Latest Drugwonks' Blog
I wrote two op-eds that just happened to be published the same day (today)
The first one explains whyTrump's Prescription Drug Price Reform is Promising.
Soaking the Sick to Make the Rich Even Richer discusses how Democrat opposition to the Trump proposal has led legislators from that party propose giving PBMs more control over access to medicines.
Not many people are told, at gunpoint no less, by a dictator to take the next flight out of his country and never come back. Fewer still have replied by asking the dictator to pay for the trip, let alone live to do so.
But such quiet acts of defiance connect the "Defining Moments of a Free Man From a Black Stream" by Frank Douglas. Douglas, one of the most highly honored and respected leaders in the pharmaceutical industry, could have written an entire book about his many careers ranging from a physician, a drug development executive, venture capital advisor, biotech CEO and director of two initiatives to accelerate the commercialization of academic life science research and that alone would have been interesting, informative and inspiring. But the formative experiences, the events that truly defined the life of Frank Douglas, were forged not in corporate boardrooms or high-level meetings but instead in how he chose to act when faced with beatings, homelessness, outright racism, and political intimidation.
The autobiography opens with a 12 year Frank Douglas being whipped by his mother after being told that he deliberately dumped a week's worth of groceries from his bicycle basket by her emotionally unstable and sadistic sister, Edith. It wasn't the first time. Edith took a sick delight in blaming Frank for things he did not do, knowing that it would lead to a beating. After this incident, Frank decided he had no choice but to kill himself by plunging into the deep waters off the coast of his native Guyana.
He asked himself how much "hope is there for a boy of twelve when in his own home he cannot defend himself or defend against injustice?" Ever the rational being, Frank realized that the possibility of jumping and living in pain wasn't worth the effort to commit suicide. Instead, he "concluded that there had to be a different solution to my dilemma."
He ran to the home of a woman he called "Moms" who is the mother would take to visit every Sunday after church and declared he wanted to live there. It was then that Moms told Frank that her son was his real father. The revelation did not devastate him, it made him stronger. He went home, no longer a victim, and told his mother and aunt Edith he would not be beaten or manipulated again.
Such defiance was forged from faith and fearlessness in confronting events and forces that appeared to be beyond his control. Much like Jacob wrestled God from darkness into dawn before receiving the name Israel, Frank Douglas truly earned his name (which literally means a free man from a black stream) by virtue of his willingness to confront malevolent, even violent forces throughout his life.
Throughout his academic career which took him from a small private school in Guyana to Lehigh University and then to Cornell for a Ph.D. in Chemistry and a medical degree, Douglas faced outright racism. Others would have endured it or, especially today sought to triumph by being defined as a victim. Instead, Frank Douglas took on the threats, often without regard to short term consequences, by confronting those who wanted to squash him because he was black.
If he had acted otherwise, the world would be a lesser place. His novel approaches to conducting drug discovery and development spread from the companies he worked for and transformed practice throughout the industry. The hundreds of students and entrepreneurs that sustain medical innovation would be fewer in number and less effective. And those fortunate enough to have read the book would not have the privilege of being taught an ageless lesson about the human condition: that our character is not just our destiny, it is the legacy we leave behind. And as Defining Moments demonstrates, that heritage is shaped by the work of our own hearts and hands and not the faceless, inexorable traverse from past to future.
But such quiet acts of defiance connect the "Defining Moments of a Free Man From a Black Stream" by Frank Douglas. Douglas, one of the most highly honored and respected leaders in the pharmaceutical industry, could have written an entire book about his many careers ranging from a physician, a drug development executive, venture capital advisor, biotech CEO and director of two initiatives to accelerate the commercialization of academic life science research and that alone would have been interesting, informative and inspiring. But the formative experiences, the events that truly defined the life of Frank Douglas, were forged not in corporate boardrooms or high-level meetings but instead in how he chose to act when faced with beatings, homelessness, outright racism, and political intimidation.
The autobiography opens with a 12 year Frank Douglas being whipped by his mother after being told that he deliberately dumped a week's worth of groceries from his bicycle basket by her emotionally unstable and sadistic sister, Edith. It wasn't the first time. Edith took a sick delight in blaming Frank for things he did not do, knowing that it would lead to a beating. After this incident, Frank decided he had no choice but to kill himself by plunging into the deep waters off the coast of his native Guyana.
He asked himself how much "hope is there for a boy of twelve when in his own home he cannot defend himself or defend against injustice?" Ever the rational being, Frank realized that the possibility of jumping and living in pain wasn't worth the effort to commit suicide. Instead, he "concluded that there had to be a different solution to my dilemma."
He ran to the home of a woman he called "Moms" who is the mother would take to visit every Sunday after church and declared he wanted to live there. It was then that Moms told Frank that her son was his real father. The revelation did not devastate him, it made him stronger. He went home, no longer a victim, and told his mother and aunt Edith he would not be beaten or manipulated again.
Such defiance was forged from faith and fearlessness in confronting events and forces that appeared to be beyond his control. Much like Jacob wrestled God from darkness into dawn before receiving the name Israel, Frank Douglas truly earned his name (which literally means a free man from a black stream) by virtue of his willingness to confront malevolent, even violent forces throughout his life.
Throughout his academic career which took him from a small private school in Guyana to Lehigh University and then to Cornell for a Ph.D. in Chemistry and a medical degree, Douglas faced outright racism. Others would have endured it or, especially today sought to triumph by being defined as a victim. Instead, Frank Douglas took on the threats, often without regard to short term consequences, by confronting those who wanted to squash him because he was black.
If he had acted otherwise, the world would be a lesser place. His novel approaches to conducting drug discovery and development spread from the companies he worked for and transformed practice throughout the industry. The hundreds of students and entrepreneurs that sustain medical innovation would be fewer in number and less effective. And those fortunate enough to have read the book would not have the privilege of being taught an ageless lesson about the human condition: that our character is not just our destiny, it is the legacy we leave behind. And as Defining Moments demonstrates, that heritage is shaped by the work of our own hearts and hands and not the faceless, inexorable traverse from past to future.
Very important initiative from the FDA to update DSHEA – without even once mentioning CBD oil. If you don't think the agency takes the twin issues of quality and claims seriously -- think again. Some excerpts:
Statement from FDA Commissioner Scott Gottlieb, M.D., on the agency’s new efforts to strengthen regulation of dietary supplements by modernizing and reforming FDA’s oversight
The opportunity to strengthen the framework that governs dietary supplements couldn’t come at a more pivotal time. On the one hand, advances in science and the growth and development in the dietary supplement industry carries with it many new opportunities for consumers to improve their health. At the same time, the growth in the number of adulterated and misbranded products – including those spiked with drug ingredients not declared on their labels, misleading claims, and other risks – creates new potential dangers.
Legitimate industry benefits from a framework that inspires the confidence of consumers and providers. Patients benefit from products that meet high standards for quality.
Dietary supplements can, when substantiated, claim a number of potential benefits to consumer health, but they cannot claim to prevent, treat or cure diseases like Alzheimer’s. Such claims can harm patients by discouraging them from seeking FDA-approved medical products that have been demonstrated to be safe and effective for these medical conditions. In recent years, we’ve also taken action against companies and dietary supplements making similar claims regarding treatment of serious conditions such as cancer and opioid addiction. These enforcement actions are just one part of our overall efforts to update our policy framework governing dietary supplements.
Our first priority for dietary supplements is ensuring safety. Above all else, the FDA’s duty is to protect consumers from harmful products. Our second priority is maintaining product integrity: we want to ensure that dietary supplements contain the ingredients that they’re labeled to contain, and nothing else, and that those products are consistently manufactured according to quality standards. Our third priority is informed decision-making. We want to foster an environment where consumers and health care professionals are able to make informed decisions before recommending, purchasing or using dietary supplements.
I’m pleased to announce that we’ve recently created the Botanical Safety Consortium, a public-private partnership that will gather leading scientific minds from industry, academia and government to promote scientific advances in evaluating the safety of botanical ingredients and mixtures in dietary supplements. This group will look at novel ways to use cutting-edge toxicology tools, including alternatives to animal testing, to promote the goals of safety and effectiveness we share with consumers and other stakeholders
Statement from FDA Commissioner Scott Gottlieb, M.D., on the agency’s new efforts to strengthen regulation of dietary supplements by modernizing and reforming FDA’s oversight
The opportunity to strengthen the framework that governs dietary supplements couldn’t come at a more pivotal time. On the one hand, advances in science and the growth and development in the dietary supplement industry carries with it many new opportunities for consumers to improve their health. At the same time, the growth in the number of adulterated and misbranded products – including those spiked with drug ingredients not declared on their labels, misleading claims, and other risks – creates new potential dangers.
Legitimate industry benefits from a framework that inspires the confidence of consumers and providers. Patients benefit from products that meet high standards for quality.
Dietary supplements can, when substantiated, claim a number of potential benefits to consumer health, but they cannot claim to prevent, treat or cure diseases like Alzheimer’s. Such claims can harm patients by discouraging them from seeking FDA-approved medical products that have been demonstrated to be safe and effective for these medical conditions. In recent years, we’ve also taken action against companies and dietary supplements making similar claims regarding treatment of serious conditions such as cancer and opioid addiction. These enforcement actions are just one part of our overall efforts to update our policy framework governing dietary supplements.
Our first priority for dietary supplements is ensuring safety. Above all else, the FDA’s duty is to protect consumers from harmful products. Our second priority is maintaining product integrity: we want to ensure that dietary supplements contain the ingredients that they’re labeled to contain, and nothing else, and that those products are consistently manufactured according to quality standards. Our third priority is informed decision-making. We want to foster an environment where consumers and health care professionals are able to make informed decisions before recommending, purchasing or using dietary supplements.
I’m pleased to announce that we’ve recently created the Botanical Safety Consortium, a public-private partnership that will gather leading scientific minds from industry, academia and government to promote scientific advances in evaluating the safety of botanical ingredients and mixtures in dietary supplements. This group will look at novel ways to use cutting-edge toxicology tools, including alternatives to animal testing, to promote the goals of safety and effectiveness we share with consumers and other stakeholders
When members of the tort bar start to salivate over a piece of legislation, it’s worthwhile to find out where the red meat resides.
In a rush to pass legislation to “lower drug prices,” lawmakers are pushing forward H.R. 965 (Cicilline and Sensenbrenner) and S.340 (Leahy). The worthwhile goal of this new version of the CREATES Act is to prohibit pharmaceutical and biologic companies from engaging in anti-competitive conduct that blocks lower-cost generic drugs from entering the market.
Both bills address an important problem – but create an even bigger one.
This proposed legislation establishes a private right of action for “eligible product developers” to sue “license holders” for failure to comply with the process set forth in CREATES for providing access to covered product. Good! But …
As written, the CREATES Act is ripe for abuse by entities that have no intent to actually develop a generic or biosimilar version of the covered product. This potential for abuse is exacerbated by the significant monetary damages available under CREATES—up to the amount of revenue generated on the covered product during the period of violation. Indeed, in certain instances it may be more profitable to litigate and obtain damages under CREATES than it would be to actually market a generic/biosimilar product.
Can you hear the tort bar drooling? Can you hear the tort bar … drafting?
As currently drafted, the CREATES Act could have significant unintended consequences:
The damage provisions of the current draft create the potential for windfall damages, which will distort incentives. Specifically, the bill allows for damages up to the entire gross profit of the brand medicine during the period of negotiations. This creates a powerful incentive for generic companies to prolong negotiations (increasing their damage award), which will actually delay generic entry and competition in the marketplace.
Indeed, generic developers would be able to earn more from a lawsuit than from actually selling the proposed generic drug. An "opportunistic" company (Can you say "Shkreli?") could develop a business model of demanding samples and engaging in litigation for damages without ever submitting an abbreviated application to FDA—undermining the bill’s stated goal to speed availability of lower-cost drugs for patients.
Smart changes will fix these problems, save the government money and achieve the desired policy goals of facilitating generic access to samples and increasing competition; maintaining safeguards for products subject to a REMS; and ensuring generic developers actually develop generic products.
Here’s a savvy path forward:
Establish an affirmative defense for license holders where the license holder has made a timely offer to provide sufficient quantities of samples at commercially reasonable, market-based terms.
Such an affirmative defense is intended to prevent frivolous litigation—where samples are offered on commercially reasonable terms, the eligible product developer should not be able to decline the offer and continue litigation. The term “commercially reasonable, market-based terms” is defined to provide further clarity to all parties and avoid unnecessary litigation. Remedies would not be available if the license holder has established an affirmative defense by a “preponderance of the evidence.”This affirmative defense also protects good acting companies from protracted litigation and stops generic sponsors from unnecessarily prolonging negotiations to increase damages.
Revision to the definition of “eligible product developer” to clarify that the eligible product developer must be a person that seeks to develop “and submit” an application for a generic or biosimilar product.
These change will help ensure that only legitimate manufacturers are considered eligible product developers for purposes of CREATES; entities that seek only to engage in frivolous litigation and do not seek to submit a generic/biosimilar product application would not be eligible for the remedies under CREATES. The tort bar won’t like it – but this important legislation must be about lowering drug prices – not raising their income.
In a rush to pass legislation to “lower drug prices,” lawmakers are pushing forward H.R. 965 (Cicilline and Sensenbrenner) and S.340 (Leahy). The worthwhile goal of this new version of the CREATES Act is to prohibit pharmaceutical and biologic companies from engaging in anti-competitive conduct that blocks lower-cost generic drugs from entering the market.
Both bills address an important problem – but create an even bigger one.
This proposed legislation establishes a private right of action for “eligible product developers” to sue “license holders” for failure to comply with the process set forth in CREATES for providing access to covered product. Good! But …
As written, the CREATES Act is ripe for abuse by entities that have no intent to actually develop a generic or biosimilar version of the covered product. This potential for abuse is exacerbated by the significant monetary damages available under CREATES—up to the amount of revenue generated on the covered product during the period of violation. Indeed, in certain instances it may be more profitable to litigate and obtain damages under CREATES than it would be to actually market a generic/biosimilar product.
Can you hear the tort bar drooling? Can you hear the tort bar … drafting?
As currently drafted, the CREATES Act could have significant unintended consequences:
The damage provisions of the current draft create the potential for windfall damages, which will distort incentives. Specifically, the bill allows for damages up to the entire gross profit of the brand medicine during the period of negotiations. This creates a powerful incentive for generic companies to prolong negotiations (increasing their damage award), which will actually delay generic entry and competition in the marketplace.
Indeed, generic developers would be able to earn more from a lawsuit than from actually selling the proposed generic drug. An "opportunistic" company (Can you say "Shkreli?") could develop a business model of demanding samples and engaging in litigation for damages without ever submitting an abbreviated application to FDA—undermining the bill’s stated goal to speed availability of lower-cost drugs for patients.
Smart changes will fix these problems, save the government money and achieve the desired policy goals of facilitating generic access to samples and increasing competition; maintaining safeguards for products subject to a REMS; and ensuring generic developers actually develop generic products.
Here’s a savvy path forward:
Establish an affirmative defense for license holders where the license holder has made a timely offer to provide sufficient quantities of samples at commercially reasonable, market-based terms.
Such an affirmative defense is intended to prevent frivolous litigation—where samples are offered on commercially reasonable terms, the eligible product developer should not be able to decline the offer and continue litigation. The term “commercially reasonable, market-based terms” is defined to provide further clarity to all parties and avoid unnecessary litigation. Remedies would not be available if the license holder has established an affirmative defense by a “preponderance of the evidence.”This affirmative defense also protects good acting companies from protracted litigation and stops generic sponsors from unnecessarily prolonging negotiations to increase damages.
Revision to the definition of “eligible product developer” to clarify that the eligible product developer must be a person that seeks to develop “and submit” an application for a generic or biosimilar product.
These change will help ensure that only legitimate manufacturers are considered eligible product developers for purposes of CREATES; entities that seek only to engage in frivolous litigation and do not seek to submit a generic/biosimilar product application would not be eligible for the remedies under CREATES. The tort bar won’t like it – but this important legislation must be about lowering drug prices – not raising their income.
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.
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.
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.”
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.”
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.”
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.”
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.
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.
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.”
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.”
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.
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.
Center for Medicine in the Public Interest is a nonprofit, non-partisan organization promoting innovative solutions that advance medical progress, reduce health disparities, extend life and make health care more affordable, preventive and patient-centered. CMPI also provides the public, policymakers and the media a reliable source of independent scientific analysis on issues ranging from personalized medicine, food and drug safety, health care reform and comparative effectiveness.
