Separating the Healthcare Wheat from the Political Chaff

02/05/2019 10:09 PM | Peter Pitts

Last night during his State of the Union, the President addressed the issue of drug costs. Some of the ideas are sound while others deserve, shall we say, more careful consideration. Let’s look at the record.
 
BAD IDEA: Adopting an international pricing index (IPI) payment model for Medicare Part B in which a “reference price” for a prescription drug will be generated by taking the average price of that drug from 16 countries.

The president claims that proposal will lower the cost of drugs, makes America first again by stopping foreign freeloaders and limits “out-of-control” prices.
 
In reality these proposals reduce access for patients:
 
* These countries utilize government controlled and single-payer healthcare systems where governments leverage their purchasing power to dictate prices, meaning that these “reference prices” have nothing to do with actual market values. 

* In these systems, governments can only contain healthcare costs by restricting or refusing care, meaning that if a drug costs more they are willing to pay, they can refuse to cover it for patients or limit the number of patients who can receive the treatment. 

* This is why “of 74 cancer drugs launched between 2011 and 2018, 70 (95%) are available in the United States. Compare that with 74% in the U.K., 49% in Japan, and 8% in Greece.”

Access to these cutting-edge drugs means that patients can use the latest treatments to help cure their conditions; it’s why the United States has the highest five-year survival rate for cancers in the world.
 
Price controls reduce innovation:
 
* By leveraging CMS’ purchasing power to impose these price controls, the proposal creates a dramatic market imbalance which would force innovators to adjust business models and reduce investment in R&D – reducing high-risk research into complex conditions such as Alzheimer’s Disease. For example, there were numerous, high-profile failures in late stage clinical trials for Alzheimer’s treatments just in 2018. These failures represent years and billions of dollars in research which will yield no return – all part of the risk of scientific research. 

* The U.S. “funds about 44% of world medical R&D, invests 75%of global medical venture capital, and holds the intellectual property rights for most new medicines,” due to our market forces which incentivize the kind of risk that companies routinely take despite potential failures. 

GOOD IDEA: Increasing transparency around rebates in Medicare will bring down costs for patients.
 
The administration has proposed increasing restrictions around how pharmacy benefit managers (PBMs) and insurers process rebates for pharmaceutical drugs with the intent of ensuring such rebates and savings go to the patient at the point of sale.
 
This proposed rule also reduces incentives for PBMs to opt for higher-cost treatments:
 
* As higher-cost treatments often have some of the largest rebates, PBMs are currently incentivized to choose more expensive treatments and pocket the rebate savings, increasing costs for insurance companies, keeping list prices high without lowering costs for patients. 

* By mandating rebates and savings are provided to patients at point of sale, PBMs are no longer incentivized to keep list prices high or to choose the most expensive treatments. 

BAD IDEA: A rule weakening protections for six-protected classes in Medicare Part D will hurt patients.
 
The administration has proposed loosening regulations in Medicare Part D which ensure access to “all or substantially all” medications that treat diseases in six-protected classes. These medicines are protected because the treat serious, chronic and often life-threatening illnesses like clinical depression, HIV and cancer.
 
The president believes this proposal Is another example of reigning in out-of-control healthcare costs and that the new rule will force providers to make better drug choices and help fix Medicare’s cost issues
 
The reality is that this proposed rule will restrict access for patients.
 
The rule would implement what’s known as “step therapy,” commonly referred to as “fail first.” 

This means that even if a patient’s doctor has recommended a treatment, insurance companies are empowered to force a patient to first try a different treatment, waiting to see if it fails before a patient can “progress” to other options or eventually the doctor’s original prescription. 

For patients, this means that they will need to endure long periods of treatment before finally arriving at one that works, lengthening the period of illness and causing increased discomfort. 

GOOD IDEA: Transparency on the hospital pricing front.
 
The President rightly noted that hospitals are largely unchecked when it comes to procedure or prescription drug prices. On January 1, a new rule forcing hospitals to disclose their prices went into effect, creating greater transparency throughout the system and providing consumers with more information to make informed decisions about their care. In the long term, these disclosures could allow consumers to act rationally and opt for the best value for their care, creating incentives to reduce prices for patients.
 
GOOD IDEA: Enhanced PBM Transparency.
 
Last autumn, the President signed legislation banning “gag clauses” in pharmacy benefit contracts. These clauses stopped pharmacists from disclosing to patients when they could save at the pharmacy counter. By banning these practices, the administration rightly targeted the added costs that middlemen like PBMs add to the system, reducing burdens for patients and shining a light on unfair practices.
 
The best ideas are common property. – Seneca
 
The President wants to protect insurance coverage for pre-existing conditions. Bravo. The President wants to “reduce the price of healthcare and prescription drugs," eradicate HIV-AIDS and defeat pediatric cancers.  Bravo. Now that “the speech” is behind us, the President and Congress should focus and build upon the administration’s successes  in bringing down the real costs of healthcare instead of pursuing fantasy land socialist policies that puts our healthcare system under government control, deters urgent innovation and rations patient care.  Read More & Comment...

AI? Aye. Aye.

02/04/2019 08:50 AM | Peter Pitts

From The Cancer Letter …
 
Gottlieb: FDA to expand real-world data infrastructure to enhance AI capabilities
By Matthew Bin Han Ong
 
FDA is enhancing its ability to handle real-world evidence by training reviewers in data science via a curriculum on machine learning and artificial intelligence, said FDA Commissioner Scott Gottlieb.
 
“We’re working to develop new guidance documents to assist sponsors interested in developing and using real-world evidence,” Gottlieb said at a Jan. 28 panel discussion organized by the Bipartisan Policy Center.
 
“Our ‘Framework for Real-World Evidence Program’ will apply a consistent strategy for harnessing these tools across our drug and biologic review programs,” said Gottlieb, referring to a framework document published last December. The document evaluates the use of RWE to support additional indications for already approved drugs as well as to satisfy drug post-marketing study requirements.
 
“The framework is aimed at leveraging information gathered from patients and the medical community to inform and shape the FDA’s decisions across our drug and biologic development efforts,” Gottlieb said. “The goal is to develop a path for ensuring that RWE solutions can play a more integral role in drug development and regulatory life cycle at the FDA.
 
“Today, I’m announcing four additional activities that’ll help FDA and stakeholders advance these opportunities for the benefit of patients.”
 
FDA plans to:
 
Support the seamless integration of digital technologies in clinical trials by developing a framework on how digital systems can be used to enhance the efficient oversight of clinical trials. These technologies present important opportunities to streamline drug trials and improve data site integrity by remotely monitoring data trends, accrual, and integrity over the course of a trial.

Use digital technologies to bring clinical trials to the patient, rather than always requiring the patient to travel to the investigator. More accessible clinical trials can facilitate participation by more diverse patient populations within div   erse community settings where patient care is delivered, and in the process can generate information that’s more representative of the real world and may help providers and patients make more informed treatment decisions.

Explore how reviewers can have more insight into how labeling changes inform provider prescribing decisions and patient outcomes. The FDA’s Information Exchange and Data Transformation—or INFORMED—is using RWD to examine the impact of a recent FDA labeling change for two approved products from weight-based dosing to flat-dosing of immune checkpoint inhibitors. This project is focused on how community practices are adopting the flat dose after the labeling change, and factors that may affect adoption.

Work with the medical product centers to develop an FDA curriculum on machine learning and artificial intelligence in partnership with external academic partners. The aim of this program is to improve the ability of FDA reviewers and managers to evaluate products that incorporate advanced algorithms and facilitate the FDA’s capacity to develop novel regulatory science tools harnessing these approaches. 

FDA’s Oncology Center of Excellence is working with Friends of Cancer Research, NCI, and others to harmonize reference standards for assessing tumor mutational burden—as determined by multiple proprietary assays—to help identify cancer patients who are more likely to respond to immunotherapy.
 
Harmonizing the measurement of tumor mutational burden across commercial assays used in routine oncology care can help reduce treatment variability, and improve the utility of TMB as a potential biomarker for enriching clinical trials that are designed to test immunotherapies. OCE is also working on a project exploring whether it’s possible to use real world endpoints, such as time to treatment discontinuation (TTD), as a potential real-world endpoint for pragmatic randomized clinical trials, for FDA approved therapies in the postmarket setting.

“Through ‘Project: Switch,’ OCE is investigating whether well-matched contemporaneous synthetic control arms based on prior clinical trials can be used to make inferences regarding the effect of a new drug, or whether a synthetic control could be used to compare data to active control arms in ongoing randomized controlled trials in rare tumor types where the standard of care remained stagnant, and the prognosis is especially poor,” Gottlieb said.
 
FDA’s framework for RWE, created in response to a mandate in the 21st Century Cures, spells out the agency’s thinking on the types of guidances that need to be developed before RWE can be routinely used in regulatory science.
 
“We really need people to weigh in on the guidances, because one thing I did learn at FDA, pretty much if the FDA says something, the industry is going to do it,” former FDA Commissioner Robert Califf said at the meeting Jan. 28. “So, we’d like to get those guidances right.
 
“I’m very excited that Amy Abernethy is coming to the FDA [as principal deputy commissioner]. She is an expert on this, I have every confidence that she’ll help guide us through this.”
 
There is a need to better understand AI algorithms, and whether they generate results that are replicable, said former FDA Commissioner Mark McClellan, who is also a former commissioner for the Centers for Medicare and Medicaid Services.
 
“It’s great to see the progress that’s happening at FDA,” McClellan said at the meeting. “I think Rob [Califf]’s vision for what the future ought to look like, which is a lot of data from a wide variety of sources, including many that a lot of people in the health care industry aren’t really thinking about as important sources of health relevant information—that is the right vision. I think we’re still a long way from getting there. So, great vision, great potential.”

Using real-world data effectively is akin to monitoring jet engines to prevent plane crashes, said Andrew von Eschenbach, former FDA commissioner and former NCI director.
 
“People won’t die, because planes don’t crash. GE has a system in which their jet engines have an incredible number of sensors that are in those engines and they’re sensing and monitoring those engines in real time, and so they know in real time if there’s anything going wrong,” von Eschenbach said at the meeting.
 
“I think what we have is the opportunity with the kinds of tools that are now becoming available, be they sensors in humans, or the opportunity to access the data that’s coming in both real time and retrospectively, we’re going to be able to prevent problems. We’re going to be able to see ahead, just like they can, and not only retrospectively correct what’s going on, but prospectively be able to create what needs to be created to save lives.”  Read More & Comment...

Safe Harbors & Invisible Hands

02/01/2019 10:40 AM | Peter Pitts

From Bloomberg ...

Drug Rebate ‘Safe Harbor’ Axed in Highly-Anticipated Proposal
 
The legal status now protecting controversial drug rebates would be flipped upside down under a highly-anticipated proposal released Jan. 31.
 
Drug rebates paid by drugmakers to middlemen and insurance plans providing coverage through Medicare’s Part D drug program or Medicaid would no longer be protected from federal anti-kickback laws under proposed regulation from the Health and Human Services Department.
 
The anti-kickback statute prevents transactions “intended to induce or reward referrals for items or services reimbursed by federal health care programs.” However, drug rebates are currently exempted from that statute and those exemptions are often referred to as “safe harbors.”
 
The proposed change also would create a new safe harbor to protect direct discounts to patients at the pharmacy counter, the HHS said. It also would create a new safe harbor protection for fixed-fee service arrangements between manufactures and drug middlemen called pharmacy benefit managers.
 
The current drug rebate system has been criticized for incentivizing higher list prices for drugs. Drug companies charge more for the drug initially, but then offer refunds or “rebates” to pharmacy benefit managers and plans. Drug companies say the process forces them to raise the original price.
 
Changing the system is part of the Trump administration’s plan to lower drug prices, and many have said changing the rebate structure could be a massive step toward that goal
 
‘Invisible Hand’
 
The trade-off would be higher premiums in Medicare, but the government counters that this change would “lead to lower Part D spending for Medicare beneficiaries as a whole, because the projected reductions in out-of-pocket costs are larger than potential increases in premiums.” The pharmaceutical lobbying group said in a statement pharma companies support the plan. It will “fix the misaligned incentives in the system that currently result in insurers and pharmacy benefit managers (PBMs) favoring medicines with high list prices.”
 
“What the safe harbor has allowed [pharmacy benefit managers] to do is act as a non-regulated invisible hand in the drug pricing ecosystem,” Peter Pitts, president of the Center for Medicine in the Public Interest, told Bloomberg Law.
 
The center is a nonprofit research and education organization focused on patient-centered health care. “By removing the safe harbor, it’s forcing PBMs to play by the rules like everyone else and be transparent about it,” he said.
 
The HHS is also asking the public to weigh in on potential transparency requirements that would require drug middlemen to disclose details of fee arrangements with drugmakers and plans.
 
But would the change lead to directly lower prices for consumers? Pitts thinks so. “One of the many important things it would do is to reduce the price for patients at point of sale at the pharmacy,” he said. “That’s what this is designed to do.”
   Read More & Comment...

The Real Problem with Biosimilars

01/10/2019 09:38 AM | Peter Pitts

In today’s Washington Post, our long-time pal Chris Rowland writes, “Health-care and government officials are growing concerned that the makers of the most advanced drug therapies are using scare tactics to ward off emerging generic versions of their products, a bid to protect profits that has enormous implications for the nation’s efforts to control health-care costs.”
 
There are two major problems with this statement. The first is that the manufacturers of biosimilars are those same “makers of the most advanced drug therapies.” The second issue is far more important – that’s not even the problem.
 
Why haven’t biosimilars gained a larger share of the market? There are a number of structural ecosystem issues that reflect misaligned incentives in the marketplace. The industry here isn’t just Big Pharma, but also “Big Payer.”
 
The insurance industry and prescription benefit managers (PBMs) engage in a dance called “exclusionary contracting” that often blocks a less-expensive product from replacing a costlier one on a patient’s insurance plan. Biological medicines (both brand and biosimilar) are purchased via a “buy-and-bill” process, where providers purchase medicines and then bill the payers (both private or public) once the medicines have been administered to the patients.
 
The net result is a “cost plus” payment system, where providers lose money when they prescribe a lower-cost product. The current system also incentivizes payers to prefer medicines that carry higher rebates rather than lower list prices, driving preferences for higher-priced products and anti-competitive behavior that blocks access to other medications.
 
Unsurprisingly, manufacturers are willing to raise prices and transfer the greatest list-price-based rebate value to middlemen to secure preferred formulary position at the expense of real free-market competition, while also limiting the therapeutic options of physicians and patients.
 
“Facts,” as John Adams reminds us, “are pesky things.” Blaming Big Pharma may resonate with politicians and the press – but it’s not going to advance the worthy cause of biosimilars. As they say in Japan, don’t fix the blame, fix the problem.  Read More & Comment...

Joy for ODES

01/08/2019 09:26 AM | Peter Pitts

FDA plans to create a new office to leverage cutting-edge science
By Matthew Herper @matthewherper
 
The Food and Drug Administration plans to create a new office to improve the review of new medicines — one that will develop a standardized approach to using personalized medicine, digital data, and patients’ own reports, according to Commissioner Scott Gottlieb.
 
Gottlieb will outline the plan for the new 52-person group, called the Office of Drug Evaluation Science (ODES), as part of a talk at the annual J.P. Morgan Healthcare Conference on Tuesday. Because of the government shutdown, he will deliver the talk via videoconference. “We’re operating with limited staff and I’m needed here,” he said.
 
He said the new office is not just an organizational shift, but part of something grander.
 
To spend or not to spend: Investing for commercial success as an emerging company

A review of emerging biopharma company launches identifies the “sweet spot” for launch spending that could mean the difference between success and failure.
 
“Eventually the drug review process will look a lot different,” Gottlieb wrote in an email. He envisions a world where data will be uploaded from drug company studies into the cloud, and instead of looking at the charts and tables companies create themselves, the FDA will use its own standardized methods on the raw data. “That is what I mean by a structured approach,” he said. “That is where we are heading, starting with the evaluation of safety data.”

Often, industry’s approach can seem anything but structured. For instance, immune-system-unleashing cancer medicines like Merck’s Keytruda, Bristol’s Opdivo, and AstraZeneca’s Imfinzi all depend on tests for the presence of a protein called PD-L1 in tumors; but each company used its own measures.
 
But these kinds of personalized approaches are becoming ever more important. Last year, the FDA even approved two drugs not for traditional cancer categories, but for cancers caused by particular genetic mutations. (The drugs: Keytruda for patients whose tumors have a condition called MSI-High, and Vitrakvi, from Loxo Oncology and Bayer, for tumors caused by mutations in a protein called TRK.)
 
Another important mission for the new office will be understanding how to turn what patients tell doctors into structured data. Take the case of Pfizer’s gene-targeted lung cancer drug Xalkori. It’s because of patient reports that the drug’s label contains a warning that it can cause eye problems, but patient reports also showed that it may reduce worsening of shortness of breath. Patient reports have become increasingly important to the agency since 2011, when the FDA demanded that Incyte Pharmaceuticals, which was developing a drug called Jakafi for myelofibrosis, show not only that the medicine shrank patients’ spleens but also made people feel better.
 
ODES will be part of the Office of New Drugs, which is itself part of the FDA’s Center for Drug Evaluation and Research, which oversees the approval of new medicines. It will have its own director, and three divisions: an 18-person Division of Clinical Outcomes Assessments, charged with evaluating measures of how well drugs are working and how safe they are; an 18-person Division of Biomedical Informatics and Safety Analytics, which will evaluate new ways of using information technology; and an 11-person Division of Research and Biomarker Development, whose job it will be to monitor all those blood draws and genetic scans.
 
The new office is going through the final stages of review and Gottlieb expects to start the office in the first half of this year.
 
“These are now hard sciences,” Gottlieb said. “We think this is going to allow us to understand safety and efficacy much more efficiently.”  Read More & Comment...

Solving the Drug Shortage Problem

12/18/2018 08:23 AM | Robert Goldberg

The primary cause of drug shortages is, to paraphrase the old joke, that the portions are small and the market is terrible.  It’s hard to make a buck churning out old medicines when the cost of production and distribution increase faster than prices. It makes more sense to invest fixed assets in more profitable products. As FDA Commissioner Scott Gottlieb and Janet Woodcock, the Director of FDA’s Center for Drug Evaluation and Research point out: “There may be critical drugs that may sometimes be priced too low relative to the full cost of reliably producing a predictable and high-quality pharmaceutical product. These critical drugs are typically older generic medicines that must be in a sterile, injectable form.”  (It’s amazing how markets and pricing signals determine supply and demand.)
 
Indeed, solving the drug shortage requires creating a robust market for the products that are, or will be, in short supply. The FDA has done a remarkable job in reducing the number of product shortages by preventing them before they occur, instead of having to scramble after they emerge. The agency prevented 132 shortages in 2017. That’s one reason that shortages declined from a peak of 251 in 2011 to 35 in 2017.
 
Specifically, FDA’s drug shortage czar, Keagan Lenihan, (FDA’s Associate Commissioner for Strategic Initiatives of the Agency Drug Shortages Task Force) has increased the amount of collaboration required to identify and avert potential shortages. The agency is not staffed with mind readers, so it needs more advance information from manufacturers, providers, pharmacists, and consumers, which surprisingly is also in short supply.
 
The dearth of predictive information hurts in two ways: First, it forces the FDA to react, rather than head off, shortages. As Dr. Gottlieb and Woodcock note: “If an additional production facility or supplier is needed to help mitigate or prevent a shortage of certain important drugs, we can expedite inspection of a new facility so that it can become operational as soon as possible. We can also expedite review of a new or generic drug application that, if approved, may help mitigate or prevent such a shortage. We prioritize these inspections and reviews.”
 
But these tools are most effective when they are used to prevent a shortage. While an early warning system would help resolve some shortages (and Congress is considering legislation to create such a program), it can be really valuable in creating a risk index to support a commodities market for the raw materials and finished products. In fact, in 2011, IMS (now IQVIA) recommended an early warning system that would include data for “risk identification, demand forecasting, a volatility index, and predictive modeling.”
 
Drug shortages have all the hallmarks of a manufacturing sector that could benefit from trading futures. Like many agricultural products and raw materials for finished goods, generic injectables face volatility due to (1) global sourcing, (2) number of qualified suppliers, (3) market constraint, (4) price increase, and (5) geopolitical climate. Depending on the supply risk of the commodity, food, and agribusiness companies are able to decide whether it is necessary to take actions for securing their supply. More insight into the risks of key input commodities helps companies in their decision-making and risk management. And a robust futures market creates liquidity (cash) that companies can use to invest in manufacturing.
 
But creating a market for drug shortages also requires an upgrade in manufacturing and a reliable source of demand. After Pfizer bought Hospira, it realized that the manufacturing arm of the company (which is virtually a sole supplier of many injectables with persistent shortages)  needed to be overhauled.  An article in Fortune describes the daunting task facing Pfizer in just one facility:
 
The Rocky Mount facility, for example, makes up to a half-billion sterile injectables each year, enough to fill 20 semi-trailers every day. Workers there make 500 different products, fitted into syringes, vials, and ampoules. They span a human life, from the vitamin K used to promote blood clotting in new babies to the morphine used to ease the pain of terminal illness.
 
The plant, though, has only 26 manufacturing lines, meaning that any given line is likely to be running something different every day. Each line, moreover, has to be FDA-qualified for the drugs made on it, a costly and lengthy vetting process. Schedules are typically planned weeks in advance and can be scuttled for any number of unforeseen events, from a snow day to a worker’s illness to components that don’t arrive at the factory on time.
 
Because of the testing and paperwork involved, it takes batches three to six weeks to leave the factory. And each batch generates a 200- to a 400-page stack of paper that documents the process. These, of course, are merely logistical wrinkles. Achieving a sterile environment—essential for medicines that are shot directly into the bloodstream—is the true challenge.
 
 
The long-term solution is to replace the current manufacturing platform for medicines and injectables, which are based on 19th-century production principles and technology with continuous manufacturing. The FDA is encouraging “the adoption of new production technologies, such as 3D printing and continuous manufacturing. Over time, these methods could lower drug production costs, enable more rapid scale up of manufacturing, and help prevent drug shortages caused by product quality and manufacturing problems.” But such a shift needs incentives as well.
 
And that is where public policy could help. Overhaul of the pharmaceutical manufacturing platform may require a public-private partnership (like the Semiconductor Manufacturing Technology or Sematech program) that would focus on continuous manufacturing, 3-D printing, and other advanced production and supply chain technologies. Such a partnership – a pharmaceutical advanced manufacturing technology consortium (PharmaTech?) would require funding but also a commitment on the part of private companies to involve their best and brightest in the enterprise. This is not a fully fleshed out proposal. But it is a model that works.  “Sematech has become a model for how industry and government can work together to restore manufacturing industries—or help jump-start new ones. “ It’s time to approach the drug shortage issue with the same spirit of urgency and inventive opportunity.
 
   Read More & Comment...

Right to Try vs. Right Way to Try

12/15/2018 10:00 AM | Peter Pitts

Great article by BioCentury’s Steve Usdin on the FDA’s new approach to facilitating appropriate and responsible expanded access to experimental drugs. Rather than buying into the political pabulum of “Right to Try,” the FDA is taking the reins with the right way to try.
 
Here are some snippets from the BioCentury article:
 
FDA to facilitate access to unapproved drugs
 
How FDA plans to help patients get expanded access to unapproved drugs
by Steve Usdin, Washington Editor
 
FDA plans to launch a new program in 2019 that will help patients gain access to unapproved therapies. The agency will field telephone requests from physicians and patients, streamline the application process, and act as an intermediary between physicians or patients and drug manufacturers.
 
Legislation is not required, and FDA has sufficient funding to conduct the pilot. Richard Pazdur, director of FDA’s Oncology Center of Excellence, proposed the initiative in early 2018.
 
The goals of the program, FDA Commissioner Scott Gottlieb told BioCentury, are to remove impediments that prevent physicians and patients from seeking access to investigational drugs and to communicate FDA’s support for manufacturers providing access.
 
An FDA internal working group has been meeting for two months to develop implementation plans and to iron out legal issues for the initiative, which FDA staff have dubbed Project Facilitate. The project involves the Center for Drug Evaluation and Research (CDER) and the Center for Biologics Evaluation and Research (CBER).
 
Under the initiative, the agency will provide a telephone number that patients and physicians seeking compassionate use -- which FDA calls expanded access -- can call. FDA staff will answer calls and fill out the form required to apply for a single-patient IND request. It will send the completed paperwork to the physician for signature and then forward the request to the manufacturer.
 
Manufacturers will be expected to respond to requests within a specified time period. FDA has not yet determined the response deadline. Drug companies will continue to have the discretion to approve or deny requests, but for the first time “they’ll have to give the reason for denying access,” Pazdur said.
 
Legislation is not required, and FDA has sufficient funding to conduct the pilot.
 
Drug companies have an “obligation to consider expanded access, especially in areas of unmet medical need,” Gottlieb said.
 
In addition to streamlining requests and incentivizing companies to grant access, placing FDA at the center of the expanded access process will give the agency insight into demand, drug company behavior and outcomes.
 
Under the current system, drug companies have no obligation to report data to FDA or the public about the number of compassionate use requests they receive or grant, or about the outcomes patients experience. Under the new program, FDA will collect data on requests for unapproved drugs to help close the knowledge gap and make it easier to formulate policy. And if FDA learns that a drug company is receiving numerous requests for access to an unapproved drug, it may recommend that the company open an expanded access protocol designed for an intermediate or large population, or a clinical trial, Pazdur told BioCentury.
 
FDA’s expanded access program will, for the first time, create a systematic process in the U.S. for learning about the outcomes of access to unapproved drugs.
 
While biopharma companies often express concern that adverse experiences from expanded access may lead FDA to delay or derail drug reviews, the fear is largely unwarranted, according to FDA officials. The idea that expanded access will harm a development program is “urban lore,” Peter Marks, director of CBER.
 
An FDA review of expanded access data from 2005-2014 found two instances in which adverse events from expanded access contributed to FDA’s decision to impose a clinical hold. “It is very hard to find instances where something identified in the setting of expanded access raised questions that were an impediment to a review,” Gottlieb said.
 
Bob Temple, deputy center director at CDER, suggested that expanded access protocols can produce data that can demonstrate efficacy in populations outside those studied in registration trials, potentially leading to broader indications.
 
If sponsors create large non-randomized expanded access protocols, “they can actually use the information to expand the label,” Gottlieb told BioCentury.
 
The complete Usdin article is worth a read. One interesting take-away is that the FDA is now leading the conversation, controlling the playing field and searching for areas of convergence that reward advancing the health of not just individual patients but also the broader public health by rewarding appropriate industry cooperation.

The FDA's new program is a tremendous step in the right direction but many unanswered questions remain, such as who pays -- and how?

Stay tuned.  Read More & Comment...

Is FDA getting Real with Real World Evidence?

12/09/2018 07:57 AM | Peter Pitts

The FDA has posted a Framework for FDA’s Real-World Evidence Program, creating a framework for evaluating the potential use of real-world evidence (RWE) to  help support the approval of a new indication for an already approved drug and help support or satisfy drug post-approval study requirements. (The framework does not cover medical devices.)
 
The framework will evaluate the potential use of RWE to support changes to labeling about drug product effectiveness. This includes adding or modifying an indication, such as a change in dose, dose regimen, or route of administration; adding a new population; or adding comparative effectiveness or safety information. The RWE Program will establish demonstration projects, engage stakeholders, get input from FDA senior leadership when evaluating RWE, and promote shared learning and consistency in applying the framework. FDA will also develop guidance documents to assist sponsors interested in using RWE to support drug development.
 
Fine sentiments but divisional actions speak louder than policy statements.

In the framework, FDA identifies a three-part approach for assessing whether the use of real world data (RWD) to generate RWE is appropriate to answer a regulatory question:  
 
(1) Are the RWD fit for use? 

(2) Can the trial or study design used to generate RWE provide adequate scientific evidence to answer or help answer the regulatory question? 

(3) Does the study conducted meet FDA regulatory requirements (e.g., for study monitoring and data collection)? 

The agency is accepting comments on the framework and encourages interested parties to submit comments to the established docket (FDA-2018-N-4000). 
 
It’s time to get real.  Read More & Comment...

Being and Nothingness in Drug Pricing

11/16/2018 03:21 PM | Peter Pitts

Pfizer has just issued a statement concerning it’s 2019 price increases. Here’s the headline of the company’s press release:
 
“Pfizer Provides Transparency on Drug Prices in the U.S. 90% of Company’s Prices Will Remain Unchanged”
 
When you separate the spin from the substance, here’s what the headline should be:
 
“Pfizer adjusts 2019 prices in order to achieve 0% net revenue growth”
 
That’s the truth – but it’s not likely to be reported (or tweeted by a certain someone) that way.
 
Here are the facts:
 
Effective January 15, 2019, Pfizer will increase the list price of 41 medicines (10% of its entire drug portfolio).  The increase in list price of this subset of the company’s portfolio will be 5%. The only exceptions are three products that have a 3% increase and 9% for Xeljanz due to the completion of two extensive development programs leading to new medical uses for unmet patient needs.
 
But just as you can’t measure risk without benefit, price increases must be considered relative to cost increases. These increases will be offset by higher rebates and discounts paid by Pfizer to insurance companies and Pharmacy Benefit Managers (PBMs) – resulting in a net effect on 2019 Pfizer revenue growth in the U.S. to zero.  According to the company’s statement, “Given the higher rebates and discounts, we expect that the healthcare system will share those benefits with patients, so they do not experience higher costs for their medicines. In 2018 the net impact of price increases on revenue growth is projected to be a negative one percent in the U.S compared with 2017.”
 
PBMs and insurers should explain what they will do with this enhanced revenue source besides holding it onto it for themselves
 
It’s also important to note that in 2016 Pfizer invested $7.8 billion in R&D, in 2017 that number was $7.7 billion and in 2018 its projected to be between $7.7- $8.1 billion. That’s billion with a capital “B.”  Innovation is hard. Today it takes about 10,000 new molecules to produce one FDA-approved medicine and only 3 out of 10 new medicines earn back their R&D costs. Moreover, unlike other R&D-­intensive industries, biopharmaceutical investments generally must be sustained for over two decades before the few that make it can generate any profit. The costs to bring a new cancer drug to market are about $2.6 billion. Risk/Benefit anyone?
 
The President, Health & Human Services Secretary Azar, just about every member of Congress, governors, members of state legislatures, policy wonks and media cognoscenti have weighed in on why our healthcare system is broken and requires change – some even have ideas on how to fix it. Per Pfizer Chairman and CEO Ian Read, “We believe the best means to address affordability of medicines, is to reduce the growing out-of-pocket costs that consumers are facing due to high deductibles and co-insurance and ensure that patients receive the benefit of rebates at the pharmacy counter.”  
 
The concept of “zero” is one of the most significant breakthroughs in the history of mathematics. It’s an equally important – and complex -- concept when it comes to pharmaceutical pricing.
 
When you make yourself into zero, your power becomes invincible. -- Mahatma Gandhi  Read More & Comment...

Amgen’s Repatha Pricing Approach Disrupts PBM Business Model: Will Patients Benefit?

11/16/2018 02:36 PM | Robert Goldberg

Repatha, Amgen’s breakthrough medicine that attacks treatment-resistant hyperlipidemia, has been shown to save lives and prevent heart attacks and stroke.   PBM policies, enabled by a rigged cost-effectiveness evaluation produced by the Arnold funded ICER, have made it made it impossible to get the medicine.  First, the PBM  prior authorization process has been lengthy and confusing because, it was argued, Repatha was too expensive to make widely available.

So Amgen increased the rebate amount it would provide for Repatha.  Amgen’s rebate deals with payers are 65 percent of Repatha's commercial revenue.  In turn, the PBMs simply pocketed the rebates and charged people who actually got through the step therapy gauntlet up to 50 percent of Repatha’s NON-rebated price.   And of the small percent of patients who actually got permission to use Repatha, nearly 75 percent never filled the prescription because of the huge out of pocket cost. 

A few weeks ago, Amgen cut the list price of Repatha by 60 percent, as a way of reducing the out of pocket cost to patients.   And it also meant that PBMs like Express Scripts were getting less rebate loot.   

It did so in a way that ultimately embarrassed and exposed the PBM rebate game.  

According to the company’s press release: “Amgen is making Repatha available at a reduced list price by introducing new National Drug Codes (NDCs). SureClick®, the most commonly used delivery system, will be available immediately; the Pre-Filled Syringe and Pushtronex® (monthly, on-body infusor) delivery systems will be available in the next 2-3 months. The lower priced Repatha is identical to the Repatha currently available…At the same time, Amgen will continue offering Repatha at its original list price until 2020 or sooner.”

Express Scripts responded to the Amgen gambit by announcing it would create a separate Flex formulary of products with lower list prices.  

It will be interesting to see if such a move gets traction.  Adam Fein notes that someone in Express Scripts said that employers are addicted to rebates.  That may be true, but that begs the question of why are PBMs and health plans are still supplying the employers rebate fix.  

By forcing a real choice between a rebate driven or patient-driven drug benefit Amgen has put the PBM business model on trial.  How many PBM and employers will continue to use the higher price to rake in rebates?  How many will use the lower price?  And how will this affect prior authorization and step therapy?

In the short-term patients may not benefit.  In the long term, I believe Amgen is forging a path other companies will follow.   Amgen cut the price because it aligns with a business strategy based on increasing access and demonstrating value.   And it aligns with Amgen’s recognition that it cannot rely on the newly integrated health plans and PBMs to deliver value.  The company will have to deliver value directly to patients and physicians, something that PBMs are unable to provide.  
  Read More & Comment...

Healthcare reform through ... xenophobia?

10/26/2018 07:09 AM | Peter Pitts

What did the President propose?
 
Lowering the price that Medicare pays for the prescription drugs it purchases.
 
The President couched his remarks as part of an effort to battle “unfair foreign prices.” But none of his proposals addressed any change in the pricing policies of any other country. It was only a political talking point for public consumption as we come down the home stretch of the 2018 midterm election cycle.
 
The villain wasn’t the pharmaceutical industry, but “unfair foreign nations who free load off of American drug development."
 
How will this be accomplished?
 
The President wants CMS to negotiate directly with manufacturers to achieve price parity with a basket of reference countries. By 2025, the target price decrease would (assuming all things work out according to a yet undeveloped plan) average around 30%.
 
BUT – it does not address whether or not this decrease in spending would reduce premiums for seniors on Medicare Part B or D or Medicare Advantage plans, although in one scenario (per HHS):
 
“A senior who receives an eye medicine that currently costs Medicare $1,800 a month but other countries just $300, would see their co-insurance drop from $4,400 a year to $900 a year after full implementation of the proposal.”
 
How soon will this happen?
 
These new strategies would be rolled out post 2020 via a pilot program that will be gradually phased-in (and has not yet been developed).
 
Initially, this will take place via CMMI (Center for Medicare and Medicaid Innovation pilot programs). Specific CMMI pilots would each address a specific product.) For the plan to roll out across the entire spectrum would require federal legislation to revoke the existing non-interference clause which prohibits direct federal negotiations. This is why the President spoke about his desire for “bipartisan support.” Political response from Democratic leaders has been tepid.
 
The non-interference clause was written by Senators Ted Kennedy and Tom Daschle. Nobody doubts that Trump and his team are shrewd negotiators. But the sorts of "negotiations" that Trump refers to have nothing in common with haggling over a real estate deal. Instead, the action that Trump has proposed — repealing the non-interference clause would result in Medicare drug prices going up and patient choice going down.
 
Through their own negotiations with drug makers, private insurers that offer Part D plans have had great success in keeping pharmaceutical prices down. In fact, the Congressional Budget Office observed that Part D plans have "secured rebates somewhat larger than the average rebates observed in commercial health plans." The non-interference clause prohibits government officials from intruding in these negotiations.

Doing away with the non-interference clause, on the other hand, "would have a negligible effect on federal spending." In a report from 2009, the CBO reiterated this view, explaining that such a reform would "have little, if any, effect on [drug] prices."

In fact, allowing the feds to negotiate drug prices under Part D likely would have a negative effect on the program. The CBO explains that to achieve any significant savings, the government would have to follow through on its threats of "not allowing [certain] drug[s] to be prescribed."

In other words, the government might drop some drugs from Medicare's coverage. Patients who need those drugs would then be forced to pay for them out-of-pocket, which would make medicines vastly more expensive for the seniors the President wants to help.

This clause has been the key to Medicare's success. Between 2004 and 2013, the Medicare "Part D" prescription drug benefit program cost an extraordinary 45 percent less than initial estimates. Premiums for the program also are roughly half of the government's original projections. These unprecedented results are largely due to Part D's market-based structure. Beneficiaries are free to choose from a slate of private drug coverage plans, forcing insurers to compete to offer the best options to American seniors.

What about Part B drugs?
 
Per Part B, the President announced a move from physician “buy and bill” payments based on the price of a product to a flat fee-for-service platform. This was previously tried during the Obama Administration as a CMMI pilot program and worked pretty well. It would, among other things, remove the incentive for physicians to prescribe a more expensive product when less expensive options are available. This will be particularly important for biosimilars. Such a change would require changes in both the strategies and tactics manufacturers use to incentive physician prescribing. A "target price" will be set for Part B drugs, but even when the pilot program goes live, it will be slowly phased in (and we don't get to the new target price of drugs until 2025 at the earliest).
 
Per the HHS plan, initial CMMI “negotiation” pilots will focus on “single source drugs and biologicals, as they encompass a high percentage of Part B drug spending and are frequently used by physicians that bill under Medicare Part B.”
 
These Part B changes reinforce the absence of any real ties to “foreign prices” since a drug approved in the US before Europe would be priced via domestic negotiation.
 
The focus of Part B drugs “in the line of fire” are largely drugs oncology-related medicines that represent the highest gross cost to CMS.
 
The new HHS document (Comparison of U.S. and International Prices for Top Medicare Part B Drugs by Total Expenditures ) also notes that prices cited in the study, ”may not accurately reflect the actual amount paid in the US or abroad,” because they generally do not show  the effects of rebates offered by  drug manufacturers.” A key question is how the President’s plan will insert more market-based forces into Part B while retaining existing price transparency.
 
HHS is requesting comment in an Advance Notice of Proposed Rulemaking (ANPRM).

What's next?
 
The President’s proposals do not address the “other 90%” of healthcare costs in the U.S. Those that have nothing to do with pharmaceuticals. Are we really willing to risk investment for development of innovative medicines by slicing and dicing 10% of healthcare costs but ignore the middlemen, insurers, PBMs, hospitals and other entities that consume the lion’s share of healthcare spending in the US?
 
Bottom line, nothing is going to happen quickly and nothing will happen comprehensively at least until 2020 at the earliest.

Stay tuned.  Read More & Comment...

The Laura and John Arnold Foundation and the New Eugenics

10/24/2018 11:57 AM | Robert Goldberg

The WSJ article on John Arnold and Laura and John Arnold Foundation campaign to reduce spending on new drugs portrays John Arnold as a really rich guy who just wants to reduce the price of drugs.  If only. 

The focus of the Arnold initiative is limiting the development of and access to the new medicines, particularly those for ultra-orphan conditions, by gaining control over the clinical research process, the measurement of health outcomes and the development of institutions to arrive at and enforce clinical decisions.  There is little room for the kind of democratic decision-making and deliberation that characterizes medicine, at least for now. 

It is using ICER, funded by Arnold, (and also funded by insurance companies/PBMs) and the Center for Evidence-Based Decision Making at Oregon Health & Science University, to take control of the coverage decisions of Medicaid, Medicare and of course, health plans. Through these entities, Arnold is increasing the power of PBMs and government agencies to limit access to new medicines, guided of course, by ICER recommendations of the value of these treatments (to PBMs and plans).  They provide a short window for public input, but there is no mechanism for allowing different communities with different traditions to choose treatments based on what they value. 

Value is defined as limiting total drug spending to an arbitrary level.  And that level is in turn based on Arnold’s erroneous belief that new drug spending will drive health plans, families and our economy into bankruptcy.  But it is a fact, based on evidence that Arnold ignores and would never fund, that new drug spending overall reduces the total cost of treating disease.  New drugs do not just compete with old medicines or similar products.  They are substitutes for less effective and more efficient forms of treatment.  The trend in cancer and other disease is towards less hospitalization, more productivity, better health as we spend more on medicines.  As I have noted before, nearly 90 percent of spending on childhood infectious diseases is on medicines.   Would we want to turn back to a time when we didn’t?  Societies have avoided financial and existential catastrophes by using new medicines to stem the progression and incidence of disease. 

This is a calculus that Arnold, with his billions, has purposely rejected.  Instead, he has funded sloppy and misleading research about the cost of drug development and the value of medicines. And he  spent millions funding a network of groups that are using this twisted evidence to take control over drug coverage decisions 

Across the country, ICER and other Arnold funded organizations are packing health technology assessment panels, which are often funded by Arnold or supported by Arnold funded entities to restrict access to new medicines and diagnostics.  And they are doing so by justifying these decisions using the same sloppy and misleading research Arnold funds. 

In Oregon, a panel tasked by the state’s Medicaid program initially rejected coverage for Foundation One genetic testing to determine which drugs work in treating cancer.   The panel was run by the Center for Evidence-Based Decision Making funded by the Arnold Foundation and chaired by Vinay Prasad who is also funded by Arnold.  The Center relied on upon input from ICER, Cochrane Library (Wiley Online Library, Medicaid Evidence-based Decisions Project (MED), and the Washington State Health Technology Assessment Program which contracts with ICER to determine the value of new technologies.  All of these experts receive Arnold funding. 

The Prasad chaired HERC voted against paying for the genetic test and reversed itself only after Brian Druker, who discovered the first truly targeted cancer drug, accused the panel of discriminating against poor people with cancer.  The Center has conducted similar evaluations for 23 state health programs. 

Last year’s National Academy of Science study on making medicines affordable was underwritten in large part by the Arnold Foundation.  In addition, 3 members of the NAS committee guiding the recommendations receive funding from the Arnold Foundation.  The key proposals: limiting patient access to new medicines and forcing them to try cheaper drugs first to save insurers money.

And all these efforts, as well as the Arnold funded researchers that sustain them, are reported in Kaiser Health News, ProPublica and HealthNewsReview.org, all with Arnold funding.  In addition, all these outlets ensure Arnold funded articles are widely syndicated.  

Finally, Arnold is spending nearly $10 million on negative, misleading political ads in New Jersey attacking the Republican candidate for US Senate, former Celgene CEO Bob Hugin.  The actual ad buys are being made by Patients for Affordable Drugs Now, a group fully funded by the Arnold Foundation and, when it is not running malicious ads, attacks real patient organizations as pharma mouthpieces in an effort to reduce their influence. 

For all the talk about lowering drug prices, the Arnold program focuses on reducing incentives for innovation to reduce the number of new medicines, reducing prices by enriching insurers and PBMs by jacking up rebates and most important, deny the poor, minority communities and people with the deadliest and debilitating illnesses states access to the kind of advances wealthier and more entitled groups will get.  Ultimately, the guiding impulse of the Arnold enterpise is that the sickest and most vulnerable people in society aren’t worth spending money on because it comes at the expense of healthier and wealthier people.  

In this regard, the Arnold project is similar in approach and purpose used by earlier philanthropic efforts to address the financial burden of spending more and more money on individuals with hard to treat or intractable conditions.   In 1930, well-intentioned billionaires supported eugenics to solve the rising cost of health care and social services, arguing that reducing the number of such ‘defectives’ was a better strategy.

Today, the Arnold Foundation, without malice and with the same sense of noblesse oblige, supports reducing the development of, access to and spending on new medicines for people with the greatest health risks.   The Arnold Foundation is hell-bent on giving a handful of well-paid elites in academia, business, politics and the media control over technologies that not only determine if we live or die but how we live or die to ensure the economic sustainability of society.   This enterprise, like the eugenics movement it has replaced,  is more dangerous precisely because it is well-intentioned.   Read More & Comment...

ICER Set to Establish Pharma Protection Racket

10/18/2018 01:12 PM | Robert Goldberg

From the Regulatory Focus online publication comes this bit of good news for pharma companies worrying about ICER: 

ICER Plots Early Scientific Advice Program for Biopharma 

The Institute for Clinical and Economic Review (ICER) is looking to help the biopharma industry with earlier reviews of clinical work, adding to their current independent evaluations of the clinical and economic value of prescription drugs, medical tests and other health innovations.
 
“For some time, ICER has been receiving requests from life sciences companies to help them rethink clinical trial design, so that the trials more adequately measure the types of outcomes that matter most to patients and their families,” David Whitrap, ICER VP of Communications and Outreach told Focus.
 
The idea floated is that biopharma companies pay a fee for such a pre-market or pre-clinical review, though it’s unclear at this stage what that fee would be or how such a review would be conducted.
 
“Some international health technology organizations, such as NICE and CADTH, have offered this ‘early scientific advice’ to industry for many years with general success. We are therefore evaluating the options to provide a similar service but have not made any definitive plans,” Whitrap said. 

Translation:  Nice drug you got there, it would be a shame if something happened to it. 

This is a protection racket plain and simple.   Moreover, as Regeneron found out, working with ICER only guarantees deeper rebates, not broader uptake of products. 

Any company that plays ball with ICER deserves what they will get.   Read More & Comment...

A Kick-Back by Any Other Name

09/21/2018 03:37 PM | Peter Pitts

In their recent op-ed, Drug Rebates Aren’t Kickbacks, Joe Antos and Jim Capretta claim that rebates are incentives because drug companies charge less when more of their drugs are sold to patients. The facts speak otherwise. Rebates create an environment where higher list prices drugs are favored providing zero incentives for pharma companies to introduce lower priced medicines in competitive therapeutic classes.
 
Over the last five years, according to the Department of Health and Human Services, pharmaceutical spending has increased by 38% while the average individual health insurance premium has increased by 107%. During the same time period, rebates, discounts and fees paid by the biopharmaceutical industry to insurers and PBMs have risen from $74 billion to $153 billion - an increase of 107%. Not only are rebates, discounts and fees outpacing the increase in spending on drugs but they haven’t slowed precipitous premium increases.
 
Because PBMs retain a portion of negotiated rebates and other price concessions as compensation for their services, list prices are rising rapidly even as net prices have held steady. A key unintended consequence of this dynamic is that patients do not directly benefit from significant price negotiations in the market today.  Unsurprisingly, manufacturers are willing to raise prices and transfer the greatest list-price-based rebate value to middlemen to secure preferred formulary position at the expense of real free-market competition while also limiting the therapeutic options of physicians and patients.
   Read More & Comment...

CVS Plan to Use ICER To Screw Patients Elicits Silence From HHS and Health Media

09/14/2018 02:15 PM | Robert Goldberg

 
Yesterday the Partnership to Improve Patient Care along with nearly 100 other patient organizations sent a letter to CVS demanding that it abandon the plan to deny patients access to drugs that a private organization has deemed not worth it.
 
CVS is using the Institute for Clinical and Economic Review’s estimate of the value of life ($100K) to determine whether to cover all existing drugs.  Those that are priced above the $100K threshold will not be covered by CVS because, according to ICER, at that price the drugs are not cost effective.
 
The letter notes: ”This type of cost-effectiveness analysis discriminates against people with disabilities and other vulnerable groups like the elderly because it assigns higher value to people in “perfect health” than people in less-than-perfect health.  As the letter states, "policy decisions based on cost-effectiveness ignore important differences among patients and instead rely on a single, one-size-fits-all assessment. Further, cost-effectiveness analysis discriminates against the chronically ill, the elderly and people with disabilities, using algorithms that calculate their lives as 'worth less' than people who are younger or non-disabled."
 
Moreover, the ICER threshold is used to cap total spending on new drugs at a fixed amount ($940 million) each year   If a new drug can cure a disease that’s too bad.  You can’t spend more than that $940 million.  That’s another form of rationing. 
 
According to a BiopharmaDive article, in response a “CVS Health spokesperson described the QALY-based decision plan as non-discriminatory and said it would help patients get treatments "at a price they and the health care system can afford."
 
"We like ICER because it's very transparent," CVS Health Chief Medical Officer Troyen Brennan said in a recent interview with STAT News.
 
"They undertake this activity voluntarily, they're supported largely by philanthropy, and when combined with market pressure, their analysis is every bit as powerful as government regulation might be," Brennan added.
 
In fact, CVS will use get companies to cut their prices to ICER thereby increasing rebates.  CVS will pocket, not pass, those additional rebates based on the ICER price to patients in order to increase access or reduce out of pocket costs. CVS will use ICER guided rationing and cost sharing to ratchet up policies that discriminate against the sickest patients.
 
And Brennan must have forgotten that CVS funds ICER along with Laura and John Arnold Foundation which by the way has invested $9.7 million in the CVS Pass Through Trusts (“created to finance the purchase of, or refinance existing financing, on drugstores. The Trust's drugstores will be leased, subleased, or sub-subleased.”)

There are not many organizations who did not sign the letter.  One notable exception is Patients for Affordable Drugs which is also funded by the Arnold Foundation and has come out in favor of the proposal to use step therapy and cost-sharing tiers to limit access to medicines under Medicare part B.    Perhaps the group and its founder, advertising tycoon David Mitchell, were too busy funneling Arnold dough to run attack ads against Bob Hugin in the NJ senate race.
 
Curiously, the journalists, editorial writers, and news outlets that cover drug cost issues have written nothing.  I could only find the BiopharmaDive article I quoted as well as a great article in Biocentury that provides insight into the impact of applying ICER to formulary access: "ICER has found only one of 14 MS drugs and zero of nine rheumatoid arthritis treatments to be cost-effective. Although the two treatments for tardive dyskinesia, a side effect of antipsychotic treatment, that ICER has reviewed were each deemed not cost-effective, both compounds have breakthrough therapy designation from FDA and would not be eligible for exclusion from the formulary."



  As of this writing STAT and Kaiser Health News have not reported on this controversy.  Ditto, Jayne O’ Donnell at USA Today, Max Nisen at Bloomberg, Carolyn Johnson at the Washington Post, Matt Herper at Forbes or Peter Loftus at WSJ. 
 
I guess the fact that CVS which will soon acquire Aetna and could use the extra cash squeezed out of the sickest patients to boost net revenues and the stock price of the new company is of no interest to these reporters.  Neither is the fact that CVS is outsourcing life and death decisions to an unelected and unaccountable private organization which it also funds. 
 
If health journalism has a pulse, I can’t find it. 
 
Finally, you would think that the CVS assault on patients would get the attention of HHS Secretary Azar.  Not even a tweet.  So much for the administration’s concern about patient access.  Something tells me that the blueprint to reduce drug costs is now being written to facilitate the very shenanigans HHS once condemned.   Read More & Comment...

(Out of) Pocket Change

09/13/2018 10:22 AM | Peter Pitts

When it comes to healthcare reform, a key goal is to reduce what patients pay for their medicines. And that means what comes out of their pocket. This is particularly important for seniors and timely, since Congress now has the opportunity to address the so-called “donut hole.”
 
Because of language in the Bipartisan Budget Act of 2018 (BBA), seniors in the Part D donut hole will soon pay five times more than insurers for the brand medicines they rely on. In 2020, the BBA will increase a patient’s cost-sharing costs by $1250, raising out-of-pocket costs for the most vulnerable seniors. Why? Well, among other things, when Congress passed the BBA in February, it made changes to Medicare Part D that threaten the program’s successful competitive structure -- and leaving seniors mired even deeper in the donut hole.
 
Now is the time to aggressively address this issue. When people say, “my drugs are too expensive,” what they mean is “my out-of-pocket costs are too high.” Congress can help. And they can help now.     
 
Congress has the opportunity to make two small fixes that will protect seniors in the Medicare Part D donut hole and save them money on out-of-pocket costs for their medicines.  These fixes would leave seniors with high drug spending better off while stabilizing the program for the long-term. Together these two policy fixes would reduce out-of-pocket costs for seniors with high drug spending them better off and, in 2020, saving them up to 7% on their out-of-pocket costs. 
 
While these changes closed the donut hole a year early, they went much further by lowering insurers’ payment responsibility to just five percent of costs in the donut hole for brand medications. This undermines Part D’s market-based structure by reducing insurance plans’ stake in the program and therefore reducing their incentive to manage program costs, while also creating a significant imbalance in payment responsibility. 
 
When Part D was created, it included a catastrophic phase of coverage where seniors’ out-of-pocket costs would be reduced once their total medicine costs reached a certain amount. Each year the amount of spending required to move into the catastrophic phase increases slightly. A measure originally included in the Affordable Care Act temporarily slowed the growth rate of this increase. But now that measure is set to expire at the end of 2019, reverting back to pre-ACA levels overnight. This will result in a sudden increase in out-of-pocket costs for seniors in the donut hole who will have to reach a much higher spending threshold to get into catastrophic coverage.
 
Congress should take this opportunity to fix the donut hole "cliff" by enacting legislative language that restores balance to payment responsibility. They can act right now to both protect seniors and save them money on out-of-pocket costs.  Read More & Comment...

John Arnold: ICER Can Make PBMs Great Again

08/27/2018 01:35 PM | Robert Goldberg

Here's the key phrase in John Arnold's article on how to make PBMs great again: "The Laura and John Arnold Foundation has supported the development of value-based pricing through the Institute for Clinical and Economic Review, which can be used by pharmacy benefit managers to select drugs that maximize patient value rather than the size of the rebate. CVS recently announced it would use ICER pricing in establishing its formulary."

Translation: Let a handful of experts decide for millions of Americans about patient access by setting prices based on some abstract estimate of human worth and then enforcing those prices by excluding drugs, step therapy, prior authorization, clinical pathways and cost sharing (albeit at net prices).

Arnold and his foundation cast his effort as an effort to use the best scientific evidence developed by the most expert experts to achieve the greatest good in an era of scarce resources.  Indeed, his investment is part of a long tradition of wealthy individuals funding as Thomas Leonard wrote in "Illiberal Reformers", "scientific experts (who) should be in society’s saddle, determining the “human hierarchy” and appropriate social policies." Indeed, Arnold's entire philanthropic program is based on the belief that a better future would derive from the beneficent activities of expert social engineers (armed with evidence from randomized clinical trials) who would bring to the service of social ideals all the technical resources which research could discover and ingenuity could devise.”

At that time, the progressive solution was eugenics.  And in addition to making the case for experts making decisions about selective breeding and whether or not to spend money on helping the sickest based on randomized controlled trial data.  

And here is the statement of Margaret Sanger, a eugenics proponent: 

"Every single case of inherited defect, every malformed child, every congenitally tainted human being brought into this world is of infinite importance to that poor individual; but it is of scarcely less importance to the rest of us and to all of our children who must pay in one way or another for these biological and racial mistakes." 

Here's the Steve Pearson, the President of ICER:

 “The opportunity cost of supporting the use of ultra-orphan drugs necessitates that patients with a more common disease, for which a cost-effective treatment is available, are denied treatment.”    To reduce that cost we must restrain “society’s desire to help those weakest among us, especially when their small numbers allow us to see them as unique individuals.” In that way, we can “ensure that an undue burden is not placed on others for the sake of a few.”

ICER is part of an enduring feature of progressivism in its prior and current incarnations.  As Leonard points out, "this last Progressive belief—that modern conditions of industrial capitalism no longer permitted a quaint liberal individualism, but demanded wise government by expert elites— is what we can call technocratic paternalism. The idea is that benignly motivated experts should interpose themselves, in the name of the greater good, to better represent the interests of the industrial poor, for whom many reformers felt contempt as much as pity. "

ICER’s assault on people with rare diseases is rooted in such technocratic paternalism.  As Leonard noted: "Progressives believed that modern conditions required the state to assume control of human reproduction."

Today, as articulated and calculated by ICER, they require expert elites to assume control of the human condition.  And instead of eugenics, ICER and John Arnold want to turn an evidence-based approach to Munchausen syndrome by proxy to control drug costs. 

History is scarred with the accounts of societies and governments that deployed the solutions of expert technologists to empower to apply their wisdom to improve humankind.  We know better and have chosen better. Civilization is enriched when people who are marginalized – or have been eliminated -- because of their medical condition are freed from despair. 




 


   Read More & Comment...

Bloomberg’s Max Nisen: CVS Should Use ICER Pricing to Exclude Drugs for Sickest Patients

08/21/2018 11:50 AM | Robert Goldberg

Bloomberg opinion writer Max Nisen believes that CVS should use ICER’s drug pricing recommendations to exclude 
breakthrough drugs, including those for orphan diseases. Would he want his wife or daughter 
to have their access limited by CVS and Aetna (who is being acquired by CVS)? 

 He may not know that ICER is funded by CVS. He may not know that ICER never talks about 
sharing the increased rebates or fees that CVS would pocket if their lower prices are used. He 
may not know that even with the price cuts he thinks ICER should set, patients will still pay 
retail or be forced to try other treatments. He may not know that breakthroughs are 
breakthroughs because they are first in class. And he may not know that the step therapy or 
exclusions ICER also recommends are also based on containing costs, not increasing 
affordability. And he may not know that limiting access to drugs to generate rebates and fees 
comes at the expense of the sickest 2 percent of patients or that limiting access to drugs 
considered by ICER as cost effective is associated with worse outcomes and more spending 

But now he knows and now he should ask himself if G-d forbid he, his wife or children had their 
access to treatment denied by CVS and ICER would he embrace it. If he does, that͛s fine. But 
leave me and everyone else out of an approach that in my opinion violates the spirit of 
Nuremberg code on human experimentation. 
  Read More & Comment...

Peter" Bachs" Dying PBM Business Model

08/08/2018 09:05 PM | Robert Goldberg

Peter Bach recently published an article claiming that PBM rebates are only 4 percent of the total share of list price drug spending.   The fact that he even acknowledges rebates and what Drug Channels calls the gross to net bubble is to be commended since for so long he and others ignore them. 

Bach’s claim that PBMs only extract 4 percent while pharmacies and doctors pocket more — was bought hook, line and sinker by Politico’s Sarah Carlin-Smith.  But his analysis is laughable for two reasons:

1. Bach uses PBM gross profit margins to estimate the industry’s share of the pie revenues.   PBMs count the list price cost of drugs as expenses  in calculating their gross profits.   The 3 largest PBMs only had an operating-profit margin of 4% to 7%, which is 16% below average among S&P 500 companies, according to an article in Bloomberg. But PBMs never take title or own the drugs..  they make money on the pass-through income such as rebates, fees, etc.  Had the PBMs calculated their revenue in the same way other companies do, their margins would dramatically increase, the article alleged. While this tactic may not attract new investors, it can, however, reduce criticism related to the companies’ practices. “It hides a lot. It’s as simple as that,” Ravi Mehrotra, a partner at the MTS Health Partners investment bank, told Bloomberg.

2. Moreover, unlike other parts of Bach’ supply chain, PBMs — unlike drug companies -invest litte in fixed assets or R and D.  So the  better benchmark is, as AllianceBernstein concluded  EBITDA (earnings before interest, taxes, depreciation and amortization) and the rate at which gross profit converts to EBITDA. While drug distributors convert 45% of their gross profit to EBITDA, and insurers and pharmacies around 30%, PBMs convert 85%. And the reason for that is the relative lack of fixed assets, which in turn keeps depreciation and amortization low. PBMs, are middlemen without the warehouses or stores of pharmacies and wholesalers. 
 
 The release of the article coincides with growing skepticism of the PBM business model and the proposed merger of Cigna and Express Scripts(ESI).  Both companies claim this is a merger to make health care more cost-effective and personalized.  The share price Cigna paid to acquire ESI —$96 — reflects the huge impact the cash PBMs generate and which  Bach’s article tries to hide.  But as the PBM model is threatened, it behooves ESI and thepro-PBMM Bach to downplay margins.    

 Carl Icahn is publicly urging Cigna shareholders to reject the ESI acquisition because the PBM business model — built on the spread between list price and what PBMs pocket — is going to be dead: 

“(We believe that Express Scripts is a company with major problems whose business could well fall off a cliff. Given the significant worsening of several major risks since the deal announcement, we are confident in saying that Express Scripts on a standalone basis would likely be worth less than $60. Though there is a not another standalone PBM to compare Express Scripts to, we note that drug distributors McKesson and Amerisource Bergen are down 17% and 16% respectively since the announcement of the Cigna/Express Scripts deal and that the risks are likely greater in the case of Express Scripts. Applying the 9x P/E multiple that pharmacies and drug distributors currently trade at to Express Scripts’ 2019E ex-Anthem earnings of $6.50 would result in a $58.50 standalone stock price. We find it unconscionable to pay over $90 for a company that today would likely be worth less than $60.”

If you had to take investment advice from Bach or Carl, who would you choose? 

  Read More & Comment...

Outbreak of Foot-in-Mouth Disease at HHS

07/24/2018 04:46 PM | Peter Pitts

It’s the self-inflicted wounds that hurt the most.
 
From the savvy pen of BioCentury’s Washington Editor, Steve Usdin.
 
Azar’s political play with drug importation
 
The drug importation policy announced by Alex Azar last week is a political stunt, aimed at generating headlines at a time when the HHS secretary seems desperate to demonstrate to Donald Trump and the media that he’s fulfilling the president’s pledges to lower drug prices. In fact, as Azar knows, importation will have a negligible effect on access to drugs.

Opening the door to importation as a price control tactic will, however, create precedents that will damage FDA, and consequently hurt biomedical innovators and patients.
 
The new policy would allow importation of drugs that lack patent protection or exclusivity, and that are produced by one manufacturer.
 
Azar indicated in a July 19 interview with Fox News that the move was his idea, and that he expects FDA to fall into line behind it. The HHS secretary said he called FDA Commissioner Scott Gottlieb to demand establishment of a working group on importation, telling him: “I insist that you find a pathway to make this happen.”

The record shows both Azar and Gottlieb know that importation won’t move the needle when it comes to drug prices.
 
Speaking to reporters in May, Azar dismissed drug importation as a “gimmick,” arguing that even if it could be done safely, drug companies would respond by limiting supplies to countries that were exporting to the U.S.
 
In March 2016, Gottlieb wrote that presidential candidate Trump’s endorsement of importation was “good politics” but that it would “offer consumers little relief.” The cost of ensuring the safety of imported drugs would eat up any savings, he wrote.

During his FDA confirmation hearing in April 2017, Gottlieb reiterated his belief that importation isn’t a feasible tool for lowering drug prices.

Azar’s politically motivated plan will undermine FDA’s well-earned reputation as a non-partisan, science-based regulator.
 
Azar and Gottlieb didn’t issue any caveats. They never suggested importation could be used to target price hikes taken on off-patent drugs by unscrupulous pharma companies.
 
The issue isn’t whether FDA can ensure the safety of imported drugs. History shows it can do so to address public health emergencies, on a limited scale and at great cost.
 
For example, in 2012 the agency facilitated the importation of an unapproved vaccine to combat meningitis outbreaks on college campuses. The next year, FDA found and arranged importation of foreign supplies of injectable drugs used to make total parenteral nutrition after a U.S. manufacturer voluntarily shut down to resolve quality issues. In a blog posting, the agency described the resource-intensive process it went through to ensure the safety of the imported products.
 
There’s a big difference, however, between taking extraordinary steps to secure drugs needed to combat a public health emergency and claiming importation should be used to puncture a pricing bubble.

Azar’s politically motivated plan will undermine FDA’s well-earned reputation as a non-partisan, science-based regulator by putting it at the center of political and economic controversies it is ill-equipped to navigate.

Across multiple presidencies, the agency has consistently said it has no authority over prices. But Azar would force FDA to develop a methodology to determine which prices are egregious - inevitably leading it to steer regulatory policy on the basis of public outrage, media attention, or political expediency. 
 
The alternative is for HHS to tell FDA which drugs would be subject to importation. This would set a precedent at odds with FDA's mandate to operate as an independent agency.
 
What’s going to happen when President Trump or a future occupant of the White House sees TV programs about a lifesaving new drug with an eye-popping price in the U.S. that is available for less in Italy or Indonesia? How long will it take for the president to pick up the phone and order HHS to arrange for imports from a country with price controls? And in the heat of the moment, will either the White House or HHS stop to ensure that the supply chain is safe, to consider the disincentive to innovation caused by intemperate importation of price controls, or to consider other ways to ensure that American patients have access?
 
Azar and Gottlieb have described a circumscribed program in their public statements, and reiterated their opposition to large-scale importation. Nuance doesn’t get far in Washington.

No matter how targeted the program is, it will fuel the enthusiasm of activists who are demanding the broad importation practices that Gottlieb and his predecessors have condemned as infeasible and dangerous.
 
It already has. 
 
Within hours of Azar’s announcement of the importation policy, Sen. Chuck Grassley (R-Iowa) praised the action as the first step toward opening the borders to prescription drugs from Canada and other countries.
 
While it will be politically attractive, whacking a pharma bro or two wouldn’t fundamentally change the drug pricing environment.

Given his prior opposition to importation, it seems Azar is motivated by a desire to placate Trump by generating favorable publicity. In fact, his department has been prodding and cajoling reporters for weeks as part of an organized effort to get more favorable coverage of its drug pricing blueprint. 
 
Although he talks about market forces and promoting competition, Azar also has displayed an enthusiasm for intimidating individual companies and vilifying CEOs. He has amplified Trump’s tweeted threats to pharma companies and celebrated their demonstrations of contrition. 

Tweets and headlines fade quickly. In their relentless search for publicity, Azar and the Trump administration will be reaching for more quick fixes.  Read More & Comment...