FDA opens portal to future science and tech trends

The FDA is lending additional support behind “horizon scanning,” a practice in which government and business entities collaborate to gather information broadly about emerging trends in science and technology. Horizon scanning helps these entities develop better capabilities to react to the quickly changing field. The FDA set up its own intra-agency horizon scanning group back in April 2015 – the Emerging Sciences Working Group – comprised of representatives from various FDA product and research centers.

Along those lines, the FDA is asking science and technology experts in the private sector to submit predictions on the next “new” items in their field of specialization. The agency stressed that it is not looking for advances already under discussion, but instead is seeking information about scientific and technological advances under the radar–so far under that a web search would have difficultly finding it. The FDA’s ability to achieve its stated agency mission relies on awareness of, and proactive preparedness for, emerging issues and scientific advances, which will impact the development of regulated products well in advance of formal FDA regulatory submissions, which can be anywhere from five to 10 years prior to when the regulatory submissions arrive at the FDA.

The information should be submitted electronically to the FDA’s Emerging Sciences Idea Portal. The portal is public, so confidential information should only be provided in writing. The FDA makes no promises on response, but did note that it would ask for more information if the submission sufficiently interested the agency. The FDA will use this information gathering to assist in the agency’s science-based planning, programs, policies, reporting, and communication within and outside the FDA. The public docket will be available for comment submissions through October 2019.

Kusserow on Compliance: OIG reports concern and interest in billing for ventilators

The HHS Office of Inspector General (OIG) issued a report to CMS expressing concerns about the recent substantial increase in Medicare billing for noninvasive pressure support ventilators (coded as E0464). The agency analyzed Medicare claims data on noninvasive multimodal ventilators, CPAP devices, RADs, and related supplies from 2009 through 2015 and found an increase of 85 times over this period of time. The OIG noted that ventilator technology has evolved so that it is possible for a single device to treat numerous conditions by operating in several different modes—e.g., basic continuous positive airway pressure (CPAP) mode, respiratory assist device (RAD) mode, and traditional ventilator mode. Medicare covers ventilators and RADs for similar respiratory diagnoses, but the selection of the appropriate device is based on the severity of the beneficiary’s condition. RADs are covered for beneficiaries with less severe conditions, whereas ventilators are covered for more severe conditions. CPAP devices are covered for the treatment of obstructive sleep apnea.


  1. The OIG could not find a reasonable explanation for the increase.
  2. A large proportion of the beneficiaries with E0464 ventilators had recently switched to these devices from using a CPAP device or RAD.
  3. Emergence of this multimodal device, when combined with Medicare coverage and payment policies that favor reimbursement for ventilators, appear to create incentives for suppliers to provide and bill for a ventilator when the device is actually being used as a RAD or CPAP device.
  4. Increased billing trend is being driven primarily by three national suppliers that have rapidly expanded their market share and that accounted for 54 percent of the nationwide growth in ventilator claims from 2012 to 2015.
  5. There has been a dramatic shift in the use of ventilators to treat respiratory conditions rather than neuromuscular conditions.
  6. Medicare also paid $25 million for E0464 ventilator claims with indicators of inappropriate billing (e.g., billing for multiple devices or billing to treat obstructive sleep apnea).

The OIG called upon CMS to monitor the providers with the largest market shares of ventilator beneficiaries or exploring the causes and implications of the shift in diagnoses on ventilator claims, as well as have increased contractor reviews (both prepayment and postpayment) of ventilator claims for improper payments. The results of this report will result in closer scrutiny of these claims and it also may increase interest in future audits and investigations in this area, particular those national suppliers that dominate the market.

Richard P. Kusserow served as DHHS Inspector General for 11 years. He currently is CEO of Strategic Management Services, LLC (SM), a firm that has assisted more than 3,000 organizations and entities with compliance related matters. The SM sister company, CRC, provides a wide range of compliance tools including sanction-screening.

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Copyright © 2016 Strategic Management Services, LLC. Published with permission.

Mylan calculated profitability using 37.5% tax it doesn’t pay

Mylan is being met with yet more derision after a profitability analysis released by the company to the Securities and Exchange Commission (SEC) revealed that its profits are calculated after factoring in a U.S. tax rate that is much higher than the actual rate—which the Washington Post reports is nearly nothing.

When Mylan CEO Heather Bresch appeared before the House Committee on Oversight and Government Reform to address the pen’s price increases, she claimed that the company receives about $100 of profit from each sale of the $608 EpiPen® 2-Pak (see Mylan CEO highlights EpiPen® access improvement efforts before House committee, Health Law Daily September 22, 2016). The SEC’s profitability analysis revealed that Mylan includes a 37.5-percent tax rate when calculating its net product profitability.

According to the Washington Post, Mylan relocated its headquarters to the Netherlands, which reduced its tax rate. In 2015, the company’s overall tax rate was 7 percent in 2015, but an independent tax expert reported that the U.S. tax rate is actually close to zero. Mylan argued that standard profitability analyses include tax for the jurisdiction reviewed. Representative Elijah Cummings (D-Md) expressed Congress’s skepticism over the numbers provided, and noted that Mylan has until Friday, September 30, 2016, to give Congress files that will allow the government to determine the company’s actual profits.

Mylan CEO highlights EpiPen® access improvement efforts before House committee

Mylan CEO Heather Bresch attempted to deflect the conversation away from the EpiPen® price hike before the House Committee on Oversight and Government Reform by emphasizing Mylan’s efforts to improve access to the device. Dr. Douglas Throckmorton, Deputy Director for Regulatory Programs for the FDA’s Center for Drug Evaluation and Research, also testified about the FDA’s efforts to support the development of new auto-injector products to compete with the EpiPen.

Price hike

When Mylan first purchased the EpiPen from Merck in 2007, the list price for the device was about $57. Today, a 2-Pak is listed at $608. These numbers gained national attention, resulting in outcry from consumers, government scrutiny, and falling stock prices. In response, Mylan doubled eligibility for the patient assistance program allowing consumers to use a savings card when purchasing the EpiPen. Consumers and the press found this action insufficient, especially considering that those without insurance and patients enrolled in federal health care programs are not eligible to use the savings card (see Mylan attempts to mitigate EpiPen® cost hike controversy, Health Law Daily, August 25, 2016).


Throckmorton noted that four epinephrine auto-injectors have been granted FDA approval, but only two are on the market. Amedra’s brand name Adrenaclick® is not currently marketed, but the company is marketing its own generic version. Its Twinject® product was discontinued. Kaleo purchased Auvi-Q® from Sanofi after it was recalled and has not yet returned the product to market. According to Throckmorton’s testimony, the FDA is willing to provide one-on-one guidance for products like an auto-injector that combines drug and device components and is working to assist manufacturers in bringing generic drugs to market.

Bresch believes that the issue of access to the EpiPen is equally critical as the pricing aspect. She testified that in 2007, fewer than one million out of the 43 million consumers at risk for anaphylaxis had access to an auto-injector. Since then, about 80 percent more patients have been reached and 85 percent who obtain the EpiPen pay less than $100 for the 2-Pak. Mylan has also provided 700,000 free EpiPens to schools.

Turning to price, she clarified that Mylan does not receive $600 in profits per 2-Pak sold. Although the wholesale acquisition cost (WAC) is $608, Mylan receives $274 after rebates and fees. After subtracting cost of goods and costs, Mylan’s profit is about $100 per 2-Pak. Bresch outlined four steps Mylan has taken to combat the pricing issue:

  • announcing a generic EpiPen to be priced at $300;
  • providing a direct ship option for the generic;
  • increasing the savings card program benefit to $300, from $100; and
  • doubling the income eligibility limit for receiving free pens.

Medicare Part D costs

The Kaiser Family Foundation (KFF) found that between 2007 and 2014, Part D spending on EpiPens increased by 1151 percent. Although the total number of EpiPen users grew from about 80,000 to 211,500 during that time frame (164 percent growth), the average total spending per prescription went from $71 to $344 (383 percent increase). Part D spent $7 million on EpiPens in 2007 and almost $88 million in 2014.

Out-of-pocket spending increased dramatically as well, even though Part D covers some of enrollees’ drug costs. The increase in users and price resulted in a jump in out-of-pocket spending from $1.6 million to $8.5 million. The report noted that the price of the EpiPen has increased by 74 percent since 2014, but Part D spending information for this time period is not yet available.