Life Science Compliance Update

July 29, 2016

Ubl Gets Personal, Lays Out Vision for Future of PhRMA


PhRMA President and CEO Steve Ubl recently joined the Medium blogging website and penned his first post, "Health Care Veteran Gaines New Perspective." The post goes through the struggles his family experienced with chronic disease, and how they have shaped his approach to his role at PhRMA. This post is expected to be the first of many where he will dive into topics such as: PhRMA's policy solutions to deliver innovative treatments to patients, promise in the pipeline, and the biopharmaceutical industry's economic footprint, among many other issues.

Ubl opens his inaugural post by opening up about a phone call he received from his wife, a phone call that followed a presentation and was eerily similar to the content provided in the presentation.

Mere minutes after presenting that video [about a mom struggling with caring for a toddler with type 1 diabetes], my wife called to tell me our son, Chris, who had been suffering from fatigue, weight loss and unusual thirst, had just been diagnosed with type 1 diabetes. The moment bordered on surreal.

Ubl goes on to explain that he felt that he knew what patients went through every day: interacting with doctors, nurses, insurance companies, and the various other parts of the health care system. This experience made him realize "I really didn't have a clue about what it's like to care for someone with a chronic medical condition."

While Ubl notes that insulin has come a long way and that researchers continue to innovate and deliver more stable forms of insulin, "that's not the exciting part." He states that what he is "most passionate about" is what is coming. He notes that "America is on the cusp of a golden era of medical innovation" and that we "have the building blocks to revolutionize the treatment of costly and debilitating diseases like cancer and Alzheimer's disease."

Importantly, Ubl does not make this post entirely about him, or entirely about the past and the progress that PhRMA has made in being able to help patients. He places an emphasis on what needs to happen in the future, to ensure that the aforementioned "golden era" can become a reality. He states,

We need policies that make the patient a priority, improve how our health care system works and make it affordable. That's why my organization recently introduced new recommendations and solutions to ensure our policy environment continues to support delivering these innovative treatments to patients like my son.

One such suggestion is to modernize the process. Ubl recognizes that it "takes too long and costs too much to develop a medicine, test it and get it to patients." He believes that the Food and Drug Administration (FDA) should be "empowered to use the latest technologies and methods, such as biomarkers, real world evidence and patient-reported outcomes." Such a process would "speed the delivery of innovative treatments to patients, enhance competition and keep costs down."

Ubl also believes that communication with payers would help to get more value out of health care. He notes that the prohibition of discussions between insurance companies and biopharmaceutical companies about medicines that are on the horizon gets in the way: it "doesn't give insurers the opportunity to plan their budgets, causing uncertainty about insurance premiums and other planning tools." If those barriers were removed, "efficiency and affordability" would be promoted, and it would help to ensure that "the right drug is getting to the right patient at the right time."

Along with many other health care professionals, Ubl does believe that a "well-informed consumer is an engaged and empowered patient." He believes that the information that should be made available to patients isn't so much the information provided in the so-called transparency effort by the Sunshine Act, but instead, in making the following types of information accessible to patients: is the physician or hospital they visit in network? Is the medicine they need covered, or are all medicines for their disease placed out of reach by the health plan?

Lastly, Ubl noted that market distortions need to be addressed, that "the U.S. health care system is largely market-based and has worked well over time, but more can be done to help it work even better." Items to be addressed here include the 340B program and risk adjustment programs. He believes that "helping the market work at its best can help preserve the safety net and improve affordable access to medicines for patients."

While showing such a raw side of himself, Ubl put a personal face on the PhRMA industry. We are hopeful that these blog posts will continue in a positive way forward: showing that the industry is there to support patients, not take advantage of them.

June 17, 2016

PhRMA Members Invested $58.8 Billion in R&D in 2015

In 2015, PhRMA member companies invested $58.8 billion in research and development, up 10.3% from 2014. The new R&D data is based on findings from the 2016 PhRMA annual member survey released in the 2016 Biopharmaceutical Research Industry Profile and the corresponding industry chart pack, Biopharmaceuticals in Perspective, which highlighted the wide-reaching impact of PhRMA member companies on the economy and biopharmaceutical innovation.

In the United States, the biopharmaceutical industry is a driver of economic growth and global competitiveness, and is the most research-intensive sector of the economy. The biopharmaceutical industry invests an average of six times more in R&D as a percentage of sales than all other manufacturing industries. The sector also accounted for approximately 17% of all business R&D spending by U.S. businesses. Overall, PhRMA member companies represented the majority of all biopharmaceutical R&D spending in the United States.

According to Stephen J. Ubl, president and CEO of PhRMA,

Investing more than half a trillion dollars in R&D since 2000, our member companies remain tireless in their commitment to driving innovation and delivering greater value than ever before. It is through this increased R&D that the U.S. biopharmaceutical industry continues to lead the world in the development of new medicines to address unmet medical needs of patients.

The increase in long-term R&D investments made by the biopharmaceutical industry have led to more medicines in clinical development than ever before, more than 7,000 medicines globally. As a sign of how increased R&D can really help, from 2000 to 2015, more than 550 new medicines were approved by the United States Food and Drug Administration (FDA) – including 56 new medicines in 2015 alone. Since only 12% of medicines in clinical trials make it to patients, it is critical that there are pro-innovation policies in place that can help sustain the long-term investments needed to develop tomorrow's cures.

As noted in the recently-released "Medicines in Development for Rare Diseases," the biopharmaceutical industry is currently developing more than 560 medicines for patient with rare diseases. The industry is also working to find cures and other treatments for Alzheimer's, cancer and heart disease, and other devastating conditions. This progress once again makes clear that public policies are needed that maintain a health care system that recognizes the value of medicines and incentivizes researchers to continue to develop new treatments and cures for patients.

Of those 560 medicines currently in development for rare diseases, 151 are for rare cancers and 82 are for rare blood cancers; 1468 are for generic disorders, including cystic fibrosis and spinal muscular atrophy; 38 for neurological disorders, including ALS and seizures; 31 for infectious diseases, including rare bacterial infections and hepatitis; and 25 for autoimmune diseases, including systemic sclerosis and juvenile arthritis.

ALS (also known as Lou Gehrig's disease), is notorious for being a rare disease with no cure. However, new therapies that are currently under development, such as antisense technology against SOD1, are a step toward helping patients and their families manage the disease.

These figures and anecdotes show that the biopharmaceutical industry is delivering true value to Americans by transforming patient's lives, lowering projected health care costs, strengthening the United States economy, and helping to improve the drug review and approval process, all while continuing to invest for the long term health of our country.

January 26, 2016

CMS Final Rule on Covered Outpatient Drugs

The Centers for Medicare & Medicaid Services (CMS) issued the Covered Outpatient Drugs final rule with comment on January 21, 2016. The rule addresses important areas of Medicaid drug reimbursement, as well as some of the changes that were made to the Medicaid Drug Rebate Program by the Affordable Care Act. This final rule also requests comments on the definition of line extension, and that comment period expires on April 1, 2016.

This rule attempts to assist states and the federal government in managing drug costs and establishing a long-term framework for implementing the Medicaid drug rebate program.

Managing Drug Costs

While the Affordable Care Act increased the Medicaid rebates that are paid to the federal and state governments, this final rule went a step further in an attempt to ensure that the federal and state governments will save money in managing Medicare costs over the long term. One of those steps the final rule took was to create a regulatory definition for Average Manufacturer Price (AMP). The AMP is a key metric in the Medicaid drug rebate program, determining manufacturer rebates and pharmacy reimbursement for certain generic drugs that are subject to the Federal Upper Limit (FUL).

The new definition of AMP for inhalation, infusion, instilled, implanted, or injectable drugs (5i drugs) will permit states to collect additional rebates on more expensive infused and injected drugs. Some of these 5i drugs are a constantly increasing expense to the Medicaid program and are not commonly dispensed through a retail community pharmacy.

The final rule also creates an incentive for pharmacies to utilize generic drugs by updating the FUL formula for the payment of certain generic drugs. The rule also implements the Affordable Care Act provision that extended rebates to covered outpatient drugs provided to beneficiaries that are enrolled in Medicaid managed care organizations.

Lastly, the final rule expanded the definition of "states" to include United States territories so that territories like Puerto Rico and Guam can receive savings in their drug expenditures.

Sustain Medicaid Drug Rebate Program

The final rule attempts to clarify many of the changes that were made to the Medicaid Drug Rebate Program under the Affordable Care Act and provides pharmaceutical manufacturers with clear regulatory guidance to help calculate and report drug product and pricing information.

In addition to clarifying the definition of what is considered a manufacturer's "best price" and aligning that definition with the definition of AMP, the final rule clarifies the definitions of Retail Community Pharmacy and Wholesaler in determining AMP.

Pharmacy Reimbursement System

The final rule also attempts to align pharmacy reimbursement with the acquisition cost of drugs and work to ensure that the states pay an "appropriate" professional dispensing fee.

The final rule also creates an exception to the FUL calculation, allowing for the use of a higher multiplier than 175% for certain multiple source drugs, and establishes actual acquisition cost (AAC) as the basis by which states determine their ingredient cost reimbursement. One of the impetuses behind AAC being the ingredient cost reimbursement basis is so that payments are "based on a more accurate estimate of the prices available in the marketplace."

In addition, a professional dispensing fee will be initiated so that the dispensing fee paid to pharmacies reflects the cost of the pharmacist's professional services and cost to dispense the pharmaceutical product to a Medicaid beneficiary.

Comments Sought After

While most portions of the rule are considered final, as previously mentioned, CMS is still considering comments received on the definition of line extension. For the time being, manufacturers should rely on the statutory definition of line extension found at 1927(c)(2)(C) of the Act, and are permitted to use reasonable assumptions in determining whether their drugs qualify as a line extension drug.

While the definition of line extension is not yet solidified in the final rule, CMS did finalize two aspects of the line extension provision: specifying the rebate calculation requirements and requiring the alternative rebate be calculated if there is a corporate relationship between the manufacturer of the line extension drug and the manufacturer of the initial brand name listed drug.



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