Is it Worth It?

The term that keeps coming up when you talk to Republican staffers in the House of Representatives about their 2011 agenda is: oversight.

“I think one of the lessons Republicans learned when they lost power in 2006 is they should have done more oversight of their own people,” says one Democrat on Capitol Hill who doesn’t think oversight of the Obama Administration would be such a bad idea.

If Republicans didn’t learn the lesson of conducting more oversight of their own, they sure are planning to teach a lesson to their colleagues on the other side of the aisle.

Unless you were living under a rock, you know that repealing health care reform was one of the top issues Republican candidates across the country ran on as they took over the majority in House and made major gains in the Senate.

The start of that process, according to many Republicans, is to haul up heads of key agencies in HHS—including the HHS Secretary Kathleen Sebelius—to start asking some hard questions about healthcare reform and its implementation going forward.
“Once he gets vaccinated, we look forward to seeing him” for oversight hearings, quips one Hill staffer of Acting CMS Administrator Don Berwick, who has yet to go before a House congressional committee but will testify before the Senate Finance Committee on November 17.

CMS is already a focal point of the soon-to-be incoming Congress with pending national coverage decisions for Dendreon’s prostate cancer cell-based immunotherapy Provenge, Amgen’s Aranesp and erythropoiesis-stimulating agents (ESAs), and the possibility of doing the same with Roche/Genentech’s Avastin for first-line treatment of breast cancer.

The House Oversight & Government Reform Committee, which will be chaired by Rep. Darrell Issa (R-Calif.) come January, has already sent a letter to FDA Commissioner Margaret Hamburg probing the agency’s oversight of pharmaceutical manufacturing plants in Puerto Rico. The letter promises more questions in the future, and we expect an in-person appearance before the committee will not be far off.
The question is: are Obama Administration officials ready and willing to face a hostile Congress for the two years?

There are already rumors in Washington that HHS Secretary Sebelius could be the next high-level official out the door. And FDA Commissioner Hamburg has a built-in successor in Deputy Joshua Sharfstein, who has previous Hill experience. And remember, Berwick is still only “acting” (he was a recess appointment) and has yet to be confirmed by the Senate.

Whether they stay or go may depend on their appetite for a good, long public fight. Do they think it’s worth it? We’ll know in the next 12 months.

Sebelius HHS Announcement Coming Monday?

Are we there yet? Almost. 

Our understanding is that the White House could announce Kansas Governor Kathleen Sebelius as HHS Secretary on Monday. 

Given the nature of the ups and downs for the HHS Secretary search, we want to stress that things could change at any moment and we'll do our best to keep you up to date. 

It would be a remarkable turn of events for Sebelius' nomination, which appeared to be finished just one week ago. Not too long ago, the administration had settled on Sebelius for the position. To read our coverage, click here and here. 

Then, multiple people we trust on Capitol Hill said the nomination was in deep, deep trouble over the issue of abortion. Sebelius, a Roman Catholic, is understood to be pro-life but carried out pro-choice policies in her state and has links to a vocal pro-choice doctor in Kansas. Social conservatives in the Senate wouldn't allow the nomination to get through. To read our story on this, click here.   

However, it appears as though the White House decided to step in due to President Obama's personal relationship with Sebelius and desire that she fill the Cabinet post. To read our story, click here. 

The talk in town is that Nancy-Ann DeParle will be named to head up the White House Office for Health Reform. This, like everything else health, is subject to change. 

Former New York City Health Commissioner Margaret Hamburg is still in line to be tapped as FDA Commissioner and Baltimore Health Commissioner Joshua Sharfstein is expected to be named principal deputy. We stress that this arrangement could also change. 

So to summarize, assuming things remain as they are, HHS will look like this, with the possibilty of some of these candidates having dual roles in the White House: 

HHS Secretary Kathleen Sebelius

HHS Deputy Secretary Bill Corr

HHS General Counsel Bill Schultz

CMS Administrator Don Berwick

CMS Deputy Administrator David Cutler

FDA Commissioner Margaret Hamburg

FDA Deputy Commissioner Joshua Sharfstein

We would like to emphasize that, with the downfall of the Daschle nomination, the economists in the White House (Larry Summers) and at OMB (Peter Orszag) have filled the health care reform vacuum. 

We'll tell you when we hear more. 

HHS Secretary Sebelius? It Might Spark a Fight

What we've been telling you for some time is now official: Kansas Governor Kathleen Sebelius is the front-runner to replace Tom Daschle as the nominee for Secretary of Health & Human Services under President Obama.

At least, it is as official as these things get: unnamed "advisers" confirmed to the New York Times that she is the leading candidate.

In Washington, DC and other world capitals, this is what is known as a trial balloon. Get the name out there and make sure you have a chance to weigh any vigorous objections before you make the nomination official. The Administration has to make sure it knows the landscape, especially after the collapse of the Daschle nomination threw the White House's carefully crafted plan to launch the health care reform debate into disarray.

Here's the hitch: If the goal is to pick someone who can sail through to confirmation without a fight, it may turn out that Sebelius is not the perfect choice. As we noted, Sebelius is likely to stir up passionate opposition from pro-life members of the Senate.

The Times explains the issue well:

One issue that could draw attention is her stance on abortion. A Roman Catholic who says abortion is wrong, Ms. Sebelius vetoed a bill requiring clinics to report information on why a late-term abortion was performed, drawing the condemnation of the archbishop of Kansas City, Kan.

With that in mind, it can't be a good sign for Sebelius that the Pope himself just issued a statement affirming the view that Catholic politicians are morally obliged to work to end abortion. That was a direct slap at House Speaker Nancy Pelosi, herself a Catholic, who met with Pope Benedict on February 18. (Reuters has the story here.)

But it doesn't seem like a stretch to see the statement as a call to action against Sebelius, who as HHS secretary would oversee everything from stem cell research to regulation of RU-486 to the use of public funds for family planning services.

Stay tuned....

The Next HHS Secretary: All Signs Point to Kansas

So we thought we would be done with this game, but apparently not. Now that Tom Daschle has withdrawn his nomination, the question on everyone’s mind is: Who will replace him?

All signs point to Kansas Governor Kathleen Sebelius. The Governor made a name for herself in her home state as an insurance reformer. She stopped Blue Cross Blue Shield from merging with another out of state company and she refused to accept contributions from insurance companies during her campaign.

She was a key surrogate for President Obama during his campaign and remains close to him. Maybe most importantly, she was already thoroughly vetted for Vice President and was thought by many to be a close second to Joe Biden. As a serving public official, she would bring none of the lobbying concerns that weighed down Daschle’s nomination and eventually torpedoed it.

If Sebelius is the pick, we imagine that Jeanne Lambrew will be named head of the White House Office of Health Reform and Sebelius will take on the more classic role of the HHS Secretary.

But…

If President Obama attempts to remake the pick in the mold of Daschle—a legislative general with knowledge of the issues—here’s our list of potential candidates.

Rosa DeLauro (US Congress): The Connecticut Congresswoman was originally a candidate the first time around, so why not the second? DeLauro currently chairs the agriculture appropriations subcommittee in the House, which among other things oversees FDA's budget. She's no fan of DTC ads, sloppy overseas manufacturing, or anything that looks like overly cosy relationships between industry and regulatory.

DeLauro knows as well as anybody the ins and outs of Congress and where the levers of power are.

And remember that cozy little Super Bowl Party President Obama threw at the White House for a select few members of Congress? Well, DeLauro was invited and attended. We’re just saying…The President may need her as part of the stimulus plan passage/maintenance/implementation but ignore her at your peril.

Ron Wyden (US Senator): Wyden, weirdly, has been one of the forgotten figures of health reform. However, he’s got a bill floating out there and he’s taken a long-term interest in health care. The Health Americans Act, co-sponsored by Utah Senator Robert Bennett, aims to get universal coverage by creating a new private insurance market and uses state-based purchasing pools.

Plus Wyden has served in both the House and Senate, so he knows both worlds well. Not only that, my friends (John McCain reference), but one Emanuel seems to really like his approach. That would be NIH’s Ezekiel Emanuel who is on detail at the Office of Management & Budget. But if one Emanuel likes your thinking, don’t they all?

Donna Shalala (former HHS Secretary): President Clinton had one HHS Secretary for all eight years: Donna Shalala. Is there anyone who knows HHS better? Or the lessons of the failed Clinton health reform plans?

She could step in from Day 1 and hit the ground running while coordinating seamlessly with the White House health care group. In addition, Shalala has spent her post-government life as a university president at the University of Miami.

She appears to garner wide respect from both sides of the aisle. President George W. Bush awarded her the Presidential Medal of Freedom last year. Shalala has also remained very engaged in the health reform debate showing up at reform meetings involving all of the critical stakeholders.

Jay Rockefeller (US Senator): If you can’t get a Kennedy, why not a Rockefeller? (that one goes to one of our blog colleagues). Rockefeller has been intensely engaged and personally moved by the health reform because of family experience. His stake in the Clinton Reform effort is well documented.

Rockefeller would carry the interest, knowledge, experience in the Senate, and gravitas to the position of HHS Secretary. And as Senate Finance Health Subcommittee Chairman, he has the right title.

He has been particularly visible during hearings on Medicare Part D drug prices over the last few years. Before you dismiss this one out of hand, we have it on good sources he considered the Major League Baseball Commissioner job very seriously many years ago because he loves new challenges. We would categorize health care reform and universal coverage as a challenge.

Richard Gephardt (former US Congressman): We think Gephardt would be perfect for the Daschle-like role of legislative general. He served in the House of Representatives from 1977 to 2005 and was both the House Majority Leader and Minority Leader.

In fact, we would think his Daschle-like temperament and experience would make him perfect for the job. Except for one thing: he’s been a consultant to DLA Piper and Goldman Sachs since he left public life. That probably sticks a fork in any chance of Gephardt getting the job even if he wanted it, but you never know. 

Corr Returns to HHS: Another Piece in FOBs Puzzle

Bill Corr will be Health & Human Services Secretary-designate Tom Daschle’s deputy secretary.

The position requires Senate confirmation. Corr has been an advocate of tougher government controls on tobacco, which often draws the ire of some Republicans in the Senate. As a long-time aide to key Democratic health figures on Capitol Hill (including Daschle), however, Corr’s confirmation is a formality.

In addition to working as chief counsel and policy director for Daschle for two years, Corr has valuable experience within the HHS bureaucracy, acting as an advisor and chief of staff to Clinton Administration HHS Secretary Donna Shalala. He has also been a leader of the Obama HHS transition team, catching up on the broad array of current initiatives.

From biopharma’s perspective, the most important quality that Corr brings to the new position is a familiarity and commitment to an approval pathway for follow-on biologics. Corr was Congressman Henry Waxman’s (D-Calif.) primary staffer for the Waxman-Hatch generic drug law in 1984.

Corr was a forceful advocate for establishing a clear route for quick approval of generics at the end of patent terms as a way to cut drug prices and reduce drug marketing activities – in a period when drug marketing was a pale version of the current level of promotional support.
In fact, despite the rapid success of the Waxman/Hatch legislation in creating a generics drug business, Corr was not pleased by the ability of the program to bring down drug prices rapidly.

He held a hearing two years after the enactment of the law to show that drug companies were still charging high prices. That hearing also showed the unanticipated effect of driving companies to expand dramatically their research budgets (from 8% of sales to around 12-15% of sales) to try to find products to replace products facing generic competition.

Corr won’t be able to devote the same type of focused attention to the development of follow-on biologics legislation, but he will be able to press FDA for action and he won’t need a long-time to learn the ins-and-outs of the issues. There won’t be long delays trying to discuss the philosophy of follow-on biologics at the top level of HHS.

Corr’s appointment may affect the FDA selection process in a variety of ways.
From his Congressional background, Corr shares the most with Josh Sharfstein (head of the Baltimore Health Department). They both served Waxman, though in distinctly different generations: Corr in the late 1970’s and early 1980’s and Sharfstein recently. That connection, however, could cut both ways. There may be subtle reaction against putting too many people recognized as disciples of Waxman in key positions throughout HHS. FDA watchers have already begun speculating that Sharfstein’s candidacy is losing momentum.

By temperament, Corr is closer to the Cleveland Clinic’s Steven Nissen.

Through his commitment to anti-tobacco campaigns, Corr shares a common theme with former FDA Commissioner David Kessler.

Frank Torti Tapped As Acting FDA Commissioner

Drum roll, please….The next commissioner of the Food & Drug Administration will be chief scientist and principal deputy commissioner Frank Torti.

According to an email message sent to HHS staff on Friday evening, Torti will become acting FDA commissioner come Inauguration Day, once Andrew von Eschenbach leaves office. Torti will serve under President Barack Obama until a permanent successor is named.

The announcement comes more than a week before the transition will take place. After 300 meetings with department and agency staff, HHS chief of staff Rich McKeown said in the email message, “the next phase of Transition involves the departure of our team on January 20, and the arrival of President-Elect Obama’s team later that day.”

“In order to create a clear path for leadership transition, I am attaching a list of senior leaders who will become the acting heads of their respective agencies and offices (or in some cases, remain as heads of their respective agencies and offices) until the new Administration appoints individuals to various leadership positions.”

HHS secretary Michael Leavitt will leave the department once President-elect Obama takes office. Assistant secretary Charlie Johnson will lead the department until Secretary-designate Tom Daschle is sworn in. “Once Secretary-designate Daschle is confirmed by the Senate and sworn in as HHS Secretary, he will assume leadership of HHS,” McKeown’s email says.

Once that happens, Daschle is expected to quickly announce his picks for the heads of each agency. At his Senate confirmation hearing last week, Daschle said that the Obama transition team had been aggressively interviewing candidates, and that he hoped to start building his new leadership within the next few weeks. (We've filled up the ethernet with quite a bit about potential commissioner candidates; you can start here, here and here).

But at least for now, Torti will be The Man at FDA. So what do we know about him? If you attended FDC-Windhover’s FDA/CMS Summit for BioPharma Executives in December, then you heard his keynote address first-hand. But if you missed it, you can check out this story from “The Pink Sheet.”

But we can’t help but point out that we called this one back in June—despite rumblings from Torti’s colleagues at Wake Forest that he would be returning to academia as soon as the next president took office.

In many ways, Torti is the logical pick: under the Federal Vacancies Act, Torti’s position as principal deputy commissioner puts him in line to become acting commissioner once von Eschenbach departs. Having joined the agency less than a year ago, he carries no baggage. And he comes from an academic (not political) background—the perfect profile for a caretaker commissioner.

But as recently as early December, Torti had not yet been approached about the job—at least not to the point, he said, where he would have to sit down with his wife and discuss a longer stay in Washington than was originally planned. But, hey, a lot can happen in a month.

Here are some of the other top-level acting positions announced by HHS:

The Centers for Medicare & Medicaid Services will be headed by chief operating officer Charlene Frizzera; acting CMS administrator Kerry Weems will step down;

The Centers for Disease Control & Prevention will be led by chief operating officer William Gimson; current director Julie Gerberding will leave office;

The National Institutes of Health will continue to be led by acting director Raynard Kington;

The Agency for Healthcare Research & Quality will continue to be headed by director Carolyn Clancy; and

The Office of the Surgeon General will continue to be held in an acting capacity by Steven Galson (more on his future plans here).

HHS Secretary and the FDA Commissioner

Everybody's talking about the selection of former Senate Majority Leader Tom Daschle as the next HHS Secretary. To read our take, check out The Pink Sheet DAILY. Now that the Daschle pick has been made, everyone's attention is turning to FDA Commissioner. We've given you our list of initial possibilities here and here and here.

But we wanted to use this space to make a nuanced, but important, point about what say the HHS Secretary may have on the commissioner pick. It could be very little.

In addition to Senate HELP Committee Chairman Ted Kennedy, and a few other prominent Senate leaders, the pick may come from just a few internal White House advisers. One former senior White House adviser told us this not too long ago:

"Whenever the HHS Secretary made it clear they didn't want to get locked out of the FDA commissioner process, we made sure to lock them out." White House advisers, this person said, would even literally lock their notes inside a safe when they were done for the night to ensure there were no leaks.

In the Bush White House, Assistant to the President for Presidential Personnel Clay Johnson was critical in the commissioner choice, conducting the interview process. Johnson is now OMB Deputy Director for management.

Daschle may have tremendous influence on who the next commissioner is, or even make the choice himself. The point, though, is he also may not have any say at all, or only a marginal one.

We just want to urge caution in assuming Daschle will make the pick.

The Next Administration: McCain's Top Health Positions

With the actual election almost here, we figure we’d provide you with a few shortlists of possible candidates for three key positions under either a McCain or Obama Administration. First the McCain people. The lists are by no means scientific. These are names that have been circulated, brought up in discussions with sources, or individuals we think could end up being candidates based on their experience. Remember, this is just for fun. Without further ado:

McCain Administration

HHS Secretary:

Former Arkansas Governor Mike Huckabee: The former governor’s name has been floating around as a possible HHS Secretary from the time he bowed out of Republican Primary because of his reputation as a health reformer in his home state. Will his cool relationship with McCain preclude him from a role in the Cabinet?

Former Massachusetts Governor Mitt Romney: Romney makes the most sense as HHS Secretary for the leadership role he took in ushering in the universal coverage system (with the help of Ted Kennedy and state congressional leaders) in Massachusetts. The program initially ran into serious early problems but now it seems to be gaining in popularity. Why not Romney? As they say in boxing: these two guys just plain old don’t like each other.

Former FDA/CMS head Mark McClellan: There’s only one significant health care post McClellan hasn’t held: HHS Secretary. The reasons for choosing him are obvious: former FDA commissioner, former CMS administrator (implemented the Part D program), leading the way on active surveillance through the Engelberg Center for Health Care Reform, and chairs the public-private Reagan-Udall Foundation. And he’s respected by Republicans and Democrats alike. The problem? We think McClellan’s best shot at HHS Secretary was during the Bush Administration and he was passed over for Utah Governor Michael Leavitt.

Iowa Senator Chuck Grassley: The ranking minority member on the Senate Finance Committee is a reform-minded Republican, particularly when it comes to FDA and Medicare. He hasn’t been talked about much but we think he should be considered.

FDA Commissioner:

Bill Schultz (Zuckerman Spaeder): Although Schultz is considered to be a Democrat, his name has surfaced as a possible commissioner candidate under a Republican administration. Why’s that? We’re not sure, and this one has us scratching our collective heads. However, Schultz played a key role representing generic drug makers in Congressional negotiations over a follow-on biologics bill that barely missed getting attached to the FDA Amendments Act.

Ray Woosley (C-Path Institute in Arizona): The cardiologist is highly regarded by both sides of the aisle and has made a name for himself in the area of drug safety. With his C-Path Institute, Woosley has also taken the lead on one of FDA’s most high profile public/private efforts, the Critical Path Initiative.

Edward Diethrich (Arizona Heart Institute): The cardiovascular surgeon is a prominent physician with a specialty in endovascular procedures and founder of the Arizona Heart Institute. His strong Arizona ties make him an obvious candidate for the commissioner’s job.

Frank Torti (FDA): The FDA’s chief scientific officer and former Wake Forest researcher is only one of two viable internal candidates for the job. Many think he will take over FDA in the interim between Andrew von Eschenbach’s departure and the choosing of the next commissioner. If he plays his cards right, with the administration and Congress, it could be him. But the permanent job almost certainly won’t go to someone from the inside.

Janet Woodcock (FDA): We believe that Woodcock is a registered Democrat (Plan B testimony) but she has a very good working relationship with the drug industry and proven herself to be a good manager of a number of large initiatives within FDA ranging from the Sentinel active surveillance system and Critical Path to Safety First. She could also lead FDA in the interim post-Von E, however, we believe her chances of landing the top spot permanently are incredibly slim.

CMS Administrator:

Former CMS Administrator Gail Wilensky: Currently a senior fellow at the non-profit Project HOPE, Wilensky is an official adviser to the campaign and is on any short list for administration positions. She served a two-year stint as administrator of the Health Care Financing Administration (now CMS) from 1990-1992 under Bush I. We could see her going back to oversee the next complicated phase of Part D.

McCain Advisor Jay Khosla: Khosla serves as a health policy advisor on the McCain team. He served in the Senate as health counsel for the Senate Budget Committee and health policy counsel to former Senate Majority Leader Bill Frist (R-Tenn.). Medicare cost-cutting has been a focus of his public comments.

McCain Advisor Dan Crippen: Former domestic policy advisor to President Reagan from 1988-1989, Crippen could take on any number of advisory roles in a McCain Administration. The former CBO director would seem most suited to the top spot at CMS given his stance on addressing Medicare cost savings above and beyond anything else.

This list is just a start and we’ll surely be adding to it and subtracting from it after the election. We’ll give you the Barack Obama short lists on Tuesday. Then we'll give you our picks, but we want to know: What do you think? Any names you’d like to add? We’d love to see you’re picks. We may even post them.