Life Science Compliance Update

September 28, 2016

Novartis CEO Predicts Shift in Drug Pricing, Post-Election


In an interview with the Financial Times, Joe Jiminez, CEO of Novartis, predicts that November’s election may “trigger a sea change in the industry.” It is his prediction that the constant pricing pressures industry is currently facing will only increase when a new administration takes over - regardless of whether that administration is headed by Hillary Clinton or Donald Trump, noting,

“We believe that, no matter which candidate wins, we will see a more difficult pricing environment in the U.S. We all have to plan for new pricing models in the US that could help us ensure the sustainability of the system as the population ages.”

Jiminez also predicted that pressure from the United States would not stop at our borders, he believes it may have a ripple effect “across the pond” to Europe and that drug makers on both continents could be in trouble if they do not adapt to the changing climate.

Some of the new pricing models include pay-for-performance deals, similar to those Novartis recently agreed to with Cigna and Aetna. The arrangements are based on clinical trials that showed Novartis’ new heart failure drug Entresto could keep patients out of the hospital. The agreement concludes that if the drug performs as promised, rebates decline; if not, rebates will increase. Sanofi, Regeneron, and Amgen have also struck results-based agreements with payers on their PCSK9 cholesterol fighters.

Jiminez has been a proponent of pegging drug prices to real-world results for some time now. He believes that approach allows pharmaceutical manufacturers to capitalize on innovative and effective drugs instead of developing drugs that only offer incremental benefits. He also believes that results-based drug payments would cut overall healthcare costs, noting, “if you move to that kind of pricing system over a period of years, you will be able to take out a lot of waste.”

Where Do the Candidates Stand?

Both presidential candidates have proposed varying measures with respect to drug pricing. Democrat Hillary Clinton, for example, has proposed reimportation of medicines (particularly those where United States prices are more than double prices in other countries). Republican Donald Trump has also said that he wants the United States to have access to imported drugs. Clinton also: backs a monthly cap on out-of-pocket prescription costs for patients; wants to stop direct-to-consumer drug company advertising subsidies and reinvest those funds in research; require drug companies that benefit from taxpayers’ support to invest in research, not marketing or profits; prohibit “pay for delay” arrangements; fully fund the FDA’s Office of Generic Drugs to clear out the generic drug backlog; and lower the exclusivity period from 12 to 7 years; among other things.

With polls continuing to tighten, and debates coming up over the next few weeks, it is hard to say which candidate will have the honor of being our next president. Not only is the presidential election uncertain, but the Congress is also up in the air, meaning we can’t be positive that certain “to do” items get done during the lame duck session, or wait until January 2017 with a new slate. One thing is for sure, though, pharmaceutical companies and their pricing of prescriptions are sure to remain at the forefront of political discussions.

September 27, 2016

Value Frameworks: Are They the Way of the Future?


Pharmaceutical companies have long been dealing with negative press about the supposed “rise of prescription drug costs.” Now, several organizations are adding themselves to the drama, developing different ways to assess the value of new medicines, based on attributes such as cost, quality of life, and effectiveness. The tools, also known as “value frameworks,” are being developed by four groups: the American Society of Clinical Oncology, the Institute for Clinical and Economic Review, the National Comprehensive Cancer Network, and Memorial Sloan Kettering Cancer Center, detailed below.  

American Society of Clinical Oncology

The American Society of Clinical Oncology (ASCO) formed the Task Force on the Cost of Cancer Care in 2007, focused on educating oncologists about the importance of discussing costs associated with recommended treatments and identifying the drivers of the rising costs of cancer care, among other things. In a statement released by ASCO, the Association believes that “health care will become less and less affordable for Americans unless steps are taken to curb current cost trends.” As such, the group renamed the Task Force to the Value in Cancer Care Task Force in 2013, and changed the focus to “developing a framework for comparing the relative clinical benefit, toxicity, and cost of treatment in the medical oncology setting.”

In the ASCO frameworks, “points are awarded (or subtracted) in the categories of clinical benefit and toxicity. In the advanced disease framework, bonus points can be earned if a regimen shows statistically significant improvement in palliation of symptoms and/or treatment-free interval compared with the control treatment in a clinical trial.” Clinical benefit and toxicity, along with any bonus points, are then combined to generate a net health benefit score, which is juxtaposed against the direct cost of the treatment.

Institute for Clinical and Economic Review

The Institute for Clinical and Economic Review (ICER) framework has been denounced by many, and ICER has put out a request for ways to improve it. The value assessment includes: comparative clinical effectiveness, incremental cost per clinical outcomes achieved, other benefits or disadvantages, contextual considerations, “care value,” potential short-term health system budget impact, provisional “health system value,” mechanisms to maximize health system value, and achieved “health system value.”

However, the actual “health system value” is not evaluated by ICER. As we recently wrote about, ICER has been found to overestimate drug price impacts, and the fact that they do not make attempts to evaluate health system value and the accuracy of their estimates, should be a concern to members of industry.

National Comprehensive Cancer Network

The National Comprehensive Cancer Network (NCCN) has created the Evidence Block, which follows a failed effort from seven or eight years ago to come up with ratings for drugs based on toxicity, effectiveness, and cost. That effort failed because stakeholders could not agree on what defined effectiveness across different forms of cancer.

The Evidence Block, however, was created roughly two to three years ago and uses five measures: effectiveness of treatment, its toxicity, the quality of evidence used to determine safety and effectiveness, the quantity of evidence used to determine safety and effectiveness, and affordability. The panels of experts who work to draft the Evidence Block do not make a decision to recommend a treatment or not based on affordability, but that information is provided as a supplement.

Memorial Sloan Kettering Cancer Center

Memorial Sloan Kettering Cancer Center (MSKCC) came up with their own an interactive strategy, in an attempt to put the cost of a drug in context with its overall value. The strategy is created by Peter B. Bach, MD, director of the Center for Health Policy and Outcomes, who notes that “this is really a proof of principle that we could develop an approach - if we choose to – where price was based on the value of drugs.” The MSKCC approach incorporates measures of cost, toxicity, efficacy, novelty, research and development costs, rarity of the disease, and population health burden.

Dr. Bach recognizes, however, that it is hard to define value when it comes to drug pricing, “It seems that there was a fair amount of coalescence around the possible domains of value, but there has been little effort and certainly little consensus on how much each of those domains should matter in the determination of value, or if they should even be included.”


Interestingly, a survey conducted by Avalere Health found that out of eleven health plans surveyed, none of them rely on the new tools, and a majority do not expect to do so next year, either. According to the survey, the plans would like to see the provider community embrace the frameworks before formally adopting them into their decision-making process.

It is possible that these frameworks have the potential to be as dangerous to patients as Open Payments. As we have learned, more information is not always beneficial, and it can oftentimes add to the confusion many patients already feel about their health care treatment. We urge extreme caution when it comes to these frameworks, in part because it is hard to generalize and predict the value of medications to individual patients.

AseraCare - Even Courts Seek Second Medical Opinions


In the AseraCare case, the United States Department of Justice (DOJ) sought to show that AseraCare submitted false claims. Relying upon a single medical expert, the DOJ attempted to show patients’ medical records do not contain “clinical information and other documentation that support [this] medical prognosis,” and thus, AseraCare’s claims for those patients were “false.” In rejecting the DOJ’s case and granting Summary Judgment for AseraCare, the Court held that reliance on a single medical expert was insufficient to demonstrate that a company submitted false claims.

AseraCare is a national healthcare company that provides both hospice and palliative care related services. The care aimed at relieving pain, symptoms or stress of terminal illness, includes a comprehensive set of medical, social, psychological, emotional and spiritual services. Under the Medicare rules, elderly patients may qualify for hospice, palliative care, and other medical only if the particular patient is deemed to be “terminally ill” by way of a Certification of Terminal Illness (“COTI”). Medicare defines a COTI as “a life expectancy of 6 months or less if the terminal illness runs its normal course.” 

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