WASHINGTON WATCHLINE. The 21st Century Cures Act. The National Institutes of Health Awarded $4.8 billion

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1 WASHINGTON WATCHLINE PHYSICIAN ADVOCACY FOR EXCELLENCE IN THE DELIVERY OF PULMONARY, CRITICAL CARE AND SLEEP MEDICINE January VOLUME 27 No. 1 The 21st Century Cures Act In the final days of the 114th Congress, the House passed the 21st Century Cures Act, with a vote of 392 for and 26 opposed. The Senate followed shortly thereafter with a vote of 94 for and 5 opposed and President Obama has signed the legislation into law. HPRT-RU00-SAHR34.pdf This legislation, was originally introduced in 2014 by House Energy and Commerce Committee Chairman Fred Upton and Senate Health Committee Chairman Lamar Alexander as a 300 page bill to provide additional funds to the National Institutes of Health (NIH) for medical research and the Food and Drug Administration (FDA) for accelerated approval of new treatments. The original legislation devoted $8.75 billion to the National Institutes of Health and $550 million to the FDA over a five-year period. Subsequent lobbying, for and against, by more than 1,455 lobbyists representing 400 companies, universities and other organizations turned it into an almost 1,000 page health care bill with a total funding of roughly $6.3 billion dollars to be spent over the next decade. The National Institutes of Health Awarded $4.8 billion The National Institutes of Health budget has slipped about 20 percent over the past decade in terms of real buying power. Congress approved $ billion for the Institutes in the Federal budget for 2017 fiscal year. The new legislation adds $4.8 billion spread over the next decade; however, it is very prescriptive in how that money is to be paid and used. The legislation establishes an NIH Innovation Account in the United States Treasury funded by a combination of savings and revenues. Each year, from 2017 to 2026, a specified amount is deposited in that account from the Treasury. The Bill allots a total of $1,400,000,000 to the Precision Medicine Initiative, $1,564,000,000 for the Brain Research through Advancing Innovative Neurotechnologies (BRAIN) Initiative, $1,802,000,000 for Vice -President Biden s Cancer Moonshot and $30,000,000 to further the field of The WASHINGTON WATCHLINE is published monthly and provides timely information to NAMDRC members on pending legislative and regulatory issues that impact directly on the practice of pulmonary medicine. NAMDRC s primary mission is to improve access to quality care for patients with respiratory disease by removing regulatory and legislative barriers to appropriate treatment. INSIDE THIS ISSUE: About NAMDRC Membership Benefits NAMDRC Application...7 NAMDRC Leadership...4 Product and Technology News...5 NAMDRC 40th Annual Meeting and Educational Conference will be held: March 23 25, 2017 The Meritage Resort Napa Valley, CA NAMDRC 8618 Westwood Center Drive, Suite 210 Vienna, VA Phone: Fax: ExecOffice@namdrc.org NAMDRC will directly affect your practice more than any other organization to which you belong.

2 January 2017 VOLUME 27 NO 1 Page 2 regenerative medicine. For 2017 NIH will receive $372,000,000 to be spent on the Cancer Moonshot. Funding for the other projects begins in While the additional monies will be welcome at the NIH, the legislation adds an administrative burden. In the next six months the Director of NIH must develop a work plan, including the proposed allocation of funds, for each of fiscal years 2017 through 2026 and present the plan to the Senate Committee on Health, Education, Labor, and Pensions and the Committee on Appropriations and the House of Representatives Committee on Energy and Commerce and the Committee on Appropriations. Furthermore, Congress requires the Director of NIH to develop and maintain a biomedical research strategic plan that identifies Mission Priority Focus Areas with an emphasis on rare and pediatric diseases and includes developing more effective antibiotics. The Director is required to make the initial strategic plan publicly available on the website of the NIH within 9 months. When comparisons are made of the impact of Chronic Obstructive Pulmonary Disease (COPD) on the healthcare system, compared to other chronic diseases, most would agree that research funding is woefully inadequate. Management of COPD is a public health issue that does not lend itself to easily recognized or implemented solutions by the private sectors. Despite being the nation s third leading cause of death, with nearly 140,000 lives lost annually, COPD funding from the National Institutes of Health (NIH) is only $108 million per year. It does not appear that this legislation will increase funds available for research into COPD. The Food and Drug Administration Awarded $500 million The 2017 Federal Budget awarded $5.1 billion in total funding for the Food and Drug Administration, an increase of $358 million above The Cures Act adds $500 million over a ten year period starting with $30 million in 2018 which will be deposited in a new FDA Innovation Account in the Treasury. This cash infusion is expected to help the FDA fill more than 600 vacant positions -- jobs that have remained open because the pay hasn't been competitive. The legislation gives the Commissioner some flexibility to increase employee compensation. The Food and Drug Administration provisions have been the most contentious portion of this legislation. While the goal is to speed up the approval process without allowing harmful or ineffective products to reach the market, it has been pointed out by some observers that the FDA is already the fastest regulatory system in the world. In recent years, once the FDA starts its review, it rules on new pharmaceuticals within 6 to 10 months. The experience of device developers, however, appears to be much different. According to the Advanced Medical Technology Association (AdvaMed), the FDA regulatory process for medical devices remains too time-consuming, too inefficient, and too inconsistent. Despite existing legislation and guidelines, the actual device review process has been spotty and the FDA s least burdensome policy is often disregarded by reviewers. In recognition of these issues, the legislation significantly increases responsibility and accountability for both the Secretary of Health and Human Services (HHS Secretary) and the FDA Commissioner as well as an increase in Congressional oversight. Some analysts have suggested that the increased funding will be inadequate to cover the increased workload. Within the next 6 months, the FDA Commissioner is required to develop and submit a work plan outlining the proposed allocation of funds for review by the Senate Committee on Health, Education, Labor, and Pensions and the Committee on Appropriations as well as the House of Representatives Committee on Energy and Commerce and the Committee on Appropriations for each of fiscal years 2018 through 2026.

3 January 2017 VOLUME 27 NO 1 Page 3 The 21st Century Cures Act significantly alters the requirements for approving medical devices, an area long criticized for lack of rigor as compared with drug evaluations. The legislation requires the HHS Secretary to establish a program for priority review of breakthrough medical devices and train FDA employees on the least burdensome appropriate means concept in their review of medical devices. The HHS Secretary must establish a streamlined FDA data review program for device applications and the Commissioner of Food and Drugs must issue final guidance for implementation of the data review program. When a device is specifically the subject of review by a classification panel, the HHS Secretary must ensure that adequate expertise is represented on the classification panel and provide an opportunity for the device developers to provide recommendations on the expertise needed among the voting members of the panel. The new law redefines the evidence on which high-risk devices can be approved to include case studies, registries, and articles in the medical literature. For better or worse, the law now allows device makers to pay a third-party organization to determine whether the manufacturer can be relied on to assess the safety and effectiveness of changes it makes to its devices, in place of submitting an application to the FDA. Thus certified by the external company, a device maker would be authorized to continue to assess its own products on an ongoing basis. How these changes will affect innovation in the device industry and the availability of respiratory support devices for our patients is difficult to predict and will be the topic of the February Watchline. Council for 21st Century Cures The legislation establishes a new bureaucracy, The Council for 21st Century Cures. This Council is to be a public-private partnership, not an agency of the United States Government. The purpose of the Council is to accelerate the discovery, development, and delivery of innovative cures, treatments, and preventive measures for patients. Funding for 2017 through 2024, is $10 million per year from the U. S. Treasury while industry is encouraged to provide additional financial support. The Board of directors will consist of 17 individuals; four from the biopharmaceutical industry, two from the medical device industry, two from the information and digital technology industry, two from academic research, three patient advocates, two health care providers and two representing health care plans and insurers. While expectations of establishing a strategic agenda and fostering collaboration among academia, government agencies, industry, health care payors and providers are expressed in the legislation, the question arises of how the agenda of this group will be driven by industry funding? There is no expressed authority or reporting requirements for this Council. Funding the 21st Century Cures Bill Funding has been an issue of contention. Critics have pointed out that while significant changes in the way FDA operates have been mandated the funding for the NIH Innovation Account and the FDA Innovation Account is discretionary and subject to annual appropriations. The majority of the funding is from savings by reducing funding of existing programs. The only new money is an anticipated $1,040 million from the sale of oil from the Strategic Petroleum Reserve: The Secretary of Energy shall drawdown and sell from the Strategic Petroleum Reserve 10,000,000 barrels of crude oil during fiscal year 2017 estimated $513,698,630 9,000,000 barrels of crude oil during fiscal year 2018 estimated $462,328,200 6,000,000 barrels of crude oil during fiscal year estimated $308,218,800 Of course the actual amount of income realized from this move will depend on the price of oil in the future. The income realized from this drawdown is not guaranteed for the 21st Century Cures

4 January 2017 VOLUME 27 NO 1 Page Officers & Board of Directors OFFICERS Timothy A. Morris, MD President Charles W. Atwood, MD President-Elect James P. Lamberti, MD Secretary/Treasurer Dennis E. Doherty, MD Past President Board of Directors Robert J. Albin, MD Albee Budnitz, MD Kent L. Christopher, MD Peter C. Gay, MD Thomas B. Hazlehurst, MD Theodore S. Ingrassia, III, MD Peter S. Marshall, MD, MPH Steve G. Peters, MD Valerie A. Schneider, MD Thomas M. Siler, MD PRESIDENT S COUNCIL George G. Burton, MD John Lore, MD Louis W. Burgher, MD, Ph.D. Alan L. Plummer, MD E. Neil Schachter, MD Joel M. Seidman, MD Frederick A. Oldenburg, Jr., MD Paul A. Selecky, MD Neil R. MacIntyre, MD Steven M. Zimmet, MD Joseph W. Sokolowski, MD Peter C. Gay, MD Steve G. Peters, MD Lynn T. Tanoue, MD Dennis E. Doherty, MD Executive Director Phillip Porte Associate Executive Director/ Legislative Affairs Sarah Walter Bill but will be deposited in the U. S. Treasury. The Appropriations Committee must then approve the transfer on an annual basis. While the Strategic Petroleum Reserve has been a closely guarded asset for the last 40 years, Congress is now turning to it as a source of income for other expenses also. As part of the temporary spending bill to bridge the gap for the 2017 Federal budget, Congress authorized the sale of $375 million worth of crude oil from the country's emergency reserve this winter. The majority of the expected funding of the legislation assumes $3.5 billion in savings by rescinding funds from the Prevention and Public Health Fund, a slush fund created by the Affordable Care Act (ACA). Additional savings to be transferred to the programs established by this legislation, projected by the Congressional Budget Office, include: Reducing Overpayments of Infusion Drugs $660 million Rescission of Portion of ACA Territory Funding $464 million Reduced Medicare Coverage of Home Infusion Therapy $372 million Reduced Medicaid Reimbursement for Durable Medical Equipment $370 million The Benefits of the Bill Any increase in funding for the National Institutes of Health is welcome; however, the 700 pages added to the original 300 page bill contain provisions that significantly increase the burden on the HHS Secretary, the Director of NIH and the FDA Commissioner. It remains to be seen if the changes mandated in the additional 700 pages will actually stimulate advances in healthcare. The availability and affordability of pharmaceuticals and medical devices has been an impediment to reducing the burden of chronic diseases. In the last year, one of the greatest concerns that patients and patient advocacy groups expressed to lawmakers was the escalating cost of medications, including generics. In debating the legislation, many lawmakers believed the bill provided a good opportunity to control drug prices as representatives of industry argued that one of the reasons their products were expensive was because the FDA's requirements were burdensome and time-consuming. The Pharmaceutical Researchers and Manufacturers of America lobbyists convinced many in the legislature that the bill would generate efficiency and result in cost savings. While the law will likely reduce the cost of bringing products to market, there is no reason to believe that the companies will lower the prices of their products. Associate Executive Director Karen Lui, RN, MS Director Member Services Vickie A. Parshall

5 January 2017 VOLUME 27 NO 1 Page 5 PRODUCT AND TECHNOLOGY NEWS! NAMDRC is providing this space to our benefactors and patrons who provide us with information about new products and innovations related to pulmonary medicine. NAMDRC reserves the right to edit this copy as appropriate.

6 January 2017 VOLUME 27 NO 1 Page 6 NAMDRC Membership Benefits AT A GLANCE... Monthly publication of the Washington Watchline, providing timely information for practicing physicians; Publication of Current Controversies focusing on one specific Pulmonary/Critical Care Issue in each publication; Regulatory updates; Discounted Annual Meeting registration fees; The Executive Office Staff as a resource on a wide range of clinical and management issues; and The knowledge that NAMDRC is an advocate for you and your profession. One of NAMDRC s primary reasons for existence is to provide both clinicians and patients with the most up-to-date information regarding pulmonary medicine. Bookmark this page! The complexity of our nation s health care system in general, and Medicare in particular, create a true challenge for physicians and their office staffs. One of NAMDRC s key strengths is to offer assistance on a myriad of coding, coverage and payment issues. In fact, NAMDRC members indicate that their #1 reason for belonging to and continuing membership in the Association is its voice before regulatory agencies and legislators. That effective voice is translated into providing members with timely information, identifying important Federal Register announcements, pertinent statements and notices by the Centers for Medicare and Medicaid Services, the Durable Medical Equipment Regional Carriers, and local medical review policies. ABOUT NAMDRC: Established over three decades ago, the National Association for Medical Direction of Respiratory Care (NAMDRC) is a national organization of physicians whose mission is to educate its members and address regulatory, legislative and payment issues that relate to the delivery of healthcare to patients with respiratory disorders. NAMDRC members, all physicians, work in close to 2,000 hospitals nationwide, primarily in respiratory care departments and critical/intensive care units. They also have responsibilities for sleep labs, management of blood gas laboratories, pulmonary rehabilitation services, and other respiratory related services.

7 January 2017 VOLUME 27 NO 1 Page 7 NAMDRC MEMBERSHIP APPLICATION MEMBERSHIP DUES SCHEDULE (Dues for first year include $75.00 Initiation Fee) Individual and Small Group Dues. $ Includes groups of up to 6. Please include contact information for all members. TWO EASY WAYS TO BECOME A NAMDRC MEMBER 1. Go to and register for membership online. 2. Mail this application to: NAMDRC 8618 Westwood Center Drive, Suite 210 Vienna, VA Please print clearly or type: NAME (LAST) (FIRST ) (MIDDLE INITIAL) DEGREE ADDRESS CITY STATE ZIP CODE TELEPHONE FAX FACILITIES WITH WHICH YOU ARE AFFILIATED GROUP MEMBERSHIP DUES (For larger groups, please attach a list of names. If a group member wishes to receive mailings at an address other than that indicated above, please attach appropriate information.) Groups of $1, Groups of $1, Groups of $1, TOTAL PAYMENT DUE $ PAYMENT Enclosed is a check payable to NAMDRC (U.S. Dollars) Change my credit card for total payment due American Express VISA MASTER CARD CREDIT CARD NUMBER _ EXPIRATION DATE SECURITY CODE NAME AS IT APPEARS ON CREDIT CARD BILLING ADDRESS (IF DIFFERENT FROM REGISTRATION) _ SIGNATURE ln accordance with IRS Regulations, 95% of your 2O17 Annual Dues are tax deductible. NAMDRC s Federal TAX ID # is FOR MORE INFORMATION, CONTACT NAMDRC Phone: Fax: ExecOffice@namdrc.org Web Site: