Life Science Compliance Update

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.

January 16, 2017

U.S. House Introduces Updated Value-Based Incentive Legislation

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The House Ways & Means Health Subcommittee recently released updated draft legislation that would establish value-based incentive payments for Medicare post-acute care (PAC) providers such as skilled nursing facilities (SNFs), inpatient rehabilitation facilities (IRFs), home health agencies (HHAs), and long-term care hospitals (LTCHs) – similar to efforts that are presently underway in the acute care setting.

The revised discussion draft – the Medicare Post-Acute Care Value-Based Purchasing Act of 2015 (H.R. 3298) – was first introduced by full Committee Chairman Kevin Brady (R-TX) and Rep. Ron Kind (D-WI) in July 2015. The Subcommittee’s updated draft reflects feedback provided by stakeholders, including feedback received during a hearing held in September 2015, in which the Subcommittee explored different Medicare Part A policies and ways to improve PAC quality.

During that hearing, Committee members on both sides of the aisle asked witnesses for recommendations to incentivize higher-quality care in post-acute settings so that patients receive the treatment they need, at a cost they can afford. Steve Guenthner, president of Almost Family (a post-acute care provider), said, “Value-based purchasing is the natural next step in the evolution of patient-centric Medicare policy, especially when it rewards providers for patient-focused outcomes, balanced against the cost incurred to achieve those outcomes … We need to change the policy question from ‘how should we pay providers’ to ‘how we should care for patients.’”

Dr. Gregory Worsowicz, chairman of the board for the American Academy of Physical Medicine and Rehabilitation, noted, “I would ask you, whatever programs we put in place, we coordinate them…we don’t suboptimize what we are doing and restrict [doctors] with so many regulatory issues [they’re] hamstrung on what [they] can do or chasing incentives that may not align with others.”

Previously several provider groups, including the American Hospital Association (AHA), voiced concerns about the lack of “valid, reliable quality measures” under the bill’s proposed PAC value-based purchasing (VBP) program and raised a number of broader methodological considerations. The AHA also felt it was “premature” to move forward with a PAC VBP when efforts to collect mandated data pursuant to the expanded reporting requirements under the Improving Medicare Post-Acute Care Transformation (IMPACT) Act of 2014 were still ongoing.

Highlights of the updated legislation include:

  • Mandating that the Department of Health & Human Services (HHS) establish a value-based purchasing (VBP) program for PAC providers beginning on or after Oct. 1, 2019;
  • Outlining changes to the requisite performance measures, with HHS directed to use measures related to Medicare spending per beneficiary, discharge to community, and all condition risk-adjusted potentially preventable hospital readmissions, with the option to phase-in quality measures and geographic measures after Oct. 1, 2021;
  • Modifying the previous bill’s methodology by which value-based incentive payments are made by establishing an initial two-track performance-risk system, with varied payment withholds (to be redistributed) depending on whether a provider is “high performance-risk PAC provider” a or “low performance-risk PAC provider” for each performance year. By Oct. 1, 2026, HHS is required to establish, via rulemaking, a single reduction method to apply across PAC providers.

According to the press release, the Committee continues to encourage stakeholders to provide feedback on the latest draft of the legislation, though does not specify a date by which comments are due.

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