Author: Rihana Miller

What About The Children?: Saving the Children’s Health Insurance Plan (CHIP)

On November 3, 2017, in a vote cast primarily along party lines, the United States House of Representatives passed a five-year extension of funding for the Children’s Health Insurance Plan (CHIP).

The vote on November 3 is Congress’ most substantial move toward reauthorization of the Program since its expiration on September 30. Although a state-run program, funding for CHIP is approved by the federal government, then disbursed to the states, which subsequently administer healthcare services pursuant to policies crafted by each state. While every state has adopted the expansion of health coverage to include kids who qualify for CHIP, how the Program is implemented varies. Many states process CHIP funding through Medicaid expansion; some maintain a system thoroughly separate from Medicaid; while others utilize a mixed system.

For twenty years, CHIP has covered children and pregnant women from low- to moderate-income families that typically earn too much to qualify for Medicaid and too little to afford private insurance, providing these populations with prescription medicine, checkups, and hospital care.

In 2016, roughly nine million children were insured under CHIP. In Utah, where 20,000 children are covered, the Division of Medicaid and Health Care projects that federal funding of the program would be exhausted by the end of December, and the state would probably end the program altogether if Congress does not act. Similarly, Arizona anticipates it will run out of federal funding by December 31, 2017; its officials announcing that if Congress does not reauthorize federal funding prior to that date, the state will be forced to consider various policy alternatives, since state statute mandates the freezing of enrollment if the federal match goes below its current level. Likewise, in Ohio, where 200,000 children are covered under CHIP and 97% of the program is supported by federal funds, state officials estimate complete depletion of funds by the end of the year. Unsurprisingly, California, the nation’s most populous state, covers the most CHIP beneficiaries with over 1.9 million children participants, and estimates the program will also exhaust funds by the fourth quarter of 2017. In all, as many as eleven states have given notice that funds will likely run out by year’s end.

Because some families of CHIP recipients are eligible for Medicaid, many children and pregnant women may obtain health insurance by other means. However, of the current CHIP enrollees, nearly four million children are still at risk of losing their health coverage altogether. As with all populations lacking healthcare, this shift will likely result in heavier burdens on the system, exacerbating emergency room occurrences, and increasing the overall healthcare costs.

While CHIP has enjoyed popularity among both Democrats and Republicans in the past, the legislation is expected to be met with great resistance as it moves to the Senate. In addition to reauthorizing CHIP for five years, the bill passed on November 3 would also provide funding for community health centers for two years. The legislation would simultaneous make changes to the Affordable Care Act policies such as “grace periods” for premium non-payments, changes in income determination rules and other measures, which are very unpopular with Democrats.

CHIP falls under the statutory authority of the Social Security Act of 1965. Originally sponsored by Senator Orrin Hatch (R-UT) and the late Senator Edward Kennedy (D-MA), the legislation was signed into law in 1997. Since then, after a number of extensions and a budget increase that expanded insurance to more than four million children, Congress’ current inaction has brought CHIP closer to the brink of extinction than it has been since its enactment two decades ago.

Understanding Escobar: Gilead to petition SCOTUS to address circuit split

On October 3, Gilead Sciences, Inc. filed a motion to stay a Ninth Circuit Court of Appeals’ decision pending the filing of Gilead’s petition for a writ of certiorari with the United States Supreme Court. In a unanimous decision announced on July 7, the Ninth Circuit reversed and remanded a trial court’s dismissal of a qui tam action against that the South San Francisco-based biotechnology company.

In the initial suit of 2015, two former Gilead employees brought a qui tam suit against Gilead. They accused the biotech company of retaliation, hiding information about adulterated and misbranded active ingredients, and alleging that the noncompliant drugs, on which the Government spent billions in 2008 and 2009, were not eligible for payment by federal health care programs because the company knowingly made false statements that the drugs passed internal testing in violation of the Federal False Claims Act. Gilead argued that the Government’s continued reimbursement for medications in light of knowing of Gilead’s regulatory violations proved that the discretions did not meet the “materiality” prong required to implicate the FCA. In the 2016 landmark case Universal Health Services v. Escobar, SCOTUS held that, “if the Government pays a particular claim in full despite its actual knowledge that certain requirements were violated, that is very strong evidence that those requirements are not material.” 136 S. Ct. 1989, 1995 (2016). While the Ninth Circuit conceded the existence of issues involving the Government’s continued payments to Gilead, notwithstanding, “there are many reasons the FDA may choose not to withdraw a drug approval, unrelated to the concern that the government paid out billions of dollars for nonconforming and adulterated drugs.”

The present issue is whether Gilead breached the FCA by covertly changing to a Chinese active ingredient supplier after winning approval for several HIV drugs and by concealing information about contaminated ingredients when it later sought approval to use that supplier.

In this latest attempt at petitioning SCOTUS to further discern the parameters of its decision in Escobar, Gilead announced that its petition for writ of certiorari will present two questions: (1) whether, under Escobar, a complaint fails the materiality requirement of the False Claims Act when the allegations demonstrate the Government continued paying claims despite knowledge of the alleged misconduct; and (2) whether the Food and Drug Administration’s continued approval of a drug after learning of alleged regulatory violations is fatal to an FCA complaint premised on those violations. Gilead contends that the Ninth Circuit created a Circuit split by virtue of its reversal, stating that the appellate court, “expressly acknowledged its departure from three circuits [interpretations of Escobar].’”

Enacted in 1863, the Federal False Claims Act combatted the influx of fraudulent claims submitted to the federal Government during the Civil War. To aid the Government in its fight against fraud and abuse, Congress empowered whistleblowers to bring suit on behalf of the Government, known as qui tam actions, offering individuals a percentage of the amounts recovered from FCA violators. The FCA imposes liability on persons who: make false or fraudulent statement; with requisite scienter (having actual knowledge, acting in deliberate ignorance, or acting with reckless disregard); that is material; and that caused the Government to pay out money.

In fiscal year 2016, the United States Department of Justice recovered over $4.7 billion in settlements and judgments from civil cases involving fraud and false claims against the federal Government. About $2.5 billion came from the health care industry, including drug companies, medical device companies, hospitals, nursing homes, laboratories, and physicians – this number does not reflect the settlements and judgments from cases filed under similar state FCA causes of action.

If Gilead’s writ of certiorari petition is denied, and the trial court finds for the plaintiffs, the biotech company could be required to pay as much as three times the amount of damages plus $10,957 to $21,916 per claim for violations of the FCA.

Trump, Biotech, and the FDA Drug Approval Process

During his Joint Address to Congress on the evening of February 28, President Donald Trump denounced the decades-old prescription drug approval process, pledging to “slash the restraints” of the current regulatory landscape at the US Food and Drug Administration (“FDA”).  “Our slow and burdensome approval process at the Food and Drug Administration keeps too many advances…from reaching those in need,” President Trump said, giving a nod to his guest, 20-year-old Megan Crowley. Crowley, a college student who was diagnosed with a rare and typically terminal ailment – Pompe Disease – at 15 months old, was not expected to live past age 5. Since her diagnosis, Crowley’s father went on to launch Amicus Therapeutics, a biotechnology company that aims to be the frontrunner of advancing therapies for rare and devastating diseases.  

To many, the President’s harsh opinion of the FDA drug approval process was seen as misleading. Not only is the drug review process in the United States recognized worldwide as the gold standard, FDA is the fastest regulatory agency in the world. Today, the average total review time of a single drug is 8.5 months, down from an average of 30 months in the 1980s.

While most drug and biologic companies must successfully maneuver their compounds through three phases of clinical trials, proving not only safety but efficacy (via two “well-controlled and adequate studies”), there are several other expedited processes that may be utilized to obtain agency approval, at least preliminarily. Breakthrough, priority review, fast track, and accelerated approvals are all programs created to speed up the market availability.

Perhaps most misleading about Mr. Trump’s statements was the approval process for rare diseases like that of Megan. The term “Rare Diseases” is a term of art, defined as afflicting less that 200,000 people nationally. Drug manufacturers of potential treatments of rare diseases, like Pompe, may participate an expedited approval program depending on the seriousness of the ailment. ON the other hand, they may participate in the Orphan Drug Designation process, by which they are incentivized by the FDA to increase research and development on novel drugs via seven years of patent exclusivity, tax credits, and expanded access to Investigational New Drugs (IND). In other words, those who have rare diseases, to the extent to which therapies are being developed, have access to treatment faster than average.

Moreover, many biotech and pharmaceutical companies are skeptical of the deregulation of the industry. “People often argue that the FDA is too restrictive, [but] [w]e have the sense that the balance is pretty right … you have to have a well-characterized risk/benefit profile,” said Roger Perlmutter, head of Research and Development at pharmaceutical heavy hitter Merck. Similarly, Alnylam Pharma CEO John Maragarone stated what, to some, may be obvious: while deregulation seems like a good idea, “payors are looking for evidence of value.” As it is, insurance companies have already shunned some approved treatments that have not demonstrated strong effectiveness.

In 1962, in response to several children dying from ingesting elixir, Congress enacted the Drug Efficacy Amendment to Food, Drug and Cosmetic Act of 1938, explicitly requiring the pre-market approval process to include not only safety profiles, but proof of effectiveness by a showing of substantial evidence. Deviation from this would deem the product false and misleading if placed on the market, and likely open the manufacturer up to liability.

Attacking the Opioid Epidemic: 21st Century Cures Act and America’s Reefer Referendum

Notwithstanding the Patient Protection and Affordable Care Act of 2009 (“Obamacare” or “the ACA”), the 21st Century Cures Act is the largest health care innovation treatment-based American law in over a decade. Signed by President Barack Obama in December 2016 as one of his last major acts as the head of the executive branch, the Cures Act has been hailed as a bipartisan, bicameral success. “‎We are now one step closer… helping people seeking treatment for opioid addiction finally get the help they need,” Obama said in a statement. The legislation primarily seeks to implement several approaches to improve the health industry, including establishing accelerated discovery, development, and delivery of novel treatments in the biotechnology and medical device industries, as well as cost savings plans. Yet within the primarly pharma/device focused bill, albeit awkwardly placed, comes language that addresses what has steadily become a major public health risk facing the nation’s heartland: supporting state prevention activities and responses to mental health and substance use disorder need vis-à-vis the opioid epidemic.

According to the Centers for Disease Control and Prevention (CDC), drug overdose and opioid-involved deaths continue to increase in the United States. The majority of drug overdose deaths involve an opioid. From 2000 to 2015, more than half a million people died from drug overdoses, and 91 Americans die every day from an opioid overdose. The epidemic has hit the Appalachian region particularly hard, where it has wreaked havoc in states like West Virginia, Ohio, Kentucky, and Pennsylvania; in some cases Heroin deaths have surpassed gun homicides  and car crashes. Likewise, in New England states like Massachusetts, New Hampshire, and Delaware, drug addicts are collapsing in the streets.

The Cures Act has allocated $1 billion of federal funds over two years for grants to states to supplement opioid abuse prevention and treatment activities, such as improving prescription drug monitoring programs, implementing prevention activities, training for health care providers, and expanding access to opioid treatment programs. Further, money will be appropriated toward treatment, recovery, and transition for the homeless, incarceration diversion programs, as well as grants for suicide prevention.

Outside of the Cures Act, marijuana proponents are rallying around research that seems to suggest a correlation between fewer opioid-caused deaths in states where marijuana has been legalized. Researchers have found that when legal medical marijuana dispensaries begin to operate in a state, deaths from opioid overdoses drop within that state. In what could be deemed a reefer referendum, after the 2016 election cycle in which a record number of states sought to legalize marijuana in some capacity, as of early 2017, a total of 25 states – half of the states in the Union – have legalized marijuana (for either recreational medical use). In 2014, studies suggested that states with medical marijuana laws had an overall 25% lower rate of death from opioid overdoses than other states. There was a 20 percent lower rate of opioid deaths within the laws’ first year, 24% by year three, and 33% by year six. By the end of the study in 2010, there were 1,729 fewer deaths than expected in medical marijuana states. Moreover, another study examined data from 1999 to 2013 and found  opioid abuse in states that have legalized medical marijuana was reduced. The research showed an association between a state legalizing medical marijuana and a reduction in testing positive for opioids after dying in a car accident, particularly among drivers ages 21 to 40.


A further study suggests that medical marijuana may simultaneously drive down prescription drug spending, and subsequently likely use. Per the CDC, “we now know that overdoses from prescription opioids are a driving factor in the 15-year increase in opioid overdose deaths. Since 1999, the amount of prescription opioids sold in the U.S. nearly quadrupled, yet there has not been an overall change in the amount of pain that Americans report.” Recent research found that states that legalized medical marijuana — which is sometimes recommended for symptoms like chronic pain, anxiety or depression — saw declines in the number of Medicare prescriptions for drugs used to treat those conditions and a dip in spending by Medicare Part D, which covers the cost on prescription medications.

On February 23, Press Secretary Sean Spicer asserted the Department of Justice will likely be further looking into marijuana in a recreational capacity. Unlike his predecessor who chose not to aggressively pursue marijuana prosecutions, the President Donald Trump has already decidedly taken a more hardnose stance. Still, it remains to be seen whether marijuana will be utilized by the public health community to mitigate America’s growing opioid.

Averting Antimicrobial Anarchy: The War on Antibiotic Resistance has Begun

On September 2, 2016, the Food and Drug Administration (FDA) issued a press release on the safety and effectiveness of antibacterial soaps, calling for the removal of 19 active ingredients, including the much used triclosan and triclocarban, from over-the-counter antibacterial hand and body washes, determining that the risks of using these products outweigh their benefits. This is perhaps one of the Agency’s boldest steps yet toward fighting the phenomenon of antimicrobial resistant superbugs, an issue of increasing global frustration.

In its official final rule, issued in the Federal Register on September 6, the FDA noted that the investigation into the risk-benefit analysis of antiseptic began in 2013. “New information on potential risks posed by the use of certain consumer antiseptic washes prompted us to reevaluate the data needed for classifying consumer antiseptic wash active ingredients as generally recognized as effective (GRAE). As a result, we proposed that the risk from the use of a consumer antiseptic wash drug product must be balanced by a demonstration—through studies that demonstrate a direct clinical benefit (i.e., a reduction of infection)—that the product is superior to washing with [non-antibacterial] soap and water in reducing infection [].” As a result of considering recommendations from the public, evaluating available literature, data and comments, the FDA determined that “the data and information submitted for these active ingredients are insufficient to demonstrate that there is any additional benefit from the use of these active ingredients in consumer antiseptic wash products compared to [non-antibacterial] soap and water. Consequently, the available data do not support a GRAE determination for these consumer antiseptic wash active ingredients.” Likewise, with regard to safety, the FDA declared that “the available information and published data for the 19 active ingredients . . . are insufficient to establish the safety of long-term, daily repeated exposure to these active ingredients used in consumer wash products,” and thus could not be considered generally recognized as safe (GRAS).

“[W]e have no scientific evidence that [antibacterial washes] are any better than plain soap and water…In fact, some data suggests that antibacterial ingredients may do more harm than good over the long-term,” said Janet Woodcock, M.D., director of the FDA’s Center for Drug Evaluation and Research (CDER).

This announcement comes at a time when the spread of antibiotic-resistant strains of bacteria, or superbugs, have proliferated, causing international concern. Antibiotic resistance occurs when bacteria evolve, becoming immune to what was used to treat the infections they cause. While a nature occurrence, it is believed that the widespread use of antibacterials, including soaps, exacerbate the problem.

Some bacterial infections once thought to be relatively benign, or at the very least curable, are having much more dire consequences. On July 26, 2016, professional football player Daniel Fells ended a short career with the NFL after contracting an antibiotic resistant strain of MRSA from a cortisone shot for an ankle injury. Further, in earlier this month, gonorrhea patients in Hawaii made up the first known US case cluster in which the sexually transmitted infection showed reduced susceptibility to the only available effective treatment option, the Centers for Disease Control and Prevention said, though their conditions were ultimately positively resolved.

On September 21, heads of state from across the globe convened at the United Nations General Assembly in New York, alongside experts in the field, for a one-day, high-level meeting to address the issue of antibacterial resistance. A rare occurrence, the UN has only met for public health issues three times before for reasons which included the HIV and Ebola pandemics. In a historic agreement, the U.N.’s declaration required nations to develop a two-year plan to protect themselves against antibiotics. After two years, the U.N.’s secretary-general would evaluate each country’s plan and monitor progress.

At this time, hand sanitizers, antibacterial wipes, and antiseptic products used in healthcare settings are not subject to the new regulation, though the FDA has called for additional research.

The effective date of this rule is September 06, 2017.

Pharma Transparency Bill Wains in California as Price-Gouging Discussion Gains Momentum Nationally

On August 17, California lawmakers killed a drug price transparency bill, putting to rest a policy that would have major implications on the pharmaceutical industry in the United States’ most populous state. The bill, which was first introduced by State Senator Ed Hernandez (D-West Covina) in February 2016, sought to require drug makers to report and explain any price pharmaceutical increase of ten percent within any given twelve-month period, as well as justify any drug price of at least $10,000 within thirty days of moving to that amount and require insurers to disclose how much money they spent on drugs. While the bill received far-reaching support from healthcare providers, insurers, patient advocacy groups, labor groups, and business groups alike, it was met with fervent opposition by pharmaceutical companies.

According to the Los Angeles Times and lobbying activity filings, Hernandez’s legislation was one of the most lobbied bills of current the session, with at least seventy groups spending  money to advocate for or against it. “It’s probably amongst one of the more heavily lobbied bills — similar to tobacco and the most controversial bills,” the measure’s author, Senator Hernandez, told The Times.  However, by August 17, after four amendments, Hernandez pulled the plug on it entirely, stating that the amendments made it difficult to accomplish the bill’s intention, which would have “shed[] light on the reasons precipitating skyrocketing drug prices.”

The demise of this legislation is another huge win for Big Pharma lobbyist PhRMA, which in October 2015 won a summary judgment ruling in the United States District Court for the District of Columbia, blocking certain hospitals from receiving discounts for pricey orphan drugs. It also comes at a time when pharmaceutical companies, biotech firms, and orphan-drug makers have come under high scrutiny for price gouging, including the 5,455% price increase of HIV and Malaria-treatment medication, Daraprim, from $13.50 to $750 per pill in September 2015. Earlier this month, the uptick of the price of the allergic reaction-treating EpiPen Auto-injector medical device – from $57 to $600 between 2007 and 2016 – as its maker anticipates the arrival of a generic competitor, though, its non-generic, brand name competitor Auvi-Q was recalled in 2015 over dosage concerns.

A proponent for changes to Big Pharma since the 1990s, United States Senate Bernie Sanders (I – VT) made “out of control” prescription drug pricing a key issue during his 2016 presidential campaign. After winning the Democratic nomination, Presidential hopeful Hillary Clinton has carried the torch, speaking out on drastic price increases, sending stocks for EpiPen-maker, Mylan, tumbling.

With little being done by the United States Congress on the issue of drug price transparency, fourteen state legislatures have introduced measures to reign in prices. As of 2016, only Vermont has been successful in passing a bill, while others stall or fail outright, as is the case in California.

The pricing war in California now marches to the ballot in November. Citizens will vote on an initiative that would prohibit state agencies, like Medical (the state’s version of Medicaid) and Medicare from being charged any more for drugs than the United States Department of Veterans’ Affairs.