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Price Faces Tough Questions on Stock Trading, Health Care Law

Secretary of Health and Human Services nominee Rep. Tom Price, R-Ga., takes his seat before the start of his confirmation hearing in the Senate Health, Education, Labor and Pensions Committee on Wednesday, Jan. 18, 2017. (Bill Clark/CQ Roll Call)
Secretary of Health and Human Services nominee Rep. Tom Price, R-Ga., takes his seat before the start of his confirmation hearing in the Senate Health, Education, Labor and Pensions Committee on Wednesday, Jan. 18, 2017. (Bill Clark/CQ Roll Call)

Rep. Tom Price sought in a contentious hearing Wednesday to defend his purchases of medical stocks against Democratic charges of conflicts of interest.

Price told Sen. Patty Murray of Washington, the ranking Democrat on the Health, Education, Labor and Pensions Committee that held the hearing, that he bought Australian biotech Innate Immunotherapeutics shares after talking with Rep. Chris Collins, R-N.Y., about the company. Collins serves as a director of the company. That raises questions about whether that would be a potential violation of the STOCK Act which prohibits lawmakers from benefiting from insider information or ethics rules. However, Price said he did not receive information that was not public.

The Senate HELP hearing was the first on President-elect Donald Trump’s pick of Price, a Georgia Republican, to lead federal health programs as Department of Health and Human Services secretary. The Finance Committee, which has the responsibility of voting to send the nomination to the floor, will hold a Jan. 24 hearing.

Debate over health care law

During the wide-ranging hearing, Price agreed with fellow Republicans’ calls for quick action to keep private insurers participating in the exchanges created by the 2010 health care law.

Republicans say they want to repeal and replace many provisions of the law, such as by switching to offer age-related tax credits instead of income-related tax subsidies to help Americans buy insurance. Republicans also would revive high-risk pools to cover particularly sick patients.

But in the short term, some want to stabilize the market. Michael B. Enzi, R-Wyo., suggested that HHS could act on its own to make small changes to aid insurers in the struggling markets, such as tightening the rules on grace periods for customers who don’t pay, special enrollment periods and the process to verify that enrollees are eligible. Insurers are trying to prepare their 2018 offerings for government reviews despite uncertainty about how the Trump administration and Congress will change the law.

“Targeted actions by the Department of Health and Human Services may provide some meaningful changes that could impact premiums for the next year,” Enzi asked Price at the hearing. “Are those some options you might consider?”

“Absolutely,” Price replied, saying he sees a need for “support and stability” in the insurance market.

HELP Chairman Lamar Alexander, R-Tenn., pressed Price to commit to a moderate pace for changes to the 2010 health law. While Trump’s recent statements appear to call for a faster timeline, Alexander argued for taking a more deliberative approach, a view that he implied that Senate Majority Leader Mitch McConnell, R-Ky., shares.

“If anyone is expecting Sen. McConnell to roll a wheelbarrow onto the Senate floor with a comprehensive Republican health care plan, they’re going to be waiting a long time because we don’t believe in that,” Alexander said. “We don’t want to replace a failed Obamacare federal system with another failed federal system.”

The HELP hearing highlighted partisan fault lines on health care, with Democrats and Sen. Bernie Sanders, I-Vt., consistently pushing for maintaining and expanding the government’s role. Sanders pressed Price to declare that Americans have a right to care. Price answered by speaking of how he would like to improve “access” to coverage.

Sen. Tammy Baldwin, D-Wis., tried to get Price to agree to back allowing Medicare to directly negotiate drug prices and take other steps to rein in drug cost growth. Price went only as far agreeing with Baldwin on the “merit in transparency” for drug pricing.

Sen. Christopher S. Murphy, D-Conn., noted that Republicans have spoken in favor of many the law’s provisions, including the extension of young people’s coverage on parents’ plans until age 26 and protections against discrimination of sick people. What Republicans have not fully detailed is how they will maintain these parts and preserve coverage, he said.

“We don’t get any specifics as to how that’s going to occur,” Murphy told Price. “It seems as if you and the president-elect want to do everything that the Affordable Care Act does, but just do it in a totally different way.”

Price fielded questions on a range of topics, including assuring Senate Finance Chairman Orrin G. Hatch, R-Utah, that he would listen to the lawmaker’s concerns about how dietary supplements are regulated. In response to questions from Sen. Todd Young, R-Ind., Price said he saw “great possibility and great promise” in the Center for Medicare and Medicaid Innovation created by the health law, while challenging its requirement that many medical providers participate in the payment tests it oversees. He also agreed with Young’s view that Indiana’s alternative Medicaid plan, which encourages beneficiaries to pay into health savings accounts, may serve as a model for other states’ changes to the state-federal health program.

Stock trades

Democrats repeatedly raised questions about Price’s notably active trading in health stocks. Price never expressed remorse for purchasing shares of medical industry shares while serving on the Ways and Means Committee’s health panel. Most of these trades were part of efforts to diversify his portfolio, according to Price and the Trump transition team.

Shares of Australian biotech Innate Immunotherapeutics appear to be an exception.

Murray questioned whether Price had received private information about Innate. Price maintained he had not. Sen. Al Franken, D-Minn., said the purchases by Price and Collins of shares at lower-than-average prices sounded like “sweetheart deals.”

Even if Price’s trades kept within the legal bounds for members of Congress, ethics experts have criticized him for buying and selling shares of companies that can be affected by bills he sponsored or supported. Many lawmakers stick with mutual funds in order to avoid the perception of conflicts of interest.

Center for American Progress Neera Tanden called in a statement for Price to withdraw, saying “he cannot be trusted to put the American people’s interests ahead of his own financial gain.”

Democrats also homed in on Price’s March 17 purchase of orthopedics company Zimmer Biomet at a time when he was leading an effort to have Medicare back off a test of payments for hip-and-knee surgeries. The Trump transition team has said Price’s Morgan Stanley adviser bought about 26 shares of Zimmer Biomet, worth $2,697.74, as part of a large number of trades made that day. Price maintains he didn’t know about the trade until after it was made.

Price long protested the mandatory nature of this test. On March 23, he introduced a bill that would have delayed the Medicare hip-and-knee test until 2018. The bill never gained traction. The test, known as the Comprehensive Care for Joint Replacement Model, instead so far has continued as the Obama administration intended. In response to questions from Sen. Elizabeth Warren, D-Mass., Price said he had complied with the rules of the House in handling his investments, including the Zimmer one.

Zimmer Biomet spokeswoman Monica Kendrick told CQ Roll Call that the firm is a supporter of the Medicare pay test, not an opponent. She also said in an email that Zimmer did not support Price’s bill.

Yet the hip-and-knee test is creating a more competitive environment for the field of orthopedics. This will affect companies such as Zimmer Biomet, Citi Research analyst Amit Hazan has said in research reports. Companies such as Zimmer may find themselves facing choosier buyers of their products as the Medicare pay test raises the consequences for poor performance.

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