Category: Lobbying

Raising the Blinds – Gaining Meaningful Insight into Pharmaceutical Pricing through Legislation

February 7th, 2019 in Analysis, Federal Legislation, Legislation in Court, Lobbying

Rising healthcare costs are a growing concern across the United States; in 2016 U.S. health care spending was $10,348 per person – or 17.9 % of the nation’s Gross Domestic Product (GDP). To counter this alarming rise in healthcare costs, states are addressing one of the largest factors in rising healthcare costs – high drug prices. 

Many factors contribute to the high price of healthcare in our country, some of which are natural to an aging populace due to the baby boom of the 1950’s as the proportion of the population that is 65 and over is projected to experience a large increase in the coming years. An increase in costs is natural with a larger number of consumers – addressing this change is an important, but avoidable, challenge to overcome.

One avoidable factor of increasing healthcare costs is rapidly increasing pharmaceutical prices. Variance in drug prices may be geographic; based on where the drug is sold , or whom the drug is being sold to (pharmacy v. government). Many factors contribute to price differences, but an important factor are Pharmacy Benefit Managers (PBMs) as an intermediate in the market. States have been working to roll back the PBM layer of the market for  the pharmaceutical industry.

Pharmaceutical pricing has long been the target of legislators, but with a lot of talk and a surprising lack of action. Drug pricing is  discussed in both major party’s campaign platforms of the major parties and has been featured prominently in speeches by President Trump, and has featured in initiatives by previous administrations. There has been an uptick of legislation passed in the past decade, at all levels of government, with state action against pharmacy benefit managers and President Trump’s signing the Know the Lowest Price Act and the Patient Right to Know Drug Prices Act.  A common thread in the legislation is increased transparency because a big factor in the high drug prices — and medical care generally—is the lack of information for consumers and purchasers. Since 2015, California, Oregon, Louisiana, Nevada, Vermont, Connecticut, and Maryland imposed reporting requirements on pharmaceutical manufacturers who increase prices over an established threshold in a set time period. For example, California requires reporting when a drug that costs more than $40 and its wholesale acquisition cost (WAC) increases by more than 16% over two calendar years.  The WAC is similar to a “list” price for pharmaceuticals to wholesalers and direct purchasers. The WAC, however, does not include discounts or rebates offered by pharmacy benefit managers.

The new transparency offers insight to price increases; if there are no legitimate reason for the increase other than higher profits due to market control, state officials, drug customers and the public can take action.

The states with transparency statutes have imposed different methodologies with manufacturers reporting to different government officials such as the Department of Health and Human Services, creation of new departments, or to the state’s Attorney General.

Oregon currently requires the most detailed reporting; manufacturers must report to the Department of Consumer and Business Services the following:

  1. Name, price of drug and net increase in price (in %) over previous calendar year
  2. Length of time on market
  3. Factors contributing to price increase
  4. Name(s) of any generic version(s) of the drug
  5. Research & Develop Costs from Public Funds
  6. Direct costs to Manufacturer
  7. Total sales revenue for drug over prev. calendar year
  8. Profit from drug over previous calendar year
  9. Drug’s price at release and yearly increases over the past 5 years
  10. 10 highest prices paid for the drug during past year outside of the US
  11. Any other info relevant to price increase
  12. Supporting documentation

In contrast, California’s requirements provide for advance notice of price increases and unearthing the reasoning for the increase. The California law requires manufacturers to report (A) Date of increase, current WAC, and future increase in WAC (in dollar amounts); and (B) The change or improvement, if any, that necessitates the price increase. Purchasers then have notice of any forthcoming price changes and if the increase is warranted.  California also requires a report for new drugs if its price exceed $670—the 2017 Medicare Part D threshold.  California’s reporting scheme has been a model for other states.

Maryland’s approach was more severe, with a provision banning “price gouging” of generic drugs. An “unconscionable price increase” of any “essential off-patent or generic drug” is illegal and  Maryland can levy a fine and take action to reverse the price change. The state did not include any limitation of the law to drugs that have come into or passed through Maryland.

The generic drug lobby, the Association for Accessible Medicines, challenged the law and the Fourth Circuit Court of Appeals struck down the law as an unconstitutional regulation of interstate commerce. Maryland has petitioned the Supreme Court to revisit the case.

The Pharmaceutical Research and Manufacturers (PhRMA), one of the largest pharmaceutical lobbying groups, has sued California alleging the law, like Maryland’s, is unconstitutional. Because California’s law is informational—and does not allow forced price changes—it is likely constitutional. In fact, PhRMA’s initial complaint was dismissed, and subsequently filed an amended complaint on Sept. 18, 2018.

It will be imperative for states seeking to regulate pharmaceutical manufacturers to observe where courts determine the extent of reporting they may require when they go after a manufacturer for increasing the price of their drug. For the time being, it appears that information-gathering may be the easiest available avenue for states seeking to curtail increases in drug prices. Seeking justifications and reasoning for large increases in drug prices may create a barrier for pharmacuetical companies seeking to impose unsubstantiated increases in drugs. Going further towards affirmative control of pricing appears to be off limits to states going as far as Maryland, but more careful structuring of the controls to the specific state may be permissible.

 

Drew Kohlmeier is a student in the Boston University School of Law Class of 2020 and is a native of Manhattan, KS, graduating with a degree in Biology from Kansas State University in 2016. Drew decided on Boston for law school due to his interest in health care and life sciences, and will be practicing in the emerging companies space focused on the life sciences industry following his graduation from BU.

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Whose Legislation is it, Anyway?

March 13th, 2018 in Analysis, Federal Legislation, Lobbying

It seems that after every mass shooting, the gun control debate transforms into a discussion about mental illness.  Was the shooter mentally ill? If so, some gun rights advocates will deflect from the issue of gun safety and argue for mental health reform while gun control activists will argue for stricter gun laws–specifically those that make it harder for people with mental illnesses to buy guns. The most recent Las Vegas and Parkland shootings are no different. Despite the copious research suggesting that the existence of a mental illness correlates much more strongly with suicide than it does with interpersonal crimes, mental illness is once again being deemed the culprit. Of note is Speaker Ryan’s call for mental health reform, which he described as a “critical ingredient” in preventing further mass shootings. Ryan was subsequently questioned as to whether he thought repealing the Social Security Rule (a rule that expanded background checks to include Social Security data on people with mental illnesses) was a mistake. When pressed on the issue, Ryan argued that the Obama administration rule was an infringement on Second Amendment rights. President Trump has also advocated more treatment for people with mental illnesses as a solution to gun violence.

Although some federal laws designed to prohibit gun access to citizens with mental illnesses exists, it isgun limited and under-enforced. Following the shooting at Virginia Tech, President Bush signed the NICS Improvement Amendments Act of 2007 into law, which attempted to identify individuals who are unqualified to possess guns due to mental illnesses or criminal backgrounds. This law proved to be inadequate; most notably when a mentally ill man, Adam Lanza, killed 20 first grade students and six teachers at Sandy Hook Elementary School in 2012. In response, President Obama proposed the Social Security Rule, which added more mental health records to the national background check system but was removed by Republicans in Congress under the Congressional Review Act in February of 2016.

There is a wide political divide in the gun control arena, with 79% of Democrats agreeing with the statement “it is more important to control gun ownership than protect gun rights,” compared to only 9% of Republicans. In fact, this divide has widened substantially since 2012, when 62% of Democrats and 21% of Republicans agreed with the statement.

However, despite this deep division, the issue of gun restrictions for those with mental illness stands as a unique common ground. According to a Pew Research poll from June 2017, 89% of both Republicans and Democrats support restrictions that would prevent people diagnosed with a mental illness from purchasing guns. No other gun policy proposal was found to have the same kind of bipartisan support, though barring gun purchases by people on no-fly lists and background checks for private sales and at gun shows come close.

Even more striking is the support for preventing people with mental illnesses from obtaining guns among gun and non-gun owners. Again, there is wide agreement amongst the two groups: 89% of both gun owners and non-gun owners support this policy proposal. Again, there is no other policy proposal that garners the exact same support amongst gun-owners and non-gun owners. Moreover, 82% of those who say it is more important to protect gun rights rather than control gun ownership actually favor laws that prevent the mentally ill from buying guns, compared with 77% support amongst those who say it is more important to control gun ownership.

Given that the policy restricting access to guns for those with mental illnesses is so widely accepted amongst Democrats and Republicans, gun owners and non-gun owners alike, why don’t we have a more robust policy in place?

One hypothesis is the National Rifle Association’s opposition to this type of gun control proposals and their generous campaign contributions to Republican politicians. In the 2016 election cycle, the NRA gave over $77,000 to the Republican National Committee, and $838,215 to individual federal congressional candidates. In addition, the group spent over $30 million in support of Donald Trump’s presidential campaign, more than any other outside group, according to the Center for Responsive Politics. Opensecrets.com, a campaign finance accountability website, wrote that “[t]his election cycle, the NRA spent more than $52 million—a number that will rise as final campaign finance figures are tallied — to carry on its effort to increase Republican control of government.” In a news article following“The NRA, of course, was among the earliest and staunchest supporters of Trump’s presidential bid. We thank him for his quick action on this measure and look forward to working with him and the pro-gun majorities in Congress to protect Americans’ Second Amendment rights.” Trump responded at the NRA convention in April where he stated “You came through big for me, and I am going to come through for you.”

As it turns out, even NRA members support legislation that prevents those with mental illnesses from purchasing guns. A July 2017 Pew Research poll that controlled for partisanship found that 79% of Republican members of the NRA support this policy proposal. However, NRA members also report a general level of satisfaction with the organization’s political authority. Only 9% of NRA members say that the organization has too much influence over gun laws and about six in ten members say that they are satisfied with the amount of influence that the organization has over gun laws.

Thus, it seems the future for the gun debate may be determined not by the popularity of the ideas proposed, but by the strength of Americans’ allegiance to a very powerful group in Washington. Either that, or these ironies tainting the gun debate remain a mystery.
 

Goldman_Jessica_U31841823 Jessica Goldman anticipates graduating from Boston University School of Law in May, 2019.

 

 

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Why Big Pharma Lawsuits Probably Won’t Fix Things

February 28th, 2018 in Federal Legislation, Lobbying, Opinion

By: Lindsey Pasieka

Pharmaceutical companies are sued every single day. There are literally thousands of drug and medical device-related lawsuits going on right now. And they run the gamut, from things like Pradaxa lawsuits, brought on by victims of side effects, to statewide and regional opioid lawsuits, brought on by mayors and state attorneys general. Even government agencies have been known to take Big Pharma to court over violations like dangerous products, and illicit marketing techniques.

So why don’t things change? Why do drug companies continue to hide side effects, market off-label uses and manage to stay out of jail? Well, there’s a few reasons. First, since individual marketers and CEOs are rarely the defendants, the company as a whole has a chance to absorb any penalties- and there are plenty of loopholes to reduce the effects of a guilty verdict. Second, existing laws and regulations favor companies over consumers. And just like with old laws, new laws are hugely influenced by pharmaceutical companies, and more importantly, their money.

They’re Called “Big” for a Reason

FDA approved stamp

FDA approved stamp

One of the biggest pharmaceutical companies in the world is Pfizer. As of 2014, they owned over 500 subsidiaries, and that number is only growing. In 2016, the company has a revenue of $52.8 billion. To put it simply, it is a monster of a company.

That came in handy back in 2005, when the FDA brought an action against the company for its painkiller Bextra. Bextra was approved in 2001 as an alternative to generic options; as a Cox-2 inhibitor, it was supposed to be safer for patients. However, the drug was specifically rejected for approval for post-surgical pain. Despite this, marketers for Bextra deliberately sought out surgeons and marketed the drug for their patients.

Marketing a drug for off-label or unapproved uses is a direct violation of the Food, Drug, and Cosmetic Act (FDCA). So the FDA brought charges against the company. And if Pfizer had taken the hit, the punishment would have meant exclusion from Medicare/Medicaid programs-- and an almost guaranteed financial collapse.

But here’s where being big helps out. Instead of being pinned, Pfizer made a deal so that prosecutors charged their subsidiary, Pharmacia & Upjohn Co., Inc. That company went under, and Pfizer was left only with a fine. Again, being big was beneficial. To a small company, a $1.2 billion bill would be crushing; to Pfizer, it was only 2.5% of their revenue at the time.

The Approval Process Favors Them

Many people think the approval process is too long, too full of red tape and that because of this process that new, desirable drugs can’t get to the patients that need them. When you’re on the outside of the process, it’s easy to understand that point of view. On the inside, though, the pitfalls of our process shine through. Most of those pitfalls are because we try to get things to market faster than every other country, and because money plays a role.

Currently, the FDA must respond to any application for drug approval within 10 months. That’s already outpacing most other countries. But did you know that drug companies can pay the FDA to speed up? The FDA actually has several programs like Priority Review and Fast Track, which companies can pay to get into, which shrinks the approval time to as little as 6 months. This doesn’t include the trials they need to complete before applying for approval, but it does make it difficult for the FDA to make a fully informed decision.

Take, for example, Pradaxa. The drug was submitted to a priority process in 2010, and immediately, the problems with the clinical trials became obvious. The RE-LY trial used a broad population, and excluded the older generations and those with medical conditions that would be most likely to experience side effects. A third-party safety group also discovered that the trial waths not, in fact, a double-blind study. This means that the results pulled from the study are less reliable.

Despite these issues, the FDA pushed Pradaxa through. Some would say this backfired. Within 3 months, the FDA received more serious incident reports for Pradaxa than any drug before it. In its first five years on the market, Pradaxa caused over 1,000 deaths. And it’s now the target of an onslaught of lawsuits, led by victims and their families, and it’s received a black box warning for severe bleeding risks.

Yet, on the flip side, Pradaxa is still a leader on the market for blood thinners, and it brings in billions of dollars a year. So if the lawsuit charges don’t make a dent in revenue, the FDA doesn’t take away approval, and individual employees aren’t charged, why should Pradaxa’s maker change their tactics?

They’ve got Money in Washington

If pharmaceutical companies have some money in the FDA, they have whole banks of it in lobbying. In the first quarter of 2017 alone, the pharmaceutical industry spent $78 million in lobbying. Again, this is a drop in the bucket for companies making dozens of billions a year; but to lawmakers it speaks volumes.

Our example here is the ongoing opioid crisis. Most opioid addictions begin in the doctor’s office, with a prescription. When the pill bottles run out, addicts turn to illegal opioids for a high, most often to heroin. It’s a national issue, and it’s even been addressed by President Trump on several occasions, and declared it a Public Health Emergency. Yet law and regulation changes regarding opioids and addiction are slow to come about.

A big reason is because opioids make pharmaceutical companies money. OxyContin is one of the most prescribed opioids on the market. It is used by millions of people a year, and for many, it saves them from severe, debilitating pain. Evidence shows, however, that the 12-hour drug starts to wear off after 9 hours, causing patients to experience withdrawal between doses. As Oxycontin sales quadrupled between 1999 and 2016, opioid overdose deaths rose to over 200,000-- and counting.

Still, drug makers stand behind their products, and they expect lawmakers to as well. When laws to limit prescribing behaviors were introduced in the House and Senate, Big Pharma pushed back. They went so far as to fund the Pain Care Forum, a lobbying company that spent upwards of $740 million to curb the legislation, and they continue to lobby every time a new motion is brought forward to fight the epidemic.

What We Can Do

Lawsuits don’t seem to work, the FDA falls short, and Big Pharma has Washington in its pocket. While the outlook seems bleak and none of it will be easy to fix, there are ways to improve the situation. 2018is an election year; get out and vote with consumer safety in mind. Find representatives who promise to combat these issues. If your current reps aren’t following through, hold them accountable by calling or writing in. Donate to lobbyists who represent the people, not just large companies.

You can also ask your doctor if they work with pharma reps. You can ask them to explain their medication choices to you, and bring up your concerns regarding painkillers or other drugs with serious side effects. Use your voice to protect yourself, your family and your neighbors, and together, we can work towards change.

 

LindseyLindsey Pasieka is an investigator and writer who focuses on public health and safety issues. Through her work, she has become an avid advocate for consumers, fighting for their right to safe products. In her role as Consumer Rights Investigator for ConsumerSafety.org, she focuses on health and legal topics that are essential to protecting consumers. In her spare time, Lindsey enjoys reading and spending time with her cat, Lava.

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