HealthCare Roundtable e-News – July 21, 2017

Health Care ‘Free-for-All’ Planned in Senate

A seven-year effort by Republicans to replace the Patient Protection and Affordable Care Act (ACA) may reach its peak with a vote in the Senate the week of July 24, but it is unclear exactly what, if anything, senators will be voting on.

The GOP-controlled House of Representatives passed legislation (H.R. 1628) in May that would revise major portions of the ACA, but Republicans in the Senate have struggled to put together a bill that will pass the chamber, where they hold a two-vote majority.

After several attempts have failed to gain enough support to even reach the Senate floor, Senate Majority Leader Mitch McConnell, R-Ky., reportedly plans to bring the bill passed by the House – which few GOP senators have backed – up for consideration in a process that The Washington Post described as “a sort of free-for-all for substituting in either of the Senate measures or new iterations.”

Sen. Susan Collins of Maine, one of a handful of Republicans whose outspoken opposition to the options presented by the party so far has stalled the effort, had little good to say about this approach, noting on CBS’s “Face the Nation” that she and her colleagues “don’t know whether we’re going to be voting on the House bill, the first version of the Senate bill, the second version of the Senate bill, a new version of the Senate bill or a 2015 bill that would have repealed the Affordable Care Act now and then said that somehow we’ll figure out a replacement over the next two years.”

“I don’t think that’s a good approach to facing legislation that affects millions of people and one-sixth of our economy,” Collins said.

It is still unclear if Republicans will have enough votes to approve a procedural measure to begin debate, much less pass a bill.

In order to avoid the possibility of a filibuster by Democrats, who are united in opposition to Republicans plans, GOP leaders plan to try to pass the health care bill using the budget reconciliation process. This reduces the votes required for passage in the 100-member chamber from 60 to 50, but it limits the provisions the bill can include to measures related to taxes and spending. Complicating things for Republicans, the Senate parliamentarian has determined that several of the House bill’s provisions – notably, anti-abortion measures, including defunding of Planned Parenthood, that are important to conservatives – do not fall within those limits. The parliamentarian is still reviewing other major provisions in the bill. GOP leaders, though, may be able to maneuver around those rulings. Sen. Ted Cruz, R-Texas, has suggested that they simply ignore them.

Both the House bill and the main proposals developed by Senate Republicans would, among other things, eliminate or make major changes to the ACA’s individual and employer mandates, Medicaid expansion, subsidies for the purchase of health insurance in the state-level exchanges, prohibition on setting premiums based on a person’s health status, and requirement that policies cover certain “essential health benefits,” all while cutting taxes. Conservative Republicans have complained that the party is not moving far enough away from the ACA, while moderates have expressed reluctance to support legislation that, the Congressional Budget Office projects, would increase the number of people without insurance by 15 million within a year.

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FDA Commissioner Discusses Plans to Boost Generic Competition

The head of the Food and Drug Administration (FDA) reiterated his intention to stop certain practices by brand-name drug companies that block generic competition.

The prices of some generic drugs have increased sharply in recent years, prompting calls from consumer advocates and some lawmakers for a legislative or regulatory response. One area of focus has been on the use by brand-name companies of the FDA’s risk evaluation and mitigation strategies (REMS) and similar programs that are typically intended to control the distribution of medicines for which there are safety concerns to deny generic firms access to their products. Without such access, generic firms are unable to show the bioequivalence – or, in the case of biologics, biosimilarity – that is needed for approval by the FDA.

FDA Commissioner Scott Gottlieb has denounced these tactics before, and during a July 18 public meeting on generic drug competition, he repeated his criticism, saying, “This sort of gaming is wrong. It undermines the careful balance Congress struck between access and innovation.”

“At FDA, we want to hear from the public today, about the ways that we can continue to make sure that this system is benefiting consumers,” Gottlieb said. “We want to know how we can prevent a select few from disadvantaging many, by exploiting loopholes in our rules in ways that upset the careful balance between access and innovation. Ultimately, this sort of activity undermines the market-based incentives needed to attract the sort of entrepreneurship that supports new innovation. & We’re looking for places where this sort of gaming is happening, and we will change our rules where we can, to make sure the competition that Congress envisioned is taking place.”

Gottlieb identified three approaches that the FDA is taking to increase generic drug competition. He said the agency is:

  • Reviewing its guidance for generic companies that seek a letter from the agency assuring a brand-name company that providing drug samples would not be a REMS violation
  • Looking at “scientific and regulatory obstacles” that may block generic competition, especially in the case of complex drugs
  • Improving the efficiency of its generic drug program

Gottlieb also spoke forcefully against the price hikes that can result when a company acquires an old drug that is off-patent but has no competition.

“These speculators then undertake very large and seemingly gratuitous price increases that appear untethered to any market conditions or other practical considerations,” he said. “They do this knowing it can take years before another generic can enter the market to compete with them and force down their price. They’re exploiting a regulatory arbitrage, born of the growing complexity of our regulatory system, and its occasional slowness.”

He noted that the FDA has been trying to address this by reducing the time it takes to review and approve generic drugs.

The FDA will accept public comments related to the meeting through Sept. 18.

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FDA Downgrades Priority of Rule on Generic Drug Safety Labels

The Food and Drug Administration (FDA) has made completion of a rule concerning the updating of safety information on generic drug labels a lower priority.

The FDA in November 2013 proposed allowing generic drug manufacturers “to change the product labeling to reflect certain types of newly acquired information in advance of FDA’s review of the change.” Currently, generic companies cannot change a label until the brand-name company updates the safety information on its product. Brand-name companies use a process similar to what is being proposed for generics and update labels while the change is under review.

The proposed rule is a response to the 2011 U.S. Supreme Court decision in Pliva vs. Mensing, which shields generic manufacturers from state “failure-to-warn” lawsuits related to adverse reactions to drugs as long as the companies have complied with the FDA’s labeling requirements. The proposal states that this ruling “alters the incentives for generic drug manufacturers to comply with current requirements to conduct robust postmarketing surveillance, evaluation, and reporting, and to ensure that the labeling for their drugs is accurate and up-to-date.”

The final rule has already been delayed at least three times, and now the FDA has said that issuing the rule will no longer be an “immediate priority,” but will instead be classified as a “long-term priority,” Inside Health Policy reported. This was done in response to the Trump administration’s efforts to reduce regulations.

An FDA spokesman told Inside Health Policy that changing the status of the rule “does not mean the agency does not consider it a priority or will not continue to consider it moving forward.” The labeling issue has been controversial, with many consumer groups supporting the rule and both generic and brand-name drug manufacturers opposing it.

The Association for Accessible Medicines and Pharmaceutical Research and Manufacturers of America (PhRMA) have proposed an alternative that would establish an “expedited agency review” process that would be triggered by notification of the possible need for a label change by either the brand-name drug manufacturer or the generic manufacturer or the FDA itself. The FDA would then be required to provide all parties with direction regarding any label changes.

The Public Sector HealthCare Roundtable and 14 other groups wrote to the FDA in April 2016 to oppose the rule, stating that it “would foster confusion and create unnecessary costs that could easily be avoided with more sensible regulatory solutions.” The Roundtable also wrote to the agency in March 2014 to “express concern” about the proposed rule, which, the organization wrote, could have the result of “creating dangerous confusion by allowing for multiple, different labels for the same drug to simultaneously exist in the marketplace.”

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Economists Find Flaws with Indication-Based Pricing of Drugs

Indication-based drug pricing will not lower drug spending, according to a pair of economists writing in the New England Journal of Medicine.

In an effort to tie pricing to effectiveness, there have been suggestions that the cost of a drug should vary depending on the condition being treated and how effective the medicine is at treating that specific condition. However, Amitabh Chandra and Craig Garthwaite from Harvard University and Northwestern University, respectively, concluded that this approach would drive up overall expenditures on prescription drugs.

“Contrary to the hopes of its supporters, indication-based drug pricing will result in higher prices for patients who benefit the most from a given drug, higher utilization by patients who benefit least, higher overall spending, and higher manufacturer profits,” the economists wrote.

In March 2016, the Centers for Medicare and Medicaid Services (CMS) included indication-based pricing as one component of a proposal to reform drug payments in Medicare Part B. CMS abandoned the proposal in December amid opposition from many drug manufacturers, health care providers and lawmakers, especially Republicans. The reforms were supported by the Public Sector HealthCare Roundtable, which, along with 26 other consumer groups and labor unions, signed on to a June 2016 letter that said the proposal “seeks to realign perverse payment incentives, while ensuring that health care providers can continue to prescribe the Part B medications best suited to the needs of individual patients.” The Roundtable and seven of its members also wrote to CMS in May 2016 to back the proposal, saying the changes “will address and ameliorate perverse incentives under the current payment formula that encourage providers to prescribe higher priced drugs under Medicare.”

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