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Takeaway: A misreading of field conditions is bad politics & threatens relevance of the federal regulatory regime's influence | PFE, MRNA, THC, JNJ

Editor's Note: Below is a brief excerpt from a complimentary Health Policy Unplugged note written by our Health Policy analyst Emily Evans. Click HERE to learn more about Emily's research process and the analysis subscribers receive.

FDA Regulations & Congressional Irrelevance - 11 8 2021 12 08 11 PM

"It's a long road to wisdom and a short one to being ignored" ~ The Lumineers

Politics

It could all be just a matter of timing, as MRNA President Stephen Hoge claimed on 3Q earnings call.

That explanation was in response to a question about the Food and Drug Administration’s recent notification it would take until January to review data on myocarditis in the 5–11-year-old cohort as a possible COVID-19 vaccine risk factor.

Calling it his “best version” of what he had heard from the FDA, Hoge claimed that the signal for myocarditis did not emerge until after PFE had filed for an Emergency Use Authorization, hence the disparate treatment.

Perhaps it is just coincidence that the FDA’s delay comes on the heels of the White House’s rather pointed and public criticism of MRNA. Apparently, the company has incurred the government’s wrath because it has not made sufficient commitments to sell or distribute their version of the COVID-19 vaccine to Low Income and Lower Middle-Income countries. The White House argues, MRNA is obligated to do so because it benefitted from federal subsidies.

According to UNICEF, MRNA and PFE have made similar commitments to COVAX, about 500M doses each.

MRNA, of course, received direct government support for development and production of the vaccine. Both PFE and MRNA benefitted from advance purchases by the federal government and decades of research at the National Institutes of Health.

Certainly, we are a long way from political norms but as a rule, politicians and bureaucrats generally refrain from name checking a company. In the early days of the pandemic, Dr. Deborah Birx would refer to DGX and LH obliquely as “the large testing labs” or “Coke and Pepsi.”

When a False Claims Act lawsuit was ongoing against CHE in 2014, CMS would twist itself into knots to avoid calling the company by name when referring to aggressive hospice billing practices.

Maybe it is timing AND coincidence, but it could also be politics. The president refers to Albert Bourla, PFE’s CEO as a “good friend.”

In contrast, MRNA’s former board member, Moncel Slaoui served the Trump administration as Chief Scientific Adviser to Operation Warp Speed.

Maybe it is none of those things. Perhaps the FDA has developed bona fide concerns about myocarditis as a risk factor of the COVID-19 vaccination for young people.

Given the performance of federal scientific agencies in the service of politics on everything from vaccine approvals to school closures, that possibility is more remote than we care to admit.

FDA Regulations & Congressional Irrelevance - Provider of Service File

Policy

It may be counterintuitive, but regulation – when done well – requires a good bit of humility. To regulate something over which a government has no jurisdiction – as the Trump administration did when it issued a rule imposing an eviction moratorium – inevitably means the humiliation of a court reversal.

Even when that is not the case, regulations imposed that are overly onerous or appear arbitrary and capricious risk widespread non-compliance and/or lax enforcement and eventually, irrelevance.

Last week the Biden administration finalized 2022 payment rules for Hospital Outpatient Departments and Ambulatory Surgery Centers, reversing Trump-era policies that had greatly expanded the number of procedures that could be performed outside of hospitals.

Medicare rules have often acted as a pace car for commercial insurers; a way to objectively determine coverage and site of service. While Congress has explicitly stated that Medicare rules are not to determine the standard of care, that does an insurer no good before a jury, so they follow the federal government’s lead.

 As 3Q earnings commentary from JNJ, ISRG, SYK and THC, among others, demonstrates the twin challenges of labor shortages and rising acuity from delayed care, have forced more and more serious procedures into the ambulatory setting.  

Many of these cases increasingly relying on robotic systems that decrease the probability of poor outcomes that would need the support of an inpatient acute setting.

Gone, it appears, is any deference to the federal government’s policies on site of service.

It probably won’t stop there. CMS’ Medicare Coverage of Innovative Technology rule was intended to solve a genuine problem. Many device makers are granted FDA clearance only to languish for years, if ever, before receiving Medicare reimbursement. The Biden administration is finalizing a rule to reverse that policy, citing risk to patients and implying a lack of confidence in the FDA.

Nonetheless, UNH has recently launched an effort to collaborate with genetic test developers to get more innovative products to market more quickly and with better evidence of clinical validity. Health insurers, in the wake of the ACA’s regulation are being redefined as “payviders” a new form of risk bearing primary care but without the minimum Medical Loss Ratios that may ultimately be credited with destroying health insurance as we know it.

The price of regulation that ignores conditions on the ground, including advances in technology and innovation, will be paid by Medicare beneficiaries. An ironic outcome to say the least.

Power

After having flunked out of “stay-at-home” motherhood a few years ago, I ran for local office. I figured a short stint in politics would not be any worse than contending with the mean girls at NALTA tennis matches. Maybe I would learn a thing or two.

I was elected alongside a small group of gentlemen who represented what are generally acknowledged as the more conservative parts of town. The Mayor at the time referred to them – jokingly – as the “Angry White Men.”

They could be counted on to introduce legislation on topics over which the City had no control, like open carry of guns, abortion restrictions and limits on the tax levy rate. While they got plenty of media attention, their proposals were largely met with a lot of eye rolls within the body.

Today the coin is flipped.

In the name of messaging, the more extreme and usually useless measures are introduced by a small group of progressive members. All appear designed to start an argument with the Governor.

In the intervening years, the local population – and I would argue the elected officials themselves – have lost an understanding of what precisely government does. Helped along by a deterioration of news coverage, term limits, and an influx of new residents from Illinois, California and New York, local government has slipped largely into obscurity and irrelevance. In some years, attracting just a single candidate to run unopposed has been difficult

In the same period, Congress has trod a similar path. The Tea Party’s more extreme members advocated for repeal of the federal income tax in the wake of the Great Financial Crisis.

More recently, a small group of progressives have garnered a disproportionate share of airtime for their advocacy of policies – many of them, like public housing, long ago discredited – that appear out of sync with the very serious problems at hand.

In short, Congress has failed to attract original and creative thinkers who know and understand both the limits and power of government.

Aided and abetted by the group think of national media organizations that have been left alone to cover Congress, a highly consolidated fundraising system, and low turnover of more aged and nostalgic members, has left the world’s most important legislative body teetering on the brink of irrelevance.