Last year was an unquestionably busy time for health care news of all kinds. Media and policy coverage rightly focused on the many attempts to repeal the Affordable Care Act, but it was also an eventful year in news for those of us who focus on prescription drug policy. In this post, I review five of the biggest drug policy developments of the past year, and look ahead to five issues I expect to make headlines in 2018.
1. Inaction From The White House And Congress On Drug Pricing
Arguably the biggest story of the year was, well, a non-story. Throughout 2016 and early 2017, candidate and then President-Elect Donald Trump talked a big game about drug pricing. He suggested that Medicare should negotiate drug prices, made drug importation part of his health care platform, and accused pharmaceutical companies of “getting away with murder.”
Yet President Trump has failed to take even a single action on the topic of drug pricing. He has periodically renewed his rhetoric against the drug companies, but his actions are to the contrary. His proposed budget does not call for Medicare to negotiate prices, as President Barack Obama’s did; he has seemingly abandoned his view on importation; and his choice for the next head of the Department of Health and Human Services (HHS) is a former pharmaceutical CEO who is unlikely to take significant action against the industry. At least some pharmaceutical companies no longer believe President Trump’s rhetoric, and with good reason. These are not the actions of a man who truly cares about this issue.
Congress has been somewhat more active on the subject. Democrats have introduced a number of bills in both houses of Congress that would address different drug pricing issues. I have summarized the provisions of the most comprehensive bill, the Improving Access to Affordable Prescription Drugs Act, here. Other bills would focus on particular issues, such as Medicare drug price negotiation or pay-for-delay deals. Yet even bills with bipartisan support, such as the CREATES Act, cannot seem to gain traction in Congress.
In the last few weeks of 2017, the Senate HELP Committee and Health Subcommittee of the House Energy & Commerce Committee held hearings on the topic of drug pricing. But based on the inaction of this last year, I do not anticipate legislative movement any time soon.
2. A Story Of Bipartisan Cooperation
In stark contrast to the typical partisan rancor in Washington, D.C., one of the biggest drug policy stories of 2017 was a story of bipartisan cooperation: the passage of the U.S. Food and Drug Administration (FDA) Reauthorization Act of 2017 (FDARA), the latest reauthorization of the FDA user fee program. Although many past user fee reauthorizations have been Christmas trees, loaded up with a host of ancillary provisions, committee staff and members rightly kept this year’s version simple. Minimizing extraneous provisions allowed Congress to pass FDARA with a minimum of partisan bickering.
3. Strong FDA Performance In A Number Of Areas
FDA Commissioner Scott Gottlieb has quickly established himself as one of the strongest, most effective agency heads in the Trump administration. Commissioner Gottlieb has already taken decisive action on important priorities like the opioid crisis, potential drug and device shortages caused by the devastation in Puerto Rico, and generic drug competition. To be sure, the FDA’s powers are limited, and Gottlieb will need serious support from both from other health-related agencies (like the currently leaderless HHS) and the White House if he is to make a difference in some of these problems. Other initiatives (like the publication of a list of drugs with no generic competition, in the hopes that it encourages entry) will take time to evaluate. But in general, Commissioner Gottlieb has demonstrated his commitment to science- and evidence-based policy, supported by a strong agency staff.
One issue to flag, however, is the question of what evidence will be sufficient to support FDA approval of new drugs. At his confirmation hearing, Commissioner Gottlieb emphasized the “gold standard” of FDA review. But he has also pushed the agency to be more flexible, with his support for an expansion of the FDA’s accelerated approval program as a recent example. If Commissioner Gottlieb is moving the agency toward the approval of drugs on the basis of less (or even just less rigorous) evidence, it is my hope that he will consider the consequences for the system as a whole—particularly our public reimbursement system, which for now must cover most or all FDA-approved drugs, regardless of evidence—in doing so.
4. State Entrepreneurship On Drug Pricing
If the White House and Congress remained paralyzed on the question of drug pricing, state legislatures certainly did not. In 2017, drug pricing bills were proposed in more than half of the states, and potentially significant legislation was passed in Maryland, New York, and Nevada. Federal law does limit what the states can do to combat drug pricing, so many of these bills are targeted at increasing transparency or capping annual price increases. But state legislators feel driven to do something, as consumers are burdened by higher out-of-pocket costs and the federal government refuses to act.
Two states have proposed to take more aggressive action to mitigate the impact of drug prices on their Medicaid spending. Massachusetts and Arizona have filed applications with the Centers for Medicare and Medicaid Services (CMS) that would allow them to exclude drugs from coverage in their Medicaid programs. Massachusetts is seeking a waiver that would allow it to exclude drugs “with limited or inadequate evidence of clinical efficacy”—likely those approved through the accelerated approval process, as mentioned above. This category includes many expensive new drugs, such as those for orphan indications or for cancer, that may pose budgetary concerns in the aggregate.
5. Pharma Tries To Reform Its Image—But Faces Setbacks From Bad Actors
Last year, PhRMA established a set of new membership criteria, potentially in response to a series of drug pricing scandals by some of its members. PhRMA members now need to meet certain benchmarks in terms of their research and development investment, and the group as a whole has sought to rebrand its public image as one of true innovation, under its “Go Boldly” campaign.
But PhRMA’s new membership criteria do not compel its members to take any particular actions regarding drug pricing, and scandals continue to plague the industry. One of the biggest drug pricing stories this year was PhRMA member Allergan’s transfer of its patents on the drug Restasis to a Native American tribe in order to avoid review of those patents before the Patent and Trademark Office. A prominent theme of Alex Azar’s hearing before the Senate HELP Committee was the insulin price increases taken by Eli Lilly (another PhRMA member) under his leadership. Other, smallercompanies have continued to raise prices, following the Valeant model. As long as these stories make the news week after week, it will be difficult for PhRMA and the industry as a whole to distance itself from these actors.
It has been a busy year. But what should drug policy observers be looking for in the year ahead? This list is not exhaustive, but here are five issues across the spectrum I’ll be watching for.
1. New Paradigm-Shifting Drugs
In 2018, expect much more discussion over new drugs that will challenge both our budgets and our traditional reimbursement paradigms. Some of these products have already been approved. Luxturna, a gene therapy treatment for an inherited form of blindness, was just approved by the FDA in December. Luxturna’s list price was announced at $850,000, lower than the price of $1 million many observers anticipated.
As another example, consider the newly approved CAR-T cancer therapies. Although the list prices of these products are high, at $373,000 and $475,000 for the first approved products, they may still be cost-effective, based on their significant benefits. But these drugs challenge our traditional reimbursement paradigms. For now, the fact that these products are administered during inpatient hospital stays means that they are reimbursed (for Medicare beneficiaries) under Medicare Part A, which contains no billing code for the products. And the cost of the drugs far exceeds the available Part A reimbursement for the forms of cancer treated by these therapies.
Drugs like these may finally force the conversation about alternative payment mechanisms, like drug mortgages or outcome-based pricing, that some have been promoting. Spark Therapeutics’ announcement of Luxturna’s price was accompanied by the information that Spark has already agreed to at least one outcome-based deal, with others in the works. Similarly, Novartis has already struck an outcome-based deal with CMS for its CAR-T therapy, but little is known about the details.
2. A New Head For HHS?
Assuming that Alex Azar is renominated and confirmed as the head of HHS, his actions on drug policy broadly and pricing specifically will be watched closely. During his Senate HELP hearing, Azar stated quite clearly that “drug prices are too high,” and that he intends to focus on this area as a top priority. However, it remains to be seen what actions in particular he would attempt to take. I would expect Azar to focus on things like patient out-of-pocket costs, the role of pharmacy benefit managers in the system, or the 340B program, rather than drug companies themselves.
3. Continued FDA Entrepreneurship
In 2018, I’ll be watching to see what Commissioner Gottlieb does next in the drug policy arena. Perhaps his collaboration with the Federal Trade Commission will spark a crackdown on some of the drug competition “shenanigans” he’s referenced. Hopefully, his efforts to spur more competition in generic markets will begin to show results. And, ideally, he will have support from the rest of the administration on the opioid crisis.
4. 21st Century Cures Policymaking
I will also be watching Commissioner Gottlieb’s actions to fulfill the many requirements imposed on the agency by the 21st Century Cures Act. Many provisions of the Act imposed 2018 deadlines on the agency, and the agency has been transparent in its completion of these tasks so far. In 2018, observers can look forward to the first draft guidance on the subject of patient-focused drug development, public meetings on novel clinical trial designs and the qualification of drug development tools, and a plan to move forward on the question of real-world evidence in drug approvals.