Life Science Compliance Update

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.

October 06, 2017

FDA Releases Draft Guidance for Industry: Statistical Approaches to Evaluate Analytical Similarity

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The FDA announced a draft guidance for industry titled “Statistical Approaches to Evaluate Analytical Similarity”. The draft guidance offers advice to biosimilar sponsors on the evaluation of analytical similarity of a biosimilar to its reference product. FDA says this type of evaluation is performed as part of the biosimilar approval process to support a demonstration that the proposed biosimilar is highly similar to a reference product.

The draft guidance describes “the type of information a sponsor of a proposed biosimilar product should obtain about the structural/physicochemical and functional attributes of the reference product, how that information is used in the development of an analytical similarity assessment plan for the proposed biosimilar, and the statistical approaches recommended for evaluating analytical similarity.”

The draft guidance released is part of a series of guidance documents that FDA is developing related to the biosimilar approval process. Comments on the draft guidance are due to FDA within 60 days; on or around November 22, 2017. All submissions received must include the Docket No. FDA-2017-D-5525 for “Statistical Approaches to Evaluate Analytical Similarity; Draft Guidance for Industry; Availability.”

Guidance Specifics

According to the FDA, the objective of this guidance is to assist sponsors in demonstrating, through an evaluation of the analytical similarity of the proposed biosimilar and reference product, that the proposed biosimilar and reference product are highly similar to support licensure under section 351(k) of the PHS Act. In general, an analytical similarity assessment involves a comparison of structural/physicochemical and functional attributes using multiple lots of the proposed biosimilar product and the reference product.

To address the challenges of conducting appropriate statistical analyses in the evaluation of analytical similarity, FDA recommends using a risk-based approach. This approach to the evaluation of analytical similarity consists of several steps:

  • The first step is a determination of the quality attributes that characterize the reference product in terms of its structural/physicochemical and functional properties.
  • In the second step, these quality attributes are then ranked according to their risk of potential clinical impact.
  • Third, these attributes/assays are evaluated according to one of three tiers of statistical approaches based on a consideration of risk ranking as well as other factors. However, some attributes may be important but not amenable to quantitative evaluation.

FDA recommends that the analytical similarity evaluation begin with an understanding of the structural/physicochemical and functional attributes of the reference product. Based on information obtained about these attributes during development of the proposed biosimilar, the sponsor should develop an analytical similarity assessment plan. A key component of this plan is the description of lots available for similarity testing.

In general, principles for evaluating analytical similarity should be assessed by using appropriate statistic methods to evaluate the analytical data. Methods of varying statistical rigor should be applied depending on the risk ranking of the quality attributes. Sponsors should develop an analytical similarity assessment plan that includes their proposed statistical approach to evaluation and then should discuss this approach with the FDA as early in the development program as feasible.

The final analytical similarity report, which should include the analytical similarity assessment plan, should be included when a 351(k) biologics license application is submitted. The development of the analytical similarity assessment plan is the topic of the first subsection of the guidance, followed by a discussion of FDA’s current thinking on the statistical methods to be applied for evaluation.

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