Life Science Compliance Update

April 28, 2017

CHRONIC Care Act Reintroduced in the Senate


On April 6, 2017, the Creating High-Quality Results and Outcomes Necessary to Improve Chronic (CHRONIC) Care Act of 2017 was reintroduced by the Senate Finance Committee’s Chronic Care Working Group. The bill was introduced by Senate Finance Committee Chairman Orrin Hatch and Ranking Member Ron Wyden, along with Johnny Isakson and Mark Warner, the co-chairs of the Committee’s Chronic Care Working Group. The bill is largely unchanged from the previous version, which was introduced in December 2016. 

The CHRONIC Care Act is intended to improve the Medicare program through various policies that target traditional fee-for-service, Medicare Advantage, and Accountable Care Organizations (ACOs). For example, it expands and extends the Independence at Home program, which allows seniors with multiple, complex, and expensive chronic conditions to receive specialized care at home from a team of healthcare providers. It is also expected to improve flexibility and predictability in the Medicare Advantage plan, to better serve those that are chronically ill through: (1) value-based insurance design, allowing MA plans in each state to tailor coordination and benefits to specific patient groups, in contrast to current law requiring uniform benefits; (2) a permanent expansion of special needs plans (SNPs); and (3) expanding supplemental benefits to better address the underlying causes of chronic illness.

It will further establish a program that allows certain Accountable Care Organizations (ACOs) to use their own money to help assigned patients afford primary care services needed to manage the individual’s chronic conditions, and give certain ACOs the option to have beneficiaries assigned at the beginning of a performance year, providing them with increased financial predictability and certainty along with the flexibility to target needed services to individuals suffering from chronic conditions.

The bill is also expected to have an impact on telehealth. For example, it: allows an MA plan to include additional telehealth services in its bid; gives certain ACOs more flexibility to provide telehealth services; allows beneficiaries receiving dialysis treatments at home to do their monthly check-in with their doctor via telehealth, rather than having to travel to the doctor’s office or hospital; and expands the availability of telehealth to ensure individuals who may be having a stroke receive the correct diagnosis and treatment.

The Finance Committee notes that six policies championed by the Chronic Care working group were either signed into law or executed administratively in 2016.  Those include two provisions in the 21st Century Cures Act – improving risk adjustment and giving Medicare-eligible individuals with end-stage renal disease access to the Medicare Advantage program – and four policies included in the 2017 Medicare Physician Fee Schedule Final Rule -- expanding the Diabetes Prevention Program model; providing enhanced payment for additional care management services for beneficiaries with chronic conditions; promoting the integration of behavioral health care and primary care services; and establishing a new code to pay for assessment and care planning for beneficiaries with Alzheimer’s disease and other cognitive impairments.

A section-by-section summary of the CHRONIC Care Act of 2017 can be found here.

April 27, 2017

Senate HELP Hearing on FDA User Fee


On March 21, the Senate Health, Education, Labor, and Pensions (HELP) Committee held a hearing on Food and Drug Administration (FDA) user fee agreement reauthorizations. In the first of two expected hearings, senators discussed the ability of the user fee agreements to improve medical product regulation and advance initiatives laid out by the 21st Century Cures Act passed in the last Congress. On a broader level, there are four different user fees that are the subject of hearings and must be updated and reauthorized by Congress. This includes the prescription drug user fee act (PDUFA), the medical device user fee amendments (MDUFA), the generic drug user fee amendments (GDUFA), and the biosimilar user fee act (BsUFA).


At the hearing included FDA’s Janet Woodcock, Director for the Center for Drug Evaluation and Research; Peter Marks, Director of the Center for Biologics Evaluation and Research; and Jeffrey E. Shuren, Director of the Center for Devices and Radiological Health. Chairman Alexander announced a second hearing on user fees would be held April 4, during which patients, device manufacturers, and brand and generic drug manufacturers are expected to testify.

Selected Opening Statements

Chairman Lamar Alexander opened the hearing by thanking the committee for working together in the past to advance important legislation such as the 21st Century Cures Act. He asked that the Committee work together again to advance the reauthorization of user fee agreements “to ensure that the policies laid out in the 21stCentury Cures Act to support innovative medicines and therapies are not delayed by the drug approval pipeline.” […] The sooner we reauthorize the agreements, the better – to give patients, reviewers and companies certainty,” he said. Chairman Alexander also warned that any bills being added to user fee reauthorizations must be bipartisan and non-controversial to ensure the user fees are reauthorized before adverse effects are triggered. Patty Murray (D-WA) began by reminding Chairman Alexander of the letter sent to him and signed by every Democrat on the Committee asking that the hearing be delayed to instead discuss the healthcare bill currently moving through the House of Representatives.

Selected Testimony

Dr. Woodcock indicated that the FDA user fees are responsible for fast and predictable review of innovative therapies for Americans, and ensure these therapies are available first in the United States. She reminded the Committee that prescription drug user fees have brought many cures to the market recently. Dr. Marks stated the user fees fund the Center for Biologics Evaluation and Research have advanced necessary public health initiatives such a vaccine development, approval, and distribution. He spoke to the importance of the applications of biologics, and the ability of regenerative medicine to meet currently unmet medical needs. Dr. Jeffrey E. Shuren affirmed that the user fee programs are much different from the last time he testified before the Committee. He declared that the Center for Devices and Radiological Health has gone beyond their three commitments under the medical device user fee program, and now approve innovative technology in record time.


During the hearing, many Democrats used their time to express their disapproval for the timing of the hearing, which they argued should have been delayed to make way for discussion on the AHCA. For example. Sen. Elizabeth Warren (D-MA) grew frustrated when witnesses refused to respond to her questions regarding President Trump’s budget proposal. The Senator questioned whether budget cuts to the FDA would make it harder for the agency to operate, to which witnesses responded they were not in any position to discuss budgetary matters. 

The hearing also offered little discussion of President Trump’s proposal to double industry user fees to fully pay for premarket approvals. Although most senators were quick to praise the user fee program, Sen. Richard Burr (R-NC) grilled witnesses on how the funding earned from user fees was spent. He asked several questions that suggested user fee funds were misspent, and even asked the witness if they thought the fees should be returned to manufacturers if they do not believe their agreement with the FDA was fulfilled.

Sen. Susan Collins (R-ME) noted during the hearing she will seek to add a Risk Evaluation and Mitigation Strategy (REMS) bill to a user fee reauthorization during markup. She asserted that certain brand pharmaceutical abuse the REMS system by preventing generic competitors from gaining access to drug samples for studies. Dr. Woodcock noted that FDA has notified the Federal Trade Commission about 150 times that pharmaceutical companies are using REMS to delay generics, but said that FDA itself cannot force companies to give branded drugs to generic manufacturers for studies.

April 14, 2017

Grassley Seeks Answers from EpiPen Competitor


In early March 2017, Senator Chuck Grassley sent a letter to the manufacturer of Auvi-Q (an epinephrine injector similar to EpiPen), requesting an explanation of its pricing, including which entities within the health care system pay the cited list price of $4,500 for a two-pack when consumers without insurance pay $360 for the product.

Kaléo said that as a part of its Auvi-Q AffordAbility program, patients with commercial insurance will pay nothing out-of-pocket. For patients without insurance and a household income of less than $100,000, Auvi-Q will be made available free of charge, according to the company.

Each prescription includes 2 auto-injectors and a training device. The Auvi-Q features voice instructions to guide users through the delivery process and an automatic retractable needle system, which Kaléo touts as a 1st for epinephrine auto-injectors.

“We met with patients and physicians and listened to the very real challenges in the current healthcare environment with obtaining access to affordable medicines,” president & CEO Spencer Williamson said in prepared remarks.  “As a result, starting Feb. 14, for more than 200 million Americans with commercial insurance, including those with high-deductible plans, the out-of-pocket cost for Auvi-q will be $0.”

“We know how important it is that severely allergic patients have an epinephrine auto-injector that can be with them at all times and used correctly, even without training, during a panic-stricken allergic emergency,” VP of product strategy Dr. Eric Edwards added. “We are excited to make Auvi-q, an epinephrine auto-injector with innovative features, available for millions of patients living with severe, life-threatening allergies.”

“Kaléo has offered various patient support programs in an effort to ensure that some patients pay effectively nothing for the Auvi-Q,” Grassley wrote to Spencer Williamson, president and chief executive officer of Kaléo Pharmaceuticals.  “However, your pricing structure may simply shift the burden and cost to another entity within the health care system. With respect to your choice of price, a number of insurance companies and pharmacy benefit managers do not support the strategy and have stated they will not be adding the Auvi-Q to their list of covered medications.”

Grassley asked a series of questions to understand the pricing decision-making, including:

  • Why the company is charging $4,500 for a two pack, and requesting an explanation of their decision-making process in terms of charging that price and whether patient accessibility and research and development were considerations;
  • How much Kaléo spent on R&D for the drug;
  • Whether any entity in the health care system will have to pay $4,500, and if so, which entity; and
  • How the pricing structure will result in reduced prices to the consumer.

Reminiscent of EpiPen

Grassley began looking at EpiPen’s pricing last year after Iowans raised concern to him about high prices for the product. The EpiPen maker, Mylan, gave an incomplete response to his inquiry. Grassley continues to the press the federal government on the misclassification of EpiPen under the Medicaid Drug Rebate Program, which resulted in overcharges of potentially hundreds of millions of dollars to states and taxpayers. President Trump’s nominee to lead the Centers for Medicare and Medicaid Services pledged to produce records on the misclassification. Grassley requested those records from the Obama Administration, which claimed it took action on the problem, to no avail. 


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