HHS Secretary Alex Azar (AP Images)

At­tor­neys gen­er­al ask HHS to pun­ish 340B pro­gram bilk­ers — but phar­ma claims it's fight­ing 'waste and abuse'

Imag­ined as a ben­e­fit for low-in­come pa­tients, the gov­ern­ment’s 340B scheme re­quires par­tic­i­pat­ing drug­mak­ers to sell their drugs at sig­nif­i­cant dis­counts to play ball in Medicare and Med­ic­aid. But some phar­mas are now loud­ly re­fus­ing to fol­low the rules af­ter cit­ing “waste and abuse” — and state pros­e­cu­tors are de­mand­ing an in­ter­ven­tion.

In a Mon­day let­ter to HHS Sec­re­tary Alex Azar, a group of at­tor­neys gen­er­al from 28 states and the Dis­trict of Co­lum­bia called on the agency to im­pose civ­il penal­ties on a group of Big Phar­ma play­ers it claims have ei­ther stopped or plan to stop hon­or­ing dis­counts un­der the gov­ern­ment’s 340B pro­gram.

The 340B pro­gram re­quires drug­mak­ers that choose to par­tic­i­pate in Medicare Part B and Med­ic­aid to of­fer ne­go­ti­at­ed dis­counts for out­pa­tient drugs to “cov­ered en­ti­ties,” which in­clude six dif­fer­ent hos­pi­tal types: dis­pro­por­tion­ate share hos­pi­tals, chil­dren’s hos­pi­tals and can­cer hos­pi­tals ex­empt from the Medicare prospec­tive pay­ment sys­tem, sole com­mu­ni­ty hos­pi­tals, rur­al re­fer­ral cen­ters, and crit­i­cal ac­cess hos­pi­tals.

The at­tor­neys gen­er­al tar­get­ed six drug­mak­ers in their let­ter — As­traZeneca, Sanofi, Eli Lil­ly, Mer­ck, No­var­tis and Unit­ed Ther­a­peu­tics — for fail­ing to meet their end of the agree­ment and asked HHS to im­pose civ­il fines and lean on its new “ad­ju­di­cat­ed dis­pute res­o­lu­tion” frame­work to en­cour­age 340B hos­pi­tals to hound drug­mak­ers who don’t par­tic­i­pate.

“Each day that drug man­u­fac­tur­ers vi­o­late their statu­to­ry oblig­a­tions, vul­ner­a­ble pa­tients and their health­care cen­ters are de­prived of the es­sen­tial health­care re­sources that Con­gress in­tend­ed to pro­vide,” the AGs wrote. “Drug man­u­fac­tur­ers are, with­out jus­ti­fi­ca­tion, flout­ing dis­count­ed pric­ing re­quire­ments for low-in­come pa­tients and/or un­rea­son­ably con­di­tion­ing 340B pric­ing on da­ta de­mands, de­priv­ing such pa­tients of af­ford­able med­ica­tions to the detri­ment of the health cen­ters and hos­pi­tals that serve these vul­ner­a­ble com­mu­ni­ties.”

But Big Phar­ma — un­sur­pris­ing­ly — doesn’t see it­self as a bad ac­tor and claims it’s fight­ing “waste and abuse” in the pro­gram. Even more, one drug­mak­er said, it isn’t threat­en­ing to cut 340B pric­ing for hos­pi­tals that play along.

Take Sanofi, for in­stance: The French drug­mak­er on Oct. 1 kick­start­ed an ini­tia­tive re­quir­ing 340B hos­pi­tals to for­ward “de-iden­ti­fied” pa­tient claims da­ta to de­ter­mine whether there had been “du­pli­cate dis­counts,” in which those com­pa­nies are of­fer­ing both 340B-priced drugs and pay­ing re­bates to Med­ic­aid. Sanofi claimed 30% of Health Re­sources and Ser­vices Ad­min­is­tra­tion (HRSA) au­dits in 2018-19 found du­pli­cat­ed dis­counts at 340B hos­pi­tals.

If 340B hos­pi­tals com­ply with the pro­gram, Sanofi said, it would hap­pi­ly con­tin­ue work­ing with HRSA; if not, Sanofi said it would still sell its drugs to those hos­pi­tals at 340B prices, just out­side of the gov­ern­ment’s purview. The drug­mak­er al­so took ex­cep­tion with con­tract phar­ma­cies that 340B providers use to dis­trib­ute the pro­gram’s out­pa­tient drugs to pa­tients, claim­ing the mid­dle-man arrange­ment cuts ben­e­fits for pa­tients.

“Sad­ly, and con­trary to re­cent pub­lic state­ments by oth­er pro­gram stake­hold­ers, pa­tients do not al­ways ben­e­fit from con­tract phar­ma­cy arrange­ments,” a spokes­woman told End­points News via email. “Of­ten pa­tients re­ceive no dis­count at all on con­tract phar­ma­cy-dis­pensed drugs, and 340B cov­ered en­ti­ties’ own in-house phar­ma­cies are much more like­ly to pro­vide dis­counts to pa­tients than phar­ma­cy chains.”

No­var­tis is tak­ing an even more di­rect line of at­tack on con­tract phar­ma­cies, tak­ing on a “fo­cus-based ap­proach” that would on­ly hon­or dis­counts for 340B providers that use con­tract phar­ma­cies with­in a 40-mile ra­dius of their lo­ca­tion.

“The over­whelm­ing ma­jor­i­ty of dis­counts from med­i­cines dis­pensed at con­tract phar­ma­cies are not shared with pa­tients,” a spokesper­son said by email. “The dis­counts ben­e­fit for-prof­it phar­ma­cies, third-par­ty ad­min­is­tra­tors, oth­er mid­dle­men and hos­pi­tals, with no re­quire­ment that those funds be used for char­i­ta­ble care at hos­pi­tals.”

As­traZeneca was more coy in its re­sponse, say­ing its re­la­tion­ship with 340B con­tract phar­ma­cies “ful­ly com­plies with all op­er­a­tive re­quire­ments.”

Spokes­peo­ple for Unit­ed, Eli Lil­ly and Mer­ck could not be reached for com­ment by press time.

The de­ci­sion by top state at­tor­neys to team up in their pur­suit of chron­ic 340B jumpers is the lat­est es­ca­la­tion in a years-long war of words be­tween Big Phar­ma and HRSA over the 340B pro­gram. Com­pa­nies have long threat­ened to force their hand, claim­ing du­pli­cate dis­count­ing has led to over­charg­ing.

In their let­ter, the at­tor­neys gen­er­al called out drug­mak­ers’ “deeply trou­bling” de­ci­sion to go ahead with their da­ta roundups amid the Covid-19 pan­dem­ic, a de­ci­sion they said could have an ad­verse im­pact on low-in­come pa­tients.

“Not on­ly are the man­u­fac­tur­ers’ ac­tions an at­tempt to dis­rupt long-set­tled ex­pec­ta­tions and ex­ist­ing con­trac­tu­al arrange­ments for dis­pens­ing 340B drugs, but they have been tak­en when mil­lions of Amer­i­cans in our re­spec­tive States are al­ready reel­ing from the grave health and fi­nan­cial con­se­quences caused by a his­toric pan­dem­ic and un­prece­dent­ed eco­nom­ic cri­sis,” the pros­e­cu­tors said. “We urge HHS to do more than de­cry these un­law­ful prac­tices and pro­vide im­me­di­ate re­lief.”

No­var­tis reshuf­fles its wild cards; Tough sell for Bio­gen? Googling pro­teins; Ken Fra­zier's new gig; and more

Welcome back to Endpoints Weekly, your review of the week’s top biopharma headlines. Want this in your inbox every Saturday morning? Current Endpoints readers can visit their reader profile to add Endpoints Weekly. New to Endpoints? Sign up here.

If you enjoy the People section in this report, you may also want to check out Peer Review, my colleagues Alex Hoffman and Kathy Wong’s comprehensive compilation of comings and goings in biopharma.

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Demis Hassabis, DeepMind CEO (Qianlong/Imaginechina via AP Images)

Google's Deep­Mind opens its pro­tein data­base to sci­ence — po­ten­tial­ly crack­ing drug R&D wide open

Nearly a year ago, Google’s AI outfit DeepMind announced they had cracked one of the oldest problems in biology: predicting a protein’s structure from its sequence alone. Now they’ve turned that software on nearly every human protein and hundreds of thousands of additional proteins from organisms important to medical research, such as fruit flies, mice and malaria parasite.

The new database of roughly 350,000 protein sequences and structures represents a potentially monumental achievement for the life sciences, one that could hasten new biological insights and the development of new drugs. DeepMind said it will be free and accessible to all researchers and companies.

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In­side Bio­gen's scram­ble to sell Aduhelm: Pro­ject 'Javelin' and pres­sure to ID as many pa­tients as pos­si­ble

In anticipation of Aduhelm’s approval for Alzheimer’s in June, Biogen employees were directed to identify and guarantee treatment centers would administer the drug through a program called “Javelin,” a senior Biogen employee told Endpoints News.

The program identified about 800 centers for use, he said, and Biogen now pays for the use of bioassays to identify beta amyloid in potential patients having undergone a lumbar puncture procedure, the employee said — and one center preparing to administer the drug confirmed its participation in the bioassay program.

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EMA re­jects FDA-ap­proved Parkin­son's drug, signs off on Mod­er­na vac­cine use in ado­les­cents ahead of FDA

The European Medicines Agency on Friday rejected Kyowa Kirin’s Parkinson’s disease drug Nouryant (istradefylline), which the US FDA approved in 2019 under the brand name Nourianz.

EMA said it considered that the results of the clinical studies used to support the application “were inconsistent and did not satisfactorily show that Nouryant was effective at reducing the ‘off’ time. Only four out of the eight studies showed a reduction in ‘off’ time, and the effect did not increase with an increased dose of Nouryant.”

6 top drug­mak­ers of­fer per­spec­tives on FDA's new co­vari­ates in RCTs guid­ance

Back in May, the FDA revised and expanded a 2019 draft guidance that spells out how to adjust for covariates in the statistical analysis of randomized controlled trials.

Building on the ICH’s E9 guideline on the statistical principles for clinical trials, the 3-page draft was transformed into an 8-page draft, with more detailed recommendations on linear and nonlinear models to analyze the efficacy endpoints in RCTs.

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Al Sandrock, Biogen R&D chief (Biogen via YouTube)

Bio­gen has a shaky end to H1 with a $542M write-off adding to its woes — but an­a­lysts see big rev­enue ahead for Aduhelm

All eyes at Biogen’s Q2 earnings call Thursday were on Aduhelm, but investors also got a glimpse of what Biogen would have faced had the FDA not opted to approve their controversial Alzheimer’s drug.

That glimpse, revealing a combination of declining sales, growing competition and failed medicines, underscores the stakes of the big biotech’s Aduhelm efforts, as execs punch back at the criticism they’ve engendered in the political and medical world and vigorously pushes its sales staff to roll out the drug as fast as possible.

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Vas Narasimhan, Novartis CEO (Jason Alden/Bloomberg via Getty Images)

No­var­tis dis­cards one of its ‘wild card’ drugs af­ter it flops in key study. But it takes one more for the hand

Always remember just how risky it is to gamble big on small studies.

A little more than 4 years ago, Novartis reportedly put up a package worth up to $1 billion for the dry eye drug ECF843 after a small biotech called Lubris put it through its paces in a tiny study of 40 moderate to severe patients, tracking some statistically significant markers of efficacy.

By last fall, the program had risen up to become one of CEO Vas Narasimhan’s top “wild card” programs in line for a potential breakthrough year in 2021. These drugs were all considered high-risk, high-reward efforts. And in this case, risk won.

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No­var­tis to pay near­ly $178M in law­suit over BRAF drug — and will be on the hook for roy­al­ty

After a four-year battle over a cancer drug patent, Novartis has been ordered by a California judge to pay a Daiichi Sankyo subsidiary $177.8 million.

Plexxikon filed a lawsuit against the pharma giant in 2017, alledging that Tafinlar, a rival to its melanoma drug Zelboraf that was brought to market in collaboration with Roche, has stepped on its intellectual property. The jury ruled in its favor, adding that the infringement is in fact willful.

Michel Vounatsos, Biogen CEO (Credit: World Economic Forum/Valeriano Di Domenico)

Bio­gen de­fends slow roll­out of new Alzheimer's drug, crit­i­cizes neg­a­tive me­dia at­ten­tion

As Biogen execs bemoaned the negative media coverage around Aduhelm’s approval a month ago, the biotech isn’t gaining much traction yet in using its new drug, largely due to a lack of insurance coverage, according to an earnings call Thursday.

Management indicated that of the nearly 900 sites that were prepped and ready following Aduhelm’s approval, 325 of those, or about 35%, have completed a positive pharmacy and therapeutics (P&T) review or won’t require one. The review is a step some hospitals or health systems take prior to using a new drug. Some major sites, however, have said they won’t participate.