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Pharmacy Groups Want to Change the FDA’s REMS Authority

Pharmacy & Therapeutics Journal...January 2012

Battles Loom as Congress Aims to Pass a Major Bill by September 2012


     Congress's return to Washington in January starts the clock ticking on a 10-month deadline for updating the Food and Drug Administration's (FDA) new drug approval and post marketing authorities. Those were last tweaked in 2007, when Congress passed the FDA Amendments Act (FDAAA), a mélange of reforms wrapped around the fourth iteration of the Prescription Drug User Fee Act (PDUFA), the law first passed in 1992. The PDUFA specifies the fees drug companies must pay when submitting applications to the FDA for approval of a new drug or biologic. The fees supplement--in fact the user fees exceed--annual congressional appropriations and help underwrite the salaries for staff the FDA needs to comb through those applications, and help both speed up FDA approval times and prevent backlogs.
       Back in 2007, Democratic titans Rep. Henry Waxman (D-Calif.) and former Sen. Edward Kennedy (D-MA) were ascendant, and pushed a wheelbarrow of post-marketing safety reforms through Congress. Drug companies agreed to pay higher user fees for faster FDA approval times, and agreed, for the first time, that user fees--to the tune of $225 million over five years--could be used for the new safety programs.
       What a difference half a decade makes. Republicans now essentially dictate congressional action. The FDA, well aware of the GOP's anti-regulatory bent, has produced a PDUFA V proposal heavily weighted toward "process" improvements in assessing new drug applications and cautious commitments to consider taming some of the unruly aspects of some of the 2007 safety measures, such as Risk Evaluation and Mitigation Strategies (REMS) which the 2007 law allowed the FDA to require for drugs whose risks are higher than what the FDA might otherwise like to see in a new drug. A REMS might require just distribution of a MedGuide or can be much more complicated forcing physicians and pharmacists to follow numerous "elements to assure safe use (ETASU)."
    The REMS that drug companies have produced--the FDA has not established a standard format--have come in different sizes and colors, making life difficult for pharmacists. The drug companies haven't been much happier with the FDA's unfocused administration of its REMS authority, which the agency, in its PDUFA V proposal, admits needs to be clarified.
     That will be the big issue for the pharmacy community as Congress begins to fashion the 2012 version of FDAAA, which will be wrapped around PDUFA V, which will specify higher fees for drug companies. But revamping REMS won't be the only issue. Pharmacists are concerned about another FDAAA provision: the FDA creation of an active Sentinel adverse reaction alert system, meant to supplement its existing passive MedWatch system, which has been roundly criticized for its shortcomings. In fact, expect both Democrats and Republicans, often at the behest of interest groups, to toss all sorts of proposals in what will a stew pot of FDA reform, simmering all year on the congressional front burner.
     The FDA got the reform process started in late August when it published a draft commitment letter  which outlined the kinds of process changes it wants to make to improve the current drug approval and post-marketing programs. The agency aired those proposals at a public meeting at FDA headquarters on October 24. The guts of that initial effort are an increase in drug company user fees to $712 million in fiscal 2013, which starts October 1, 2012. The fees amounted to $672 million in fiscal 2012. In exchange, the FDA essentially retains the PDUFA IV timeframes of approving 90 percent of priority applications for new drugs and biologics within six months and 90 percent of standard applications within 10 months. There is no proposed change here, which isn't all that surprising, given the fact that the FDA, once it digested some of the FDAAA required reforms, has done a good job of approving new drug applications.
     The guts of this program is additional meetings the FDA promises to hold with an applicant prior to submission of a new drug application, and during the application process. In addition, with an eye to helping drug companies speed up clinical trials, the  FDA will develop a dedicated drug development communication and training staff focused on "enhancing communication" between FDA and sponsors during drug development. Other improvements are development of staff capacity to review submissions that contain complex issues involving pharmacogenomics and biomarkers and advancing development of patient-reported outcomes (PROs) and other endpoint assessment tools.
      With regard to REMS and Sentinel, the FDA made some vague commitments to hold workshops and listen to complaints.
     The FDA put together its PDUFA proposal after hearing ideas from all interested parties starting in early 2010. The agency winnowed that "wish list" down, dropping numerous proposals, and then submitted the ideas to the pharmaceutical industry, seeking its buy-in since the drug companies pay the user fees. 
     At the October 24 meeting, representatives of consumer and patient groups gave the PDUFA V proposals mostly lukewarm praise, but highlighted ideas that had not been included, criticized the fuzziness of the REMS and Sentinel enhancements and generally complained that the issue of drug "safety" was being made a handmaiden to the issue of easing the path to approval of new drugs. Celia Wexler, Washington Representative for the Union of Concerned Scientists, says she was surprised by the "tone" of the FDA's PDUFA V proposals. "I don't have any problems with improving the FDA's new drug review process, but this proposal is so wedded to timelines that it sends the message that promptness trumps all."
     Janet Woodcock, M.D., Director of the FDA Center for Drug Evaluation and Research (CDER), says she hopes that "PDUFA can go through Congress cleanly." By that she means she hopes there are no policy initiatives tacked on to the process improvements the FDA proposed in the draft commitment letter. The FDA will deliver a formal PDUFA V proposal to Congress in  January, and may make some changes to reflect some of the criticisms heard on October 24. Whatever its final shape, expect members of Congress to attempt to graft on policy initiatives in the areas of drug advertising, off-label use, conflicts of interest at FDA advisory committees, drug recall authority, inspection of foreign facilities and much more.
       There is a good reason why the FDA's PDUFA V "process improvement" proposals are so unambitious.  Jeff Allen, PhD, Executive Director, Friends of Cancer Research, says the FDA approval process is working fine as is. The FDA is approving new cancer drugs twice as fast as the European Union does. Of the 27 new cancer drugs that came on the market since 2003, all have been available in the U.S. before they were available in Europe. Allen says the "unsustainable crisis we are nearing" is the 15 years and $1 billion it takes to bring a new drug to market. "The FDA part of this is such a small component of the problem," he adds.
      "My hope is that as this discussion moves ahead that all stakeholders will acknowledge that there are challenges to new drug development that are much bigger than just FDA review," says Allen of the Friends of Cancer Research. "As other components of a resulting bill are mulled by Congress and others perhaps some attention can be given to elements that could go after addressing the 15year/$1B challenge drug development challenge."

     But the key objective for pharmacy groups is a revision of the REMS provisions of the 2007 FDAAA. "That is our key priority," says Marcie Bough, Senior Director, American Pharmacists Association (APhA).

    The good news here is that almost all stakeholders, including the drug companies, think that the 2007 REMS provisions have been troublesome. The pharmaceutical companies complain that the FDA has no black-and-white criteria for determining when a REMS is necessary, that the FDA requires them willy nilly. Pharmacy groups complain that the REMS  the FDA has approved have been all over the place, in terms of their provisions, complicating life for pharmacists, both in retail, hospital and nursing home settings. Not only have the REMS had workflow implications for pharmacists, they have, at least in the hospital setting, added to confusion and opened the door to potential medical mistakes.
     Kasey Thompson, Vice President, Office of Policy, Planning and Communications, American Society of Health-Systems Pharmacists, says, "It is not clear that REMS are being created for patient safety." He said some drug companies are creating REMS as marketing tools. REMS which include ETASU requirements have in some instances led to a problem the ASHP calls "brown bagging." That describes a situation where a patient has to obtain an injectable product from a specialty supplier and then bring that product with them for administration in the hospital.
     The FDAAA essentially substituted REMSs for the Risk Minimization Action Plans (RiskMAPs) the FDA had been requiring of some new drugs since PDUFA III. After 2007, those RiskMAPs were automatically converted into REMSs, and new first- time REMSs were issued. Many of these essentially required only that pharmacists provide a patient with a MedGuide when he or she picked up his or her prescription. In some other instances, REMSs include  ETASU which the FDA, in a Federal Register notice previewing the October 24 public meeting, admitted "can be challenging to implement and evaluate." The agency acknowledged: "Our experience with REMS to date suggests that the development of multiple individual programs has the potential to create burdens on the health care system and, in some cases, could limit appropriate patient access to important therapies."  REMS are designed from scratch by the pharmaceutical manufacturer and then subject to negotiations with the FDA during the new drug approval process. They can require such tools as prescriber training or certification, pharmacy training or certification, dispensing only in certain health care settings, documentation of safe use conditions, patient monitoring, and patient registries. Through March 2011, according to the APhA, the FDA had approved 177 drugs which included REMS, some of them converted from RiskMAPs. The majority of these, 123, were MedGuide-only. Of the remaining 54, 37 included a communications plan and 17 included ETASU (12 approved since passage of FDAAA, five being RiskMAPs converted to a REMS).
     In terms of impact on a pharmacy, a REMS can involved a number of administrative, training/education, registration, monitoring or other restricted distribution elements. that can strain workloads, and thus may encourage prescribers and dispensers to do such things as seek alternative drug products that may not be as effective or require a REMS, or limit patient access by not prescribing, distributing or dispensing the drug.
     FDAAA authorized the FDA to require a REMS when one was necessary to "ensure that the benefits of the drug outweigh the risks of the drug.” In making that decision, the FDA has to consider several factors, including: (1) the estimated size of the population likely to use the drug involved;” (2) the seriousness of the disease or condition that is to be treated with the drug; (3) the expected benefit of the drug with respect to such disease or condition;  (4) the expected or actual duration of treatment with the drug; (5) the seriousness of any known or potential adverse events that may be related to the drug and the background incidence of such events in the population likely to use the drug; and (6) whether the drug is a new molecular entity.”
     On the issue of standardizing REMS, the FDA has already taken a step in that direction by seeking to develop an industry-wide REMS with all brand-name and generic manufacturers of long-acting and extended-release opioids. An Industry Working Group submitted a proposed opioids REMS to the FDA in August. The agency has not approved it yet. The agency originally proposed an opioids REMS in 2009, but the industry balked, arguing it was too detailed, prescriptive and onerous, and would incent physicians to avoid prescribing the drugs. The FDA then loosened its terms, which formed the skeleton on which the industry put the meat in its August 2011 submission.
      The PDUFA V proposal does not mention all that spadework done on the opioids REMS as a basis for standardizing REMS going forward. The draft commitment letter simply includes a commitment to develop and issue guidance by the end of fiscal 2013 on how to apply the statutory criteria (i.e. in the FDAAA) to determine whether a REMS is necessary to ensure that the benefits of a drug outweigh the risks. The FDA also promises to explore strategies to standardize REMS, where appropriate, with the goal of reducing the burden of implementing REMS on practitioners, patients, and others in various healthcare settings. Wexler of the Union of Concerned Scientists says, "There is almost nothing there on how the FDA plans to accomplish its goals."
    Moreover, the intentions don't go nearly far enough, given various criticisms, such as those voiced by the American Society of Health System Pharmacists (ASHP). ASHP and the APhA, the latter of whom held a workshop on REMS in July 2010 and has produced two detailed White Papers, the latest in May of 2011. The APhA would like to see, for example, an improved FDA website on REMS and, perhaps more importantly, some mechanism for reimbursing pharmacists for the time they spend implementing their part of a REMS. The APhA's Bough suggests, for example, some part of the user fee pool could be used to reimburse pharmacists.
     Other than unspecified changes to REMS, the only other post-marketing safety change the FDA has talked about deals with its Sentinel system. That is the "supplement" adverse reaction system to MedWatch, which has, up until now, been the data repository for admittedly incomplete and sometimes unclear reports from physicians, pharmacists, patients and others on adverse reactions caused by drugs already on the market. The idea behind the Sentinel system is that the FDA, after getting some inkling of problems with a new drug just on the market, perhaps from initial results of a post-marketing survey, could "query" a data bank containing health records of millions of Americans to see whether that adverse reaction was frequent enough for the FDA to take remedial action. "It is very important to our membership," explains Marissa Schlaifer, Director, Pharmacy Affairs, Academy of Managed Care Pharmacy.
     The FDA's PDUFA V proposal on changes to Sentinel, as is the case with its approach to REMS improvements, sticks to vague process clarifications which would come out of public meetings in the fiscal 2013-2017 time period. Here is what the draft commitment letter published in September says: "FDA will use user fee funds to conduct a series of activities to determine the feasibility of using Sentinel to evaluate drug safety issues that may require regulatory action..."
    The FDA is now using a pilot "mini-Sentinel" system with data from 17 "data partners" who control health information for  25 million-plus individuals. The first real test was done last July when over a period of two days the FDA queried mini-Sentinel on myocardial infarctions suffered by individuals who were taking the smoking cessation drugs varenicline and bupropion. Varenicline is a new drug, and the FDA wanted to see whether it was causing more myocardial infarctions than the long-time drug used for that indication, bupropion. The answer was "no," there was no difference between the two. However, one academic who works on mini-Sentinel noted the query on varenicline was "quick and dirty" and "not a full epidemiological study." Asked what the FDA was going to do next, he said he did not know.
         Amy Allina, Program Director, National Women's Health Network, complains the FDA has no specific plans for pushing Sentinel forward. "The agency has only vague statements in its PDUFA V plan," she states. "Sentinel has been tested, and it is working in a limited way. It is time to move forward. At some point, the rubber has to meet the road. If the FDA only uses Sentinel to find risks it expects to see, instead of broader data on unexpected adverse reactions, it will have missed a huge opportunity."
     Talking about missed opportunities, every representative from every consumer and pharmacy group who spoke at the October 24 meeting advocated broader authority for the FDA so it could review drug ads on TV, in print and on the Internet more thoroughly than it does now, which is to say not thoroughly at all. The FDA draft commitment letter says nothing about drug advertising. Additional authority provided by Congress in 2012 would be the kind of "policy initiative" Janet Woodcock opposes. Sally Greenberg, Executive Director of the National Consumers League, says, "It is imperative that the FDA review ads for accuracy before they reach the consumer." Companies can now voluntarily submit their ads to the FDA for review. In some instances they wait to get a green light, in some instances they air the ads before hearing from the FDA. Greenberg and others think all ads should be reviewed before they are disseminated. She advocates a moratorium on ads for all new drugs where there are unanswered questions about the drug's safety, questions that could be answered via post-marketing surveys. "User fees should be allocated for advertising reviews so that the FDA can hire additional staff," she states.
     The FDA's failure to include any proposed drug advertising changes and the general timidity of its PDUFA V proposal probably are no accident. No federal agency in its right mind would have the temerity, in this anti-regulatory political climate, to suggest expansion of  its regulatory reach. Janet Woodcock and her FDA colleagues are not blind. They can read the tea party leaves.

Does the U.S. Really Need An Energy Policy?

Financial Executive Magazine...January/February 2012


     Sen. Joe Mancini (D-W. Va.) was frustrated. Mid-way through a two-hour hearing in the Senate Energy and Natural Resources Committee on November 8, Mancini was taking out his ire on Chris Smith, Deputy Assistant Secretary for Oil and Gas in the DOE Office of Fossil Energy. The hearing was held to discuss whether the Department of Energy should approve applications for U.S. companies to export liquid natural gas (LNG). Just half a decade ago, LNG import terminals were popping up like dandelions in American coastal ports amidst spreading industrial user panic over sky-high domestic prices and disappearing supplies.
     But toward the end of this century's first decade, that gas gloom lifted without warning and  with nary an assist from the U.S. government. Because of an innovative technology called horizontal drilling or fracking, natural gas started flowing from the Marcellus and Barnett shale plays like Champaign from bottles uncorked at the Ritz on New Year's Eve. Gas prices dropped precipitously. The Energy Information Administration (EIA) now estimates the U.S. produces 5 billion cubic feet a day of natural gas more than what consumers can use, with the result that prices have dropped from a high of $12.69 per million BTUs in June 2008 (the average for that year was $8.94) to $3.60 m/BTUs in October 2011.
     Mancini had just asked Smith a question about whether foreign ownership of wells in the Marcellus formation lapping across Pennsylvania and New York could impact the domestic price of natural gas if those foreign owners decided to sell "their" gas overseas. Smith tried to answer. But an impatient Mancini interrupted. "It is shame this country doesn't have an energy policy, that is all I am saying," sputtered Mancini.
    Just half an hour earlier, though, at the very same hearing, from the very same dais, Sen. Lisa Murkowski (R-AK), the top Republican on the panel, had made the opposite point. Naming   Marcellus, Utica, Barnett and other shale plays, she emphasized, "I don't think we should fool ourselves. The government didn't make this happen. The natural gas resource is proving out without any mandate, without any tariff or moratorium, without so much as a tweak in any law or regulation."
     Ever since the Arab oil embargo of 1973, U.S. president after U.S. president has paid at least rhetorical attention to the need for the federal government to develop an energy independence policy. Last March 30, in a speech at Georgetown University, President Obama announced his Blueprint for a Secure Energy Future. He said: "We’ve known about the dangers of our oil dependence for decades.  Richard Nixon talked about freeing ourselves from dependence on foreign oil.  And every President since that time has talked about freeing ourselves from dependence on foreign oil.  Politicians of every stripe have promised energy independence, but that promise has so far gone unmet."
     But it is highly unlikely that Obama's Blueprint will lead to a firmer footing for U.S. energy security than past Blueprints from other presidents, or, perhaps more importantly, whether a Blueprint is even necessary. Obama's Blueprint policy is a loosely knit set of policies which focus on producing more oil at home and reducing dependence on foreign oil by developing cleaner alternative fuels and greater efficiency. The Blueprint is not the result of any particular deep thinking or strategy. The President's Council of Advisors on Science and Technology (PCAST) called for the development of such a strategy in its November 2010 Report to the President on Accelerating the Pace of Change in Energy Technologies Through an Integrated Federal Energy Policy. The PCAST called for a Quadrennial Technology Review (QTR) as the first step in preparing a Quadrennial Energy Review. The DOE completed the QTR in November 2011, six months after Obama published his Blueprint.
     Steven E. Koonin, Under Secretary for Science, DOE, says the QTR is limited in scope and all the DOE felt it could get done given budget and time. "Technology development absent an understanding and shaping of policy and market context in which it gets deployed is not a  productive exercise," he states. At this point there is no indication that the DOE will even undertake the much more important QER, much less complete it any time soon.
      The larger reality is that any energy independence plan proposed by any U.S. President--whether based on a QER or not--has as much a chance of coming to fruition as Washington's hapless Redskins have of getting into the Super Bowl. In any case, the rhetoric of President after President aside, maybe the U.S. doesn't even need an energy independence or energy security policy.
     The biggest energy input for industrial and commercial business users is natural gas. Natural gas prices are incredibly important, both because the fuel is used directly to run industrial processes, heat facilities and commercial buildings, and make products such as fertilizers, pharmaceuticals, plastics and other advanced materials. Thanks to the Shale Revolution, the Energy Information Administration (EIA) forecasts natural gas prices will stay low for the foreseeable future, rising to $4.66 m/BTU in 2015 and $5.05 m/BTU in 2020. That is good news for the owners of 15,000 to 17,000 industrial boilers in this country, most of which use natural gas (and many of those who still use coal are switching to natural gas). In addition, companies such as Dow Chemical are restarting operations at facilities idled during the recession, Bayer is  in talks with companies interested in building new ethane crackers at its two industrial parks in West Virginia, and Chevron Phillips Chemical and LyondellBasell, are considering expanding operations in the U.S.
     Fracking has also had a much less remarked-upon effect on petroleum prices, which are important to businesses with transportation fleets. New oil sources are spurting from the   Bakken and Eagles Ford shale plays.  U.S. oil prices have fallen from $133.88 a barrel of Texas intermediate crude in June 2008 to $86.07 today. The EIA predicts oil prices will rise to $94.58/bbl in 2015 and $108.10/bbl in 2020.
    Beyond the flood of natural gas washing over them, U.S. companies are also benefitting from three decades of investments--most of which made without federal subsidies or support--into facility energy efficiency. Ralph Cavanagh, Co-Director, Energy Program, Natural Resources Defense Council, member of Electricity Advisory Board at the DOE, says the most important single solution for U.S. businesses worried about energy prices and energy access is aggressive energy efficiency. "Energy independence is the wrong issue," he says. "It is reducing the cost of energy services and improving energy security. "U.S. business has done a tremendous job in energy efficiency over the past three decades," he states. "It takes less than one-half of a unit of energy to create $1 of economic value than it did in 1973. Industry has done that by upgrading the efficiency of process equipment and upgrading lighting."
     Others may well argue that the U.S. needs, and has always needed, an energy policy, but one narrowly targeted. Kenneth B Medlock III, PhD, Deputy Director, Energy Forum, James A Baker III Institute for Public Policy at Rice University, notes that the DOE and the Gas Research Institute  helped develop, with federal funding,  the horizontal drilling (i.e. fracking)  technology that Mitchell Energy (now a part of Devon Energy) pioneered.  "Government ought to be focused on research & development," he states. He also is a supporter of loan guarantees to promote investment activity in frontier technologies, and argues that as long as there are more good bets than bad bets in that kind of portfolio, the funds committed in total are a good investment.
     But spectacular failures like Solyndra and other less publicized busts such as Beacon Power's Chapter 11 filing kill the prospect of any additional congressional funding for energy loan guarantees of any kind. That is true even when legislation has bi-partisan support, which is the case for the Energy Savings and Industrial Competitiveness Act of 2011 (S. 1000) which would, among other things, provide grants for a revolving loan program designed to develop energy-saving technologies for industrial and commercial use. The bill passed the Senate Energy Committee by a vote of 18-3 in July. However, the Congressional Budget Office has pegged the cost of the bill's provisions at $1.2 billion over five years. That is a serious barrier to passage. And in any case, even if it did pass, the bill would simply authorize funding. Congressional appropriations committees would have to approve the money as part of the DOE's budget, which would be highly unlikely, Solyndra aside, since similar programs authorized by the 2005 and 2007 energy bills are still begging for appropriations.
        Besides impact on the federal deficit, politics, too, often impede progress on otherwise sensible policies. Politics clogged up the Keystone XL oil pipeline extension from Canada. Environmentalists, a Democratic constituency, oppose the project, arguing it would created more greenhouse gas emissions than necessary and pose a potential drinking water danger for Nebraska residents because it passed over the Ogallala Aquifer, a view held, too, by Nebraska's Republican Governor Dave Heineman, who took the opposite position from all Republican presidential candidates, who supported U.S. approval of Keystone XL.  Labor unions, another key Democratic constituency, support the project which TransCandada, the project sponsor, says will bring more than 118,000 person-years of employment to workers in the states of Montana, South Dakota and Nebraska.
      If the Keystone debate features Democrats v. Democrats and Republicans v. Republicans, efforts to substitute domestic natural gas for foreign petroleum features business v. business. Obama in his Blueprint speech at Georgetown mentioned legislation supported by both Republicans and Democrats called the New Alternative Transportation to Give Americans Solutions Act of 2011 (H.R. 1380), called the NAT GAS Act.  The bill has 180 co-sponsors ranging from Rep. Joe Barton (R-Texas) on the right and Rep. Barbara Lee (D-Calif.) on the left. The bill seeks to provide federal support for a natural gas fueling structure for autos thereby reducing gasoline demand. However, 65 manufacturing and agricultural organizations sent a letter to the House Ways & Means Committee in September opposing the bill, fearing a diversion of natural gas to transportation--even give the 5 b/cu/ft/day overage in supply at the moment--would increase domestic costs of natural gas. Calvin M. Dooley, President & CEO, American Chemistry Council, calls the NAT GAS Act, an "ineffective, inefficient proposal." Supporters of the bill include local and interstate natural gas companies, bus and taxi companies, food companies and the National Beer Wholesalers Association.
      Regardless of whether Americans start driving natural gas fueled vehicles, dependence on Middle Eastern oil for gasoline to fuel autos has dropped dramatically since 1973, without much U.S. government intervention, making the U.S. much more energy secure than ever before. Our number one import source is Canada, from whom we get about twice as much crude oil, according to the EIA, as Saudi Arabia, the number three source, and the only Middle Eastern source besides Iraq in the top 10. Mexico is number two.
     Given the new domestic sources of natural gas and crude oil, important strides in industrial energy efficiency and the shift away from imported Arab oil, the U.S. has made considerable progress toward energy independence or security, whatever term one wants to use, without an "energy policy." That doesn't necessarily mean we don't need a policy. But it does mean that U.S. companies do not have to panic about the absence of one.

Obama Signs New Pipeline Safety Bill

Pipeline & Gas Journal...January 2012


     The new pipeline safety bill President Obama signed in December gives PHMSA new latitude to expand integrity management requirements to new areas and require new industry safety measures such as automatic or remote-controlled shut-off valves. But the Pipeline and Hazardous Materials Safety Administration (PHMSA) will have to jump through more flaming hopes than a circus performer before it can issue final rules. The new Pipeline Safety, Regulatory Certainty, and Job Creation Act of 2011 (H.R. 2845) requires PHMSA to first do a number of studies and reports, submit them to Congress, meet congressional thresholds for enacting any new standards and in one important instance gives Congress an opportunity to forestall any new standard.
      The final bill generally pleased all industry groups, including INGAA. INGAA is already voluntarily extending integrity management procedures beyond what are called High Consequence Areas--deemed areas with high population density. The bill gives the PHMSA authority to require extension of IM processes. But first it must make an evaluation of whether extension of IM procedures is necessary and economically justified, based on criteria the bill lays out. The PHMSA has two years to make that evaluation. It must then submit its thoughts to Congress. Then Congress has one year to pass legislation based on the PHMSA report, or pass legislation prohibiting PHMSA from acting. If Congress does nothing, PHMSA is free to act on its own.
     PHMSA also has to jump through numerous hoops before requiring interstate pipelines to install automatic or remote-controlled shut-off valves. It can only do so two years after the bill's passage and after determining such a requirement is "economically, technically, and operationally feasible" and can require installation only on new pipelines.
      The bill uses identical language with regard to any PHMSA rule requiring distribution pipelines to install excess flow valves (EFVs) on lines serving apartment buildings, commercial and industrial facilities. The current PHMSA rule, enacted as a result of a provision in the last (2006) pipeline safety bill, limits installation of EFVs to new, single family homes. The National Transportation Safety Board (NTSB) has a long-standing recommendation (see item below) to require EFVs for all residential, commercial and industrial buildings.
     Among the more significant of the bill's 31 sections is the one related to maximum allowable operating pressure (MAOP). MAOP, like remote-controlled shut-off valves, was the subject of recommendations from the NTSB as a result of its investigation of the PG&E gas pipeline explosion in San Bruno, California. The NTSB recommended that Congress remove the provision in current law that exempts gas transmission pipelines constructed before 1970 from hydrostatic testing to determine the line's maximum allowable operating pressure; and require post-construction hydrostatic pressure tests of at least 1.25 the maximum allowable operating pressure in order for manufacturing- and construction-related defects to be considered stable.
      The bill does remove that exemption; it requires PHMSA to publish within 18 months rules for testing "the material strength" of previously untested pipelines within HCAs. But it goes further by saying PHMSA must require interstate and intrastate pipelines to verify that the MAOP of pipelines in class 3 and class 4 locations and class 1 and class 2 HCAs accurately reflect their physical and operational characteristics. Pipeline owners would have to submit to PHMSA within 18 months of the bill's passage documentation where their records are "insufficient" to confirm the established MAOP. Any time pressure on a pipeline exceeds MAOP the company would have to report that to PHMSA within five days.
   The bill also addresses the issue of excavation damage. It requires states to eliminate current exemptions for certain participants in one-call notification systems if that state wants to get federal excavation damage prevention grants.

ACO Final Rule Acknowledges Medication Concerns

Pharmacy & Therapeutics Journal...December 2011


     The final rule published by the Centers for Medicare and Medicaid Services (CMS) at the end of October mostly simplifies and improves the financial aspects of the Accountable Care Organization (ACO) program in an effort to convince physician groups and hospitals to participate. It doesn't change the rules on who can share in any savings to Medicare produced by an ACO, a new form of integrated health care organizations, formed by physician groups and in some cases hospitals with staff physicians, aimed at providing comprehensive care to Medicare patients, and thus lowering the costs of that care, producing savings for Medicare. The Affordable Care Act (ACA) specifically states that only physicians and hospitals can share in the savings. The proposed rule followed that edict; pharmacists, chiropractors, nurses...all were deemed "out of the money." The final rule sticks to that decision.
     That said, the medication management provided by pharmacists in large physician practices and hospitals will be critical to the success of any ACO. Dave Rhew, MD, CMO of Zynx Health, a provider of evidence-based and experience-based clinical decision support (CDS) solutions to hospitals, says physicians basically prescribe medications they have traditionally prescribed, and can sometimes be behind the curve, because of time constraints, on current changes in drug profiles. It will be up to a pharmacist to update physicians and hospital formularies, for example, when a drug like Xigres (Drotrecogin Alpha), for severe sepsis, is voluntarily recalled by its manufacturer, here Eli Lilly, because of FDA concerns about the drug's effectiveness, in this case a concern that the drug does not reduce mortality.
     With regard to pharmacist interventions in ACOs, they only come into play where drugs are supplied to a Medicare fee-for-service patient by a physician in the physician's office (Part B) or in a hospital (Part A). An ACO participant's Part D drug costs will not be part of the "shared savings" calculations. This may turn out to be problematic in a number of instances, for example, in certain clinical areas such as cancer care and cardiac ablation for atrial fibrillation where ACOs may have an incentive to move patients from appropriate treatments or procedures reimbursed through Parts A or B to Part D therapies. The CMS acknowledged these are "important concerns" but the program's quality measurement and program monitoring activities "will help us to prevent and detect any avoidance of appropriately treating at-risk beneficiaries. Furthermore to the extent that these lower cost therapies are not the most appropriate and lead to subsequent visits or hospitalizations under Parts A and B, then any costs associated with not choosing the most appropriate treatment for the patient would be reflected in the ACO's per capita expenditures."
     It is impossible to know now whether this concern--medication cost shifting from A or B to D--will bear factual fruit going forward. But the CMS will apparently be looking over the shoulders of ACOs on this issue. "The financial incentives could cause physicians that are part of ACOs to increase the use of Part D medications to decrease the use of Part B medications or appropriate medical procedures," says Marissa Schlaifer, the Academy of Managed Care Pharmacy's (AMCP) Director of Pharmacy Affairs. "The Academy shares this concern." 
 
      Of course, the program integrity watchdogs at the CMS and other federal health agencies are getting fewer and fewer, federal budget cuts being the order of the day, and even in the halcyon days of federal spending with bigger staffs Health and Human Services were rather passive policemen. The office of pharmacy affairs, which administers the 340B drug program, is a good example of a department where, according to a recent Government Accounting Office report, the department detectives have had their feet up on their desks.

     We mention the 340B program here because it, too, comes into play with regard to concerns about medication cost shifting in ACOs. The 340B program allows safety net hospitals with high Medicaid populations to buy discount drugs, and it restricts whom those hospitals can give those drugs to. Recipients have to be patients of the hospital, seen by a hospital physician, and the drugs must be purchased at an out-patient (not in-patient) pharmacy. The drug manufacturers hate the 340B program, which requires them to sell drugs more cheaply than they would otherwise have to. Their concern is that safety net hospitals who join an ACO will expand their purchases of 340B drugs and provide those drugs to perhaps a medical group with whom it has partnered in an ACO. That allows the physician to substitute a cheaper drug (at 340B price) for the more expensive one he would have used, thus reducing the ACOs costs, since drug costs within Part B are calculated in the ACO equation.

        Hospital pharmacists are knee deep in the 340B program. So while they and their brethren stationed in physician offices will not be able to share in ACO savings, it looks like they will have their hands full preventing ACO headaches.