Democratic Takeover of House Sparks Drug-Price Legislation Talks

P&T Journal - for the original article go HERE.  For a PDF version go HERE.

But Strong Legislation Unlikely Given Patient and Industry Opposition

Representative Elijah Cummings (D–MD), chairman of the House Oversight and Reform Committee, was apoplectic. He was delivering his opening statement at the committee’s first hearing for 2019, titled Examining the Actions of Drug Companies in Raising Prescription Drug Prices. He was describing the devastation felt by his leading witness, Antoinette Worsham, whose diabetic daughter had died for lack of the insulin medicine she could not afford. “It would have cost $1,000 for three months of insulin!” Cummings thundered into the microphone in his opening statement. “She died.”

On the other side of Capitol Hill, that same day, Senator Ron Wyden (D–OR), was pounding his right hand on the dais during the Finance Committee’s first hearing of the year, probably not coincidentally titled (given the House committee’s hearing the same day) Drug Pricing in America: A Prescription for Change, Part 1. Wyden had just addressed Kathy Sego, another mother whose college-age son with stage 1 diabetes had resorted to rationing insulin because the cost per month, even with insurance, was $1,700. “Manufacturers are taking advantage of families like yours,” Wyden, the top Democrat on that important committee, said, his voice rising. Then pounding the tabletop in front of him, he added, “No one has been willing to take them on. That ends today.”

President Trump has been condemning high drug prices since the start of his term, and his Department of Health and Human Services (HHS) has issued a number of proposed regulations that would attack high prices on a number of fronts. In the last Congress, there was plenty of fire and brimstone aimed at drug companies, and from both parties, but no significant pricing-reform legislation advanced. That was in large part a result of legislative roadblocks in the Republican-controlled House.

With Democrats taking control of the House this year, the 116^th Congress looks to be in sync with Trump on drug prices and theoretically—theoretically being the key word—able to move forward with legislation clamping down on unreasonable drug prices. But although there is a lot of rhetorical thundering from Democrats in this new Congress, there are indications that actions may not speak louder than words. Already, key Democratic House committee chairmen have indicated opposition to some of the reforms pushed by the Trump administration, such as ending the current safe harbor for rebates paid to pharmacy benefit managers (PBMs) by drug manufacturers. The HHS proposed a rule in early February ending that safe harbor and proposing a new one that would cover rebates passed along to consumers at the pharmacy counter (see Prescription: Washington column on page xx). Numerous patient advocacy groups support the proposed rule.

However, key Democrats in the House are opposed to ending the current safe harbor for rebates in Medicare, putting them on the PBMs’ side and against consumers. Ways & Means Committee Chairman Richard Neal (D–MA) and Energy and Commerce Committee Chairman Frank Pallone, Jr. (D–NJ) issued a statement saying, “The Trump administration’s rebate proposal will increase government spending by nearly $200 billion and the majority of Medicare beneficiaries will see their premiums and total out-of-pocket costs increase if this proposal is finalized. While we agree that the cost of prescription drugs must be addressed, we are concerned that this is not the right approach.”

That pro-rebates position from Democrats surprised some patient advocacy groups, who are opposed to rebates and support HHS’ proposed rule. Carl Schmid, Deputy Executive Director of the AIDS Institute, says, “I was surprised they took that position. Maybe they didn’t have all the information; maybe it was a knee-jerk reaction because it came from the Trump administration.”

It is too early to tell whether Democrats will propose legislation to nix Trump’s proposed rule on rebates, and, if they do, whether they will gain any Republican support, which is crucial for passing any drug-pricing legislation on broader health care or otherwise. However, some bills that faltered in the last Congress because of Republican control of the House will undoubtedly advance in and probably be approved by this new Congress.

A key example is the Creating and Restoring Equal Access to Equivalent Samples (CREATES) Act, which would give generic companies more leverage to force brand-name companies to supply drug samples. That bill passed the Senate Judiciary Committee last year with bipartisan support but never came up in the House because of GOP leadership opposition. This year, Pallone replaces Representative Greg Walden (R–OR) as chairman of the House Energy & Commerce Committee. Walden opposed the CREATES Act; Pallone is an enthusiastic supporter. But Erik Komendant, Vice President of Federal Government Affairs at the Association for Accessible Medicines, the generic industry trade group, says, “Nothing is a done deal.” He points out that there are 90 new members in the House and 10 in the Senate. “Many of them campaigned on and heard from constituents about high drug prices,” he says. “And now is the time for Congress to pass CREATES and take meaningful action to lower the cost of prescription drugs for patients.”

However, CREATES does nothing to solve the more important brand-name- versus-generic conflict: brand-name extension of patents to block the entry of generics, as has been the case of the best-selling drug in the world, AbbVie’s Humira, whose main patent expired in 2016. But AbbVie has extended that drug’s patent to 2034 by gaining other, follow-on subsidiary patents. AbbVie has licensed Humira to seven companies that will be allowed to sell Humira in 2022 in Europe, but not in the U.S. Humira, an arthritis drug, has a list price that has increased from $19,000 to $38,000 a year over six years, according to Wyden.

But where Democrats and Republicans agree––either in substantial numbers as with the CREATES Act, or when a bipartisan team of leading members of an influential committee sponsor a bill––legislation will move. Wyden’s Right Rebate Act (S.205), which closes a loophole that allowed the EpiPen manufacturers to “rip off” consumers, according to Finance Committee Chairman and act co-sponsor Senator Chuck Grassley (R–IA), is an example of a bipartisan bill with a tailwind. At the hearings on February 26, Grassley also referred to Senator Amy Klobuchar’s (D–MN) Pay for Delay bill, of which he is an original co-sponsor. It would limit brand-name companies from paying generics companies to delay the introduction of generics, including biosimilars. Another example is legislation forcing drug companies to include list prices in television advertisements. Such a bill passed the Senate last year by a bipartisan vote but never came up in the House because of GOP committee chairmen opposition. The Trump administration has proposed a rule mandating the publication of list prices but the drug industry has threatened a lawsuit, so congressional passage of a bill would make any lawsuit null and void. There is also bipartisan support for a Grassley bill allowing the importation of lower-priced foreign drugs, a proposal that some patient groups, not to mention the drug manufacturers, oppose.

In fact, the Democrats who are now in control of the House will find Republican members freer—no longer having to buck leadership—to support drug-pricing legislation. Representative Bob Gibbs (R–OH) questioned Gerard Anderson, Professor of Health Policy and Management at Johns Hopkins University, at the Cummings hearings about a number of issues, including orphan drug pricing, the use of risk evaluation and mitigation strategies (REMS) by patented companies to thwart generic introduction, and PBMs. “There are lots of problems about how the PBMs are operating. If we address the orphan issue, the REMS, and the PBMs, we’ll make a lot of progress without over-regulating and disincentivizing, and let the market function,” Gibbs said.

These bipartisan drug-pricing bills will probably not pass Congress as separate legislation. Rather, they will be added to a larger health care bill. Senator Lamar Alexander (R–TN) began a hearing on February 5 in the Senate Health, Education, Labor and Pensions Committee, of which he is chairman, by referring to his request to health care groups to provide suggestions on what the federal government can do to lower the cost of health care for American families. “This year I am committed to passing legislation based on that input,” he stated. Alexander said that he and Senator Patty Murray (D–WA), the ranking Democrat on the committee, have met with Grassley and Wyden “to see if we can find one or two big things and several medium-sized things that will help reduce health care costs.” Alexander is retiring in 2020 so it is likely that the committee, on a bipartisan basis, will pass some health care legislation during this session of Congress to memorialize his tenure.

House Republicans Closely Aligned with Drug Industry

To get some idea as to why House GOP leaders may have been protective of the pharmaceutical industry and opposed legislation such as the CREATES Act, which drug manufacturers have also opposed, one only has to go to www.opensecrets.org. and view the top recipients of drug industry political action committee (PAC) contributions in the 2017–2018 congressional session (the category includes both pharmaceuticals and health care products). OpenSecrets is a database run by the Center for Responsive Politics. Of the top four senators and representatives receiving PAC contributions from the drug industry, three were House Republicans, and all were in leadership positions, especially regarding drug industry legislation. Representatives Greg Walden (R–OR), Kevin McCarthy (R–CA), and Kevin Brady (R–TX), who received contributions of between $315,000 and $460,000, were, respectively, chairman of the Energy & Commerce Committee, majority leader of the House, and chairman of the Ways & Means Committee.

The Pharmaceutical Research and Manufacturers Association (PhRMA) contributed $28 million in the 2017–2018 election cycle to candidates and party PACs. Its biggest contribution was to the Grand Old Party Political Action Committee (GOPAC), whose motto is Educating and Electing a New Generation of Republican Leaders. PhRMA’s $215,000 contribution was more than four times the amount of the next biggest contribution GOPAC received, and was a significant percentage of the PAC’s $747,900 total revenue. PhRMA’s millions went to numerous Washington lobbying firms, 10 of whom received more than $250,000 in 2018. Their contributions put PhRMA in the number four position among trade associations, behind the U.S. Chamber of Commerce, the National Association of Realtors, and the Open Society Policy Center.

Among drug industry companies, Pfizer and Amgen were number one and number two in regard to lobbying expenditures ($11.3 million and $10.9 million, respectively), with eight other companies spending over $6 million, including the Biotechnology Innovation Organization (BIO), the trade association for the biologics industry.

Where Debate Is Headed

The big question with regard to any legislation on drug prices is whether facts intercede with rhetoric and emotion. Drug prices in general declined over the past year, according to the Bureau of Labor Statistics, which says that the consumer price index (CPI) for the prescription drug category (all urban consumers) dropped 0.6% between the end of 2017 and the end of 2018. The increase in the CPI for all items was 1.9% over this period; medical care services as a whole were up 2.5%. However, regardless of whether prices are up or down, it is clear that prices for drugs in the U.S. are unquestionably higher than they are elsewhere in the world, often by substantial amounts.

Douglas Holtz-Eakin, president of the American Action Forum, says, “Fundamentally, there is no broad prescription- drug pricing crisis. Indeed, in most instances, things are working just fine. Rather, what we face are more nuanced challenges.” Those nuanced challenges concern new, expensive, and often sole-source specialty drugs. Some sole-source generics have also posted ridiculous price increases. There are some problems, too, with the extension of brand patents in ways that have drawn critics—AbbVie’s Humira being a prime example—as well as efforts to block the entry of generics, which, in Humira’s case, the CREATES Act attempts to alleviate.

Any anger over drug prices and medical costs more broadly will only translate into legislative action where there is bipartisan agreement, Democratic takeover of the House aside. Thus, legislation giving Medicare the authority to negotiate drug prices, which is the topic of one bill sponsored by Senator Klobuchar, a presidential aspirant supported by many Democrats, is going nowhere.

Congress is likely to focus on current costly federal programs that need reform. At the top of that list are the Medicare Part D outpatient drug program, the Part B physician office/outpatient facility-reimbursement program, and the Medicaid drug-rebate program. Outside groups such as the Medicare Payment Advisory Commission (MedPAC) and its Medicaid counterpart annually recommend the reform of all three programs.

Part D spending was over $100 billion in 2016; Part B spending was close to $30 billion. Mark Miller, executive vice president of health care at the Laura and John Arnold Foundation, and former executive director of MedPAC, told the Finance Committee at its January 29 hearings that the average Medicare household will use approximately 15% of their total expenditure on health care. In Medicaid, spending on drugs grew by almost 50% between 2011 and 2017. “The federal government and states spent about $30 billion on drugs in Medicaid in 2017, after rebates,” Miller explained.

Miller said new treatments are launching at increasingly unsustainable prices that are not justified by their research and development costs. He cited life-extending cystic fibrosis treatments that cost close to $300,000 per year. Chimeric antigen receptor T-cell (CAR-T) therapy can easily top $500,000, and several companies have discussed pricing gene therapies in the region of $2 million.

Aaron Kesselheim, MD, director of the Program On Regulation, Therapeutics, And Law at Harvard Medical School, says list prices for brand-name drugs have increased from about 8% to 16% per year over the last decade, well beyond the CPI general inflation rate of 1–3% per year. U.S. drug prices and spending far exceed those of other, similar industrialized countries around the world. For example, in countries like Canada, Germany, France, and Australia, all of which have excellent health care systems, per-capita expenditure for prescription drugs is $400 a year compared to $850 a year in the U.S. The main driver behind the U.S. figure is brand-name drugs, which account for 10% of prescriptions and 75% of outlays.

But legislation to trim federal and patient spending on Part D, Part B, and Medicaid is hardly a done deal, given the broad opposition from drug manufacturers, PBMs, and patient advocacy groups to many of the Trump administration’s regulatory initiatives meant to cut federal and patient costs by reining in prices of specialty drugs, which account for the lion’s share of federal (and commercial) drug spending.

The Medicare Part B program allows physicians and hospital outpatient clinics to bill Medicare and patients, where there is a deductible or co-payment or both based on the “average sales price” alone—that is, what the market can bear—with no consideration as to the value or cost-effectiveness of the drug. Again, these are typically the expensive oncology, hepatitis C, and arthritis drugs, often biologicals. Among the 75 drugs with the highest annual Part B expenditures in 2016 (accounting for about $20 billion, or 77% of Part B drug spending), prices for 65 of the 67 drugs with evaluable data (97%) were considerably higher than the median prices in other high-income countries (Japan, Germany, Switzerland, and the UK), and generally made and sold by the same manufacturers as in the U.S. In May 2018, drug prices were, on average, 46–60% lower in those countries than in the U.S.’s Medicare drug-benefit program.

Pressure on Congress from Interest Groups

Trump’s Centers for Medicare and Medicaid Services has already proposed a major reimbursement change for Part B drugs (see the March 2019 issue of P&T), basing drug prices on international prices and a competitive acquisition program where hospitals and physicians would have less incentive to buy the highest-priced drugs, which spikes their reimbursement. But importing international drug prices into Medicare has been panned by Express Scripts and other PBMs, who argue that it would destroy the PBMs’ incentive to participate because they would buy drugs from U.S. manufacturers at high prices and have to sell them at low foreign prices. There has been considerable opposition to that from interest groups and drug manufacturers, among others.

Democrats in Congress have endorsed an international pricing index, not just for Part B drugs but for all drugs, paid for by the federal government and private employers. Their Prescription Drug Price Relief Act would peg the price of prescription drugs in the U.S. to the median rate in Canada, the UK, France, Germany, and Japan. If pharmaceutical manufacturers refuse to lower drug prices below that level, the federal government would approve cheaper generic versions of those drugs, regardless of any patents or market exclusivities in place. It is unclear, however, whether that bill will gain any Republican support. Schmid of the AIDS Institute says his group opposes the bill.

The flip side of questionable Republican support for those pricing caps is the questionable Democratic support for Trump-proposed changes to Part D, including new power for pharmacy and therapeutics committees to limit access to drugs. Chief among those changes is a constriction of the current six “protected classes” by allowing the use of step therapy and prior authorization, neither of which can be used in those six categories at present. That initiative, like the Part B initiative, is aimed at the specialty drug category by, for example, forcing cancer patients to try less expensive alternatives before being prescribed the most expensive oncology drugs. The American Society of Clinical Oncologists calls the proposal “misguided.” The six classes are: (1) antidepressants; (2) antipsychotics; (3) anticonvulsants; (4) immunosuppressants for the treatment of transplant rejection; (5) antiretrovirals; and (6) antineoplastics, except in limited circumstances. The Trump administration argued that the protected classes do not allow normal price negotiations and that there is “a strong incentive for the promotion of overutilization, particularly off-label overutilization, of some of these drugs.”

The Obama administration also published a proposed rule in 2014 that would have relieved Part D plans from providing “all or substantially all” of the drugs in the six protected categories. But patient groups complained to Congress and bipartisan pressure forced the Obama administration to cease and desist. Now the Trump administration has picked up the cudgel against the six protected classes.

Patient and physician groups and drug companies are besieging Congress once again. In response, Senators Marco Rubio (R–FL) and Kyrsten Sinema (D–AZ) have circulated a letter to HHS Secretary Alex Azar decrying the changes. They wrote that although they applauded the administration’s commitment to lowering drug prices, “undermining the protected class status of medications could have much larger consequences in the long term.” Representatives Barbara Lee (D–CA) and Will Hurd (R–TX) are readying a similar letter from House members.

Anyone who thinks Democratic control of the House will lead to congressional passage of important drug-pricing legislation oughtn’t bet their 401(k) on that. Although drug companies, PBMs, physician groups, and patient advocacy organizations swear they want to do “something” about high drug prices, they are simultaneously opposing many of the proposals that would reduce those prices the most. One almost can’t blame Congress for being frozen in its tracks.

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

Early Biosimilars Face Hurdles to Acceptance

P&T Journal - June 2016 for the original article go HERE.

The FDA Has Approved Few, So Lack of Competition Is Keeping Prices High

The Food and Drug Administration (FDA) approval of Inflectra (infliximab-dyyb) in March as the second bio-similar cleared for sale in the U.S. gave the agency a small victory in a war of sorts that it has been losing badly. But the agency’s green-lighting of a biosimilar is no guarantee that the market will receive the product with open arms, as the experience of Zarxio (filgrastim-sndz) proves.

Five years after Congress gave the agency the authority to approve supposedly cheaper alternatives to budget-busting biologics, the FDA has cleared only two. “I know people are anxious to see more progress and certainty,” admits Janet Woodcock, MD, head of the FDA’s Center for Drug Evaluation and Research. “Most of the progress so far has been under the hood.”

Pfizer’s Inflectra will compete with Janssen’s Remicade, the reference drug. Zarxio (marketed by Novartis subsidiary Sandoz) competes against both Amgen’s Neupogen (filgrastim) and Teva’s Granix (tbo-filgrastim); the latter was approved as a biosimilar in Europe but as a biologic in the U.S. Pfizer says it will be selling Inflectra by the end of 2016, once all legal barriers fall. Hospital pharmacists are eagerly awaiting its arrival. In usage, infliximab is typically at or near the top among the drugs in a hospital pharmacy. Hospitals use it for rheumatoid arthritis, Crohn’s disease, colitis, and a host of secondary and tertiary off-label purposes. Moreover, doses typically escalate. Remicade’s cost was $3,159 per administration and $18,129 per beneficiary in 2013, according to a June 2015 report from the Medicare Payment Advisory Commission.¹

But Zarxio’s early experience shows that biosimilars, when first introduced, face hurdles. “Our P&T committee has not reviewed Zarxio yet and we have not used it in patient care,” says John Fanikos, Executive Director of Pharmacy at Brigham and Women’s Hospital in Boston, Massachusetts. “Granix was not approved as a biosimilar but through the biologics license application pathway. Since its list of indications is comparable to Neupogen but not all-inclusive, we added it to the formulary as our preferred growth factor.”

When Zarxio first came to market, it was more expensive than Granix but less expensive than Neupogen. “We could not see a reason to use Zarxio on the inpatient or outpatient sides of care,” Fanikos explains. “Sandoz has recently come forward with a contract favorable in terms of pricing, but the other companies have made adjustments in their pricing, too.”

Moreover, physicians haven’t been clamoring for Zarxio. “I was somewhat shocked; many of physicians had no idea what the biosimilar process even is,” states one hospital pharmacist who did not want to be named. “Even those that do would have to be aware of the differences between Neupogen, Granix, and Zarxio. Physicians who have prescribed filgrastim for years are likely to keep prescribing Neupogen rather than going down the list to filgrastim alternatives with suffixes,” he adds.

Even if physicians were totally up to speed on biosimilars, neither Granix nor Zarxio is available in a vial. Because children use filgrastim in lower doses, children’s hospitals need it in a vial. Their only alternative is Neupogen. Pediatric hospitals such as St. Jude’s Children’s Hospital and Children’s Healthcare of Atlanta make up about 5% to 10% of the client base for Vizient, Inc. “That is very influential when organizations like those cannot use a product in question,” says Steven Lucio, Senior Director of Clinical Solutions and Pharmacy Program Development for Vizient, a large group purchasing organization that represents academic medical centers, pediatric facilities, community hospitals, integrated health delivery networks, and nonacute health care providers. Vizient represents almost $100 billion in annual purchasing volume.

Biosimilars in different therapeutic categories face different challenges. For example, Pfizer won’t have to deal with a Granix-like competitor once Inflectra comes to market. The biosimilar will go head-to-head with Remicade. However, infliximab is a mono clonal antibody and therefore a more complicated biologic than filgrastim. Infliximab patients are not immune-compromised, which means the prescribing physician has to be much more concerned about potential side effects. Filgrastim patients are already immune-compromised. “Rheumatologists, dermatologists, and other physicians using infliximab will have to have more of a clinical conversation with patients before using Inflectra since it is not an exact copy of Remicade,” Lucio says. “And that will pose a higher hurdle for its use.”

The FDA Is Part of the Problem

The FDA’s assignment of suffixes is one of a number of controversial regulatory issues that stymie acceptance of biosimilars. The agency published a proposed rule on suffixes² in the summer of 2015 and has still not produced a final rule. The agency received different opinions from different parties as to whether a suffix ought to mimic a biosimilar marketer’s name, as is the case with filgrastimsdnz, or whether the suffix should not conjure up the marketer’s name, or whether the reference drug ought to have a suffix, which is not now the case. Neupogen is simply filgrastim.

Numerous, important guidance documents are also stuck in the FDA’s maw. The FDA’s slow pace is not fully its own fault. Congress has never appropriated segregated funds for the biosimilars program. As part of the Patient Protection and Affordable Care Act (PPACA), the agency was allowed to charge companies user fees for submitting applications. But given the regulatory uncertainty, few applications have been submitted. Instead, the agency has charged companies for meetings during which the FDA advises them on what they need to do prior to submitting an application. Those fees totaled $6 million, $13 million, and $23.8 million in fiscal years (FY) 2013, 2014, and 2015, respectively. Meanwhile, a study by the consulting firm Eastern Research Group (ERG)³ commissioned by the FDA had the agency spending $23.6 million in FY 2013, $21.4 million in FY 2014, and $28.7 million in FY 2015. That $74 million total compares to the $42 million the agency raised in user fees. Still, the mismatch in funding only partly explains why the agency has missed quite a few deadlines it set for itself in terms of answering sponsors’ questions posed during user-fee meetings.

“The FDA infrastructure put into place for BsUFA I is insufficient to meet the objectives and manage the workload it currently faces,” says Hubert C. Chen, MD, Chief Medical Officer of Pfenex. “This is consistent with the experience of Pfenex, as we have worked with the agency across multiple programs in diverse therapeutic areas.” BsUFA is the Biosimilar User Fee Act included in the PPACA.

Dr. Woodcock paints the early troubles of biosimilars with the brush of perspective. She argues the small-molecule generic-drug approval program launched by the Hatch-Waxman law in 1984 took a while to gain momentum. “We didn’t have success overnight with that program,” she says. “But today, over 88% of prescriptions are filled by generics.”

Of course, three decades ago the eight leading drugs in U.S. sales were not expensive biologics, all costing Medicare, for example, more than $1 billion a year and sapping the savings of Americans in all walks of life. So the exigencies surrounding the need for faster biosimilar introductions are magnitudes greater than they were for chemical generics in the 1980s. Express Scripts, one of the largest U.S. pharmacy benefit management organizations, estimates potential savings of $250 billion in the next decade with the approval of just 11 biosimilar products.⁴ A 2014 RAND Corporation study estimates that biosimilars will lead to a $44.2 billion reduction in direct spending on biologic drugs from 2014 to 2024, with anti–tumor necrosis factor agents such as infliximab accounting for the largest chunk of savings (Figure 1).⁵

However, because of the shortage in funding, the FDA’s progress on biosimilars may well get worse before it gets better. As of January 21, 2016, 59 proposed biosimilar products to 18 different reference products were enrolled in the Biosimilar Product Development (BPD) Program. “What I am concerned about is that the program is going to explode and we will not have the staff to handle it,” Dr. Woodcock says.

At hearings of the House health subcommittee on February 4, 2016, Mary Jo Carden, RPh, JD, Vice President of Government and Pharmacy Affairs for the Academy of Managed Care Pharmacy expressed concern about the ability of biosimilars to reach their full potential in the United States because of incomplete guidance from the FDA, confusing federal and state regulatory guidance, and lack of clarity related to payment, coding, and reimbursement.

FDA Guidance Documents Are Coming Slowly

The FDA cleared Inflectra two months after the House subcommittee hearings. Manufactured by Celltrion, it is being marketed in the U.S. by Pfizer’s Hospira subsidiary. Inflectra is approved for a half-dozen uses, including psoriasis and five other conditions in which the immune system attacks the body’s tissues. The drug helps reduce inflammation and control the immune system, which slows those diseases. Remicade, first approved in 1998, is the top-selling medicine of Johnson & Johnson (Janssen’s parent company), with sales of $6.56 billion in 2015.

Inflectra and Zarxio were approved while many critical FDA guidance documents were incomplete. Although the Biologics Price Competition and Innovation (BPCI) Act does not require the FDA to issue guidances before approving a biosimilar application, the FDA understands the importance of guidances in helping to ensure successful implementation of this new pathway.

Perhaps the most important upcoming guidance concerns interchangeability. The FDA did not deem Inflectra interchangeable with Remicade; the same was true for Zarxio, which is not interchangeable with Neupogen. If they were interchangeable, a pharmacist could substitute the biosimilar for the reference product without checking with the physician first. The FDA has not yet established the standard it will use when judging whether a biosimilar is interchangeable.

The FDA expects to publish the eagerly awaited draft interchangeability guidance by the end of 2016. To meet the standard for interchangeability, an applicant must provide sufficient information to demonstrate biosimilarity and also to demonstrate that the biological product can be expected to produce the same clinical result as the reference product in any given patient. The applicant must also demonstrate that if the biological product is administered more than once to an individual, the risk in terms of safety or diminished efficacy of alternating or switching between the use of the biological product and the reference product is not greater than the risk of using the reference product without such alternation or switching.

“Interchangeability is the thing about biosimilars that makes a lot of physicians nervous,” explains Donald Miller, PharmD, a Professor of Pharmacy Practice at North Dakota State University. “Interchangeability means a pharmacist could switch products without physician authorization, and thus potentially expose a patient to a product with slightly different immunogenicity without the physician being aware of it.” Dr. Miller is a member of the FDA advisory committee that recommended approval of Inflectra in February.

While the FDA will determine interchangeability, the states will control automatic substitution—and states are already approving a variety of limits on that still-to-come process.

Even if pharmacists don’t have to notify physicians when a biosimilar is rated interchangeable, pharmacists could still be in an uncomfortable position. Pharmacists may feel that they are “under the microscope” when switching to a biosimilar based on their own judgment, and they may hope that any unilateral substitution doesn’t come back and cause trouble for them, for whatever reason.
However, the publication of draft guidance does not suddenly quiet controversy. That wasn’t the case after the FDA published its draft labeling guidance in March.⁶ The guidance says biosimilars can use the clinical data gathered by reference product sponsors. That is a point of controversy, with some companies and patient groups saying the company producing the biosimilar ought to include its own clinical trial data on the label. Regulators would also allow biosimilar labels to include the statement that the product is biosimilar to the reference product.

That doesn’t mean the biosimilar’s label has to be identical to the reference product label. It does not. It needs to reflect currently available information necessary for the safe and effective use of the product. Certain differences between the biosimilar and reference product labeling may be appropriate. For example, biosimilar product labeling conforming to the physician labeling rule and/or pregnancy and lactation labeling rule may differ from reference product labeling because the reference product labeling may not be required to conform to those requirements at the time of licensure of the biosimilar product. In addition, biosimilar product labeling might have to reflect differences such as administration, preparation, storage, or safety information that do not otherwise preclude a demonstration of biosimilarity.

The Generic Pharmaceutical Association (GPhA) and its Biosimilars Council praised the draft guidance. Chip Davis, Jr., GPhA President and Chief Executive Officer, says the guidance takes steps to avoid confusion and in many aspects mirrors the protocol for the labeling of generic drugs. For example, a statement defining biosimilarity would be included rather than lengthy and already established scientific data proving biosimilarity. And immunogenicity details would mirror the label content of the reference product. “GPhA and the council are especially pleased that the proposed label contents avoid causing confusion or raising unnecessary questions about the safety and efficacy of biosimilar products,” he adds. “We also commend the agency for postponing guidance on interchangeable biologic labeling at this time.”

Andrew Powaleny, Senior Manager of Communications for Pharmaceutical Research and Manufacturers of America, declined to provide his group’s views on the draft guidance in advance of the deadline for written comments.

The Undermanned FDA

The FDA’s tentative decision in the draft labeling guidance not to require biosimilar companies to cite their own data from their own clinical trials may be a practical necessity given that the FDA clearly does not have the staff to review all that data. Budget begets staff, of course, and budgets have not been kind to the FDA’s biosimilars program. The ERG study proved that.³ User fees have simply not been sufficient for the FDA to provide necessary staff resources for prospective biosimilar marketers who pay for one of five types of meetings the FDA offers under its BsUFA program. The number of those meetings has far outpaced what the FDA projected when the user-fee program was put in place. There were 59 BPD program participants as of November 2015. When the BsUFA went into effect, the FDA had anticipated a total of 11 participants in the BPD program by FY 2015.

In December 2015, the FDA held a meeting to get input on the changes it needs to the biosimilar fee program. Any modifications would be made by Congress when it reauthorizes the BsUFA. David R. Gaugh, RPh, Senior Vice President for Sciences and Regulatory Affairs at the GPhA, says the meetings the FDA holds with potential biosimilar sponsors are extremely useful, but at times there are uncertainties about the outcomes. “With that said, the meetings should have well-defined objectives, clear outcomes, and meaningful decisions about future development options,” he explains. “Where the outcome or guidance is unclear to the sponsor, there should be an opportunity for a timely follow-up teleconference to promote better understanding, communication, and transparency.”

Critics Complain About Medicare Policy, Too

Criticism over biosimilar policy has also encompassed the Centers for Medicare and Medicaid Services (CMS). In October 2015, the CMS clarified its policy on reimbursement for biosimilars, which are paid for mostly under Medicare Part B, where physicians administer the drugs in their offices or outpatient infusion clinics provide the drugs. But reimbursement also goes through Part D when patients are able to self-administer. The new policy managed to offend nearly every pharmaceutical sector; both generic and brand-name industry associations decried a number of aspects of the new policy, in some instances the same aspect.

The final rule clarifies that the payment amount for a biosimilar is based on the average sales price (ASP) of all National Drug Codes assigned to the biosimilars included within the same billing and payment code.⁷ So all biosimilars citing Remicade as their reference drug would be paid the same. This is the way Medicare pays for chemical generics, which are considered multiple-source drugs. The CMS would assign the first biosimilar, such as Zarxio, a code under the Healthcare Common Procedure Coding System (HCPCS). All other Remicade biosimilars would have the same HCPCS code. Zarxio’s code is Q5101 Injection, Filgrastim (G-CSF), Biosimilar, 1 mcg. Zarxio would then pick up a modifier to help track its use and potential adverse effects. For Zarxio, that would be ZA-Novartis/Sandoz.

Sandie Preiss, Vice President of Advocacy and Access for the Arthritis Foundation, says, “We believe that treating biosimilars as multiple-source products stands counter to other biosimilar policies and the intent of Congress in passing the Biologic Price Competition and Innovation Act. Further, this proposal is not consistent with other CMS reimbursement policies, which treat biosimilars as single-source drugs within certain Part D programs and Medicaid.”

The Cost of Biosimilars Is at Issue

Based on the experience in Europe, where biosimilars have been available longer, it had been a given that a biosimilar coming onto the U.S. market would have a price somewhere in the neighborhood of 15% to 25% lower than the reference drug. But early anecdotal experience with Zarxio doesn’t bear that out.

Vizient’s Lucio says the prices of Neupogen, Granix, and Zarxio have all come down between 15% to 20% since Zarxio’s introduction in September 2015. Typically Neupogen is the most expensive of the three, with Granix and Zarxio trading second and third place depending on the market they are selling to. But the price difference between the three is normally not great. “Until you have two or three biosimilar providers for same-molecule competitors to branded [products], biologicals will not be priced definitively lower,” Lucio says.

Some of the other biosimilars now in the application phase at the FDA (there are seven or eight, but the FDA doesn’t confirm those numbers) will be much more likely to be self-administered than Zarxio or Inflectra. That means they will ostensibly be available for retail purchase, and therefore reimbursed under Medicare Part D and outpatient drug plans in the private sector or through the PPACA. A study from the consulting firm Avelere, published in April, found that Medicare patients in Part D plans are likely to pay more for biosimilars than for the reference drug.⁸ That is because the Part D plans, under federal law, get a discount from the brand-name manufacturer when a Medicare recipient hits the so-called “doughnut hole,” the gap in Part D coverage where a senior must pay more of the cost of a drug. The reference-drug manufacturer must provide rebates to Part D plan members who fall into that coverage gap. Biosimilar marketers cannot match those rebates. “Any voluntary point-of-sale discounts would be viewed by the OIG [Office of the Inspector General] as a kickback and would likely lead to punitive action,” says Caroline Pearson, Senior Vice President at Avalere.

“The unintended consequence of the ACA is that consumers have a financial disincentive to switch to a lower-cost biosimilar,” Pearson adds. “While the Medicare program will save money if beneficiaries take biosimilars, higher consumer out-of-pocket costs are a barrier to patient adoption.”
It may be that biosimilars will become a boon to patients, payers, and providers. But until the FDA moves more quickly to approve biosimilars and they start to populate therapeutic categories in numbers that lead to lower prices, their success won’t be a given.

Author bio: 

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

340B Guidance Riles Hospitals, Drug Makers

P&T Journal - February 2016 - for the original online article go HERE.

They Push in Opposite Ways on Eligibility, Discounts, and More

The Health Resources and Services Administration (HRSA) may have gotten it more right than wrong with its new proposed guidance on the 340B outpatient drug program.¹ Hospitals and drug manufacturers, the program’s two key constituencies—long at loggerheads—are both complaining to high heaven about proposed changes. The program requires drug companies to sell medicines at deep discounts to hospitals (generally those located in rural or poor areas with significant indigent populations) that use those discounts to fund medical services they couldn’t otherwise afford.

The guidance, which may be revised based on public comments, greatly reduces the number of patients who would qualify to purchase 340B drugs. That has enraged hospitals and buoyed pharmaceutical companies. But the guidance proposed in August does very little to crack down on how hospitals use contract pharmacies, to prevent duplicate discounts where drug companies can be billed once for the 340B discount and again for a Medicaid discount, and to prevent private hospitals with no local or state government contracts from participating in the program. The HRSA’s failure to propose such restrictions is just fine with hospitals, but drug companies are beside themselves because of those and other omissions.

The 340B program is controversial, and some of its requirements are sketchy. The HRSA, part of the Department of Health and Human Services (HHS), has been prohibited by federal courts from issuing legally binding regulations in all but a few areas—hence the guidance the HRSA published in an attempt to clear up confusion about program rules. It would change the standard for patient eligibility, make it more difficult for patients receiving infusion to qualify for drugs, require hospitals to implement new billing and tracking systems, and make other changes. However, guidance, as opposed to regulation, is not legally enforceable.

Upward of 2,000 covered entities—general, rural, and children’s hospitals and AIDS and rural clinics—buy drugs from nearly 650 manufacturers. The drugs are sold at discounts of around 25% to qualified patients who receive the drugs at outpatient pharmacies, either on the grounds of the hospital or at satellite locations, including nonaffiliated contract pharmacies. Covered entities make money because insured patients buy the drugs at discounted prices and the covered entity bills their insurance company for the full price of the drug, pocketing the difference between that price and the lower, discounted 340B price. Over the years, the program rules have been abused both by covered entities and drug manufacturers, each side says, and the HHS inspector general has confirmed their suspicions— hence the need for clarification.

The key change riling hospitals concerns the way the HRSA would limit the number of patients eligible to purchase 340B drugs. The HRSA wants to substitute a six-pronged test for the current three-pronged test. The new standard would restrict the number of physicians who could write 340B-eligible prescriptions. Even if they were somehow affiliated with a hospital, physicians who did their own billing could not write a 340B-eligible script. Physicians would have to be employed by the hospital; having “privileges” would not meet the test. The guidance would limit the covered-entity facilities where individuals could be seen and still fit the definition of “patient.” For example, outpatient facilities would have to be listed on a reimbursable line in the hospital’s most recently filed Medicare cost report and the services provided would have to have associated outpatient Medicare costs and charges. An inpatient who receives a prescription while in the hospital, from an eligible provider, could not go to his or her local pharmacy and qualify for a 340B prescription.

“The guidance would require every prescription to pass at least 10 requirements to qualify for 340B discounts,” says Bruce Siegel, MD, President and CEO of America’s Essential Hospitals, which represents 340B hospitals. “The test must be applied to each prescription written and depends on where an individual patient sought care for a particular medical condition, which clinician wrote the prescription, and what type of insurance, if any, the patient has. This would be disastrous for patients and providers.”

The Pharmaceutical Research and Manufacturers of America (PhRMA) wants the HRSA to narrow the requirements for hospitals to qualify as covered entities. Over the past few years, U.S. Senator Charles Grassley (R-Iowa) has questioned whether academic medical centers are using 340B revenue for purposes intended by Congress, and whether they ought to qualify given their upscale patient mix. So PhRMA wants the HRSA to require private, nonprofit hospitals that have a contract with a state or local government to provide “at least a specified amount of care to low-income people ineligible for Medicare and Medicaid with the specified minimum threshold selected so as to ensure that a minor contract to care for this population cannot confer 340B eligibility.”

The HRSA guidance appears to try to split the difference between the demands of two opposing interest groups. But given its failure to do that successfully, and the fact that guidance is only guidance, Congress is likely to step in. If so, it is not clear which side of the scale Congress will put its thumb on.

Author bio: 

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