Jill Wechsler

The legislators departed Washington, DC this week for a six-week summer recess without passing a host of critical budget bills, including key measures involving healthcare and drug regulation. At the top of the legislative to-do list are multiple appropriation bills to continue funding the federal government past Sept. 30. Another important measure on hold would reauthorize programs to prepare the nation for the next pandemic. And policies to rein in pharmacy benefit managers (PBMs) gained approval from some committees, but not a final vote.

Demands to radically cut spending and to further limit access to abortion erected major roadblocks to agreement on important funding bills, as conservatives in the House demanded spending cuts unacceptable to Democrats and moderate Republicans. Only the Department of Veterans Affairs saw its budget approved, enabling members of Congress to claim support for military veterans when engaging with constituents back home.

While the Senate passed most fiscal 2024 spending measures, very partisan proposal in the House blocked any agreement on final measures. Funding for the Department of Defense was stymied by Republican opposition to a Biden administration policy to fund travel of armed forces members to obtain abortion services. House Republicans alienated Democrats with cuts in multiple agencies in the Department of Health and Human Services (HHS), including the National Institutes of Health (NIH) and the Centers for Disease Control and Prevention (CDC) and proposed to eliminate the Agency for Healthcare Research and Quality (AHRQ), a perennial target of conservatives.

Similarly, the House measure to fund the Department of Agriculture, including FDA programs, made significant cuts in food program such as foreign food aid and support for US food exports, outraging both Republicans and Democrats from rural states. Not only was FDA’s overall budget slashed, but the bill sought to ban mail order delivery of the abortion pill mifepristone, a proposal that drew a veto threat from the Biden administration. The Agriculture/FDA funding bill in the Senate provides a slight 1% budget increase for FDA, which means less severe but still significant program reductions.

House and Senate committees made some progress on legislation to support national preparedness and response to future pandemics, which has to be reauthorized before it expires Sept. 30. But that tight timeframe for passing the Pandemic All Hazards and Preparedness Act (PAHPA) is encouraging lawmakers to include various pet programs and policies in the measure. The Senate Health, Education, Labor and Pensions (HELP) committee approved PAHPA on July 20, readying the measure for a vote by the full Senate in September. HELP committee chairman Bernie Sanders added a number of provisions, including one requiring drug manufacturers to notify FDA in advance of product shortages and other shortage-related provisions. While the legislators generally back continued support for preparedness, House Republicans moved to slash funding for the program, setting up a partisan battle over the program’s future.

Also pending is legislation to boost transparency and revise fees from insurers to PBMs. These drug plan middlemen have been under attack from manufacturers and policymakers for failing to pass on savings to consumers and limiting patient access to certain medicines, and both the House and Senate held hearings this past year to consider reforms. Continued Federal Trade Commission investigation of PBM practices has set the stage for legislative reform.

Despite this support for change, the policy reforms in current bills appear relatively tame. The Senate Finance Committee recently approved a legislative package aimed at boosting transparency of PBM practices affecting Medicare Part D plans. And the House Ways and Means Committee similarly agreed to give patients and employers more information to stimulate competition in the field. House Republicans approved a bill that Democrats opposed as too weak, raising the likelihood of differing bills from the House and Senate in the fall that may be hard to reconcile.

With the August recess extending through mid-September, Congress will have only a few days to approve 12 appropriations bills and other expiring measures before the Sept. 30 deadline. Unless the feuding parties reach some agreement, that could mean a federal government shutdown in October and added difficulties in maintaining the nation’s healthcare system, along with a viable drug approval and regulatory program.

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Pandemic preparedness and curbing PBMs among the pending legislation that will have to wait until after summer recess. 

Congress Leaves Town with Major Drug-Related Bills on Hold

As part of agency initiatives to strengthen its oversight of human food and food products, FDA is revising inspection and compliance programs for drugs and medical products, at home and abroad. While the current goal is to improve FDA’s capability for monitoring and curbing contamination issues involving foods, the agency also proposes significant changes in oversight and inspection programs for medicines and other regulated products. Some of the changes arise from FDA’s greater reliance on remote oversight activities during the global COVID-19 pandemic, which encouraged more cooperation with foreign inspection programs, and these are likely to continue as FDA seeks to better monitor overseas facilities in more timely and less costly ways.

A recent sign of these developments is a slight change in how the Center for Drug Evaluation and Research (CDER) selects drug manufacturing sites for inspections to ensure compliance with standards. CDER’s Office of Pharmaceutical Quality (OPQ) recently updated procedures for its risk-based site selection model to additionally include the compliance history of an establishment in the country or region where it is located. This information will be added to FDA’s existing list of risk factors for setting inspection priorities, which includes site operations, product characteristics, compliance history, past field alert reports, recalls, and other compliance issues.

The aim of the update, FDA explains, is to provide more clarity on risk factors associated with patient exposure and inherent product risk, as specified in legislation enacted by Congress in late 2022. The Food and Drug Omnibus Reform Act (FDORA) encourages continued agency focus on inspections for the most critical production sites overseas and at home. However, one outcome of this change could be additional oversight of facilities that have good compliance histories but are located in regions or countries that warrant more frequent inspections.

This relatively targeted change in criteria for FDA selection of drug manufacturing inspection sites is part of an ongoing restructuring of the agency’s Office of Regulatory Affairs (ORA) to better monitor food safety issues and to schedule field inspections more efficiently. The aim is to prevent delayed responses to serious food contamination issues, as occurred with the baby-formula plant contamination and recall occurrence in 2022, which created a national crisis in formula shortages. FDA Commissioner Robert Califf announced on June 28 a revised model for ORA to better align with a new unified Human Food Program and to coordinate and respond expeditiously to public health issues.

These changes have been in the works since January of this year, as part of a broader initiative to better monitor food safety issues and to reorganize FDA’s field work to reflect the priorities of program offices and Centers.

 The reorganization will shift certain compliance functions currently managed within ORA to compliance offices in FDA centers, a shift that aims to “streamline operations and expedite decision-making” so that the agency can determine more quickly what sites to inspect and what compliance actions to take. ORA will focus more on conducting investigations, inspections, and oversight of imports, still operating through offices for medical devices, human and animal drugs, biologics, and bioresearch monitoring inspections (BIMO)—all reporting to an associate commissioner for regulatory affairs. More details on the plan are expected this fall and ultimately will involve Congressional review and more formal rulemaking, as well as agreement from FDA unions and staff. It remains to be seen whether these changes lead to more aligned and efficient oversight activities or uncertainty and duplication of effort.

Risk-based approach for clinical research monitoring

FDA’s emphasis on considering risk factors in planning for medical product oversight also applies to BIMO investigations. The agency issued a guidance in April that makes recommendations to industry on implementing a risk-based approach to monitor investigational studies on human drugs, biologics, medical devices, and combination products.

 This expands on a 2013 guidance on this subject, here providing additional recommendations for sponsors in planning and developing research monitoring plans and assessing results from such activities.

The guidance responds to a provision in FDORA that clarifies FDA’s authority to conduct BIMO inspections and which sites and facilities are subject to this oversight and required to provide records and other information. The guidance emphasizes the importance of data integrity in clinical trial monitoring and the need to design research protocols that identify potential risks for data collections. Centralized monitoring, moreover, should be applied across multiple clinical sites so that sponsors may detect inconsistencies or omissions in data and determine which clinical sites need further review.

Meanwhile, members of Congressional continue to complain that FDA is moving too slowly to revitalize foreign plant inspections, particularly for manufacturers of active ingredients and generic drugs in China and India found to violate FDA safety and quality regulations. A recent letter to FDA from leaders of the House Energy and Commerce Committee criticizes the agency’s decision to allow the temporary import of unapproved drugs from China, even though the purpose is to address a serious drug shortage. The legislators urge the agency to ramp up on-site inspections in those regions, instead of utilizing alternative oversight methods such as record reviews and remote site visits.

The broader aim of the July 18 letter is to urge more FDA action to reduce ongoing shortages of critical drugs, many with ingredients or generic products made abroad.

 FDA halted almost all foreign inspections during the pandemic, and only restarted those efforts earlier this year. Lawmakers have pressured FDA to end preannounced foreign site visits, a change that is difficult when resources and schedules are limited and offer little flexibility.

FDORA addresses this and a number of issues related to FDA foreign inspections. The legislation encourages more unannounced FDA inspections of foreign drug establishments, shifting away from FDA’s usual practice of scheduling foreign site visits in advance to ensure access to the facility. At the same time, FDORA aims to reduce unneeded foreign site visits by supporting expanded FDA use of mutual recognition agreements (MRAs) with trusted foreign regulatory counterparts to obtain reports and information related to pre-approval inspections, as well as more routine manufacturing site visits. The legislation supports FDA recognition of inspections by foreign regulatory counterparts, such as the European Union, the UK, Switzerland, and other established agencies, in an ongoing effort to minimize duplicative site visits by all parties.

https://www.fda.gov/media/116004/download?utm_medium=email&utm_source=govdelivery

https://www.fda.gov/news-events/press-announcements/fda-provides-update-proposal-unified-human-foods-program-including-new-model-office-regulatory

https://www.fda.gov/news-events/press-announcements/fda-provides-update-proposed-human-foods-program-and-office-regulatory-affairs-restructuring

https://www.fda.gov/regulatory-information/search-fda-guidance-documents/risk-based-approach-monitoring-clinical-investigations-questions-and-answers

https://d1dth6e84htgma.cloudfront.net/Letter_to_FDA_on_Foriegn_Drug_Inspections_dc7bf60a6d.pdf

https://energycommerce.house.gov/posts/e-and-c-republicans-press-fda-over-inadequate-inspection-of-drug-manufacturing-in-india-and-china

The agency proposes significant revisions to oversight programs for drugs and medical products. 

FDA Inspections Face Overhaul

As the feds began to roll out the rules and procedures for negotiating prices of drugs reimbursed by Medicare Part D plans, biopharma companies launched an attack on the legality of the controversial program. Merck took the lead in filing a detailed lawsuit on June 6 in the Washington, DC federal district court, claiming that the negotiation process established by the Inflation Reduction Act (IRA) violates the constitutional rights of manufacturers.

Merck and Bristol Myers Squibb, which filed a similar lawsuit a few days later in New Jersey, charged that the Medicare price setting program would involve a “taking” of private property for public use without just compensation, in violation of the Fifth Amendment to the constitution.

 In addition, the companies claimed that the IRA also is unconstitutional under the First Amendment right to fee speech because the process would coerce a manufacturer to sign an agreement it opposes: any company that wants to walk away from a price negotiation deal it doesn’t agree with, would have to pay an onerous fine for doing so and thus is denied free speech. Both manufacturers have much to lose under the new pricing program, as lead targets for the scheme include Merck’s Januvia and Keytruda and BMS’ Eliquis and Opdivo, which would undermine company efforts to test and reformulate these therapies for new life-saving and profitable uses.

Similar to the Merck and BMS suits, the US Chamber of Commerce filed a complaint in Ohio also charging that the price negotiation program violates the manufacturers’ constitutional rights. It additionally claims that Congress lacks the power to levy the specified excise tax for noncompliance because that would “compel” commerce.

Next up, on June 21, the Pharmaceutical Research and Manufacturers of America (PhRMA) joined a lawsuit filed by National Infusion Center Association (NICA) and the Global Colon Cancer Association (GCCA) challenging the constitutionality of the price negotiation provisions in the IRA.

 The plaintiffs take issue with the IRA’s excise tax—the provision that sets an 18% fine or more on a drug’s annual revenues for refusing to comply with the negotiated rate. Such a penalty, they claim, is an “excessive fine” and violates the constitution because there is no provision for judicial review of the many decisions involved in determining negotiated prices under the program. The plaintiffs also argue that the new law breaches due process by denying public input on the how the program will be implemented.

Beyond the specific legal issues raised in these lawsuits, which ultimately may end up before the Supreme Court, biopharma companies continue to claim that the administration’s price negotiation scheme will discourage investment in more risky research and development programs for new cures, particularly for rare diseases. Although the program exempts orphan drugs from negotiations, manufacturers note that this applies only to the first approved indication, and not to additional uses of the therapy. That provision is expected to undermine manufacturers’ plans to test additional uses for therapies hit by negotiated prices, cutting off industry’s main strategy for discovering and developing new treatments for cancer and rare diseases.

The Centers for Medicare and Medicaid Services (CMS), meanwhile, is working to implement the drug price negotiation program, as mapped out in a final guidance published June 30.

That document made some changes from its initial memorandum issued on March 15, responding partially to the industry lawsuits challenging CMS’ planned process for reaching agreement on negotiated prices by 2026.

The documents outline what information CMS will require from manufacturers in order to select the first 10 drugs for negotiations by Sept. 1. The agency then will propose “maximum fair prices” in February 2024 and final prices by August 2024, which would become effective Jan. 1, 2026. The June advisory allows for more public discussion of the negotiation process and provides leeway for manufacturers to disclose proposed prices if they choose to do so.

The bottom line will be whether Medicare price negotiations actually reduce program outlays for drugs, as promised by the Biden administration and critics of high drug prices. Congressional approval of the program represented an unprecedented defeat for the pharmaceutical industry’s long-time efforts to block government price control initiatives. Pharma companies claim that they have long tried to facilitate patient access to needed medicines, but through individual discounts and other strategies that maintain market share. Industry also points to health insurers and pharmacy benefit managers (PBMs) for thwarting these efforts and limiting opportunities to reduce patient outlays for medicines. The legal challenges are only just beginning, and much can happen in Washington between now and 2026.

Washington Correspondent and can be reached at

https://www.politico.com/f/?id=00000188-90b0-d649-abfa-b9b614160000

https://www.bms.com/impact-of-the-inflation-reduction-act-on-innovative-medicines-for-patients.html

https://phrma.org/resource-center/Topics/Press-Room#press-room-results_content%20type=Press%20release

https://www.cms.gov/files/document/revised-medicare-drug-price-negotiation-program-guidance-june-2023.pdf

https://www.cms.gov/files/document/medicare-drug-price-negotiation-program-initial-guidance.pdf

Recent lawsuits are challenging the constitutionality of provisions in the Inflation Reduction Act.

Industry Slams Medicare Price Negotiation Scheme

Confusion recently arose over whether and how Medicare will cover new Alzheimer’s treatments, but the fine print indicates that reimbursement for such medicines still will occur only with the completion of studies to support full FDA approval. And even with that imprimatur from FDA, the Centers for Medicare and Medicaid Services (CMS) will limit reimbursement to patients who enroll in physicians’ registries. While one treatment for this widespread condition may gain full approval next month, accelerated approval status remains insufficient to support reimbursement by the feds.

The issue made headlines when CMS announced last week that Medicare will cover drugs in this new class of Alzheimer’s treatment that receive “traditional approval” from FDA.

 However, the fine print stipulated that coverage will only apply to those who participate in a registry to collect real-world data that can further assess the usefulness of these drugs for elderly patients. CMS ignited controversy last year when it decided to only pay for treatment of those few patients participating in confirmatory studies, under its coverage-with-evidence-development program.

The first drug likely to qualify for full approval is Leqembi from Eisai, which is scheduled for an FDA advisory committee review of its confirmatory studies on Friday.

 FDA granted accelerated approval for the treatment in January, but CMS limited coverage to those patients enrolled in confirmatory trials, as it did earlier with Biogen’s Aduhelm. In addition, Eli Lilly hopes to provide sufficient data to gain full approval for its Alzheimer’s therapy by year-end.

The Alzheimer’s Association protested CMS’ requirement for registry enrollment as erecting “an unnecessary barrier” to coverage. While patient registries are “important tools for gathering much needed real-world evidence” to improve patient care, they should not be used to limit access to an FDA-approved treatment, the patient advocates stated.

Similarly, the Biotechnology Innovation Organization (BIO) described CMS’ policy as reinforcing criticism of FDA accelerated approval and raised concerns that these challenges to accelerated approval will limit patient access to treatment and curb future innovation. Some members of Congress and patient groups agree with FDA on the importance of permitting broad access to potentially beneficial treatments, especially for severe conditions affecting small patient populations.

It really all comes down to money: the high cost of new Alzheimer’s treatments and potentially millions of patients likely to seek treatment would run up Medicare prescription drug budget exponentially.

https://www.cms.gov/newsroom/press-releases/cms-announces-plan-ensure-availability-new-alzheimers-drugs

https://www.fda.gov/advisory-committees/advisory-committee-calendar/june-9-2023-meeting-peripheral-and-central-nervous-system-drugs-advisory-committee-meeting

https://www.alz.org/news/2023/cms-requires-registry-fda-alzheimers-treatments

Indicates that reimbursement for new slate of Alzheimer’s treatments will occur only with the completion of studies to support full approval.

