Energy and Commerce committee unanimously approves FDA reauthorization

The House Energy and Commerce Committee voted unanimously—54 to zero—to approve H.R. 2430, the Food and Drug Administration Reauthorization Act of 2017 (FDARA), after a markup on June 7, 2017. The bill would reauthorize the FDA’s user fee programs for prescription drug, medical device, generic drug, and biosimilar biological products. Without the reauthorization, the use fee programs will expire at the end of September, 2017.

The FDARA would renew the FDA’s authority to collect user fees from the makers of prescription brand drugs, medical devices, generic drugs, and biosimilars. The fees account for more than one-fourth of the agency’s funding (see HELP committee advances FDA user fee agreements to Senate floor, May 12, 2017).

The bill passed the committee with six amendments, offered by: Chairman Greg Walden (R-Ore), Rep. Ryan Costello (R-Pa), Rep. Scott Peters (D-Calif), Rep. Mimi Walters (R-Calif), and Rep. Jan Schakowsky (D-Ill). Rep. Schakowsky offered two amendments. The amendments are designed to further the development of generic therapies, update approval and quality reporting requirements for medical devices, allow for risk-based classification of accessories, foster the development of medical device safety surveillance pilots, and encourage steps to lower the cost of prescription drugs.

Senate committee works to understand balance between drug innovation, affordability

Drug pricing is a complex system in the United States, and costs vary significantly between different payers and consumers for a number of reasons, including rebates and discounts offered by manufacturers, drug patents, agreements with insurers, and changes from volume- to value-based payment systems. In a hearing before the U.S. Senate Committee on Health, Education, Labor & Pensions titled “The Cost of Prescription Drugs: How the Drug Delivery System Affects What Patients Pay,” experts testified about who pays for prescription drugs, and what that money pays for. In his opening statement, Committee Chair Sen. Lamar Alexander (R-Tenn) explained that this is the first of three planned hearings; the second hearing will consider the full drug delivery process and its associated costs, and the third hearing will focus on ensuring patient access to affordable drugs.

Dan Mendelson, President, Avalere Health, said in his testimony that consumer drug prices are “determined jointly by health system design, pharmaceutical company pricing, and decisions by health plans, pharmacy benefit management (PBM) practices, and other transactions involving distributors and pharmacies along the supply chain.” He explained that total costs often include payments for (1) the product; (2) services provided; (3) shipping; (4) rebates; (5) pharmacy reimbursement; and (6) costs associated with PBMs and third-party payers including reimbursement, share of rebates, and contractual obligations. Mendelson noted that most patients pay cost-sharing for prescription drugs based on list price, not net price, because many rebates are not shared directly with consumers. He added that the patient protections included in the Patient Protection and Affordable Care Act (ACA) (P.L. 111-148) led to payers increasing deductibles for consumers in order to offer lower monthly premiums. However, he said, the ACA’s cost-sharing reductions have allowed individuals using the health insurance exchange to pay less for drugs; Mendelson reminded committee members that the American Health Care Act (AHCA) (H.R. 1628) in its current form would repeal cost-sharing reductions.

Allan Coukell, Senior Director of Health Programs, Pew Charitable Trusts, testified that net pharmaceutical spending has increased 42 percent since 2006, but two-thirds of that growth has occurred in the past four years. He listed the following limitations on effective drug pricing competition:

  • monopoly pricing for new drugs;
  • lack of competition for some older drugs;
  • misaligned incentives and incomplete information for stakeholders, including payers, providers and patients at many points in the system, and
  • a historical willingness to cover new therapies without ensuring that their clinical benefits justify the price.

Coukell said that the cost of new medicines is rising, and that is largely responsible for increased drug spending—for example, high-cost specialty products, particularly biologics that are not used by many individuals, account for more than 40 percent of drug spending. He suggested that the 12 years of exclusivity granted to biologic manufacturers, particularly when compared with the five years that drug manufacturers get, is excessive.

Paul Howard, Ph. D., Senior Fellow and Director of Health Policy, Manhattan Institute, also spoke about the challenges involved with specialty medicines, such as those that treat hepatitis C, cystic fibrosis, and rheumatoid arthritis. He said noted that the vast majority of prescription drugs are “highly affordable,” and that the “outlook for innovation has never been brighter,” but mentioned the need for increased competition to reduce waste and ineffective care. Howard recommended that Congress “create incentives that reward providers who use medicines (both generic and branded) and technology to deliver care as efficiently as possible, while also empowering patients with the information they need to identify high quality providers.” He suggested changes to the 340B drug discount program, HHS and FDA coordination on safe harbors for innovative contractual arrangements, and broader Medicare, Medicaid, and patient-empowerment reforms.

Gerard Anderson, Ph.D., Professor of Medicine, Johns Hopkins University School of Medicine, also blamed high costs on specialty drugs and chronic conditions, but added that state and federal health care programs cannot afford to continue paying high prices for these expensive drugs for Medicare and Medicaid recipients, and are being forced to make “life or death decisions.” His recommendations are increasing competition and changing policies to increase access to pharmaceuticals, such as including drugs in bundled payments and accountable care organizations (ACOs) while eliminating rebates from PBMs and prescription drug plans. Anderson also recommended cracking down on abuse of orphan drug designations and allowing branded drugs to move to the generic market sooner. He suggested that negotiating drug prices, specifically by a single designated federal agency using existing authority under 28 U.S.C. §1498, and enacting price-gauging legislation.

Gottlieb confirmed as FDA Commissioner

The U.S. Senate confirmed Scott Gottlieb, M.D., as FDA Commissioner on May 9, 2017 in a 57 to 42 vote, with all voting Republicans and five Democrats voting for confirmation, and all remaining Democrats voting against confirmation. Gottlieb’s ties to the investment company, New Enterprise Associates (NEA), were discussed at length during contentious confirmation hearing; nevertheless, he was easily confirmed. Sen. Lamar Alexander (R-Tenn), who chaired Gottlieb’s confirmation hearing, opined that new Commissioner “will help American families benefit from the promise of 21st Century Cures.”

Gottlieb most recently served as a resident fellow at the conservative American Enterprise Institute (AEI), clinical assistant professor at New York University School of Medicine, and a member of the HHS Federal Health IT Policy Committee. He served as Deputy FDA Commissioner in the George W. Bush administration from 2005 to 2007.He is known for encouraging a quicker FDA approval process for new drugs, with a focus for shortening wait times on large, clinical trials (see Trump nominates Gottlieb for FDA Commissioner, Health Law Daily, March 13, 2017). During his April 5, 2017 confirmation hearing, Democratic senators expressed concern about his financial ties to pharmaceutical and medical device companies (see Gottlieb’s ‘financial entanglements’ troubling or heartening, depending on the senator, Health Law Daily, April 5, 2017). Gottlieb acknowledged the importance of impartiality and told Senators, “I want to earn and keep the public’s trust.”

FTC nails opiate withdrawal supplement company for misleading statements

Catlin Enterprises, Inc. (Catlin) is now barred from making scientifically unsubstantiated claims that their opiate withdrawal treatment alleviates withdrawal symptoms and increases the chances of overcoming opiate dependency. A Texas district court ordered the permanent injunction following the Federal Trade Commission’s (FTC) complaint against Catlin.

Complaint and order

The FTC alleged that Catlin falsely advertised its products Withdrawal Ease and Recovery Ease and participated in deceptive acts throughout the process of labeling, advertising, distribution, and sale of the products. According to Catlin’s statements, Withdrawal Ease significantly alleviates opiate withdrawal symptoms and significantly increases the likelihood of overcoming dependency, while Recovery Ease significantly alleviates post-acute withdrawal symptoms.

The injunction prevent Catalin and its officers, agents, employees, and other people actively participating in the company from engaging in any steps of the process of making and selling any dietary product intended to provide withdrawal assistance or other health benefits and represented as having such benefits unless such statements are not misleading. Any representation of benefits much be based on reliable scientific evidence, obtained from human clinical testing of the product or an equivalent product. The testing must be conducted by qualified researchers and be randomized, double-blind, and placebo controlled.

A $6.6 million judgment was entered and suspended premised upon the accuracy of sworn financial statements. Catalin must provide the FTC with customer information to allow the FTC to “administer consumer redress,” when requested, then destroy this information when instructed to do so by the FTC.