Tuesday, May 20, 2008
Medicare ‘Food Fight’ Intensifies
• Last-Minute Maneuvering On Pharmacy Reimbursement
• Medicare ‘Food Fight’ Includes Off-Label Fix
• CMS Tries Again To Redefine Part D Negotiated Prices
• Former FDA Chief Helps Waxman Fight FDA Preemption
• Stupak Wants Straight Answer From FDA On Subpoena Power
• More DTC Ad Questions, This Time From FDA
LAST-MINUTE MANEUVERING ON PHARMACY PAYMENT
Congress is likely to pass a Medicare reform bill within weeks and stakeholders are frantically lobbying to get their wish-lists tucked into the package. Among those in the fray is the chain drug store lobby, which declared this week that 11,000 pharmacies might shut down unless Medicaid pharmacy cuts are averted. Community pharmacists also held a lobbying “fly in” as Senate Finance leaders met in secret to draft the framework for their highly anticipated Medicare bill.
Pharmacists might get some help from Reps. Nancy Boyda (D-KA) and John Carter (R-TX). Boyda told Inside CMS’ Brett Coughlin Tuesday (May 20) that the two have requested a meeting with House Majority Leader Steny Hoyer (D-MD) and Energy & Commerce Chair Dingell (D-MI) to discuss pharmacies’ reimbursement problems.
The pharmacy industry is lobbying for three things: reform of CMS’ new average manufacturers’ price (AMP) payment rule, which they say drastically cuts Medicaid reimbursements to pharmacies; a requirement that pharmacies be promptly paid; and legislation that would protect community pharmacists from price negotiation conducted by mail order pharmacies. When asked what her priority is, Boyda said, ““All three of them are critically important, but AMP has the shortest fuse.”
But chain drug store and community pharmacists disagree on how the pharmacy reforms should be paid for. As Rx Drug Alert reported last week, chain drug stores want lawmakers to offset the cost of a fix to CMS’ AMP rule by requiring physicians to adopt e-prescribing, but community pharmacists are nervous about entangling e-prescribing, which physicians have been slow to embrace, with the Medicare bill.
Pharmaceutical benefit managers are strong advocates of e-prescribing, as is a coalition of consumer and labor groups—including AARP, Consumers Union, AFL-CIO and SEIU. PBMs this week also stepped up their press for e-prescribing, releasing a study that shows 35,000 doctors are already successfully employing e-prescribing in their practices. Baucus told Coughlin Tuesday that there is a 50-50 chance e-prescribing could land in the Finance Committee’s upcoming Medicare bill.
Finance Democrats have primarily eyed Medicare Advantage cuts to pay for their Medicare bill, but, facing GOP opposition to MA cuts, are exploring other options. A press to limit the growth of physician-owned specialty hospitals has already been tapped by Democrats to pay for legislation that would delay CMS’ planned Medicaid provider cuts. Lawmakers are keeping other pay-for options close to the vest.
MEDICARE ‘FOOD FIGHT’ INCLUDES OFF-LABEL FIX
As Finance leaders put the finishing touches on their Medicare bill outline, stakeholders’ annual ‘food fight’ to get pet issues included in the yearly provider payment bill is intensifying. Beneficiary advocates are part of the fray. The Medicare Rights Center is renewing its push to ensure beneficiaries have the same access to off-label prescriptions under Medicare Part D as they do under Part B. The group is urging lawmakers to include the reform in the Medicare bill, and is also moving forward on a lawsuit it filed last year on behalf of two beneficiaries who were denied coverage.
Déjà vu? MRC and several other patient advocacy groups—including the Center for Medicare Advocacy, Easter Seals and the National Association for Rare Disorders—tried but failed to get off-label language in health legislation passed last year. An MRC official told Inside CMS’ Amy Lotven that the group is now talking with “anyone who will listen,” including the Bush administration, congressional staff and the courts.
Under current Part D regs, plans may cover off-label usage if prescribed for a “medically accepted indication,” meaning that it has been included in one of three compendia. If it is not included, there is no way a beneficiary can win in the Part D appeals process, even if studies in other peer-reviewed journals and multiple experts agree that the drug is appropriate. MRC’s legislative proposal would ensure that Part D plans and Independent Review Entities could review additional studies like they do for Part B.
For cancer, the Part D off-label policy would statutorily mirror the part B standards. For all other conditions, the standards would also mirror Part B, but not statutorily. Plans would be able to reference Part B compendia, but would have no obligation to cover any off-label use not listed.
The MRC source said the group’s proposal strikes a balance that protects people from inappropriate off-label use while allowing case-by-case exceptions based on a review of medical evidence, which is how part B carriers and commercial carriers make their decisions.
New data released by Avalere Health show that CMS dropped more than 1,500 drug codes from its 2008 Part D Formulary Reference File. This caused a chain reaction in which commercial health plans dropped many of the same drugs from their Medicare offerings in 2008, resulting in significantly smaller Part D formularies in 2008 compared to 2007. CMS’ move was partly an effort to remove hundreds of prescription drugs that were being marketed without FDA approval.
Off-label prescribing and marketing makes for strange bed fellows. A coalition of consumer and patient groups recently reformed to argue against off-label marketing and prescribing, though without one of its prominent regulars—the National Organization for Rare Disorders. The group’s position also appears to clash with that of the Medicare Rights Center. Ten drug companies banded together to lobby in favor of FDA allowing such dissemination.
CMS TRIES AGAIN TO REDEFINE PART D NEGOTIATED PRICES
CMS’ new MA marketing rule received a lot of attention, but less notice was paid to an important Part D pricing provision tucked into the measure. CMS is trying once again to narrow the definition of negotiated prices and lower its Part D payments to drug plans – after having backed away from similar proposals in the past.
CMS stuck the complex provision in its Revisions to the Medicare Advantage and Prescription Drug Benefit Program proposed rule, reports Inside CMS’ Theresa T. Morgan. While stakeholders focused on the rule’s MA marketing restrictions, the proposal also revives the pricing question, and proposes to redefine some drug costs currently paid by CMS as administrative costs and thus potentially lower payments CMS makes to Part D sponsors.
The new proposal attempts to clarify confusion created by a January 2005 rule, in which CMS backed the principle of limiting drug costs to the price paid at the pharmacy, which include ingredient cost, dispensing fee and sales tax. Stakeholders complained that the 2005 rule could be read to allow a negotiated price that is different from the cost paid to the pharmacy. Critics of the rule said it allowed for a “lock-in” price approach where a plan sponsor agrees to pay a PBM a set rate for a particular drug which may vary from the price that the PBM negotiates with individual pharmacies.
Responding to concerns that the pricing changes could disrupt plan operations, in 2006 CMS issued guidance saying that CMS would temporarily allow lock-in prices to fall into the category of negotiated prices, but said in the future it would propose a rule to change the definition. In the previous rule, CMS defined actual cost as “the negotiated price for a covered Part D drug when the drug is purchased at a network pharmacy, and the usual and customary price when a beneficiary purchases the drug at an out-of-network pharmacy.”
CMS’s new rule defines negotiated prices as “prices for covered Part D drugs that (1) are available to beneficiaries at the point of sale at network pharmacies; (2) are reduced by those discounts, direct or indirect subsidies, rebates, other price concessions, and indirect or direct renumerations that the Part D sponsor has elected to pass through to Part D enrollees at the point of sale; and (3) includes any dispensing fees.”
In turn, CMS says that it will pay Part D plans higher low-income subsidies. Those subsidies are equal to the difference between the cost-sharing of a low-income beneficiary and other Part D beneficiaries. If the other beneficiaries are paying a higher cost share, the gap between the two grows and CMS must reimburse the plans a greater amount. The plans will also receive higher reinsurance subsidies with higher negotiated prices, as CMS is required to reimburse 80 percent of the covered Part D drug costs in the catastrophic phase, the rule says.
Sound complicated? Stay tuned for likely detailed and complex reactions from the various stakeholders involved.
FORMER FDA CHIEF HELPS WAXMAN MOUNT ASSAULT ON FDA PREEMPTION
Former outspoken FDA commissioner David Kessler, appointed by President George H.W. Bush in the 1990s, is no friend of the current Bush FDA when it comes to the issue of federal preemption. Kessler, known for his controversial bid to put FDA in charge of tobacco regulation, came out of the woodwork last week to help House government reform committee Chair Henry Waxman (D-CA) make an assault on FDA’s bid to override state product liability suits.
Kessler, appointed by Bush senior and then reappointed by President Bill Clinton, likely reminded his GOP critics why they turned against him in the 1990s after he was initially backed by Sen. Orrin Hatch (R-UT) for the top FDA job.
After Rep. Henry Waxman (D-CA) pronounced at a hearing last week that FDA has far overstepped its authority in pushing a doctrine of federal preemption in lawsuits involving FDA-approved drugs, Kessler tag-teamed by charging that preemption is at odds with a holistic, life-cycle approach to drug safety, reports FDA Week’s Sam Baker.
FDA policy director Randall Lutter tried to defend preemption at the May 14 hearing, but the deck was pretty well stacked against Lutter—only two of the hearing’s 10 witnesses supported preemption. Lutter had trouble answering Waxman’s questions about why FDA has so aggressively stepped up its preemption arguments under the current Bush administration, after decades of agency regulations coexisting with state tort suits. Since 2000, the agency has filed an increasing number of pro-preemption briefs in court cases, and also claimed supremacy over state tort suits in the preamble to a 2006 final rule on labeling.
But there’s no express preemption clause in federal drug law. Waxman accused FDA of trying to make new laws from within the executive branch. “Suddenly the FDA’s trying to do it by regulation. You don’t have the power to do it by regulation,” he said. “If you want a change, come to Congress and make an argument. I think you have a weak one, but you certainly don’t have the power to do it on your own.”
Enter Kessler, who testified that tort suits predate FDA. He reminded lawmakers that, under previous administrations, FDA lawyers and policy officials explicitly said the threat of liability complements federal regulations. Kessler tried to recast the preemption debate as an information issue. Sure, FDA’s approval process is rigorous, he said, but it stops once a drug hits the market—and most safety information emerges through post-market reports, not limited clinical trials. So preemption might make sense on the day a drug is approved, Kessler said. But after that point, drug companies will always have more information than FDA.
“My greatest concern with preemption is that it would, I believe, dramatically reduce the incentives for manufacturers to act quickly and responsibly to detect, analyze, investigate, and take action on potentially serious and life-threatening adverse reactions once a drug is on the market,” Kessler stated in prepared testimony.
The anti-preemption view of Kessler, a lawyer and physician, was supported by actor Dennis Quaid, who argued that drug maker Baxter might have done even less to rectify confusing labels on heparin, a popular blood thinner, had FDA’s proposed labeling preemption rules been in place.
LAWMAKER WANTS STRAIGHT ANSWER FROM FDA ON SUBPOENA POWER
If FDA is serious about cracking down on unsafe products, why doesn’t it ask Congress for power to subpoena company documents? That’s the question a House oversight subcommittee chair wants FDA chief Andrew von Eschenbach to answer.
Seem simple? Not quite. Rep. Bart Stupak (D-MI), supported by consumer advocates, tried to give FDA subpoena power back in 2002, but FDA and industry nixed the ideal. Rep. Bart Stupak (D-MI) asked FDA at the time to provide its opinion in writing. FDA wrote back that it had adequate enforcement tools and would “inform Congress” if it felt new authority was in order.
Six years later and FDA still hasn’t informed Congress, at least officially, that it needs such power. Stupak, who is considering adding a subpoena provision to House Democrats’ import bill, got FDA drug center chief Janet Woodcock and compliance director Deborah Autor to admit at an April hearing that such power would be useful. Now he wants a straight answer from the FDA chief.
In a May 14 letter Stupak asks von Eschenbach whether he will “stand by” Woodcock’s and Autor’s answers. “For at least six years, Congress has been debating whether to give the FDA subpoena power, without any indication from FDA if they felt it was necessary, or whether they would use this authority if it was given to them,” the letter states.
After Woodcock and Autor endorsed subpoena power at last month’s hearing, Energy & Commerce Committee Chair John Dingell (D-MI) asked them to submit a list of other new authorities they think FDA should have. While FDA subpoenas aren’t mentioned in the House import bill ”discussion draft” circulating now, Stupak said at last month’s hearing — and reiterated in his letter — that a future draft could include subpoena power. “This is a needed enforcement tool FDA can no longer work without,” the letter to von Eschenbach states.
MORE DTC AD QUESTIONS, THIS TIME FROM FDA
Last week Rx Drug Alert wrote that lawmakers were again questioning FDA’s ability to police direct-to-consumer drug ads. But FDA appears to also have a few questions for Congress, writes FDA Week’s Jennifer C. Smith.
FDA is having a hard time figuring out what lawmakers intended by a provision in the FDA Amendments Act that requires the agency to analyze the impact of DTC ads on children. The FDA report is due to lawmakers by September 2009, but agency officials don’t know what age range of kids to study. It is also unclear if FDA is supposed to evaluate how well children understand ads or how their parents and caregivers, who would purchase pediatric medicines, perceive the ads.
The issue was discussed at an FDA Risk Communication Advisory Committee meeting last Thursday.
Nancy Ostrove, FDA senior adviser for risk communication, said it “would certainly make some good sense” to ask Congress to clarify what it wants in the study. “Maybe (Congress) was thinking of acne medications or (attention deficit hyperactivity disorder),” Ostrove said, referring to medications targeted to those 18 and younger. “We really don’t know,” she said.
The meeting, the second for the risk communication panel since its creation under the FDA Amendments Act, addressed the FDAAA mandate that FDA report on how well DTC ads communicate not only to children, but also to the elderly, and ethnic and racial minorities.
The panel urged FDA to partner with other agencies and the private sector to create standards to evaluate how DTC ads affect subpopulations, and also said FDA should improve its own health communication for the elderly, children and ethnic and racial populations. Current research shows that seniors tend to have difficulty with fast speech and an easier time with written text; by age 7 children began to understand the persuasive intent of ads; and minorities tend to trust spokespeople from their own ethnic groups and relied on bilingual friends and children as information sources.
In a related action, drug giant Merck will now face FDA preapproval of its drug ads, thanks to a multi-state, $58 million settlement it reached this week in a suit alleging the company’s ads concealed increased risks associated with Vioxx. The settlement – reached by Merck with 29 states and the District of Columbia – is the largest ever for a multi-state consumer protection drug case.
Merck agreed to submit all television advertising campaigns to FDA for review and to adhere to any FDA recommendations before ads are aired.--Donna Haseley