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.

January 23, 2017

U.S. Senators Collins and McCaskill Release Drug Pricing Investigation Report

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United States Senators Susan Collins (R-ME) and Claire McCaskill (D-MO), the Chairwoman and Ranking Member of the Senate Aging Committee, respectively, released a report on drug pricing titled, “Sudden Price Spikes in Off-Patent Prescription Drugs: The Monopoly Business Model that Harms Patients, Taxpayers, and the U.S. Health Care System. The 131-page report details findings from the Committee’s bipartisan investigation into abrupt and dramatic price increases for prescription drugs whose patents expired long ago.

The bipartisan duo launched the Aging Committee’s investigation in November 2015 after a series of media reports detailing dramatic drug price increases after the acquisition of decades-old, off-patent, and previously affordable drugs. The investigation focused on four companies: Turing Pharmaceuticals, Retrophin, Inc., Valeant Pharmaceuticals International, Inc., and Rodelis Therapeutics. According to the Senators, evidence gathered by the Committee suggests that additional companies have employed the “monopoly business model uncovered in this report.”

During the course of the bipartisan investigation, the Aging Committee held three different hearings; interviewed patients, doctors, hospital administrators, consumer advocates, health experts, and pharmaceutical industry executives/board members; reviewed more than one million pages of documents obtained from the four companies; and deposed or took transcribed interviews of numerous corporate witnesses.

The report examines what it refers to as a “monopoly business model” used by the four aforementioned pharmaceutical companies to exploit market failures: the way companies acquired decades-old, off-patent, and previously affordable drugs, only to suddenly raise the prices “astronomically.” The report provides case studies of the four companies, explores the influence of investors, assesses the impact of price hikes on various stakeholders, and discusses potential policy responses.

Chairwoman Collins noted, “The skyrocketing prices of prescription drugs affect every American family, particularly our seniors. This report is the culmination of the Senate Aging Committee's year-long, bipartisan investigation into the egregious price increases on a number of decades-old drugs acquired by pharmaceutical companies that act more like hedge funds. We must work to stop the bad actors who are driving up the prices of drugs that they did nothing to develop at the expense of patients just because, as one executive essentially said, ‘because I can.’”

Ranking Member McCaskill stated, “The hedge fund model of drug pricing is predatory, and immoral for the patients and taxpayers who ultimately foot the bill—especially for generic drugs that can be made for pennies per dose. We’ve got to find ways to increase competition for medicines and ensure that patients and their families aren’t being gouged.” 

The report identified several potential policy responses, including:

  • Enact the Increasing Competition in Pharmaceuticals Act, introduced by Chairman Collins and Ranking Member McCaskill, to incentivize competition to address regulatory uncertainty, small market size, and other factors that serve as limitations to generic entry;
  • Encourage generic competition by ensuring the right to obtain samples and simplifying Risk Evaluation and Mitigation Strategies;
  • Consider allowing highly targeted, temporary prescription drug importation to provide prompt price relief for major price increases in off-patent drugs;
  • Take steps to prevent the misuse of patient assistance programs and copay coupons;
  • Reinvigorate the Federal Trade Commission to take greater enforcement action on drug company mergers, operations, and drug market dynamics; and
  • Improve transparency in the health care system.

The report noted that “while release of the report does not indicate unanimous support of each of these policy options, we hope that it will help contribute to the ongoing discussion.”

January 17, 2017

Democrat Senators Send Letter to Trump On Drug Pricing

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United States Senators Sherrod Brown (D-OH) and Al Franken (D-MN) led the charge to send a letter to President-Elect Donald Trump, outlining specific action items they would like to see his Administration taken to help Congress bring down the cost of prescription drugs. The letter was cosigned by eighteen other senators, including Patrick Leahy and Bernie Sanders (both of Vermont), Elizabeth Warren and Ed Markey (both of Massachusetts), Dianne Feinstein (D-CA), Dick Durbin (D-IL), and Kirsten Gillibrand (D-NY).

The letter expressed frustration shared by the senators over the cost of drugs and outlined several ways they believe Mr. Trump can make good on his promise to lower the rising cost of prescription drugs for consumers including: allowing the Secretary of Health and Human Services (HHS) to negotiate better prices for Medicare recipients; requiring drug companies to disclose costs associated with creating drugs so prices are more transparent; putting an end to abusive price gouging; and ensuring competition and innovation that will lead to greater competition and more affordable, effective drugs.

In the letter, the Senators wrote, “It is undeniable that more and more families are struggling to access medications, and in many cases, are forced to choose between paying for prescription drugs and other necessities, like food and shelter. The American public is fed up, with roughly 8-in-10 Americans reporting that drug prices are unreasonable, and that we must take action to lower costs. You now have the authority to push for a future that prioritizes patients. We are ready to advance measures to achieve this goal and we urge you to partner with Republicans and Democrats alike to take meaningful steps to address the high cost of prescription drugs through bold administrative and legislative actions.”

Candidate Donald Trump’s Positions

The letter referenced several promises made by President-Elect Donald Trump on the campaign trail. “During your campaign, you promised to implement bold reforms to bring down the cost of prescription drugs. In fact, you acknowledged that “Congress will need the courage to step away from the special interests and do what is right for America.” You also supported allowing consumers’ access to imported, safe, and dependable drugs from overseas and vowed to negotiate lower prescription drug prices for seniors. And earlier this month you again promised to “bring down drug prices.” While there are many different policy options to achieve lower drug prices, it’s clear that we all agree that all Americans deserve access to safe, effective, and affordable lifesaving medications. As Members of Congress, we are ready to advance bipartisan reforms that will help achieve the goal we all share: reducing the burden exorbitant drug prices are placing on hard-working Americans.”

In an interview with TIME ahead of Mr. Trump’s selection as TIME’s 2016 Person of the Year, he said he doesn’t “like what’s happened with drug prices” and that he will “bring down” the costs of prescription medication. On the campaign trail, Mr. Trump often called for allowing, or even going so far as requiring, Medicare to negotiate with drug companies to lower costs.

With his inauguration only days away, it will be very interesting to see how a President Donald Trump interacts with Congress – Democrats and Republicans alike. It will also be interesting to see how he governs, as there is not much (or, really any) prior experiences to look to for clues.

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