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Sept. 15, 2017

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FEATURED STORY
 

Sanders Getting the Party Started for Later. Way Later

 
 

Healthcare remained a hot topic in Congress this week with competing healthcare bills and 2 more hearings by the Senate Health, Education, Labor, and Pensions (HELP) Committee on how to stabilize the Affordable Care Act (ACA).

Tuesday’s HELP hearings focused on state flexibility, including the idea of altering the actuarial value requirements in the 1332 waivers, something Committee Chairman Lamar Alexander (R-TN) supports. The concern of Democrats is that while changing the actuarial values allows for additional state flexibility and the ability to offer plans at lower price points, it also permits plan offerings that may not be comprehensive and/or could discriminate against beneficiaries.

Thursday’s hearing focused on stabilizing premiums in the individual market. In his opening comments in Thursday’s hearing, Chairman Alexander described 3 key features he saw as necessary moving forward: 1) continued funding of cost-sharing reduction payments; 2) offering “copper plans” with lower premiums and higher deductibles; and 3) offering states more flexibility in benefit design and plan approval.

This week, the much-anticipated Graham-Cassidy bill (H.R. 1628) was released. The bill focuses on state flexibility through block grants and would repeal the individual and employer mandates as well as the medical device tax.

And Bernie Sanders (I-VT) introduced his “Medicare for All” bill with 16 co-sponsors—all Democrats. The bill would, as the title suggests, open up Medicare for everyone (over a 4-year transition period) and be paid for by payroll taxes. Costs would be cut by Medicare drug price negotiation and eliminating the role of insurers. No one believes this bill has a chance of passing, but it looks to establish a beachhead in the health-reform conversation that is likely to continue.

To use the budget reconciliation process, requiring only a simple majority, the bills would have to be passed by the end of September. It all seems unlikely, but the conversations continue as we march closer to open enrollment for 2017. The best-case scenario for many of those with Exchange coverage is that the Trump Administration provides some stability for the benefit (like promising to cover cost-subsidies) while Congress continues to determine the legislative path forward.

 

Data Strategy: The Connective Tissue Required to Bring Cell and Gene Therapies to Market

 
 

Drug Discovery & Development

Data strategy is the connective tissue that weaves together a strategic value story required to bring cell and gene therapies to market successfully. In Drug Discovery & Development magazine, Michael Eaddy, PharmD, PhD, Vice President of Scientific Consulting at Xcenda, gives in-depth insights about how manufacturers can leverage their data. Learn more

 

 

 
LEGISLATIVE UPDATE
 

California Is (Still) Not Making Friends With Pharma

 
 

This week, 2 bills in California moved closer to authorizing state authorities with the ability to limit the usage of branded drug coupons and to require pricing disclosures by manufacturers and payers.

On Tuesday, the Senate passed Assembly Bill (AB) 265, which would prohibit manufacturers from offering any “discount, repayment, product voucher, or other reduction in an individual’s out-of-pocket expenses” for any prescription if a lower-cost generic is covered under the individual’s health insurance. Likewise, the prohibition applies to any prescription covered by the individual’s health insurance on a lower cost-sharing tier designated as “therapeutically equivalent.” Earlier this year, similar bills were proposed in New Jersey SB 2769 and New Hampshire HB 443.

Proponents of AB 265 argue that steering patients to less-expensive alternatives is a common-sense approach to keeping cost down. However, as reported in the August 18, 2017 issue of Health Policy Weekly, empirical studies demonstrate the opposite may occur in chronic disease populations. Stable patients who are forced to change medications are more likely to incur longer hospital stays and require more physician office visits and more lab testing.

On Monday, the State Assembly passed Senate Bill (SB) 17, impacting both manufacturers and health plans. Insurers would be required to disclose pricing information to state agencies and to make publicly available the following information:

  • 25 most commonly prescribed drugs
  • 25 most expensive drugs
  • 25 drugs with greatest annual increase in spending

Manufacturers would be required to issue notices of price increases at least 60 days in advance to both public and private purchasers. Mandated reporting would apply to drugs with a wholesale acquisition cost (WAC) of more than $40 for a course of therapy, or when a new-to-market drug has a WAC exceeding the threshold set for a specialty drug under the Medicare prescription drug benefits (Part D) program (currently $670 per month at an in-network retail pharmacy).

The manufacturer may be subject to civil penalties if it fails to:

  • List dollar amounts for future increases of the drug
  • Include a schedule of cost increases for the previous 5 years of the drug
  • Include the drug’s sales volume
  • Issue a statement “regarding whether a change or improvement in the drug necessitates the price increase”

Commenting on states attempting to moderate drug prices and specifically SB 17, the Pharmaceutical Research and Manufacturers of America (PhRMA) noted such legislation does little to actually lower the cost of prescriptions. In burdening manufacturers and state agencies with red tape, disclosure bills become counterproductive and conceal the true cost of prescriptions from the public by not including rebates and other discounts. Notable disclosure bills surfaced earlier this year in Nevada SB 539, Maryland HB 631, and Pennsylvania HB 161.
 
Both California bills are expected to progress to the governor’s office, provided recent amendments are accepted by their originating bodies. Other states with lawmakers of a similar mindset (as well as a host of other stakeholders) have been watching the bills’ progress through the California legislature, and many are anxiously awaiting Governor Jerry Brown’s (D) decision.

 

What Do Payers Think About Digital Health Technologies?

 
 

Digital health technologies (DHTs) could revolutionize how we approach our health, as well as how we access healthcare services. Despite their potential, there is a gap between payer interest and payer coverage for DHTs.

We conducted a double-blinded online questionnaire to survey 61 payer decision makers from plans that cover approximately 180 million lives in the US. Explore the results through this interactive experience to learn how payers are thinking about digital health and how pharmaceutical manufacturers can communicate the value of DHTs.

 

 

 
 
REGULATORY UPDATES
 

So, How Much Does It Really Cost to Bring a Drug to Market?

 
 

A new study published Monday in JAMA Internal Medicine surmised the median cost to develop a cancer medication is approximately $648 million. The authors, from Oregon Health and Science University and Memorial Sloan Kettering Cancer Center, identified 10 companies that each had a single cancer drug on the market and reviewed the companies’ research and development (R&D) costs, as reported in their Securities Exchange Commission (SEC) filings.

While the median cost to develop a new cancer product was $648 million, the authors then added roughly $100 million to account for what could have been earned had that money been invested instead. According to the study, the total revenue from sales of these 10 drugs since approval by the Food and Drug Administration (FDA) was $67 billion, compared with total R&D spending of $7.2 billion ($9.1 billion, when including 7% opportunity costs).

High drug prices are often cited as contributing to the sizable R&D necessary to bring a drug to the US market. A recent estimate of R&D spending from an analysis conducted by the Tufts Center for the Study of Drug Development is $2.7 billion (2017 US dollars). Conversely, the consumer group, Public Citizen, estimates it takes $320 million (2017 US dollars) to develop a drug. While these 2 other studies are at opposite ends of the development-cost spectrum, the new study is much closer to the lower end, which has sparked conversation and debate within the industry.

The study cites its limitations, such as the small data set, the possibility the SEC filings were not accurate, the singular focus on cancer drugs, tax breaks not accounted for in the analysis, and the lack of R&D transparency in general. It could also be said that the analysis done by the authors does not account for the risk associated with pursuing these products—most importantly, accounting appropriately for products that fail to come to market and underestimating R&D costs (starting at 2 years before mention in literature). There are also concerns with how sales revenues were determined (timing and what formulation).

So how much does it really cost to bring a drug to market? The answer, of course, is highly dependent on the product and company, but it probably is somewhere between the Tufts study and these JAMA results. There is intense pressure for companies to turn R&D expenditures into approved products and, ultimately, revenue. Patients (and shareholders) demand it.

 

Nice Try, But. Physician-Focused Payment Models Found Wanting

 
 

Late last week, Secretary of Health and Human Services (HHS) Tom Price issued decisions on several proposed physician-focused payment models (PFPMs) that would qualify as alternative payment models (APMs) under the Quality Payment Program (QPP) introduced by the Medicare Access and CHIP Reauthorization Act of 2015 (MACRA). The legislation also created a Technical Advisory Committee to evaluate proposals for PFPMs and provide commentary and recommendations.

After reviewing the committee’s reports, Secretary Price responded to 3 PFPM proposals:

  • Project Sonar: Specialty medical home model incorporating evidence-based medicine with proactive patient engagement in the irritable bowel disease (IBD) population
  • American College of Surgeons (ACS)-Brandeis Advanced APM: Episode-based payment model including procedures performed in outpatient settings and episodes for acute and chronic conditions
  • COPD and Asthma Monitoring Project: Care model utilizing telemedicine to improve monitoring and management of patients with chronic obstructive pulmonary disease (COPD) and asthma

Below are the details of HHS’ recommendations about next steps for the 3 PFPM proposals.

Other proposals for PFPMs have been received, and even more are currently under committee review. HHS is driving toward a value-based healthcare system and—since there is no single approach to APMs that will work for all physicians or their patients—the department is relying on providers and relevant stakeholders to suggest innovative models of payment and delivery.

 

Getting the Skinny on Genes at FDA: Commissioner Forecasts Policy Changes

 
 

Last Thursday, FDA Commissioner Scott Gottlieb spoke at the Research America 2017 National Health Research Forum, focusing on how the FDA is responding to regulations involving immunotherapy and chimeric antigen receptor T cell therapy (CAR-T) and agency plans to modernize regulating these products.

The FDA currently has more than 550 active investigational new drug applications (NDAs) related to gene therapy products and has 76 active investigational NDAs related to CAR-T cell products. The Commissioner acknowledged that while there have been many advances scientifically, the FDA’s policies and regulatory framework need updating to properly evaluate the safety and effectiveness of new technology platforms.

As the FDA takes steps to continue to advance modernization efforts, Gottlieb indicated more emphasis will be placed on how new technologies perform in clinical use, during routine care, and, particularly, over the long term—similar to how the FDA evaluates many medical devices.

Commissioner Gottlieb also discussed how the FDA approaches the early, pre-clinical stages of development, especially relating to new technology platforms and what new approaches the agency is implementing, such as:

  • New policies for earlier engagement with product developers
  • Eliminating unnecessary pre-clinical tests or suggesting optimal pre-clinical or clinical designs
  • Modifying policies for how clinical trials are initially designed

The Commissioner maintained that the FDA’s aim is to ensure policies match the sophistication of the science the agency is asked to evaluate, adding that the modernization of these policies will be incorporated into the FDA’s forthcoming “Strategic Policy Roadmap.” The Roadmap will serve as an organizing framework—a strategic plan for unveiling and advancing the major policy efforts planned across the FDA.

On Monday, Commissioner Gottlieb spoke before the 2017 Regulatory Affairs Professional Society (RAPS) Regulatory Convergence. During the speech, the Commissioner said he hopes to bring the agency’s policies on commercial speech in line with recent industry-friendly precedents. He acknowledged that the FDA is currently operating in a period of ambiguity and said the agency must have clear guidelines before it can feel comfortable enforcing without fear of conflicting with recent case law.

On Tuesday, PhRMA issued a statement regarding Commissioner Gottlieb’s address to the 2017 RAPS Regulatory Convergence. PhRMA reiterated that America’s biopharmaceutical research companies are committed to working with the FDA to explore innovative approaches to drug development and clinical trials aimed at enhancing the efficiency of the development and review processes, and accelerating patient access to safe and effective medicines.

Significant policy and regulatory changes in regard to new technologies are forthcoming at the FDA. Commissioner Gottlieb’s speeches come on the heels of the FDA approving the first gene therapy, and biopharmaceutical manufacturers have an opportunity to participate in the policy and regulatory changes the agency will make about evaluating new technologies.

 

Using Data to Build the Case for New Payment Models

 
 

To aid researchers, policymakers, and other stakeholders with estimating the costs of new bundled-payment initiatives and to provide insight into Medicare spending patterns, authors of a recent Health Services Research article calculated per-patient monthly and yearly costs for 4 common cancers: breast cancer, prostate cancer, lung cancer, and colorectal cancer.

As cancer spending continues to rise, new innovative models are being developed to help address the high costs by incentivizing efficiency while maintaining or improving quality. Bundled payment models, such as the Centers for Medicare & Medicaid Services’ (CMS) Oncology Care Model, move away from fee-for-service (FFS) reimbursement to basing reimbursement, penalties, and bonuses on providing care over a period of time (eg, per month, per 6 months).

The authors of this study linked the 2007–2012 National Cancer Institute’s Surveillance, Epidemiology, and End Results (SEER) data with Medicare FFS data to estimate expenditures by cancer type, stage at diagnosis, and medical service category. Key findings from the study, reported at the per-patient level, include:

  • Mean spending during the year of the cancer diagnosis ranged across the 4 cancers (in 2013 dollars): $35,849 for breast cancer, $26,295 for prostate cancer, $55,597 for lung cancer, and $63,063 for colorectal cancer. There was less variation in spending during the year of death, with a range of $59,912 to $72,883 for the 4 cancers.
  • For all stages of breast, lung, and colorectal cancer, mean spending per month in the first year after the cancer diagnosis peaked the first month, declined during the following 3 months, and then stabilized for the remaining months of the year.
    • Mean spending per month for prostate cancer patients in stages I–III increased for the first 4 months before declining at a slow rate during the remainder of the year.
  • For all 4 cancer types, mean spending per month steadily increased during the last 6 months of life, with the highest expenditures reported in the last month of life. Inpatient spending heavily drove the costs in the last month of life.

With CMS and other payers continuously rolling out new bundled payment and care models, these data could help researchers test the impact of the models on practices, patients, and other stakeholders.

 
HEARD ON THE STREET
 

“We are writing to request additional information regarding the Administration’s plans to cut funding for the Affordable Care Act’s (ACA) Navigators and slash funding for open enrollment marketing and advertising by 90 percent. The Administration’s continued efforts to depress Marketplace enrollment and sabotage the ACA threatens to destabilize insurance markets and raise premiums for millions of consumers, contrary to the President’s promise to provide quality, affordable ‘insurance for everybody.’”

 

Letter sent by Senate Energy and Commerce Committee Democratic leadership to HHS Secretary Tom Price and CMS Administrator Seema Verma about the Trump Administration’s plans to reduce funding for the ACA Navigators program and open enrollment marketing and advertising, September 11

 
POLICY BY NUMBERS
 

9.1% to 8.8%

 

From 2015 to 2016, health insurance coverage in the US decreased 0.3%, to 8.8%.

Source: “Health Insurance Coverage in the United States: 2016,” Census Bureau, September 2017

 
UPCOMING MEETINGS & CONFERENCES
 

Cell & Gene Meeting on the Mesa

October 46 l LaJolla, CA
The Cell & Gene Meeting on the Mesa is a 3-day conference bringing together senior executives and top decision makers in the industry with the scientific community to advance cutting-edge research into cures. World Courier, part of AmerisourceBergen, is proud to be a Gold Sponsor of this unique event. The meeting features a nationally recognized Scientific Symposium, attended by leading researchers and clinical experts from around the globe, in conjunction with the industry’s premier annual Partnering Forum, the first event of its kind dedicated solely to facilitating connections in this sector. Learn more

 

AMCP Nexus 2017

October 1619 l Dallas, TX
Join Xcenda at this year’s AMCP Nexus 2017 conference in Dallas, TX. AMCP Nexus 2017 will explore perhaps the most transformative change taking place in healthcare: how we pay for healthcare and the emergence of value as the defining factor and goal. Xcenda’s team of experts can help you navigate the value landscape and maximize access for your product. Visit Xcenda’s booth in The Exchange at #503, or contact us to schedule a meeting at the conference. Learn more

 
 
 

Count on Health Policy Weekly for an at-a-glance view of legislative and regulatory developments and news that impacts the healthcare industry.

 
 
 
 
 
FEATURED CONTRIBUTORS
 

EDITOR-IN-CHIEF:
Jennifer Snow
Director,
Health Policy
Xcenda

MANAGING EDITOR:
Scott Shields
Associate Director,
Health Policy
Xcenda

 

ADVISORY BOARD:

Peyton Howell, MHA
President | Global Sourcing & Manufacturer Relations | AmerisourceBergen Corporation

Amy Grogg, PharmD
Senior Vice President | Strategy & Commercialization | AmerisourceBergen Corporation

Tommy Bramley, PhD, RPh
President | Xcenda

Stacie Heller
Vice President | Government Policy | AmerisourceBergen Corporation

Rita Norton
Senior Vice President | Government and Public Policy | AmerisourceBergen Corporation

Ana Stojanovska
Vice President | Reimbursement & Policy Insights | Xcenda

CONTRIBUTING AUTHORS:

Zachary Bridges | Dan Cadle | Andrew Gaiser | Maureen Holmes | Jennifer Le | Scott Shields | Jennifer Snow | Stephen Wilson

PRODUCTION:

Laurie Kozbelt | Ellen Olson | Olivia Ziebarth

 

Sept. 15, 2017

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