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Last week, federal prosecutors in Los Angeles arrested 53 people for raking in $150 million in Medicare and Medicaid payments for medically unnecessary compounded drugs. In cooperation with a large L.A. based compounding pharmacy --Fusion Rx  -- the doctors to bill health care providers for those compounded drugs, many of which were reimbursed at rates much higher than common medications. 
 
Doing this enabled the pharmacies to boost the reimbursement rates for the prescriptions and routinely waive patient copayment obligations.  FusionRx is one of many compounding pharmacies that are endangering patient lives by driving up the cost of prescription drugs.
 
It's no surprise that few people are familiar with compounding pharmacies, purely because the altered medications account for less than one percent of prescriptions. However, as the DOJ suit notes, the price of compounded drugs has surged by as much as 3,400 percent since 2006.  Despite legislative efforts to strengthen oversight of compounding pharmacies, their production and distribution are still mostly unregulated. This is not the time to ease up on federal oversight of compounding drugs. 
 
Compounding – the combining of two or more ingredients to produce a medicine for a patient – has been around for centuries, evolving from age-old concoctions into a service that increasingly customizes lifesaving medicines. Most drugs were compounded until large-scale development and manufacturing emerged in the 1950s, allowing companies to bolster their research and development to provide tailored treatments for patients.   
 
Over the past decade, however, there has been a substantial increase in compounding medications to address the need to customize dosing for patients who would otherwise not benefit from specific treatments. Small compounding pharmacies don't have to get Food and Drug Administration (FDA) approval for their medicines. This is because Congress exempted compounding pharmacies from FDA oversight in 1998 and handed the responsibility over to state pharmacy boards. 
 
Traditionally, the bespoke nature of compounding has allowed pharmacies to charge health plans a premium for their products. While no public estimates are available, industry experts believe that the gross margins from compounding products is between 70-87 percent. As the pharmacy benefit management market consolidated around large companies such as Express Scripts and CVS, small specialty drug firms saw their margins squeezed. Compounding provided the opportunity to make more money due to the markups involved, and as a small portion of drug spending, most PBMs and health plans paid for compounded medicines without question. 
 
Soon it became clear that in the absence of FDA regulation, a compounding pharmacy could produce large commercial quantities of medicines and ship them anywhere in the United States. Around 2010, private equity groups invested in several compounding pharmacies to increase capacity. 
 
It didn't take long for small compounding companies to become large companies, pumping out mass quantities of medicines originally meant for single patients. As noted, Medicare Part D spending skyrocketed for topical compounded drugs-such as creams, gels, and ointments to relieve pain. Most of the increase in spending is a result of expenditures for pain medications, including opioid-based medicines and steroids. 
In 2004, TRICARE – the Department of Defense's health system – spent approximately $5 million for compounded prescriptions. By 2010, the cost had risen to $23 million. In the first nine months of 2015, TRICARE paid $1.7 billion for compounded drugs. Shockingly, this is over 20 percent of TRICARE's total prescription budget. The average cost of a compounded drug is now $2,595, with some drugs costing as much as $40,000 per prescription.
 
As noted, FusionRx is just one of several criminal cases the DOJ is pursuing against compounder.  For example,  the owners of Parks and Lee compounding pharmacy are accused of paying kickbacks and bribes to physicians to get them to write prescriptions to their pharmacies. After the prescriptions were written and carried out, the defendants allegedly submitted huge claims for payment to federal health care programs – dividing the profits.
  
In 2013, The Drug Quality and Security Act (H.R. 3204) was passed by the Senate and signed into law by President Obama on November 27, 2013. Since that time, the FDA has made significant steps for heightened enforcement and site inspections of compounders, shutting some facilities down and helping others correct public health threats. The 2013 Act gave the FDA control over the quantity of compounded drugs that could be shipped or sold across state lines.  Proposed regulations for doing so were not finalized until May of this year. 
 
The proposed regulations continue to exempt compounded drug products from demonstrating to the FDA that they are safely and effectively manufactured.  However, the compounder must agree to limit intrastate distribution to 50 percent of total prescriptions or less. If not, then the amount of out of state sales drops to 5 percent. 
 
The compounding industry opposes these generous limits and declares them as anti-patient. But, as the FDA notes, Congress did not intend for compounding pharmacies to grow into conventional manufacturing operations that can make and sell large quantities of unregulated medicines. 
 
Though steps have been taken to instigate proper oversight, compounded drugs are still laced with containments and corruption. The FDA's proposed regulations increase transparency and accountability. The failure to adopt these modest requirements suggests that compounding pharmacies are more interested in their profits than in public health.

New House Drug Pricing Bill is a Joke

  • 09.10.2019
  • Peter Pitts
In my new book, “Common Sense Health Policy for Common Sense Americans (and Presidential Candidates),"  I plead for sanity and stress that it’s time to put away unworkable soundbite solutions. I sent copies to every member of Congress. Reviewing H.R. 3 (the new price negotiation bill), it’s clear that no one (at least on the majority side) has read it.

The bill is a hit parade of bad ideas.  For example:

An International Pricing Index. Patients often lose access to the best medicines when their government adopts price controls. Of the drugs launched in the last seven years, only 60% were available in Sweden. And only half made it to patients in Canada. In the United States, meanwhile, nearly 90% of those medicines were available. Americans will no longer enjoy generous access to the newest drugs if we embrace price controls. Importing the socialist pricing tactics of foreign governments is no way to stand up for Medicare patients. Bad idea when it comes from the White House, Bad idea when it comes from the People’s House.

Direct Government Negotiation. Is the direct federal negotiation of drug prices a good idea? Consider the “non-interference clause” that currently prohibits such actions in Medicare Part D — the federal program that subsidizes prescription drugs for seniors. A repeal of the non-interference clause would result in a sharp increase in Medicare drug prices and a substantial decline in patient choice. The Congressional Budget Office observed that Part D plans have “secured rebates somewhat larger than the average rebates observed in commercial health plans.” According to the CBO, 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 would drop some drugs from Medicare’s coverage to save money. That would be a raw deal for patients. The average Part D plan provides access to more than 95 percent of the top 200 Medicare Part D Drugs. (PS/ The Non-Interference Clause was written by Senators Ted Kennedy and Tom Daschle.)

Rebates to Off-Set Price Hikes. When Americans say, “My drugs are too expensive,” what they generally mean is that their co-pays at the pharmacy are too expensive. And they’re right. But co-pays aren’t tied to list prices. Consider this: payers negotiate discounts of between 30-50% of the list price – and then base the co-pay off of the list price. What happens to the discount? They pocket the difference. When payers say that higher co-pays are a result of higher list prices they are lying. Surprisingly absent from H.R. 3 is any call for pricing transparency. Shameful.

H.R. 3 is a cruel  joke. It's time to put down the political talking points and pick up Common Sense Healthcare Policy.
 
Some snippets from the Pink Sheet …

Sarepta, US FDA Offer Sparring Positions Over Release of Complete Response Letters

Following Vyondys 53 rebuff, Sarepta CEO contends it would be "disrespectful" to release the complete response letter, while FDA contends that there is nothing stopping companies from publishing the letters.

During a webinar conversation between Sarepta and Parent Project Muscular Dystrophy (PPMD) released on 22 August, company CEO Doug Ingram said multiple times that it might be "disrespectful" for Sarepta to publish the CRL.

"These complete response letters are not public," Ingram said. "They're non-public letters between the agency and sponsors. I am not comfortable making the complete response letter public for the simple reason that I think it might look disrespectful to the agency as we are working through these issues."

An FDA spokesperson, however, told the Pink Sheet that there is nothing stopping companies from making their CRLs public. "Applicants can release the CR letter it receives from FDA (or any other correspondence it gets from us)," the spokesperson said.

A former FDAer chided the company's assertion that it would be disrespectful to the FDA by releasing the CRL. "Any company that is doing business with the FDA understands what is and what is not commercial confidential," Peter Pitts, president of the Center for Medicine in the Public Interest and a former FDA associate commissioner, told the Pink Sheet. "Whether the company chooses to release a CRL is their decision. But to say it is disrespectful is just living in fantasy land. It's just another way to blame the FDA."

The full Pink Sheet article can be found here.
 

A Serious Proposal

  • 08.01.2019
  • Peter Pitts
Kudos to President Trump, HHS Secretary Alex Azar and Acting FDA Commissioner Ned Sharpless for taking the idea of drug importation from the absurd to the serious. Moving away from empty political talking points to a real regulatory agenda takes guts – especially since it has the very real possible outcome of demonstrating once and for all that this idea has no merit.

The “Safe Importation Action Plan” posits two pathways. Under the first, states, wholesalers, or pharmacists could submit plans for demonstration projects for HHS to review outlining how they would import Health-Canada approved drugs that are in compliance with section 505 of the FD&C Act. The importation would occur in a manner that adequately assures the drug is what it purports to be and that meets the cost requirements of the rulemaking. The demonstration projects would be time-limited and require regular reporting to ensure safety and cost conditions are being met. Controlled substances, biological products, infused drugs, intravenously injected drugs, drugs inhaled during surgery, and certain parenteral drugs would be excluded from this pathway. (Yes, that means no Canadian insulin.)

The NPRM would explain the requirement for demonstrating that drugs imported under this pathway must result in a significant reduction in the cost of covered drug products to the American consumer. As such, the NPRM would seek  feedback on the best way to identify the expected acquisition cost of the imported drug, the cost of assuring the drug is safely imported, and the mechanism for delivering those savings to the consumer (as opposed to the savings being absorbed by the supply chain). That’s a tough assignment. Will such a plan lower co-pays for a single patient with health insurance?

Pathway 2 would allow manufacturers of FDA-approved drug products to import versions of these FDA-approved drugs that they sell in foreign countries into the US. To use this pathway, the manufacturer or person authorized by the manufacturer would need to establish with FDA that the foreign version is the same as the U.S. version (such as through manufacturing records). If this condition is met, FDA would allow the drug to be labeled for sale in the US (potentially with labeling that identifies the product as originally manufactured for sale abroad) and imported pursuant to section 801(d) of the FD&C Act under the existing approval for the US approved version.

What’s missing from the Administration’s action plan is a bilateral meeting to discuss drug importation from Canada – with the Canadian government. “Canada does not support actions that could adversely affect the supply of prescription drugs in Canada and potentially raise costs of prescription drugs for Canadians,” reads an April briefing for Canadian officials obtained under freedom of information laws.  No plan can ever be taken seriously without this essential cross-border conversation.

Pathways 1 and 2 will both be driven by a Notice of Proposed Rulemaking (“NPRM”). It’s a detailed and lengthy process –precisely the opposite of loose political rhetoric. It’s about time we get serious and base our future discussions about drug importation on facts rather than fiction.
 
It appears that the American Hospital Association  (AHA) and the health plan lobby, America's Health Insurance Plans (AHIP) are not fans of the Trump administration's executive order to require hospitals to " publish prices that reflect what people pay for services."  According to HHS Secretary Alex Azar, the rule would "require hospitals to disclose the prices that patients and insurers actually pay in "an easy-to-read, patient-friendly format"  and "require health care providers and insurers to provide patients with information about the out-of-pocket costs they'll face before they receive health care services." 

AHA responded: (Consumers) "don’t look at price alone when it comes to seeking the highest quality care for themselves or loved ones. Moreover, consumers say they are most interested in what their out-of-pocket costs for care will be, what is covered by their health plan, which providers are in their networks and what their health plan’s cost-sharing obligations are in terms of their deductible and coinsurance. 
 Meanwhile, economists and analysts have suggested that publicly posting certain information, such as privately negotiated rates, could, in fact, undermine the competitive forces of private market dynamics with unintended consequences such as insurers coordinating to disadvantage providers and consumers."

AHIP   CEO Matt Eyles said the same thing, claiming that  "Publicly disclosing competitively negotiated, proprietary rates will reduce competition and push prices higher — not lower — for consumers, patients, and taxpayers," said in a statement. He says it will perpetuate "the old days of the American health care system paying for volume over value. We know that is a formula for higher costs and worse care for everyone."

Wow, it sounds like the Trump proposal would violate the economics equivalent of the third law of thermodynamics.  So it must apply across the board, to any industry and therefore AHIP and AHA would take a principled stand against any proposal to reveal negotiated prices.  Or maybe not:

AHIP and USA Today Agree: It’s Time for Open and Honest Drug Pricing

When it comes to out-of-control drug prices, the USA Today Editorial Board gets it right. (“How the Trump prescription for drug prices transparency could make health care well again,” May 16). Disclosing prescription drug prices in direct-to-consumer (DTC) advertising is an effective way to help patients make informed decisions about their health.
Lifesaving drugs and treatments are placed out of reach for too many Americans because of the outrageously high list prices set exclusively by Big Pharma. The Trump administration’s proposal will help consumers learn more about what their prescription costs before they access it, and will empower them to discuss cheaper alternatives with their doctor, including generics.
Americans deserve to know how high prices are fueling Big Pharma’s marketing machines and bottom lines at our expense. Direct-to-consumer advertising price disclosure is an important first step in helping us get there.

Matt Eyles
President and CEO
America’s Health Insurance Plans

Well, okay.  But maybe the AHA has a more principled position:

Committee approves AHA-supported drug price transparency bill

The House Ways and Means Committee on Tuesday approved the Prescription Drug Sunshine, Transparency, Accountability and Reporting Act (H.R. 2113), AHA-supported legislation that would increase transparency with regard to prescription drug pricing. 
  
"As it considers this legislation, we want to commend the Committee for including several policies that will better hold drug manufacturers accountable," AHA said in a letter of support for the bill. 
  
Specifically, AHA applauded the inclusion of the Reporting Accurate Drug Prices Act, which would require all manufacturers to submit pricing data to the Department of Health and Human Services.

Sp do AHA and AHIP agree with PhRma that publishing sticker prices "would potentially confuse patients who might be misled into believing the list price is the price they would pay and would potentially deter them from seeking needed medical care?"

Or more to the point: hey support it when it benefits them and oppose transparency when it hurts their industries.

The line between self-interest and hypocrisy in politics is thin.  For AHIP and AHA it is non-existent. 


  
ICER claims :” Unfortunately, there is no persuasive evidence that [ Exondys and other treatments for Duchenne Muscular Dystrophy (DMD) ] improve outcomes that matter to patients, including functional status, quality of life, or length of life. Eteplirsen has been on the market for three years and yet we still found notably inadequate data on patient outcomes.”

But under the ICER model, no treatment for Duchenne Muscular Dystrophy would be considered valuable under that standard because none of the existing treatments had clinical trial data to support use.  ICER is engaged in hypocritical data manipulation:


1.    ICER claims there is no evidence that compared to ventilation that Exondys is improving outcomes.  Yet, there was never any prospective study of ventilation. So according to ICER’s methods, there is no persuasive evidence that ventilation improves outcomes that matter to patients. 
2.    Further, not one study demonstrated that ventilation meets ICER’s 100K per QALY threshold.  Indeed, one study found that mechanical ventilation users had 16.4 hrs per day of licensed practical nurse/ registered nurse care costing $269,370 per year.   Yet non-invasive ventilation, which has replaced mechanical or conventional non-variable ventilation (CNVS) which is less expensive would have been denied by ICER. 
3.    If the ICER standard has been applied to non-invasive ventilation, then tracheotomy would still be the preferred treatment.  Yet, without CNVS these patients would either still be in iron lungs around-the-clock or, more likely, would have undergone tracheotomies and by now be dead from complications related to the tube since four out of five patients with some NMDs using tracheostomy
4.    In fact, current treatments are also not cost-effective because they prolong life and add to the total cost of care.  Indeed, a recent study concludes that “DMD should be now considered an adulthood disease as well, and as a consequence, more public health interventions are needed to support these patients and their families as they pass from childhood into adult age.”
5.    That is, death is the preferred outcome if you only care about saving money:“(E)xtending life for a patient with DMD by 1 year would be associated with a QALY gain of 0.18 at a cost of $54,000 (not accounting for the cost of the evaluated intervention), resulting in an incremental cost-effectiveness ratio of $300,000, well above “ the ICER cut-off. 
6.    Further, the main cause of death in DMD in our population remains cardio-respiratory failure.  People with DMD are more likely to die if they have poor respiratory profiles and elevated cardiac biomarkers. Collectively, these factors highlight a high-risk cardiovascular population with a worse prognosis.  
7.    However, other technologies that would extend life that ICER compares to Exondys are also NOT cost-effective. For example, the incremental cost-effectiveness ratio (ICER) for destination ventricular assist device therapy (DT-VAD) was $179,086 per quality-adjusted life-year (QALY).


The documented delay in loss of lung and heart function from Exondys exceeds that of ventilation.  Moreover, the use of Exondys is likely to help reverse weight loss, also a risk factor for death, by allowing people to swallow food safely.  

Hence, every treatment for DMD between the 1980s and today has increased life expectancy and improve quality of life.  Yet NONE meet ICER thresholds.  ICER would have deprived tens of thousands of patients longer, better lives.  

This assumption, that people who, because of genetic conditions, are likely to be sicker and more likely to require medical care as they live longer is shaped by the same impulse justifying eugenics at the turn of the century. 

Here is the statement of ICER president Steve Pearson “In practice, however, a sickest-first principle might require allocation of resources even when only minor gains can be achieved and the cost is very high, which is obviously inefficient…coverage decisions must not only incorporate consideration of the benefits gained but the opportunity costs incurred when covering expensive orphan drugs.”

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."

Limiting the use of new medicines that prolong and improve the lives of people with DMD to save money is eugenics by another name.  And that name is ICER. 
 

How the Media Enables ICER's Evil Agenda

  • 07.25.2019
  • Robert Goldberg
Today ICER is holding a public discussion about its assertion that “there is no persuasive evidence that... “Exondys 51, a treatment from Duchenne Muscular Dystrophy exon-skipping  improve outcomes 
that matter to patients, including functional status, quality of life, or length of life.”

The media coverage of this event will, if past reporting is any indication, ignore the science, ignore the perspectives and courage of the patients who have benefited from Exondys, who have found the medicine to be a source of freedom and hope.  Instead, it will focus on the fact that patient groups receive money from companies who have developed such medicines. 

In doing so, such journalists are seeking to marginalize the plight of people with rare, degenerative conditions, tarring them as mere tools of the evil Big Pharma while exalting groups such as ICER, ally the while ignoring the massive amount of funding ICER receives from former Enron trader, John Arnold.  Indeed, some journalists are being paid from money John Arnold has given their publications.  

The demonization of small patient groups as somehow being mere mouthpieces for drug companies is consistent with the narrative that pharma funding of organizations who would otherwise have no voice is illegitimate.  And it also sidelines a more serious discussion of whether patients believe  Exondys work.

The fact is, ICER ignores the value of orphan drugs and media coverage of funding enables such willful ignorance.   ICER claims that though Exondys  has “ been on the market for three years and yet we still found notably inadequate data on patient outcomes.”

Bet on journalists such as Kate Sheridan from STAT, Peter Loftus from the Wall Street Journal and Jonathan Saltzman from the Boston Globe accepting ICER’s assessment at face value and devoting more time attacking the patients who are justified in taking exception to such smears. 
 Indeed, these same reporters will side with ICER.  By demonizing patient groups for receiving pharma funds, these journalists legitimize ICER’s refusal to take into account the impact of such medicines on patients and their families. 

While ICER is welcome to conduct its assessment of our product or any other orphan medicine using its own set of value and methods, I know for a fact that ICER excludes many, if not most, of the information 
and considerations that insurers, doctors and patients took into account in determining how Exondys should be reimbursed. 

ICER assumes that everyone with DMD lives with the disease in the same way. Indeed, ICER favors those with more treatable conditions and those with greater potentials for health—be it in terms of functioning or longevity.  Its founder noted in an article entitled “Which Orphans Will Find a Home: The Rule of Rescue in Resource Allocation for Rare Diseases” that there is no apparent obligation to rescue identifiable rare  disease patients based on a duty of rescue within personal morality.”   

In evaluating the value of Exondys and other medicines for rare diseases, ICER claims to take into account that to people with the most serious rare diseases a small improvement in well-being is important. Yet in determining this value – on behalf such patients – ICER states: “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.” 

In other words, ICER’s assessment of orphan drugs is shaped by its desire as Pearson writes, to “ensure that an undue burden is not placed on others for the sake of a few.” More specifically, ICER claims that paying for orphan drugs means “…we’re siphoning off resources for other things we need like better schools and more resources for local police, roads and bridges. “


These assertions are morally repugnant and factually misleading. Why should the cost of orphan drugs be pitted against spending on other forms of care for most other patients? Why not pit the high cost of hospitalization relative to medicines for so-called common diseases? What about the nearly $400 billion that is spent each year on ineffective or needless care? Indeed, to the extent that ICER does not  evaluate whether each additional dollar spent on police, roads and bridges generate more benefit using 
the same methods it applies to people with rare diseases, such trade-offs are both arbitrary and ideological.

Ultimately, what ICER fails to measure is what better health provides people living with orphan diseases: human dignity that is made possible when every individual, no matter how rare their condition has the same opportunity to live a full and long life. The price of Exondys reflects the size of the community with DMD and an indication of the importance of that social contract. But it also measures what ICER  does not: The effect of increasing the freedoms – the capabilities – to choose to do and be more of what people value. 

As Nobel Prize-winning economist Amartya Sen points out: groups that weigh the cost and benefit of helping people with serious illnesses against the total cost of health care, do so “without taking any direct interest in freedom, rights, creativity or actual living conditions. To insist on the 
mechanical comfort of having just one homogeneous “good thing” would be to deny our humanity as reasoning creatures.”

Instead of focusing on the freedoms generated by medical innovation, ICER and its journalistic allies measure medical innovation in terms of how much money it “siphons off” from governmental and insurance budgets. 

It does not measure “What is each person able to do and to be?" In other words, ICER measures an average health benefit (in QALY units) that has nothing to with increasing the capabilities and
opportunities available to each person. 

A measure of what advances in medicine contribute to increasing our capabilities is focused on choice or freedom. Rather than budget impact, the value of medicines should be measured by how they contribute to each individual’s ability to do or be what they hope for. And unlike ICER, both the approach and methods of measuring value must be inclusive, taking into account that the capability achievements that are central for people are different in quality, not just in quantity.

Rejecting a price or price increase using the ICER standard is tantamount devaluing the lives of people such institutions are responsible for. ICER’s use of standard cost-benefit analysis does not capture the tragic choices people with rare disease must live each day. It does not capture the daily and accumulated costs of living with a fatal or degenerative disease that people with good health don’t have to bear. Nor does it capture what living a life with more capabilities means to individuals or our nation.  The media is complicit in ICER’s implementation of soft eugenics.

 Finally, ICER suggests limiting spending on any medicines if the total amount goes over a certain percentage of our GDP. This is not the first time some have made the GDP a measure of what’s important and ultimately valuing individuals in terms of whether they add or subtract to that total.  Before the Nazis did so to justify sterilizing and killing people with hemophilia, depression, spina bifida or DMD, private foundations in the United States spent millions to support a similar program of extermination to save money and ensure that a small group of patients doesn’t impose a drain on society. 

In 1968 Robert F. Kennedy discussed the danger of this approach. His words are as important today as they were over a half-century ago:

“Too much and for too long, we seemed to have surrendered personal excellence and community values in the mere accumulation of material things. Our Gross National Product, now, is over $800 billion dollars a year, but that Gross National Product - if we judge the United States of America by that - that Gross National Product counts air pollution and cigarette advertising, and ambulances to clear our highways of carnage. It counts special locks for our doors and the jails for the people who break them. It counts the destruction of the redwood and the loss of our natural wonder in chaotic sprawl. It counts napalm and counts nuclear warheads and armored cars for the police to fight the riots in our cities….

Yet the gross national product does not allow for the health of our children, the quality of their education or the joy of their play. It does not include the beauty of our poetry or the strength of our marriages, the intelligence of our public debate or the integrity of our public officials. It measures neither our wit nor our courage, neither our wisdom nor our learning, neither our compassion nor our devotion to our country, it measures everything in short, except that which makes life worthwhile. And 
it can tell us everything about America except why we are proud that we are Americans.”

Ultimately medicines for rare diseases should be measured by the latter set of standards. And journalists who savage rare disease groups should care how they stack up against that moral measure.  My guess is they won’t and will continue to give ICER the legitimacy it requires to advance an inherently evil agenda.  
 

Pharma Faces a Penalty Kick

  • 07.24.2019
  • Peter Pitts
The US Senate is debating whether to implement a Consumer Price Index (CPI) penalty on drug price increases. In other words, if any given product price increase is greater than general inflation, a penalty will be assessed by the government with monies then returned to Uncle Sam in the  form of a rebate. (This mechanism already exists in Medicaid.)  Sound good? Not so fast.
 
Drug manufacturers are already subject to such penalties today in the  form of “price protection rebates” negotiated by Pharmacy Benefit Managers (PBMs) and insurers.  These rebates effectively establish a private sector ceiling or cap on the amount by which medication prices can increase. Almost 100% of contracted medicines already have price protection built into their contracts Now that the HHS rebate rule is dead, a better and more timely question is: how much of those rebates/fees collected by PBMs and insurers are going back to the government? Without complete supply chain transparency we will never know.

And there’s more than one CPI. Which is the right one? General inflation or medical inflation? Medical inflation rates are at least 1-2% above general inflation. According to the U.S. Bureau of Labor Statistics, prices for medical care were 88.70% higher in 2019 versus 2000 (a $887.03 difference in value). Details count.

Between 2000 and 2019: Medical care experienced an average inflation rate of 3.40% per year. This rate of change indicates significant inflation. In other words, medical care costing $1,000 in the year 2000 would cost $1,887.03 in 2019 for an equivalent purchase. Compared to the overall inflation rate of 2.08% during this same period, inflation for medical care was higher.

Another unaddressed detail is, which price will be used for the inflation penalty? Will it be the retail price increase or the net price increase after all of the systemic cross-trading rebates and fees have been accounted for? Per IQVIA:



Our national policy makers are laser-focused on drug costs. But what about hospitals or physician expenditures, shouldn’t they peg the inflation rate to where the real inflation is -- the growth in hospital and physician per capita spending? Per Axios:



As always, the devil is in the details but, as Admiral Hyman Rickover reminds us “so is salvation.”

Contracting Biosimilars

  • 06.24.2019
  • Peter Pitts
Per Denny Lanfear ‘s op-ed, “How Big Pharma Suppresses Biosimilars” (WSJ, June 24, 2019), it’s nice to see that the group Patients for Affordable Drugs has finally recognized that Prescription Benefit Managers (PBMs) are  a major roadblock to affordability and access to medicines. It just goes to show you that even David Mitchell can't be wrong 100% of the time. Shenanigans such as exclusionary contracting that prioritize PBMs profits over patient access to FDA-approved, safe and effective biosimilars must end. Just because such actions aren’t illegal doesn’t make them right. It’s past time to prioritize what’s best for patients.
 

Drug Importation: Stupidity Redux

  • 06.03.2019
  • Peter Pitts
From the pages of Politico ...

Vermont considers insulin, HIV drugs for importation
 
By Rachana Pradhan
05/31/2019
 
Vermont is eyeing birth control, insulin and pricey medications for HIV and multiple sclerosis patients as possible candidates for the state’s landmark program to import cheaper drugs from Canada, according to documents obtained by POLITICO.
 
The drugs are among the 17 most expensive that two private insurers identified for state officials and are potentially eligible for importation, show the documents, which were obtained through a Vermont public records request. Vermont officials determined the importation program could save insurers up to $5 million annually, based on that list of drugs.
 
The medications include Gilead’s Truvada, a $20,000-a-year HIV prevention pill whose price tag drew scorn from congressional Democrats during a hearing this month; Harvoni, among the recent class of drugs effectively curing hepatitis C; Merck’s Nuvaring, a contraceptive costing up to $200 per month without health insurance; and Zytiga, a blockbuster prostate cancer drug manufactured by Johnson & Johnson.
 
The list, which is from last year, isn’t a final catalogue of drugs Vermont would seek to obtain from the United States’ northern neighbor, but it provides a glimpse into the state’s deliberations more than a year after state lawmakers authorized the nation's first wholesale drug importation program.
 
“The 17 is our first cut, or our first time analyzing what would be candidates for importation that would generate savings,” said Ena Backus, the state's director of health care reform. “I think you do it a different quarter of the year you’re going to get a different list.”

Florida and Colorado approved similar importation programs this year. The idea has support from President Donald Trump but has encountered resistance from his top health officials.

Vermont still has several hurdles to overcome before its program could get off the ground. It still must finalize a plan and submit it for the Trump administration’s approval. Vermont is also delaying a statutory deadline to send its plan to HHS by a year — giving itself until July 2020 — because it wants to huddle with other larger states trying to build importation programs.

Because the process is breaking new ground, Backus said state officials were essentially "flying blind" on how to best approach federal officials.
 
“That’s why we felt like it was a great opportunity to slow down on submitting our application and to understand how more people are thinking about this," she said, adding that the state has not yet discussed its plan with HHS.
 
Vermont and other states seeking HHS approval must prove the importation program wouldn’t pose additional risks to patient safety and that consumers will pay less for drugs under the new model.

HHS set up a working group last summer to study importation, but its work — and even who’s in the group — has been kept secret.
 
The pharmaceutical industry and other importation opponents, including many Republicans, have argued that it will open up a dangerous pipeline into the United States for drugs whose safety cannot be accounted for. Further, they say it won’t produce much savings because importation could drain Canadian drug supplies, creating shortages and driving up prices, resulting in minimal savings for U.S. customers.
 
“We simply can’t fathom a duration or a scheme or a structure in which this plan will drive significant savings,” said Tom Rutkowski with CBPartners, a consulting firm focused on pharmaceutical and device issues which has analyzed the Vermont program.
 
The company said Vermont was unlikely to save much because discounts Canadian provinces negotiate with drugmakers would not be passed down to U.S. customers, and some especially expensive drugs that could drive greater savings don't qualify for importation.
 
“It’s a dumb idea now and a dumb idea in 2020,” Peter Pitts, president of the Center for Medicine in the Public Interest and former associate FDA commissioner, said of importation. “It’s a political ploy.”
 
The idea of importing drugs from Canada is gaining steam in states as officials grapple with rising costs and see a steady stream of new drug approvals with eye-popping prices. Maine and Connecticut are among the other states also considering creating their own programs, although legislation is unlikely to pass this year.
 
Trump has recently heaped praise on the idea, and he’s frequently complained that U.S. patients often pay much higher prices for drugs. He’s asked HHS Secretary Alex Azar — who has called importation a “gimmick” — to work with Republican Florida Gov. Ron DeSantis, a close ally, on his state’s importation plan.
 
“We may allow states to buy drugs in other countries if we can buy them for a lesser price — substantially less price,” Trump said at a White House event on health care earlier this month.

A plan won’t come easy, though. Vermont officials are still figuring out how much operating an importation program would cost and how it would pass cost-savings on to consumers. Backus, the health reform director, said the list of import candidates is a moving target because of changing prices and drug usage.
 
Further, the state doesn’t have the full picture of which drugs cost health insurers the most. Blue Cross Blue Shield of Vermont and MVP Health Care provided information for the state’s analysis but Cigna declined, Backus said.
 
Other regulatory issues could alter Vermont’s plans. For example, the FDA next year will regulate insulin as a biologic rather than a drug, which could make it ineligible for importation.

Backus and others said should Vermont manage to get its program off the ground, the state would likely update its list of importation candidates every quarter.
 
“This is all new ground,” said Trish Riley, executive director of the National Academy for State Health Policy, which is working with Vermont, Florida and Colorado on their importation plans.

“They want to be consistent and they want to think it through together,” she said.
 
Sarah Owermohle contributed to this report.
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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.

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