Life Science Compliance Update

January 30, 2017

Senate Finance Committee Holds Hearing on Dr. Price to Lead Department of Health and Human Services

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On Tuesday, January 24, 2017, the Senate Committee on Finance held a hearing to consider the nomination of Representative Thomas Price, M.D., to be Secretary of the Department of Health and Human Services (HHS). The hearing was the last for Dr. Price before the entire Committee holds its formal vote on confirmation and provided key insights to Representative Price’s views on healthcare reform, from the Affordable Care Act (ACA) repeal and replace to Medicare and Medicaid reform.

The hearing somewhat highlighted the division between the political parties, with Democrats focusing on concerns surrounding Representative Price’s healthcare investments, his previous statements on health policy, and his legislative record combating the ACA. On the other hand, Republican support for Representative Price remained strong, and he seems to be on track for confirmation some time over the next couple of weeks.

Opening Remarks

In his opening remarks, Senate Finance Committee Chairman Orrin Hatch offered glowing remarks on Representative Price’s qualifications to lead HHS, noting that he has the “experience and qualifications necessary to effectively lead this large and diverse set of agencies.” Chairman Hatch noted numerous stakeholder organizations that have “enthusiastically” supported Price’s nomination, including the American Medical Association, the American Hospital Association, and the Healthcare Leadership Council.

Senator Hatch also criticized Senate Democrats for their “grossly exaggerated attacks” on Representative Price’s record, attempting to derail his nomination. “I have never seen a party in the Senate – from its leaders on down – publicly commit to not only opposing virtually every nomination, but to attacking and maligning virtually every single nominee,” noted Chairman Hatch.

Senate Finance Committee Ranking Member Ron Wyden voiced concerns surrounding Representative Price’s nomination for HHS Secretary. Senator Wyden pointed to the Trump Administration’s promises not to cut Medicare and Medicaid, noting that the President’s positions are in contrast with Representative Price’s policy positions.

Senator Wyden labeled Representative Price’s ACA replacement plan as “repeal and run,” stating that if it became law, “18 million Americans would lose their health care plans in less than two years.” Senator Wyden expressed concern the future of women’s health and coverage for individuals with pre-existing conditions if Representative Price’s replacement bill were enacted.

In his opening remarks, Representative Price spoke fondly about his time as a physician and legislator in the Georgia State Assembly, highlighting his experience in strengthening children’s healthcare throughout his tenure. Representative Price also complimented HHS’ “incredible work” in the areas of drug treatment research, as well as food safety. Representative Price commented on his frustrations with the current healthcare system, noting that the system has lost focus on its top priority: the patient. He emphasized a “bipartisan, team-driven” policy when it comes to reforming healthcare, calling for a “patient first” system that strengthens medical innovation, accessibility, and choice.

Discussion and Commentary

Affordable Care Act

Senate Democrats harped on several different issues related to repeal and replace of the ACA, especially focused on the ACA’s individual mandate and the ban on denying coverage based on pre-existing conditions. Representative Price strongly stated that Republicans will not “abandon” people with pre-existing conditions as the Republican-led Congress makes plans to repeal and replace the law. Additionally, Representative Price voiced support for extending funding for the Children’s Health Insurance Program (CHIP).

Representative Price noted that he would not commit to utilizing the executive order issued by President Trump to eliminate the ACA individual mandate, nor did he promise that no one would lose coverage because of the executive order. “I’m humble enough to appreciate and understand that I don’t have all the answers,” Representative Price said, stating that “the people in the department have incredible knowledge and expertise.” Additionally, Representative Price did not comment on whether HHS would wait for Congress to prepare a replacement plan before taking steps to dismantle the ACA, noting that he would promise to put “patients at the center of healthcare.”

Sunshine Act

During the hearing, Senator Chuck Grassley went into detail about the Sunshine Act that he worked hard to implement. Senator Grassley noted that several years back, he worked hard to get the Patient Physician Sunshine Act passed in Congress, and that it took the prior Administration several years to get the Act in full swing, working the way it was intended. Senator Grassley questioned Dr. Price as to whether he would help support an expansion of the Sunshine Act, to include nurse practitioners and others, because he feels that the increased transparency is truly a good thing for patients and the healthcare industry as a whole.

When Dr. Price responded, he did not give a yes or no answer, instead opting to note that he does believe transparency is vital in so many different ways in health care, including drug pricing and industry interactions, so that patients can understand what is going on in the health care system.

Medicare and Medicaid Reform

Throughout Representative Price’s confirmation process, Democrats have emphasized that his position on Medicare and Medicaid is at odds with President Trump’s promise not to cut either program.  In the Senate hearing, Representative Price stated that Medicare must be reformed if the government wishes to keep its promise to seniors, while avoiding questions surrounding his support of reforming Medicaid into a block grant program, only commenting that he is in favor of turning Medicaid into a system “that responds to patients, not government.”

Representative Price indicated some support for the Center for Medicare and Medicaid Innovation (CMMI), calling it “vehicle that might help” incentivize innovation. At the same time, however, he also argued that the directives and programs from CMMI should not be mandatory, and that the center’s work had “gotten a bit off track” during the previous Administration.

January 23, 2017

U.S. Senators Collins and McCaskill Release Drug Pricing Investigation Report

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United States Senators Susan Collins (R-ME) and Claire McCaskill (D-MO), the Chairwoman and Ranking Member of the Senate Aging Committee, respectively, released a report on drug pricing titled, “Sudden Price Spikes in Off-Patent Prescription Drugs: The Monopoly Business Model that Harms Patients, Taxpayers, and the U.S. Health Care System. The 131-page report details findings from the Committee’s bipartisan investigation into abrupt and dramatic price increases for prescription drugs whose patents expired long ago.

The bipartisan duo launched the Aging Committee’s investigation in November 2015 after a series of media reports detailing dramatic drug price increases after the acquisition of decades-old, off-patent, and previously affordable drugs. The investigation focused on four companies: Turing Pharmaceuticals, Retrophin, Inc., Valeant Pharmaceuticals International, Inc., and Rodelis Therapeutics. According to the Senators, evidence gathered by the Committee suggests that additional companies have employed the “monopoly business model uncovered in this report.”

During the course of the bipartisan investigation, the Aging Committee held three different hearings; interviewed patients, doctors, hospital administrators, consumer advocates, health experts, and pharmaceutical industry executives/board members; reviewed more than one million pages of documents obtained from the four companies; and deposed or took transcribed interviews of numerous corporate witnesses.

The report examines what it refers to as a “monopoly business model” used by the four aforementioned pharmaceutical companies to exploit market failures: the way companies acquired decades-old, off-patent, and previously affordable drugs, only to suddenly raise the prices “astronomically.” The report provides case studies of the four companies, explores the influence of investors, assesses the impact of price hikes on various stakeholders, and discusses potential policy responses.

Chairwoman Collins noted, “The skyrocketing prices of prescription drugs affect every American family, particularly our seniors. This report is the culmination of the Senate Aging Committee's year-long, bipartisan investigation into the egregious price increases on a number of decades-old drugs acquired by pharmaceutical companies that act more like hedge funds. We must work to stop the bad actors who are driving up the prices of drugs that they did nothing to develop at the expense of patients just because, as one executive essentially said, ‘because I can.’”

Ranking Member McCaskill stated, “The hedge fund model of drug pricing is predatory, and immoral for the patients and taxpayers who ultimately foot the bill—especially for generic drugs that can be made for pennies per dose. We’ve got to find ways to increase competition for medicines and ensure that patients and their families aren’t being gouged.” 

The report identified several potential policy responses, including:

  • Enact the Increasing Competition in Pharmaceuticals Act, introduced by Chairman Collins and Ranking Member McCaskill, to incentivize competition to address regulatory uncertainty, small market size, and other factors that serve as limitations to generic entry;
  • Encourage generic competition by ensuring the right to obtain samples and simplifying Risk Evaluation and Mitigation Strategies;
  • Consider allowing highly targeted, temporary prescription drug importation to provide prompt price relief for major price increases in off-patent drugs;
  • Take steps to prevent the misuse of patient assistance programs and copay coupons;
  • Reinvigorate the Federal Trade Commission to take greater enforcement action on drug company mergers, operations, and drug market dynamics; and
  • Improve transparency in the health care system.

The report noted that “while release of the report does not indicate unanimous support of each of these policy options, we hope that it will help contribute to the ongoing discussion.”

January 17, 2017

Democrat Senators Send Letter to Trump On Drug Pricing

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United States Senators Sherrod Brown (D-OH) and Al Franken (D-MN) led the charge to send a letter to President-Elect Donald Trump, outlining specific action items they would like to see his Administration taken to help Congress bring down the cost of prescription drugs. The letter was cosigned by eighteen other senators, including Patrick Leahy and Bernie Sanders (both of Vermont), Elizabeth Warren and Ed Markey (both of Massachusetts), Dianne Feinstein (D-CA), Dick Durbin (D-IL), and Kirsten Gillibrand (D-NY).

The letter expressed frustration shared by the senators over the cost of drugs and outlined several ways they believe Mr. Trump can make good on his promise to lower the rising cost of prescription drugs for consumers including: allowing the Secretary of Health and Human Services (HHS) to negotiate better prices for Medicare recipients; requiring drug companies to disclose costs associated with creating drugs so prices are more transparent; putting an end to abusive price gouging; and ensuring competition and innovation that will lead to greater competition and more affordable, effective drugs.

In the letter, the Senators wrote, “It is undeniable that more and more families are struggling to access medications, and in many cases, are forced to choose between paying for prescription drugs and other necessities, like food and shelter. The American public is fed up, with roughly 8-in-10 Americans reporting that drug prices are unreasonable, and that we must take action to lower costs. You now have the authority to push for a future that prioritizes patients. We are ready to advance measures to achieve this goal and we urge you to partner with Republicans and Democrats alike to take meaningful steps to address the high cost of prescription drugs through bold administrative and legislative actions.”

Candidate Donald Trump’s Positions

The letter referenced several promises made by President-Elect Donald Trump on the campaign trail. “During your campaign, you promised to implement bold reforms to bring down the cost of prescription drugs. In fact, you acknowledged that “Congress will need the courage to step away from the special interests and do what is right for America.” You also supported allowing consumers’ access to imported, safe, and dependable drugs from overseas and vowed to negotiate lower prescription drug prices for seniors. And earlier this month you again promised to “bring down drug prices.” While there are many different policy options to achieve lower drug prices, it’s clear that we all agree that all Americans deserve access to safe, effective, and affordable lifesaving medications. As Members of Congress, we are ready to advance bipartisan reforms that will help achieve the goal we all share: reducing the burden exorbitant drug prices are placing on hard-working Americans.”

In an interview with TIME ahead of Mr. Trump’s selection as TIME’s 2016 Person of the Year, he said he doesn’t “like what’s happened with drug prices” and that he will “bring down” the costs of prescription medication. On the campaign trail, Mr. Trump often called for allowing, or even going so far as requiring, Medicare to negotiate with drug companies to lower costs.

With his inauguration only days away, it will be very interesting to see how a President Donald Trump interacts with Congress – Democrats and Republicans alike. It will also be interesting to see how he governs, as there is not much (or, really any) prior experiences to look to for clues.

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