World Trade Month: Trade’s impact on domestic drug prices

By Oliver Kim

Happy World Trade Month! While health policy is often seen as something particularly domestic, trade can have an impact on health policy here at home.

Just a day before President Trump’s speech outlining the administration’s approach to rising drug costs, the Pharmaceutical Research and Manufacturers of America (PhRMA) declared May as a time to “celebrate the many American companies exporting products around the world.” However, PhRMA also warned that “Americans should not subsidize the medicine costs in other wealthy countries.”

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CMS Issues Notice Regarding Barriers to HCV Treatment

By Dalia Deak

Yesterday, the Centers for Medicare & Medicaid Services (CMS) issued a notice that affirmed CMS’s commitment to provide prescription drugs to beneficiaries, specifically highlighting beneficiaries suffering from hepatitis C virus (HCV). The notice comes at a moment of heightened interest in the cost of prescription drugs (particularly on the federal level as an inquiry in the Senate has been initiated regarding rising drug prices).

In the statement, CMS:

  • Reminded the states of their obligation, under the terms of the Social Security Act, that Medicaid programs must cover prescription drugs for medically accepted indications if the manufacturer of the drug is a manufacturer with whom they have rebate agreements with;
  • Discussed the concern regarding costs of direct-acting antiviral (DAA) HCV drugs, emphasizing the role of competition and negotiation in bringing down the drugs’ prices;
  • Expressed concern regarding some states’ policies to restrict access to the DAA HCV drugs that may be contrary to their obligations under the Social Security Act;
  • Encouraged states to ensure that their policies do not unreasonably restrict coverage of effective treatment;
  • Reminded states that drugs available under the states’ fee-for-service programs must also be available to beneficiaries of Medicaid managed care organizations; and
  • Indicated that CMS will monitor state Medicaid policies for DAA HCV drug coverage to ensure that they are compliant with approved state plans, statutes, and regulations.

CMS also followed up its notice with a letter to the CEO of AbbVie asking for additional information regarding the types of value-based purchasing arrangements offered to payers and to state Medicaid agencies by December 31, 2015.

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A New Cholesterol-Lowering Drug at What Price?

By Kate Greenwood
[Cross-posted at Health Reform Watch]

This summer, the Food and Drug Administration (FDA) is expected to approve the first entries in a new class of drugs that lower patients’ low-density lipoprotein (LDL) cholesterol levels by more than half, even those patients who are already taking other cholesterol-lowering medication. The new drugs are biologics—monoclonal antibodies—that target, and inhibit, the gene proprotein convertase subtilisin–kexin type 9 (PCSK9). In mid-March, the New England Journal of Medicine published the results of important studies (here and here) of the two PCSK9 inhibitors that the FDA is expected to pass judgment on this summer. These studies—of Repatha (evolocumab), which is sponsored by Amgen, and Praluent (alirocumab), which is sponsored by Sanofi and Regeneron—suggest, but do not definitively establish, that PCSK9 inhibitors will reduce not just LDL levels, but also a patient’s chance of a major cardiovascular “event”, like a heart attack or stroke.

The race to approval between Amgen and Sanofi and Regeneron has been dramatic. (Pfizer also has a monoclonal antibody PCSK9 inhibitor in development, but it has lagged behind the two leaders.) As John Carroll reported at FierceBiotech last summer, Sanofi and Regeneron jumped ahead of Amgen when they purchased a priority review voucher from BioMarin for $67.5 million dollars. BioMarin was awarded the priority review voucher, which shrinks the time the FDA takes to approve a drug from ten months to six, because it developed and sought approval for a treatment for a rare pediatric disease. Per the Wall Street Journal, “[t]he voucher was the first to be issued under the pediatric incentive program, and also the first to change hands.”

As I mentioned earlier this week here, speculation has begun about what the price of the new PCSK9 inhibitors will be. Weighing in favor of a high price, the evidence of their efficacy is impressive and growing. The drugs hold particular promise for patients who cannot tolerate statin medications, or whose cholesterol cannot be controlled by statins alone. And, they are biologics, which are more expensive to produce than small-molecule drugs. On the other hand, PCSK9 inhibitors are not without safety concerns. In addition, patients will have to inject themselves with the new drugs, which some will find undesirable (although some might prefer a once- or twice-a-month injection to a daily pill regimen). Finally, the new drugs will have to compete with generic statins.

Payers are very concerned. Read More

The Tylenol Debate: Can Hospitals be Sued for Excessive Markups on Medications and Devices?

By Alex Stein

Steven Brill’s TIME MAGAZINE blockbuster article, Bitter Pill: Why Medical Bills are Killing Us, uncovers the CHARGEMASTER: a publicly undisclosed pricelist accountable for what we see in hospital bills. What we see there doesn’t look good: it includes acetaminophen sold for $1.50 a tablet (you can buy 100 of those for the same price at Amazon); $77 for a box of sterile gauze pads (Amazon’s prices vary between $6 and $11); $18 for a single diabetes test strip (sold for 54 cents by Amazon); $108 for antibacterial Bacitracin ointment (Amazon’s prices vary between $2.50 and $6.50); and so forth. Charges for stay, scans, surgeries, canes, and wheelchairs skyrocket as well.

The American Hospitals Association (AHA) rejects Brill’s analysis. According to AHA, the chargemaster aggregates the hospital’s overall costs on delivering quality care to patients: “In order to take medications in a hospital, even over-the-counter medicines, they must be prescribed by a doctor (a little bit of cost for the doctor), that order gets transmitted to the pharmacy (a little more cost), the order gets filled by a pharmacist or pharmacy tech who retrieves just one Tylenol pill and individually packages that one pill (still more cost), the pill gets transported from the pharmacy to the nursing unit where the patient resides (a little more cost), then the pill is retrieved by a registered nurse who personally gives the pill to the patient and then must document the administration of that pill in the patient medication administration record (a little more cost). All of this process to give a patient a single dose of Tylenol in a hospital bed [must also be] in compliance with all pertaining regulations (a little more cost).”

This post will not try to resolve the Tylenol Debate. Nor will it say anything about the government as a plausible substitute for the eccentric chargemaster. Instead, I will raise a legal question: Can patients sue hospitals for excessive markups on medications and devices?

My answer to this question is a qualified YES. Entrepreneurial and business aspects of running a hospital fall under states’ consumer protection laws (Brookins v. Mote, 292 P.3d 347 (Mont. 2012)). Those aspects certainly include billing (Jaramillo v. Morris, 750 P.2d 1301, 1304 (Wash. App. 1988); Ambach v. French, 216 P.3d 405 (Wash. 2009)). The key question here is whether an excessive markup on medications and devices amounts to deceit or an unfair trade practice. If it does, the hospital would be in violation of the relevant state consumer protection law. This might happen to hospitals whose billing practices—to which patients gave no informed consent—are particularly aggressive. Those hospitals might face class action suits and the prospect of paying treble damages. They also may be stripped of the special protections given to defendants in medical malpractice suits (that include shortened limitations and repose periods for filing suits, caps on damages, and charitable immunities). For my account of the competition between medical malpractice and consumer protection rules, click here.

Brill and other participants in the Tylenol Debate call on the government to start regulating hospital prices. My short advice to hospitals: get rid of unconscionable markups forthwith.