In an abrupt about-face, the Obama administration halted its ill-timed effort to launch an overhaul of the Medicare Part D program and announced it would not pursue changes in some key rules as proposed earlier this year. The Centers for Medicare and Medicaid Services (CMS) had issued a proposed rule Jan. 10, 2014 to drop “protected” class status for antidepressants and immunosuppressants in 2015 and antipsychotics in 2016, and to limit the number of Part D plans an insurer can offer in each Medicare region. Insurers and pharmacy benefit managers (PBMs) backed the reduction in protected drug classes as a way to gain leverage in negotiating lower prices from manufacturers.
Despite a slight boost in funding for FDA and stronger tax incentives for investment in R&D, significant changes in Medicare drug reimbursement and coverage policies have biopharmaceutical companies up in arms. The biggest hit comes from the Obama administration’s proposal to impose rebates on drugs provided to low-income Medicare patients in Part D plans. That change plus added rebates on drugs that experience price hikes faster than inflation would cost pharma companies $117 billion over 10 years. The 2015 budget plans also seeks to encourage greater use of generic drugs by these “dual eligible” beneficiaries and for pharma companies to provide discounts to cover 75% of the cost of drugs prescribed to patients in the Part D coverage gap—up from 50% discounts today. And reimbursement would reduce “excessive” payment for certain drugs covered by Medicare Part B by revising the formula for calculating reimbursement.
Despite recent legislation to establish a more secure pharmaceutical supply chain to deliver high quality, approved medicines to American patients, efforts to block the import of substandard, fraudulent, and counterfeit drugs remains an uphill fight. Criminals are expanding from “lifestyle” drugs to widely used anti-cholesterol and cancer medicines, attracted by huge profits and low risks from drug counterfeiting activities, noted Marcia Crosse, director for healthcare at the Government Accountability Office, testifying at a Feb. 27, 2014 hearing before the House Energy and Commerce, Oversight and Investigations subcommittee.
A main problem is that penalties for distributing counterfeit drugs are too low to spur prosecution and to deter illegal operators, explained Howard Sklamberg, FDA deputy commissioner for global regulatory operations and policy. FDA is working with other federal agencies to identify and take action against illegal operators, with a focus on fraudulent Internet pharmacy sites that sell low-cost “Canadian” medicines. But most counterfeiters end up facing charges of “misbranding” or importing “unapproved foreign-made drugs,” which carry minor fines and minimal jail terms.
Despite notable successes in preventing and mitigating short supplies of important medicines, the drug shortage crisis still disrupts medical treatment and gives drug manufacturers a bad name. FDA is doing a better job of identifying potential shortage situations and implementing relief strategies, but many supply problems continue to limit treatment options for doctors and patients. A severe shortage in intravenous saline solutions has generated outcries from hospitals, dialysis centers, and physicians. The situation is aggravated by increased hospitalizations due to flu outbreaks. Some states are taking extreme measures for executing felons facing the death penalty due to difficulties obtaining supplies of drugs for lethal injections. Recent vaccine shortages have forced physicians to delay immunizations.
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The Food and Drug Administration plans to issue a number of new guidances in 2014 that will address drug development and manufacturing practices. There will be more advice on establishing a quality system approach to current good manufacturing practice (GMPs) and on quality agreements with contract manufacturers, according to the 2014 guidance agenda for the Center for Drug Evaluation and Research. Other documents will address use of cloud computing systems in manufacturing, interim GMPs for drug compounding outsourcing facilities, submission of field alert reports and biological product deviation reports, and electronic filing of information on manufacturing establishments.
Specifically related to chemistry, manufacturing and controls (CMC), FDA plans to provide advice on analytic procedures and methods validation, appropriate packaging for injectables drugs, CMC information in comparability protocols, evaluation of near infrared spectroscopy methods, CMC and other documentation for liposome drug products, and labeling vial fill size.
Further information is expected on developing biosimilars, including the hot topic of demonstrating interchangeability to a reference product. There also will be advice on developing pharmacology data, on labeling biosimilars, and on reference product exclusivity. Other guidances will clarify approaches for developing new analgesics, drugs for rare diseases, and treatments for chronic fatigue syndrome and infectious diseases. FDA also plans to clarify best practices in developing drug proprietary names and on distributing drug samples. And there will be advice on identifying suspect products and tracking drugs, as required by the Drug Quality and Security Act.
More guidance on Internet/social media communications is expected this year – one on presenting risk and benefit information in limited space, another on correcting independent/third party misinformation about a drug or medical device, and a third on appropriate use of website links. And a long-anticipated document on using the “brief summary” to disclose drug risk information may finally emerge.
At the same time, the Office of the Inspector General (OIG) of the Department of Health and Human Services will be busy investigating a number of issues related to drug regulation and costs, according to the 2014 OIG work plan. The investigators plan to examine how often and how well FDA inspects generic drug manufacturing facilities and what enforcement actions result – a new probe evidently generated by concerns over drug shortages and regulatory lapses by major generic drug makers such as Ranbaxy.
The OIG also will analyze whether Medicare pays too much for drugs, as seen in plans to examine the effect of reporting based on average sales price vs. average manufacturer prices; if Medicare Part B should have access to 340B pricing; if payments are appropriate for off-label drug uses, namely for immunosuppressive drugs and for chemotherapies; and if prescription drug compendia are developed fairly and transparently.
Medicare Part D drug benefits face considerable scrutiny, as seen in a long list of investigations into plan billing and payment practices. The OIG also will examine whether retail pharmacies provide appropriate discounts on generic drugs; if rebates on brand-name drugs reduce plan spending sufficiently; and if Part D plans prevent the use of manufacturer co-pay coupons, as required by the rules.
After two years in budget limbo, Congress finally enacted federal spending legislation for fiscal year 2014. In this period of ever-tighter government outlays, the Food and Drug Administration did fairly well in gaining additional funds, along with user fee revenues that had been put on hold.
The legislation appropriates $2.552 billion to FDA, an increase of $217 million over actual 2013 funding levels, which were reduced by last year’s budget sequester. Total funding for FDA, including user fees, is $4.4 billion for the current year. In addition, the legislation restores $80 million to the agency, that portion of user fees set aside under sequestration.
The actual appropriations bill is brief and largely authorizes collection of numerous user fees: $760 million in prescription drug fees, $306 million for generic drugs, $115 million for medical devices, and $20 million for biosimilars. The latter is important because up until now, the agency did not have access to that portion of fees due up front from sponsors to support the extensive advisory activities involved in helping manufacturers navigate the complex biosimilar development and application process.
Under the new budget, the Center for Drug Evaluation and Research will receive nearly $1.3 billion for its operations and for field force activities related to drugs. The Center for Biologics Evaluation and Research gets $338 million. Some of the agency’s added funds will support FDA consolidation at its White Oak campus and help maintain current buildings and facilities.
The Centers for Disease Controls and Prevention (CDC) similarly benefits from a budget increase of about 8 percent. CDC gains added funds to support biodefense programs that combat infectious disease and build national stockpiles of critical medicines.
But the National Institutes of Health (NIH) continues to suffer on the funding front. Congress set the NIH budget at nearly $30 billion, an increase of about $1 billion over its previous level. But the new amount is below the agency’s peak 2010 funding level that exceeded $31 billion. The Senate summary notes that added funding will support NIH’s new BRAIN initiative and research related to Alzheimer’s disease. But with inflation, NIH will be hard-pressed to fund much new research, let alone continue many of the discovery programs underway.
Under pressure to stop the funding logjam, Republicans stepped back from using the budget bill to take major whacks at Obamacare. The legislators pulled $1 billion from a new prevention fund established by the Affordable Care Act to support various health programs, and they cut funding by $10 million to the much criticized Independent Payment Advisory Board (IPAB), which may never become operational. The legislation also retains provisions that ban federal funding of abortions and of creating embryos for research purposes.
The higher budget level for FDA puts the agency in a good position to negotiate the appropriations process for fiscal year 2015, notes the Alliance for a Stronger FDA, which has led the fight to bolster FDA’s resources so it can meet its ever-growing mandates and assignments. The late action on the 2014 budget, though, may delay the administration’s 2015 budget roll-out for a month or so.
The Washington health policy world is headed for a major shake-up next year, as more long-time leading legislators opt for retirement. The recent announcement that Rep. Henry Waxman (D-Calif) will leave marks the end of a 40-year career on Capitol Hill, highlighted by engineering enactment of legislation that established the generic drug industry, supported treatment for AIDS and promoted development of orphan drugs.
The Senate faces even more substantial changes, with the departure of leading Democrats Max Baucus of Montana, who currently chairs the Finance Committee; Tom Harkin of Iowa, head of the Health, Education, Labor, and Pensions committee; and Commerce Committee chair Jay Rockefeller. They have been shaped Medicare and Medicaid programs, FDA regulatory policy and, more recently, national health reform. Their collective experience has provided a basis for bipartisan collaboration with Republicans on key legislative initiatives important for biomedical research, drug regulation, and medical product reimbursement, and it’s uncertain who will provide comparable leadership in the coming years.
Waxman, who currently is the top Democrat on the House Energy & Commerce Committee, previously chaired that panel and also led the House Oversight & Government Reform Committee. Also departing with Waxman is Rep. George Miller, another leading Democrat from California who helped shape current health programs as a leader of the House Education & Work Force Committee. He and Waxman came to Washington as part of the “Watergate class of 1974” and gained leadership positions that enabled them to promote important policies affecting health, education, and the environment.
If FDA is going to establish standards for assessing the quality of manufacturing sites and products, it should seek data on a few well-defined measures that reflect longer-term results and trends, rather than “snapshots of current numbers.” And such metrics should include more leading—vs. lagging—indicators to reflect a firm’s commitment to continuous improvement in production processes. Those recommendations come from a PDA “points to consider” paper, written to help FDA set standards to measure product quality and manufacturing capabilities.
Moving fast to bolster its authority over compounding pharmacies that operate as manufacturers of prescription drugs, FDA is urging “outsourcers” to register, seeking state support, and moving to issue more rules and guidance. The agency is pleased that 14 outsourcers registered through mid-January. The number is small, considering that an estimated 3000 compounding pharmacies make sterile injectible drugs, but this initial activity reflects FDA’s fast action in implementing the Drug Quality and Security Act (DQSA), which was enacted less than three months ago.
As expected, FDA approved only 27 new molecular entities (NMEs) in 2013. There was no late-December surge in approvals to bring the tally closer to the near record of 39 innovative new drugs approved in 2012. In addition, the Center for Biologics Evaluation and Research (CBER) approved eight novel products, including innovative influenza vaccines and a number of blood products.