Drug Pricing Rule Leads Otherwise Quiet Week

November 30, 2020 Dan Goldbeck, Dan Bosch

In a week shortened by the Thanksgiving Day holiday, there was limited activity in the pages of the Federal Register. Most rulemakings published last week had an economic impact of less than $10 million in terms of either costs or savings. The most significant action of the week was the Department of Health & Human Services (HHS) rule establishing the “Most Favored Nation (MFN) Model.” Across all rulemakings, agencies published $181.5 million in total net costs and added 39,549 hours of annual paperwork.

REGULATORY TOPLINES

·        Proposed Rules: 35

·        Final Rules: 73

·        2020 Total Pages: 76,323

·        2020 Final Rule Costs: $12.7 billion

·        2020 Proposed Rule Costs: $22.7 billion

TRACKING THE REGULATORY BUDGET

The rule with the most consequential effects for the fiscal year (FY) 2021 regulatory budget was the aforementioned MFN rule. The rule seeks to fix the price Medicare Part B pays for certain drugs to an international pricing index. The American Action Forum (AAF) further reviewed the rule’s substantive implications here. HHS estimates that, for regulatory budgeting purposes, the administrative burdens involved in establishing this system would be roughly $29.4 million annually or $175 million in present value (over the rule’s 8-year analytical window).

While the administration’s FY 2021 regulatory budget caps are still forthcoming, so far into FY 2021 agencies have officially published 41 deregulatory actions and 11 regulatory actions (as defined by Executive Order (EO) 13,771), totaling $34.6 billion in quantified total net costs. It is worth noting at this point, however, that regardless of whether or not the current administration releases said caps, the Biden Administration assumes power in January 2021. It is highly unlikely that EO 13,771 will remain operative (at least in anything resembling its current form) beyond then, and thus the FY 2021 regulatory budget “window” will be a truncated one. Nevertheless, AAF will continue to track EO 13,771 activity through the end of the administration to provide a record of the regulatory budget initiative’s historical legacy and implications. AAF’s review of the administration’s FY 2020 regulatory budget progress can be found here.

THIS WEEK’S REGULATORY PICTURE

This week, HHS announces a tranche of regulatory reforms.

HHS published four documents in the Federal Register this week with the aim of establishing regulatory reforms prior to the end of the Trump Administration. The actions amount to two statements of policy that took effect immediately and two requests for information (RFI) on potential reforms.

The first policy statement requires all agencies at HHS that produce analyses used in a proposed or final regulatory action to post “for public viewing on the Department’s website all data and assumptions underlying any such analysis, including all working papers, all calculations, all references, and all other information necessary to allow a third-party to replicate the agency’s analytic work.” It does not apply, however, to analyses conducted for settlement or litigation purposes, or communications with the White House.

The second policy statement aims to prevent future rules from causing conflicts with existing ones. The statement requires that future rules not overlap, duplicate, or contradict existing rules. If an agency has proposed a rule that it finds to meet one of these criteria, the agency will need to develop a plan to modify the rule so that it does not conflict with the existing regulation, including, presumably, withdrawing the proposal entirely.

The first RFI builds off the second policy statement and asks for public submissions of rules that might be overlapping or contradictory.

The second RFI requests information on the 382 actions HHS has taken in response to the COVID-19 pandemic for the purpose of making permanent many of the actions. The RFI is in response to an executive order issued earlier this year that directed agencies to identify regulations that may inhibit the economic recovery and to make possible changes to encourage economic growth.

The staying power of these changes may be limited, however. The Biden Administration could reverse the policy statements at will, and either curtail reforms stemming from the RFIs if no changes are finalized by January 20, 2021. If the Trump Administration is able to finalize some regulatory changes, the Biden Administration can still reverse those if it desires, though it would have to go through a notice-and-comment rulemaking procedure to do so.

TOTAL BURDENS

Since January 1, the federal government has published $35.4 billion in total net costs (with $12.7 billion from finalized rules) and 344.5 million hours of net annual paperwork burden increases (with 285.9 million hours due to final rules). Click here for the latest Reg Rodeo findings.

Disclaimer

DAN GOLDBECK Senior Regulatory Policy Analyst is a Senior Research Analyst for Regulatory Policy at the American Action Forum.

DAN BOSCH Director of Regulatory Policy is the Director of Regulatory Policy at the American Action Forum.

https://www.americanactionforum.org/week-in-regulation/drug-pricing-rule-leads-otherwise-quiet-week/#ixzz6fP9CD08p
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