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

Jill Wechsler

	In publishing its proposed rule on disclosing drug prices just three weeks before the November mid-term Congressional elections, it’s not a big stretch to regard the move by the Trump Administration as designed primarily for short-term political purposes-and not to better inform the American public. It appears just in time for President Trump and Republicans to claim they’re taking action to lower exorbitant drug prices-even though analysts question whether the required price information will be of any use to patients, and legal challenges could delay enforcement of the policy for months, if not years.

proposal issued by the Centers for Medicare and Medicaid Services 

(CMS) now faces a 60-day comment period that will generate multiple objections to the requirement that direct-to-consumer (DTC) drug ads disclose the wholesale acquisition cost (WAC) for products that cost more than $35 a month for treatment. Insurers, doctors, and consumer groups applaud the price transparency proposal, while the Pharmaceutical Research and Manufacturers of America (PhRMA) and the advertising industry strongly oppose it. Broadcasters stand to lose a good chunk of the $3.5 billion spent by pharma companies on DTC ads and will support PhRMA’s expected lawsuit challenging the validity of the rule and claiming that it violates First Amendment protection of free speech.

	A broader issue is whether disclosing WAC prices on drugs in DTC ads would provide any useful information to consumers, particularly those in Medicare or Medicaid, the stated beneficiaries of the rule. Even though FDA regulates prescription drug advertising, the proposal came from CMS, which can claim that price transparency supports its interest in reducing outlays for drugs paid by public health programs. But Medicare and Medicaid patients largely have fixed co-pays that don’t vary with price, and they benefit from negotiated rates instead of paying list prices, as do many individuals in commercial plans. List price disclosure might be of greater benefit to individuals with high-deductible plans or percentage co-pays, and for consumers without any health insurance who pay cash. High list prices can pose a particular burden for patients using specialty drugs and therapies for rare disease, but those products run few TV ads, and marketers point to patient support programs that can address individual coverage hardships.

	Pharma companies claim that disclosure of WAC rates will only confuse consumers and may inhibit patients from seeking care. And they regard the requirement to disclose proprietary price information as a violation of first amendment protections, particularly if the required information is not relevant to most consumers. The administration counters that court decisions have upheld the right of government agencies to require disclosures that support a public interest. In fact, CMS is considering whether to expand disclosure to other marketing media, such as print ads and electronic communications.

	PhRMA lobbying succeeded in blocking Congressional approval of a similar ad disclosure provision that was added to a big budget bill in September and is ramping up to achieve a similar outcome in this round. As a stopgap, PhRMA is pushing 

 for DTC ads to direct viewers to company websites with relevant price information. Despite the opposition, the administration is expected to finalize the rule sometime next year, and FDA will be key to implementation, including publication of guidance clarifying the requirements and penalties for violations.

Articles

The US Department of Health and Human Services has published its proposed rule on the disclosure of drug prices, just in time for the November mid-term elections.

Politics Drives Direct-to-Consumer Price Disclosure Rule

	Before leaving Washington to campaign for the November mid-term elections, members of Congress approved a few bills with provisions important to FDA and industry. Some measures-as well as industry-backed bills that fell by the wayside-reflect continuing concerns about drug pricing and transparency.

	Most prominent is legislation to help fight the deadly opioid epidemic, which gained strong bi-partisan support from legislators anxious to impress the voters. This multi-faceted 660-page package authorizes $8.5 billion to support a range of prevention and treatment programs. It increases access to medication-assisted treatment for substance abuse disorders and lifts a decades-old rule that limited Medicaid coverage of residential treatment for such individuals.

	One notable measure authorizes FDA to require drug manufacturers to distribute opioids in blister packs with limited three- to seven-day supplies. The bill also aims to combat illegal import and sale of illicit drugs such as fentanyl by authorizing FDA collaboration with other federal agencies to block mail shipments into the United States of violative products. A late tweak retains FDA flexibility to permit individual patients to import drugs for personal use. And the Drug Enforcement Administration can reduce manufacturing quotas for controlled substances, including prescription opioids where there is evidence of diversion.

	To support access to non-opioid painkillers, FDA is directed to hold a public meeting and publish guidance on developing non-addictive pain products. The agency will require postmarket studies or clinical trials to assess whether such drugs remain effective pain treatments and will consult with stakeholders on evidence-based opioid prescribing guidelines for physicians treating acute pain.

	Important for pharma is a little-noticed provision that expands the scope of the “Sunshine Act” by requiring pharma and medical products makers to report on payments and gifts to additional healthcare practitioners. “Covered recipients” in the Open Payments program now will include physician assistants and a range of nurses, in addition to physicians and teaching hospitals. At the same time, the legislators rejected a big industry push for a change in how they pay for drugs in the Medicare Part D coverage gap. And generic-drug makers lost their bid for reform in how brand-drug companies use FDA-mandated safety programs to block access to brand supplies needed for equivalence testing.

	In the name of drug price transparency, Congress also approved legislation to override rules set by pharmacy benefit managers (PBMs) that prevent pharmacists from informing patients about less costly options for obtaining prescriptions. The measures ban such gag clauses for Medicare drug plans and for commercial insurers.

	That legislation also takes action against “pay-for-delay” deals between brand and generic-drug firms by extending disclosure requirements on such agreements to biologics and biosimilars. Manufacturers of conventional drugs already have to report on patent settlements to the Federal Trade Commission, and now that policy applies to biologics.

	Congress also approved a massive funding bill that covers the Department of Health and Human Services, with a notable increase in the budget for the National Institutes of Health. But another budget measure that covers FDA was put aside. That bill may move forward in the post-election “lame duck” session, but FDA currently operates under a “continuing resolution” based on last year’s funding.

Congress approves bills with provisions important to FDA and industry, some of which reflect continuing concerns about drug pricing and transparency. 

Congressional Action Alters FDA Policies, Pharma Practices

	The critical need for new medicines to combat infectious diseases that fail to respond to current medical treatment is prompting FDA to join with other federal health agencies and the biomedical research community to advance the science, regulatory policies, and reimbursement strategies to support innovation in this area.

	Unfortunately, significant obstacles have curbed industry investment in developing new antimicrobials. Clinical trials are costly and complex, and efforts to develop monoclonal antibodies and peptide therapeutics, along with complex non-traditional antibiotics, pose manufacturing challenges. Financial issues raise further hurdles, as new antimicrobials need to be used sparingly to remain effective against lethal pathogens. Current payment and coverage policies for new drugs, however, encourage widespread use of the product to generate a sufficient return on investment, making it difficult for companies sponsoring research on new treatments for infectious disease to realize sufficient returns on investment.

 that as of June 2018 only 42 new antibiotics were in clinical development to treat serious bacterial infections. Just one in five, moreover, are likely to succeed, and only a handful have potential to address serious resistance problems, such as gram-negative bacteria, which cause particularly hard-to-treat infections.

	To address this crisis, FDA commissioner Scott Gottlieb announced a 2019 Strategic Approach for Combatting AMR (antimicrobial resistance) at a meeting September 14, 2018 organized by Pew. The plan includes policies and programs to encourage development of new drugs, diagnostic tests and vaccines; to promote responsible stewardship of antimicrobials in animals and humans; to improve surveillance of antimicrobial use and resistance; and to advance research for developing new tools, standards, and policies in this area.

 to support antimicrobial stewardship in veterinary settings, particularly to reduce the use of antibiotics to promote animal growth. Another component involves improving surveillance of antibiotic use in humans and animals to uncover infections more quickly and to determine when antibiotics should be used or discontinued. New 

 diagnostics are needed to detect disease rapidly, identify appropriate treatment, and track resistance, as are clear standards for transmitting lab test results related to antimicrobial use and resistance.

	To advance regulatory science in this area, the Office of Antimicrobial Products in the Center for Drug Evaluation and Research (CDER) has requested input from stakeholders on science initiatives likely to spur development of new antimicrobial products. In June, FDA issued draft guidance to help manufacturers utilize the Limited Population Pathway for Antibacterial and Antifungal Drugs (LPAD) in developing new therapies. The program was authorized by the 21

 Century Cures Act but has been challenging for both sponsors and FDA to implement.

	In addition, the Center for Biologics Evaluation and Research (CBER) is promoting development of non-traditional alternatives to small-molecule drugs, including bacteriophages, live biotherapeutics, and fecal microbiota for transplant. CBER also is 

 to prevent infections caused by microbes resistant to current treatment, which ideally would reduce the risk of infections that require treatment with new antimicrobials.

	Key to spurring innovation in this field is to devise new reimbursement strategies to support the development of products that would be prescribed and used on a highly limited basis. At the Pew conference, Gottlieb 

 for innovative milestone payments or fees for developers of products targeted at multi-drug resistant organisms. These include a subscription-based model that charges hospitals a flat rate or licensing fees for access to a certain number of doses each year of a new antimicrobial. By creating a predictable revenue stream, this kind of “pull incentive,” Gottlieb explained, would “create natural markets for drugs targeted to rare but dangerous, multi-drug resistant pathogens that can threaten human health.” 

	These models, along with add-on payments for new antibacterials that meet public health needs, may be tested in pilot programs or demonstrations that involve FDA and the Centers for Medicare and Medicaid Services (CMS). Other health and research agencies may participate, such as the Gates Foundation, the Center for Medicare and Medicaid Innovation, and the Biomedical Advanced Research and Development Authority (BARDA), along with insurers and payers.

FDA is joining with other federal health agencies and the biomedical research community to advance the science, regulatory policies, and reimbursement strategies to support innovation in antimicrobials. 

Manufacturers Face Challenges in Developing New Antimicrobials

	Janet Woodcock, director of the Center for Drug Evaluation and Research (CDER), aims to start implementing new review practices in the Office of New Drugs (OND) by the end of 2018 and to stand up a new OND structure by the summer of 2019, but has to overcome numerous hurdles in the process. A first order of business is to select a new OND director, she told members of the Alliance for a Stronger FDA at a recent briefing, a position that Woodcock has assumed temporarily while the reorganization process has proceeded.

	A main challenge in expanding the drug review operation is to fully staff the organization. CDER currently has approximately 1000 staff openings of about 6000 full-time employees, a situation that requires the agency to contract out numerous operations and tasks. CDER also seeks to further automate and modernize inefficient review data systems. Establishing a new framework for improved “knowledge management” is “not that sexy,” Woodcock observed. But with drug development involving a huge expansion in information through wider collection of real-world evidence, patient reported outcomes, genomic data and reports from registries, CDER will be “bombarded by data,” she noted.

	A new IT platform able to put “all this vast information at the fingertips of reviewers” is critical, she said, and will lead to better informed regulatory decisions. Woodcock also aims to improve the review process by forming cross-disciplinary teams for each new drug application (NDA), instead of leaving it to individual reviewers to consult with additional specialists. At the same time, OND will have a centralized project management operation to ensure that all review divisions follow a consistent review process.

	The reorganization of OND takes longer than revising internal review processes, as such operational changes require review and approval by the Department of Health and Human Services, by the Office of Management and Budget, and by Congress. To enhance CDER’s ability to meet tight timeframes for a growing volume of work, Woodcock seeks to increase the number of review offices from five to nine, which will contain 30 review divisions, up from 19. The result will be more specialized units that better understand the diseases being treated by proposed drugs. For example, hematology will be separate from cancer, which now is managed by FDA’s Oncology Center of Excellence.

	One thing that Woodcock opposes is the creation of additional centers of excellence for difference diseases areas, such as cardiovascular, neurology, and rare diseases. Patient groups and research organizations all want their own centers, noted the CDER director, but she expressed skepticism that such a change would be beneficial. OND strives to ensure that there is consistency in policy, research standards, and review policies and to avoid duplication and inconsistencies among FDA medical product centers, a process that involves a complex matrix structure. “You can’t just make more Centers of Excellence and hope they work,” she commented. And instead of a new center of excellence for rare diseases, as patient groups have requested, she is proposing that the new OND will have a division for rare diseases.

	These organizational and operational changes in CDER are supported by additions to the Center’s management team. At the briefing, Woodcock introduced Patrizia Cavazzoni, deputy center director for operations, who is involved in implementing OND modernization, and Gary Mays, CDER executive officer in charge of administrative management operations, including finances and facility management.

CDER director plans to start implementation of new review practices by the end of 2018.

Overhaul of New Drug Approval Process Moves Forward

Editor's note: This article has been updated on Sept. 14, 2018.

	In the name of enhancing transparency in agency decisions and compliance actions, FDA is publishing updated information on how it selects and schedules pharmaceutical plant inspections around the world and the process for disclosing the findings of those oversight actions. The increasingly global nature of the biopharmaceutical supply chain has prompted FDA to revise its inspection process and to seek harmonization in standards for United States and foreign regulatory oversight to further ensure the safety and quality of medicines in the US and around the world.

	This approach is highlighted in a September 5

by FDA Commissioner Scott Gottlieb outlining a series of actions FDA is taking to ensure drug quality by all producers (1). Gottlieb noted that FDA moved to modernize its field inspection program through a recent reorganization of its Office of Regional Affairs (ORA) to better align staff expertise with inspection priorities and to expand oversight of foreign manufacturers.

	It’s no coincidence that the FDA commissioner is emphasizing the agency’s more extensive scrutiny of foreign manufacturers in the wake of uncovering potentially harmful impurities in a widely used API produced in China. FDA and other regulatory authorities have launched 

, a common generic-drug treatment for high blood pressure, after multiple drug manufacturers detected a possible cancer-causing chemical known as N-nitrosodimethylamine in the Chinese API (2). 

 has uncovered an additional impurity-N-Nitrosodiethylamine (NDEA)-in valsartan drug products (3). The problem evidently arose when Zhejiang Huahai Pharmaceutical made a change in its manufacturing process four years ago.

	The problem evidently arose when Zhejiang Huahai Pharmaceutical (ZHP) made a change in its manufacturing process four years ago.

	One response from FDA is to emphasize how its pharmaceutical inspection program is designed to focus on more problematic production sites, including the rising number of overseas firms providing pharmaceuticals for the US. In 2017, FDA conducted 1453 surveillance inspections, including 762 on foreign soil, to ensure that firms were following good manufacturing practices (GMPs) and maintaining high quality standards.

	To this end, FDA has implemented a risk-based program for scheduling both foreign and domestic GMP surveillance inspections, as outlined in an updated 

(MAPP) document from the Center for Drug Evaluation and Research (CDER). This inspection model is structured so that inspection frequency for all facilities relates to operations that pose the greatest potential risk for problems-regardless of where the facility is located. Priority factors considered in scheduling inspection visits include the facility’s compliance history, recall trends, time since last inspection, inherent risk of product being produced, and processing complexity. These criteria are similar to those initially proposed by CDER in 2005 and then codified in legislation in 2012. CDER notes that its Office of Surveillance (OS) in the Office of Pharmaceutical Quality maintains oversight of more than 5000 drug manufacturing facilities around the world, including 3000 outside the US. The agency taps risk information on these sites from the OS database to produce an annual Site Surveillance Inspection List that sets priorities for surveillance inspections.

	FDA also is expanding its capacity for monitoring foreign manufacturers through expanded collaboration with European and other capable regulators. An FDA 

 (MRA) with the European Union has been established to recognize drug inspections conducted by participating parties. The aim is to avoid duplicate inspections of facilities that demonstrate good compliance with standards and rules in order to focus resources on more high-risk and non-compliant operations.

	In addition to targeting inspections to more problematic firms, Gottlieb discusses how FDA is making inspection results more visible to the public. The aim is to be more transparent about inspection outcomes and compliance issues, particularly where the agency uncovers violative conditions that may warrant further regulatory action. FDA recently updated its i

 to provide more recent information on the outcomes of GMP surveillance visits. This supports the EU MRA through the addition of inspection reports from European and other recognized regulatory authorities. Access to more current inspection reports aims to enable FDA and other regulators to issue import alerts, warning letters, and recalls more efficiently to prevent repeat violations.

	FDA also is working to speed up the process for communicating inspection findings to facility owners to facilitate fast resolution of any quality failings. Agency officials now aim to provide inspection classification information to companies within 90 days of the close of a surveillance

	inspection, which is much faster than in the past. FDA similarly seeks to notify firms seeking approval of new drugs and generics when issues are identified during premarket inspections that could block application approval. While the agency recognizes that the majority of firms in the US and overseas meet quality standards, the aim is to prevent problems that can delay efforts to provide quality products efficiently to patients.

	1. FDA, “Statement from FDA Commissioner Scott Gottlieb, M.D., on the Agency’s Global Efforts to Help Assure Product Quality and Transparency at Foreign Drug Manufacturing Facilities,” Press Release, Sept. 5, 2018, www.fda.gov/NewsEvents/Newsroom/PressAnnouncements/ucm619435.htm.

	2. FDA, FDA Updates on Valsartan Recalls, FDA.gov, www.fda.gov/drugs/drugsafety/ucm613916.htm.

	3. FDA, “FDA provides update on its ongoing investigation into valsartan products; and reports on the finding of an additional impurity identified in one firm’s already recalled products,” Press Release, Sept. 13, 2018, www.fda.gov/NewsEvents/Newsroom/PressAnnouncements/ucm620499.htm

	4. FDA, MAPP 5014.1 Understanding CDER’s Risk-Based Site Selection Model (CDER, OPQ, Sept. 26, 2018), www.fda.gov/downloads/AboutFDA/CentersOff ices/Off iceofMedical-ProductsandTobacco/CDER/ManualofPoliciesProcedures/UCM619302.pdf.

	5. FDA, Mutual Recognition Agreement, FDA.gov, www.fda.gov/InternationalPrograms/Agreements/ucm598735.htm.

	6. FDA, Inspection Classification Database, FDA.gov, 

www.fda.gov/ICECI/Inspections/ucm222557.htm


	Vol. 42, No. 10
	October 2018
	Pages 14-15

	When referring to this article, please cite it as J. Wechsler, "FDA Clarifies Worldwide Inspection Policies," 

FDA is revising its inspection process and seeks harmonization of standards for US and foreign regulatory oversight to ensure the safety of medicines.

FDA Clarifies Worldwide Inspection Policies

	With the rise in industry programs for developing biosimilars, tensions are high as innovator firms back strategies that appear designed to delay competition. Key regulatory issues under review: testing requirements to document interchangeability; product naming to distinguish biosimilars from reference drugs and limit prescribing; and suggestions that switching from one interchangeable therapy to another raises additional safety concerns. 

	Biotech exclusivity issues, moreover, recently emerged as a point of debate in the proposed US-Mexico trade pact updating the North American Free Trade Agreement (NAFTA). The Trump administration has included a provision that provides 10 years’ data protection for new biologics-an increase from the five-to-eight years of exclusivity allowed by Canada and Mexico. The Obama administration previously sought to negotiate a five-year exclusivity limit in the 

, but met strong opposition from innovator firms, which have pressed for extending exclusivity to 12 years for biologics.

 with FDA seeking agency action to halt “misinformation” on biosimilar safety and use from reference product manufacturers. Pfizer cited false and misleading statements from innovators that suggest biosimilars are not as safe or effective as brands and have slowed prescribing and uptake of the new competitors. The petition asks FDA to issue guidance to prevent such violative actions.

	These and other prominent regulatory, legal, and research issues were addressed by representatives of innovator firms and biosimilar makers, as well as patient advocates, payers and providers, at a recent FDA 

 on competition and innovation in the biological products marketplace.  FDA sponsored the session to further advance its proposed 

 and expects to receive more extensive formal comments from stakeholders by Sept. 21, 2018. Although FDA has approved a dozen biosimilar products, only four are available to patients due largely to patent and competitive issues that block market access. 

	Interchangeability was a key topic at the meeting, as brands urged “robust standards” for documenting this more similar status, including numerous switching studies that use only FDA-approved refence products as comparators. Biosimilar makers seek more leeway to submit data from clinical trials of similar products approved in the Europe and other industrial countries. A number of patient advocates backed the innovators’ stance, emphasizing the importance of produce safety and equivalence over potential cost savings. 

	The need for distinct names and labeling of biosimilars vs. brands also was supported by innovators and some patient groups as important for avoiding confusion in tracking adverse events and post-marketing developments. A related issue is the use of individual billing codes for biosimilars as a way to discourage biosimilar coverage and reimbursement. 

	An emerging issue is the claim by brands that switching patients to biosimilars may generate added costs. A recent 

 funded by AbbVie documents high expenditures for testing and doctor visits to ensure that shifting patients with autoimmune conditions to a similar therapy is safe and appropriate.

	Less contentious were proposals to expand and revise FDA’s 

listings of patent and exclusivity information on new biologics to facilitate biosimilar development. Biosimilar makers also sought a clearer, more seamless process for adding indications to approved products, and urged more scrutiny of coverage and rebate practices by health plans and payers.

	But biosimilar makers continued to protest actions by innovators that block access to reference products needed for new drug testing, a heated issue for generics makers in all areas. FDA has objected strongly to brands “gaming” agency rules designed to ensure safe use and distribution of more high-risk therapies to block potential competitors from legitimate access to these products. 

	This issue may be addressed by Congress, which is considering legislation to curb roadblocks erected by brands to supplies needed for bioequivalence testing and clinical trials. Additional measures would require all parties to report to the Federal Trade Commission (FTC) any “pay-for-delay” agreements designed to postpone when a new competitive product comes to market. 

FDA, innovator companies, and biosimilar developers maneuver over exclusivity, naming, interchangeability, and more.