Life Science Compliance Update

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 We repealed the core of disastrous Obamacare -- the individual mandate is now gone.”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.

 

December 01, 2017

Trump Nominates Alex Azar to Head HHS 

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A few weeks ago, President Donald Trump nominated Alex Azar to lead the Department of Health and Human Services (HHS), following in the footsteps of Tom Price. The nomination – announced where else other than Twitter – said “Happy to announce, I am nominating Alex Azar to be the next HHS Secretary. He will be a star for better healthcare and lower drug prices!” 

Azar has a history of involvement in the pharmaceutical world, including serving as HHS General Counsel and Deputy HHS Secretary under President George W. Bush. Mike Leavitt, the HHS Secretary when Azar was Deputy had kind words about his former colleague, noting, “He’s precise, highly motivated, he has high standards for performance for himself and for other people. He had full responsibility as deputy secretary for the regulatory processes at HHS.” 

As HHS general counsel, Azar worked on the administration’s response to the 9/11 terrorist attacks and the ensuing anthrax attacks, stem-cell policy and the advent of the Medicare prescription drug benefits. During his tenure as deputy secretary, he pushed for greater disclosure of prices associated with medical services to help foster competition and contain costs. He also backed converting medical records to electronic form. He was confirmed for those previous positions by unanimous voice vote. 

Azar recently spent five years at Eli Lilly, which makes several blockbuster medications, including the antidepressant Cymbalta and several forms of insulin. Insulin prices have drawn widespread ire because they keep spiraling higher, even though insulin has been around almost a century. During his tenure at Lilly, Azar sat on the Board of Directors of the Biotechnology Innovation Organization (BIO).  

"Drug corporations have undue influence over health policy in America, and they use it to make money on the backs of patients and taxpayers," said Ben Wakana, executive director of Patients For Affordable Drugs, an advocacy group. Even still, Wakana supports Azar and believes that he has a good history, "Mr. Azar is well-qualified and has the chance to stand up for patients because he knows exactly how our drug pricing system is broken. If he wants to take meaningful action to lower drug prices, we want to help him." 

Azar currently serves on the board of HMS Holdings, a Texas company that helps health insurance companies cut costs, and runs his own biotech and health insurance consulting company, Seraphim Strategies. 

Congressional Reaction 

Senate Majority Leader Mitch McConnell: “Alex brings a wealth of private and public sector knowledge that will prepare him well for this crucial role. The Secretary of HHS oversees some of the nation's most important programs, including Medicare and Medicaid in addition to safeguarding public health at the Centers for Disease Control, advancing cures at The National Institutes of Health, and working through the Food and Drug Administration to get those cures to patients. I look forward to meeting with him soon to discuss his outlook and vision for the department, particularly the opioid epidemic that has hurt so many Kentuckians and so many Americans across the country.” 

Speaker of the House Paul Ryan: “Alex Azar is an experienced and highly capable leader who knows what it takes to tackle big challenges in health care. The Senate should swiftly confirm him as our next @HHSGov secretary.” 

Advocacy Groups in Support 

There are many advocacy groups and commentators who support Azar’s appointment. A few are sampled below.  

American Hospital Association President and CEO Rick Pollack: “We welcome the nomination of Alex Azar to be Secretary of the Department of Health and Human Services (HHS). We are confident that his extensive background in business, health care and medicine distinguishes him as a uniquely qualified candidate for the vacancy. The expertise garnered from his career in the private sector and prior public service at HHS as Deputy Secretary will prove to be particularly valuable in addressing the serious challenges facing our nation's health care system today. We look forward to working side-by-side with him to achieve our mission of advancing the health of the patients and communities we are privileged to serve.”  

Politico Healthcare Editor Adriel Bettelheim:“Azar built a reputation as a pragmatist during stints as HHS deputy secretary and general counsel in the George W. Bush administration.” 

Doctor Roger Klein:“I applaud President Trump’s nomination of Alex Azar to lead the Department of Health and Human Services. As a former Deputy HHS Secretary and attorney with extensive private sector business experience, he brings the necessary skills and expertise to confront the disruption and dislocation the Affordable Care Act has caused. Alex Azar’s appointment will add stability to HHS, and help improve healthcare for millions of Americans.” 

 What Does the Future Hold 

Republicans predicted that, if confirmed, Azar would pursue Trump’s goals to tilt health-care policies in a more conservative direction through executive action. Leading Democratic health policy experts, while not sharing Azar’s views, said he is well qualified for the post.   

In today’s world, predictability is sparse, but based on past comments and statements, it is possible that Azar will attempt to move authority to the states over Medicaid, turning over the program to the states to make them “better stewards of the money.” He has previously alluded to a path forward by having HHS use its regulatory powers to allow states to customize the rules around Medicaid. Seema Verma, the CMS Administrator, also favors giving states waivers to create their own Medicaid Systems.   

However, where Azar stands on the issue that has just about everyone all riled up – drug prices – is much less clear. While drug prices were a hot topic during the 2016 presidential campaign, President Trump has not made it a priority this year. Interestingly, he did mention drug prices when announcing Azar’s nomination on Twitter.  

The White House believes that Azar’s combination of public and private sector experience will serve him well at a time when the administration is seeking big changes to Obamacare and regulatory agencies like the FDA.  

November 29, 2017

Hospitals and Health Systems Sue CMS Over 340B Provisions

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Three hospital groups, along with three health systems, have filed suit against the Department of Health and Human Services (HHS) regarding the Centers for Medicare and Medicaid Services’ (CMS) recent regulation that made substantial cuts to hospitals for 340B drugs. The American Hospital Association, Association of American Medical Colleges, America’s Essential Hospitals, Eastern Maine Healthcare Systems, Henry Ford Health System, and Fletcher Hospital Inc. brought the suit, challenging the changes made to the 340B program that were included in the calendar year 2018 hospital outpatient system (OPPS) and ambulatory surgical center payment systems final rule that CMS released earlier this month. The 340B provisions of the final rule, including a 27 percent reduction in the reimbursement rate for hospitals for 340B drugs, are scheduled to take effect on January 1, 2018.

The lawsuit contends that while CMS has the statutory authority to “calculate” and “adjust” drug payment rates, it does not have statutory authority to reduce those rates by nearly 30 percent. The complaint also states that the 340B provisions of the final rule “undermine the 340B Program by depriving eligible hospitals of critical resources Congress intended to provide those hospitals through 340B discounts.” The groups also note that the cuts will undermine critical programs that provide health services to vulnerable and underserved populations.

On July 13, 2017, CMS issued its proposed rule on OPPS and Ambulatory Surgical Center payment systems for the Calendar Year 2018. In addition to updating the OPPS with 2018 rates, CMS proposed to change how Medicare pays certain hospitals for separately payable drugs purchased under the 340B Program. CMS justified this proposed change by stating that the new rate better recognizes “the significantly lower acquisition costs of such drugs incurred by a 340B hospital,” and that it “better represents the average acquisition cost for these drugs and biologicals.” On November 1, 2017, CMS issued the final version of the 340B Provisions of the OPPS rule, adopting the proposed rate of ASP minus 22.5% for drugs purchased under the 340B Program.

The plaintiffs believe that the 340B Provisions of the OPPS Rule also exceed the Secretary’s authority because they thoroughly undermine the 340B Program by depriving eligible hospitals of critical resources Congress intended to provide those hospitals through 340B discounts.

According to the complaint, the Plaintiffs have used the 340B Program to provide critical healthcare services to their communities, including to underserved patient populations in those communities. The Plaintiffs allege that they, and the populations they serve, would suffer significant and immediate harm from the negation of the cost-reimbursement differential through the 340B Provisions of the OPPS Rule.

The harm would come from the 340B provisions of the OPPS rule because it would deprive the hospitals “of millions of dollars of savings currently generated from the differential between Medicare reimbursements and 340B discounts.”

The hospitals have asked the court to either strike the changes in payment methodology for 340B drugs from the final rule and direct CMS to use the methodology used in calendar year 2017 or issue a preliminary injunction suspending the effective date of the changes until the lawsuit is concluded.

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