Category — Pharmaceuticals

On February 9, 2012, FDA issued its long-awaited draft guidance on biosimilar product development.  The agency issued a suite of three guidance documents that collectively address scientific considerations and quality considerations in demonstrating biosimilarity to a reference product and offer a Q&A on the Biologics Price Competition and Innovation Act of 2009 (BCPIA). The scientific considerations document emphasizes a risk-based approach based on the totality of the evidence and recommends a “stepwise” approach to developing biosimilars.  The quality considerations document, applicable to reference protein products, gives an overview of analytical factors to consider in assessing the biosimilarity of a therapeutic protein product.  The third, as its name indicates, is meant to answer common questions.  The documents area meant to help industry in developing generic equivalents to brand-name biologic drugs and have been anticipated since BCPIA was enacted as part of health care reform in March 2010.  FDA has also updated its Biosimilars web page to include the draft guidance document and a February 15^th educational webinar and presentation slides where the agency provided participants with an overview of the law, the FDA’s progress in implementation, and updates on next steps.

On Friday, January 27, 2012, the Centers for Medicare & Medicaid Services (CMS) released a proposed rule revising Medicaid requirements for covered outpatient drugs.  The purpose of the rule is to implement changes to Medicaid drug pricing and reimbursement requirements made by the Patient Protection and Affordable Care Act of 2010,[1]  as amended by the Health Care and Education Reconciliation Act of 2010[2] (collectively referred to as the “ACA”).  The proposed rule was published in the Federal Register on Thursday, February 2, 2012.  Comments to the proposed rule are due by 5 p.m. on April 2, 2012. 

The proposed rule addresses a number of issues relevant to pharmaceutical manufacturers and pharmacies.  The ACA increased the minimum rebate percentage for most single source and innovator multiple source drugs from 15.1 percent of the average manufacturer price (AMP) to 23.1 percent of AMP.  However, until now, CMS had provided little guidance to manufacturers on the agency’s interpretation of the various revisions to AMP made by the ACA.  The following are the highlights of the proposed rule, which are explained in more detail below—

• the definition of “retail community pharmacy”
• bundled sales
• moving away from the “default rule”
• bona fide service fees
• “5i” products
• the treatment of authorized generic drugs
• base date AMP recalculation
• line extensions
• rebates for drugs dispensed through Medicaid managed care organizations (MCOs)
• expanding rebate-eligible sales to include sales made to U.S. territories
• reporting revised pricing data
• AMP smoothing
• penalties for late filers
• pharmacy reimbursement.  

[Read more →]

On November 14, 2011, the Supreme Court announced that it will hear challenges related to the Affordable Care Act (ACA) during its spring term. The Court has chosen to address four specific issues with respect to legal challenges of the health reform law:

(1) the constitutionality of the law’s requirement that all individuals purchase insurance (i.e., the Minimum Essential Coverage provision, also referred to as the individual mandate);

(2) whether the Anti-Injunction Act, a law which requires individuals to refrain from suing the federal government for the imposition of a tax until after the tax has been paid, bars a pre-enforcement challenge to the individual mandate until 2014 when the provision goes into effect;

(3) the constitutionality of the law’s Medicaid expansion requiring states to provide coverage to all adults under 65 with household incomes below 133 percent of the poverty level; and

(4) the issue of severability, as the Court must determine whether the law must be struck down in its entirety if one of the provisions is found unconstitutional, or whether that provision may be removed while the remainder of the ACA remains intact.

An extraordinary five-and-a-half hours for oral arguments have been granted: two hours on the constitutionality of the individual mandate, 90 minutes on the issue of severability, one hour on whether the Anti-Injunction Act bars some or all of the challenges to the insurance mandate, and one hour on the constitutionality of the Medicaid expansion.  Observers speculate that the arguments will be held in March and a decision may be issued by the Court by late June, well in advance of the 2012 Presidential election.

In the August 4 New England Journal of Medicine (NEJM), four high-level FDA officials authored an article that outlines FDA’s progress in developing the biosimilars approval standards, which FDA expects to issue later this year under the Biologics Price Competition and Innovation Act (BPCIA), which was passed as a part of the larger health care reform bill.  In “Developing the Nation’s Biosimilars Program,” Dr. Steven Kozlowski (Director, Office of Biotechnology Products), Dr. Janet Woodcock (Director, Center for Drug Evaluation and Research), Dr. Karen Midthun (Director, Center for Biologics Evaluation and Research) and Dr. Rachel Behrman Sherman (Associate Director for Medical Policy) highlight that an entirely new framework will be required for evaluating biosimilars, one that requires much more data and analysis than the approval process for traditional generic drugs. 

The article indicates that FDA is evaluating the biosimilars guidelines adopted by the European Medicines Agency (EMA) in 2005 and 2010, and that FDA will most likely adopt EMA’s product-specific approach, which creates different standards for different product categories.  Additionally, FDA may allow “fingerprint” technology—which allows biosimilar drugs to be more easily compared to the reference biologic product—to substitute for full-scale clinical trials in some cases, depending on whether the mechanism of the biologic drug is well characterized.  A Patent Docs article provides a more detailed summary of the NEJM article.

Congress’ failure to specify what kind of “exclusivity” applies to biologics has led to a heated debate between biologic drug innovators and generic drug makers and insurers, with bipartisan groups of lawmakers on both sides.

The Biologics Price Competition and Innovation Act of 2009 (BPCIA), enacted as a part of the of Patient Protection and Affordable Care Act (PPACA), provides for 12 years of exclusivity for biologic drug products, but fails to specify whether this exclusivity applies to data or marketing. Data exclusivity is the period of time after FDA approves a new drug before a competitor can rely on data submitted in the original approval process for its own filing. Market exclusivity is the period of time after FDA approves a new drug before a competitor can begin marketing a generic version of the drug. [Read more →]

The Congressional Research Service has released another report, dated November 3, 2010, focusing on the Medicare provisions in the health care reform laws.  This new report, which is entitled Medicare Provisions in the Patient Protection and Affordable Care Act (PPACA): Summary and Timeline, outlines the numerous reform provisions impacting the Medicare program and provides a detailed chart listing the effective dates of such provisions.  Notably, the CRS report highlights the growing tension regarding the treatment of any Medicare savings under the reform law – should the savings be considered to be funding sources for the expansion of health care or should such savings be directed towards shoring up the Medicare program’s trust fund.  Finally, the report addresses findings made by both the Congressional Budget Office and the CMS, Office of the Actuary that some of the Medicare payment reductions are likely not sustainable in the long terms and could actually result in reduced quality of care and access to services.  The 143-page report can be found here.

On November 1, 2010, the IRS announced the names of the companies that received tax credits or grants under the Qualifying Therapeutic Discovery Project program.  The program was created as part of the Patient Protection and Affordable Care Act to promote the development of therapeutic drugs.  Eligible companies had to have no more than 250 employees.  The IRS, in conjunction with the Department of Health and Human Services, approved applications for projects that showed significant potential to produce new and cost-saving therapies, support jobs and increase U.S. competitiveness.  

Under the program, a total amount of $1 billion was allocated for credits and grants with a $5 million limit per each eligible applicant. Since awards were made by project, companies were eligible to receive funding for multiple projects, each worth up to $244,479.24, designed to offset 50 percent of qualifying research and development costs.

On Friday, June 18, the IRS and HHS released application materials related to the Qualifying Therapeutic Discovery Project program (QTDP) which was established under the Patient Protection and Affordable Care Act.   The QTDP allows small companies that undertake certain biomedical research projects to apply for and receive tax credits or grants of up to 50 percent of the qualified investment made toward such research.  The application materials released on Friday include IRS Form 8942 and the accompanying Project Information Memorandum form.  The IRS will review Form 8942 to determine whether the company and its stated investment meet the statutory requirements for the program, and also whether the project is likely to create jobs and increase competitiveness in the United States.  HHS, through the NIH, will review the information provided in the Project Information Memorandum to determine whether a project meets the definition of a “qualifying” research project, if so, whether it shows a ”reasonable potential” to result in new therapies, reduce long-term health care costs, or advance the goal of curing cancer.  With the release of these application forms, the IRS has officially begun to accept applications for certification under the program.  Completed applications are due to IRS by no later than July 21, 2010.  The IRS expects to issue certifications for approved research projects by the end of October.       IRS posted the following application documents to its Web site, in addition to its press release—

• Form 8942
• Instructions for completing Form 8942. 

HHS posted the following application-related documents to the the NIH Office of Extramural Research Web site—

• Project Information Memorandum 
• Several documents that describe the process by which HHS will review and “score” applications according to the specified criteria, including the QTDP Reviewer Response Sheet and a flowchart of the QTDP Review Process.   

All of the application materials, along with several new Q&A documents, can be accessed on the NIH Web site.

CMS released letter to Part D sponsors providing additional guidance regarding the implementation of the Medicare Part D coverage gap discount program, including additional guidance regarding Part D supplemental benefits, application of the discount to Part D employer group waiver plans, Platino plans and subrogation claims.

CMS publishes the draft manufacturer’s coverage gap discount model agreement in the Federal Register. In the preamble to the draft agreement, CMS states that it intends to use the model agreement as a standard agreement and that it will not negotiate amendments with individual manufacturers. The draft model agreement includes provisions defining key terms; outlining the manufacturer’s and CMS’s responsibilities; describing penalties and payment amount dispute resolution; and providing for confidentiality.