Presented by the Partnership for America’s Health Care Future

With help from Adam Cancryn, Arthur Allen and David Lim

On Tap

— Drugmakers blast Medicaid block grants, saying they’ll disrupt coverage.

— There’s concerns coronavirus could hit the drug supply chain and FDA work in China.

— FDA says no shortages but the status of plant inspections is less clear.

Happy Friday and welcome back to Prescription Pulse! Any hunches or bets on what President Donald Trump will bring up in the State of the Union next week? Send pharma tips and news to Sarah Owermohle ( or @owermohle) and Sarah Karlin-Smith ( or @sarahkarlin).

Drug Pricing

DRUG INDUSTRY FUMING ABOUT MEDICAID BLOCK GRANTS — The Trump administration’s new Medicaid block grant plan would let states exclude coverage of some prescription drugs while still receiving the program’s guaranteed drug rebates. That is not sitting well with drugmakers who have argued that the large discounts they provide to Medicaid is part of a trade-off in which states must cover essentially all FDA-approved medicines. Under traditional Medicaid, brand-name drugmakers must provide states a 23 percent rebate or the best price available on the U.S market, whichever is lower.

“The administration has put forward a regulatory scheme that gives states a green light to deny and disrupt access to medicines for millions of low-income patients. More and more states are adopting creative solutions that ensure medicines and cures are accessible and affordable for both patients and taxpayers, yet this rule moves in the opposite direction,” BIO spokesperson Brian Newell said.

Asked whether the biotech lobbying group is considering a legal challenge, Newell said BIO “will do everything we can to ensure patients have access to the medicines they need and will weigh all of our options as this process unfolds.”

LIMITED FLEXIBILITY — In 2018, CMS Administrator Seema Veerma told Massachusetts it could create a limited drug formulary only if it gave up the mandatory discounts drugmakers provide in exchange for states agreeing to cover all medicines. CMS told POLITICO that the block grant program is “the only demonstration pathway for this flexibility.” It said that the block grant program “is limited to certain optional adult beneficiaries, which allow for broader flexibility to apply to a formulary.” In contrast, the Massachusetts proposal “targeted a broader population of individuals,” the agency said.

LEGALLY FRAUGHT? Legal experts questioned whether CMS would be able to defend this position. Rachel Sachs of Washington University in St. Louis said it looks like CMS is making “policy judgments” without support from the statute governing Medicaid.

“Nothing in the law says ‘you can use closed formularies but only within the context of other demonstration projects,’” Sachs said. She said states would likely have to take CMS to court if they want to apply these flexibilities more broadly.

“This CMS guidance is a complete and arbitrary reversal of the agency’s Massachusetts waiver decision 18 months ago and flies in the face of clear statutory requirements and contractual obligations,” PhRMA CEO Stephen Ubl said in a statement. “It violates federal law and the Medicaid statute by allowing the use of closed formularies while maintaining statutorily mandated rebates on drugs in the Medicaid program.”

PhRMA CALLS ON VOTERS TO FIGHT IPI — The drug lobby on Thursday sent an email blast urging voters to ask their representatives to fight the international pricing index rule, a looming Trump administration proposal that could land as soon as the State of the Union address.

“The Administration continues to ignore all the evidence showing that when governments set the price of medicines, medical innovation slows and patients lose access to lifesaving treatments,” PhRMA wrote in an uncharacteristically direct plea to voters to take action.

The proposal to link payments for Medicare drugs to an index of lower global prices — first announced in 2018 — has lingered at the White House as Congress hammered out other drug pricing legislation. But it was reportedly revived this month after President Donald Trump berated HHS Secretary Alex Azar over polling showing voters trusted Democrats more on health care.

Public Health

WILL CHINA’S DRUG SUPPLY CHAIN BE OK AMID CORONAVIRUS? — Lawmakers and some industry experts are increasingly concerned that the virus quickly spreading in China could eventually affect the massive supply of basic pharmaceutical ingredients that the country’s manufacturers ship to drugmakers worldwide.

The outbreak — which has killed nearly 200 and sickened thousands in China so far — could be a chance to reexamine the U.S. drug supply, Rep. Susan Brooks (R-Ind.) said after a closed-door briefing for Energy and Commerce committee members with top health officials.

“We have to be concerned about the supply chain to make sure that we have enough of what we need if there are any potential outbreaks here,” she said, adding that China also manufactures much of the protective medical gear used in U.S. hospitals and clinics. “This should cause us to be reexamining what we’re doing in China versus what should be brought back to this country.”

China provides the raw material used in 13 percent of U.S. drugs, Janet Woodcock, director of FDA’s drug evaluation and research center, told an E&C panel in December. Lawmakers at the time questioned the safety of the drug supply chain, and Woodcock told them that FDA lacks the staff in China to inspect facilities more frequently.

FDA SAYS NO SHORTAGES … BUT INSPECTION STATUS UNCLEAR — Manufacturers had not reported any impact due to the coronavirus outbreak, FDA told POLITICO late Thursday. The agency said it would quickly and publicly share information if a potential shortage of a medical product is reported. Officials also acknowledged the situation is fast-moving — so updates could come soon.

The agency could not, however, offer a clear picture of how its routine work in China, like inspections of facilities manufacturing drugs for the U.S. market, is being impacted by coronavirus as of Thursday. “At this time, we are not able to offer specifics on the breadth and scope of our inspection activities in China over the past weeks,” spokesperson Megan McSeveny said.

Agency officials did not make it clear if FDA staff based in China are still in the country, deferring to the State Department. On Wednesday the State Department authorized the departure of all non-emergency U.S. government employees at the U.S. Embassy in Beijing, including FDA personnel. The State Department could not provide numbers on staff members who have elected to leave China.

On Thursday the department issued a Level 4 travel advisory urging people to avoid travel to China and urging Americans currently in the country to consider leaving, following the WHO’s declaration of a global public health emergency.

“Safety is the highest priority of the FDA, and we will continue to work to balance the safety of our staff with the safety of the products the American public relies on,” the FDA’s McSeveny said.

HOW FEDS MISSED THEIR CHANCE ON A CORONAVIRUS VACCINE Two scientists in Texas developed a SARS virus vaccine in the early aughts — before the epidemic ended and funding dried up, Arthur Allen reports. That vaccine could be used against the Wuhan coronavirus today, Peter Hotez and Maria Elena Bottazzi from the Texas Children’s Hospital Center for Vaccine Development believe.

SARS should have been seen as a coronavirus warning shot, not an isolated outbreak, and it should have triggered federal investments like the billions sunk into flu vaccines a decade or so earlier, they and other scientists say.

National Institutes of Allergy and Infectious Diseases Director Anthony Fauci this week acknowledged this could be a new normal: “Clearly they have pandemic potential, and novel coronaviruses are likely to continue to emerge,” he said at a conference. “You know, I’ve been talking about a universal flu vaccine for a long time — maybe we should start talking about a universal coronavirus vaccine. Because this is three in 18 years, I mean that is heavy stuff.”

… NIH is now working with Moderna Therapeutics to develop a Wuhan vaccine that they estimate will be in human trials in three months.

Eye on FDA

HAHN: WE NEED TO BE PROACTIVE AND CREATIVE ON DATANew FDA Commissioner Stephen Hahn is eager to work on modernizing data in a way that could eventually speed up product reviews, he told staffers during his first all-hands meeting on Thursday morning.

“I strongly believe that we need to do everything we can to attain more and better data for the work we’re doing, to be more proactive in gathering data, and to be more creative and thorough in our analysis of it,” the longtime oncologist, who won Senate confirmation in December, said in an email later circulated to staff. In that message he also discussed incorporating real-world data like electronic health records, studies and patient registries, as well as patient input, into FDA processes.

“Most importantly, we must maintain the vital balance between the speedy approval of new products and the integrity of the data and the process itself,” he wrote.

Patient input could improve data around drugs and devices — Hahn mentioned building upon the Patient-Focused Drug Development initiative — but he also wants to discuss how FDA can better communicate with consumers.

The all-hands meeting wasn’t without controversy: Prescription Pulse can exclusively report that Hahn told staff he’d be supporting the 49ers in the Super Bowl this weekend.

FDA PRIORITIZES HIGH-NEED GENERICS The agency on Thursday said it would prioritize review for generic drugs designed to address shortages or acute public health needs. FDA will also aim to quickly review certain generics connected to patent disputes on the underlying brand-name drug, as well as those whose viability is dependent on the expiration of a patent or exclusivity period — if the submission is made between two and three years before the patent or exclusivity lapses.

FDA described the revision to its procedure manual, which also prioritizes applications for drugs with few or no existing generics, as a way for it to focus resources on generics of most value to public health and to “ensure fairness to applicants.” The manual was created in 2006 to revise the agency’s “first-come, first-serve” policy for applications.

Around the Agencies

NIH NOT CHANGING ITS TUNE ON MARCH-IN RIGHTS — Nearly all the 2020 Democratic presidential candidates have supported letting the government “march-in” and break brand drug patents to speed generic drugs to market if companies don’t make products fueled by government-developed patents available on reasonable terms. Sen. Elizabeth Warren has even said this is something she’d get to work on in her first days in office.

But longtime NIH Director Francis Collins is continuing to warn against the practice. In an interview with BioCentury, Collins said that when NIH experimented with putting clauses in contracts with industry calling for “reasonable pricing” of products, companies “completely lost interest” in collaborating with the agency. “It was a deal breaker, and I don’t think that would be any different now.

“As much as we are concerned about the drug pricing issue, I don’t think we have levers to pull to help with this that wouldn’t have other really negative consequences,” Collins added.

Collins said legal advisers have told him that it may not be possible to use the Bayh-Dole Act as Democrats are urging to exercise march-in rights and try to adjust prices. He said the law was written to ensure that if a product wasn’t available to the public at all, then the government could step in. “That’s that’s not the situation that people are talking about right now,” he said.

Research Corner

FDA TESTS DTC ADVERTISING TECHNIQUES — FDA’s Office of Prescription Drug Promotion is conducting two studies to try to understand the best way to make direct-to-consumer cancer drugs easy to comprehend. One of the studies, which the agency noted this week in a federal filing, is aimed at measuring the value of disclosures that distinguish between surrogate endpoints, like progression-free survival and overall response rate, from overall survival.

The agency will create television ads for fictitious prescription drugs with audio claims about their endpoints, with or without the disclosures. In the other study, agency scientists will vary presentation of information in superimposed text only, in audio only, in both superimposed text and audio, or in neither. The agency hypothesizes that consumers will retain audio-alone or audio-text combinations best.

Previous FDA research indicates that direct-to-consumer ads increase awareness of available treatments but also confuse many consumers about a drug’s relative risks and benefits.

DRUGMAKERS CONTINUE BIG ‘DETAIL’ SPENDING — Pharmaceutical companies spend more on doctor office visits from salespeople offering free samples — known as detailing — than any other marketing, an article in this week’s JAMA Internal Medicine found. And those visits are largely happening in smaller practices in the South, wrote Ashleigh King of the Dartmouth Institute for Health Policy and Clinical Practice.

Drugmakers spent $5.6 billion on prescriber detailing and $13.5 billion on free samples in 2016, according to an accompanying editorial by Joseph Guglielmo of UCSF. These promotions increase the cost of drugs and also encourage the prescribing of inappropriate and more expensive drugs, Gugielmo writes: “The patient may not pay for the sample, but medication samples are not free.”

The drug that’s free for a month will end up costing the patient, an insurer and the health care system more money over the next 11 months. Most studies of detailing show a consistent association with inappropriate prescribing, lower prescribing quality and increased costs.

Pharma Moves

FDA REGULATORY SCIENCE OFFICE HEAD TO RETIRECarol Linden, the official who led the FDA office tasked with promoting development of new technologies used to evaluate products, is set to retire today, she announced on LinkedIn Thursday.

As director of the Office of Regulatory Science and Innovation, Linden helped lead efforts to expand FDA’s regulatory science capabilities through collaborations with universities such as Johns Hopkins University and the University of Maryland.

FDA declined to comment on Linden’s retirement or discuss who would take over the post.

Document Drawer

The FDA is seeking voting member nominations to fill vacancies on the Center for Devices and Radiological Health’s Patient Engagement Advisory Committee.

A public meeting to discuss how FDA develops and formats medical device safety communications is scheduled for April 1.

Patient Services Inc. reached a $3 million settlement with the Justice Department over allegations it acted as a conduit for drugmakers to give kickbacks to patients using certain drugs by paying their copayments.

Go to Source

Drugmakers blast Medicaid block grants – Politico