Vol. 8 No. 249
As Congress begins work on final healthcare legislation, creation of an approval pathway for biosimilars and increased drug rebates under Medicare Part D are among the measures most likely to survive.
PhRMA’s $80 billion deal with the White House and the Senate Finance Committee may not, although the trade group denies it has been asked for additional funding.
“We made an $80 billion ironclad commitment to help make healthcare reform a reality back in June, and we have never, at any time, retrenched from that position,” Ken Johnson, senior vice president at PhRMA, told DID. “That said, we will continue to keep an open mind as the Senate moves toward a final vote.”
The biosimilars approval pathway is not likely to be altered because of the support of influential members of the House, including Rep. Anna Eshoo (D-Calif.), Jack Calfee, an American Enterprise Institute economist who studies the drug industry and the FDA, told DID.
“A lot of [members of Congress] like the biotech industry so I think they’re willing to give a little slack to the districts where the biotech industry is pretty strong — which is a lot of California,” Calfee said.
The approval pathway also may remain unaltered because both bills would give innovator biologics 12 years of exclusivity and would save federal dollars. The Congressional Budget Office (CBO) score for the House and Senate versions includes $6 billion and $7 billion, respectively, over 10 years in government savings from generic biologics.
Innovator groups such as the Biotechnology Industry Organization (BIO) support the bills’ language as a good balance in the areas of patient safety, expanded competition, reduced costs and incentives for innovation, BIO President and CEO Jim Greenwood says.
The Generic Pharmaceutical Association (GPhA), however, will continue to fight the proposed 12-year exclusivity for innovator biologics, saying it shortchanges patients.
The Part D rebates also are likely to survive a House-Senate conference, as the bills share provisions to reduce the Medicare Part D “doughnut hole,” but differ in the way they would accomplish the reduction.
In the Senate version, U.S. pharmaceutical and biologics makers would provide a 50 percent discount to most beneficiaries on brand medicines to close the gap.
The House legislation would eliminate the doughnut hole in stages, beginning in 2011, closing it by progressively increasing the initial coverage limit and decreasing the annual out-of-pocket threshold.
Under the current system, Medicare beneficiaries receive coverage for $2,700 in yearly prescription costs, at which point the program stops covering drug costs — the doughnut hole — until the annual amount exceeds $6,100. At that point, coverage again picks up the cost.
“The Senate version where, in effect, the industry is discounting for a period, has less long-term effects on the industry than what the House would do,” Edmund Haislmaier, a senior research fellow at the Heritage Foundation, told DID.
Provisions to close the doughnut hole, which are part of PhRMA’s $80 billion deal, have survived several challenges. The greatest threat was an amendment from Sen. Bill Nelson (D-Fla.) that was not accepted, which would have required drugmakers to provide Medicare rebates that matched Medicaid rebates for full-benefit, dual-eligible beneficiaries.
An amendment from Sen. Byron Dorgan (D-N.D.) that would have allowed U.S.-licensed pharmacies and drug wholesalers to import FDA-approved medications from Canada, Europe and other countries, and individual consumers to purchase prescription drugs from Canada, also was rejected by the Senate.
Several other differences between the House and Senate bills will have to be resolved if the two final versions go to a conference committee. For example, the House bill would allow the government to negotiate prices for Medicare Part D drugs directly with pharmaceutical companies and would ban pay-for-delay agreements between brand-drug and generic-drug makers. The Senate version does not include either provision, but it includes $2.3 billion in annual fees the industry agreed to pay as part of the $80 billion deal (DID, Sept. 10).
Both bills also contain provisions to fund comparative-effectiveness research. The Senate legislation would create a nonprofit Patient-Centered Outcomes Research Institute to study comparative-effectiveness research, including the health outcomes, clinical effectiveness, and appropriateness of medical treatments and services.
The two bills also contain provisions that effectively would expand discounts from drugs purchased through the 340B Drug Discount Program by including purchases by children’s hospitals and cancer hospitals among other institutions (DID, Oct. 8). The minimum rebate percentage for single-source and innovator multiple-source drugs covered under Medicaid would be set at 23.1 percent under the Senate bill — the House version sets the minimum at 22.1 percent — and 13 percent as the minimum for other drugs.
The Senate’s Patient Protection and Affordable Care Act (H.R. 3590) can be found at www.democrats.senate.gov/reform/patient-protection-affordable-care-act.pdf. The House’s Affordable Health Care for America Act, H.R. 3962, can be found at docs.house.gov/rules/health/111_ahcaa.pdf. — David Belian
HHS is asking for more time to respond to a lawsuit brought by two former Purdue Pharma executives that HHS excluded from participation in federally funded healthcare programs after they pleaded guilty to misbranding OxyContin.
The former executives’ 12-year exclusion from federally funded programs appears to be the first time exclusion has been imposed based on the “responsible corporate officer” doctrine, which permits plaintiffs to be charged and convicted due to their status as senior executives, HHS Office of Inspector General (OIG) spokesman Donald White told DID Wednesday. The charges were based on accusations that the company misled healthcare providers about OxyContin’s (oxycodone HCl) abuse potential.
HHS filed its motion last week in the U.S. District Court for the District of Connecticut asking for a delay until Jan. 18 for its response to the suit by Michael Friedman, who was Purdue’s CEO, and Howard Udell, who was its executive vice president and chief legal officer. The current deadline is Jan. 4.
HHS says the extension also would give the court time to consider a motion that it expects the plaintiffs will make to transfer their case to the U.S. District Court for the District of Columbia. Paul Goldenheim, another former Purdue executive who pleaded guilty to the same charges as Friedman and Udell, also might have his case transferred from the U.S. District Court for the District of Massachusetts court to the Washington, D.C.-based court.
The three executives’ exclusions are based on their May 2007 convictions for the misdemeanor of misbranding a drug in violation of Title 21, U.S. Code, Sections 331(a) and 333(a)(1).
They agreed to pay $34.5 million in fines after filing guilty pleas in the U.S. District Court for the Western District of Virginia (DID, May 11, 2007). The U.S. Attorney’s Office in the Western District of Virginia, which investigated the drug’s promotion, alleged the company trained sales representatives to tell healthcare providers that it was more difficult to abuse OxyContin than similar products and that the drug had a smaller risk of addiction than other painkillers.
The OIG has the authority to exclude individuals who have been convicted of certain crimes, including criminal offenses related to fraud or unlawful distribution of controlled substances, from participation in federal healthcare programs.
But Andrew Ceresney, attorney for Udell, told DID the decision exceeds the OIG’s statutory powers.
The Connecticut suit, Michael Friedman and Howard R. Udell v. Kathleen Sebelius and Daniel R. Levinson, was filed Oct. 28. It is expected to be argued in the spring or summer of 2010, Ceresney said.
The suit filed in Washington is Friedman, et al. v. Sebelius, et al., while Goldenheim v. Sebelius was filed in Massachusetts. — April Hollis
Compugen has entered into an agreement with Pfizer to discover three therapeutic peptide drug targets and then synthesize them for Pfizer.
The process Compugen calls “discovery on demand” will take a few months and will be funded by Pfizer, Israel-based Compugen said Wednesday.
After Pfizer receives synthesized molecules, it can exercise options for worldwide exclusive milestone and royalty-bearing licenses to develop and commercialize product candidates. Pfizer also would be able to obtain final product candidates with specified pharmacokinetic characteristics, Compugen said.
Success of the peptide therapeutic candidates could result in “substantial milestone and royalty payments to Compugen,” Anat Cohen-Dayag, Compugen’s vice president of R&D, told DID Wednesday.
Compugen did not disclose the development platform to be used in the collaboration. — Owen Skoler
Bristol-Myers Squibb (BMS) has reduced its 2009 guidance on earnings from continuing operations to $1.51 to $1.56 a share and updated its development strategy.
The lowered outlook for earnings is based on discontinued operations from splitting off its Mead Johnson Nutrition business to focus on biopharmaceuticals, the company says. The previous guidance called for $1.72 to $1.77 a share.
The drugmaker has submitted an application with the FDA for belatacept, a novel biologic in development to prevent rejection of organ transplants, BMS spokesman Brian Henry told DID Wednesday.
BMS also acquired Medarex in August, gaining the rights to ipilimumab, a novel immuno-oncology agent that is in Phase III development to treat melanoma and other cancers, Henry said. — Owen Skoler
Novartis is acquiring biopharmaceutical company Corthera, gaining rights to relaxin, a heart-failure drug in Phase III testing.
Novartis will develop and commercialize the biologic, a recombinant version of a naturally occurring human peptide, as a potential treatment for patients with acute decompensated heart failure (ADHF), the company said Wednesday. Regulatory submissions are planned in the U.S. and Europe in 2013, Novartis added.
The biologic has been granted fast-track status by the FDA. The treatment also has been shown to increase cardiac output and systemic and renal vasodilation in clinical trials, according to Corthera.
Diuretics and vasodilators are the current standard of care for ADHF, but available therapies have been associated with renal impairment, low blood pressure and other adverse outcomes, Novartis says.
The acquisition is expected to close in the first quarter of 2010. Novartis will acquire the outstanding shares of Corthera for $120 million. In addition, shareholders may receive additional payments of as much as $500 million for milestones related to relaxin. — April Hollis
Drugmakers may be able to sell new products in the UK before they are formally approved by the Medicines and Healthcare products Regulatory Agency (MHRA) if a proposed initiative is approved.
The initiative would cover new medicines that treat, diagnose or prevent life threatening, chronic or seriously debilitating conditions without other treatment options, the MHRA says in a proposal posted on its website recently.
The agency will conduct a 12-week public consultation on the plan early next year with the goal of introducing it in the UK later in 2010. It was proposed by the Ministerial Industry Strategy Group (MISG) — a coalition composed of UK government ministers and pharmaceutical industry chief executives.
The plan would only be available for drugs that have completed Phase III trials and drugmakers would be required to present data indicating that a product’s benefit-risk profile is positive and that it is likely to offer advantages over existing treatment options.
In exceptional circumstances, an earlier authorization based on Phase II data may be possible if the information available merits it, the MHRA says.
The company developing the medicine may decide whether to apply for approval, and the MHRA, with input from an independent expert advisory group, will review applications.
Applicants can expect a maximum 75-day review process, the possibility of a single round of questions and a fee to cover the costs of the review, the agency says. Once approved through this new scheme, a product may be sold for one year, after which the manufacturer may apply for renewal.
Drugmakers who receive approval under the scheme will be able to set their own pricing for the products, and no appraisal from the UK’s National Institute for Health and Clinical Excellence will be required.
The MISG report on earlier access to medicines can be found at www.mhra.gov.uk/home/idcplg?IdcService=GET_FILE&dDocName=CON065737&
RevisionSelectionMethod=Latest. — David Belian
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