Life Science Compliance Update

September 20, 2016

Legislation Introduced to Modify Hospital Quality Star Ratings Release


We have previously covered another of CMS’ transparency initiatives—its hospital star ratings—and some of the concerns industry has with the program. After a delay, CMS released the star ratings amid significant industry criticism. At the same time, a recent bipartisan bill would require CMS to take down overall hospital quality star ratings. Of note, according to a recent analysis, these rankings have been found to actually further confuse consumers, rather than provide actionable data to improve health care choices and the market overall.

Bill in Congress

Reps. Kathleen Rice (D-N.Y.) and James Renacci (R-Ohio) introduced the bill (Hospital Quality Rating Transparency Act of 2016, H.R. 5927) that would require CMS to remove its newly published overall hospital quality star ratings from its Hospital Compare website and delay the ratings' release for one year. On July 25, it was referred to the House Committee on Energy and Commerce.

Tom Nickels, the American Hospital Association’s executive vice president for government relations and public policy, in a statement said, "We continue to urge CMS to work with hospitals and health systems to provide patients with a rating system that accurately reflects the quality of care provided at their facilities, and will work with Reps. Renacci and Rice to move this legislation forward"

225 members of Congress previously wrote to CMS in April with their concerns over the hospital ratings system. Part of the letter states, “Many prominent hospitals that are in the top echelon of other quality rating reports, and handle the most complex procedures and patients, will receive one or two stars (out of possible five), indicating that they have the poorest quality in comparison to other hospitals".

The lawmakers' specific concerns included CMS' insufficient disclosure of its methodology and the possibility the rating system gives excessive weight to the "patient experience of care" category, as reported by patients, which accounts for 25 percent of a hospital's score, according to CMS's Quality Net website. The remaining criteria categories are outcome (40 percent), efficiency (25 percent), and clinical process of care (10 percent).

The Ratings

According to CMS, the methodology for the new Overall Hospital Quality Star Rating was developed with significant input form a Technical Expert Panel and refined after public input. CMS says it will continue to analyze the star rating data and consider public feedback to make enhancements to the scoring methodology as needed. The star rating will be updated quarterly, and will incorporate new measures as they are publicly reported on the website as well as remove measures retired from the quality reporting programs.

The agency notes it hosted two opportunities for public input and hosted two National Provider Calls with over 4,000 participants. Hospitals had an opportunity to review their Overall Hospital Quality Star Rating, ask questions, and provide feedback during a “dry run” in July and August 2015.

Ultimately, 3 out of a possible 5 stars was the most common rating, earned by 1,770 hospitals, or about 39 percent. The ratings summarize the findings from 64 existing quality measures already reported on the Hospital Compare website and summarize them into a unified rating of one to five stars. The ratings include measures for care provided when treated for heart attacks and pneumonia, as well as hospital-acquired infections.

Industry Reaction to Ratings

Hospital groups were strongly opposed to the ratings, writing in July to CMS the following: “We urge CMS to share additional information with hospitals and the public about how accurately star ratings portray hospital performance. We also urge CMS to address several significant underlying methodological problems with its star ratings. Until CMS has taken the time to address these problems and share information with hospitals and the public demonstrating that its star ratings methods offer a fair and accurate assessment of hospital quality, we strongly urge the agency to continue to withhold publication of the flawed star ratings.”

The letter was signed by the American Hospital Association, the Association of American Medical Colleges, America’s Essential Hospitals, and the Federation of American Hospitals.

Despite their objections, the ratings were released. Rick Pollack, President and CEO of the American Hospital Association released a statement strongly opposing CMS’ move. “The new CMS star ratings program is confusing for patients and families trying to choose the best hospital to meet their health care needs. Health care consumers making critical decisions about their care cannot be expected to rely on a rating system that raises far more questions than answers. And it adds yet another to a long list of conflicting rating and ranking systems,” said Pollack.

He added, “We are further disappointed that CMS moved forward with release of its star ratings, which clearly are not ready for prime time. As written, they fall short of meeting principles that the AHA has embraced for quality report cards and rating systems. We want to work with CMS and the Congress to fix the hospital star ratings so that it is helpful and useful to both patients and the hospitals that treat them.”

Lack of Utility and Fairness

A recent report in Health Affairs looks at the Hospital Compare ratings from the perspective of a 5-star hospital. The results are highly critical of the CMS program. While supportive of using public disclosure of provider quality data, the article notes, “as currently constructed the scores are unlikely to achieve this goal for the following reasons: roll-up scores across conditions/procedures obfuscate quality at the level of the condition or procedure where gains in quality could happen; grading on a curve fails to identify whether quality is good or bad; and measurement is incomplete and/or imbalanced both in terms of the application of existing measures across hospitals and the absence of important measures in the set.”

The continue by summarizing: “the current scores don’t help consumers pick a high-quality hospital for specific conditions or procedures and don’t promote meaningful quality improvement across hospitals. In fact, in a value-based market where financial rewards are given only to the highest performers rather than providers that achieve high quality, defining quality based on a curve rather than a meaningful threshold will prevent some high-quality hospitals from being rewarded and could discourage hospitals from sharing best practices.”

It has also been repeatedly pointed out that the CMS ratings unfairly penalize teaching and safety net hospitals. For example, the ratings fail to account for socio-demographic factors such as patients' education, race, economic status and regular access to medical care which all have a tremendous impact on health. As a result, many urban hospitals that provide stellar patient care and pioneer groundbreaking therapies, in addition to caring for large numbers of poor patients, received fewer stars than hospitals in affluent suburbs that treat fewer complex patients.

July 18, 2016

Bipartisan PRICED Act Introduced in Congress

Three members of Congress, a bipartisan trio that spans both the House and the Senate, have introduced the Price Relief, Innovation, and Competition for Essential Drugs (PRICED) Act in the House of Representatives and the Senate on Friday, June 24. The bill points to higher medication prices and if passed, would reduce the data exclusivity period for biologic drugs from twelve years to just seven.

The bill, clocking in at a whopping two pages, would amend the Reference Product Exclusivity (RPE) provisions in the Public Health Service Act (PHS Act), striking "12 years" and inserting "7 years" in place. Conforming amendments would be made throughout the Act where necessary. The PRICED Act would apply only with respect to a biological product for which the reference product … is licensed under [PHS Act] on or after" the date of enactment of the PRICED Act.

Such a reduction would have a large effect on the biologic industry: it would mean significantly more competition for branded biologic manufacturers from the biosimilar drug makers. The current twelve-year data exclusivity threshold for biologic products was set under a compromise in the Affordable Care Act. Since that time, President Obama has advocated for reducing that period to seven years through budget proposals, in an effort to cut healthcare spending.

According to Representative Janice Schakowsky, the sponsor of the bill in the House of Representatives, the PRICED Act would "foster competition and provide opportunity for more biologics to enter the marketplace and drive down costs."

Senator Sherrod Brown believes that, "in the same way the entrance of generics helped increase competition and boost access to more affordable prescription drugs, an increased number of biologics and equally effective 'biosimilars' will provide additional competition in the marketplace and make life-saving drugs more affordable for consumers."

Senator John McCain opined that the "PRICED Act would inject much-needed competition in the biologics market, bring down costs for live-saving drugs, and save billions in taxpayer dollars."

Industry Reaction

Industry reaction has overall been very predictable: major trade groups oppose any efforts to shorten the period while generic groups support efforts. The Biotechnology Innovation Organization (BIO) argues that anything less than twelve years of exclusivity would have repercussions, i.e., stifled innovation, reduced drug access, and increased prices of drugs in the long run. They also noted that a "majority of biotechnology companies are small, private start-ups, heavily reliant on venture capital investment" and need the full twelve-year incentive.

The Generic Pharmaceutical Association (GPhA), on the other hand, argues that the legislation would "speed patient access to more affordable versions of some of the most expensive medicines" and that "as brand and specialty drug costs rise at a concerning rate, the association looks forward to working with Congress and others to ensure timely access to biosimilar medicines."

What Does This Mean

This bill is introduced in the midst of several other important, and related, discussions and events. The Trans-Pacific Partnership (TPP) currently under negotiations, has caused high-level discussions on the exclusivity period, as some countries have pushed for a shorter exclusivity period under the deal (e.g., Australia only allows for a five-year exclusivity period), which United States negotiators have resisted.

This bill also comes shortly after the Supreme Court's invitation to the Solicitor General to file briefs regarding the Sandoz and Amgen petitions for certiorari.

The likelihood that the PRICED Act will make its way through Congress and be signed into law by the end of President Obama's term is pretty low. Even still, the bill is yet another sign of the concern on Capitol Hill over drug prices.

July 05, 2016

Bipartisan Policy Center Holds Briefing on Health Innovation

At a briefing hosted by the Bipartisan Policy Center (BPC), Senate Health, Education, Labor, and Pensions (HELP) Committee Chairman Lamar Alexander confirmed that negotiations over the Senate "Innovation Initiative" are still underway. Senator Alexander noted that the Committee is "in the midst of discussions" with House Speaker Paul Ryan and Senate Majority Leader Mitch McConnell on how to advance the package.

Specifically, Senator Alexander highlighted a conversation he had with Senator McConnell, where both senators agreed that the medical innovation package could possibly be "the most important legislation that Congress acts on this year."

In his remarks, Chairman Alexander described the Innovation Initiative as a proactive investment to help cut down healthcare spending, citing the forward-looking success of President George W. Bush's President's Emergency Plan for AIDS Relief (PEPFAR) in helping to control the HIV/AIDS epidemic abroad.

Senator Alexander highlighted the need for a smooth transition to electronic health records, as precision medicine will not work without using advanced health data. He does not believe that the federal government's investment in EHR has not been spent very well, and that Congressional leaders are working together to help ensure future efforts are more efficient.

Senator Alexander addressed the critics of the Innovation Initiative, stating that the Senate needs to take steps to "make sure the horror stories don't derail the success stories."

Senator Alexander also used his time to highlight other issues, including combating the opioid abuse epidemic and how to improve opportunities for Americans to be treated with regenerative medicine.

New BPC Report

In connection with the briefing, the BPC published a new report, "Using Real-World Evidence to Accelerate Safe and Effective Cures." The report provides a set of recommendations on improving the use of data in data development and strengthening the Food and Drug Administration's (FDA's) ability to oversee the progress.

The recommendations focus on different ways the current drug development process could be modernized and improved through the use of real-world evidence, as well as policy action suggestions to implement those suggestions.

Among the proposals are measures to: improve the medical product development process, increase regulatory clarity, use health information technology to improve health care, and increase investment in medical products to address unmet and public health needs.


The recommendations are as follows:

Recommendation I: Improve Regulatory Clarity Regarding Use of Real-World Evidence

Current evidence requirements date back to 1962, when amendments to the Federal Food, Drug and Cosmetic Act (FDCA) included provisions requiring manufacturers of drug products to establish a drug's effectiveness by substantial evidence and adequate and well-controlled investigations before it could be approved for marketing. Since that time, several regulations and guidances have been published.

Included in the policy ideas for this recommendation were suggestions that the FDA should: develop formal guidance regarding the use of real-world evidence to inform regulatory decision-making, including the circumstances under which real-world data could be used as well as the types of real-world data, methods, and the levels of evidence that would be acceptable for use in regulatory review and decision-making. The guidance should include, but not be limited to, new drug approvals (including approvals under expedited programs), label expansions, new indications, post-market commitments, and post-market study requirements; and engage representatives of regulated industry, patient and disease research organizations, academia, experts in the use of electronic data, experts in statistical methods, and experts in privacy policy in the development of the guidance.

Recommendation II: Improve Methods and Data Quality for the Generation and Use of Real-World Evidence

The scope and amount of real-world data potentially available is rapidly expanding, as are the methods to effectively use and interpret the data for regulatory decision-making purposes. The methods and interpretations that have traditionally been used may not be the most appropriate methods to use for understanding larger data sets, or data drawn from across a network of disparate databases. It is therefore imperative that regulatory agencies and others who rely on the data educate themselves about best practices in methods of use and interpretation of real-world evidence for decision-making purposes.

This recommendation included suggestions for both the FDA and HHS, including:

  1. the FDA should establish a program to promote sharing and evaluation of methods used in the evaluation of real-world evidence for regulatory decision-making. The FDA should invite a broad spectrum of researchers who are active in the generation and use of real-world evidence and methods development, as well as leaders who rely upon such real-world evidence—including regulators and payers—to participate in this program.
  2. The U.S. Department of Health and Human Services (HHS) should support research to improve methods for the use of real-world evidence, which take into account the much larger samples of electronic data now available and enable high-throughput methods that produce accurate and well-calibrated inferences that quantify levels of uncertainty more accurately. Such research should focus on issues that include, but are not limited to, mitigating bias, obtaining solutions to better refine outcomes definitions, understanding implications to analyses for integrating observational data across a number of disparate sources, and understanding the contributions of real-world evidence to causal reasoning.

Recommendation III: Improve Policies for Information Sharing to Support Clinical Research

Under current law, in order to conduct one real-world study across multiple health care systems, multiple institutional review board (IRB) approvals are required. Given the differences in how IRBs view their remit and what constitutes a clinical trial, a unique and individualized approach is often needed to seek approval from each, which can lead to delays in trial execution and increased costs.

In light of that, two suggestions were made to Congress, including the idea that Congress should require the HHS Secretary—through the OHRP and the FDA—to issue regulations and guidance to facilitate the broader use of centralized IRBs within 36 months, by clarifying the roles of IRBs in multi-site studies and the risks and benefits to human subjects, standardizing informed consent, and incorporating community values through the use of local IRBs while continuing to use central IRBs.

Recommendation IV: Explore New Adaptive Pathways to Modernize Drug Development and Support a New Era of Personalized Medicine

As medicine continues to become more personalized and drugs become targeted for smaller populations, traditional, large-scale RCTs will become increasingly less feasible and additional approaches will be needed to assure safety and efficacy and protect the public's health. Rapid advances in technology and personalized medicine will allow for more-close monitoring to be easier, cost effective, and accurate. To advance the exploration of a new, more flexible adaptive approach to drug approval, several steps must be taken.

Included in those steps are the following suggestions:

  1. The FDA should develop a new program to develop and test a new adaptive pathway approach to expand the capacity for drug development that has the following key attributes: iterative phases of development, beginning with initial marketing authorization to a restricted patient population, then expanding to wider populations based on risk-benefit ratios; gathering evidence through close-monitoring and other real-world evidence, to supplement RCTs; and early involvement of stakeholders who have a role in determining patient access to the drug, including industry, payers, regulators, clinicians, and patients.
  2. The FDA's new program to develop and test a new adaptive pathway approach for drug development should include the following elements: qualifying criteria for the program, which will determine which types of drugs at what stages could be considered for the adaptive pathway approach; types and levels of evidence required for initial approval and expansion, including evidence generated from close-monitoring, other real-world evidence, and randomized controlled trials, as appropriate; methods for early involvement of patients, clinicians, payers, industry, and regulators; and methods for assuring market removal or label modification of products when follow-up studies and monitoring are not completed or when an unfavorable risk-benefit ratio for certain populations is demonstrated.



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