HealthCare Roundtable e-News – Jan. 20, 2017

FDA Releases Guidance on Biosimilar Interchangeability

The Food and Drug Administration (FDA) on Jan. 17 released guidance on demonstrating biosimlar interchangeability with a brand-name reference product.

Biologic drugs are highly advanced medicines derived from biological, rather than chemical, processes. They are among the most innovative of drug treatments and, as such, are also among the most expensive, potentially costing tens, even hundreds, of thousands of dollars each year for a single patient. Generic biopharmaceuticals, known as biosimilars, offer lower-cost alternatives, as with generic versions of traditional drugs. The FDA has approved four biosimilars so far.

If a drug is designated as “interchangeable” with its reference product, pharmacists may substitute it when a doctor prescribes the reference product. The interchangeability issue is more complicated with biologics than it is with traditional, chemical drugs because biologics involve living material, so a biosimilar can never be an exact copy of the original biologic. The FDA guidance states that the agency “expects that sponsors will submit data and information to support a showing that the proposed interchangeable product can be expected to produce the same clinical result as the reference product in all of the reference product’s licensed conditions of use.”

The FDA states that the types of data and information submitted by companies will vary depending on the drug, but it notes that the submissions could include:

  • Identification and analysis of the critical quality attributes
  • identification of analytical differences between the reference product and the proposed interchangeable product and an analysis of the potential clinical impact of the differences
  • Analysis of mechanisms of action in each condition of use for which the reference product is licensed
  • Pharmacokinetics and biodistribution of the product in different patient populations
  • Immunogenicity risk of the product in different patient populations
  • Differences in expected toxicities in each condition of use and patient population
  • Other factors that may affect the safety or efficacy of the product in each condition of use and patient population for which the reference product is licensed

“Where applicable, the data and information should include a scientific justification as to why any differences that exist between the reference product and the proposed interchangeable product, with respect to the factors described, do not preclude a showing that the proposed interchangeable product can be expected to produce the same clinical result as the reference product in any given patient,” the guidance states.

The guidance is not legally binding, and the FDA notes that a company “can use an alternative approach if it satisfies the requirements of the applicable statutes and regulations.”

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18 Million Would Lose Coverage in Year Following Partial ACA Repeal, CBO Projects

The number of uninsured people in the United States would increase by 18 million within a year of major portions of the Patient Protection and Affordable Care Act (ACA) being repealed, according to the Congressional Budget Office (CBO) and the congressional Joint Committee on Taxation (JCT).

A year ago, the Republican-controlled Congress used the budget reconciliation process to pass a bill that, among other things, would have repealed major portions of the ACA, including the law’s individual mandate, employer mandate, subsidies for the purchase of insurance through the state-level exchanges, “Cadillac tax” on high-value health insurance plans, 2.3 percent medical device tax, creation of the Medicare Independent Payment Advisory Board, and expansion of Medicaid eligibility.

President Barack Obama vetoed the bill, but Republican lawmakers had demonstrated that they could get a repeal bill to the president’s desk, since budget reconciliation legislation does not allow for filibusters and, thus, requires only a simple majority of votes to get through the Senate. Republican leaders are expected to repeat the process now that Donald Trump has become president.

The CBO projected what the impact would have been if the bill that was vetoed by Obama – which would have left the law’s insurance reforms, such as the prohibition of coverage denials based on pre-existing conditions, of lifetime benefit caps and of premium variations based on factors other than age, tobacco use and location – had become law. The estimates were calculated in the absence of any replacement plan.

CBO found that, in the first year following repeal, 18 million people would lose coverage as a result of the change, with that number increasing to 32 million within a decade. The 18 million in the first year would include 10 million people who would no longer have individual coverage, 5 million who lose Medicaid coverage and 3 million who would newly be without employer-based coverage.

“Most of those reductions in coverage would stem from repealing the penalties associated with the individual mandate,” the report stated. “However, CBO and JCT also expect that insurers in some areas would leave the nongroup market in the first new plan year following enactment. They would be leaving in anticipation of further reductions in enrollment and higher average health care costs among enrollees who remained after the subsidies for insurance purchased through the marketplaces were eliminated. As a consequence, roughly 10 percent of the population would be living in an area that had no insurer participating in the nongroup market.”

Premiums for individual policies, CBO estimated, would be 20 to 25 percent higher than what is now projected in the first year after repeal and would be twice as high by 2026.

“The majority of that increase would stem from repealing the penalties associated with the individual mandate,” the report stated. “Doing so would both reduce the number of people purchasing health insurance and change the mix of people with insurance – tending to cause smaller reductions in coverage among older and less healthy people with high health care costs and larger reductions among younger and healthier people with low health care costs. Thus, average health care costs among the people retaining coverage would be higher, and insurers would have to raise premiums in the nongroup market to cover those higher costs. Lower participation by insurers in the nongroup market would place further upward pressure on premiums because the market would be less competitive.”

Congressional Republicans and Trump have long described their intention as “repeal and replace,” but the GOP has not yet offered a replacement plan. The House and Senate have both passed a budget resolution that directs congressional committees to begin drafting legislation that dismantles the law. It is unclear, though, if Republican lawmakers plan to package their own – yet to be determined – health care reform plan with repeal legislation, pass their plan separately but soon after repeal, or pass repeal legislation and delay the effective date – possibly for several years – while they develop a plan. The last option, though, as the CBO report indicated, carries the risk of creating long-term uncertainty that could destabilize the insurance market.

Trump, meanwhile, said shortly before taking office that his team is “down to the final strokes” in the development of its own health care reform proposal. While he offered no details, he said that it would provide “insurance for everybody” and “much lower deductibles” than under the ACA. Trump also vowed that, under his plan, there would be no Medicare cuts and pharmaceutical companies – who he said have been “getting away with murder” – would have to negotiate with the federal government over the prices of drugs covered by Medicare.

Several of these statements could lead to conflicts with many GOP lawmakers who do not seek to ensure universal coverage through a government program; often argue that increased out-of-pocket costs – as from higher deductibles – make people better consumers of health care, which can bring down prices; support Medicare reform; and oppose allowing the federal government to negotiate drug prices with manufacturers.

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Trump Issues Executive Order Directing Agencies to Stand Down on ACA Enforcement

Soon after taking office on Jan. 20, President Donald Trump issued an executive order aimed at “minimizing the economic burden of the Patient Protection and Affordable Care Act pending repeal.”

One of Trump’s campaign promises was to repeal and replace the Affordable Care Act (ACA). Republicans control both houses of Congress, but GOP lawmakers appear to have backed off their plans for immediate repeal of major portions of the law since they do not have a replacement ready.

Trump’s order, in part, directs the health and human services secretary and the leaders of other relevant agencies to “exercise all authority and discretion available to them to waive, defer, grant exemptions from, or delay the implementation of any provision or requirement of the Act that would impose a fiscal burden on any State or a cost, fee, tax, penalty, or regulatory burden on individuals, families, healthcare providers, health insurers, patients, recipients of healthcare services, purchasers of health insurance, or makers of medical devices, products, or medications.”

The order, in itself, will not strip away any part of the law, and it is unclear what its direct impact will be, since it does not empower agencies to take any action they could not have done even in the absence of the order. This has caused some analysts to downplay the practical effect of the order, even as others, such as NPR, suggest that the order is “so broad it could allow many of the law’s provisions, including many of [the] taxes it imposes on insurers and the requirement that individuals buy insurance, to die from lack of enforcement.”

The document states at the start that, “It is the policy of [the Trump] Administration to seek the prompt repeal of the Patient Protection and Affordable Care Act,” but that has never been in doubt.

Trump indicated before taking office that his team is close to completing work on a health care reform proposal to replace the ACA.

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Federal Judge Blocks Aetna-Humana Merger

A federal judge has blocked the planned merger of insurance giants Aetna and Humana.

The Department of Justice had sued to stop the $34 billion merger, arguing that it would significantly reduce competition in Medicare Advantage and in the government-run, state-level health insurance exchanges, and saying it is “unprecedented in the Medicare Advantage industry and affects hundreds of markets across the country.”

U.S. District Judge John Bates agreed, stating in his opinion that there is “valuable head-to-head competition between Aetna and Humana which the merger would eliminate.”

“Federal regulation would likely be insufficient to prevent the merged firm from raising prices or reducing benefits, and neither entry by new competitors nor the proposed divestiture [of some Medicare Advantage business] to Molina [Healthcare] would suffice to replace competition eliminated by the merger,” Bates said. He also wrote that, “the Court is unpersuaded that the efficiencies generated by the merger will be sufficient to mitigate the anti-competitive effect for consumers.”

An Aetna spokesman reportedly said that the company is “giving serious consideration to an appeal,” while Humana had no immediate comment on the ruling.

Separately, the Justice Department is also suing to block Anthem’s $54 billion purchase of Cigna, saying it would “substantially lessen competition in numerous markets around the country.”

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