CMS Star Ratings: Will Biosimilars Benefit?

This article is in Biosimilar Development: Click here to read the article

In case you can’t access the article, here is the text below.

The Centers for Medicare and Medicaid Services (CMS) star ratings system was created in 2007 for insurance plans operating under both the Medicare Advantage and Part D. This 1 to 5 system (with 5 being the highest rating) is a way for CMS to measure the value of a plan and determine whether to continue to allow it to be part of the program. However, it’s more than just the plan, since the plan’s providers play a key role in how CMS evaluates each plan.

Essentially, the system measures other items as well, such as clinical quality, beneficiary satisfaction, and regulatory compliance, in addition to included providers. Plans are incentivized with financial rewards for improving quality performance and achieving the highest rating. What has been interesting to watch over time is how the star ratings system has become the go to evaluator for anything healthcare. The question is whether this concept could be applied to reduce drug costs, specifically, where biosimilars are concerned. 

We received our answer with the introduction of the Star Ratings for Biosimilars Act, otherwise known as H.R. 4629. This bipartisan bill is sponsored by Congressmen Tonko (D-NY) and Gibbs (R-OH), but to date it hasn’t gotten much support. The bill has a U.S. Senate version sponsored by Senators Cassidy (R-LA) and Menendez (D-NJ). According to Senator Cassidy’s press release, “This bill would incentivize insurers to use lower cost versions of drugs by rating the plan based on usage of biosimilar medications. Using lower cost drugs will lead to positive health outcomes with lower out of pocket costs for patients.” We have also seen similar legislative language in S.2543, known as the Prescription Drug Pricing Reduction Act of 2019.

For years now, we have witnessed several debates on how biosimilars could potentially lower drug costs, and this proposed legislation is another example of the potential promise that biosimilars have in helping policymakers lower drug costs. But will this bill help? Specifically, the proposed legislation calls for determining whether a biosimilar is on the formulary, assesses whether and how utilization management tools are applied with respect to a biosimilar, and assesses the percentage of enrollees prescribed the biosimilar biological product when the reference biological product is also available.

While I applaud any idea that attempts to lower costs and promote patient access, the devil is always in the details. For example, will these proposed metrics of incentivizing plans to use biosimilars work? Will there be competing metrics that plans have that may be better measurements than CMS?

Industry stakeholders like physicians and pharmacists may not like having plans with too much autonomy because unfairness and bias in measuring provider compliance may come into play, as plans and their partner pharmacy benefit managers (PBMs) would likely favor their providers and pharmacies, which could result in different star ratings for some. Will hospitals be amenable to this system when they already have complaints against CMS’ star ratings programs due to hospitals not being able to predict quality improvement metrics for operational efficiency? Physician education on biosimilars will have to be increased as well, since their comfort level with biosimilars will help spawn more utilization by their patients. Lastly, what impact will star ratings on biosimilars have on insurer rebates? At this time, it is too early to tell, since without this clarity it is even hard to quantify if biosimilars are already experiencing formulary disadvantages due to innovators offering larger discounts. One thing is for certain, in order to force monumental change, it may be best to do it via mandate. Forced compliance, in my opinion, will bring out the potential bugs in a system fast.

Ultimately, the other big issue is whether there is enough time to get legislation like this through Congress, along with a presidential signature. It would also help if the bill had more support, through either Congressional members or a push from powerful interested stakeholders. To date, the bill doesn’t have a significant number of cosponsors. It could be that it is December or that lowering drug prices through biosimilars is an idea that is spread throughout too many current Congressional proposed bills.

Theoretically, this seems like a win-win for both parties, but, realistically, we are on the doorstep of campaign season. With the upcoming elections on the state and federal level expected to be explosive, will lawmakers find the will to agree on a bipartisan solution like this before the political rhetoric heats up? We can only hope.  

Lanton Law December 2019 Newsletter Now Available

We are out with our December 2019 newsletter. This edition covers data oversight, a Medicaid white paper and upcoming webinars. Click here to access the December 2019 newsletter.

Additionally, if you are interested in signing up for our newsletter that has trending information on healthcare, technology and fintech, click here to sign up.  

Don’t Ignore the Steady Drumbeat of Drug Importation Part 2

Back in April 2019 we published an article through Specialty Pharmacy Times titled “Don’t Ignore the Steady Drumbeat of Drug Importation?” Click here to read the article

However; we have been noticing lately that there is a lot more chatter on importation, especially from the Administration. It seems as though some state administration officials are moving forward with the idea of providing imported medications for their citizens. Besides the state ideas discussed in the article above, states like Maine, Colorado, Vermont, Michigan, New Hampshire and Florida are all currently debating what an importation program would look like in their states. 

This is all a result of increased discussions initiated by the President who has mentioned the goal of lowering drug prices several times since he took office. The President has been a supporter of importing prescription drugs from Canada, namely following Florida’s importation model that was recently enacted by the state’s legislature.

While there are many solutions to lowering drug prices, importation has been a policy that has supporters on both sides of the aisle. However; there are still questions of safety as well as whether importation will have the cooperation of stakeholders such as drug manufacturers, the supply chain, and the Canadian government.  

While it can be argued that importation may not gain too much momentum with the end of the year quickly approaching and the elections starting to heat up in 2020, we still don’t expect importation to go away. If you are a stakeholder and are interested in learning what either your legal or policy options are contact us at Lanton Law by clicking here.

Lanton Law's Webinar With WellSky Now Available

Our recently recorded webinar with WellSky titled “What home care policies to watch for the rest of 2019” is now available at https://info.wellsky.com/LP-Emerging-SPRX-and-IV-Policies.html Below is a description of the webinar:

Unlike anything we have experienced before, the backend of the legislative calendar year is proving to be louder than ever. While Capitol Hill is embroiled in contentious topics, issues that are more important to home infusion and specialty pharmacy industries are impacted, and slowly working their way through the system. The webinar discussed the following:

DIR and possible policy solutions

• Latest drug price and how these will impact specialty and home infusion stakeholders

• Patient co-payments and biosimilars

• The Home Health Payment Rule

New Lanton Law Webinar on December 4th with the American College of Apothecaries (ACA)

We have a new webinar on December 4, 2019 via the American College of Apothecaries (ACA) on CBD.

Cannabidiol (CBD) products are flooding the market at an alarming rate. Many consumer stakeholders are excited about this new product line, while providers such as pharmacies, natural health food stores, and other retailers are casting a watchful eye; torn between developing market strategies to meet demand while also watching for state and federal regulatory oversight. This webinar will discuss the various aspects of CBD regulations and market trends to give stakeholders a better understanding of the CBD environment for patient and market opportunities.

Register at: https://ce.ppsinc.org/index.cfm?pg=semwebCatalog&panel=showLive&seminarid=10631

What's Next for DIR Policy?

We have a new article in the American College of Apothecaries (ACA) titled “What’s Next for DIR Policy?” We will be having a new white paper on the subject coming out soon. In the meantime, this link will take you to the article in the ACA Fall Magazine 2019. https://acainfo.org/wp-content/uploads/flipbook/22/mobile/index.html#p=9

The Specialty Pharmacist's Role in Educating Patients about Biosimilars and Biologics

Ron Lanton III, Esq. of Lanton Law discusses with Specialty Pharmacy Times the specialty pharmacist's role in educating patients about biosimilars and biologics. https://www.pharmacytimes.com/news/the-specialty-pharmacists-role-in-educating-patients-about-biosimilars-and-biologics

Specialty pharmacies really can help the patient in getting the education out about biologics and biosimilar products in a number of different ways. First of all, the specialty pharmacy is very educated about what products are out on the market, and they’re in close communication with the physician. It’s also going to depend on the formulary and whether or not the pharmacy benefit manager or the carrier is actually going to carry the drug on the particular formulary. So I think if it does, I mean, obviously they don’t know everything about the patient’s formulary but they can find out that information and then see whether or not that’s good for the patient to take, as far as cost and outcomes-wise. So I think that with the specialty pharmacist being positioned in the center of everything, it’s a great position to be in for them to say, ‘Look, this is coming down. This is something I think that can help you, and let’s try and see if we can lower your costs and improve your outcome.’

New Administration Rules Seek Healthcare Cost Transparency

With the release of the Administration’s American Patient’s First Blueprint in May 2018, price transparency was shown to be a centerpiece of the Administration’s governing agenda. Last week, the Administration released two rules, each at different points of the rulemaking process. 

The first is a final rule effective 1/1/21 targeting hospitals that will require them to display their negotiated rate to patients. The second is a proposed rule which according to CMS  “includes two approaches to make health care price information accessible to consumers and other stakeholders, allowing for easy comparison-shopping.” The proposal has a 60 day comment period. At this point in time there is no anticipated effective date.  

Pricing transparency continues to be a re-emerging theme that shows no signs of slowing down. If you need strategic advice or lobbying where price transparency is concerned, contact us at Lanton Strategies. If you need legal advice with regulatory or compliance concerns, contact us at Lanton Law.

New PBM Legislation Advances in Congress

Congresswoman Amy Spanberger (D-VA) has sponsored H.R. 2115 titled “Public Disclosure of Drug Discounts and Real-Time Beneficiary Drug Cost Act.” This is important for healthcare stakeholders, as this proposed legislation requires greater transparency for discounts provided by manufacturers. This bill also proposes to include real-time benefit information as part of a prescription drug plan’s electronic prescription program under Medicare. 

Below are a few of the bill’s highlights: 

“In order to allow the comparison of PBMs’ ability to negotiate rebates, discounts, direct and indirect remuneration fees, administrative fees, and price concessions and the amount of such rebates, discounts, direct and indirect remuneration fees, administrative fees, and price concessions that are passed through to plan sponsors, beginning January 1, 2020, the Secretary shall make available on the Internet website of the Department of Health and Human Services the information with respect to the second preceding calendar year provided to the Secretary on generic dispensing rates (as described in paragraph (1) of subsection (b)) and information provided to the Secretary under paragraphs (2) and (3) of such subsection that, as determined by the Secretary, is with respect to each PBM.”

Not later than January 1, 2021, the program shall implement real-time benefit tools that are capable of integrating with a prescribing health care professional’s electronic prescribing or electronic health record system for the transmission of formulary and benefit information in real time to prescribing health care professionals. With respect to a covered part D drug, such tools shall be capable of transmitting such information specific to an individual enrolled in a prescription drug plan. Such information shall include the following:

(I) A list of any clinically-appropriate alternatives to such drug included in the formulary of such plan.

(II) Cost-sharing information for such drug and such alternatives, including a description of any variance in cost sharing based on the pharmacy dispensing such drug or such alternatives.

(III) Information relating to whether such drug is included in the formulary of such plan and any prior authorization or other utilization management requirements applicable to such drug and such alternatives so included.

Conclusion:

Efforts to advocate for stronger PBM transparency has picked up in the last few years but this legislation which was voted 403-0 is telling. Usually this time of the year has Congress winding down its legislative agenda in preparation for the upcoming election. While I don’t expect to see too much legislation that is politically charged passing by year end, I do foresee either something on drug pricing or PBM transparency; if not both passing before we head into 2020. This Act is currently in the U.S. Senate. 

If you have additional questions about lobbying or need strategic advice on developing state or federal policies, contact Lanton Strategies or our sister company Lanton Law for regulatory compliance and legal issues.

Setting the Record Straight on March-In Rights and Drug Prices

This article appeared in Specialty Pharmacy Times

Following the launch of sofosbuvir (Sovaldi) in 2013, the pharmaceutical industry has been in the crosshairs of the government because of the drug's cost. Many industry stakeholders have been wrestling with difficult questions: How should the fair value of a drug be determined? What should the cost be for better outcomes? How much should a drug cost if it extends life? We have seen some political solutions advanced, such as the International Pricing Index, the Rebate Rule, and others, but no silver bullet to controlling costs has manifested to date.

The political costs of seeing an initiative through have often been harsh. The solution called march-in rights has been discussed frequently, but it has been clouded in confusion. Let’s examine what this policy is and whether it is a feasible solution to controlling prescription drug costs.

March-in rights arose from the Bayh-Dole Act, otherwise known as the Patent and Trademark Law Amendments Act, which was enacted in 1980. The law, found at US Code, Title 35, Part II, Chapter 18, Section 203, addresses intellectual property arising from federal government–funded research.

The law states that if an invention was created with the assistance of federal funds, the agency that provided the funding can require the granting of licenses to responsible applicants. These licenses can be exclusive, nonexclusive, or partially exclusive. If any licensee refuses to abide by reasonable terms for the granted licenses, then the federal agency can empower itself with a license based on specific conditions outlined in the law.

Right now, stakeholder groups are lobbying the National Institutes of Health by arguing that high prescription drug costs are not meeting patient needs, thus satisfying the burdens outlined in the law. Although it sounds as though the federal government can impose price controls on prescriptions, the government has never invoked this type of authority since it legally does not exist within the statute. If this were the case, the industry could possibly witness less innovation, which could inadvertently lead to the devaluation of patents in general.

The Commerce Department’s latest actions may have put the nail in the coffin on exploring the idea of government intervention via price controls. In April 2019, the National Institute of Standards and Technology finalized its green paper that recommends against the government exercising its march-in rights to lower prescription drug costs.1

“The green paper notes that in the intervening decades, interpretation of the Bayh-Dole Act has created confusion over the ‘march-in rights’ and ‘government-use license’ provisions, and that some stakeholders want clarification,” the authors wrote. “March-in rights described under Bayh-Dole allow the government, in certain limited circumstances, to force the party with title to a government-funded intellectual property to grant a license to another entity. To date, the government has never exercised these rights.”

If march-in rights are not the answer to lowering drug prices, then what is? The answer lies with Congress, which alone has the power to amend the Bayh-Dole Act to clarify when government intervention can occur, either by legislation or a regulatory directive. If not through Bayh-Dole, then Congress is the best place to legislation prescription price controls. There are several legislative bills pending on this issue, including the Prescription Drug Pricing Reduction Act, which has gained public momentum in the last few weeks. It will be interesting to see whether there is an emerging policy on price transparency from the states, as several legislatures are exploring solutions to this issue.

I am neutral when it comes to finding the appropriate answer to this issue. I believe that patients should have access to affordable medications. But how do we define affordable and what market-sufficient protocols could convince manufacturers that they should continue to innovate, knowing that they may not recoup their research and development costs?

My neutrality comes from not having an answer. I am for specialty stakeholders being able to operate on a level playing field while servicing their patients. I would advise that whenever there is a gray area, such as march-in rights, we should seek to obtain a long-lasting solution by changing the statute.

Yes, it may take significant time, but going through the courts is not always a guaranteed outcome. Although the short-term work of getting a solution memorialized through legislation is sometimes painstaking, the resulting certainty can last for many years.

Reference
1. NIST releases findings on increasing the innovation impacts of federally funded R&D [news release]. Gaithersburg, MD: National Institute of Standards and Technology; April 24, 2019. www.nist.gov/news-events/news/2019/04/nist-releases-findings-increasing-innovation-impacts-federally-funded-rd.

The Specialty Pharmacist's Role in Educating Patients about Biosimilars and Biologics

Ron Lanton III, Esq., discusses the specialty pharmacist's role in educating patients about biosimilars and biologics on the following link: https://www.pharmacytimes.com/news/the-specialty-pharmacists-role-in-educating-patients-about-biosimilars-and-biologics

Below is the text of the interview.

Specialty pharmacies really can help the patient in getting the education out about biologics and biosimilar products in a number of different ways. First of all, the specialty pharmacy is very educated about what products are out on the market, and they’re in close communication with the physician. It’s also going to depend on the formulary and whether or not the pharmacy benefit manager or the carrier is actually going to carry the drug on the particular formulary. So I think if it does, I mean, obviously they don’t know everything about the patient’s formulary but they can find out that information and then see whether or not that’s good for the patient to take, as far as cost and outcomes-wise. So I think that with the specialty pharmacist being positioned in the center of everything, it’s a great position to be in for them to say, ‘Look, this is coming down. This is something I think that can help you, and let’s try and see if we can lower your costs and improve your outcome.’

The Challenges to Launching Biosimilars

Check out Ron Lanton’s interview with Specialty Pharmacy Times on “The Challenges to Launching Biosimilars” https://www.pharmacytimes.com/news/challenges-to-launching-biosimilars

Below we have provided the text from the interview as well:

Ron Lanton III, Esq.: Well, there are a few challenges to launching biosimilars after approved. One I can think of is litigation. So there’s been constant litigation between the biologic and the biosimilar to make sure that there is some kind of market exclusivity. So that’s the first thing. The second thing is that the biosimilars are actually fighting the patent thicket, so the biologic or innovator product is throwing up a lot of patents to keep the biosimilar off of the market, so you’re having a fight about that. I think education—so physicians, patients, they’re not really knowing too much about biosimilars and what some of these biological products are and kind of use them interchangeably because they don’t know about either/or. So I think a little bit more education is key, and I know that the FDA has been trying to put out a lot of policies recently to get more utilization out of this to drive down the cost of medication.

Specialty Pharmacy Times Interviews Ron Lanton on the Prescription Drug Price Relief Act

Watch Ron Lanton’s video with Specialty Pharmacy Times, as the Times gets his viewpoints on the pending Prescription Drug Price Relief Act.
https://www.pharmacytimes.com/news/prescription-drug-price-relief-act-of-2019

Here is the text of the interview:

The Prescription Drug Price Relief Act, that’s an interesting bill. Right now, it’s pending in Congress. It’s in the Senate HELP committee—the Health, Education, Labor, and Pensions Committee, otherwise known as Senate HELP. It’s sponsored by Bernie Sanders. And I’ve never seen this type of a bill before because what it does is it takes the IPI—the International Pricing Index—and it makes it a little bit more succinct. So the administration earlier had a blueprint where it talked about taking a drug and actually benchmarking it against 16 other countries, and this particular bill benchmarks the drug against 5 different countries. So it makes it a little smaller and more manageable to figure out how is the reimbursement going to be. What is interesting about this bill is that it has a couple of elements in it really aimed at drug pricing control and trying to get more generics and biosimilars out into the marketplace and, again, spelling out that IPI. What is interesting, though, is that it has 6 co-sponsors to it, and 5 of them are actually running for president, so I don’t think I’ve ever seen anything like this before. I’m not really sure if this is a bill to make a statement on, as the debates go, to maybe shape a future platform, or whether this is something that they’re going to continue to push. But if they do, they’re running out of legislative calendar time so that’s something to be mindful of.

Cannabidiol Made Simple

This article appeared in Specialty Pharmacy Times.

Cannabidiol (CBD) has certainly drawn significant attention over the past few months. Marked by the recent passage of the Farm Bill and the FDA’s hearing on CBD at the end of May, the curiosity about and demand for the products have never been stronger. Unfortunately, misinformation on the effects of CBD remains rampant, including details on whether combining CBD with food affects the body’s absorption and conflicting reports on the various differences in state regulation.

This article examines the basis of CBD use in health care along with the recent major regulatory discussions surrounding this emerging trend.

Market Trends
Market projections for CBD have varied widely. A study by cannabis investigators BDS Analytics and Arcview Market Research projected the collective market for CBD sales to exceed $20 billion in the United States by 2024. The study also showed that US retail sales of CBD consumer products in 2018 were between an estimated $600 million and $2 billion. The investigators estimated that CBD products could generate approximately $16 billion in retail sales by 2025.1

What Is CBD?
According to the FDA, “Cannabis is a plant of the Cannabaceae family and contains more than 80 biologically active chemical compounds. The most commonly known compounds are delta-9-tetrahydrocannabinol (THC) and cannabidiol (CBD). Parts of the Cannabis sativa plant have been controlled under the Controlled Substances Act (CSA) since 1970 under the drug class ‘Marihuana’ (commonly referred to as ‘marijuana’) [21 U.S.C. 802(16)].”

The FDA classifies marijuana as a schedule I drug under the CSA because of a high potential for abuse, largely attributable to the psychoactive effects of THC and a lack of agreement on acceptable medical use in the United States.2

CBD Regulation
The passage of the 2018 Farm Bill, also known as the Agriculture Improvement Act of 2018, reauthorized many expenditures from the Agricultural Act of 2014. Enacted on December 20, 2018, the law deemed hemp a legal substance and set the THC threshold of CBD products to 0.3% on a dry weight basis.2

Most important, the law maintains the FDA’s authority to regulate cannabis and its derivatives, as any product claiming therapeutic benefits derived from CBD requires FDA approval for its intended use before going to market. The Farm Bill stated that significant shared state–federal regulatory power over hemp cultivation and production will be instated. State departments of agriculture must consult with their governors and chief law enforcement officers to devise a regulatory plan to submit to the secretary of the US Department of Agriculture (USDA) for approval. Hemp cultivators in states that opt not to devise a program will need to apply for licenses and comply with a federally run program constructed by the USDA.

Before the passage of the Farm Bill, CBD took a major step forward with the FDA approval of Epidiolex. On June 25, 2018, the oral solution was approved for the treatment of seizures associated with 2 rare and severe forms of epilepsy, Lennox-Gastaut syndrome and Dravet syndrome, in patients 2 years and older. This was the first FDA-approved drug containing a purified substance derived from marijuana. It was also the first FDA approval of a drug for the treatment of patients with Dravet syndrome.3

What is happening in state legislatures? Thirty-four states, the District of Columbia, Guam, Puerto Rico, and the US Virgin Islands have approved comprehensive medical marijuana programs, and 12 states allow the use of products containing low THC and high CBD for medical reasons in limited situations or as a legal defense, according to the National Conference of State Legislatures. Furthermore, as of June 5, 2019, 13 states and territories have approved the adult use of cannabis.4

On May 31, 2019, the FDA held a public hearing to gather information from industry stakeholders on the use of CBD in cosmetics, dietary supplements, and food. The FDA made no new regulatory announcements, as the agency recognized that further discussion is needed before it can determine the appropriate regulatory pathway for these products. This point was emphasized by former FDA Commissioner Scott Gottlieb, MD, who outlined the need for a high-level internal agency to explore potential pathways for dietary supplements and/or conventional foods containing CBD to be lawfully marketed. He also emphasized the need to find answers to frequently asked questions to help the public understand how the FDA’s requirements apply to these products, as well as next steps for the FDA.

What Is Next for CBD?
Pharmacy professionals should monitor statements from the FDA in the immediate future to see how it intends to regulate CBD. Further, they can glean regulatory insight by examining warning letters, such as the 3 recent warnings the agency sent to companies making unsubstantiated claims regarding the ability of their products to limit, treat, or cure cancer, neurodegenerative conditions, autoimmune diseases, opioid use disorder, and other serious conditions without sufficient evidence and legally required FDA approval.

The USDA’s Agricultural Marketing Service (AMS) is another place to look for clues to CBD oversight. Earlier this year, the AMS issued a notice to trade over hemp production and cultivation. Cannabis-based stocks such as GW Pharmaceuticals, OrganiGram, Tilray, and the Canopy Growth Corporation could offer further insights into how the FDA will regulate this industry.

However, my closing advice for retailers looking to enter this market is to learn how your hemp products are created, processed, and tested for contaminants, because no uniform standard exists. Lastly, I would advocate for the use of counsel to ensure that the products you wish to sell comply with current FDA regulations and to help you understand the different state regulatory requirements surrounding CBD.

References

1. U.S. CBD market anticipated to reach $20 billion in sales by 2024 [news release]. Boulder, CO: BDS Analytics; May 9, 2019. bdsanalytics.com/u-s-cbd-market-anticipated-to-reach-20-billion-in-sales-by-2024. Accessed June 8, 2019.

2. FDA regulation of cannabis and cannabis-derived products: questions and answers. FDA website. fda.gov/news-events/public-health-focus/fda-regulation-cannabis-and-cannabis-derived-products-questions-and-answers. Updated April 2, 2019. Accessed June 8, 2019.

3. FDA approves first drug comprised of an active ingredient derived from marijuana to treat rare, severe forms of epilepsy [news release]. Silver Springs, MD: FDA. www.fda.gov/news-events/press-announcements/fda-approves-first-drug-comprised-active-ingredient-derived-marijuana-treat-rare-severe-forms. Accessed June 8, 2019.

4. State medical marijuana laws. National Conference of State Legislatures website. ncsl.org/research/health/state-medical-marijuana-laws.aspx. Published June 5, 2019. Accessed June 8, 2019.

How Will the United States–Mexico–Canada Agreement Affect Biosimilars?

This article appeared in The Center for Biosimilars.

For years we have witnessed the fierce debate over whether the North American Free Trade Agreement (NAFTA) is serving the best interests of the United States. In following up on a 2016 campaign promise to renegotiate NAFTA, the new NAFTA, called the United States–Mexico–Canada Agreement (USMCA), is currently being debated by Congress, and there are concerns as to whether the agreement will be ratified.

Since Democrats control the House, Speaker Nancy Pelosi, D-California, is a major factor in determining how fast this agreement moves through Congress. One of the major Democratic points of concern is how prescription drugs, namely biologics, are handled in the USMCA.

The point of contention for biologics occurs in the agreement’s exclusivity period. Biosimilar manufacturers have raised concerns about the fact that the USMCA would award biologic manufacturers 10 years of market exclusivity.

The USMCA would not change the current biologic exclusivity in the United States. According to the current US law, “With regard to protecting new biologics, a Party shall, with respect to the first marketing approval in a Party of a new pharmaceutical product that is, or contains, a biologic, provide effective market protection...for a period of at least ten years from the date of first marketing approval of that product in that Party.”

However, the USMCA would raise the exclusivity timelines in Canada and Mexico, which could impact biosimilar manufacturers operating in those markets.

Supporters argue that the exclusivity period doesn’t change existing US law, innovators need time to recoup research and development costs, and drug costs may be reduced in the United States, since subsidization would be reduced due to the expansion of biologic exclusivity in Mexico and Canada.

USMCA critics, however, argue that the Administration’s Blueprint to Lower Drug Prices featured greater biosimilar utilization, and the USMCA contradicts this goal. The Association for Accessible Medicines (AAM) argues in its position that the “USMCA expands the definition of biologics, doubling exclusivity for certain medicines” and “expands the scope of drug exclusivities beyond US law.” According to AAM, “All of these issues should be conformed to the US Hatch-Waxman Amendments and the Biosimilars Law [the Biologics Price Competition and Innovation Act].”

So where does all this leave us? Negotiations between the Democrats and the Administration’s trade czar, Robert Lighthizer, continue. Going into an election year, the USMCA could serve as political fodder. Democrats may use this to criticize the President’s foreign policy while the President could make good on his threat to invoke the 6-month notice period and withdraw from NAFTA, but that action could be risky, since the economic effects are unknown going into 2020’s election.

One thing is certain; prescription drug prices remain a potent political issue where change has been called for by the electorate. Will the USMCA’s current form be enough or will further changes be realized?

2 Bills, 1 Goal: Lower Drug Prices Through Biosimilars

This article appeared in Biosimilar Development

Just prior to an election season, it is not surprising to see a few bills emerge as potential silver bullets to solve pressing policy issues. The latest issue that has consumed the public for several years is how to lower drug prices. While policymakers have raised a series of threats to the industry, such as having Medicare negotiate drug prices, getting rid of drug rebates, and the specter of importation, none of these threats have yet to materialize into any meaningful legislation. What has remained consistent is the intrigue of biosimilars and whether finding ways to increase their utilization in the market could provide the elusive key to lowering drug costs. Two Congressional bills have recently emerged illustrating this desire.

The first bill is H.R. 3991, titled the Affordable Prescriptions for Patients Through Improvements to Patent Litigation Act. This bill is sponsored by Congressman Hank Johnson (D-GA), who serves as the chair of the House Judiciary Subcommittee on Courts, Intellectual Property, and the Internet (the IP Subcommittee), while Ranking Member Martha Roby (R-AL) is serving as cosponsor. The bill proposes to amend the patent dance process detailed in the Biologics Price Competition and Innovation Act of 2009 (BPCIA). Specifically, the bill would limit the number of patents that can be claimed by the reference product sponsor to 20 and also require that not more than 10 of those 20 patents shall have issued after the date the innovator sends the initial patents allegedly infringed on by the biosimilar. Exceptions can be made by a court of law overseeing the matter at issue.

Congressman Johnson stated his intentions for the bill in the bill’s press release. According to the release, “while the BPCIA was designed in part to expedite the pathway for new versions of previously marketed biologic drugs, the current regime for addressing patents that may cover biosimilar drugs -- which are much more complicated and costly to bring to marker than small-molecule drugs -- is like a clogged artery.” The Congressman stated, “By streamlining and simplifying the patent litigation process, we hope to help boost an already robust biosimilar application process and help to expeditiously make these life-saving drugs affordable to every consumer.”1

While the intent of the bill is good, there are two things that concern me. First is the lack of additional cosponsors. While there is no magic number of cosponsors necessary for a bill to move, more support for the bill is needed to create the necessary momentum to get a vote on the House floor. Having more Congressional sponsors will increase awareness about the need to change the law to avoid more biosimilars being bogged down by “delay tactic” litigation. Second, the legislative calendar is working against this bill. While there is still time left before this Congress adjourns, we are headed into the fall before election season, where momentum for pending bills slows to a crawl, since legislators are less inclined to rock the boat for fear of looking less favorable in the public’s eyes prior to re-election. Politics are a real factor and unless something happens that shines the light on the need for biosimilars to come into the market faster, without additional sponsors it will be hard to see this bill advancing anytime soon.

The other relevant bill is The Prescription Drug Pricing Reduction Act (PDPRA) of 2019, which is sponsored by Senators Grassley (R-IA) and Wyden (D-OR). This bill, which is aimed at lowering prescription drug prices, has advanced out of the Senate Finance Committee and will be considered by the full Senate this fall. While this bill covers several issues, it does address a few issues concerning how biosimilar use will lower drug prices. Below are a few relevant provisions from the act:

The proposal would require prescription drug, biological, and biosimilar manufacturers that do not have a Medicaid drug rebate agreement to report average sales price (ASP) information to the HHS secretary, which would be used to help establish Medicare payment rates. These manufacturers would be required to report quarterly ASP information beginning with the first calendar quarter after the date of enactment.

• The proposal would require prescription drug, biological, and biosimilar manufacturers to exclude the value of coupons provided to privately insured individuals from each drug’s ASP, as reported to the HHS secretary. This provision would apply to manufacturers’ product sales for calendar quarters beginning on July 1, 2021. This provision would define coupons to mean financial support provided by a manufacturer to a patient, either directly or indirectly, specific to the manufacturer’s drug through a physician, prescriber, pharmacy, or other provider that is used to reduce or eliminate cost sharing or other out-of-pocket costs, including costs related to a deductible, coinsurance, or copayment. Manufacturers would not have to exclude contributions to patient assistance programs or foundations, which are generally provided to patients based on need and are not specific to the contributing manufacturer’s drug.

• The proposal would establish a wholesale acquisition cost (WAC) add-on payment of no greater than plus 3 percent when ASP is unavailable for new drugs, biologicals, and biosimilars furnished on or after Jan. 1, 2019.

• The proposal would establish a payment rate for biosimilars furnished on or after July 1, 2020 for the roughly two-quarter initial period that would be the lesser of: (1) the biosimilar’s WAC plus 3 percent; or (2) ASP plus 6 percent of the reference biological product.

• Lastly, to encourage biosimilar product development, the proposal would increase the add-on payment for a biosimilar biological product from 6 percent of the reference product’s ASP to 8 percent of the reference product ASP for a period of five years. The temporary add-on payment increase would apply to a biosimilar: (1) paid for by Medicare as of Dec. 31, 2019, for a five-year period beginning Jan. 1, 2020; and (2) paid on or after Jan. 1, 2020, for a five-year period that would begin on the first day of the first calendar quarter in which the product was paid for under Medicare Part B.

Needless to say, there is a lot going on in this proposal. It is clear that the sponsoring senators want to get drug prices under control and policymakers such as Congress and the Medicare Payment Advisory Commission (MedPAC) have been floating proposals for a few years now on how reigning in the ASP calculation would save the system money. While this proposal in theory sounds feasible, I fully expect there to be pushback from the industry on any reductions in reimbursement. This is on top of the contentious fight the pharmacy benefit managers (PBMs) put up against coupons and, seeing that this language includes that, I question whether all of this can get done. The difference between this bill and Congressman Johnson’s is that the Senate bill has more support than the Congressional bill.

There is no doubt that the remainder of the year will focus on last-minute policy initiatives to beat the winding down of the legislative calendar. After all, with so much on the line for the election of 2020, members of Congress must be able to go back to their districts and show how they have addressed major constituent issues such as high drug prices. While biosimilars do hold a lot of theoretical promise, we need more policies to help them get into the market faster to see if and whether we need additional tweaks for the drug price savings that many are hoping to achieve with biosimilars.

References:

Rep. Johnson Introduces Bipartisan Legislation to Lower Prescription Prices, Press Release July 26, 2019, https://hankjohnson.house.gov/media-center/press-releases/rep-johnson-introduces-bipartisan-legislation-lower-prescription-prices