CONGRESS.
Round Up the Usual Suspects. (BIIB (-), PFE (-), ABBV (-)) The House Oversight and Reform Committee released its report on the sketch approval of BIIB’s Adulhelm. No surprise, the committee found some unseemly collaboration between the drug company and its regulator. You must read the report with an understanding of partisan goals, but it still represents a nasty rebuke of business as usual.
The FDA’s reputation has been circling the drain for about a decade. The size and concentration of bio-pharma companies and their influence on the FDA’s budget is a bad combination. Making things worse is, absent sound scientific foundations in a world of surrogate endpoints and “right to try,” are the endless employment and consulting opportunities that only serve to accomplish the regulatory capture we see today.
Some heads will roll and Janet Woodcock probably tops the list. But, hell she has been at the FDA since Ronald Reagan was president so she has probably already made plans. The question is what reforms can Congress insist on, if any? They seem mostly focused on approval of Alzheimer’s Disease drugs but the problem is not confined to those NDAs.
Although Republicans did not participate in the report, they don’t have much for Pharma either. Neither side seems sure what to do, however.
It is enough for Governors to throw up their hands and do it themselves which is what has begun to happen.
THE WHITE HOUSE.
Cannabis Regulation Returns. It seems like just yesterday when the FDA had convened stakeholders and started listening sessions on the almost impossible regulation of CBD, as provided for in the 2018 Farm Bill. The Wall Street Journal reported this week that the FDA has collected some data and is planning on moving forward with a proposal.
Easier said than done, of course. The FDA does not have a regulatory pathway that is well suited for CBD-derived products. It is not consistently considered benign at any concentration so approval as a food additive (such as adding lemon to bottled tea) is probably out of the question.
The drug pathway is available, and JAZZ has used it for Epidolex but probably not what the industry is looking for.
Barring Congressional action, the most viable pathway for CBD regulation is as a dietary supplement. It would require applicants to submit information on the safety of CBD-derived products. The New Dietary Ingredient (NDI) process takes about 3-6 months.
Based on comments in the press, I am expecting the FDA’s own data to argue for a “go slow” approach and limit concentrations, require warning labels for pregnant women and prohibit marketing to children and teens.
The FDA’s jurisdiction only applies to products that are sold across state lines.
No Surprises Act Keeps Delivering Them. ((UNH (-), HCA (-)) Congress and the White House apparently forgot the lessons of RAC auditors. Companies like HMSY were so good at their job of clawing back Medicare improper payments, hospitals responded by appealing nearly every claim adjudication.
There are more health care claims than there are administrative law judges and dates to hear complaints so the Medicare Appeals Board raised the white flag and settled what they could as the program ground to a halt.
The Independent Dispute Resolution process created by the No Surprises Act will be no different. The first report on the IDR process was released this week jointly by HHS, DOL and Treasury.
Between April 15th and September 30th, the departments received over 90k filings. Of that amount, 23k were closed for a variety of reasons, leaving almost 70k filings to be resolved.
About 23k were filed by the privately owned SCP Health, based in Atlanta. TeamHealth and Envision have filed 3500 and 2700, respectively.
The primary target of initiated claims is – drum roll please – UNH. Recall that it was UNH that paid for research at Yale, which fed it to the New York Times on an embargoed basis, that created the perception of a problem in need of a fix.
Recall also that CMS decided the starting point for the bill’s Independent Dispute Resolution process was the median in-network rate, de facto setting the price.
With not quite 2Qs of experience and 70k cases to resolve, expect this problem to get worse as providers, especially in emergency medicine, use the IDR process to gum up the works.
Other Stuff.
Rebates Are Still Bad. PhRMA released a new report on the impact of drug rebates on prices. It is hard to find much love for the drug industry these days but on the subject of rebates they have a point. It was an issue that appeared to be headed toward some resolution in 2018-19 but the No Surprises Act became outgoing HELP Chairman, Lamar Alexander’s priority.
Rebates distort prices like nothing else, other than the 340B program, with little observable benefit as co-pays are attached to the list price not the one that is actually paid by insurers to pharmaceutical companies. Sure, benefit costs are lowered but that accrues to all insured not just the ones with costly drug spend. PhARMA may be trying to change the subject after their bruising loss over drug prices. We are a bit dubious key provisions of that bill survive a court challenge so redirecting everyone's attention may be time well spent.
Recent Events
Venture View with Marcus Whitney: Markdowns, Exits & 2023 Outlook
Where to From Here? MCOs 2023 Outlook, HUM, CNC, MOH
Have a great weekend and Happy New Year.
Emily Evans
Managing Director – Health Policy
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