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My colleague Peter Pitts has written an article on a Democrat proposal to submit the price and use of a new drug for binding arbitration before Medicare or another government program pays for it.   Arbitration is supposed to be a fair way to impose drug prices, but it is price controls all the same. 
 
As with everything, proof in practice is more instructive than proof in principle.  So, let me provide you with a real-world example of how such arbitration would proceed.  Proponents use the German approach to pricing arbitration as a wonderful example of how spectacular arbitration is.  There, the process comes after a company and the committee set up to determine prices can’t agree on reimbursement levels for the medicine in question. 
 
Throughout, the goal is to set a price for a drug based upon the additional value it generates and converting that into a price premium compared to the average price of an existing drug for a condition selected by the committee.
 
The selection of comparator (as well as the reference price) is one critical element.  The other is whose value is being measured.  Interestingly, the German approach does not use quality-adjusted life years to make value determinations.  The Germany process defers to an independent group to determine what comparator to use and whose value should be preferred.
 
In the US, proponents of pricing arbitration envision the Arnold Ventures funded group ICER serving as the arbitration organization, or something else that John Arnold would pay for by sponsoring its formation or operation.   The Center for American Progress, in particular, loves the idea of the ICER driven pricing deals.
 
ICER puts limits on how many people could use a drug using a price that is sensitive to insurer and PBM profits.  And that price is also based on a comparator that ICER also selects.  The cheaper the comparator, the greater the hurdle for a new drug regardless of benefits, particularly since the goal is to save insurers money and maintain the PBM spread between net and list pricing.
 
Here’s an example of how the binding arbitration proposal in the US would work using a real-world example and ICER’s most recent analysis of a new drug:
 
Spravato, a new drug for major depression was recently approved, a form of ketamine that quickly improves mood without resort to ketamine’s hallucinogenic effects.
 
ICER’s initial review of the drug determined Spravato was effective but said that at the list price it was not cost effective and could only be used by a small percentage of people. 
 
ICER’s comparator?  Injectable Ketamine which is now used to knock out animals and some patients.  The ketamine that, in the ICER preferred formulation, has the same mechanism of action at PCP.  What’s more, ICER’s comparator is not even approved for treating depression.  Untested, off-label use of ketamine.  You might know it as Cat Tranquilizer, Cat Valium, Jet K, Kit Kat, Purple, Special La Coke, Super Acid, Super K, and of course, Special K, the medicine preferred by Bill Cosby.
 
You read that right.  ICER used a form of a date rape drug as the comparator for determining price and is recommending the use of a date rate drug as a more cost-effective treatment. 
 
That might sound extreme, but in fact, the capricious and one size fits all selection of comparators is a hallmark of every price negotiation.  Standard of care is chosen to make price decisions.  Benchmarks are adjusted, goal posts are moved to maximize rebates, not well-being.  Drugs that require price cuts based on comparators are often not sold in a particular market because they lose money.   Advocates of arbitration claim that is just an example of value-based care.  Yet in Germany, 82 percent of drugs that were withdrawn because they didn’t meet the comparator price-value threshold were recommended by at least one guideline.  Hence, drugs recommended because of their clinical benefit were no longer available.   
 
Early assessment of new medicines is fraught with danger because prediction is not just political, it is unscientific and uncertain.   ICER’s involvement assures that such arbitration related assessments and comparisons will be downright immoral. 
From the pages of the Roanoke Times
 
Med Beat: Drug makers' coupons to count toward deductibles

Gov. Ralph Northam signed a bill that will require insurers to count toward deductibles and co-pays any payments made on behalf of a patient, including assistance by pharmaceutical makers.
 
The practice known as copay accumulator adjustments excluded from patients’ deductibles and maximum out-of-pocket costs the coupons and assistance programs that lower the price of medication.
 
Fair Health Care VA Coalition lauded passage of the bill.
 
“As out-of-pocket costs continue to rise, Virginia patients already face enough barriers to accessing the health care coverage that they need. Copay assistance programs are a critical resource, particularly for patients whose health care costs could bankrupt their families or force them to live without the care they need,” Dr. Bruce A. Silverman, a Richmond nephrologist and advocate for the collation, said in a news release. “Patients should not be denied one of the key benefits of copay assistance programs, particularly since insurers are already getting the value of negotiated drug price discounts while withholding these benefits from patients.”
 
When the change goes into effect July 1, all payments made by patients or on their behalf will count toward maximum out-of-patient payments and deductibles.

Drug Rebate Head Fake

  • 03.12.2019
  • Robert Goldberg
Today United HealthCare announced that they will be passing rebates directly to patients.  But the impact is not as impactful as may seem. 

United noted that “all new employer-sponsored health plan customers that use UnitedHealthcare must give discounts they get for including certain drugs in their lists of covered medications directly to consumers at the point of sale… UnitedHealthcare said Tuesday that its expanded requirement does not apply to existing employer customers that do not already give rebates directly to the consumer.”

As Drug Channels notes: “PBMI found that only 4% of employers reported that rebates were used to reduce member out-of-pocket costs at the point of sale.”

Indeed, despite the announcement of these offering, Drug Channels demonstrates (see chart below) that employers really don’t want to use rebates to cut out of pocket drug costs.

 

So much for sharing the savings.  

But even passing rebates on to patients is not enough.  In fact, it could make things worse in a perverse fashion.  For example, a pass-through model would reward the most rebated drugs but lead to even more step therapy or greater formulary restrictions in an effort by PBMs to make money on contracts that still reward them for lowest net cost of medicines.   Even drugs that offer zero copay but do little to affect overall net cost of medicines could be excluded.  

Another question:  Will insurers and PBMs increase the use of (illegal) co-pay accumulators – programs that intercept money designated by drug companies to reduce out of pocket costs is confiscated by insurers and NOT used to reduce cost sharing -- and then pass that cash to employers.  Can we say racketeering?  (You can read my colleague Peter Pitts article on the wholesale thievery called copay accumulators here. 

To be sure, many business health groups claim they want to optimize the use of medicines.  However, they lack the data and bandwidth to do so.  Some individual companies do make an effort to support value-based design, but most of these offerings are designed to drive people to more generic drug use.  

Absent these insights, the well-intentioned effort to reduce out of pocket costs by shifting rebates will help some but likely hurt others. Which is why at some point, large employers will be asked to explain why they aren’t doing more through smarter changes to benefit design to help their employees stay health – and alive. 

 

Is Everyday Oncology Day at the FDA?

  • 03.12.2019
  • Peter Pitts
Two exciting pieces of news from White Oak. The first is that the Director of the National Cancer Institute (NCI), Dr. Ned Sharpless, has been tapped to be the interim Commissioner of the FDA. Whether or not this translates into his getting the official nod for the nomination is anyone’s guess. But he’s clearly the odds on favorite – and that’s a good thing.
 
The second item of interest is the release of new recommendations for broadening cancer clinical trial eligibility criteria. Per the FDA, these new guidelines will facilitate the design of clinical trials that are more representative of the patient population and maximize the generalizability of the trial results and the ability to understand the therapy's benefit-risk profile across the patient population likely to receive the drug in clinical practice.  
 
This is Big News across a spectrum of issues – including expanded access. As Janet Woodcock mentioned earlier this year, “Expanded access programs are only an iterative step towards more regular and robust use of platform trials.” And, per Bob Temple, “Expanded access protocols can produce data that demonstrate effectiveness in populations outside those studied in registration trials, potentially leading to broader indications.”
 
Hopefully, Dr. Sharpless will continue to urge divisions – beyond Oncology – to embrace new clinical trial protocols for both orphan diseases and other areas of urgent public health concerns.

Gottliebensraum

  • 03.10.2019
  • Peter Pitts
Gottliebensraum: Will the FDA need more (or less) living space in a post-Gottlieb world?
 
Since Scott Gottlieb’s decision to step down as FDA Commissioner the tributes have been coming in fast and furious. And they're all, save for Sid Wolfe of course, well deserved. But here’s something you haven’t thought about – the exceptional role and excellence of the FDA career staff.
 
One of the reasons that Scott was so successful in so many was because he acknowledged the importance of the FDA's professional staff. Their participation and enthusiasm to share his agenda has helped create a more elastic and angular FDA.
 
So, now what happens? Can the many initiatives begun at say, CDER, gain and maintain velocity? Or do they kind of just fade away? How sharp will FDA elbows be as we slowly march our way towards another glorious round of PDUFA-Palooza? And e-cigarettes? Will planned agency actions back a half-step back to stay quiet and avoid attention? Or will we get a surprise?
 
Swap out NCI for FDA? It’s been done before and wasn’t a disaster, but why disrupt two agencies that are functioning well when you don’t have to. Alex Azar has seen this before as well and his suggestions will carry a lot of weight. As will the Vice President’s.
 
Is the President a wildcard? Are you kidding me? So, there’s that.
 
Momentum comes from without and within. A Scott-Free FDA presents a lot of opportunity space. (But, then again, I’m a cockeyed optimist.)

Stay tuned.

Great Scott!

  • 03.07.2019
  • Robert Goldberg


Those of us who have worked with Scott Gottlieb were not surprised at the extraordinary energy and focus he brought to the job as FDA Commissioner.  Similarly, it was unsurprising that Scott announced his resignation effective next month.   As dedicated as he was to the role at the FDA, he is even more devoted to his family.  

His tenure was short but his impact on the agency and the public health will be enduring.  Scott spent most of time and energy implementing the 21st Century Cures act and building the infrastructure to move product development away from randomized controlled trials and encouraging the use of predictive biomarkers and real-world evidence.  His public pronouncements about drug prices, PBMs and vaping were not mere rhetoric.  Though all the initiatives in these areas are not fully implemented, it is to be noted that Scott never said or tweeted anything he was not prepared to back up with action. 

Most important, Scott raised the bar for the next FDA commissioner.   The agency – and the country – has been blessed with a series of solid FDA commissioners over the past decade or more.  Mark McClellan, Andy von Eschenbach, Peggy Hamburg, Rob Califf all made important contributions to the FDA’s modernization and its movement away from what Scott called the hunger for statistical certainty.  It can be truly said that the FDA is now leading the way in personalized medicine, regenerative medicine and applying regulatory policy to promote competition.  

There are some who still wish to turn the clock back on a decade of FDA reform.   Organizations funded by John Arnold, in particular, want to use FDA regulation to slow down drug development, limit investment in orphan drugs and eliminate patient-centered drug development.  But Scott has, by showing how smart regulation is done, demonstrated that much would be lost if we turn back now.   He built, enlarged and secured a broad consensus about FDA’s mission. In doing so, Scott did something nearly impossible in public policy today: he turned a government agency into a source of health, hope, and possibility. 

Well done. 


 

Dispatches from the Inquisition

  • 02.26.2019
  • Peter Pitts
What the best advice for a bevy of Big Pharma execs as they prepare for a Congressional crucifixion? Don’t bend over.
 
Just the other day, the New York Times ran an editorial titled, “It’s Time for Pharmaceutical Companies to Have Their Tobacco Moment.” Do the CEOs need a roadmap to know where this is going? Medicines save lives. Tobacco kills. While the headline is off-base and objectionable, the prose makes a number of important points that can be summed up in one statement: Pharma has a lot of explaining to do.
 
So, here’s the good news – it’s a terrific opportunity to speak truth to power. But, will that happen? Here’s what Senator Charles Grassley had to say on the matter:
 
“I hope that the drug CEOs testifying tomorrow don’t try to blame everyone but themselves/take no responsibility for their role in fixing the problem. We already understand there are other factors to consider. Tomorrow is about the part drug companies can do to lower costs for patients and taxpayers.”
 
Wise words from a wise man. But will those posing the questions be seeking sage advice or their very own "I am Torquemada" moment?
 
It’s time we all took to heart the Japanese proverb, “Don’t fix the blame. Fix the problem.”
 
And to those CEOs preparing their remarks – be honest, forceful and helpful. Call it as you see it. Have solutions. That’s why you earn the big bucks.

As the great Frank Douglas reminds us, "It's not what you control, it's what you contribute."

Do the right thing.

Purdue Punches Back

  • 02.26.2019
  • Peter Pitts
How bad is it getting for Purdue Pharma? Bad enough that they're actually fighting back – and not pulling any punches.
 
They’ve responded forcefully to the recent 60 Minutes episode with a tick-tock response and a very unambiguous lawyers letter.
 
Some snippets:
 
Contrary to assertions that FDA’s changes to the OxyContin indication in 2001 broadened the medicine’s use to chronic pain, the opposite was actually the case. In July 2001, to address extensive abuse of OxyContin, FDA added a black box warning and narrowed the indication to “the management of moderate to severe pain when a continuous, around the clock analgesic is needed for an extended period of time.”
 
Purdue Pharma expressed concerns in the following letter to Mr. Bill Owens, Executive Producer of 60 Minutes …
 
Despite multiple meetings, phone calls, and email exchanges between representatives of Purdue and 60 Minutes Associate Producer Sam Hornblower (during which detailed information was exchanged), we are still concerned that Mr. Hornblower and 60 Minutes intend to air a biased and one-sided segment rife with significant errors and inaccuracies, and that 60 Minutes will refuse to disclose to its viewers critical information about the sources it intends to rely on (and even put on the air), including their personal biases toward Purdue and their financial incentives in making false and misleading statements about the company and OxyContin.
 
Dr. Kolodny has admitted, in the form of a court-filed expert disclosure report made under the penalty of perjury, to the fact that he is a paid consultant and advisor, earning $725/hour for his services.2He also lists on his CV that he submitted to the U.S. House of Representatives Committee on Energy and Commerce on February 27, 2018 as part of his required disclosures prior to his testimony under oath, that he served in a “CONSULTING AND ADVISING” role for “CBS 60 Minutes” in 2017 as part of 60 Minutes’ “The Whistleblower” segment. A copy of this expert disclosure report and Dr. Kolodny’s CV he submitted for his congressional testimony is enclosed for your reference. The facts demonstrate that Dr. Kolodny admits that he worked for 60 Minutes as a consultant and advisor within the last two years (and on a segment that touched on substantially similar subject matter is this segment) and that he is also a paid consultant on behalf of plaintiffs currently involved in active litigation with Purdue.
 
In that same vein and upon information and belief, we understand that Dr. Kessler has also performed extensive work for and has long consulted with and on behalf of plaintiff-side law firms who are or have been engaged in litigation against Purdue regarding the very same issues he purports 6to comment on for 60 Minutes’ planned segment. These types of consulting and advising roles for law firms involved in active or potential litigation are rarely if ever performed for free. It is incumbent upon 60 Minutes, as the ultimate publisher and airer of segments featuring biased and conflicted individuals like Dr. Kolodny and Dr. Kessler, to thoroughly investigate and vet its own sources and intended on-screen interviewees to confirm any such biases and financial incentives for promoting certain viewpoints and commentary. And where such biases and financial or otherwise personal motives to provide one-sided, incomplete, and even false commentary on a subject matter such as opioid use in the United States exists(as it clearly does with Dr. Kolodny and Dr. Kessler who are, at a minimum, paid-for consultants by individuals and parties who are currently suing Purdue), 60 Minutes has a duty to its viewers to clearly and unambiguously disclose such bias and the facts supporting their incentive and motivation for their viewpoints and commentary during any aired segment in which Dr. Kolodny and Dr. Kessler participate in, and to confront such bias head-on.
 

Transparency for thee but not for me?
 
Powerful stuff.
 
As Pharma CEOs prepare to step up to the plate and face a Congressional grilling, it’s time for Pharma to forcefully defend itself with context and … the truth.
Per the New York Times editorial, “How Much Will Americans Sacrifice for Good Health Care?, one urgent issue relative to a broader government role in providing healthcare is rationing. No nation (and certainly not those in Europe or Canada) provide universal access to everything. Government bureaucrats make decisions about what medical treatments (new cancer drugs, surgeries, new genetic interventions, etc.) are paid for.

Today, of the 74 cancer drugs launched between 2011 and 2018, 95% are available in the United States, 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.

Do we want Uncle Sam, MD to replace the considered opinions of our own physicians? Government-paid healthcare presents significant hurdles as well as interesting opportunities and healthcare rationing is an important part of the discussion about any kind of government-run healthcare proposal.

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.  


 
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CMPI

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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