Jill Wechsler is Pharmaceutical Technology's Washington Editor, jillwechsler7@gmail.com.

Jill Wechsler

	Trump Administration proposals to revamp drug coverage and reimbursement policies governing Medicare Part D drug plans have generated loud objections from both manufacturers and patient advocates. The debate reflects ongoing controversy over the requirement that Medicare plans cover “substantially all” approved therapies in six protected drug classes established as part of the Medicare drug coverage program established 12 years ago. The original intent was to prevent plans from limiting coverage of high-cost medicines needed by sicker patients so that insurers could not skew enrollment to healthier, less expensive beneficiaries. Pharma companies supported the policy because it expanded coverage of innovative therapies and limited the ability of plans to negotiate discounts.

from the Centers for Medicare and Medicaid Services (CMS) proposes to give plans more flexibility to limit coverage of certain drugs for treating depression, mental illness, immune disease, HIV/AIDS, and cancer. The stated aim is to enhance the ability of plans to negotiate lower prices and bigger rebates and discounts with manufacturers seeking favorable formulary placement.

	Specifically, plans would be able to exclude from formularies certain drugs in protected classes where price increases are greater than inflation and where a new formulation is not a significant improvement over existing products. In addition, insurers could set “utilization management” requirements that require patients to obtain prior authorization and try step therapy to gain reimbursement for certain more expensive products. Plans would still have to cover at least two drugs in every therapeutic class, as for all Part D treatment classes.

	CMS also proposes that drug plans consider pharmacy price concessions and dispensing fees in patient cost-sharing. And drug pricing data would be disclosed more visibly through electronic health record systems.

	The rhetoric is heating up fast. AIDS activists are particularly vocal in calling for coverage of a broad range of drugs needed to address diverse patient needs. Oncologists voice concerns about limiting options for treating cancer patients. And industry strongly objects that the changes to protected class coverage will reduce coverage protections for individuals with serious conditions. Jim Greenwood, president of the Biotechnology Innovation Organization (BIO), predicted that the proposed rule would “financially benefit insurance plans and other middlemen in the drug supply chain at the expensive of patients.” The Partnership for Part D Access, which includes pharma companies and disease groups, issued a report documenting that less costly generic drugs currently account for a good portion of prescriptions for drugs in protected classes and that policies 

 of certain products and use formularies and coinsurance fees to manage drug benefits. CMS officials maintain that the reforms are modest and will reduce costs for federal health programs and for patients, notably by encouraging companies to avoid sharp price increases.

	While Health and Human Services proposes to make these changes administratively, Congress may move to intervene. Liberal Democrats say the reforms could harm patients and don’t go far enough to curb high drug prices. Conservative Republicans oppose increased government interference in market-based health coverage. Four years ago, CMS sought to drop two of the six protected classes in Part D, but industry opposition blocked the move. The feds may be able to require step therapy and more price transparency, but not the broader Part D reforms.

Articles

The proposal from the Centers for Medicare and Medicaid Services (CMS) proposes to give plans more flexibility to limit coverage of certain drugs.

Opposition Demands Protection for Part D “Protected Classes”

	Patients, providers, and policy makers are up in arms over persistent and more prevalent shortages of important medicines, primarily generic sterile injectables needed to treat critical diseases and infections, provide emergency care, and enable surgery and multiple aspects of medical care. Despite ongoing efforts to address the problem, FDA now sees a rise in active shortages and in the duration of supply problems. Some shortages have lasted more than eight years, according to 

 in November sponsored by FDA and the Duke Margolis Center for Health Policy, and solutions remain elusive.

	Stakeholders participating in the FDA public meeting look to address the systemic root causes of shortages, with a focus on the economic incentives likely to drive product quality, supply chain resiliency, and appropriate reimbursement for drugs. In some cases, said 

, “the prices reimbursed on these drugs have been driven down to such low levels, that it makes it hard to manufacture them profitably and have enough margin left over to invest in modern manufacturing upgrades." Adam Kroetsch, deputy director of the office of program and strategic analysis in the Center for Drug Evaluation and Research (CDER), linked shortages to older generic drugs where the market fails to reward product quality and reliability.

	Consolidation throughout the supply chain was cited as a key factor in aggravating shortages. Mergers in the generic-drug industry can limit production of a drug to one firm and minimize sources of key ingredients. A handful of hospital buying groups and large distributors, moreover, limit competitive bidding opportunities and overall reimbursement for common, but important, injectables.

	A full range of issues and proposals will be weighed by an FDA 

, formed in July 2018 in response to rising concerns from members of Congress. The panel includes representatives from the Centers for Medicare and Medicaid Services, the Federal Trade Commission, and other federal agencies, as well as senior leaders from FDA. The group has been meeting with manufacturers and other stakeholders leading up to the public meeting with the goal of developing a report to Congress outlining a policy framework to resolve the problems underlying persistent drug shortages.

	Manufacturers at the meeting cited unclear or changing FDA product development standards and noted that efforts to scale up production to address a shortage can be stymied by FDA’s complex post-approval changes requirements. Several speakers urged greater transparency in agency warning letters and inspection reports to provide information earlier on where quality problems at one manufacturer may lead to limited production and create an opening for added competition. To avoid delays in gaining FDA approval of new or upgraded facilities to produce alternative products, the agency noted its adoption of a more efficient inspection program for sterile drug facilities, with more transparent quality standards that will make the oversight process more predictable.

	There was disagreement among participants on some issues, with certain manufacturers seeking incentives to produce drug components in the United States to shorten supply chains, while others maintained that high-quality products can be obtained reliably overseas. Generic-drug makers urged flexibility in meeting product standards that FDA revises after drug development and testing is underway. David Gaugh of the Association for Accessible Medicines (AAM) 

 or other assistance to help manufacturers upgrade or build new manufacturing facilities to provide excess capacity for when shortages occur and to establish a national contingency plan to stockpile critical medicines.

	FDA officials continue to urge industry to adopt more reliable, high-quality manufacturing systems to avoid production breakdowns, but gains have been elusive. A CDER quality metrics initiative has been mired in dispute for months over what and how to measure quality operations and a firm’s “quality culture.” CDER’s emerging technology program offers advice and support to companies looking to adopt continuous manufacturing and other advanced production technologies, but uptake has been limited. Efforts to streamline the post-approval changes process also have fallen short in modifying agency oversight of manufacturing revisions. At the same time, newer just-in-time manufacturing systems that reduce vendor inventories may increase vulnerability to unexpected shortages. All these issues are before the FDA taskforce and will be considered in its report on the multiple challenges for all supply chain parties in preventing drug shortages to ensure public health.


	Vol. 42, No. 12
	December 2018
	Pages: 14–15

	When referring to this article, please cite it as J. Wechsler, “Quality Manufacturing Key to Reducing Drug Shortages," Pharmaceutical Technology 42 (12) 2018.

Despite ongoing efforts to address the problem, FDA now sees a rise in active shortages and in the duration of supply problems.

Quality Manufacturing Key to Reducing Drug Shortages

	The biggest hurdle for advancing gene therapy from treating rare diseases to addressing more common conditions is difficulties in achieving efficient scale-up of production processes, says Peter Marks, director of FDA’s Center for Biologics Evaluation and Research (CBER). Marks noted that there are now more than 700 investigational new drug applications (INDs) filed with the agency, and more arriving daily. But to move forward with development, he observed at Prevision Policy’s Biopharma Congress in Washington in November 2018, requires a “quantum leap” in manufacturing capabilities.

	Marks added that FDA often is “very lenient” about companies meeting manufacturing standards for testing gene therapies in Phase I trials. But scaling up to larger production for further studies is difficult and can delay product development for years.

	Clinical trials for gene therapies are not a problem, Marks noted. A manufacturer can gain proof of concept in a study of only 10 patients. To more forward, however, requires manufacturing at scale, and few companies can produce the necessary vectors, and they need to do so more efficiently.

	While there remain many uncertainties about developing and testing gene therapies, particularly related to concerns about immune reactions to vectors, Marks seeks to avoid “regulatory paralysis” arising from safety concerns. “Things will happen,” he conceded, and sponsors and regulators need to understand the risks and work to develop therapies that patients and providers can trust. The vision, Marks observed, is that gene therapies eventually will provide important treatments for a broader range of diseases, but only if they can be proven to be safe and can be produced efficiently, which also is key to reducing product costs.

Moving forward with gene therapy development requires a “quantum leap” in manufacturing capabilities. 

Manufacturing Challenges Limit Gene Therapy Development

	Healthcare was the deciding issue for more than 40% of voters in the mid-term elections, setting the stage for action on Capitol Hill to further challenge too-high prescription drug prices. Concerns over access to affordable care helped Democrats take control of the House. And even though Republicans increased their majority in the Senate, they acknowledge that efforts to dismantle the Affordable Care Act are over in the face of public demand for coverage of pre-existing conditions and other safety-net programs. Three states voted to expand Medicaid coverage, and new Democratic governors may push for similar changes, along with expanded support for opioid abuse programs.  

	Despite disagreement on most healthcare issues, leaders of the two parties are open to challenging the status quo on drug costs and spending. While the legislators may stop short of mandating Medicare price negotiations or outright price controls, there is common interest in proposals to enhance price “transparency” in health coverage and drug advertising, to examine rebates and relationships between drug companies and pharmacy benefit managers (PBMs), to require the public release of data on pharma R&D and manufacturing costs, and to reform coverage of drugs under Medicare Part B and Part D.

	Even if Democrats fall short of enacting new legislation, they now will set the agendas for key committees overseeing health policy and funding and be able to launch more investigations and hold public hearings on healthcare and pharmaceutical industry practices. Rep. Frank Pallone (D-NJ) is slated to head the House Energy & Commerce Committee, which has the lead in vetting healthcare legislation and federal health programs. Rep. Elijah Cummings (D-Md) will lead the House Oversight and Government Reform Committee, which can issue subpoenas for investigations of health-related abuse and malfeasance. Federal government appropriations, tax policy, and funding for biomedical research will reflect Democratic goals.

	Even though Republicans still control the Senate, there will be notable changes in that body. Senate Finance Committee chairman Orrin Hatch (R-Utah) retired after years of promoting legislation of great importance to the pharmaceutical industry. His committee is slated to be led by Sen. Chuck Grassley (R-Iowa), who has long played a visible role in healthcare policy, and not always in support of pharma.  

	Republicans will be able to block overly radical or intrusive measures, such as compulsory licensing for patent protected products with limited competition or challenges to medications accused of “price gouging.” At the same time, pharma companies are unlikely to find much support on Capitol Hill for reversing the $4-billion increase in industry’s share of drug costs for seniors in the Medicare Part D catastrophic program.

	House leaders may find themselves supporting some Trump Administration initiatives to reform Medicare drug coverage through regulation and administrative pilots. While Democrats largely consider most Republican drug pricing proposals too modest and limited, there could be agreement on some proposals that target drug marketing and pricing practices. 

Leaders of the two parties are open to challenging the status quo on drug costs and spending.

Split Congress to Attack Drug Pricing

	Continuing his attack on high drug prices, President Donald Trump and Health and Human Services (HHS) secretary Alex Azar launched a salvo to change how Medicare pays for drugs administered in doctors’ offices and hospital clinics. A new proposal aims to reduce reimbursement for medicines administered to seniors under the Part B benefit to an amount pegged to the average price paid in foreign industrial nations. The change is projected to save more than $17 billion over five years by reducing the $30 billion annual spending on these drugs, largely injectables to treat rheumatoid arthritis, cancer, eye disorders, and immune disease.

	The plan would establish a new “International Pricing Index” (IPI) payment model for certain expensive drugs covered by Part B, 

(ANPRM), the program would be phased in over five years, initially in half of the country, and expanded if successful. The new program would move away from basing reimbursement for Part B drugs on average sale price (ASP) plus a 6% “add-on” fee, which has been criticized for encouraging physicians to prescribe more expensive products. The IPI model instead would engage private sector vendors to offer certain drugs to participating physicians and hospitals at a rate based on a Target Price derived from an international price index. The Centers for Medicare and Medicaid Services (CMS) estimates that the Target Price would produce approximately a 30% savings over total spending for the selected Part B drugs.

 of US and international prices for leading Part B drugs finds that Medicare pays nearly twice as much as it would pay for the same or similar drugs in other countries. The study compares prices on 27 high-cost therapies in the United States to rates in 14 European nations, Canada, and Japan. In 2016, Medicare paid more than $17 billion for the 27 drugs, an amount that would be reduced by more than $8 billion under the new model. Those drugs that stand to lose the most revenue include Rituxan from Genentech and Biogen, Amgen’s Neulasta, Regeneron’s Eylea, and Genentech’s Lucentis.

	About 10 years ago, CMS tried to revise how Part B pays for drugs through a Competitive Acquisition Program (CAP), which authorized approved vendors to provide drugs to physicians. The program failed, though, because it deprived doctors and clinics of the add-on percentage that is an important source of their income. In this latest proposal, CMS seeks to avoid push-back from the medical community by proposing to pay physicians and hospitals a “drug add-on amount” to equal the revenue derived from the current ASP+6% reimbursement system.

	Although HHS describes the plan as a “free-market approach” that protects incentives for private sector development of new medicines, pharma companies blasted it as a way to impose price controls on important therapies that will harm patients. Instead of ending “foreign free-loading,” as Trump promised, the proposal “embraces it and exacerbates its harmful effects,” stated the 

. BIO President Jim Greenwood predicted that adopting foreign price controls will “severely chill investment in new cures and therapies for America’s seniors.”

A new proposal aims to reduce reimbursement for medicines administered to seniors under the Part B benefit to an amount pegged to the average price paid in foreign industrial nations. 

Pharma Unhappy with Trump Reference Pricing Proposal

	A main strategy for challenging the high prices of innovator therapies is to support the development and production of more competitive generic drugs and biosimilars, as outlined in FDA’s 

, issued in June 2017. One sign of success is the agency’s approval of a record 971 new generic drugs this past fiscal year, largely due to devising a more streamlined and efficient review process and providing added advice and assistance on product development to manufacturers.  

	FDA is applying a similar approach to spurring development of more complex generic drugs and combination products, such as injectables, topicals, and patches that act locally on the skin, inhaled drugs affecting the lungs directly, or eye drops that act on the surface of the eye. These all raise challenging issues for production, formulation, and demonstrating equivalence to a brand reference listed drug (RLD). One result is that competition is limited for complex and combination products that involve complex and expensive product development and production methods, permitting brands to retain high prices even years after losing exclusivity. To achieve a more dynamic marketplace, FDA is issuing more guidance documents and targeted advisories to support R&D on these products, as outlined by FDA Commissioner Scott Gottlieb in a 

on advancing the development of generic copies of complex drugs to improve patient access to medicines.

 advising industry on the design and conduct of studies to evaluate the adhesive performance of proposed generic transdermal and topical delivery systems (TDS) products. A 

provides recommendations for the design and conduct of studies to evaluate 

 skin irritation and sensitization potential of such treatments. In addition, FDA issued 235 product-specific 

to help manufacturers identify appropriate methods for developing specific generic TDS products.

	Anna Abram, FDA deputy commissioner for policy, planning, legislation, and analysis, 

 on these efforts at an October 2018 workshop on complex generic drug-device combination products sponsored by the Drug Information Association (DIA). She described FDA strategies for spurring the development and review of complex therapies that are difficult to formulate and to manufacture because the drug acts directly on the skin or eye or lungs, producing a therapeutic effect that is hard to measure for bioequivalence through the blood, as with conventional generic drugs. Challenges in identifying the most accurate, sensitive, efficient, and reproducible method for demonstrating “sameness” between the proposed generic and RLD erect notable hurdles in developing complex generic drug-device combination products, Abram pointed out. FDA seeks to engage earlier and more extensively with manufacturers in pre-ANDA meetings to discuss new or alternative development strategies for complex drug-device products.

	Complex generics and other combination drug/biologic-device products also can obtain advice and guidance from FDA’s Office of Combination Products (OCP), which has expanded to better manage the growing number of requests from manufacturers for decisions on designating the review of a combination product to the appropriate lead FDA product center. FDA’s inter-center consult process seeks to ensure consistency and clarity in the combination product review process, explained OCP Director Thinh Nguyen at the subsequent DIA Combination Products conference. A forthcoming Q&A guidance on combination products may provide additional specifics on essential performance requirements, sample sizes for human factors studies, manufacturer consultation with FDA during development, and strategies for documenting sameness to an RLD. 

	FDA officials noted that they succeeded in addressing some of these issues in the ageny’s recent approval of the first generic for EpiPen, the widely prescribed epinephrine auto-injector that has been in the spotlight in recent years for its high price, made possible by limited competition. The new alternative offers a lower-cost option for patients and may help protect against product shortages, Abram commented.

	To further advance complex generics, Gottlieb noted that FDA is devising more sensitive and accurate analytical tools and 

 tests to demonstrate sameness between a generic and brand. A forthcoming umbrella guidance, moreover, should help generics makers overcome the most challenging regulatory and scientific issues, as will more targeted guidance documents that address legal issues blocking generic competition.


	Vol. 42, No. 11
	November 2018
	Pages: 16Â­Â­–18

	When referring to this article, please cite it as. J. Wechsler, " FDA Promotes Complex Generics and Combination Products," 

To achieve a more dynamic marketplace, FDA is issuingguidance documents and targeted advisories to support R&D on complex generics and combination products.