Life Science Compliance Update

January 03, 2017

Trump CMS Administrator Has Work Cut Out for Her

Verma

As we previously announced, President Elect Donald Trump plans to nominate Seema Verma, a private health policy consultant, to head the Centers for Medicare and Medicaid Services (CMS). While Ms. Verma likely has a few ideas of her own that should be instituted rather quickly, current CMS acting administrator Andy Slavitt believes that “[t]he person sitting in my chair next isn’t going to have a choice but to make this one of their top two or three priorities,” discussing drug pricing.

Slavitt continued, noting that CMS will need to create partnerships with members of the Medicare Part D community in order to be successful. He believes that the current dialogue on prescription drug pricing is set up between whether to have innovative, expensive drugs, or to have less expensive treatments. Slavitt believes boiling it down to simple terms creates a false choice and is not productive for anyone, least of all patients.

Slavitt compared the current pharmaceutical spending debate to conversations several years ago about rising hospital costs. He noted that we now know how to have treatments that are both innovative and less expensive, and that several years ago, frameworks were created to help make hospital care more affordable. He believes similar frameworks can be created for pharmaceuticals.

Slavitt also expressed his hopes that the new political climate in Washington, DC will not reverse the progress made over the last eight years, including the Affordable Care Act (ACA) and implementation of the Medicare Access and CHIP Reauthorization Act of 2015 (MACRA), which is set to change how clinicians get reimbursed under Medicare.

Slavitt cited the following statistics, in support of not only his reign over the past few years, but over the past eight years under President Obama:

  • Today, 30% of fee-for-service Medicare payments flow through alternative payment models, up from essentially none in 2010. And, millions more are covered through innovative Medicare Advantage programs.
  • Quality and safety have improved with the rate of hospital-acquired conditions declining by 17%, which has prevented an estimated 87,000 deaths over 4 years. The rate at which Medicare patients are readmitted to the hospital within 30 days after discharge has decreased sharply, resulting in 565,000 fewer total readmissions.
  • Medicare provides more access with new prescription benefits and, thanks to the Affordable Care Act (ACA), we’ve closed the Medicare donut hole and with that, 11 million beneficiaries have saved an average of more than $2,000.
  • The CMS Innovation Center, which the ACA created, takes best practices from the clinical field and has developed over 30 alternative payment models and initiatives, serving millions of Medicare beneficiaries. The CBO expects the Innovation Center to reduce federal spending by about $34 billion over the next 10 years as we find new and better ways to care of people.
  • And, with all of this, we have been spending tax payer resources more wisely with extended record low medical inflation. The ACA extended the life of the Medicare trust fund and has helped deliver $473 billion in savings.

MACRA is not likely to go anywhere with the new administration, but the ACA is under extreme attack. Slavitt noted that he hopes Ms. Verma “build[s] from a foundation of progress, not head backwards. There can be no delivery system reform without building on the foundation of reaching universal coverage.”

Slavitt believes that the CMS Innovation Center, created by the ACA to take best practices and develop alternative payment models and initiatives, is crucial to the success of MACRA, stating, “I’ll say this bluntly: MACRA can’t work as well without a CMS Innovation Center that can move quickly to develop and expand new approaches to paying for care.”

Slavitt ended his talk reminding attendees that “people are the heart of every policy made,” and that “[w]e are on a journey as a nation towards better health for all. Patients. Care givers. Consumers. You know them better than anyone because you care for them. View MACRA as a step in the journey to develop care together.”

December 08, 2016

21st Century Bill Headed to President Obama’s Desk

President-obama-desk

Nearly three years after its initial introduction, the 21st Century Cures Act has finally passed both houses of the Congress, and is expected to be signed by President Obama relatively quickly. This bill represents one of the few truly bipartisan efforts undertaken by this Congress.

We have previously written about some of the items included (and excluded) in the bill. The bill gives the health institutes the authority to finance high-risk, high-reward research using special procurement procedures, as opposed to more conventional grants and contracts. It also requires the agency’s director to establish “Eureka prize” competitions to advance biomedical research and improve treatments for serious illnesses. The bill also creates a new assistant secretary for mental health and substance use, to be appointed by the president, thereby raising the status of mental health issues throughout the country.

Further, the bill directs federal agencies to step up their enforcement of laws that require equal insurance coverage for mental and physical illnesses. Federal laws and rules requiring mental health parity have been adopted with bipartisan support over the last twenty years, but a White House task force recently found that compliance with those laws has been lagging.

Political Reactions

The bill includes $500 million a year to help states prevent opioid misuse and get better treatment for addicts. "These additional resources are particularly critical in rural areas, where rates of opioid misuse and overdose are high, access to treatment is limited, and patients who seek treatment are often met with waitlists that can mean the difference between life and death," said Agriculture Secretary Tom Vilsack.

In a statement made by President Obama shortly after passage of the bill, “We are now one step closer to ending cancer as we know it, unlocking cures for diseases like Alzheimer’s, and helping people seeking treatment for opioid addiction finally get the help they need.”

Obama also noted, “This is a reminder of what we can do when we look out for one another. Like Joe Biden and so many other Americans, I’ve lost people I love deeply to cancer. I’ve heard often from those whose loved ones are suffering from Alzheimer’s, addiction and other debilitating diseases. Their heartbreak is real, and so we have a responsibility to respond with real solutions. This bill will make a big difference, and I look forward to signing it as soon as it reaches my desk.”

Senator Susan Collins (R-ME) stated, “I doubt that there is a family in America who will not be touched by this important legislation.” Representative Steve Cohen (D-TN) was also pleased with the passage, saying, “I don’t think there is enough money that we can put into the N.I.H., because it is important and affects all Americans independent of political party, race, sexual orientation – you name it.”

Medical and Industry Reactions

"The remarkable bipartisan, bicameral support for the 21st Century Cures Act proves that congressional lawmakers are serious about the need for scientific research, effective care-delivery, and the removal of barriers to scientific progress," said Dr. Daniel Hayes, president of the American Society of Clinical Oncology.

"This legislation will improve the lives and health of countless Americans," said American Psychological Association President Susan McDaniel. "It will increase access to effective, evidence-based care, particularly for those with serious mental illness."

In a Statement from Sharad Lakhanpal, MBBS, MD; President of the American College of Rheumatology, he noted,  "While we are pleased that the 21st Century Cures Act will infuse additional, much-needed funding to the NIH to support medical research across the healthcare spectrum, we also know that more can and should be done to help Americans who are disproportionately impacted by arthritis and other rheumatic diseases. Today, arthritis is the leading cause of disability among U.S. veterans and the second most common reason for medical discharge from the U.S. Army. One in three veterans is diagnosed with arthritis, compared with one in five members of the general U.S. population.

As Congressional leaders turn their attention to budget appropriations for the upcoming fiscal year, we urge them to prioritize the creation of a dedicated $20 million arthritis research program at the Department of Defense so that we can better meet the care needs of the thousands of active duty and veteran members of our Armed Forces who live with arthritis.”

Conclusion

Once the bill is signed by President Obama, it will be up to the Food and Drug Administration (FDA) to implement many portions of the law, which could take years. Funding may be immediate, but the actions the FDA and other federal agencies are responsible for may still be quite a bit away. We will all have to stay tuned as this bill, and its effects, continue to progress.

November 15, 2016

Post-Election Decompression: Where Do We Go from Here?

Donald_trump_flag

After almost fifteen months of campaigning, polls, and 24/7 election coverage of “he-said-she-said,” we finally have our answer: President-Elect Donald Trump. Regardless of where you fall politically, or who you voted for, the top question on everyone’s mind is what is next for industry once Mr. Trump is in the Oval Office. Even still, knowing who the next president is, and which party will be in control of each chamber of Congress, there is a tremendous amount of uncertainty.

The rhetoric on the campaign trail often does not fully come to fruition once the candidate is elected; it is either tampered down a bit, or ramped up a bit, depending on what kind of platform the candidate ran on and where the candidate’s party wants the direction to go.

Mr. Trump’s major policy priorities have been: trade, immigration, infrastructure, and the Federal Reserve. One of the centerpieces of Trump’s economic platform was to reverse free trade, including declaring some countries as currency manipulators; putting tariffs on Mexico and China; renegotiating, or withdrawing from, the North American Free Trade Agreement (NAFTA); and exiting from the World Trade Organization (WTO).

As far as other campaign centerpieces, Mr. Trump promised to “build a wall” along the Mexican border and deport some or all undocumented workers, as well as pledging to invest heavily in infrastructure.

Lame Duck

The outlook for the lame duck session remains uncertain: Speaker Paul Ryan and Senate Majority Leader Mitch McConnell are surveying their caucuses, working with the Trump transition team to determine the scope and length of the lame duck session. However, there are several “must pass” pieces of legislation for the lame duck session, including fiscal year 2017 spending bills and the National Defense Authorization Act. Additionally, the 21st Century Cures and Mental Health Reform legislation are likely on a “want to pass” column.

One vote certainly taken off the table with the election of Mr. Trump is the vote on whether or not to confirm President Barack Obama’s Supreme Court of the United States (SCOTUS) Merrick Garland. Senate Leader Mitch McConnell has already confirmed that confirming Merrick Garland to the Supreme Court will not be on the Senate’s lame duck agenda.

Passage of the Trans Pacific Partnership (TPP) is also unlikely during the lame duck session. While Senator McConnell has said that the Senate will not vote on the TPP this year, Senate Finance Committee Chairman Orrin Hatch has continued to negotiate with the White House. As alluded to above, Mr. Trump rejected the trade package during the campaign, and so we may see an increased pressure from the White House and pro-trade lawmakers for Congress to at least consider TPP before Trump takes office in January.

Trump’s First 100 Days

The first 100 days has been seen as the most important period of time for a new president to lay out their primary policy priorities. Again, Trump was a very unconventional candidate, and as such, his first 100 days may very well be unconventional as well. It is estimated that during his first 100 days, Trump will focus on repealing Obama Executive actions; legislation on building a wall on the southern border; Supreme Court nomination to replace Justice Scalia; Dodd-Frank reforms; and implementing a $550 billion (or larger) infrastructure plan.

21st Century Cures

Both Leader McConnell and Speaker Ryan have expressed a shared interest in passing a version of the 21st Century Cures Act during the lame duck session. However, a key sticking point for Democrats to pass the overarching legislation has been finding how to pay for additional funding for NIH. There is a group of unions and liberal organizations that are urging Congress to hold off on passing the legislation until after Trump is inaugurated, because they feel as though it would give lawmakers time to include provisions to address prescription drug pricing.

Drug Pricing

There have been numerous high profile oversight and investigation hearings in Congress, leading to criticism of the pharmaceutical industry acting as perhaps one of the few things legislators in both parties can agree on. If any movement is to be made legislatively, it would likely be focused on areas that have seen great bipartisan interest, such as expediting the approval of generic drugs in instances of steep price hikes.

However, once again, Trump ran an unconventional campaign as an unconventional candidate. While some believe that Trump will govern as a traditional conservative, there is no prior government experience of Mr. Trump to look to, to make an educated guess as to how he will govern. Trump has been known to embrace policies such as allowing Medicare to negotiate drug prices, price transparency across the field, and importing foreign drugs

Medicare and Medicaid Reform

Republicans have long hoped to reform the nation’s entitlement programs, with full control of the legislative and executive branches. While any major overhaul of Medicare or Medicaid will always have political pitfalls, the odds are more likely than in recent history that there are major changes that could be made. One such suggestion made by House Republicans is changing the Medicare program from a system where recipients are entitled to defined benefits to one that works more like a defined-contribution system, where beneficiaries receive a set amount of federal subsidy dollars to help them purchase coverage.

Conclusion

While it is still too soon to be sure how the election will affect the industry, what is sure is that Pharma stocks immediately benefitted from the election results. Short-term success does not confirm that the gains will continue, but as of November 9, 2016, the NYSE Arca Biotechnology Index jumped 8.9%, Allergan shares rose 8%, Celgene Corp. rose 8.6%, and Pfizer Inc. rose 7%. Drug wholesalers and other industry middlemen also got a boost, with McKesson up 6.4% and Express Scripts up 3.4%.

With a fully-Republican federal government, it is possible that we finally see the stalemate in Washington break. However, with great power comes great responsibility, and the ability of the Republican-led government to govern will be tested over the next two years and has the potential to result in major legislative reforms being implemented during this period, circa 2008-2010, when Democrats controlled the executive and legislative branches.

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