PhRMA, Marathon Is Why You Can’t Have Nice Things

Yesterday, the FDA approved a steroid, deflazacort, for the treatment of Duchenne Muscular Dystrophy (DMD).  DMD is a rare, heartbreaking, and ultimately fatal genetic disease with few if any real treatments, and the steroid may be helpful to patients.  Deflazacort’s sponsor, Marathon, has offered the drug at a list price of $89,000 per year.  High, but actually much lower than the typical prices charged for new orphan drugs, which can easily run to $300,000 or more per year.

Here’s the big problem: deflazacort isn’t really a new drug.  As the Wall Street Journal and Endpoints have pointed out, the drug is approved in many other countries, and its list price is about $1,000-$1,600 in Canada and the UK.  Patients have been importing the drug and accessing it since the 1990s.  Now, patients will pay many times those prices for the same product they had already been purchasing.

But the drug had not previously been approved in the United States, and surely Marathon conducted new clinical trials to demonstrate the drug’s benefit?  Not clearly.  Marathon mostly relied on clinical trial data from the 1990s that had not been fully analyzed.  In return, Marathon gets 1) a seven-year market exclusivity period for the drug (as required by the Orphan Drug Act) and 2) a valuable priority review voucher (as required by law for rare pediatric diseases).

This is not acceptable.  Full stop.  It is the worst sort of gaming that other companies have engaged in over the years.  And at a time when the drug industry is under fire for its high prices, PhRMA cannot afford to have its members (of which Marathon is one) acting this way.  If PhRMA and patient groups funded by pharmaceutical companies are serious about drug pricing, here are three things they should do/encourage right now:

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The 21st Century Cures Act: One of Many Reasons Why Today’s Executive Order Is Misguided

Today, President Trump signed an executive order (EO) whose purpose is ostensibly to reduce the regulatory burden imposed by the government on many different types of industries.  The EO envisions achieving this goal through an incredibly sophisticated strategy: “for every one new regulation issued, at least two prior regulations be identified for elimination.”  Not how burdensome any particular regulation is, or how old it is, or how broad it is – just how many regulations there are.

The next question, of course, is what the EO means by “regulation.”  It clearly includes traditional APA notice-and-comment rulemaking (the EO specifically calls out situations when an agency “publicly proposes for notice and comment” a regulation).  More generally, the EO does provide a definition: “For purposes of this order the term “regulation” or “rule” means an agency statement of general or particular applicability and future effect designed to implement, interpret, or prescribe law or policy or to describe the procedure or practice requirements of an agency.”

This sounds to me as if it includes guidance documents, which are used extensively by many agencies to set and implement policy. To be sure, it is not always clear what counts as a guidance document, and it is not always clear whether agencies are attempting to use guidance to circumvent the notice-and-comment rulemaking process.  But by many common definitions of guidance documents (including those put forth in executive orders by the Bush Administration, for instance), the term “regulation” as defined in this EO would seem to include guidance documents.  As with other EOs issued in the past week, this one could have benefited from more clarity, but I think the better reading of the EO is that it does cover guidance.

There are many reasons why this strategy in general is a bad one, but I’ll focus on just one: the need to develop policy as a result of particular statutes.  Take the 21st Century Cures Act.  Whatever your view of its merits, it passed with overwhelming bipartisan support in the last weeks of President Obama’s administration.  It also imposes enormous new obligations on HHS and the FDA to make all kinds of policy judgments going forward.  It rarely requires the creation of a traditional notice-and-comment rulemaking (see sections 4002 and 4003 for examples), but often speaks in terms of “establish[ing] a program” or “establish[ing] a draft framework,” much of which could be done through guidance.

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Let’s All Worry About The Effects of Patent Injunctions Against Drug Manufacturers

Yesterday, a federal district judge made an important ruling in the ongoing patent dispute between Amgen’s cholesterol-lowering drug Repatha and Sanofi and Regeneron’s drug, Praluent.  Early in 2016, Amgen’s patents covering the products had been found both valid and infringed, and now Judge Sue Robinson has granted Amgen’s request for an injunction against Sanofi and Regeneron, blocking the two companies from selling Praluent.  (The injunction takes effect in 30 days, giving the companies time to appeal.)

This is very strange.  Let’s be clear: Judge Robinson looked at a situation involving two competing, chemically distinct (though similar) drugs for the same condition and opted to kick one of them off the market, putting Amgen in a monopoly position and taking some number of patients off of the drug they’ve been taking.  As far as Pharma Policy Twitter (h/t Forbes’ always-excellent Matthew Herper) can tell, an injunction of this type happens about once a decade – in 2008 with Amgen and Hoffman-LaRoche regarding an EPO product, and in 1996 with Novo Nordisk and Genentech over hGH products.  (Please send along other examples, if you have them!)

A number of commentators have already weighed in on Judge Robinson’s order, with Professor Jake Sherkow providing a particularly thoughtful tweetstorm on the subject. I largely agree with Professor Sherkow’s analysis, but I want to emphasize two aspects of the case that have not yet received sufficient attention: the first is the decision to ask for the injunction, and the second is the practical effect the injunction will have on patients, on the market, and on the gathering of information about PCSK9 products going forward.

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What is the Right Number of Unsafe, Ineffective Drugs for the FDA to Approve?

Later today, the Senate will begin voting on the 21st Century Cures Act, which passed the House overwhelmingly last week. I’ve blogged repeatedly about the Act (most recently here), and many academics and commentators are rightfully worried about the Act’s efforts to lower FDA approval standards in different ways. I write here to put some of these concerns more plainly (and more bluntly), by asking a simple question: what is the right number of unsafe or ineffective drugs for the FDA to approve? I would like to hear the Act’s supporters answer this question. Below, I offer some thoughts of my own on how we should think about and evaluate this question.

More generally, when we think about FDA approval of new pharmaceuticals, we have to consider how the FDA should balance Type I and Type II errors. You may think the FDA ought to focus on minimizing the number of unsafe or ineffective drugs that it approves (minimizing Type I errors). After all, we don’t want the FDA putting its stamp of approval on drugs that harm patients or that don’t work. Over time, this would lead to an erosion of public trust in the FDA as a tool for consumer protection. More generally, this is the entire reason we’ve given the FDA its powers to begin with. Scandals involving unsafe or ineffective drugs prompted Congress to give the FDA more, greater powers over the years, in large part to prevent such products coming to market in the first instance.

Instead, you may think that the FDA should focus on minimizing the number of safe, effective drugs it fails to approve (minimizing Type II errors). In other words, it is worse for the FDA to deny patients access to a drug that is safe and effective than it is for the FDA to approve a drug that later turns out to be unsafe or ineffective. On this view, the FDA should still perform some screening against drugs with significant safety signals or against drugs with no plausible mechanism of action, and perhaps should require post-market surveillance studies, but the FDA ought to be enabling sick patients to access drugs more quickly. This view of the FDA’s role places greater responsibility on insurers, physicians, and patients to gather, process, and act on information about a drug’s safety and efficacy.

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Your Weekly Reminder That FDA Approval and Insurance Coverage Are Often Linked

In recent days, it seems like the din of voices arguing that the FDA should approve pharmaceuticals more speedily and on less evidence has grown louder.  It is a central theme of the 21st Century Cures Act, which the House may vote on today and which I seemingly will never finish blogging about (most recent post here, with links to previous ones).  It is the premise that underlies other legislation recently introduced into Congress.  And it was the topic of a Wall Street Journal opinion piece just last week.  In the view of these critics, sure, the FDA has some role to play in ensuring safety and some basic level of effectiveness.  But the current standard for demonstrating effectiveness is, in their view, much too strict.  Instead, we ought to approve drugs more quickly and allow insurance companies and physicians to decide which products have enough supporting evidence to merit reimbursement.

Here’s the problem: that is not the way we’ve set up the system.  FDA approval is often linked to insurance coverage.  Medicaid must cover essentially all FDA-approved drugs, and Medicare similarly has limited ability to decline to cover FDA-approved drugs.  Even private insurers are generally required to cover at least some prescription drugs, although in some cases this may be on a more limited basis.  Take Exondys, a drug that recently won accelerated approval from the FDA for the treatment of a small number of patients with Duchenne Muscular Dystrophy (I’ve blogged about Exondys here).  Because Exondys was approved based on a surrogate endpoint and not actual evidence of clinical improvement (Exondys’ label actually says that “[a] clinical benefit of Exondys 51 has not been established”), it would seem to be a poster child for these arguments about the FDA.  Allow insurers to cover it or not as they choose, since we don’t yet know if it works.  Yet many insurers are legally required to pay the $300,000 a year on average the company is charging for the drug.

I’ll put it another way.  If we lower the FDA’s approval standards and do nothing to coverage requirements, we will all almost certainly end up paying more money for drugs that don’t work.  The pronoun “we” here is important: because an enormous amount of these expenditures will come through Medicare and Medicaid, which are funded by all of us as taxpayers, it costs all of us financially when ineffective or unsafe drugs are approved by the FDA.  Many people who argue for a decrease in FDA standards also believe that we spend too much through Medicare and Medicaid, yet they don’t seem to put these two pieces of the argument together.

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The Newest 21st Century Cures Draft Moderates, But Doesn’t Eliminate, Controversy

Earlier this evening, the House of Representatives released the most recent draft of the 21st Century Cures Act. This is the fifth time I’ve blogged about the Act (prior posts here, here, here, and here), which has ballooned from a 200-page discussion draft in April 2015 to a 996-page draft version today. (The House has a 44-page summary here for those with more limited time.) To be fair, the Act now contains a whole set of provisions around mental health, substance abuse, and child and family services which were not originally part of the Act. The 21st Century Cures Act is the biggest Christmas tree bill I’ve ever had occasion to read.

There will be an enormous amount of commentary on different parts of the bill, so here are some quick thoughts on the new draft, focusing not only on the provisions which are likely to attract the most attention, but also on a few quieter provisions that are nonetheless worthy of scrutiny.

Some controversial provisions have been eliminated entirely or softened greatly. One of the most controversial provisions in the last draft of the bill would’ve “farm[ed] out the certification of safety of modified devices to third parties, circumventing the FDA altogether.” That provision seems to be absent from the new draft. The last draft, in creating a program for breakthrough review of medical devices, controversially called for the use of “shorter or smaller clinical trials” for those devices. The new draft asks the Secretary only to ensure that the design of such clinical trials is “as efficient and flexible as practicable, when scientifically appropriate” (section 3051).

Other controversial provisions remain, sometimes under new names. One of the most troubling provisions in the previous draft of the bill would’ve created a program for the use of “clinical experience” evidence in drug approvals. Rather than relying on the gold standard of randomized clinical trials, this provision “would[‘ve] require the Secretary to establish a draft framework for implementing” such evidence. The new draft keeps this provision but changes the term “clinical experience” to “real world evidence” (section 3022). To be sure, this provision gives enormous discretion to the Secretary to limit (and maybe even reject) the use of such evidence. But in light of recent high-profile clinical trial failures, most notably just two days ago, we ought to be concerned about claims that the FDA is too slow and imposes too stringent requirements on drug approvals.

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Drug prices: Where do we go after the Election?

By Rachel Sachs, Washington University in St Louis
[Originally published on The Conversation]

Martin Shkreli. Valeant Pharmaceuticals. Mylan. These names have become big news, but just a year ago, most Americans devoted little time and attention to the question of pharmaceutical pricing. Now, a Kaiser Health Tracking Poll released Oct. 27 suggests many people care more about the increasing prices of drugs than they do about any other aspect of health care reform.

Nearly three in four, or 74 percent of respondents, said that making sure that high-cost drugs for chronic conditions are affordable for patients should be a top priority for the next president and Congress. And 63 percent similarly said that government action to lower prescription drug prices should be a top priority.

This poll comes on the heels of highly publicized scandals involving individuals and companies who hike the prices of products like the EpiPen, a life-saving anaphylaxis treatment whose price roughly quintupled in five years, to more than US$600, or Daraprim, a drug used to treat parasitic infections whose price increased by 5,000 percent overnight. Continue reading

Sarepta: Where Do We Go From Here?

By Rachel Sachs

This morning, the FDA finally reached a decision in the closely watched case of Sarepta Therapeutics and its drug for the treatment of Duchenne Muscular Dystrophy (DMD).  The FDA granted accelerated approval to Sarepta’s drug, Exondys, on the condition that Sarepta complete a new trial demonstrating the drug’s clinical effectiveness.  As regular FDA observers already know, Exondys’ path to approval has been highly contentious.  The key clinical trial used to support approval contained just twelve patients and no placebo, and the FDA Advisory Committee voted against both full approval of the drug and accelerated approval.  The FDA’s 126-page Summary Review, released today with their approval letter, reveals the intense disagreements within the agency over Exondys’ approval.  FDA staff scientists charged with reviewing the drug recommended against approval but were overruled by Dr. Janet Woodcock, Director of the Center for Drug Evaluation and Research.  FDA Commissioner Califf deferred to her decision.

Sarepta presented the FDA with a series of bad options.  DMD is a rare, heartbreaking, and ultimately fatal genetic disease with no other real treatments, and it is clear why patients and their families would fight for access to anything that might work.  At the same time, the FDA has rarely if ever approved a drug on less evidence than that provided by Sarepta, and approving the drug might send a dangerous signal to both the public and other companies investigating rare disease drugs.  The FDA has now made its choice.  Where do we go from here?  In my view, there are at least three key issues to watch going forward. Continue reading

Mylan Announces Generic EpiPen; Baffles Health Policy Wonks Everywhere

For weeks now, the list price of Mylan’s EpiPen ($600 for a two-pack) has been exhaustively covered by journalists, debated by academics, and skewered by policymakers as an example of the pricing excesses of even generic pharmaceutical companies.  Mylan’s latest response to the outrage?  Announce that soon, it will be launching a generic EpiPen at a list price of $300 for a two-pack.  I and others who study these issues full time cannot understand why Mylan thought this would work to quell the widespread indignation over its pricing practices.

The first red flag came when Mylan stated it would launch the product “in several weeks.”  I often find myself defending the FDA against charges that it is too slow to approve new technologies, but let’s face it: it would be shocking news if they were able to approve a new version of anything in just a few weeks.  Mylan has not had this in the works for months, so it seems that the new generic product is literally identical to the branded EpiPen – just with a different label.  So, essentially, Mylan is preparing to cut the price of its product in half.  (Even though that’s still higher than the price was just three years ago, before Mylan began its regular price hikes, and even though this should make us question their justifications for the $600 price.) Great, right?  Not so fast.

What reasons (other than public relations) might Mylan have for introducing an authorized generic of this type and how might they attempt to use the two products to maintain their current level of revenues?  By bringing the first generic EpiPen to market, Mylan has now planted its flag in the generics space.  Although epinephrine (the drug inside the EpiPen) is now generic and cheap to produce and sell, companies do seem to find it difficult to replicate the device portion of the EpiPen, with Sanofi’s product recently removed from the market due to dosing issues and Teva’s application for a generic denied by the FDA with no public explanation just a few months ago.  Mylan has now benchmarked a new price for those products if they return – they must price below $300 for a two-pack to compete effectively with Mylan. Continue reading

The Catch-22 of Bayh-Dole March-In Rights

Earlier today, the NIH rejected a request filed by consumer groups including Knowledge Ecology International (KEI) to exercise the government’s march-in rights on an expensive prostate cancer drug, Xtandi.  Xtandi costs upwards of $129,000 per year, and KEI had asked the government to exercise its rights under the Bayh-Dole Act, which specifies a range of conditions under which the government may require a patentholder to grant licenses on reasonable terms to others to practice the patent.  Specifically, the government may require such a license where “action is necessary to alleviate health or safety needs which are not reasonably satisfied,” 35 U.S.C. § 203(a)(2), or where the benefits of the invention are not being made “available to the public on reasonable terms,” 35 U.S.C. § 201(f).

For some time now, there has been debate over the question of whether high prices for pharmaceuticals are a sufficient trigger to invoke the use of march-in rights under these clauses of the statute.  I don’t take a position on that question here.  Instead, I want to ask whose responsibility it is to decide that question.  Congress has the legal right to do so, but it seems unwilling or unable to.  The agencies in question have recently declined to, even assuming they have the power to interpret the statute in that way.  And so we might look to the courts.  But there’s a puzzle here: it’s not clear that anyone can ask a court to decide whether high prices meet the statutory requirements unless an agency actually decides that high prices meet the statutory requirements.

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Thoughtful CREATES Act May Help Speed Generic Drug Approvals

Earlier this week, a bipartisan group of Senators introduced the Creating and Restoring Equal Access to Equivalent Samples (CREATES) Act, a bill designed to speed generic drug approvals (and thus lower drug costs) by removing a delaying tactic some branded drug companies use to impede the generic approval process.  Essentially, branded drug companies sometimes refuse to sell samples of their drugs to generic companies who want to come to market, preventing them (for at least a time) from performing the necessary bioequivalence testing and extending their market dominance.  Sometimes companies try to hide behind a regulatory program, Risk Evaluation or Mitigation Strategies (REMS), in claiming that they legally cannot provide such access.  Other times, such as in Martin Shkreli’s case, no such excuse exists and the company simply refuses to provide access.

These delaying tactics have received substantial attention from both scholars (Jordan Paradise’s work can be found here) and lawmakers.  This is Congress’ third attempt at addressing the situation, although as Ed Silverman helpfully notes at Pharmalot, the previous attempts would have only dealt with REMS delays, not Shkreli-like closed distribution systems.  By contrast, the CREATES Act would require brand-name companies to provide access to samples of their drugs, whether subject to a REMS or not, on “commercially reasonable, market-based terms” or face potential civil action from the generic drug company in question.  There’s already been a lot of commentary on the bill, including a particularly helpful blog post from Geoffrey Manne providing background on REMS abuses and on why antitrust law has not sufficed to solve the problem.  Here, I want to add two points that I haven’t yet seen in the discussion: one about drug shortages and another about remedies.

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Rachel Sachs on ‘The Week in Health Law’ Podcast

By Nicolas Terry and Frank Pasquale

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This week we spoke with Rachel E. Sachs, who will join the faculty of the Washington University in St. Louis School of Law in Fall 2016. Rachel earned her J.D. in 2013 magna cum laude from Harvard Law School, where she was the Articles Chair of the Harvard Law Review and a student fellow with both the Petrie-Flom Center and the John M. Olin Center for Law, Economics, and Business. Rachel has also earned a Master of Public Health from the Harvard School of Public Health. We focused on Rachel’s work on drug pricing and innovation for global health. As part of a broader academic agenda for developing access to knowledge, Rachel’s work illuminates the many trade-offs involved in optimizing innovation law. She has also illuminated the importance of “innovation beyond IP,” and the importance of legal synergies in accelerating or impeding innovation.

Listen here! The Week in Health Law Podcast from Frank Pasquale and Nicolas Terry is a commuting-length discussion about some of the more thorny issues in Health Law & Policy. Subscribe at iTunes, listen at Stitcher Radio, Tunein and Podbean, or search for The Week in Health Law in your favorite podcast app. Show notes and more are at TWIHL.com. If you have comments, an idea for a show or a topic to discuss you can find us on twitter @nicolasterry @FrankPasquale @WeekInHealthLaw

‘The Week in Health Law’ Podcast Talks Health Law and Social Media

By Nicolas Terry and Frank Pasquale

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This week and fresh from ASLME’s Health Law Professors’ Conference in Boston: a special TWIHL! Pharmalot’s Ed Silverman joins a cavalcade of past show guests (Rachel SachsRoss Silverman, and Nicholas Bagley) for a conversation about social media and health law, scholarship, and policy. Some of the works cited: Mark Carrigan, Social Media for AcademicsTressie McMillan Cottom, Microcelebrity and the Tenure Track; Tressie McMillan Cottom, When Marginality Meets Academic Microcelebrity; UW Stout, Rubrics for Assessing Social Media Contributions; Wiley, Altmetrics. And thanks to the audience for great questions!

The Week in Health Law Podcast from Frank Pasquale and Nicolas Terry is a commuting-length discussion about some of the more thorny issues in Health Law & Policy. Subscribe at iTunes, listen at Stitcher Radio, Tunein and Podbean, or search for The Week in Health Law in your favorite podcast app. Show notes and more are at TWIHL.com. If you have comments, an idea for a show or a topic to discuss you can find us on twitter @nicolasterry @FrankPasquale @WeekInHealthLaw

Our Current Pharmaceutical Payment System Isn’t Neutral

Last week, former Pfizer Global R&D head John LaMattina wrote another of his columns for Forbes, this one on the subject of pay-for-performance deals for pharmaceuticals.  These deals, in which insurers contract with pharmaceutical companies to pay for drugs based on how well they perform in practice, are becoming more common as the public conversation over drug prices escalates (examples here, here, and here).  There are many interesting questions around pay-for-performance deals, but LaMattina closes his column with a focus on one: their impact on the direction of pharmaceutical R&D.

Specifically, LaMattina argues: “Biopharmaceutical companies will closely watch how pay-for-performance evolves. Should payers become overly enthralled with rebates and continue to raise the bar, companies could move their R&D efforts into areas where a drug’s impact can be easily defined and measured. In such an environment, therapeutic areas like depression and obesity could give way to diseases like psoriasis or rare diseases where patient advocacy remains strong. In its efforts to rein in costs, payers might unwittingly force R&D out of areas where new drugs are still needed. That would be unfortunate.”

LaMattina is exactly right in one sense – and highly misleading in another.  First, underlying LaMattina’s argument is a critical claim that the way in which drugs are paid for affects the types of drugs that are developed.  This is absolutely right.  Although it may be perfectly obvious to some, as someone who just wrote a 25,000 word article on this very topic (oh hi, SSRN), I can attest that recognition of this idea is too often absent from the legal literature.  We largely focus on prescription drug insurance and payment as a way to encourage access to medications that already exist, but we ignore its effects on the types of drugs that are produced in the first place.

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Divided Infringement in Patent Law and the Doctor-Patient Relationship

Regular readers of this blog (hi, Mom) will recall that I often think and write about the interaction between the divided infringement doctrine in patent law and medical method patents of various kinds.  In previous posts, I’ve written about the Federal Circuit’s efforts to assign liability for divided infringement of method patents and considered the potential impact on medical method patents (here and here) and I’ve more recently examined a district court opinion applying the Federal Circuit’s analysis to a method-of-treatment claim (here).

I’ve just posted a new essay on SSRN (here, forthcoming in IP Theory) specifically considering the role of the doctor-patient relationship in the Federal Circuit’s analysis.  Would the Federal Circuit see the doctor-patient relationship as fitting within the scope of its divided infringement analysis?  Should it?  These questions are timely, as the Federal Circuit is due to take up these issues very soon.  Briefing before the court in the Eli Lilly case I considered in my last blog post has just been completed, and the case will likely be scheduled for argument later this summer.

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State Drug Price Cap Laws: How Do They Work?

Two weeks ago, I blogged here about various state bills designed to encourage transparency in the pharmaceutical industry, by requiring companies to disclose information about their research & development costs, marketing expenses, and prices charged to different purchasers. In that post, I glossed over the state initiatives to cap drug prices directly, but as these initiatives have been more recently in the news, I want to focus on them here and ask a basic question: can someone explain to me how they would work?

Let’s back up. Two states, California and Ohio, are considering ballot initiatives that propose to cap what drug manufacturers can charge to public payers in the state (such as Medicaid).  The texts of the initiatives are nearly identical, with a few state-specific differences in the enumeration of entities eligible to pay the capped price.  As clearly stated in a comprehensive POLITICO article earlier this week by Nancy Cook and Sarah Karlin-Smith, the initiatives “would require the state to pay no more for prescription drugs than the U.S. Department of Veterans Affairs — one of the few federal agencies allowed to negotiate drug prices.”

We can and should debate whether price caps like these are a good idea, as a policy matter, and the Cook & Karlin-Smith piece canvasses a number of the arguments on both sides.  But first, we should be clear that the laws we’re enacting can actually accomplish their intended purpose.  And if they can’t, we should acknowledge that publicly.  I see at least two primary obstacles to the implementation of these price cap initiatives, and since they’ve largely been absent from the public discussion, it’s useful to state them explicitly.

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Pharmaceutical Transparency Bills: Targeting Disclosures Purposefully

On Monday, the Massachusetts Joint Committee on Health Care Financing held a hearing on Senate bill 1048, which would require pharmaceutical companies to report to the state a range of information on their research & development costs, marketing and advertising costs, and prices charged to a number of different purchasers.  The hearing, recapped by the Boston Globe and Gloucester Times (among others), went as expected, with industry executives opposing the bill and health insurers, consumer advocates, and others testifying in support.

Massachusetts is not the only state considering a transparency bill.  At least ten other states, including California, North Carolina, Oregon, and Virginia have all drafted bills that would advance similar goals.  These bills do differ in their details.  As just one example, each state would require disclosure from a different set of drugs and companies.  Massachusetts would only require disclosure of costs and pricing for the top twenty selling drugs in the state (where the list is based around a set of criteria including but not limited to cost), California, Oregon, and Virginia would require disclosure for any drug whose wholesale cost is $10,000 or more per year (in California, this includes over 900 drugs), and North Carolina’s bill is framed around classes of drugs, rather than prices.

It is no accident that these bills have been developed in the wake of Martin Shkreli, Valeant Pharmaceuticals, and other drug pricing scandals.  Patients and policymakers are seizing this moment to take action against the drug industry.  Forcing companies to disclose their R&D costs, advertising costs, and pricing practices is seen as a step in the right direction against these secretive companies.  In this blog post, I want to focus on just one of many interesting issues raised by these bills: what and who are they useful for, and how can we target the required disclosures to best achieve those ends?  More specifically, I’m not interested in transparency for transparency’s sake.  Disclosure rules (like nutrition labels, for instance) can and should be used to help people make better decisions than they would’ve otherwise made.

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Medicaid Expansion Through Section 1115 Waivers: Evaluating The Tradeoffs

This new post by Rachel Sachs appears on the Health Affairs Blog as part of a series stemming from the Fourth Annual Health Law Year in P/Review event held at Harvard Law School on Friday, January 29, 2016.

Nearly six years after the passage of the Affordable Care Act (ACA), health law and policy experts continue to painstakingly track the progress of the Act’s Medicaid expansion. The original intention of the ACA was to expand Medicaid in every state, leading to gains in coverage by all individuals below a certain income.

However, the Supreme Court’s 2012 ruling in National Federation of Independent Business v. Sebelius(NFIB) invalidated the original expansion as unconstitutionally coercive, effectively making the Medicaid expansion voluntary for states. As of this blog post, just 32 states including DC have expanded Medicaid pursuant to the ACA.

Most of the states that have expanded Medicaid thus far have done so through the standard procedure, following the statutory guidelines set forth by the ACA and the Centers for Medicare & Medicaid Services (CMS) and incorporating the newly eligible enrollees into their existing programs as a new beneficiary group. But some states have successfully negotiated customized expansions with CMS through the use of the Section 1115 waiver process, seeking to expand Medicaid only on their terms. […]

Read the full post here.

FDA Announces Draft Guidance That Would Limit Enforcement Discretion for FMT

Yesterday, the FDA announced a new draft guidance regarding its exercise of its enforcement discretion around the investigational new drug (IND) requirements as they apply to fecal microbiota transplantation, or FMT.  For almost three years now, the FDA has exercised its enforcement discretion for FMT under a rather permissive set of guidelines, enabling patients to access FMT while companies shepherd a set of products through the clinical trial process.  I recently co-authored an article about the FDA’s regulation of FMT, and I’m concerned about this new guidance, in terms of safety, access, and regulatory clarity.  This is one of the wonkiest posts I’ve written in some time (and that’s saying something), so I’ll endeavor to be as clear as possible.

What is FMT and why is it important? To make a long story short, it’s a poop transplant.  Filtered stool from a healthy donor is transplanted into the gastrointestinal tract of a sick patient.  Although scientists are continuing to explore the use of FMT for a range of indications, we already know that FMT is a startlingly effective treatment for recurrent C. difficile infection.  C. difficile infections have become among the most common hospital-acquired infections in the United States, with more than 450,000 total incident infections annually.  Unfortunately, many of these infections are resistant to antibiotics: with those 450,000 infections came 80,000 recurrences and 29,000 deaths.  But FMT may provide a way forward.  A recent randomized trial of patients with recurrent C. difficile infections was stopped early, when 94% of patients in the FMT group were cured, as compared to roughly 30% of those getting only antibiotics.

How is the FDA involved? In May 2013, the FDA announced that fecal microbiota would be regulated as a drug.  All uses of FMT would therefore need to be part of an IND application, and patients who wanted to be treated with FMT for recurrent C. difficile would need to participate in a clinical trial to do so.  Physicians and scientists responded with concern, arguing that available evidence supporting FMT’s effectiveness as a therapy for recurrent C. difficile infection was too compelling for regulators to restrict its availability to clinical trials.  As such, in July 2013, the FDA announced that it would exercise enforcement discretion when FMT was used to treat patients “with C. difficile infection not responding to standard therapies,” so long as the treating physician obtained informed consent. Continue reading

Evolving Industry Structures in Biosimilar Development

Yesterday, I had the privilege to moderate a fantastic event here at the Petrie-Flom Center on Assessing the Viability of FDA’s Biosimilars Pathway.  Bringing together expert panelists from legal practice (Donald R. Ware, Partner, Foley Hoag LLP), industry (Konstantinos Andrikopoulos, Lead IP Counsel, Manufacturing, Biogen, Inc.), and academia (W. Nicholson Price II, Assistant Professor of Law, University of New Hampshire School of Law), the event explored different aspects of the biosimilars issue, considering the guidances issued (and still to be issued) by the FDA, the role of the “patent dance” in biosimilar litigation, and whether Europe’s experience with biosimilars has helpful lessons for our own situation.  For those who weren’t able to make it, video of the event will be posted on the Petrie-Flom Center’s website soon.

But I wanted to write here about one of the very last questions we explored during the panel, because its implications are more far-reaching than we had the time to consider.  The situation is as follows:  In the decades after the Hatch-Waxman Act created a generic pathway for small-molecule drugs, companies typically specialized in developing either innovator or generic drugs, but not both.  And although generic drug companies had great capacity for innovating in manufacturing, they were not research companies in the way that we think about innovator companies.  The situation has changed somewhat over the years, as generic companies began to invest in innovative products, and as innovator companies put out authorized generics, but in general this broad division within industry has persisted.

In the biologic context, by contrast, the biosimilar applications being filed with the FDA are more typically being filed by innovator companies themselves or by subsidiaries thereof.  For instance, the only biologic approved in the United States thus far is marketed by Sandoz, which is part of the innovator company Novartis.  Instead of a situation in which innovators battle generic companies for access to the market, now innovator companies are battling themselves.  There are a host of reasons for this development, most notably including the complex manufacturing processes involved in the biologics space and the need for the development of expertise there.

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