Life Science Compliance Update

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30 posts from November 2014

November 26, 2014

"New Chemical Entity Exclusivity Determinations for Fixed-Combination Drug Products": Combo Drugs Now Eligible For 5-Year Exclusivity


The Food and Drug Administration (FDA) recently finalized guidance which allows fixed-combination drugs consisting of at least one new drug product to be eligible for a five-year “New Chemical Entity” (NCE) exclusivity period. FDA’s policy, entitled New Chemical Entity Exclusivity Determinations for Certain Fixed-Combination Drug Products, changes the Agency's previous interpretation that rendered combination products with even one “previously approved moiety” ineligible for five-year exclusivity. While this policy is good news for manufacturers of combination products going forward, FDA’s new guidance does not apply retroactively.

What Are Combination Drugs?

Combination drugs are products that include two or more active pharmaceutical ingredients. Combination drugs may contain both new chemical entities and already approved chemical entities. For example, Gilead’s HIV treatment, Stribild, is a combination of four drugs combined into one pill (two previously approved active “moieties” and two that are new).

As FDA notes, combination drugs have become the “standard of care” in the treatment of certain cancers, cardiovascular disease, and infectious disease because the simplified medication helps promote adherence by patients, and may improve treatment outcomes and reduce drug resistance.

Exclusivity of Combination Drugs

The FDA grants “exclusivity” to New Drug Application (NDA) applicants if certain statutory requirements are met. Exclusivity provides the holder of an approved new drug application limited protection from new competition in the marketplace for the innovation represented by its approved drug product. The length of exclusivity depends on what type is granted. For orphan drugs, FDA grants 7 years exclusivity. For new chemical entities, FDA grants 5 years. For certain “changes,” FDA grants 3 years.

FDA explains its rationale as follows: "A 5-year period of exclusivity is granted to new drug applications for products containing chemical entities never previously approved by FDA either alone or in combination." On the other hand, a "3-year period of exclusivity is granted for a drug product that contains an active moiety that has been previously approved, when the application contains reports of new clinical investigations (other than bioavailability studies) conducted or sponsored by the sponsor that were essential to approval of the application." 

As Stribild illustrates, in combination drugs, one active ingredient may be a new chemical entity, while the other(s) may have already been approved.  Prior to FDA's latest guidance, such a product would have to settle for a 3-year exclusivity period.

"Historically, FDA has interpreted these provisions such that a fixed-combination was ineligible for 5-year NCE exclusivity if it contained a previously approved active moiety, even if the product also contained a new active moiety (i.e., an active moiety that the Agency had not previously approved)," states the Agency.

FDA's New Policy

In expanding its view of what products are elligible for 5-year exclusivity, FDA expressed its desire to incentive  development of certain combination drugs. "[F]ixed-combinations have become increasingly prevalent in certain therapeutic areas (including cancer, cardiovascular, and infectious disease) and [ ] these products play an important role in optimizing adherence to dosing regimens and improving patient outcomes." 

FDA's previous interpretation that combination drugs are ineligible for 5-year exclusivity stems from rather complex statutory interpretation. FDA initially interpreted the definition of the word "drug" in the term "new chemical entity" to mean "drug product." FDA intends to now interpret "drug" here to mean "drug substance" or "active ingredient."

This makes a big difference.

FDA's new interpretation allows a drug substance that meets the definition of "new chemical entity" to be eligible for 5-year NCE exclusivity, even when it is approved in a fixed-combination with another drug substance that contains a previously approved active moiety.

In offering this language, FDA agreed with the arguments of three citizen petitions that pushed for interpreting the exclusivity language to include compounds. One such product was Gilead's HIV treatment Stribild, the combination outlined above. For a full analysis of the petitions, FDA Law Blog provided a clear analysis earlier this year. 

Download Gilead Citizen Petition

However, despite agreeing with the petitioning manufacturers, one dark spot on FDA's final guidance is their statement that the interpretation "will not apply to fixed-combination drug products that were approved prior to the publication of this guidance document." 

While a number of drugmakers are likely disappointed by this--including the petitioners--two fixed-dose combinations came in at the right time. 

Regulatory Affairs has provided ongoing coverage of FDA activity in this area and reported that on the very day that FDA released this guidance, the Agency also approved two combination drugs that are eligible for the 5-year exclusivity. 

Just hours after FDA released its final FDC exclusivity policy, it announced the approval of Gilead's Harvoni (ledipasvir and sofosbuvir), a FDC used to treat chronic hepatitis C virus genotype 1 infections, and Eisai's Akynzeo (netupitant and palonosetron), an FDC used to treat nausea and vomiting in patients undergoing cancer chemotherapy.

Had the drugs been approved just one day earlier, neither would have been eligible for NCE exclusivity. Gilead's Harvoni includes sofosbuvir, a drug approved in 2014 and marketed as Sovaldi. Eisai's Akynzeo includes oral palonosetron, approved in 2008 under the brand name Aloxi.

RAPS notes that "[f]or both companies, the additional two years of market exclusivity could potentially be valuable." Gilead's drug Harvoni, for example, is "expected to become a blockbuster [link to Fierce Pharma], meaning Gilead will have at least two extra years to reap billions in revenue before it has to begin defending its patents on the drug in earnest." Thus, while Gilead's previous drug missed out on the 5-year exclusivity, they seem to be positioned well to capitalize on FDA's new guidance.


ACO Update: An Opportunity for CME?, Challenges Ahead

Clinical Trials

In recent months, we have written about the expansion of Accountable Care Organizations (ACOs) across the country. An estimate indicates there are nearly 289,000 total healthcare providers and business personnel aligned with this new model for delivering care. Other studies indicate the number of patients in organizations with an ACO arrangement is between 37 million and 43 million, or about 14 percent of the U.S. population. We have also previously noted across the country, large hospital systems are buying up physician practices with the goal of becoming ACOs that directly employ the majority of their providers. Because hospitals usually have access to capital, they are better able to finance the initial investment necessary to achieve the quality benchmarks, like the creation of electronic record systems in order to track patients.

CME and ACOs

The growth of ACOs also provides an opportunity for the continuing medical education community. In a November article in Insurance News Net by Robert Meinzer, Theresa Barrett, PhD, and Ray Saputelli, MBA of the New Jersey Academy of Family Physicians, the authors argue that ACOs represent a “paradigm shift in healthcare,” and to build competencies necessary to deliver care under this new model, there must be a fundamental change in the way education is provided.

At their most basic level, ACOs and CME providers share similar goals. Both are stakeholders in improving patient and population care, and as a result, collaboration between the two is a natural fit. However, there are challenges. The article notes that ACOs are not like other organizations CME providers work with, so the education community must first understand how ACOs work before they can get these new organizations to buy into the idea that CME can help them achieve goals.

Challenges Ahead for ACOs

Hurdles between ACOs and CME providers are only one piece of the larger ACO puzzle. As we have previously written, despite the growing number of ACOs, this new model faces significant challenges moving forward. Currently, as one physician noted, there exists a “perverse payment model,” whereby the fee-for-service payment model rewards volume of services, not necessarily superior clinical outcomes. With more complicated procedures and treatment, providers are reimbursed at higher levels. Ultimately, ACO providers will need to aggressively convert their practices and revenue streams from fee-for-service to a prepaid model.

Additionally, technological hurdles prevent the successful implementation of ACOs. While ACO technology platform solutions can be both simple and difficult, ACO providers must invest in connecting their information technology systems early on to prevent redundancy of care. Physician leadership and self-governance is also important when success depends on improvements in operational performance. Hospital administrators, for example, need to embrace physician leaders as equals while investing in physician leadership development.

Promise and Peril of ACOs

The benefits and challenges faced by ACOs were also recently discussed by Fred N. Pelzman, MD. Dr. Pelzman walks through a number of important topics involving ACOs. In the implementation stage, he describes the underlying pieces that must exist in an ACO and are already found in patient-centered medical homes. He cites safe transitions of care, robust information technology tools to monitor health trends, evidence-based care, and care coordination as four examples.

He argues, however, if a patient-centered medical home model is used to build an ACO, there must be additional infrastructure and support to coordinate care and stop excessive spending. One positive of this model is that an ACO built at an institution already providing patient-centered medical care will have pieces in place to create the best possible care, limiting redundancy and possibly improving transitions of care.

Dr. Pelzman further compares and contrasts patient-centered medical homes to an ACO model, noting that patient-centered medical homes build care coordination into their practice. This allows care coordinators to ensure patient care is delivered as planned and additional services are supplied effectively. Under an ACO model, Dr. Pelzman argues the world of care coordination would increase “massively,” becoming a major focus of care teams. He describes the point of ACOs as seeking to identify high-risk patients that need reductions in duplicate care, prevention of defensive medicine, and implementation of high-quality interventions.

But his concern is that ACOs would then become yet another monitor looking over the shoulder of caregivers, scrutinizing what they spend while caring for patients and telling them what can and cannot be done to provide care. Right now, bureaucratic hurdles already overwhelm the system, Dr. Pelzman points out.


Dr. Pelzman ends his article by noting that when money enters the picture of care and becomes too significant of a presence, it has the potential to take physicians away from the most important goal: caring for patients.

If ACOs are to benefit patients, he argues they must ensure for evidence-based care to prevent unnecessary emergency room visits, prevent patients from doctor-shopping, and keep them within systems where caregivers can better take care of patients. Dr. Pelzman acknowledges there is a business side to healthcare—ultimately someone is responsible for the bottom line—but when that becomes too much of a focus, there is a fear that linking the practice of medicine to the sometimes messy nature of healthcare delivery, with the goal of saving money, may create a paradigm where practitioners are pressured to avoid providing care they think is necessary and appropriate.

Ultimately, Dr. Pelzman provides a final warning: “But we are scared of having Big Brother look at everything we spend on our patients, because someone is always going to be worried that this is going to make us lose money.”

November 25, 2014

Physician Payments Sunshine Act: Rep. Burgess Addresses New Bill to Exempt Medical Texts and CME at Committee Meeting

  Clinical Trials

At a recent meeting in Washington, D.C., Rep. Michael Burgess, M.D. (R-TX) spoke to the importance of H.R. 5539, bipartisan legislation he co-sponsored that would exempt peer-reviewed medical journal reprints and independent continuing medical education from Sunshine Act reporting. Burgess serves as Vice Chairman of the Subcommittee on Health in the Energy and Commerce Committee, and practiced medicine for nearly 30 years prior serving in the House.

The session, led by Sylvia Trujillo, Legislative Counsel at the American Medical Association, also included valuable input from Christina Taylor, M.D. from the Iowa Clinic and Jeffrey Drazen, M.D., Editor-in-Chief of the New England Journal of Medicine. Dr. Taylor discussed the role and value of textbook reprints to busy practicing doctors. Dr. Drazen brought his perspective as an editor of an independent peer-reviewed journal, as well as an educator. 

Background on the Educational Exemption of the Sunshine Act

One of the most troublesome aspects of the Physician Payments Sunshine Act is its potential chilling effect on physician access to independent education on cutting edge medical issues. Peer-reviewed medical journal reprints and accredited or certified continuing medical education remain two of the most important ways for doctors to stay up-to-date on the best ways to treat patients with particular diseases. 

In the Affordable Care Act, Congress outlined 12 specific exclusions from Sunshine Act reporting, including “[e]ducational materials that directly benefit patients or are intended for patient use.” The Centers for Medicare and Medicaid Services (CMS), tasked with implementing the Sunshine Act, took the view that medical textbooks and reprints of peer-reviewed scientific clinical journal articles were not "directly beneficial to patients," nor are they "intended for patient use." Thus, these education materials have to be reported under the Sunshine Act. 

The AMA has noted that CMS's conclusion is "inconsistent with the statutory language on its face, congressional intent, and the reality of clinical practice where patients benefit directly from improved physician medical knowledge.”

Furthermore, CMS has also gone back-and-forth on whether to exempt accredited or certified continuing medical education. 

H.R. 5539

Rep. Burgess's goal in introducing the bill was to "try to minimize the negative impacts that…the interpretation of this provision of the ACA is having on medical education and patient care." Thus, H.R. 5539 seeks to highlight Congress' intent in passing the Sunshine Act and would exempt medical textbooks, peer-reviewed journals and reprints, and transfers of value related to continuing medical education. 

“It is important that doctors and caregivers continue to have access to the latest medical education materials as well as continuing medical education,” states Burgess. He notes that patient care has suffered due to a definite chilling effect on the transfer of information: “Doctors and companies are afraid that in the reporting there is going to be the veiled implication that something bad has been going on.” 

Burgess notes that in all likelihood the bill will be re-introduced in the next Congress. "I'm not sure we'll get this across the finish line this time," he states, but he is confident about the bill's success. Unlike many aspects of the Affordable Care Act, Burgess notes, "this bill has bipartisan support." Both sides have recognized that it is important for doctors to "stay as up to date as possible" in a rapidly changing medical environment. 

Sylvia Trujillo of the AMA states that the Association supports the Sunshine Act's transparency goal. However, H.R. 5539 would ensure that the policy does not undermine efforts to provide physicians with the most current independent medical knowledge in a timely manner. "Telemedicine and personalized medicine," for example, are "areas of medicine that are rapidly emerging and changing," for which evidence-based education really matters.  

Dr. Taylor, an internist from the Iowa Clinic, provided her experience to illustrate how CMS's interpretation of the Sunshine Act is affecting practicing physicians and patients. The intent of the Act, she notes, was to shine a light on financial relationships between physicians and pharmaceutical and device industries. "Everyone would agree that is a reasonable thing," Taylor states. Where Taylor disagrees, however, is in CMS's interpretation of what constitutes "educational materials," which would rightfully be excluded from reporting requirements. Specifically, that peer-reviewed medical journal articles are not considered to be a "benefit to patients."

Most obviously, she states, patients benefit from their doctor learning about the proper treatments or guidelines to help the patient. The other aspect is that often doctors show patients the actual guidelines as part of the treatment during the office visit. 

Despite the fact that when Dr. Taylor receives an article there is "no financial transfer of any kind," the mere Sunshine reporting suggests that she is receiving direct funds from industry. 

 "If I received a New England journal...that is now a reportable item, just like cash." 

"What doctors really want to see are independent, peer reviewed evidence," states Taylor. "Peer-reviewed journals and Immediate access to those is absolutely crucial to practicing medicine appropriately." However, with this information now reportable just as a cash payment, Taylor notes that she is less likely to accept these reprints from reps during her two-minutes in between patients. "Frankly, I don't want my name anywhere near that list saying that I received some sort of financial payment...or having the appearance of receiving something." 

Taylor states that even today, it can take 10-20 years for completed research to reach the practicing private physician in their office. Thus, if physicians have a way to get the latest treatment guidelines quickly in front of them, this process should not be discouraged.

“There is an ever increasing challenge to see every patient and keep them healthy, take care of patients with chronic diseases, and to stay on top of documentation requirements that are vastly increasing," Taylor states. Unless physicians are in an academic insitutiton where they either have time or staff to sift through research and present their finding, most simply do not have time each week to go through peer reviewed articles. Many doctors, especially those in private practice do not have the resources to allocate to exploring articles as they are published. "Not having access to peer-reviewed journal articles, unfortunately, is one of the unattended consequences of the Sunshine Act as interpreted by CMS." 

Trujillo added that physicians are not reading medical textbooks for fun--they reference these texts for a specific patient. "Clearly, this is a specific benefit to the patient." 

Dr. Drazen, the Editor-in-Chief of the New England Journal of Medicine (NEJM) echoed many of these sentiments, making the point that a NEJM reprint article could have prevented the Ebola scare in Texas. 

Drazen also went into detail about what separates a peer-reviewed journal from potential "advertising." He states: "We just don't take stuff that people send us and publish it. We have knowledgeable people that spend their time making sure that every single point in the article is defensible with data."

The "paradox," he states for patients, is that these articles are both "the most valuable things your doctor can have" and on the other hand "have absolutely no value--they are available for free on the web." Indeed, despite being classified as "transfers of value" to physicians, independent journal reprints are actually free or of very low value for almost all physicians. The problem is, doctors have to search online on their own off-hours time to seek them out. 

Dr. Taylor gave a multi-faceted endorsement for H.R. 5539 in conclusion: "Passing this resolution is not only in better standing with the original intent of the [Sunshine Act], but it's also better for the advancement of evidence-based medicine, the distribution of medical knowledge, and ultimately will help us improve the care we provide to our patients every day." 

Trujillo spoke to the important impact H.R. 5539 would have on medical education as well. CMS has provided mixed guidance over the years on the reportabilty of CME payments. While the agency has landed on the side of exempting accredited CME payments right now, H.R. 5539 would prevent them from changing their minds yet again down the line. 


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