Trump pro­pos­al ta­pers Medicare pro­tec­tion for cer­tain drugs if drug­mak­ers don't tem­per pric­ing

In its op­po­si­tion to the in­dus­try stan­dard of re­lent­less and of­ten ex­or­bi­tant drug price hikes, the Trump ad­min­is­tra­tion seems to be do­ing more than huff­ing and puff­ing. Af­ter threat­en­ing to switch to a sys­tem that pegs US prices against cheap­er rates abroad ahead of the mid-term elec­tions last month, HHS out­lined a pro­pos­al on Mon­day that could rule out cer­tain drugs from be­ing in­clud­ed as part of guar­an­teed Medicare cov­er­age, if their mak­ers con­tin­ue to hike prices un­de­terred.

Seema Ver­ma

Medicare part D — a vol­un­tary out­pa­tient pre­scrip­tion drug ben­e­fit for Medicare en­rollees, pro­vid­ed through pri­vate plans ap­proved by the fed­er­al gov­ern­ment — re­quires in­sur­ers to in­clude drugs from six pro­tect­ed class­es (an­ti­de­pres­sants, an­tipsy­chotics, an­ti­con­vul­sants, im­muno­sup­pres­sants for treat­ment of trans­plant re­jec­tion, an­ti­retro­vi­rals and an­ti­neo­plas­tics) as part of their for­mu­la­ries. So if a drug falls in­to any of those cat­e­gories, the in­sur­er is oblig­ed to car­ry it, giv­ing the man­u­fac­tur­er sig­nif­i­cant clout to charge what it likes for the treat­ment.

Al­though fed­er­al law pro­hibits the HHS from di­rect­ly in­ter­fer­ing in drug price ne­go­ti­a­tions be­tween Part D plan spon­sors and drug­mak­ers, the new pro­pos­al, which is open to the pub­lic for com­ment, of­fers the in­sur­er the abil­i­ty to claw some of that ne­go­ti­at­ing pow­er back.

“This move un­der­scores our view that the ad­min­is­tra­tion con­tin­ues to see in­sur­ers (and po­ten­tial­ly PBMs) as their part­ners in their fo­cus to low­er drug costs,” Cred­it Su­isse an­a­lysts wrote in a note.

The pro­pos­al sug­gests the in­sur­er be giv­en the op­por­tu­ni­ty to ex­clude a drug if its mak­er were to raise the price be­yond a cer­tain thresh­old over a spe­cif­ic pe­ri­od. It al­so em­pow­ers the in­sur­er to kick a treat­ment off its for­mu­la­ry if the drug rep­re­sents a new for­mu­la­tion of an ex­ist­ing sin­gle-source drug or bi­o­log­i­cal prod­uct, re­gard­less of whether the old­er for­mu­la­tion is on the mar­ket. In ad­di­tion, in­sur­ers could low­er costs by com­pelling pa­tients to un­der­go step ther­a­py, which in­volves try­ing a cheap­er drug on for size – if that treat­ment doesn’t con­fer ad­e­quate ben­e­fit, on­ly then is a more ex­pen­sive drug giv­en, sim­i­lar to the pol­i­cy al­lowed for Part B drugs in 2019.

In an in­ter­view with Bloomberg, CMS ad­min­is­tra­tor Seema Ver­ma said the pro­pos­al could save $692 mil­lion over a decade.

“We see this as some­what ex­pect­ed and priced in (and not worst case sce­nar­ios) and good pub­lic­i­ty for HHS Sec­re­tary Azar and the ad­min­is­tra­tion. While we ac­knowl­edge drugs that cost CMS the most are like­ly to be im­pact­ed in the long term, many of these changes are like­ly to un­der­go re­vi­sions and a com­ment pe­ri­od that may mod­er­ate and would not be im­ple­ment­ed un­til 2020+,” not­ed Jef­feries’ Michael Yee.

In 2014, the Oba­ma ad­min­is­tra­tion was forced to aban­don an at­tempt to lim­it the num­ber of pro­tect­ed class­es, af­ter the plan pro­voked a storm of crit­i­cism from pa­tient groups and Con­gress. Trump’s pro­pos­al, how­ev­er, has not at­tempt­ed to re­duce the num­ber of pro­tect­ed cat­e­gories or elim­i­nate the cov­et­ed pro­tect­ed class sta­tus, which is “a fear some in­vestors had ex­pressed could im­pact Gilead $GILD — re­al­iz­ing that HIV drugs aren’t even in the top 20 for Medicare ex­pen­di­ture,” added Yee.

The CMS pro­pos­al in­clud­ed a raft of oth­er changes, in­clud­ing pro­vid­ing in­for­ma­tion that could help en­rollees low­er their out-of-pock­et costs, by ne­ces­si­tat­ing the in­clu­sion of drug price in­for­ma­tion and low­er cost al­ter­na­tives in the “Ex­pla­na­tion of Ben­e­fits” that Part D plans send to mem­bers. An­oth­er pro­vi­sion im­ple­ments a statu­to­ry re­quire­ment that pro­hibits phar­ma­cy gag claus­es.

PhRMA, a large lob­by­ing group rep­re­sent­ing the phar­ma­ceu­ti­cal in­dus­try, said they were still re­view­ing the CMS pro­pos­al in re­sponse to ques­tions from End­points News.

“But we al­ready have sig­nif­i­cant con­cerns about the im­pact of these pro­pos­als on ac­cess for the sick­est and most vul­ner­a­ble Medicare Part D ben­e­fi­cia­ries,” said Juli­et John­son, deputy vice pres­i­dent of pub­lic af­fairs. “Let­ting plans re­strict ac­cess to the med­i­cines that pa­tients re­ly on, par­tic­u­lar­ly for those with se­ri­ous and com­plex health con­di­tions like HIV/AIDS, can­cer and men­tal ill­ness, re­duces ad­her­ence to those med­i­cines, jeop­ar­diz­ing their health, in­creas­ing their need for in­pa­tient care and re­sult­ing in poor­er health out­comes for se­niors and high­er costs for tax­pay­ers.”

Ac­cord­ing to the Kaiser Fam­i­ly Foun­da­tion, rough­ly 43 mil­lion of the 60 mil­lion with Medicare are en­rolled in Part D plans in 2018. To­tal re­im­burse­ment for brand­ed drugs in Part D in­creased 77% from 2011 to 2015, de­spite a 17% drop in the num­ber of pre­scrip­tions, ac­cord­ing to HHS es­ti­mates re­leased ear­li­er this year, which al­so showed that Part D unit costs for brand­ed drugs rose near­ly 6 times faster than in­fla­tion over the same pe­ri­od.

CMS’ lat­est pro­pos­al, and Trump’s gen­er­al brava­do against the phar­ma in­dus­try, may not nec­es­sar­i­ly trans­late to ma­te­r­i­al change. In the first nine months of 2018, there were 96 price hikes for every price cut, ac­cord­ing to an analy­sis by the As­so­ci­at­ed Press pub­lished this Sep­tem­ber, and more re­cent­ly Pfiz­er $PFE said it planned to in­crease prices on 41 of its drugs in Jan­u­ary.

Mean­while, oth­er law­mak­ers are al­so work­ing on ways to quell the scourge of drug price hikes. Last week Sen­a­tor Bernie Sanders and Rep­re­sen­ta­tive Ro Khan­na re­vealed their in­tent to in­tro­duce a leg­is­la­tion called the Pre­scrip­tion Drug Price Re­lief Act. If signed in­to law, the bill would re­quire the HHS to en­sure Amer­i­cans don’t pay more than the me­di­an price in five ma­jor coun­tries: Cana­da, the Unit­ed King­dom, France, Ger­many and Japan for pre­scrip­tion drugs. It al­so in­cludes a pro­vi­sion that could shat­ter the cur­rent sys­tem of patent pro­tec­tion, by al­low­ing the gov­ern­ment to ap­prove gener­ic ver­sions of patent­ed brand­ed drugs if their mak­ers were to refuse to cur­tail their prices be­low that me­di­an lev­el.

The Big Phar­ma dis­card pile; Lay­offs all around while some biotechs bid farewell; New Roche CEO as­sem­bles top team; and more

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With earnings seasons in full swing, we’ve listened in on all the calls so you don’t have to. But news is popping up from all corners, so make sure you check out our other updates, too.

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Raymond Stevens, Structure Therapeutics CEO

Be­hind Fri­day's $161M IPO: A star sci­en­tist, GPCR drug dis­cov­ery and a plan to chal­lenge phar­ma in di­a­betes

What does it take to pull off a $161 million biotech IPO these days?

In Structure Therapeutics’ case, it means having a star scientist co-founder paired with the computational drug discovery company Schrödinger, $198 million in private funding from blue-chip investors, almost six years of research work on G protein-coupled receptors and a slate of oral, small-molecule drugs, with an eye on the huge and growing diabetes and weight-loss market.

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Sen. Ron Wyden (D-OR) (Francis Chung/E&E News/Politico via AP Images)

In­fla­tion re­bates in­com­ing: Wyden calls on CMS to move quick­ly as No­var­tis CEO pledges re­ver­sal

Senate Finance Chair Ron Wyden (D-OR) this week sent a letter to the head of the Centers for Medicare & Medicaid Services seeking an update on how and when new inflation-linked rebates will take effect for drugs that see major price spikes.

The newly signed Inflation Reduction Act requires manufacturers to pay a rebate to Medicare when they increase drug prices faster than the rate of inflation.

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Te­va drops out of in­dus­try trade group PhRMA

Following in AbbVie’s footsteps, Teva confirmed on Friday that it’s dropping out of the industry trade group Pharmaceutical Research and Manufacturers of America (PhRMA).

Teva didn’t give a reason for its decision to leave, saying only in a statement to Endpoints News that it annually reviews “effectiveness and value of engagements, consultants and memberships to ensure our investments are properly seated.”

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Sanofi CFO Jean-Baptiste de Chatillon (L) and CEO Paul Hudson (Romuald Meigneux/Sipa via AP Images)

Sanofi sees downtick in flu sales as it preps for launch of RSV an­ti­body

Sanofi expects its RSV antibody jointly developed with AstraZeneca will be available next season, executive VP of vaccines Thomas Triomphe announced on the company’s quarterly call.

Beyfortus, also known as nirsevimab, was approved in the EU back in November and is currently under FDA review with an expected decision coming in the third quarter of this year. The news comes as the FDA plans to hold advisory committee meetings over the next couple months to review RSV vaccines from Pfizer and GSK.

Christophe Weber, Takeda CEO (Photographer: Shoko Takayasu/Bloomberg via Getty Images)

Take­da fo­cus­es on ‘di­verse’ pipeline prospects on heels of two ac­qui­si­tions

After a whopping $4 billion asset buy from Nimbus Therapeutics, along with a $400 million deal with Hutchmed for a colorectal cancer drug, Takeda executives touted pipeline optimism on its latest earnings call this week.

That’s because the TYK2 inhibitor for psoriasis Takeda is getting from Nimbus, along with the Hutchmed fruquintinib commercialization outside of China, are just two of what it reports are 10 late-stage development programs of promising candidates.

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In show­down with Roche, Re­gen­eron gears up for po­ten­tial Eylea ex­pan­sion amid Covid de­cline

Regeneron faced a substantial slump in overall revenue last year, but the focus still remains on some of its biggest blockbusters.

The pharma with several high-profile partnerships — Sanofi and Bayer among them — said Friday that Q4 revenue was down 31% for the quarter, and down 24% for the entire year. However, that won’t stop blockbuster expansion plans.

One of those is Eylea, the Bayer-partnered eye disease drug that has been in major competition with Roche’s Vabysmo. While Eylea is currently only approved in a 2 mg dose, the company recently filed for approval to give a 8 mg dose, in hopes of making a longer-lasting treatment.

BeiGene's new website helps direct cancer patients and caregivers to a wide variety of sources for help.

BeiGene re­veals men­tal health and can­cer care gap in study, de­buts dig­i­tal re­sources

One-fourth of cancer patients are living with depression — and another 20% suffer from anxiety. That’s according to new study results from BeiGene, conducted by Cancer Support Community (CSC), about the mental and emotional health of cancer patients.

While the fact that people with cancer are also dealing with depression or anxiety may not be surprising, what is — and was to BeiGene — is that a majority of them aren’t getting support. 60% of respondents said they were not referred to a mental health professional, and even more concerning, two in five who specifically asked for mental health help did not get it. CSC, a nonprofit mental health in cancer advocacy group, surveyed more than 600 US cancer patients.

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One of the paintings from Gilead's latest campaign making AI art to help MBC patients be 'seen and heard.'

Gilead com­bines ar­ti­fi­cial in­tel­li­gence and art to draw at­ten­tion and hope to MBC

What if you could “see” the emotions and feelings of people living with metastatic breast cancer? That’s what Gilead Sciences’ agency VMLY&R Health did last year, using artificial intelligence and sound analytics to turn the interviews of three women living with metastatic triple-negative breast cancer into works of art.

Using the sound waves, a robotic painting device translated their stories of struggle and hope into colors, contours and brush strokes. The result? An art exhibition called “Paintings of Hope” that was first displayed at ESMO in September in Paris, but has since traveled to hospitals and medical conferences in Europe and Spain.

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