Life Science Compliance Update

January 27, 2017

Politico Healthcare Briefing: What’s Next for Drug Costs?

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Late last year, Politico Pro’s Health Care Team, along with CVS Health, held a conversation on the future of prescription drug costs, and how to reduce healthcare spending under a new administration. The briefing featured a panel of health care industry experts: Peter Bach, MD, Director of Health Policy and Outcomes at Memorial Sloan Kettering Cancer Center; Jenny Bryant, Senior Vice President of Policy and Research at PhRMA; Ceci Connolly, President and CEO at the Alliance of Community Health Plans; and Chip Davis, President and CEO of the Generic Pharmaceutical Association (GPhA).

The panel discussion focused on the report, “Tackling High Drug Costs in the Trump Era,” and was followed by a discussion with Representative Jan. Schakowsky, concerning efforts on Capitol Hill to reform health care spending.

Panel Discussion

Dr. Bach argued that there was a “fundamental disconnect” between efforts to reduce costs of coverage and bring top treatments to patients. He expressed support for drug price negotiations under the Affordable Care Act, stating that such efforts have saved taxpayers over $10 billion. He also warned that if high-deductible health plans remain popular, tools will need to be developed to indicate to physicians when their prescribing patterns are negatively affecting their patients and have open conversations about the affordability of the drugs they are prescribing.

Ms. Bryant expressed hope that lawmakers can work together to reach an agreement to “move forward to advance pro-market and pro-science solutions.” She stated that drugs have the potential to avert more health care spending for a patient in the future than they cost in the present, and challenged the idea that rising pharmaceutical costs are to blame for increased health care spending. Ms. Bryant challenged the premise that the repeal of the Affordable Care Act (ACA) would be a “looming problem,” instead stating that price negotiations for pharmaceuticals under government programs would not be exclusive to the ACA. She noted that cost-sharing was actually counter-productive for the health care industry, and that the perceived value of a drug is extraordinarily personal, and it is nearly impossible to determine the “average value” for pharmaceuticals.

Ms. Connolly discussed her belief that the drug pricing debate is quickly fading as the new administration approaches, noting that many of President-Elect Trump’s larger ideas are taking focus away from the debate, and that the core of the drug pricing issue (the lack of transparency) should be more thoroughly addressed. Ms. Connolly declared that the debate no longer focuses on specialty drugs, but now also includes drugs for common ailments. She discussed reauthorization of the prescription drug user fee law as a potential vehicle to address pricing transparency, but that event transparency may not be enough to reign in health care spending. She requested that lawmakers focus on mandating transparency so that patients can make more informed decisions with their physicians about which drugs they are prescribed, and encourage affordable treatment options.

Mr. Davis cautioned lawmakers and others that a policy issue as complex as the drug pricing debate cannot be solved with a broad approach, and that by allowing complete transparency of the pharmaceutical industry could wind up forcing competition out of the industry. He encouraged lawmakers to include all aspects of the market in discussions surrounding transparency, and to not discount the opinions of the drug manufacturing industry.

Discussion with Representative Schakowsky

Representative Schakowsky expressed her belief that lawmakers should hold President-Elect Trump to his promises regarding health care and work together to pass legislation that discourages price increases and promotes transparency in drug pricing. She reminded attendees that Trump favored allowing Medicare to negotiate drugs and the re-importation of prescription drugs as two methods to combat rising drug prices and spending. She mentioned her legislation, the FAIR Drug Pricing Act, drafted with Senator Tammy Baldwin, which attempts to shed light on how drug prices are initially decided and influenced, and where profits are being spent.

November 15, 2016

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

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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.

June 21, 2016

CMS: Hospital and Critical Access Hospital (CAH) Changes to Promote Innovation, Flexibility, and Improvement in Patient Care Proposed Rule

CMS recently released a proposed rule updating the Conditions of Participation (CoP) for 6,228 hospitals and critical access hospitals (CAH) that participate in the Medicare and Medicaid programs. By incorporating elements of the Department of Health and Human Services' (HHS) Quality Strategy and Centers for Disease Control and Prevention's (CDC) Strategy to Combat Antibiotic Resistant Bacteria, CMS says the revisions aim to reduce readmissions; ease barriers to care; stem hospital-acquired conditions, including infections; address workforce shortages; and advance non-discrimination protections. Comments on the proposed rule are due by Aug. 15. 

The implication of these and various other provisions will cost the industry between $773 million to $1.1 billion, according to the CMS. However, CMS also expects complying with the various parts of the policy will result in a net savings of up to $284 million.

"Working with tools provided by the Affordable Care Act, hospitals have taken significant steps to improve safety and quality in the past several years. Already, efforts to reduce healthcare-associated infections have resulted in reducing health care costs by nearly $20 billion and saving 87,000 lives," said Kate Goodrich, M.D., M.H.S., Director, Center for Clinical Standards & Quality, CMS. "This proposal further supports hospitals' safety and quality efforts by requiring all Medicare and Medicaid hospitals to have designated leaders in charge of specialized programs to prevent infections, improve antibiotic use, and follow nationally recognized guidelines."

Rule Details

Highlights of the rule include a requirement that hospitals must have infection prevention and antibiotic stewardship programs for healthcare-related infections and for the appropriate use of antibiotics. In addition, hospitals would be required to designate qualified leaders of such programs. In a statement to The Wall Street Journal, the American Hospital Association said, "The emphasis on good infection control and antibiotic stewardship is consistent with the important work hospitals are doing to reduce infections and preserve the effectiveness of our current antibiotics. We join CMS in recognizing the importance of these programs and are always looking to make them more effective."

The rule further requires hospital adopt non-discrimination policies on the basis of race, religion, national origin, sex and gender identity, sexual orientation, age, or disability. CMS specifically says that "discriminatory behavior, or even the fear of discriminatory behavior, by healthcare providers remains an issue and can create barriers to care and result in adverse outcomes for patients." The rule also proposes a clarification of the requirement for patient access to their health records to account for the electronic format in which records may be accessible. It notes that "the patient has the right to access their medical records, including current medical records, upon an oral or written request, in the form and format requested by the individual, if it is readily producible in such form and format (including in an electronic form or format when such medical records are maintained electronically); or, if not, in a readable hard copy form or such other form and format as agreed to by the facility and the individual, within a reasonable time frame."

This rule will also enable hospitals to create a policy that specifies the outpatient departments which would not be required to have a registered nurse physically present and alternative staffing plans established under such a policy. Hospitals would also be required to incorporate quality indicator data related to hospital admission and hospital-acquired conditions. Hospitals already compile data for the Hospital Inpatient Quality Reporting program, the Hospital Value-Based Purchasing Program, the Hospital-Acquired Condition Reduction Program, the Medicare and Medicaid Electronic Health Record Incentive Programs, and the Hospital Outpatient Quality Reporting program.

CMS further proposes that a patient's medical record contain information to justify all admissions and continued hospitalizations, support the diagnoses, describe the patient's progress and responses to medications and services, and document all inpatient stays and outpatient visits to reflect all services provided to the patient. The agency notes that it emphasizes "the distinctions between discharges and transfers as well as between inpatients and outpatients by proposing to revise §482.24(c)(4)(viii) so that the content of the medical record would contain final diagnoses with completion of medical records within 30 days following all inpatient stays, and within 7 days following all outpatient visits."

Some of the other proposals in the rule include changing the existing "licensed independent practitioner" term to only "licensed practitioner" which is intended to facilitate hospitals' use of physician assistants as appropriate. CMS also establishes a requirement that a CAH develop, implement, maintain and evaluate its own QAPI program to monitor and improve patient care and a requirement that individual patient nutritional needs are met in accordance with recognized dietary practices and the orders of the attending practitioner or a qualified, state-approved nutrition professional.

   

   

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