FDA Devotes New Resources To Upgrading Generic Drug Safety

P&T Journal
May 2014 - for a PDF copy of the published version go HERE.

But in Some Instances, the Industry Is Pushing Back

If one were looking for an example of why the Food and Drug Administration (FDA) appears increasingly concerned about the quality of generic drugs in the U.S., one need look no further than the Indian company Ranbaxy Laboratories. In the past few years, it has on its own and at the FDA’s insistence recalled bottles of atorvastatin calcium (generic Lipitor) and been barred from exporting to the U.S. products made at a plant in Toansa, India. In 2013, Ranbaxy, owned by the Japanese drug company Daiichi Sankyo, paid a $500 million fine and pled guilty to criminal charges of selling adulterated drugs and making false statements to the FDA.1

The FDA also banned sales in the U.S. from Indian facilities owned by a second Indian company, Wockhardt Ltd. In a long letter dated July 18, 2013, to Habil Khorakiwala, Wockhardt’s Chairman and Group Chief Executive Officer, Michael D. Smedley, Acting Director of the FDA’s Office of Manufacturing and Product Quality, wrote that FDA inspectors had found significant violations of current good manufacturing practice regulations at the Wockhardt plant in Aurangabad, India. The company “withheld truthful information, and delayed and limited the inspection,” Smedley added.2

Of course, Ranbaxy, Wockhardt, and other major generic manufacturers such as Teva Pharmaceutical Industries Ltd., Sandoz, Actavis PLC, Mylan Inc., Hospira Inc., Sanofi, Aspen Pharmacare Holdings Ltd., and STADA Arzneimittel AG are more often the good guys, selling important drugs at significant discounts to patented alternatives. Those lower prices ease the financial strain on millions of Americans every year. Generic pharmaceuticals fill 84 percent of the prescriptions dispensed in the U.S. but account for just 27 percent of the total drug spending, according to the Generic Pharmaceutical Association (GPhA).3

Despite their financial advantages to consumers, however, generics may have a greater chance than brand-name products of causing adverse reactions because so many are in use. When they do, they prompt headlines atop stories that often very quickly mention that the company making the offending drug is headquartered outside the U.S., along with most or all of its manufacturing plants. Questions about adequate FDA inspection of overseas facilities come up just as quickly thereafter. Eighty percent of active pharmaceutical ingredients are imported to the U.S., as are 40 percent of finished drugs, according to the FDA.4 There are no good statistics on what percentage of finished generic drugs are imported.

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Generic Firms Increase Foreign Manufacturing

Even U.S.-headquartered generics manufacturers are rushing to expand overseas manufacturing, especially in India. Of the major generics players listed above, only Mylan and Hospira are headquartered in the U.S. Three of Hospira’s six major manufacturing facilities are outside the U.S., including one in Irungattukottai, India. In 2012, Hospira acquired an “active pharmaceutical ingredient” manufacturing site and an associated research and development facility from Orchid Chemicals & Pharmaceuticals Ltd. Those Orchid facilities are located in Aurangabad, India. Hospira also has an unconsolidated joint venture with Cadila Healthcare Ltd., a pharmaceutical company in Ahmedabad, India. The joint venture operates a manufacturing facility outside of Ahmedabad.

Mylan has 18,000 employees worldwide, 8,500 of them in India. Lauren Kashtan, Mylan’s Senior Manager of Media Relations and External Communications, declines to say how much of Mylan’s manufacturing is done outside of the U.S. But clearly a significant portion is done in India, with that volume apparently on the upswing. Mylan has signed a marketing agreement with India’s Natco Pharma Ltd. for Natco’s glatiramer acetate pre-filled syringes. In December 2013 Mylan purchased the Agila Specialties division from Indian generics manufacturer Strides Arcolab.5 Just two months later, on February 19, 2014, Mylan announced that Agila Specialties was conducting a voluntary nationwide recall from hospitals of 10 lots of etomidate injection 2 mg/mL packaged in 10-mL and 20-mL volumes. The 10 lots were made by Agila Specialties Polska Sp.z.o.o in Warsaw, Poland. Some vials contained pieces of paper, identified as shipper labels.6

“With so many products coming from overseas, it is a big task to effectively monitor products manufactured overseas imported to the U.S.,” says Gregory Amidon, PhD, Research Professor of Pharmaceutical Sciences in the College of Pharmacy at the University of Michigan (UM), who worked for pharmaceutical companies for 28 years.

Aside from manufacturing quality, the bioequivalence of generics has also been a concern. Questions about generic bupropion were raised as early as 2007. In October 2012, the FDA announced that 300-mg Budeprion extended release (XL), manufactured by Impax Laboratories and distributed by Teva, was not therapeutically equivalent to the reference drug, Wellbutrin XL 300 mg. A year later, after four companies completed testing requested by the FDA, the agency announced that Watson Pharmaceuticals was voluntarily withdrawing its generic bupriopion HCl ER 300-mg tablet because it was not therapeutically equivalent to Wellbutrin. At the same time, the FDA said its testing had proven that generic bupropion formulations marketed by Actavis, Mylan, and Par were bioequivalent to Wellbutrin. (Activis and Watson had merged prior to the announcement.)7

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Hamburg Trip to India Yields Very Modest Results

Concerns about generic drug quality have been percolating at the FDA for years, of course. But new regulatory requirements, funding streams, and expanding generic use on private and public formularies have forced the FDA to step up the pressure it exerts on the industry. FDA Commissioner Margaret Hamburg, MD, took her first trip to India at the end of February. While there, she signed a statement of intent with her counterpart, the Drug Controller General of India, Gyanendra Singh, PhD.8 The statement is fairly general, and its import and impact have been somewhat diluted by comments Dr. Singh made after Dr. Hamburg’s visit. Dr. Singh said, according to a journalist participating in a conference call with Dr. Hamburg upon her return, that if he had to follow U.S. standards in inspecting facilities he “would have to shut almost all of those.”

Actually, there was no need for Dr. Singh to devalue Dr. Hamburg’s efforts. The statement of intent commits India to do very little of substance beyond information-sharing and scientific collaboration. There is no talk of hiring additional inspectors, improving quality standards, or anything of that nature. And the statement allows India to forego even potential softball actions when “taking into account the limitations of existing human and financial resources and within the parameter of domestic legal and administrative requirements. …” 8

Asked whether the FDA was perturbed by Dr. Singh’s comment, a spokesman says, “Within five years, we will be able to conduct biennial inspections for both domestic and foreign facilities, allowing us to identify any noncompliant players in the drug supply chain—wherever they are based—so we can focus on the generic drug industry worldwide.”

Five years is a long time when lives are at stake. Questions about the quality and safety of generics become more important by the day as formularies for Medicare, Medicaid, employer health plans, and Affordable Care Act plans for independents heavily weight their tier-one drug offerings with generics. The announcement by Eli Lilly & Company in late March that it was eliminating pay raises for most employees in 2014 reflects the growing dominance of generics. Lilly said the loss of patent protection for Cymbalta, its best-selling drug, and Evista opened the door to generic competition and an expected sales decline of 14 percent in 2014.

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GDUFA Fees Let FDA Expand Regulatory Reach

Congress was aware of the generic surge, as well as its potential for both health care savings and safety problems, when it passed the Generic Drug User Fee Act (GDUFA) in 2012.9 The law required generic manufacturers to pay fees to the FDA for the first time. The agency uses those fees (which came to $300 million in 2013) to finance critical and measurable enhancements in generic drug programs. Generic drug facilities, sites, and organizations around the world must provide identification information annually to the FDA.

The GDUFA dictated a number of FDA actions and indirectly led to others. In addition to a key proposed rule and a testing program farmed out to academic medical centers, the FDA has published a draft guidance explaining when the agency could “refuse to receive” an abbreviated new drug application (ANDA). Before marketing a new product, generic companies submit an ANDA, which must be approved by the FDA. The guidance, which has not been finalized, delves into important issues such as whether the agency will accept a claim that a generic is “bioequivalent” to its brand-name counterpart.10

A proposed rule issued last November by the FDA allowing generic companies to change their safety labeling before the reference brand-name product does so11 has been among the most controversial of the FDA’s recent actions. The reason for the proposed rule is that generic companies are as likely to be alerted to adverse reactions as brand-name companies. But under current law, only the brand-name company can submit a “changes being effected” (CBE-0) supplement to the FDA. That allows the company to make certain labeling changes without FDA approval: for example, to add or strengthen a contraindication, warning, or precaution, or to strengthen a statement about drug abuse or an instruction about dosage. Once the revised labeling goes into effect, all generic products on the market are required to make their labeling conform within 30 days. This policy dates back to 1982.

But because only the brand-name manufacturer can make CBE-0 labeling changes, only the brand-name company is liable in court for adverse reactions. Generic companies cannot be sued for failing to update labels. Under the FDA proposal, generic drug makers could be sued—a prospect that displeases them.

The generic industry is arguing that the change in labeling policy would create nightmares for pharmacists and others as generic companies selling the same active ingredient were freed to change the labels of their individual products in any way they wanted. Uniformity would not be required. A number of pharmacy groups, including the Academy of Managed Care Pharmacy, American Association of Colleges of Pharmacy, American Pharmacists Association, and American Society of Health-System Pharmacists, signed on to a letter that the GPhA originated in March to comment on the rule. They said they were most concerned about the dangerous confusion multiple labels would cause and about the increased costs of and reduced access to generic medicines for patients who need them most. The letter stated that pharmacists could be exposed to liability as well as the generic drug companies.12

Allison Zieve, Director of the Public Citizen Litigation Group, doubts the validity of the “labeling confusion” argument. “Numerous different newly discovered safety risks are unlikely to come to light for a single drug at the same time,” she states. To buttress the contention, she refers to classes of brand-name drugs where there are several competitors. Take the selective serotonin reuptake inhibitor class of anti-depressants, for example. Fluoxetine hydrochloride (Prozac, Eli Lilly), sertraline hydrochloride (Zoloft, Pfizer), and paroxetine hydrochloride (Paxil, GlaxoSmithKline) are sold by different manufacturers. “We do not see the manufacturers discovering a variety of new safety risks all at about the same time,” she explains. “If several manufacturers submit changes at or near the same time, the changes are likely to address the same risk—and it will hardly confuse physicians and patients if, for instance, one generic warns that its drug ‘has been associated with inflammatory bowel disease in patients without a prior history of intestinal disorders,’ while another warns that ‘long-term use is associated with serious intestinal problems, including ulcerative colitis and Crohn’s disease,’ and a third warns that ‘patients taking this product should be monitored closely for signs of inflammatory bowel disease.’ ” 13

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Guidance Would Turn Back Flawed ANDAs

Labeling also comes up in the context of the draft guidance on “refuse to receive” that the FDA issued last October.10 This guidance, which the FDA has yet to finalize, was issued as a result of a GDUFA provision. It describes what should be included in an ANDA and highlights serious deficiencies that may cause the FDA to refuse to receive an ANDA. A refuse-to-receive decision indicates that the FDA has determined the ANDA is incomplete on its face, usually because of omissions. The draft guidance covers labeling, chemistry, and bioequivalence issues. Guidance, however, is advisory; the FDA cannot penalize a company for violation of guidance, as it can for violation of rules.

Underlining concerns about generic quality and safety, the draft points out that the FDA office of generic drugs refused to receive 497 ANDAs between 2009 and 2012. “Recent data underscore the need for improvement in the quality of original ANDA submissions,” the draft states. In 2012, of the 100 ANDAs that the office of generic drugs refused to receive, 40 were refused because of serious bioequivalence deficiencies, 36 because of serious chemistry deficiencies, 13 because of format or organizational flaws, six because of clinical deficiencies, four because of inadequate microbiology (sterility assurance) information, and one because an incorrect reference drug was cited. Those 100 accounted for approximately 10 percent of the ANDAs the agency received in 2012.10

The draft makes some minor and potentially major changes in current FDA policy. “There are several new criteria presented in the guidance document that will require ANDA applicants time to revise product designs and development strategies,” says David R. Gaugh, RPh, the GPhA’s Senior Vice President for Sciences and Regulatory Affairs. He is concerned, for example, with new guidance for oral liquid product formulations. “It would be inappropriate to require ANDA applicants to reformulate products, repeat clinical studies, and potentially forfeit a first-to-file opportunity by imposing the new refuse-to-receive criterion without ample time to adjust to the new standard,” he emphasizes.

The guidance says the FDA would reject an ANDA if it contains 10 minor deficiencies or one major deficiency. The sponsor may decide to submit additional materials to correct the deficiencies, but the resulting amended ANDA will be considered a new ANDA submission, received as of the new date and requiring a new GDUFA fee.

The “10-or-more” standard perturbs a number of companies. “Apotex is of the opinion that assigning a specific requirement on the total number to the deficiencies in the ANDA submission creates variability,” says Kiran Krishnan, Vice President of U.S. Regulatory Affairs for Apotex Corp. “Apotex is of the opinion that the number and nature of the deficiencies should not be used as a threshold to refuse an ANDA without giving the firms an opportunity to justify.”

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Questions on Testing Requirements for Generics

Still, some industry experts believe the FDA needs to require more from generic companies before approving ANDAs. “The current standards, criteria, and regulations governing approval and monitoring of generic drugs are inadequate,” say pharmacologist Joe Graedon, MS, and medical anthropologist Teresa Graedon, PhD. The Graedons write a syndicated newspaper column, host a health-talk show syndicated on public radio, and are founders and directors of the website www.PeoplesPharmacy.com. Their June 2013 comment letter responded to an FDA request for input on the agency’s generics regulatory science initiatives.

The major challenge generic companies face in seeking FDA approval of their ANDAs is proving their products are bioequivalent to the reference product. That involves dissolution testing: The rate at which a drug dissolves from a dosage form is measured, typically in the same medium used by the reference company’s product in its dissolution testing. The results can be used to determine whether the generic will have the same potency in a patient’s body as the reference drug. At least that is the theory—that an in vitrotest can predict in vivo results. “But that translation doesn’t work reliably in all cases,” states Dr. Amidon, the Michigan professor who worked for major drug manufacturers for nearly three decades and now directs UM’s Pharmaceutical Engineering Program. His program has received money from the FDA to develop and check new dissolution test methods and computer modeling techniques that may prove more accurate for predicting in vivo results.

Better dissolution methods and computer modeling might allow the FDA to waive in vivo bioequivalence testing, which it already does for some generics. But even some generic companies oppose easing those requirements. For example, Teva submitted a petition to the FDA in December 2013 pleading with the agency to require immunogenicity testing for companies submitting ANDAs for its branded product Copaxone (glatiramer acetate injection), a drug for patients with relapsing– remitting multiple sclerosis. The Teva petition asked the FDA not to provide any waiver of in vivo bioequivalence testing because Copaxone is a colloidal suspension rather than a true solution. In January 2014, Teva published data in the online scientific journal PLOS ONE purporting to show significant differences in biological and immunological effects between Copaxone and a generic glatiramer acetate marketed in India by Natco Pharma Ltd. Teva argued the differences have potential clinical ramifications.14 Natco and Mylan have filed an ANDA for glatiramer acetate injections, as have Momenta Pharmaceuticals and Sandoz. There has been patent litigation between Teva and the other two teams for years. The Copaxone patent expires in 2015.

Sandoz has not started manufacturing generic glatiramer acetate injections, of course, and it is not clear when and where that manufacturing will take place. The company has manufacturing sites in India. But Sandoz has had plenty of trouble with the FDA over its U.S. manufacturing sites, proving that generics manufacturing quality is a worldwide issue. The FDA issued warning letters to Sandoz manufacturing sites in Colorado, North Carolina, and Canada in 2011.15 In 2013, Sandoz, the world’s second-largest generics manufacturer, announced that it was recalling injectibles manufactured in Austria because of particles in vials.

So even with its new GDUFA authorities and funds, the FDA has its hands full ensuring the safety and effectiveness of generic drugs. The manufacturers take their responsibilities seriously, no question about that. But can they ever be serious enough?

Author bio: 

Mr. Barlas, a freelance writer based in Washington, D.C., covers topics inside the Beltway.

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REFERENCES

1. FDA. Regulatory action against Ranbaxy. Available at: http://www.fda.gov/drugs/guidancecomplianceregulatoryinformation/enforce-mentactivitiesbyfda/ucm118411.htm. Accessed March 28, 2014.

2. FDA. Wockhardt Limited 7/18/13: warning letter. Available at: http://www.fda.gov/iceci/enforcementactions/warningletters/2013/ucm361928.htm. Accessed March 28, 2014.

3. Generic Pharmaceutical Association. Comments of the Generic Pharmaceutical Association for Docket No. FDA–2012-D-0880-0006, Draft Guidance for Industry Generic Drug User Fee Amendments of 2012: questions and answers. Available at: http://www.gphaonline.org/media/wysiwyg/cms/GPhA_GDUFA_Q_A_Response_2.pdf. Accessed March 28, 2014.

4. FDA. Global initiative. Available at:  http://www.fda.gov/AboutFDA/GlobalInitiative/default.htm?utm_source=fda&utm_medium=website&utm_term=GlobalizationReport&utm_content=f1&utm_campaign=HomePageSpotlight. Accessed March 28, 2014.

5. Mylan. Mylan completes acquisition of Agila to create leading global injectables platform. Available at: http://investor.mylan.com/releasedetail.cfm?ReleaseID=811637. Accessed March 28, 2014.

6. FDA. Agila Specialties Private Limited initiates voluntary nationwide recall of 10 lots of etomidate injection 2 mg/mL – 10 mL and 20 mL due to the presence of particulate matter and/or illegible and missing lot number and/or expiry date. Available at:  http://www.fda.gov/Safety/Recalls/ucm386547.htm. Accessed March 28, 2014.

7. FDA. Update: Bupropion hydrochloride extended-release 300 mg bioequivalence studies. Available at: http://www.fda.gov/drugs/drugsafety/postmarketdrugsafetyinformationforpatientsandproviders/ucm322161.htm. Accessed March 28, 2014.

8. FDA. Statement of intent between the Food and Drug Administration of the United States of America and the Ministry of Health and Family Welfare of the Republic of India on co-operation in the field of medical products. Available at: http://www.fda.gov/downloads/InternationalPrograms/Agreements/MemorandaofUnderstanding/UCM385494.pdf. Accessed March 28, 2014.

9. FDA. Generic Drug User Fee Amendments of 2012. Available at: http://www.gpo.gov/fdsys/pkg/BILLS-112s3187enr/pdf/BILLS-112s3187enr.pdf. Accessed March 28, 2014.

10. FDA. Guidance for industry: ANDA submissions—refuse-to-receive standards. Available at: http://www.fda.gov/downloads/Drugs/GuidanceComplianceRegulatoryInformation/Guidances/UCM370352.pdf. Accessed March 28, 2014.

11. Supplemental applications proposing labeling changes for approved drugs and biological products. Federal Register. 2013;78(219):67985–67999. Accessed March 28, 2014.  [PubMed]

12. Generic Pharmaceutical Association. Comments on generic labeling rule by GPhA and other groups.Available at: http://www.gphaonline.org/media/cms/Supply_Chain_Sign_On_Letter_to_FDA_on_Labeling_FINAL.pdf. Accessed March 28, 2014.

13. Public Citizen. Comments on proposed rule: “Supplemental Applications Proposing Labeling Changes for Approved Drugs and Biological Products”. Available at: http://www.citizen.org/documents/Comments%20on%20NPRM%203-12-14.pdf. Accessed March 28, 2014.

14. Towfic F, Fund JM, Fowler KD, et al. Comparing the biological impact of glatiramer acetate with the biological impact of a generic. PLOS ONE. 2014 Jan 8; doi: 10.1371/journal.pone.008375. Available at: http://www.plosone.org/article/info%3Adoi%2F10.1371%2Fjournal.pone.0083757. Accessed March 28, 2014. [PMC free article]  [PubMed] [Cross Ref]

15. FDA. Sandoz Incorporated 11/18/11: warning letter. Available at: http://www.fda.gov/ICECI/EnforcementActions/WarningLetters/2011/ucm314931.htm. Accessed March 28, 2014.

The Pharmaceutical Industry Tussles Over Biosimilars

P&T Journal
April 2014 - for a PDF copy of the published version go HERE.


Calling it a "biosimilar brawl" would be overstating the fireworks, which were exclusively verbal, and even there lacking in venom. But sitting two seats away from one another at a Federal Trade Commission (FTC) workshop on February 5, 2014, two biotech executives named Bruce Leicher and Geoffrey Eich sparred, a little heatedly, over the issue of whether pharmacists should have to notify physicians when pharmacists substitute an interchangeable biosimilar for the innovator biologic.

Notification is a big and controversial issue as the Food and Drug Administration (FDA) gets ready to approve the first biosimilars to be sold in the U.S. Congressional legislation allowing the FDA to consider biosimilars via abbreviated applications was passed as part of the Affordable Care Act ((FDA). That was four years ago. Since then, the FDA has slowly been publishing draft guidances on what it would be looking for from companies using this new abbreviated approval pathway. The Biologics Price Competition and Innovation Act (BPCIA) did not address notification. That is up to individual states under pharmacy practice statutes. But states are not waiting for the FDA to approve the first biosimilars before establishing laws on notification. The potential ipediments to patient access posed by some of those laws worry biosimilar suporters, including the Federal Trade Commission.

Small, struggling biotech companies such as Momenta Pharmaceuticals, Inc. oppose notification. Leicher, J.D., is senior vice president and general counsel at Momenta, which lost $108 million in 2013 and has two biosimilars in development, one in conjunction with Baxter.

Large branded companies, some with patented biologics such as Amgen, support notification. Eich is executive director, R&D policy, Amgen, Inc. which earned a tad over $5 billion in 2013 on, among other products, branded biologics such as Aranesp^® (darbepoetin alfa), Enbrel^® (etanercept) and Epogen^® (epoetin alfa).

Leicher argues that Amgen and allies such as Novartis/Sandoz, Hospira, Actavis, Boehringer, AbbVie, Genentech, and Lilly are pushing notification at the state level so that they will have "a forum for disparaging comments which can be made without the risk of enforcement." Even though some of those companies also market biosimilars--Hospira's erythropoietin (EPO) biosimilar called Retacrit^™ is a big seller in Europe, for example--Leicher says they are fine with notification because they have large sales and marketing arms which reach deep into physicians' offices.

Eich retorts that passing biosimilars off as generics is "increasingly disparaged by academia, regulators and competitors as misleading. They have to be foisted on patients switched at a pharmacy before administration." Biosimilars are not exact copies of biologics. They cannot be, given the way biologics are made, in cell cultures, using a much different and variable manufacturing process than the more precise, cookbook method for making generic copies of small molecule drugs. But biosimilars are generics in a general, conceptual sort of way.

Biosimilar issues also split pharmacists. "Naming" is one of the divides. The BPCIA did not specify how biosimilars should be identified for purposes of tracking and adverse reaction reporting. This is an issue the FDA will settle, not the states. In Europe, where biosimilars have been legal and sold since 2006, companies identify a product using the International Non-proprietary Name (INN), with both innovator and biosimilar products using the same INN, sans a suffix. The American Pharmacists Association (APhA) is dead set against using suffixes such as Greek letters (e.g. "alpha")  to denote the nonproprietary name of a biosimilar.

The American Society of Health-System Pharmacists (ASHP) thinks that normally it would be enough to attach the National Drug Code to the INN. That would be suffix enough. But the NDC identifier may not currently be used to track a product in all settings and other challenges such as the reuse of NDC numbers by manufacturers may make this approach currently difficult. "Therefore, we do not oppose the addition of suffixes to the INN name if experts believe this approach is needed to facilitate pharmacovigilance," says Christopher Topoleski, director, federal regulatory affairs, ASHP.

Chose any of the controversial biosimilar issues; pharmacists are invariably on the firing line. And some already feel they are dodging metaphorical bullets. First, the push for post-dispensing notification implies that pharmacists are somehow junior, physician-subservient partners in the patient pharmaceutical chain, even though prescription drugs are their fulltime business. Marissa Schlaifer, M.S., R.Ph., head of policy for CVS Caremark, calls notification "somewhat demeaning" to pharmacists. However, the act of notification won't be that big a deal. To the extent biosimilars are infused in physician's offices, pharmacists are out of the loop. Biosimilars will be provided in hospital clinics, too, obviously. But there pharmacists will have access to electronic medical records and an easy link to the physician. Retail pharmacists will have the biggest challenge if they have to call or FAX a physician to note a substitution.

The FTC held the panel on biosimilars to explore whether emerging state laws on biosimilars presented barriers to their use. Any roadblocks could be considered anticompetitive, giving the FTC the authority to intervene. Some states have already passed laws on that. So any state law is premature, a point made by California Governor Jerry Brown when he vetoed a bill in 2013 passed with strong bipartisan support by the California legislature. 

But biosimilars will be approved by the FDA probably within the next few years, making state laws on notification a very hot topic. Companies like Amgen, Novartis and Sandoz are on record backing pharmacist notification whenever a pharmacist substitutes either a different patented biologic or a biosimilar for the biologic the physician prescribed. The notification requirement would stay in place until a given state established an interoperable health records system. 

Two Categories of Biosimilars: Interchangeable or Not

The BPCIA anticipated that the FDA would grant abbreviated approval to biosimilars in two categories: those that are interchangeable with the patented (called "reference") product, and those that are not, which will be referred to as "highly similar." The FDA would first qualify a product as a biosimilar, meaning highly similar. A product deemed biosimilar could still differ in terms of inactive ingredients, purification processes, and other areas that are proprietary. Therefore, a product that achieves only biosimilarity will not be considered a therapeutic equivalent and will not be eligible for direct substitution without prescriber notification and approval.

The BPCIA allows the FDA to declare a biosimilar interchangeable--thereby substitutable without a physician's consent-- if two conditions are met. The biosimilar has to be expected to produce the same clinical result in any given patient and the risk in terms of safety or diminished efficacy cannot be greater for a switch from a patented to biosimilar than continued use of the innovator drug, where the drug is used more than once by the same patient. "The is a pretty high standard," says Phil Katz, a partner with the global law firm Hogan Lovells. "It is not the same as for substitution of small molecule generic drugs."

The FDA published three draft guidance documents on biosimilars in March 2012. They provided some clarity in terms of some of the methods the agency would use to sort through applications. But specificity on key issues such as how biosimilars would be named, standards for interchangeability and some other areas was sorely lacking. Those guidance documents have not been finalized. The FDA says it will publish four more draft guidances in 2014, including one on interchangeability. Marie A. Vodicka, regulatory affairs director, Hogan Lovells, says the FDA does not have to finalize guidance before it can approve a biosimilar application.

Kris Kelly, an FDA spokeswoman, says the FDA's Center for Drug Evaluation and Research continues to meet with sponsors interested in developing biosimilar products.  As of January 30, 2014, CDER had received 62 meeting requests for an initial meeting to discuss biosimilar development programs for 13 different reference products and held 53 initial meetings with sponsors. To date, CDER has received 22 Investigational New Drug (INDs) applications for biosimilar development programs, and additional development programs are proceeding under a pre-IND. Twenty-one biologics with a market value of over $50 billion will lose patent protection by 2019 in the U.S. alone.

While notification was the most controversial issue discussed at the FTC's February workshop, it wasn't the only one. The daylong discussion ranged over a number of topics, such as how state laws on small-molecule generics had affected uptake of those drugs, how biosimilars should be "named" and the associated issue of pharmacovigilance, meaning the tracking of adverse effects, as well as interchangeability.

Europe Way Ahead

Given the high cost of most biologics, the potential for lower prices and the availability of biosimilars in Europe and Asia, there is considerable pressure on the FDA to open the biosimilar floodgates. The European Union approved the first biosimilar, Omnitrope (somatropin), in 2006. To date, the European Medicines Agency (EMA) has approved 20 biosimilars within the product classes of human growth hormone, granulocyte colony-stimulating factor, erythropoietin and TNF. Once the EMA approves a product, it is up to an individual country whether to allow sales within its border. In June 2013, the EMA approved the first  monoclonal antibody (mAb) therapies for Johnson & Johnson’s Remicade (infliximab).  Those are Hospira's Inflectra and Celltrion's Remsima.  Sandoz's Zarzio® (filgrastim) has become the first biosimilar to overtake both its reference product (Amgen’s Neupogen®) and European market leader (Chugai’s Granocyte®).

Eight of the ten highest-expenditure Medicare Part B drugs in 2010 were biologics. Leigh Purvis, senior strategic policy advisor, AARP, the seniors' lobby, says the average annual cost of a branded biologic is around $34,550. Costs can run as low as $25,000 and as high as $200,000. Many of these biologics are infused in a physician's office. Where a senior under Medicare Part B receives that drug, he or she is responsible for a 20 percent co-payment. If that drug is procured under Part D, the Medicare out-patient drug program, there is a cap of $4550 for the patient. With regard to non-seniors, ACA marketplace plans typically put these expensive biologics on high tiers, where there is substantial cost sharing, although there, too, like with Part D, caps do come into play.

Express-Scripts looked at the 11 branded biologics which will lose patent protection over the next decade. Its back-of-the-envelope calculation is that an average 30 percent price discount for the biosimilar could yield a quarter of a trillion dollars of savings in the U.S. for those 11 products during the next decade. That is assuming no interchangeability until 2020.

Are States Jumping the Gun?

State laws mandating pharmacist notification or limiting interchangeability could crimp savings to individuals, employers and federal health plans Medicare and Medicaid. The FTC's position is that state laws aiming to protect patient safety can restrict the use of biosimilars, but those restrictions should be no broader than necessary to protect legitimate concerns. At the workshop, FTC Chair Edith Ramirez said, "There is substantial uncertainty at the state level surrounding how follow-on biologics will compete with their reference products." Last year, 15 state legislatures considered laws which would affect how interchangeable biosimilars could be dispensed by pharmacists. 

Jessica Mazer, assistant vice president of state affairs for the Pharmaceutical Care Management Association, says the most radical state bill--the PCMA opposes state limitations on prescribing of interchangeables--was in North Dakota. It enacted a law that requires a pharmacist to notify a prescriber within 24 hours of substitution. Some states are including provisions allowing substitutions only where a state has some measure of interoperable electronic health information exchange. Another state legislative permutation is the walling off of some drug categories from interchange, particularly insulin products.

Some of the panelists at the FTC workshop besides Leichner had sharp criticism of the Amgen/Novartis/Hospira, etc.  proposal which Sumant Ramachandra, M.D., Ph.D., M.B.A., senior vice president and chief scientific officer of Hospira, Inc., justified on the basis of "transparency." 

Amgen's Eich explains, "Absent some level of interoperable health records or after the fact communication between pharmacy and clinician's office, the patient's medical record will be rendered either ambiguous or inaccurate."

Momenta's Leicher says that e-prescribing networks are operational nationally, and physicians already have the capability to reach down to the pharmacy and find out whatever it is they want to know about a patient and his or her prescriptions. Steven B. Miller, M.D., M.B.A., senior vice president and chief medical officer for Express Scripts, Inc., agrees. He points out that SureScripts, on whose board of directors he sits, reaches 500,000 physicians, 65,000 pharmacies and all 5500 hospitals in the U.S. "We already have a system that is safe and effective," he insists. "Notification is truly unnecessary."   

Miller distinguishes that current system with an interoperable system, which is nowhere in sight. He said physician offices, hospitals and pharmacies have about 30 different e-prescribing software systems, and that complexity was made worse by the 2009 economic stimulus bill which contained about $19 billion in grants for physicians and hospitals to get software in place. "The current system is immature," he explains. "Some software cannot even express the formulary a patient is on. Interoperability is a fantasy, and we won't have it for a long, long time."

Even some proponents of notification admit the proposal they support has some weaknesses. Mark McCormish, M.D., Ph.D., global head, biopharmaceutical development, Sandoz, admits, "We have tried to come up with language, not that it is perfect or great."   

What is in a Name?

How biosimilars should be named is also the subject of substantial controversy. It is an important issue because a physician or pharmacist reporting an adverse reaction to a national health agency or the manufacturer needs to be able to distinguish the offending drug from others in its class, both branded and biosimilar. In an effort to influence the FDA's position on naming, the Generic Pharmaceutical Association (GPhA) submitted a petition to the FDA in 2013 requesting the FDA implement its International Non-proprietary Name (INN) policy equally to all biologics. The World Health Organization administers the INN system. An INN names the active ingredient, such that products that share the same INN can be readily identified as sharing the same active ingredient. In addition to the INN, a product (including biosimilars) will have other names and identifiers; for example, a brand name and in the U.S. an NDC which readily distinguish it from other products that share the same INN. The EU has used INNs to track biosimilars (and brand-name biologics) as part of pharmacovigilance programs.

Underlining how divided the pharmaceutical industry is over multiple biosimilar issues, Novartis, Amgen's ally on notification, supports the GPhA's position. Amgen opposes it.

The BPCIA doesn't address how biosimilars should be named. It was a subject which came up during congressional debate but no provision was added to the bill. The FDA outlined its naming position for biosimilars in a policy paper sent to the WHO in 2006, in support of the current WHO naming conventions. The GPhA's petition states that in its 2006 paper the FDA  "agrees that there should be no change in global policy and rejects distinctive INN designations for biosimilars."

In a response to the GPhA petition, Paul R. Eisenberg, M.D., M.P.H., F.A.C.P., F.A.C.C., senior vice president, global regulatory affairs and safety, Amgen Inc., says the GPhA cites only a portion of the FDA's 2006 policy paper, but omits the remainder of the context.  "We believe that the best solution is that the reference product and biosimilar should share a root and have distinct suffix," he adds. Greek letters, such as alpha, beta, gamma, or the manufacture’s name could serve as the distinct suffix. Examples of the resulting name would be “supermab alpha” or “supermab Amgen.” This is similar to the naming convention employed by the Japanese regulatory authority, Eisenberg states.

The reason Amgen and others believe biosimilars deserve unique, non-proprietary names is that unlike chemically synthesized drug products, no two biological products are identical, and small differences can have significant and unpredictable effects on patients' immune responses. They also argue that the inability to disaggregate safety information could lead to significant safety risks.

But Alan M. Lotvin, M.D., executive vice president of specialty pharmacy for CVS Caremark, says a unique suffix, for example, would "confuse the role of the nonproprietary name." He argues that biosimilars approved in Europe and elsewhere have the same INN as their reference with no evidence of safety problems. Different nonproprietary names would discourage states from allowing substitution even if the FDA has designated the biosimilar as interchangeable. "The different nonproprietary name will be used to suggest that the active ingredient in the two medicines are different," he states.

            

The American Pharmacists Association (APhA) has also weighed in against the use of suffixes. Back during an FDA workshop on the first set of draft guidance in May 2012, Marcie Bough, PharmD, then senior director, government affairs with the APhA, said suffixes present challenges for pharmacy operating systems and in processing for fulfilling orders. Suffixes may not be included in the original electronic or written prescription. they may fall off the electronic drop down menu order form for product selection, and they many not fit into the data field in the database. Michelle Spinnler, an APhA spokeswoman, says that continues to be the group's position.

The ASHP also sees potential problems with suffixes, though it sees problems, too, with unique names. "Unique INNs would complicate the collection of product safety data across the industry," notes Topoleski. "Unique INNs would make U.S. product names different than those in the rest of the world and such a policy would be contrary to the World Health Organization naming system." The ASHP therefore wouldn't oppose suffixes such as Greek letters but it would oppose prefixes.

Patient groups are something a wildcard in the biosimilar debate. On the one hand, they want cheaper biosimilars. On the other hand, they want to be assured those interchangeable and highly similar biosimilars are as safe and effective as the reference drug, and right for the patient. Marcia Boyle, president and founder of the Immune Deficiency Foundation, wants the FDA to prohibit immunoglobulin therapies from being interchanged, at least until the science advances significantly. She bolsters her case by referring to the worldwide voluntary withdrawl in 2010 by

Octapharma USA Inc. of 31 lots of octagam® [Immune Globulin Intravenous (human)] 5% Liquid Preparation]. This was performed as a result of an increased number of reported

events. "Unlike generic drugs, biosimilars can never be identical copies of a reference

product," she states. "The choice of product should not be determined by a pharmacist, regulator, or insurer, but by a physician in consultation with his/her patient."

It is impossible to predict how the debates over notification, interchangeability, and naming will turn out. But given the overwhelming success of small-molecule generics since Hatch-Waxman was passed in 1984, it is hard to imagine that either the FDA or the states will substantially stymie biosimilar access.

FERC To Review Recent Rule Requiring Permitting Of Auxiliary Facilities

Pipeline & Gas Journal
March 2014 - for the online version go HERE.

The Federal Energy Regulatory Commission (FERC) will look again at a new rule requiring certificates to be filed for right-of-way auxiliary construction and for landowners to be given a five-day heads-up before construction and maintenance work starts. That rule was published in November and went into effect Feb. 3.

The Interstate Natural Gas Association of America (INGAA) and National Fuel Gas Supply Corp. both asked for a rehearing, and FERC granted that wish on Jan. 29. The rule was issued as the result of a petition submitted in 2012 by INGAA whose requests were essentially squashed by FERC when it issued a final rule in November.

Joan Dreskin, general counsel, INGAA, says, "FERC issued a standard ‘tolling order’ in this case which allows them to act when they wish on the rehearing/clarification."

In part, the debate revolves around the difference between replacement and auxiliary facilities. FERC wants them treated similarly as "jurisdictional," meaning they would have similar requirements with regard to pipeline companies filing certificates which the commission would have to approve before the companies could start construction. INGAA says auxiliary facilities shouldn't be permitted.

INGAA had started the ball rolling in 2012 because of Commission staff discussions with pipeline representatives where FERC staffers stated that companies undertaking section 2.55(a) auxiliary installations to augment existing facilities must stay within the right-of-way or facility site for the existing facilities and restrict construction activities to previously used work spaces. Industry officials thought this was a change in policy which would force them to obtain certificates when auxiliary facilities were installed outside rights-of-way. The kinds of auxiliary facilities at issue include: valves; drips; pig launchers/receivers; yard and station piping; cathodic protection equipment; gas cleaning, cooling and dehydration equipment; residual refining equipment; and water-pumping equipment.

Given that ostensible change in policy made outside any rulemaking, INGAA filed its petition in 2012. FERC issued a proposed rule in December 2012 which simply codified the position its staff had laid out. INGAA protested. FERC argued the proposed rule was only a "clarification" which "articulated existing, long-standing constraints and obligations with respect to auxiliary installations." It then took more comments before ignoring INGAA's protests again when issuing the final rule last November.

The final rule also codified for the first time the common industry practice of notifying landowners prior to coming onto their property to install, replace or maintain auxiliary or replacement facilities.
In its request for rehearing, INGAA says that in the Final Rule, the Commission "persists as well in a fiction that its new ruling does not change what had been the plain and universal understanding of that provision for approximately 60 years until the December 2012 NOPR."

In addition to unlawfully converting an entire class of exempt, non-jurisdictional auxiliary installations into jurisdictional NGA facilities, the Commission, without referencing a record of abuse, without identifying any material threat to its statutory obligations, and without providing any premise based on relevant facts, extends regulatory limitations to these installations that in the past have applied only to separate and distinct replacement activities. The Commission’s Final Rule is arbitrary and capricious. It is not the product of reasoned decision making.

Besides absolving auxiliary activities from permitting, INGAA also wants FERC to clarify that the five-day prior notification requirement would not apply to activities done for safety, DOT compliance, in response to “one-call obligations,” or environmental or unplanned maintenance reasons that are not foreseen and that require immediate attention by the company and for activities that result in ground disturbance where such disturbance would be located entirely within the fence line of an existing, aboveground facility site.

David W. Reitz, Deputy General Counsel, National Fuel Gas Supply Corp. and attorney for Empire Pipeline, points out that PHMSA’s regulations require a company discovering a pipeline anomaly requiring immediate remediation to excavate and inspect the pipeline within five days of discovery. "Because of the time required to verify or determine the names and addresses of the property owners and to deliver the notices, five-day advance landowner notification would be impractical in these circumstances," he explains. "In addition, a pipeline receiving a one-call notification often has a maximum of 48 hours to determine and mark the precise location of its facilities, which may require some excavation."

New Congressional Bill Attempts to Aid Pharmacy Response to Drug Shortages

P&T Journal
January 2014 - for a PDF copy of the published version go HERE.

Compounding and Tracing Provisions Seek to Improve Quality of Drug Supply

The major drug-safety bill that President Barack Obama signed on November 27 attempts to remediate two specific problems concerning pharmaceutical distribution. The Drug Quality and Security Act (H.R. 3204)1 is intended to prevent the sale of contaminated compounded drugs such as the steroidal injections sold by the New England Compounding Center (NECC)—which caused 64 deaths—and the diversion of legitimate drugs into unsafe gray market channels, from whence they infiltrate legitimate hospital and retail pharmacies.

The compounding half of the bill is more important for pharmacists, and for those in hospitals doubly
so, because they do much of the purchasing of outsourced products from companies such as NECC,
which is now out of business. Hospitals are also increasingly performing a sizable amount of compounding.

To the extent the bill attempts to improve the quality of outsourced compounded drugs, it is a potentially significant piece of legislation. Hospital compounding is unaffected by any new regulations, despite a push from the compounding industry. The drug-tracing provisions force hospitals to pay more attention to transaction statements (outlining terms of the agreement) that they receive from wholesalers, which will be either paper documents or electronic e-mails or web-based transmissions. The information in those statements will have to be  verified if questions arise about the provenance of a shipment. Hospitals were specifically excluded from the requirement to “tag” repackaged drugs.
 
The bill started out as two  separate pieces of legislation and was eventually combined in to H.R. 3204. Its intentions are good, but weaknesses and half-measures threaten the effectiveness of both halves. Large “anticipatory compounders” can voluntarily choose to be regulated by the FDA (earlier versions of the bill made federal registration mandatory). The inspection standards for the new “outsourcing facility” category are clear. Also, there is no additional funding for state boards of pharmacy, which will continue to inspect hospital pharmacies and local compounding pharmacies. There are some new requirements for communication between the state boards and the FDA. Miscommunication was an issue in the NECC disaster. Overall,the compounding provisions are fairly toothless, and they may do little more than complicate the problem.
 
The bill does not mandate “track and trace” at the item or drug-package level as did the California law, which is scheduled to go into force in January 2015. The California law is now pre-empted by this new federal law. The new federal standard requires drug manufacturers, with some exceptions, to put two-dimensional (2-D) DataMatrix bar-code product identifierson salable units of packages after 4 years. Those bar codes must contain a Standardized Numerical Identifier (SNI), the lot number, and the expiration date on every medication package and case. For the next 4 years, however, tracing will be accomplished primarily via “Stone Age” transaction statements and information on paper.
 

Skeptics Worry About Bill’s Compromise Provisions

The many compromises that were made to achieve a passable bill dimmed enthusiasm for it in some
key quarters.“Although it is a scaled-back version of earlier legislation, this bill is an important first step in assuring that compounded sterile products are prepared safely,” says Paul Abramowitz, Chief Executive
Officer of the American Society of Health-System Pharmacists (ASHP).3 This year, the Department
of Health and Human Service’s Office of Inspector General reported that nearly all of the hospitals it surveyed use compounded sterile drugs and about 75% have purchased some compounded drugs from an external pharmacy.

Edith A. Rosato, RPh, IOM, Chief Executive Office of the Academy of Managed Care Pharmacy, is more specific in her criticism. She is concerned that the bill’s voluntary registration scheme in the compounding section will not achieve the main goal (i.e., protecting the public from the unauthorized compounding of drugs). She adds: AMCP is also concerned about another regulatory wrinkle in the bill.

A licensed pharmacy (which is already regulated by state pharmacy boards) that registers as an ‘outsourcing facility’ will then be subject to FDA regulation. We believe this dual regulatory scheme will lead to administration and regulatory confusion, creating opportunities for gaps in responsibility and accountability.
 
The FDA moved quickly to implement the compounding provisions. The requirements as to which drugs can be compounded by outsourcing facilities and how these facilities will be regulated are subject to a fast, one-year rule-making process. On December 2, the agency published some guidance documents.

The specter of drug shortages hung over both original bills. Hospital pharmacists in particular opted either to compound their own drugs if a manufacturer’s product suddenly became unavailable or to turn to large compounders, such as NECC, when a shortage developed. Similarly, when confronted with a particular shortage, gray-market wholesalers have come out of the woodwork to offer hospital pharmacists the short-supply drug, which might not have been properly stored since leaving the packaging line of its legitimate manufacturer, or it couldeven be a counterfeit item.
 
The FDA has been trying to eliminate shortages administratively. Its latest step came at the end of October, when it issued a proposed rule that would require manufacturers of valuable drugs to notify the FDA within 60 days of a permanent discontinuance or an interruption that is likely to be serious. But if a 60-day advance is not possible, the manufacturer must do so within 5 days after the supply disruption. The proposed rule doesn’t provide the FDA with any additional tools with which to prevent or mitigate a drug shortage.

Compounding Provisions Are a Wing and a Prayer

In the case of a drug shortage, the congressional bill does nothing to limit the compounding that hospitals can perform themselves, nor does it place limits on the outsourcing facilities from which the hospitals can purchase products. All out-sourcers in business today can stay in business tomorrow. The hope is that a large number of major outsourcing anticipatory compounders will voluntarily register for FDA regulation. If they pass muster during an FDA inspection, they will have an informal seal of approval and theoretically can be the compounders that hospital pharmacies turn to during a shortage.

However, it is not clear how big this new class will be. To begin with, the cost of entry is a minimum $15,000 annual fee. Each outsourcing pharmacy must then meet standards to be hammered out by the FDA. For a company to even be able to compound a drug, the FDA must first certify that there is a clinical need for a drug to be produced by an outsourcing facility or that it is a drug in short supply. The drug has to be compounded according to the U.S. Pharmacopeia, the National Formulary, or another compendium or pharmacopeia recognized by the FDA. This means that the FDA will be inspecting these outsourcing facilities to determine whether they comply with USP chapters 71, 795, and 797.

There is a long list of disclosures that the outsourcing pharmacy must provide on the drug’s label. The bill sets no specific schedule for inspection of these compounding facilities. The agency is supposed to come up with a risk-based schedule for inspection, which takes into account the facility’s history, the inherent risk of the drugs it is compounding, and whether the premises have been inspected within the previous 4 years. No minimum time between inspections has been established. In fact, the guideline could even be read to imply that the FDA generally doesn’t have to inspect more frequently than once every 4 years.

The final bill is silent on the current Good Manufacturing Practice (cGMP) requirements that this new category of outsourcing pharmacies will have to meet; no quality standards are mentioned. The absence of specific information about inspection was an issue during the Senate’s consideration of its bill. The industry complained that when the FDA inspected its facilities, which wasn’t very often, the FDA sought compliance with the cGMP standards written for conventional drugs.

In a May 2013 letter to the two Senate committee chairmen who were key authors of that body’s compounding legislation, Michael A. Koch, RPh, MBA, Vice President of Marketing and Support Services, Central Admixture Pharmacy Services, Inc. (CAPS), argued that companies like his are not “manufacturers,” such as the Pfizers and Eli Lillys of the world. He wrote[The] FDA has recognized that a compounding pharmacy does not perform many of the operations of a manufacturer of finished pharmaceuticals. However, in many cases, the FDA has claimed that particular cGMP obligations apply to particular compounding operations, and these claims have varied widely depending on the particular views of the specific FDA investigator conducting an inspection. The result has been confusion in the regulated industry and an unfair and uneven enforcement environment.

As a result of that complaint, the Senate included a provision in its version of the compounding bill that would require FDA to promulgate a new set of cGMP regulations applicable specifically to “compounding manufacturers.” The final bill dropped that provision.

Joseph M. Hill, Director of Federal Legislative Affairs at ASHP, said, “Our expectation is that the FDA will be inspecting based on cGMPs, and if it has to develop new ones for out-
sourcing compounders, it will do so.” David G. Miller, RPh, Executive Vice President and Chief Executive Officer of the International Academy of Compounding Pharmacists (IACP), explains that the final bill falls short in another area.

It’s important to note that the new ‘outsourcing facility’ is not only voluntary in nature; it does not have to be a pharmacy. In fact, one of IACP’s primary concerns is that because anyone can establish an outsourcing facility, so long as they have a pharmacist compounding or supervising the compounding of medications, there may be new entities emerging which are not required to be overseen or comply with the laws and regulations of a state board of pharmacy. Because the wording of H.R. 3204 in this section is so broad, there is no way to know which pharmacies may pursue becoming an outsourcing facilities or how many physicians, clinics, health systems, pharmaceutical companies, etc., may decide to establish and operate an outsourcing facility.

Richard Kruzynski, RPh, President of PharMEDium, a large-scale anticipatory compounder, says his company will register in the new category.6 In the past, PharMEDium as a “traditional compounder” had to obtain licenses from both state boards of pharmacy and one as a “manufacturer” from the FDA. The requirements in either case did not quite fit PharMEDium, which is neither a corner pharmacy nor a major pharmaceutical manufacturer. The “outsourcing facility” category fits PharMEDium’s operations more precisely. As a result of becoming an outsourcing facility, PharMEDium will have to submit reports to the FDA regarding production volumes and adverse events; it will also have to meet new labeling requirements.

Mr. Kruzynski says that he has no problems with those requirements but hopes that FDA inspections in the future will differ in nature from previous inspections. He expects the FDA to develop cGMPs that recognize the differences between major drug companies, which can produce 50,000 doses of a standard dose premixed drug using large mix tanks, and an anticipatory compounder like PharMEDium, which produces small batches (e.g., 10–20 units) for each hospital it works with. PharMEDium’s model is “sterile-to-sterile”; the drug vials arrive sterile from pharmaceutical manufacturers. This practice is consistent with 99% of hospital needs for anticipatory-classcompounds, does not include a big mix tank, and does not
create sterile water.

Drug-Tracing Provisions Exempt Hospitals as
‘Repackagers’
The drug-tracing portion of the Drug Quality and Security
Act has a much less significant impact, both immediate and
long term, on pharmacies. Drug manufacturers are its sole,
near-term target, and even there, the final bill appears to relax
even the already diminished requirements in the bills that
Congress passed earlier in the year.

Starting in January 2015, manufacturers must provide the
subsequent owner of a “lot” of product with a transaction’s history,
information, and statement in a single paper document or
in electronic format. Four years after passage of the bill, that
information must be transmitted electronically in the form of a
product identifier regarding the individual salable units of the
drugs, with some exceptions. The electronic identifier will be
specific to the individual salable package. It will have to include
the lot number; the expiration date; and the National Drug Code
(NDC), a unique alphanumeric serial number containing up to
20 characters (the SNI). This identifier will be printed as both
a 2D bar code and in “human-readable” form.

There was some concern that hospital pharmacies would
be classified as “repackagers” under the law. In some circumstances,
repackagers must put product identifiers on small
packages; however, the bill calls pharmacies “dispensers” and
relieves them either of having to pass transaction information
when they relabel products or of having to place product identifiers
on salable units.

Manufacturers have already moved, albeit in small numbers,
to label individual drug packages with electronic SNIs. The
FDA has produced guidance on how those SNIs should be
displayed, and almost all major companies are following the
guidelines published by GS1 Healthcare, the international
standards organization.

The key initial responsibility of pharmacists is to obtain
transaction data and statements from wholesalers. The pharmacy
can sign an agreement with its wholesaler to allow the
wholesaler to store this information. The following details are
required to be included:

• proprietary or established name or names of the product
• strength and dosage form of the product
• National Drug Code number of the product
• container size
• number of containers
• lot number of the product
• date of the transaction
• date of the shipment if it occurs more than 24 hours after
the date of the transaction
• business name and address of the person from whom
ownership is being transferred
• business name and address of the person to whom ownership
is being transferred

A pharmacy cannot accept any product after January 1, 2015,
unless it comes with this transaction information and a transaction
statement.Verifying the Key Responsibility of Pharmacies
In many cases, wholesalers will be handing over transaction
information and statements (the latter must contain some
specific elements too) in paper form, as they have been doing
for some time. However, some wholesalers may begin sending
that information in electronic form, and some may already be
doing so.

“The electronic data could be provided to the hospital pharmacy
as a B2B [business-to-business] data transaction to the
pharmacy system or potentially though a web portal,” says
Brian Daleiden, Vice President of Marketing at Tracelink.
Some hospitals will have to make hardware, software, and
process changes starting on January 1, 2015. Any changes will
be dedicated to allowing them to verify and reconcile received
product shipments against transaction data received from the
supplier during pharmacy receiving operations. Hospitals will
also need a repository to store transaction data records, documents,
and other information about investigations of “dubious”
products for 6 years after the date of the transaction (e.g.,
purchase of the product) or at the investigation’s conclusion.

The hospitals, though, can contract with their wholesalers to
establish that repository. Brian Daleiden explains:
For the receipt, storage, and update of paper-based transaction data,
the relative changes to current hardware and software systems
might be relatively minor outside of modifications to the document-
management system. For the receipt, storage, and update of
electronic transaction data, I expect that the typical hospital pharmacy
system was not designed to manage the product, production,
transaction, and attestation statement information [that] they will be
required to receive for Drug Quality and Security Act compliance.
Four years after the bill becomes law, manufacturers will have
to put an electronic product identifier on each salable package,
printing the SNI in human-readable form as well. At that point,
pharmacies will be able to verify individual items instead of lots.
During the first 4 years, the transaction statement includes only
the lot. The promise of electronic verification of the individual
salable unit, instead of the multiproduct lot, is great. Recalls
will be cheaper and faster, and there will be gains for pharmacy
inventory management—but only if pharmacies buy 2D barcode
readers. There is no requirement that they do so; they
will not have to, because the item-level product identifier will
also be printed in human-readable form on the salable package.
Verifying an individual unit, based on ostensibly humanreadable
product identifiers, could turn out to be an exercise
of looking for a needle in a haystack. If a pharmacy receives a
recall notice or a similar request from a state or federal official,
the pharmacy must quarantine the product and conduct an
investigation. There are specific requirements for what this
investigation must entail and how quickly it must be done,
generally within two business days.

Bob Celeste, Senior Director of Health Care for GS1
Healthcare, explains that not all human-readable SNIs are
understandable. The GS1 put out guidance earlier this year on
that subject, urging, for example, that manufacturers not mix
numbers and letters in any alphanumeric coding.

“Sometimes zeroes can be mistaken for the letter ‘O,’ ” he said.
There has also been some uncertainty in the industry aboutwhether to put the code “(17)” in front of the numeric representation of the expiration date, as recommended in the GS1 guidance, or whether to simply use the letters “exp” before the expiration date. These kinds of matters relating to the understandability of SNIs need to be resolved and ideally will be, through the FDA rule-making process.

The legislation is confusing. When it mentions an “investigation” that a pharmacy must conduct, it specifies additional steps that must take place after 7 years, including verifying that the product identifier (and the SNI) of at least three packages, or 10% of such suspected products (whichever is greater), or all packages (if fewer than three), corresponds with the product identifier for the product.
Presumably, by this time, manufacturers will have electronic databases that list all of their SNIs so that they can quickly respond to a request for verification. However, there is no requirement that a manufacturer must develop a database. It is possible that even after 7 years, some pharmacies will be verifying products using the human-readable SNI.

Conclusion

The drug-safety bill may be envisioned as a full-scale, inter-operable, electronic item-level track-and-trace system, like California’s, after 10 years, but only if a number of conditions are met. Along the way, the FDA will have to hold numerous public meetings, issue multiple guidance documents, and initiate various rules, including one to allow dispensers, such as hospital pharmacies, to receive exemptions for any final interoperable tracking system. Thus, the package-tracking provisions of the Drug Quality and Security Act shouldn’t keep any pharmacists up at night. For the next 7 years, they simply have to make sure that they and their wholesalers are providing correct transaction information and statements, which they may already be doing.

The bill’s provisions may lead to a shakeup of the anticipatory compounding industry, with the cream rising to the top as the most credible pharmacies seek and gain FDA registration. Hospital pharmacies will vie to skim that cream, but will there be enough of it?

EPA Opens Door to Consumer Use of New, Eco-friendly Refrigerant

Aftermarket Business World
December 23, 2013

In November, the Environmental Protection Agency (EPA) continued to clear a path for use in the U.S. of the new motor vehicle air conditioning refrigerant HFO-1234yf.

The agency said that states could not consider the refrigerant, which OEMs have started to use, a volatile organic chemical (VOC). That means states cannot limit HFO-1234yf’s use as part of an ozone/smog reduction strategy.

A Honeywell petition submitted to the EPA in 2009 led to the EPA decision. Honeywell and DuPont, the other major marketer of HFO-1234yf, are selling it as a replacement for HFC-134a in motor vehicle air-conditioners (MVAC). HFC–134a has been used in automobile MVAC systems across the industry since 1993. But HFC-134a has a global warming potential (GWP) of 1430, much higher than HFO1234yf's GWP of 4.

Car makers selling into Europe already face a European Union Directive mandating OEMs use AC refrigerants with a GWP below 150 starting last January. Use of HFO1234yf in the U.S. is being spurred by the EPA/DOT car mileage/greenhouse gas (GHG) requirements, which give automakers credits for use of green air conditioning refrigerants.

At about the same time the EPA was excluding HFO1234yf as a VOC, it was publishing final rule making changes in the Significant New Use Rule (SNUR) for HFO1234yf. These SNURS dictate what hoops manufacturers have to jump through before selling a new chemical. In many instances, distribution is limited. That was the case with the original SNUR for HFO1234yf issued in 2010.

According to Michael Conlon, the outside counsel for the Automotive Refrigeration Products Institute (ARPI), that 2010 SNUR effectively banned sales of HRO1234yf in the aftermarket. The new SNUR the EPA issued on November 1, 2013 took an important first step toward reversing that decision. "It was important to get this new SNUR because we could not have gone for a new SNAP rule without it," he explains.

SNAP stands for the EPA's Significant New Alternatives Policy (SNAP) program. It tells users of new refrigerants exactly how they can be used. In the case of the SNAP for HFO1234yf issued in March 2011, the EPA restricted its use to OEMs and service stations that comply with certain conditions, such as using containers that are over 20 pounds and have fittings that comply with SAE standards. The updated SNUR now gives the aftermarket retail market standing to expand that March 2011 SNAP to consumer use of HFO1234yf. The EPA is waiting for DuPont and Honeywell to come up with the proper fittings for containers below 20 pounds before approving consumer uses.
 
It is true that aftermarket sales of HFO1234yf, after an expanded SNAP approval is secured, will ramp up slowly. That said, General Motors is already using the refrigerant in the Cadillac XTS and in the European version of the Chevrolet Malibu. Over the next five years or so, GM will convert most of its models sold in North America to the new refrigerant, Curt Vincent, GM’s engineering manager for new refrigerants, has said.

Service stations are already set to perform aftermarket refilling. "There are at least 1,200 service centers in the U.S. that are currently equipped to service vehicles that have 1234yf, and we expect that to double over the next year as additional automakers, such as Chrysler, adopt the product," says DuPont spokeswoman Janet Smith. She adds the Obama administration is also considering the possible future delisting of 134a from the SNAP list as an option to reduce greenhouse gas emissions under the Obama administration’s Climate Action Plan.

But the biggest stimulus in the U.S. for use of HFO1234yf by OEMs is the EPA/DOT car mileage standard for model year 2017-2025 light duty vehicles, which gives automakers "credits" against CO2 tailpipe emissions when they use green AC refrigerants.

SEC's White Pushes for Disclosure Relief

Strategic Finance
December 2013

The SEC is readying a congressionally-authorized study looking at potential financial reporting requirements which can be eliminated. Securities and Exchange Commission Commissioner Mary Jo White has been talking up the notion of relieving corporations of having to disclose information no longer deemed "material" so that investors have an easier job of understanding 10ks and other financial reports. Congress included Section 108 in the JOBS Act in 2012 which requires the SEC to comprehensively analyze the rules that form the underpinnings of the SEC's disclosure regime. The JOBS Act included provisions aimed at making it easier for emerging companies to go public, in part by reducing their disclosure requirements, such as those having to do with reports on internal controls. The SEC Division of Corporation Finance is finalizing this report and White says the agency expects to make it public very soon. The odds are that those recommendations will focus on going beyond the JOBS Act provisions for "emerging" companies; but reporting relief for big corporations may be in the offing as well. Of course, Congress would have to turn any SEC recommendations into legislation, which would have to pass both houses.
     
White has been talking up the need for corporate reporting simplification and slimming. In a speech in mid-October to the National Association of Corporate Directors, White said: "But the study is only the first step in any potential review effort. Such a review will need to be guided by answers to a host of questions that will move us forward on the path to more optimal disclosure. It is an important priority for me."
    
She singled out the Industry Guides the agency issues for various sectors as being ripe for review. The oil and gas industry guide was updated in 2008. But those pertaining to the mining industry, bank holding companies--that one originally published in the 1960s--and others are in the on-deck circle. "An update to these guides could take a variety of forms," White explained in her NACD speech. "We could merely update them as guidance, or we could adopt actual rules.  We would need to consider whether and how companies and investors would benefit from these options."

      

White's intentions are hardly revolutionary; but she has also been sounding something of a radical notion in another area, to a polite degree decrying congressional mandates which seem more directed at exerting societal pressure on companies to change behavior, rather than to disclose financial information that primarily informs investment decisions. That soft criticism refers to a Dodd-Frank mandate that companies disclose involvement in extracting "conflict minerals" that originated in the Democratic Republic of the Congo (DRC) or an adjoining country. She added, " I must question, as a policy matter, using the federal securities laws and the SEC’s powers of mandatory disclosure to accomplish these goals."

Capitol Connection: The Financial Impact of the MU Stage 2 Extension

Healthcare Finance News
December 19, 2013 - for the online version go HERE.

The decision by the U.S. Department of Health and Human Services to push back by one year the deadline for compliance with meaningful use stage 2 is good news for hospitals and physician practices. Many providers have had trouble marshalling adequate financial resources toward meeting even the stage 1 deadline on implementation of electronic health records.

It has been slow going even for large hospital systems such as Catholic Health Initiatives (CHI), which established a $2.2 billion OneCare capital budget in 2011. Those funds go, in part, to reaching stage 1 meaningful use compliance by the July 1, 2014 deadline. About 20 of CHI’s 87 hospitals will not make that deadline, incurring millions of dollars in penalties.

About 15 of the company's 87 hospitals will be entering stage 2 in 2014, which began, for hospitals, on Oct. 1, 2013. The start date for physician practices is January 1, 2014. Hospitals initially had two years to complete stage 2. But in December, HHS officials announced a one-year extension to October 2016.

“The extension of the stage 2 deadline for us is great,” said Ann D. Shepard, RN-BC, MSN, Vice President and Chief Nursing Informatics Officer at CHI. Shepard pointed out that the extra breathing room is doubly important because CHI hospitals and every other hospital in the country has to switch over to the ICD-10 coding system by October 1, 2014. Hospitals may now be able to reallocate stage 2 “dollars” to ICD-10 efforts. The American Hospital Association told the Senate Finance Committee last July that a survey it completed found that the vast majority of hospitals are on track for the transition to ICD-10, but see meaningful use as the single most challenging competing priority.

But, said Russell Branzell, CEO of the College of Healthcare Information Management Executives, “We still believe there's going to be a pressure point in 2014 for ICD-10 and Stage 2.”

Given the extra year to certify all its hospitals to stage 2, Shepard stated that none of CHI's hospitals expect to be penalized for failing to meet stage 2 meaningful use standards in 2016. Most health systems hope they’ll be able to say the same thing.

Capitol Connection is a monthly column looking at the financial implications of healthcare policy.