Life Science Compliance Update

September 23, 2015

Hillary Clinton Unveils New Plan for Lowering Drug Cost


Yesterday, Democratic Presidential candidate Hillary Clinton proposed a new plan to address pharmaceutical “price gouging.” Her proposal, unveiled in Iowa and outlined in a factsheet, outlines a list of measures she believes will lower prescription drug costs for Americans.

Clinton’s plan contains a range of potentially far-reaching proposals, including:

  • Ending the business expense deduction for direct-to-consumer drug company advertising.
  • Requiring drug companies “that benefit from taxpayers’ support to invest in research.” Clinton added that drug companies “should not be allowed to reap excessive profits or spend unreasonable amounts on marketing if they want to receive support that is designed to encourage life-saving and health-improving treatments.”
  • Capping monthly and annual out-of-pocket costs for prescription drugs. Specifically, her plan “will require health insurance plans to place a monthly limit of $250 on covered out-of-pocket prescription drug costs for individuals to provide financial relief for patients with chronic or serious health conditions.”
  • Decreasing market exclusivity for biologic drugs from 12 years to 7 years. “Lowering the biologic exclusivity period…will spur greater competition and save up to $5 billion for the federal government over 10 years,” she wrote.
  • Prohibiting “pay for delay arrangements” that keep generic competition off the market.
  • Allowing Americans to import drugs from other counties.
  • Allowing Medicare to negotiate drug and biologic prices and demanding higher rebates for prescription drugs for low-income individuals.

Clinton’s announcement follows a similar policy, announced earlier this month by Senator Bernie Sanders, who is also seeking the Democratic Presidential nomination. Sanders’ proposal is entitled the “Prescription Drug Affordability Act of 2015.” His Press Release announcing the Act is available here.  His main provisions would allow Medicare to negotiate pharmaceutical prices, allow consumers to import cheaper drugs from Canada, ban pay-for-delay schemes, and add additional penalties for companies who settle with the government. Unlike Clinton’s proposal, Sanders does not address direct-to-consumer advertising, nor does he seek to reduce market exclusivity for biologics or provide out-of-pocket expense caps. Further, Sanders would require companies to disclose the costs related to particular products and prices they charge in other countries, a measure that has been introduced, unsuccessfully, in several states.

While drug pricing has been a newsworthy topic over the last year, the past few days have been especially brutal for the pharmaceutical industry's reputation. On September 20, the New York Times wrote an article entitled "Drug Goes From $13.50 a Tablet to $750, Overnight." The drug Daraprim is used to treat toxoplasmosis, an infection caused by a parasite,  and was acquired  by Turing Pharmaceuticals, a start-up run by a former hedge fund manager, noted the article. "Turing immediately raised the price to $750 a tablet from $13.50, bringing the annual cost of treatment for some patients to hundreds of thousands of dollars," the article stated. A media frenzy ensued (see for example, Fierce Pharma), capped by Hillary Clinton's announcement to move forward on an official drug pricing policy.  

The company's chief executive, Martin Shkreli, defended his company's decision: "the drug was unprofitable at the former price, so any company selling it would be losing money. And at this price it's a reasonable profit. Not excessive at all," he stated in a CBS News interview. "This is a disease where there hasn't been one pharmaceutical company focused on it for 70 years. We're now a company that is dedicated to the treatment and cure of toxoplasmosis. And with these new profits we can spend all of that upside on these patients who sorely need a new drug, in my opinion," he added.

Shkreli has now pedaled back on the price after initially defending the company's decision and weathering an onslaught of criticism (see CNBC). However, the widespread coverage and backlash has already been enough to cause serious discussion about drug cost measures among Democratic presidential candidates in this election cycle. In fact, Bernie Sanders wrote a letter to Shkreli calling him to provide more information on the price hike. (See Sanders' September 21 letter). 

Pharmaceutical industry trade group, PhRMA, responded unfavorably to Clinton’s plan. “The sweeping proposals outlined in Secretary Clinton’s plan to regulate prescription drug prices would restrict patients’ access to medicines, result in fewer new treatments for patients, cost countless jobs across the country and could end our nation’s standing as the world leader in biomedical innovation,” stated PhRMA President and CEO John Castellani.

PhRMA outlined a number of specific provisions in Clinton’s announcement that could be particularly damaging to getting groundbreaking treatments to patients in need.

Drug pricing and related cost-cutting proposals will likely be a major story in the election year, and it will be an important one to follow. While Turing Pharmaceuticals' huge price hike and high profile media fallout appeared to be handed to Presidential hopeful Hillary Clinton on a silver platter, it will be interesting to see whether other pharmaceutical companies garner similar scrutiny.


August 31, 2015

EHR: Congress Moves to Delay and Modify Timeline for Meaningful Use


There is a growing movement in Congress to push the Department of Health and Human Services (HHS) to postpone Stage 3 of the electronic health record meaningful use program. Recently, Rep. Renee Ellmers (R-N.C.) introduced a bill (HR 3309) that would delay federal rulemaking for Stage 3 of the meaningful use program until 2017 or when certain conditions are met. Under the proposed Stage 3 rule, eligible providers would have the option of applying for the incentives in 2017 and would have to attest to meeting the criteria in 2018. The comment period on the proposed rule ended May 29, and the CMS is expected to finalize it soon.

During a hearing on meaningful use Stage 3, interoperability and patient access to data, Sen. Lamar Alexander (R-Tenn.) stated: "To put it bluntly, physicians and hospitals have said to me that they are literally terrified of the next implementation stage ... because of the complexity and because of the fines that will be levied,” Fierce Health IT writes.

Industry and Medicine’s Response

As reported in Medscape, industry's response to the Stage 3 proposal has been mainly negative. The Medical Group Management Association (MGMA), for example, said that Stage 3 should not be finalized until more providers had participated in Stage 2. As of May 2015, just 50,983 eligible professionals and 1461 eligible hospitals had attested in Stage 2, according to the CMS. The MGMA also wants CMS to eliminate Stage 3 objectives that require patient engagement.

The American Medical Association (AMA) also criticized the proposal, saying more time is needed to evaluate the impact of the first two stages and that the Stage 3 criteria were too ambitious. And both the American Hospital Association and the College of Health Information Management Executives (CHIME) said the CMS should not finalize Stage 3 until it had had more experience with Stage 2.

It comes as no surprise the AMA strongly supports Congressional intervention to delay Stage 3. "The AMA thanks Rep. Ellmers for sharing our deep concern with a Meaningful Use program that continues to move ahead without first fixing barriers faced by physicians, hospitals, vendors and patients," said AMA President Steven J. Stack, M.D. "Under Rep. Ellmers' leadership, federal regulations would be revised to provide greater flexibility for physicians to meet the Meaningful Use requirements and ensure that Stage 3 of the program is developed in step with other efforts to modernize our nation's health care system."

The bill also addresses key interoperability challenges by ensuring EHR systems are capable of sending, receiving, and seamlessly incorporating patient data.

"This important bill addresses many of the fundamental shortcomings in government regulations that have made many EHR systems very difficult to use," said Dr. Stack. "We heard loud and clear from physicians at the AMA's first-ever town hall meeting on EHRs and the Meaningful Use program that the systems they use are cumbersome, poorly designed and unable to 'talk' to each other thereby preventing necessary transmission of patient medical information."

Struggling to Adopt

Physicians are struggling, as noted in a recent AMA report. One physician the article profiled is in his fourth year of meaningful use, and said the program has slowed down productivity in his practice by about 25-30 percent.

“There are so many more things that you have to report on that I don’t think really add to patient care,” the doctor said. “I’m trying to work with it. I think meaningful use is not necessarily a bad thing. But I don’t think [patients] have an idea what we’re going through. To give them a copy of their note, it’s not just printing it … there are four or five steps just to give somebody a copy of their note.”

The government has known about the problems cited by physicians for a long time. Back in May 2014, CMS delayed for a year the compliance date by which certain early participants in the program meet Stage 2 requirements. The relatively high percentage of providers—62%—still stuck on Stage 1 in the fourth full year of the program bears out the wisdom of the CMS' Stage 2 compliance extension.

The latest data tracks with an analysis done earlier this year by the American Academy of Family Physicians, according to Dr. Steven Waldren, director of the AAFP's Alliance for eHealth Innovation. Waldren said the number of family physicians who attested to meaningful use in 2014 fell nearly 40% to about 23,500 practitioners compared with 2013. Physicians specializing in internal medicine experienced a similar drop-off, he said.

Additionally, a new study from Weill Cornell Medical College describes the emergence of "systematic differences" between physicians who participated in the Medicare and Medicaid EHR Incentive Programs and those who did not. That "could lead to disparities in patient care," according to Weill Cornell researchers, who examined 26,368 physicians across New York State, using payment data from 2011 to 2012, the first two years of meaningful use.


This issue raises serious questions for broader federal health care goals. As we previously wrote, HHS aims to tie 30 percent of payments to quality, including the use of electronic records, by the end of 2016, and 50 percent by the end of 2018. The new MACRA legislation and recent CMS Medicare proposed rules operate as if meaningful use is moving forward as scheduled. Should Congress delay implementation of the next stage of meaningful use, it could have a ripple effect across HHS goals, possibly causing added confusion for physicians and hospitals. It will be important to monitor this as it develops; legislation may need to be passed soon, as CMS wishes to finalize its Stage 3 meaningful use regulations.



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