Life Science Compliance Update

August 24, 2016

Federal Circuit Interprets BPCIA Provision on Notice of Commercial Marketing

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In early July 2016, a three-judge panel of the Federal Circuit Court of Appeals issued a unanimous decision in Amgen v. Apotex interpreting a provision of the Biologics Price Competition and Innovation Act (BPCIA) that requires biosimilar applicants to give reference product sponsors Notice of Commercial Marketing at least 180 days before market launch of the biosimilar.

The question the Court faced was whether compliance with the “Patent Dance” provisions of the BPCIA eliminates the need for a biosimilar applicant to provide the aforementioned 180-day notice. The Court determined, in no uncertain terms, that the answer is “No,” and that notice of commercial marketing is always required after FDA’s date of licensure for the biosimilar.

History

This case follows Amgen Inc. v. Sandoz Inc., 794 F.3d 1347 (Fed. Cir. 2015), which also involved the 180-day “Notice of Commercial Marketing” provision and also asked the question of when the notice could effectively be given. In Sandoz, the Court ruled (via a divided panel) that a biosimilar applicant “may only give effective notice of commercial marketing after the FDA has licensed its product.”

Sandoz, however, answered questions surrounding a situation where the biosimilar applicant had deliberately defaulted on the information exchange by not supplying to the reference product sponsor a copy of the biosimilar application pursuant to § 262(I)(2)(A). The question still remained as to whether the consequences for the purposes of the 180-day notice might be different for a biosimilar applicant that did comply with the requirement in § 262(I)(2)(A).

Are the Cases that Different?

The Court rejected the idea that the facts in Apotex should lead to a different result from Sandoz, instead affirming that paragraph (I)(8)(A) is a standalone provision and is not dependent on information-exchange processes, stating,

[T]hat Apotex gave a (2)(A) notice provides only a factual distinction, not a legally material distinction, between its situation and that of Sandoz in Amgen v. Sandoz.  The (8)(A) requirement of 180 days’ post-licensure notice before commercial marketing, we conclude, is a mandatory one enforceable by injunction whether or not a (2)(A) notice was given.

Why Is This Case Important?

One notable aspect of this case is that the decision was unanimous, a very different result from the fractured decision reached in Sandoz. Another important thing to note is that the Court rejected the policy-based argument that its ruling would give reference product sponsors twelve-and-a-half-years (instead of twelve years) of market exclusivity. The Court felt that the twelve-and-a-half-year issue was a necessary consequence of the “early years” of the BPCIA.

While it is possible that this will continue to be an issue for biosimilars directed at “older” reference products, the Court noted that it “should occur less and less as time goes by.” The Court felt that for “newer” reference products, there is nothing in the BPCIA to prevent the FDA from issuing a license to a biosimilar applicant at the eleven-and-a-half-year mark, with the license to be “made effective” at year twelve.

The Court also highlighted the two-phase nature of patent litigation emphasized under the BPCIA and that the post-approval 180-day exclusivity period would permit “second phase” litigation to occur in proper and orderly fashion. The Court felt that “the reference product sponsor needs time to make a decision about seeking relief on yet-to-be litigated patents, and a district court needs time for litigants to prepare their cases, in a complicated area, to provide a reliable basis for judgment.”

What You Don’t Know About AMP Can Hurt You - Part 2 This is Not Your Father’s AMP

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As part of a series on the Average Manufacturer Price (AMP), this month’s article explores the of AMP from the beginning of the Medicaid Drug Rebate Program (MDRP) to where it is today and why there is so much public scrutiny on this once obscure statutory price calculation.

Last month, we explored the origins of Average Manufacturer Price (AMP) and its purpose within the Medicaid Program. AMP is a key component of the Unit Rebate Amount (URA), which is the basis of the quarterly rebate manufacturers pay to states for Medicaid utilization. This month we explore the evolution of AMP from the beginning of the Medicaid Drug Rebate Program (MDRP) to where it is today, and why there is so much public scrutiny on this once obscure statutory price calculation.

  Read Full Article in the August 2016 Issue of Life Science Compliance Update

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August 23, 2016

CMS Seeking Comment on Cardiac Care Model

Cardiac

The Centers for Medicare & Medicaid Services recently announced a new way to pay for the care of patients who have had a heart attack or need coronary artery bypass graft surgery. CMS is seeking comment on the five-year demonstration, which would take effect July 1, 2017, in 98 randomly selected metropolitan areas.

Overview

The demonstration plan works much like the Comprehensive Care for Joint Replacement (CJR) model implemented this year. Similar to CJR, the new bundling plan would reimburse providers a set amount for an entire episode of care, from admission to 90 days after the patient is discharged. Medicare would create targets for spending, and if the total spending is less than the Medicare target, the hospitals may be eligible to receive additional payment from Medicare. If hospitals spend more than the Medicare target, they could be required to pay back Medicare for some portion of the difference. Like the CJR, the cardiac bundling plan is mandatory for hospitals in those areas.

CMS noted in the Proposed Rule that these episodes of cardiac care have been selected because, like the CJR episodes, these episodes represent high-expenditure, high-volume episodes of care for Medicare beneficiaries. However, the episodes typically result in very different patterns of care than those in the CJR. Most episodes are emergent, and not elective, and beneficiaries in these episodes commonly have chronic conditions that contribute to the initiation of the episodes and need both planned and unplanned care throughout the episode.

CMS has noted that it intends to build the Cardiac Care Model on lessons learned and comments received in the establishment of the CJR. One notable distinction is that ACOs are allowed to be collaborators under the new Cardiac Care Model, where they could not be under the CJR. CMS notes that this is due to the interest of ACOs in gainsharing during the CJR model rule making.

Move away from fee-for-service

The Cardiac Care Model confirms what many have suspected, that bundled payment and alternative payment model participation will quickly become mandatory across the industry, requiring all providers to begin to engage with the concepts of care redesign and the prospect of bearing risk. As reported by Modern Healthcare, the expansion of bundles to cardiac care is evidence that the value-based payment movement has gained substantial momentum with the government and private payers alike, said Dr. Susan Nedza, a former chief medical officer at the CMS who is now a senior vice president at MPA Healthcare Solutions. “We've often talked about a tipping point in the movement from fee-for-service to alternative payment models, and I believe today is the day,” Nedza said.

Potential pitfalls?

Joseph Burns, a Massachusetts-based independent journalist, writes that any new payment model may see unintended consequences. He cites Francois de Brantes, executive director of the consulting firm Health Care Incentives Improvement Institute and an expert on bundled payment models, who notes that it could lead some physicians to sell their practices to hospitals, contain too great of risk, and potential produce suboptimal care for patients.

By paying hospitals to lead these programs, physicians can serve only as participating providers rather than as organizers of care and as a result, physicians would have less flexibility to schedule these procedures at a less expensive facility outside the hospital. He is also concerned with the lack of appropriate mechanisms to adjust for the severity of illness, which increases the potential financial harm a hospital could face in caring for patients with highly complex illness levels. Burns writes that evidence suggests that these more complex patients thus tend to be referred to academic centers, which can be more expensive.

Reaction from medical groups

AMA President Andrew W. Gurman, M.D. supports the proposal, linking it to MACRA. Gurman’s statement reads: "In the landmark Medicare Access and CHIP Reauthorization Act (MACRA), Congress encouraged physicians to participate in alternative payment models that support their efforts to redesign the delivery of patient care in ways that improve quality and outcomes while also restraining spending growth. Under this new proposal, CMS is broadening its models so that physicians participating in its cardiac and orthopedic models will qualify as alternative payment model participants under MACRA. This is a good step and in keeping with the goals of MACRA.

Tom Nickels, the Executive Vice President Government Relations and Public Policy at the American Hospital Association is slightly less optimistic, raising concerns of the burdens created by CMS:

“[T]he proposal to bundle payments for cardiac care is the third mandatory demonstration project from CMS in a little over a year. Further, the agency is layering this new program on hospitals already working to implement the mandatory hip and knee bundled payment model. CMS also is proposing to expand and further complicate the hip and knee program less than four months after it began and before evaluating its results. CMS is putting the success of these critical programs at risk. Hospitals are under a tremendous burden to help ensure these complex models work for patients.”

"While we support the concept, it is important that bundled care models be carried out in such a way that clinicians are given the time and tools to truly impact patient care in the best ways possible," says ACC President Richard A. Chazal, MD, FACC. "Changes in payment structures in health care can pose significant challenges to clinicians and must be driven by clinical practices that improve patient outcomes. We are optimistic that CMS will listen to comments, incorporate feedback from clinicians, and provide ample time for implementation of these new payment models."

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