Developments in Drug Pricing and Anti-Kickback Laws

On Wednesday, President Trump signed the Patient Right to Know Drug Prices Act. The bill tackles a number of issues that stand in the way of lowering high drug prices, particularly the discussion over the ‘gag rule’ in interactions between insurers and pharmacists. Under the current provisions of the gag rule, insurers are forbidden from disclosing whether the cash price for a drug is in fact cheaper than the price offered under the patient’s insurance plan. The new law will rescind that prohibition. However, it will only apply to name-brand prescriptions and not generics, but many are hopeful that it will raise an overall awareness for consumers about the actual prices they are paying for their prescriptions.

The Trump Administration is also working to lower drug prices by examining some of the specifics of federal anti-kickback laws that relate to prescription pricing. Under current law, pharmaceutical and insurance companies are not allowed to offer any benefit to physicians to prescribe one particular drug versus another. There is a significant exception in these regulations, however, known as ‘safe harbor rules.’ Under these exceptions, pharmaceutical companies and prescription benefit managers (PBMs), the companies that administer pharmaceutical plans on behalf of insurers, are allowed to negotiate the prices of a particular drug by discussing the different prices the manager will offer the drug for.

This once again has put the spotlight on drug rebates offered by pharmaceutical companies. With rebates, firms offer monetary incentives to encourage insurers to carry their drug, lessening the overall cost for insurers to carry the drug. These rebates are meant to be administered to the consumer, but in many instances are taken by the PBMs to boost their profits. Pharmaceutical companies have recently attempted to combat these strategies, partially in an attempt to deflect some of the criticism towards them on drug pricing, by offering generics with lower prices, so that the PBMs will receive lower rebates on the negotiated drugs. The FDA is currently examining the administration of rebate plans and is considering ending the exceptions they have under anti-kickback statutes.

Ultimately, any of these steps to reduce drug pricing will not be broadly impactful, as expansive steps to allow Medicare to directly negotiate the price of drugs with producers have failed to gather sufficient bipartisan support. Further, much of the controversy surrounding high drug prices have been focused on some of the more infamous instances, such as Sarepta Therapeutics’ $300,000 per year muscular dystrophy treatment . Until successful generics reach the market, these specialized treatments will be under no pressure to lower their prices.

It is unlikely that there will be any unified support to take more aggressive steps to lower drug prices, but pharmaceutical companies seem to recognize to some degree the public backlash to these prices and have taken steps to cap drug prices, most notably beginning with Allergan’s promise to increase drug prices by no more than 10% year-to-year.

In his statement at the bill signing, President Trump spoke of the bipartisan nature of lowering prescription drug prices. He also spoke generally about upcoming steps the Department of Health and Human Services will begin to take to further bring down prices. It remains to be seen what further steps will be taken, but is likely both Congress and the Trump Administration will continue to evaluate how they can change many of the regulations on drug prices that keep them so high.

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What Could Brett Kavanaugh do to Women’s Health Law?

President Trump’s Supreme Court nominee, Judge Brett M. Kavanaugh, has been a constant conservative presence on the United States Court of Appeals for the District of Columbia Circuit for twelve years.  Judge Kavanaugh has made it a point to stress textual limitations of the Constitution while often supporting corporations over regulators, and the government over individuals claiming violations of their rights.  With seldom exceptions, his position is to the right.  With his nomination, Americans are concerned that long standing precedents may be overturned, and Kavanaugh’s appointment could mean huge changes especially when it comes to women’s health.

When President Trump nominated Judge Kavanaugh on July 9, 2018, the President spoke highly of him as a person, a father, and a judge.  Judge Kavanaugh has stated that he had no intentions of overturning Roe v. Wade precedent during yet has eluded to a narrower interpretation  of when a woman can exercise that right.  In this time of “fake news,” a term coined by the President himself, it is unsettling as a woman to trust Kavanaugh’s statement as a promise.  His actions and opinions thereafter have raised even more concern.

In a notable decision in the fall of 2017, the DC Circuit voted to allow an undocumented pregnant seventeen year-old girl in an immigration detention center to obtain an abortion without delay. Judge Kavanaugh dissented.  He noted that while the Court of Appeals was obliged to follow Supreme Court rulings that recognized the Constitutional protection of a woman’s right to choose an abortion, those precedents left room for the government to apply “reasonable regulations that do not impose an undue burden.” Judge Kavanaugh sided with the Trump Administration, who argued that the young women should first be transferred to an adult sponsor for guidance, and argued that it was reasonable to choose a transfer to a sponsor instead of “forcing the minor to make the decision in an isolated detention camp with no support network available. . . . The majority’s decision represents a radical extension of the Supreme Court’s abortion jurisprudence,” he wrote.

Many Democrat political figures, like Elizabeth WarrenJeff Merkley, Dianne Feinstein, and Kamala D. Harris have expressed their grave concerns with a Kavanaugh appointment and made it clear that, in their opinion, Judge Kavanaugh does not intend to maintain Roe v. Wade precedent.  Senator Harris said, in response to Judge Kavanaugh’s remark equating birth control to “abortion inducing drugs,” tweeted on September 7, 2018, “Kavanaugh chooses his words very carefully, and this is a dog whistle for going after birth control. He was nominated for the purpose of taking away a woman’s constitutionally protected right to make her own health care decisions. Make no mistake – this is about punishing women.”

As disconcerting as anything unknown, only time will tell if Judge Kavanaugh will be given Supreme Court decision making power with the hearings on the sexual assault allegations delaying the vote.  In moments like these, it is paramount we realize how influential these types of nominations and appointments can really be in our country.

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The ACA Twilight Zone

Death by a thousand cuts has been the Trump Administration’s approach to the Affordable Care Act (ACA).  To be sure, President Trump  tweeted on April 23, 2017 that “ObamaCare is in serious trouble.”  On October 13, 2017, he tweeted, “ObamaCare is a broken mess. Piece by piece we will now begin the process of giving America the great HealthCare it deserves!”  On May 30, 2018, he stated: “For the most part, we will have gotten rid of a majority of Obamacare.”  And on June 4, 2018, he tweeted, “We had Repeal & Replace done (and the saving to our country of one trillion dollars) except for one person, but it is getting done anyway. Individual Mandate is gone and great, less expensive plans will be announced this month.”

In the courts, the ACA has certainly been no stranger to the artful attack.  But two lawsuits, one filed in Texas and the other in Maryland, have gained nationwide traction and hold nationwide consequences.  The first suit, Texas v. US, made its way to U.S. District Court Judge Reed O’Connor’s bench in the Northern District of Texas.  The 20-state GOP led suit was filed on February 26, 2018 by Texas Attorney General Ken Paxton.  It argues that since the ACA was only upheld by the Supreme Court in NFIB v. Sebelius because the individual mandate was a tax, and now that the Tax Cut and Jobs Act of 2017 (TCJA) zeroed-out the individual mandate penalty, the entire ACA is unconstitutional.  The Plaintiff-states also argue that since the ACA does not have a severability clause – a clause that would allow the rest of the statute to live if one part is stricken – the ACA as a whole must fall.

Under Attorney General Jeff Sessions direction, the government will not defend the ACA’s constitutionality.  Defending the ACA, and its patient protections like the prohibition on insurers from discriminating against patients with pre-existing conditions, are 17 Democratic attorneys general representing their respective states as Intervenor-Defendants.  A slew of patient groups and scholars filed amicus briefs in support of the Intervenor-Defendants, but only Citizens United filed as amicus in favor of the Plaintiff-States.  The American Cancer Society Cancer Action Network filed as amicus, urging the court to uphold the ACA and to “recognize Congress’s clear intent to improve access to lifesaving health care for millions of Americans.”  A bipartisan group of law professors filed as amicus, arguing that “[t]he arguments of both the plaintiff States and the United States on the severability of the insurance mandate from the other provisions of the ACA are inconsistent with settled law.”  On July 19, 2018, Senate Democrats introduced a Senate resolution that would authorize Senate Legal Counsel to intervene in Texas v. US to defend the ACA’s patient protections for people with pre-existing conditions.

The second suit, City of Columbus v. Trump, filed on August 2, 2018 by the Cities of Baltimore, Chicago, Columbus, and Cincinnati in the U.S. District Court for the District of Maryland alleges that the Trump Administration’s actions over the last several years amount to an unconstitutional sabotage of the law the President is required to faithfully execute.  The suit makes two claims: the first claim that the Administration is acting arbitrarily and capriciously, and the second that President Trump is violating the “Take Care” Clause of the Constitution.  Under the Take Care Clause of the U.S. Constitution, the President and his or her Administration must “take care that the laws be faithfully executed.” U.S. Const. art. II, § 3.  The suit cites a range of administrative actions taken to sabotage the ACA and have the aim and effect of weakening ACA exchanges, driving up premiums, and driving out issuers, ultimately increasing the rate of the uninsured and underinsured.

Judge O’Connor, after first announcing that oral arguments in Texas v. US would take place on Monday, September 10, moved up oral arguments to Wednesday, September 5, at 9:30 a.m.  At the same time in Washington, D.C., Supreme Court nominee Brett Kavanaugh will be testifying before the Senate Judiciary Committee for potential confirmation.  As some have noted, the fate of the ACA could turn on Kavanaugh’s appointment to the Supreme Court.  Kavanaugh’s preeminent views on separation of powers and his textualist-meets-originalist approach to statutory interpretation is consistent and can be expected to appear in his opinions, but is alarming to health care advocates and patients.  Kavanaugh’s jurisprudence shows that he cares deeply about administrative law and is unlikely to “deconstruct the administrative state,” but he is likely to “put a tighter leash on the regulatory state.”  In all, the fate of the ACA remains to be seen.

 

 

 

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States Fight to Control High Drug Prices

On Friday, April 13, 2018, the Fourth Circuit ruled 2-1 that Maryland law HB 631, prohibiting price gouging by generic pharmaceutical companies, is unconstitutional because it violates the dormant commerce clause by directly regulating transactions that occur outside of the state.

The Maryland law prohibites generic drug manufacturers or wholesale distributors from making unconscionable increases to the price of an essential off-patent or generic drug. The Association for Accessible Medicines (AAM), a trade group of generic drug manufacturers, sued the Maryland Attorney General to stop implementation of the law because they said the law violated the dormant commerce clause and the law is impermissibly vague, violating the Fourteenth Amendment Due Process Clause. The Commerce Clause allocates power to the federal government to regulate interstate commerce and constrains states from enacting legislation that interferes with or burdens interstate commerce. The dormant commerce clause limits states from enacting legislation that controls the price of goods outside of the state. The AAM appealed the District Court for the District of Maryland’s decision that granted the State of Maryland’s motion to dismiss AAM’s challenge and denied AAM’s motion for injunctive relief.

The Fourth Circuit found the law unconstitutional because (1) the law is not triggered by conduct that happens inside the state of Maryland, (2) even if it did, the law seeks to control transactions that occur outside of the state, and (3) if other states enacted similar laws, this would impose a significant burden on interstate commerce. The Court did not address whether the statute violated the Fourteenth Amendment because it ruled it unconstitutional under the commerce clause.

Maryland is not the only state working to control high drug prices through legislation. In March of 2018, Oregon passed the Prescription Drug Price Transparency Act, HB 4005. The Oregon law would create new reporting requirements for drug manufacturers related to price increases and patient assistance programs. In 2017, Louisiana, Nevada, California, Maryland, and New York all enacted transparency bills related to drug prices. In 2016, Vermont enacted SB 216 to identify the top fifteen drugs that the state spends the most money on. These states join others that have already put in transparency laws related to prescription drugs like the District of Columbia’s AccessRx law, which requires reporting on gifts to healthcare providers in the District from pharmaceutical companies.

Similar to the Maryland law, laws in other states have been challenged by pharmaceutical and device manufacturer trade groups. The Pharmaceutical Research Manufacturers Association (PhRMA) and Biotechnology Innovation Organization (BIO) have challenged Nevada statute, SB 539, for infringement on patent and trade secrets. The Nevada law requires manufacturers of essential diabetes drugs to report manufacturing costs of the drug, a list of sales representatives who market the drug, payments or donations to nonprofit organization, and other information. In California, PhRMA filed a complaint seeking declaratory and injunctive relief against implementation of SB17, which imposes reporting requirements on pharmaceutical companies for certain price increases on their products sold to state purchasers in California.

The Maryland law was unique because it was the first state law that went beyond reporting and instead explicitly prohibited price increases. The Fourth Circuit decision might scare other state legislatures from passing more aggressive laws to stabilize or lower drug prices. Transparency laws, like the ones passed in 2017, are important because policy makers cannot know there is a problem without the data to examine whether there is one. But there also needs to be more policy action towards potential solutions to keep drug prices down. The Fourth Circuit majority opinion did note that they were sympathetic with consumers who have been affected by high drug prices and that the decision is is not meant to suggest that Maryland and other states cannot enact legislation to secure lower prices for prescription drugs for citizens within their state. Hopefully patient advocacy groups keep pushing for similar state laws and other policy changes to shift the landscape of drug pricing.

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The Right to Try

On Wednesday, March 21st, the House passed H.R. 5247, the “right-to-try” bill. The bill gives terminally ill patients the federal “right-to-try” drugs that have been approved for Phase 1 clinical trials, but are still unapproved by the Food and Drug Administration (FDA).

The Senate unanimously passed a similar version of the right-to-try bill in August but the House subsequently rejected this bill on March 13th. The recently passed bill, H.R. 527, is the updated version of the original right-to-try bill. The vote passed by a 267 to 149 vote. Currently, different versions of right-to-try legislation exist in 39 states. The recently passaged legislation expands this right to the federal level.

In its simplest form, the right-to-try gives dying patients access to potentially life saving drugs that they would otherwise not be able to try. On average it can take the FDA 10-15 years to test and approve a drug. The lengthy process is due to the three phases of clinical trials and bureaucratic application and approval procedures.

In practice, doctors and their patients can bypass the stringent, and lengthy, FDA process for drug approval and deal directly with pharmaceutical companies to gain access to unapproved drugs, once the drugs have undergone preliminary safety testing. Most frequently, right-to-try is utilized on behalf of cancer patients who want to be enrolled in clinical trials.

In addition to increasing patient access to unapproved drugs, right-to-try laws also relieve doctors and pharmaceutical companies of liability should there be negative effects of the drugs. Right-to-try laws also prohibit the FDA from using data from right-to-try patients in negative outcome analysis.

Critics have two main critiques of the bill. First, critics are concerned over the safety of the experimental drugs and their potentially negative effects on patients who are not healthy enough to receive the treatment. Second, they argue that right-to-try is merely “feel good” legislation because the right to try is unnecessary. The FDA currently has a version of right-to-try called, Expanded Access or Compassionate Use. Both right-to-try and the FDA program allow terminally ill patients to try drugs that have yet to be approved by the FDA. According to the FDA, 99% of requests for Expanded Access are approved; however, this percentage does not include the number of requests that are dismissed because they did not meet FDA requirements.

With the restrictions and requirements the FDA imposes, less than 3% of those who want experimental treatment are approved. Right-to-try advocates stress the importance of expanding the access of potentially life saving drugs to the remaining 97% of patients who want to try them.

The Goldwater Institute, a libertarian think tank, was the driving force behind the right-to-try bill. The Goldwater Institute states that “everyone deserves the right to try,” as people possess the fundamental right to try to save their own lives. Since the bill’s inception, the bill has gained notable support from Vice President Pence and President Trump. Trump publically supported the bill at the State of the Union in January, “People who are terminally ill should not have to go from country to country to seek a cure,” he said. “I want to give them a chance right here at home. It’s time for Congress to give these wonderful, incredible Americans the right to try.”

The Goldwater Institute lays out the necessities for the right-to-try.

  1. Most terminal patients cannot participate in clinical trials because they are too ill to be selected;
  2. Most terminal patients do not have access to these treatments once the clinical trials are over;
  3. The FDA’s Expanded Access plan is insufficient because it is time-consuming, expensive, and involves a complicated application process;
  4. The FDA approval process takes too long to approve promising medications and in some cases can take more than ten years;
  5. Patients should not have to ask the government for permission to save their own lives.

For these reasons and more the right-to-they has become a powerful piece of legislation on patient rights. The latest version of the bill will now go to the Senate to be disused, and hopefully passed.

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