Senate and House Send FDA User Fee Bill to President

The Senate voted 92-4 to agree to S. 3187 after the House added the conference agreement on landmark FDA user fee legislation.  The bill, which CBO says would reduce direct spending by $307 million but result in deficit reduction of $311 million over ten years, is awaiting President Obama’s signature to become law.  In general, for FY 2013-2017 the bill:  reauthorizes the Prescription Drug User Fee Act (PDUFA) and the Medical Device User Fee Authorization (MDUFA); authorizes new generic drug and biosimilars user fee programs; and, among other things, provides new incentives for the development of antibiotics; adds provisions to address drug shortages; adds a new fee program related to rare pediatric diseases; and adds a requirement for the FDA to issue guidance on the use of the internet and social media to promote FDA regulated medical products.  Senator Richard Burr (R-NC) lamented how quickly the final bill was pushed through without including “track and trace” provisions to allow for the tracking of drugs after they leave their manufacturers.  He said he would pursue legislation on such provisions together with Senator Michael Bennet (D-CO).

Health Pay-fors Avoided under Transportation and Student Loan Bill

Before recessing for the July 4th week, the House and Senate passed legislation (H.R. 4348) that freezes student-loan interest rates at 3.4% for one year and includes offsets to the $6 billion cost by changing pension rules and cutting off subsidized student loans after six years.  House and Senate negotiators finalized the legislation without agreeing to health related offsets originally included in the House bill.  The compromise omits offsets that would have cut preventive care spending, made adjustments to Medicare tax withholding for selected individuals, placed a limitation on state Medicaid provider taxes, and increased a levy on tax delinquent Medicare providers.  However, the final bill includes a new offset for additional Gulf Coast restoration funding with a $651 million cut in Louisiana’s Medicaid funds.

Appropriations Issues

The votes to pass the transportation and student loan legislation and charges holding Attorney General Eric Holder in contempt of Congress delayed until after the recess further consideration in the House of the following FY 2013 appropriations bills:  Agriculture/FDA (H.R. 5973), Department of Defense (H.R. 5856) and Financial Services (H.R. 6020).  The Financial Services bill includes restrictions on PPACA-related funding between HHS and the IRS and restrictions on federal insurance exchanges from using federal funds to pay for administrative costs associated with abortions.  Of note, the House Budget Committee passed H.R. 5872, legislation that requires the Administration to provide details on exactly what defense and domestic program cuts will be made in the event Congress does not delay the sequestration cuts enacted as part of the Budget Control Act.

Supreme Court Rules on Individual Mandate

In deciding 5-4 that the individual mandate survives constitutional muster, the Chief Justice wrote that, in considering the mandate under the Constitution’s taxing and spending clause, “the mandate is not a legal command to buy insurance.”  Rather it makes going without insurance just another thing the Government taxes, like buying gasoline or earning income.  And if the mandate is in effect just a tax hike on certain taxpayers who do not have health insurance, it may be within Congress’s constitutional power to tax.”  He concluded the penalty complies with the constitutional requirement for taxes, in that “precedent demonstrates that Congress had the power to impose an exaction in the [individual mandate] under the taxing power, and that [the mandate] need not be read to do more than impose a tax. That is sufficient to sustain it.”  He said it was not the court’s role “to forbid it, or to pass on its wisdom or fairness.”  This ruling came despite the 11th Circuit Court’s observation that fedending claural courts “unanimously” viewed the penalty enforcing the individual mandate not to rise to the level of a “tax” for purpose of the taxing and spending clause.  

Justices Alito, Kennedy, Scalia and Thomas harshly disagreed with the majority opinion and Justice Kennedy stated that the exaction required by the individual mandate is not a tax nor described in the law as such.  Of note, the majority also held that the tax anti-injunction act (AIA), which would otherwise bar court consideration of the mandate before an actual monetary extraction occurs in 2014, did not apply because the PPACA did not characterize the “penalty” as a tax for purposes of the AIA.  Notwithstanding the above ruling, Chief Justice Roberts also made clear that the commerce and the necessary and proper clauses could not be used to justify the individual mandate.  In this regard, Justices Alito, Kennedy, Scalia and Thomas concurred.  However, Justices Breyer, Ginsburg, Kagan and Sotomayor disagreed and said that upholding the mandate would be valid under the commerce clause.  In holding that a law forcing individuals to participate in an activity cannot be sustained under the commerce clause, Chief Justice Roberts argued that Congress had never before attempted to use the commerce clause as justification to “to compel individuals not engaged in commerce to purchase an unwanted product.”  Justices Alito, Kennedy, Scalia and Thomas agreed with CJ Roberts that the “….individual mandate, however, does not regulate existing commercial activity,” and to rule in favor of the commerce clause argument would open “a new and potentially vast domain to congressional authority.”  The concurring justices said that the 1942 decision Wickard v. Filburn, in which the court upheld restrictions on farmers growing wheat for personal consumption, represents the outer limit of Congress’ commerce clause authority.

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