User fee program reauthorizations necessary for product development

The House Energy and Commerce Subcommittee on Health focused its attention on the FDA’s generic drug and biosimilar user fee programs by inviting the FDA and industry leaders to a hearing to discuss how the programs have been implemented to date and recommendations on reauthorization. Both the Generic Drug User Fee Amendments of 2012 (GDUFA) and the Biosimilar User Fee Act of 2012 (BsUFA) expire in September 2017 and must be reauthorized for the Fiscal Years 2018 to 2022. The hearing also discussed H.R. 749, the Lower Drug Costs Through Competition Act, which seeks to increase generic competition through a shortened review cycle of six months.

Background

Since 1992 and based on the Prescription Drug User Fee Act (PDUFA), Congress has authorized the FDA to collect fees from regulated industry to supplement congressional appropriations. Revenues generated from these fees have been used on specific activities related to the review and regulation of medical products. In exchange for industry agreeing to pay fees, the FDA agrees to meet certain performance goals, such as completing product reviews within specified timeframes. Industry concerns about the length of time it was taking the FDA to review generic drug applications, known as abbreviated new drug applications (ANDA), and the backlog of such applications pending at the agency led Congress to pass GDUFA as part of the Food and Drug Administration Safety and Innovation Act (FDASIA).

Likewise, the Biologics Price Competition and Innovation Act (BCPIA) of 2009, as passed with the Patient Protection and Affordable Care Act (ACA) (P.L. 111-148), established a new regulatory authority for the FDA to create an abbreviated approval pathway for biological products demonstrated to be “highly similar” to, or “interchangeable” with, a previously licensed biological product. As part of FDASIA, Congress passed BsUFA to authorize FDA to collect user fees from biosimilar product manufacturers.

Pew Charitable Trusts

Allan Coukell, Senior Director of Health Programs, The Pew Charitable Trusts presented testimony on rising pharmaceutical costs, within and beyond the user fee context. He noted the rising cost of new medicines—especially high-cost specialty drugs, which are only used by 1 to 2 percent of the population, but account for more than one-third of drug spending. Although the FDA’s approval processes outlined in the generic and other user-free agreements offer some potential to address drug spending, he stressed that competition via generic drugs.

As such, the Lower Drug Costs through Competition Act (H.R. 749) would award a generic priority review voucher to any manufacturer that brings a generic drug to market in cases of limited competition or a drug shortage. It would also establish a six-month timeline for FDA review of priority applications, faster than the GDUFA review. In addition to accelerated review, the Pew Charitable Trusts called for Congress to consider requiring greater transparency of contract terms and definitions between payers and pharmacy benefit managers (PBM), as well as mandating the ability to audit these deals, and ensuring that entities that advise purchasers on PBM contracts do not also have financial relationships with the PBMs themselves.

Association for Accessible Medicines

David Gaugh, Senior Vice President for Sciences and Regulatory Affairs at the Association for Accessible Medicines (AAM), which was previously known as GPhA—the trade association representing the manufacturers and distributors of generic prescription drugs, manufacturers and distributors of bulk pharmaceutical chemicals—testified that the best way of achieving the goal of providing patients access to generic alternatives is through the development of policies that promoted competitive markets. The AAM stressed that the best way to control drug costs generally was through policies that incentivize competition, such as GDUFA.

The user fee program supports small business by exempting them from a facility fee until the first ANDA in that facility is approved. The proposal also provides for a tiered structure of annual ANDA program fees based on small, medium, and large companies. Designing GDUFA to spread fees across industry to keep individual amounts as low as possible, the AAM believed the program would help assure that patients continue to receive the significant cost savings from generics alternatives.

Biotechnology Innovation Organization

Kay Holcombe, Senior Vice president, Science Policy, Biotechnology Innovation Organization (BIO), offered testimony to the Subcommittee on reauthorization of BsUFA and H.R. 749. BIO supported the reauthorization of BsUFA, as well as expressed its support for competition in the prescription drug marketplace not only between innovator biologics and biosimilars, but also between innovator drugs and generic drugs, which is the subject of H.R. 749. BIO urged the FDA to lay out its thinking on interchangeability and believed it was crucial for the FDA to clarify its expectations for the data needed to determine that a biosimilar product is interchangeable with its reference biological product. Such a determination could serve to encourage greater prescribing and use of biosimilars as the availability of biosimilar products increases, provided the determination is sufficiently rigorous.

As for H.R. 749, BIO did not adopt a position on the question of timelines for generic drug review or awarding certain generic drug applicants with priority review vouchers under the proposed legislation. BIO did note that it supported policy intended to lower drug prices through the promotion of competition in the drug marketplace, including the timely entry of generics and biosimilars once patents and exclusivities for innovator drugs have expired.

Biosimilars Council

Bruce Leicher, Senior Vice President and General Counsel at Momenta Pharmaceuticals, and Chair of the Biosimilars Council Board of Directors, a division of AAM, noted that the BsUFA reauthorization user fees were now tied to the level of resources needed and adjust with resource demand. As such, it was vital that Congress understood that the funding provided by user fees is in addition to, not a substitute for, congressional appropriations.

Biosimilars Forum

Juliana Reed, Vice President of Government Affairs for Coherus BioSciences, stated that the Biosimilars Forum entered into the BsUFA reauthorization negotiation process with four primary goals: (1) ensuring solid financial support for the program; (2) improving communication between the FDA and biosimilars product sponsors during the approval process to improve efficiency; (3) increasing transparency during the approval process and regarding the spending of user fees; and (4) preventing the expenditure of BsUFA funds on extraneous policy issues or activities that are not exclusive to biosimilars. The Biosimilars Forum was pleased to see that the BsUFA draft met these goals.

In addition, the Biosimilars Forum urged Congress require CMS to review its current reimbursement policy for biosimilars and make it consistent with FDA biosimilar policies. Specifically, it noted that the FDA policy on biosimilars acknowledges the unique nature of each biosimilar, and CMS should align its policy by assigning unique, individualized billing codes to each biosimilar.

FDA

Janet Woodcock, Director of the Center for Drug Evaluation and Research (CDER) at the FDA, discussed both GDUFA and BsUFA during her testimony before the Subcommittee. GDUFA achieved a number of notable goals during the course of its five-year authorization. The FDA approved or tentatively approved 835 ANDAs—the most approvals in the history of the agency—in fiscal year (FY) 2016 alone. The previous high was 619. In addition, approximately 25 percent of all currently approved generic drugs were approved over the past four years. Prior to GDUFA, ANDAs were approved in one review cycle less than one percent of the time. Now, approximately nine percent of ANDAs are approved in the first review cycle.

The FDA did note some challenges to GDUFA, namely submission completeness and volume of applications. Historically, it has taken on average about four review cycles to approve an ANDA as a result of deficiencies by generic drug sponsors in submitting complete applications. More work by both the FDA and industry will be necessary to have the filings be accurate the first time. Moreover, in FYs 2012, 2013, and 2014, the FDA received over 1,000, nearly 1,000, and nearly 1,500 applications, respectively, which taxed the agency’s ability to timely process the ANDAs.

The FDA was also supportive of and fully engaged with the development and approval of biosimilar and interchangeable products. One of the first steps in the development and review process for a biosimilar is for an applicant to join the FDA’s Biosimilar Product Development (BPD) Program. As of February 2017, 64 programs were enrolled in the BPD Program and CDER has received meeting requests to discuss the development of biosimilars for 23 different reference products. Moreover, the FDA finalized six guidances and issued four draft guidances during the timeframe in question. The FDA’s challenge, however, was a result of staffing shortages. Without additional staffing to handle the increased workload for biosimilar review, the FDA warned that review performance would be impacted.

House Republicans narrow aim to specific provisions in health reform battle

House Republicans introduced four bills as part of a new piecemeal strategy to repeal and redefine the Patient Protection and Affordable Care Act (ACA) (P.L. 111-148). The proposed legislation—which will be considered at a February 2, 2017, hearing before the House Energy and Commerce Committee—concerns: (1) special enrollment period (SEP) eligibility verifications; (2) premium rate ratios; (3) grace periods for missed premium payments; and (4) a political promise to continue the ban on preexisting condition exclusions.

SEP

The first bill would require HHS verification of an individual’s eligibility for a SEP before an insurer would be permitted to make coverage effective for that individual. Although HHS has already developed a pilot program for some SEP eligibility verifications, the bill would require HHS to create a verification process, through interim final rulemaking, for plan years beginning on or after January 1, 2018.

Premium variation

The second bill would give insurers more authority to vary the premium rates charged to older enrollees, as compared to younger enrollees, in the individual and small group markets. The bill would permit insurers to raise the current ratio of three-to-one to a ratio of five-to-one, or, to any other ratio established by a state. The greater variation addresses insurer complaints that the three-to-one ratio is not actuarially appropriate.

Grace period

The third bill would reduce the length of the current 90-day grace period afforded to premium tax credit recipients who miss their premium payments. The bill would shorten the grace period to one “provided by law” or one month. Although premium tax credit recipients are, by definition, experiencing financial difficulty, the bill is designed to assuage insurers’ contentions that premium tax credit recipients are using the grace period to skip the last three months of premium payments, catching up only when or if they develop a need for health care. However, HHS noted in the preface of its Notice of Benefit and Payment Parameters for 2018 (81 FR 94058) that such grace period “gaming” claims are unsubstantiated.

Preexisting conditions

The fourth bill, which does not promise a change in policy, is a statement of policy. In essence, the bill is a promise, in the event Congress decides to repeal the ACA, that the health reform replacement will include a provision with an absolute ban on preexisting conditions clauses. The bill establishes Congress’ position that it will not allow a return to a health insurance market where coverage decisions are based upon the status of an enrollee’s health. The bill makes a curious exception, however, for genetic conditions which have not already led to a diagnosis.

Kusserow on Compliance: HHS OIG celebrates 40 year anniversary

Office of Inspector General’s (OIG) mission is to protect the integrity of Department of Health & Human Services (HHS) programs as well as the health and welfare of program beneficiaries began 40 years ago with the passage of legislation in 1976. I had the honor of being the Inspector General for 12 of those years.   The OIG focuses on combating fraud, waste and abuse and to improving the efficiency of HHS programs. A majority of OIG’s resources goes toward the oversight of Medicare and Medicaid; however their responsibilities extends to many other programs, including the Centers for Disease Control and Prevention, National Institutes of Health, Food and Drug Administration, as well as numerous social programs for the disadvantage of the Country. The OIG posted a summary of their history and current efforts;

  • Inspector General Act signed into law by President Gerald Ford on October 15, 1976
  • Today, the OIG is charged with overseeing $1 trillion dollars in HHS spending, 25% of the outlays of the Federal government
  • OIG is the largest IG office five a staff of 1,660+ employees in 70 offices nationwide
  • OIG uses advanced data analytics to eliminate fraud, waste and abuse across the Nation
  • $20.6 Billion in estimated savings for FY 2015 from actions linked to them
  • OIG claims a return of $6 per $1 spent in addressing health care fraud
  • OIG reported in first half of this year expected recoveries of more than $2.77 billion, 428 criminal actions and 383 civil actions against individuals or entities

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.

Connect with Richard Kusserow on Google+ or LinkedIn.

Subscribe to the Kusserow on Compliance Newsletter

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

Highlight on California: Aid-in-dying law allows patients to be given deadly dose of drugs

On October 5, 2015, California Governor Jerry Brown (D) signed AB2-15, the End of Life Option Act. Effective January 1, 2016, the law will allow an adult who is terminally ill to request and obtain a prescription for an “aid-in-dying drug,” defined as “a drug determined and prescribed by a physician for a qualified individual, which the qualified individual may choose to self-administer to bring about his or her death.”  The law requires several procedural steps and other protections to assure that the patient understands the nature and consequences of the act and that the patient has maintained the intention for a period of time. Specifically, the law requires:

  • attestation by both the patient’s attending (treating) physician and a consulting physician that the patient’s condition is terminal, the patient has the capacity to make the decision, and has done so with informed consent
  • two oral requests for the aid-in-dying drug made by the patient to the physician at least 15 days apart, and a written request. The patient must  make the requests personally, not through a personal representative, attorney-in-fact, guardian, conservator, or health care agent. All three requests must be made to and received by the physician personally, and not through a designee.
  • the written request must be made in a form prescribed by statute and signed in the presence of two adult witnesses, who must attest to the individual’s identity and to their belief in the individual’s voluntary action, the lack of duress or undue influence.
  • before writing the prescription, the attending physician must evaluate the individual’s mental health and make a referral to a mental health professional if there is any indication of a mental disorder and await the determination of the mental health professional that the individual has the capacity to make medical decisions and is not suffering from impaired judgment due to a mental disorder..

The witnesses may not be the attending physician, consulting physician, or mental health specialist. Only one of the two witnesses may be either a member of the individual’s family or entitled to any portion of the estate at death or the owner, operator or an employee of the healath care facility where the individual resides or is receiving care.

The prescription

The attending physician must give the patient the opportunity to withdraw or rescind the request before he or she writes the prescription and must confirm that the individual has the capacity to make the medical decision and understands:

  • his or her diagnosis and prognosis;
  • the risks associated with taking the aid-in-dying drug,
  • the probable result of taking it;
  • the possibility that he or she may choose not to take the drug after receiving it, and
  • all of the other treatment options available, including hospice or palliative care.

In addition, the physician must counsel the patient:

  • to take the drug in the presence of another person;
  • not to do so in a public place;
  • to notify the next of kin of the request;
  • to keep the drug in a safe, secure location until he or she ingests it; and
  • to complete the final attestation form within 48 hours before ingesting the drug.

Interpreters’ services

If the individual makes the requests and has the discussions with a physician or mental health professional in a language other than English, he or she may sign the form in English, but the interpreter must execute a form declaring under penalty of perjury that the interpreter is fluent in both English and the patient’s language and that the individual understood the meaning and significance of the decision and the document he or she signed.  The interpreter may not be a related to the individual by blood, marriage, adoption, or registered domestic partnership and may not be entitled to any portion of the individual’s estate.

Recordkeeping

The attending physician must maintain records of the patient’s requests in the patient’s medical records. Thirty days after writing the prescription for an aid-in-dying drug, the physician must report the prescription to the state Department of Health. If the patient has used the drug, the attestation form also is to be turned in to the attending physician, who must submit it to the state.

Prohibitions in contracts, wills, and other documents

Under the statute, any provision in a contract, will, or other agreement executed on or after January 1, 2016, that would affect a person’s making, withdrawing, or rescinding a request for an aid-in-dying drug is not valid. No obligation under a contract may be conditioned upon an individual’s making, withdrawing, or rescinding a request for such a drug. The sale, procurement,  issuance, or price of a life or health insurance policy may not be conditioned upon an individual’s making or rescinding a request for an aid-in-dying drug.

An individual’s ingestion of an aid-in-dying drug in accordance with the statute is to be considered a natural death as a result of the underlying disease and not a suicide.

Administration of drug: a fine line?

The law provides that an individual must have both the physical and mental ability to self-administer the drug or to coerce or exercise undue influence to persuade an individual to request the drug. It is a felony to administer the drug to an individual without his or her knowledge and consent. Section 443.18 provides, “Nothing in this part may be construed to authorize a physician or any other person to end an individual’s life by lethal injection, mercy killing, or active euthanasia.”

At section 443.14, the law provides that a person shall not be subject to civil or criminal liability solely for being present when the individual self-administers the drug. Still, the statute also provides that the person who is present may assist the patient in preparing the drug so long as he or she does not assist the patient in ingesting the drug.  it appears the statute leaves open the possibility that assisting with the injection of a drug, even at the request of a patient, could subject the person to civil or criminal liability.