamacare)

The Patient Freedom Act includes what amounts to “Lie of the Year” redux: if you like your Health Savings Account (HSA), you can’t keep it. While the bill does not repeal any of Obamacare-the word “repeal” appears exactly zero times in its 73 pages-it effectively ends the current HSA regime, making Health Savings Accounts less attractive to individuals.

Current law makes HSAs tax-privileged in two ways. First, contributions to an HSA can be made on a pre-tax basis-either via a payroll deduction through an employer, or an above-the-line deduction on one’s annual tax return. Second, HSA distributions are not taxable when used for qualified health expenses under Obamacare.

The Patient Freedom Act would abolish the first tax preference while retaining the second. Individuals must contribute to an HSA using after-tax dollars, but their contributions could grow tax-free, and distributions would be tax-free when used for qualified health expenses, as under current law. Section 201(b) prohibits additional contributions to “traditional” HSAs following enactment of the bill, instead diverting new contributions to the Roth (i.e., after-tax) HSAs created by the measure. While the bill does not require individuals to convert their existing HSAs to the new Roth HSAs, account administrators (e.g., banks, mutual funds, etc.) could require their customers to do so at some point-and individuals could face a hefty tax bill when they do. …

3. It Supports Government-Imposed Price Controls

In recent years, some Americans have faced the problem of “surprise” medical bills. These can occur when individuals seek emergency care at (or are taken by ambulance to) an out-of-network hospital, or when some providers at a facility remain outside an insurer’s network (e.g., a surgeon and the hospital are in-network, but the anesthesiologist is out-of-network). To address these issues, Section 1001 of Obamacare included new mandates that insurers not impose prior authorization requests on emergency care, and require only in-network cost-sharing for all emergency care, regardless of whether the patient was treated at an in-network hospital or not.

Section 121(a)(2) of the Patient Freedom Act goes further than Obamacare, imposing maximum charges for emergency services: 85 percent of insurers’ usual, customary, and reasonable charges for physician care; 110 percent of Medicare payment rates for inpatient and outpatient hospital care; and acquisition costs plus $250 for drugs and biological pharmaceuticals. …

4. It Would Create an Automatic Enrollment Program

Sections 105(c) and 107(c) of the PFA create parameters through which states can automatically enroll their residents in health insurance-complete with restrictions on the type of coverage states can auto-enroll individuals into. While individuals can opt out of insurance should they wish to do so, this mandate-without-a-mandate could prove even more problematic than Obamacare’s requirement that all individuals purchase health coverage. …

SOURCE: Chris Jacobs, The Federalist

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Michael Hamilton writes and edits for the liberty-minded clients of Good Comma Editing, LLC, a freelance writing and editing company.
media@heartland.org @MikeFreeMarket