Life Science Compliance Update

February 19, 2018

Trump Administration Releases Budget Proposal Calls for Changes to Open Payments and Increased Funding for Fighting Fraud and Abuse

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The Trump Administration recently released its fiscal year (FY) 2019 budget proposal, including extensive health policy provisions.

The budget proposal features numerous program integrity provisions. For instance, the budget calls for: a $45 million increase in Health Care Fraud and Abuse Control funding; expanded prior authorization requirements for high utilization practitioners of radiation therapy, therapy services, advanced imaging, and anatomic pathology services; expansion of the items of DME, prosthetics and orthotics that are subject to prior authorization; a demonstration to test the use of a benefits manager for serial/refill DME claims; a requirement that clearinghouses and billing agents enroll in Medicare; and the addition of the National Provider Identifier of covered recipients on the public Open Payments website.

The budget proposal also snuck in some proposed changes to Open Payments, including altering the Open Payments reporting and publication cycle, and publishing the National Provider Identifier for covered recipients in the Open Payments Program, as ways to address fraud and abuse in Medicare.  

The budget also includes proposals to streamline Medicare program rules for providers and suppliers, including: relaxing Medicare meaningful use program requirements for hospitals and physicians, simplifying Merit-based Incentive Payment System (MIPS) rules and Advanced Alternative Payment Model (APM) bonus rules for physicians, and various reforms to the Medicare appeals process.

The budget also proposes a new exception to the physician self-referral law for arrangements that arise due to participation in Advanced APMs. Furthermore, several provisions are intended to boost accountable care organizations (ACOs), including a proposal to allow ACOs to pay beneficiaries for a primary care visit.

Trump continues to attempt a “repeal and replace” method to the Affordable Care Act (ACA). This year’s budget calls for a “Market-Based Health Care Grant Program” (similar to the pending Graham-Cassidy-Heller-Johnson legislation) as an initial step to help states stabilize their insurance markets during a transition period. The second step would then repeal the ACA’s Medicaid expansion and significantly restructure Medicaid by allowing states to choose between a per capita cap or a block grant.

Another area of emphasis in this year’s budget proposal is reducing prescription drug prices, although there is debate regarding the potential effectiveness of the Administration’s approach. Among other things, the budget would:

  • “Modernize” the Medicare Part D benefit by requiring Part D sponsors to apply at least one-third of total rebates and price concessions at the point of sale and eliminating cost sharing for generic drugs for low-income, among others.
  • Establish new standards for hospitals to receive redistributed savings resulting from reduced payment for outpatient drugs purchased through the 340B discount drug program, based on the hospital’s level of uncompensated care.
  • Reduce Medicaid drug spending by establishing a Medicaid demonstration to test coverage and financing reforms that build on private sector best practices,  requiring state Medicaid to cover all FDA-approved Medication Assisted Treatments for opioid use disorder, and establishing minimum standards for Medicaid drug utilization review programs.

This budget proposal is separate from the two-year budget deal passed by Congress in early February, which is complicating efforts made by the White House to reorder federal priorities.

February 01, 2018

State of the Union De-Briefing

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President Donald Trump gave his second State of the Union address this week, and while reactions to his speech were mixed, he mentioned several items of importance to the healthcare space.

Affordable Care Act

First, he noted the repeal of the individual mandate found in the Affordable Care Act, by noting, “We eliminated an especially cruel tax that fell mostly on Americans making less than $50,000 a year -- forcing them to pay tremendous penalties simply because they could not afford government-ordered health plans. We repealed the core of disastrous Obamacare -- the individual mandate is now gone.”

Interestingly to some of his most ardent fans, however, the President did not call for the repeal of the Affordable Care Act in its entirety. Therefore, it seems as though his focus on the ACA will be muted with respect to the rest of the ACA that is still in place, including the Medicaid expansion and other reforms.

Right to Try

President Trump also noted his belief in right to try laws, stating, “We also believe that patients with terminal conditions should have access to experimental treatments that could potentially save their lives. People who are terminally ill should not have to go from country to country to seek a cure -- I want to give them a chance right here at home. It is time for the Congress to give these wonderful Americans the ‘right to try.’”

Vice President Mike Pence has long held Right to Try as a priority of his, and Trump’s call on Congress to pass legislation comes amid stalled House legislation, which easily passed the Senate in August.

More than half of the states have laws that already exist to allow some patients access to experimental treatments and the Food and Drug Administration also hash a pathway that grants expedited access to treatment to patients with terminal illnesses; however, FDA Commissioner Scott Gottlieb has been reluctant to expand much past that.

Opioid Abuse

Many Senators and Congresspeople wore purple ribbons in an attempt to highlight the opioid crisis. President Trump addressed this hot-button issue as well, saying, “In 2016, we lost 64,000 Americans to drug overdoses: 174 deaths per day. Seven per hour. We must get much tougher on drug dealers and pushers if we are going to succeed in stopping this scourge. My Administration is committed to fighting the drug epidemic and helping get treatment for those in need.”

As we have previously written, President Trump has always placed a priority on resolving opioid abuse, including creating a Task Force to review the situation and craft a plan of action. However, he has yet to propose new funding to help states respond (one of the suggestions we often hear from Democrats).

Newly appointed Health and Human Services Alex Azar recently highlighted the administration’s five-point strategy, including (1) encompassing better treatment, prevention, and recovery services; (2) better targeting of overdose-reversing drugs; (3) better data on the epidemic; (4) better research on pain and addiction, and (5) better pain management. Funding for treatment will continue to be central to the debate, and it remains to be seen whether Congress will provide the boost that many public health advocates have been calling for.  

Drug Pricing

Prescription drug prices were a hot topic in the 2016 Presidential election and were, naturally, mentioned during the State of the Union as well. President Trump stated, “To speed access to breakthrough cures and affordable generic drugs, last year the FDA approved more new and generic drugs and medical devices than ever before in our history... One of my greatest priorities is to reduce the price of prescription drugs. In many other countries, these drugs cost far less than what we pay in the United States. That is why I have directed my Administration to make fixing the injustice of high drug prices one of our top priorities. Prices will come down.”

Given the political climate, little action has been seen on this front while excessive rhetoric continues to be the modus operandi of the political class.

Conclusion

Overall, there were statements by the President that earned cheers and some jeers from both sides of the political aisle. While lip service can be effective in providing a motivating speech, we will have to wait to see what changes are actually effectuated in the future.

 

January 10, 2018

Bipartisan Senators Release Committee Report on Drug Pricing Investigation

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United States Senators Susan Collins and Claire McCaskill, the Chairwoman and Ranking Member of the Senate Aging Committee, 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 report details the findings stemming from the Committee’s bipartisan investigation into abrupt and dramatic price increases for prescription drugs whose patents expired long ago. Via a close examination of the monopoly business model used by four pharmaceutical companies to exploit market failures, the report examines how companies acquired decades-old, off-patent, and previously affordable drugs and then raised the prices suddenly and astronomically at the expense of patients. The report also: provides case studies of the four companies; explores the influence of investors; assesses the impacts of price hikes on patients, payers, providers, hospitals, and the government; and discusses potential policy responses. 

During the course of its bipartisan investigation, the Aging Committee held three hearings; interviewed scores of patients, doctors, hospital administrators, consumer advocates, health experts, and pharmaceutical industry executives and 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 first hearing of the series, held on December 9, 2015, sought to identify and define the problems resulting from these price increases. The second hearing, held on March 17, 2016, took an in-depth look inside the monopoly business models of Turing and Retrophin, formerly headed by Martin Shkreli. The third hearing, held on April 27, 2016, investigated Valeant’s business model, its investor relationships, and the harm caused to patients and the health care system by the enormous price increases Valeant imposed on certain drugs it acquired.

The senators took into account the views of a variety of health policy experts and clinicians in identifying 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 skyrocketing prices of prescription drugs affect every American family, particularly our seniors," said Chairwoman Collins. "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.”

“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,” Ranking Member McCaskill said. “We’ve got to find ways to increase competition for medicines and ensure that patients and their families aren’t being gouged.”

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