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

Jill Wechsler

The shift towards greater use of remote data collection methods and innovative clinical trial designs has focused the attention of FDA officials on related challenges for ensuring the quality and accuracy of research reports and appropriate protection of research participants. In outlining a range of compliance issues important to drug development and oversight, Don Ashley, director of the Office of Compliance (OC) in the Center for Drug Evaluation and Research (CDER), recently addressed how an increasingly complex clinical research system raises issues for ensuring the reliability of research results and patient safety.

For many clinical trials, Ashley observed in a compliance policy presentation at the PDA/FDA joint regulatory conference on Sept. 13, 2022 that the COVID-19 pandemic encouraged the adoption of modern study approaches, creating new challenges in the process. These developments and the overall modernization of clinical trial design, operational approaches, and data sources have helped increase the speed and efficiency in developing medical products to treat serious diseases and conditions, Ashley acknowledged. He noted a shift to more pragmatic study designs, increased used of real-world data and evidence (RWD, RWE), and decentralized and point-of-care trial operations—developments that also generate concerns among regulatory officials for ensuring that clinical data can be relied on in making regulatory decisions.

One approach for addressing the reliability of innovative research is for sponsors to adopt quality-by-design methods for clinical research operations, as is now widespread for drug manufacturing, Ashley proposed. This involves ensuring that trial design is adequate to answer the scientific question so that results are credible and resulting data is sufficiently accurate and reliable—fit for purpose—to support decision making. When using digital technology to obtain study data, sponsors also should consider how to ensure that the rights, safety, and welfare of trial participants are adequately protected.

Ashley discussed these concerns about clinical trial data quality and reliability as part of a broader presentation at the PDA conference on how his office works to protect patients from poor quality, unsafe, and ineffective drugs. Much of his presentation involved ongoing OC efforts to establish a modern drug supply chain security system based on enhanced methods for identifying and tracing drugs through national distribution operations. This initiative involves new licensing standards for distributors, changes in the National Drug Code, and implementation of an enhanced product verification system for 2023. Ashley further emphasized the importance of top corporate leadership in maintaining a robust state of control and a strong corporate quality culture to assure sustainable compliance and consistent production of high-quality drugs at a given facility in another presentation on Sustainable Compliance at the PDA/FDA conference.

These issues, including efforts to enhance clinical trial oversight to protect trial participants, are described in the 

. The report highlights continuing FDA efforts to expand oversight of drug compounding and to bring criminal charges against manufacturers that fail to correct ongoing product contamination problems. It also describes compliance actions to ensure that clinical trial sponsors submit required results information to the ClinicalTrials.gov data bank and collaborations with other CDER offices to challenge misconduct and violations by research organizations. And it notes that OC’s Office of Scientific Investigations helped address challenges raised by expanded use of new research technologies in contributing to an FDA 

 published in January 2022 on Digital Health Technologies for Remote Data Acquisition in Clinical Investigations.

Articles

Regulatory officials are addressing challenges in ensuring that clinical data can be relied on in making regulatory decisions. 

Clinical Trial Modernization Raises FDA Compliance Issues

An important component of the White House initiative to speed the development of innovative cancer therapies and other critical treatments for patients is to expand modern biotech manufacturing in the United States. The effort also aims to reduce US reliance on foreign sources of bioindustrial materials to avoid supply chain disruptions experienced during the pandemic. President Joe Biden unveiled the National Biotechnology and Biomanufacturing Initiative (NBBI) in a 

 to promote his long-sought Cancer Moonshot, while also announcing a new director for the Advanced Research Projects Agency for Health (ARPA-H).

 spend some $2 billion on the NBBI program

, with half of that coming from the Department of Defense (DOD) to help public- and private-sector entities expand biotech research and manufacturing capabilities, as spelled out at the White House NBBI Summit on Sept. 14, 2022. Among its multiple initiatives, NBBI calls on manufacturers to use biotechnology to produce new medicines and specialty chemicals, some as alternatives to petrochemical-based production of plastics, fuels, and other materials.

FDA notably will be “spearheading efforts” to advance regulatory science and to “leverage these emerging technologies” to increase medical supply chain resilience and improve patient access to new medical products. Regulatory reform is a goal, and FDA will work with the US Department of Agriculture (USDA) and the Environmental Protection Agency (EPA) to identify areas of “ambiguity” in federal regulations related to biotechnology and to devise plans for reform and for issuing added guidance. A specific provision supports the Bespoke Gene Therapy Consortium at the National Institutes of Health (NIH) in funding up to six new clinical trials focused on rare diseases that utilize streamlined manufacturing frameworks.

In addition, the Department of Health and Human Services (HHS) issued a long list of NBBI projects that will involve spending $40 million to expand biomanufacturing for APIs, antibiotics, and “key starting materials needed to produce essential medications and respond to pandemics,” according to an 

. There is support for advanced education programs, pilots for gene therapy manufacturing methods, expanded cell engineering, and platforms and biosafety programs to reduce risks associated with advances in the field. HHS will bolster FDA research programs for advanced manufacturing technologies and for the Advanced Manufacturing Innovation Hub in FDA’s Office of Counterterrorism and Emerging Threats to encourage platform technologies and collaborations in smart manufacturing and closed loop process controls. HHS also cites the development of guidelines under the International Council for Harmonization (ICH) to advance continuous manufacturing of drugs and to enhance safety evaluation of continuous biotech products derived from human or animal cell lines.

A stated objective for the Biden administration is to reduce US reliance on biomedical products from China and other regions. A BioPreferred Program will require federal agencies to purchase US-made biotech products related to medicine, climate change, and food and agriculture, utilizing massive federal data systems to “drive solutions” for these global issues. Such efforts will prevent future disruptions in biopharma supplies, as experienced during the COVID-19 pandemic, when dependence on imported medical products, protective materials, and test components blocked biomedical production and compromised medical services. The executive order also aims to develop a trained, diverse US workforce capable of creating bio-based products and materials.

The White House hopes to expand US modern biotech manufacturing and reduce reliance on foreign sources of bioindustrial materials. 

Advanced Biopharma Manufacturing Key to White House Cancer Moonshot

While legislative leaders, administration officials, and policy analysts in industry and medical organizations all expect Congress to approve legislation reauthorizing user fees to support FDA oversight of drugs and medical products, a serious delay in this action already has created difficulties in maintaining an effective drug regulatory process. The user fee reauthorization bill approved by the House and pending in the Senate includes multiple measures making significant changes in FDA programs and operations, but the stalemate on Capitol Hill has generated talk of enacting a slimmed-down, fee-only bill to meet the renewal deadline of Oct. 1, 2022.

Without reauthorization of new fees for drugs (PDUFA), generic drugs (GDUFA), biosimilars (BsUFA) and medical devices (MDUFA) before the current fee program expires, FDA will lose its authority to collect fees from manufacturers, along with requirements for meeting certain timeframes and for utilizing agreed-on policies for assessing and approving new drugs and medical products.

Most damaging to the agency, FDA is required to send out “pink slip” notices to thousands of staffers who are supported by fee revenues, warning of potential layoffs. Such action already is eroding agency morale and undermining efforts to recruit and hire needed employees. The agency has struggled to maintain and expand its professional workforce in a very competitive market for skilled biopharma experts, and the agency’s funding uncertainty has worsened the situation.

Medical product user fees generate about $2 billion in agency revenues, about 40% of FDA’s non-tobacco budget, points out Steven Grossman, executive director of the Alliance for a Stronger FDA, which follows closely the struggle for adequate FDA resources. While Congressional leaders on both sides of the aisle support FDA programs as important for ensuring the health and safety of Americans, the broader political debate over government funding has created added hurdles for timely reauthorization of new user fee programs. FDA commissioner Robert Califf has said that the agency has sufficient carryover funds to maintain operations for about five weeks into the new fiscal year that begins Oct. 1, 2022, but FDA still will have to issue “pink slips” notifying more than 3000 staffers of “impending employment actions” without some action on Capitol Hill.

In addition, Congress so far has not approved a broader budget bill to fund the federal government for the coming year and is under pressure to approve temporary funding for federal agencies to prevent a government shut-down Oct. 1. Such a continuing resolution (CR) for fiscal year 2023 is expected to be approved by the House and Senate in the next two weeks and run through December 16, 2022, after the upcoming mid-term elections. There is talk of attaching the FDA user fee reauthorization to that CR, along with provisions to continue a number of similarly expiring programs. To what extent the White House and Congress will agree to add-ons to a CR remains to be seen.

FDA is in jeopardy of losing its fees for assessing and approving new drugs and medical products.

FDA In Limbo as User Fee Renewal Stuck on Capitol Hill

Despite extensive opposition from biopharmaceutical manufacturers, Democrats in Congress pushed through legislation authorizing Medicare to reduce reimbursement for certain pricey medicines and to limit annual increases in drug prices. The $740 billion Inflation Reduction Act of 2022 (HR 5376), moreover, will lead to significant changes in the design of drug benefits for seniors incurring high costs, shifting much of the liability to pharma companies.

The drug and health provisions are part of a broad package of reforms in energy and tax policy designed to combat global warming and to boost taxes on large corporations and wealthy individuals (1). Republicans unanimously rejected the entire package, painting the Democrats’ plan as inflationary and fiscally irresponsible. But with all Democrats backing the reforms, the Senate was able to approve the measure in early August, and the House followed suit a week later to seal this important political victory for the Biden administration.

The prescription drug provisions in the bill will largely affect adults over age 65, as Senate rules blocked the application of certain cost controls to individual pharmaceutical sales and to health insurance provided through the market or employment. Commercial plans will not gain from provisions that penalize pharma companies for raising prices each year higher than inflation or from a cap on patients’ insulin outlays at $35 a month.

One boon for health plans and consumers, though, is the provision in the legislation that extends subsidies for health insurance provided under the Affordable Care Act. This extension delays for an additional three years premium increases for some 13 million individuals who currently receive discounted coverage for health insurance provided through Obamacare state and federal exchanges. These subsidies were authorized during the COVID-19 pandemic and are set to expire this year without the added $64 billion authorized here to continue the cost reductions in premiums for three more years.

The changes affecting Medicare drug benefits, however, are significant and calculated to save the government $100 billion over 10 years—but not the $460 billion calculated in earlier reform proposals. The legislation would cap out-of-pocket drug costs for Medicare beneficiaries at $2000 a year beginning in 2025, a provision likely to benefit more than 1 million seniors, possibly up to 3 million as more costly therapies come to market. This measure is part of broader changes in the design of the Medicare Part D program, which also eliminate the coverage gap and require manufacturers to shoulder a much larger portion of the costs of drugs prescribed for high-use seniors. Pharma companies also would have to pay large “rebates” or fees to the government if prices on drugs and biologics increase each year beyond the rate of inflation. Insulin costs would be capped at $35 a month for seniors, and free vaccines would be provided for all.

Most notable is the provision authorizing Medicare price negotiations on certain costly medicines, the holy grail in health benefit reform for many Democrats for decades. Starting in 2026, this highly contentious provision will permit Medicare to negotiate prices on 10 expensive and widely used drugs near patent expiration date, expanding to 20 drugs annually by 2029. If the manufacturer rejects the Medicare price, it would pay a hefty fee to the program, a process that industry has challenged for being closer to price controls than to negotiations.

One thing for sure is that there will be considerable jockeying among biopharma companies over which drugs are put on the price negotiation list as the new program shakes out. The process will seek to establish a Maximum Fair Price for certain expensive single-source drugs seven years after approval and biologics 11 years on the market. And certain therapies from “small” firms and orphan drugs may be exempt, provisions sure to affect acquisitions and R&D programs.

The Pharmaceutical Research and Manufacturers of America (PhRMA) led a massive assault on the proposal, with non-stop television and radio ads predicting long-term harm to patients and the healthcare system (2). Similarly, the Biotechnology Innovation Organization (BIO) has kept up a steady stream of warnings that Medicare drug regulation would limit access to many important drugs and result in fewer new cures for patients (3). PhRMA President Steven Ubl has suggested that industry may file suit to block negotiations and will challenge new rules as Medicare moves to implement the new policy—and pharma has three years to mount its opposition.

Less visible were similar objections from the generic drug industry to the Medicare price negotiations. The Association for Accessible Medicines pointed out that the likely brand candidates for spending limits will be widely used, expensive medicines just as they become eligible for generic competition. Consequently, negotiations that lower list prices will leave less room for generic-drug makers to offer lower-priced alternatives that are profitable, and very little incentive for multiple copycats to move into the market. In addition, Medicare drug plans may have little incentive to give favorable formulary placement to only slightly less expensive generics. Biosimilar makers have raised similar issues, as negotiations to lower prices on expensive biotech therapies could make it more difficult for competing follow-ons to gain market share and become profitable.

It’s not clear, moreover, how these new policies will affect state Medicaid programs and commercial plans. Curbs on annual drug price increases for Medicare could raise prices for other public and private plans. And new pricing policies may prompt higher launch prices for new therapies, change how formularies cover brand and generic products, and alter the design of both Medicare Part D drug plans and commercial coverage.

Another unknown is the impact of coverage and pricing policy changes on investment and innovation in the biopharma industry. Pharma and biotech manufacturers have loudly predicted that limits on prescription drug revenue from forced negotiations will curb incentives to invest in R&D, particularly development programs at new biotech firms, reducing jobs and the discovery of many life-saving medicines. Yet many health analysts reject such dire outcomes, maintaining that innovation will continue as the new program spurs competition and benefits Americans more broadly.

H.R. 5376, Amendment, Title I–Committee on Finance, Subtitle A–Deficit Reduction

PhRMA’s Ubl Calls Senate Passage of Partisan Drug Pricing Plan a ‘Tragic Loss for Patients’

Final Reconciliation Package a ‘Disservice to Patients and Researchers’,


Vol. 46, No. 9
September 2022
Pages: 14–15

When referring to this article, please cite it as J. Wechsler, “New Legislation Overhauls Medicare Drug Pricing and Benefits,” 

Pharma loses battle to block price negotiations, but implementation faces many challenges.

New Legislation Overhauls Medicare Drug Pricing and Benefits

Despite extensive opposition from biopharmaceutical manufacturers, Senate Democrats have pushed through legislation authorizing Medicare to negotiate prices on certain medicines and to limit outlays for seniors with high drug costs. The $740 billion Inflation Reduction Act (IRA) of 2022 also extends subsidies for health insurance provided under the Affordable Care Act (ACA) for an additional three years.

road package of reforms in energy and tax policy

 designed to combat global warming and to boost taxes on wealthy corporations and individuals. Republicans unanimously rejected the entire package, particularly the tax provisions and drug price controls, painting the Democrats’ plan as inflationary and fiscally irresponsible. The House is slated to vote on the bill later this week to seal this important political victory for the Biden administration. Democrats control that body by only a slim margin, setting the stage for a very tight vote in the face of stiff Republican opposition.

The prescription drug provisions in the bill will largely affect adults over age 65, as Senate rules blocked the application of certain cost controls to individuals who get health insurance through employment. The bill thus drops penalties for pharma companies that raise prices each year higher than inflation for commercial plans as well as a policy capping patients’ insulin outlays at $35 a month for consumers. Many plans already have some limits on insulin costs, but high prices on this critical drug have become a hot-button issue.

However, in a boon for health plans and consumers, the legislation delays premium increases for some 13 million individuals who currently receive discounted coverage for health insurance provided through Obamacare state and federal exchanges. Broader subsidies were authorized during the COVID-19 pandemic and are set to expire this year without the added $64 billion authorized here to continue the cost reductions in premiums for three more years.

The changes affecting Medicare drug benefits, however, are significant. The legislation would cap out-of-pocket drug costs for Medicare beneficiaries at $2000 a year beginning in 2025, a provision likely to benefit more than 1 million seniors, possibly up to 3 million as more costly therapies come to market. Pharma companies also would have to pay large “rebates” or fees to the government if they raise Medicare drug prices beyond the rate of inflation. And insulin costs would be capped at $35 a month for seniors.

Most notable is the provision authorizing Medicare price negotiations on certain costly medicines, the holy grail in health benefit reform for many Democrats for decades. Starting in 2026, this highly contentious provision will permit Medicare to negotiate prices on 10 expensive and widely used drugs near patent expiration date, expanding to 20 drugs annually by 2029. If the manufacturer rejects the Medicare price, it would pay a hefty fee to the program, a process that industry attacks as closer to price controls than to negotiations.

One thing for sure is that there will be considerable jockeying among biopharma companies over which drugs are put on the price negotiation list as the new program shakes out.

Pharmaceutical Research and Manufacturers of America 

(PhRMA) led a massive assault on the proposal, with non-stop television and radio ads predicting long-term harm to patients and the healthcare system. Similarly, the 

Biotechnology Innovation Organization (BIO)

 has kept up a steady stream of warnings that Medicare drug regulation would limit access to many important drugs and result in fewer new cures for patients. PhRMA president Steven Ubl has suggested that industry may file suit to block negotiations and will challenge new rules and other features as Medicare moves to implement the new policy.

Less visible was similar objections from the generic-drug industry to the Medicare price negotiations. The Association for Accessible Medicines (AAM) pointed out that the likely brand candidates for spending limits will be widely used, expensive medicines just as they become eligible for generic competition. However, negotiations that lower list prices will leave less room for generic makers to offer lower-priced alternatives that are profitable, and very little incentive for multiple copycats to move into the market. In addition, Medicare drug plans will have little incentive to give favorable formulary placement to only slightly less expensive generics. Biosimilar makers have raised similar issues, as negotiations to lower prices on expensive biotech therapies will make it more difficult for competing follow-ons to gain market share and become profitable.

It’s not clear, moreover, how these new policies will affect state Medicaid programs. Curbs on annual drug price increases for Medicare could raise prices for other public and private plans. New pricing policies may prompt higher launch prices for new therapies, change how formularies cover brand and generic products, and alter the design of both Medicare Part D drug plans and commercial coverage.

Another unknown is the impact of coverage and pricing policy changes on investment and innovation in the biopharma industry. Pharma and biotech manufacturers have loudly predicted that limits on prescription drug revenue from forced negotiations will curb incentives to invest in R&D, particularly in new biotech firms, reducing jobs and the discovery of many life-saving medicines. Some health analysts reject such dire outcomes, maintaining that innovation will continue as the new program spurs competition and benefits Americans more broadly.

Democrats approve curbs for Medicare plans, but not for commercial drug coverage. 

Senate Advances Drug Price Negotiations

Amidst a host of serious challenges for maintaining FDA operations and programs, FDA Commissioner Robert Califf is most determined to combat erroneous reports about medical treatments and clinical practice. “Misinformation is the leading cause of death in the United States today,” Califf stated at a online briefing sponsored by the Alliance for Health Policy on July 28, 2022. He noted that a poor understanding of the effects of medical treatments “leads people to make decisions that are harmful to health.”

Unfortunately, Califf fears that FDA is “actually losing the battle on misinformation” related to COVID, as seen in the large number of Americans who have not been vaccinated, he observed in a conversation with the editor of 

 on August 3, 2022. Millions of people are refusing vaccines and therapies despite evidence that such treatments can reduce the risk of dying from the disease by 90%. “Vaccines are basically working,” Califf stated, yet he sees many people who won’t take a treatment that’s free and highly effective.

Califf hopes to address this conundrum with a strategy for dealing with the “avalanche of differing opinions” that is confusing and difficult for Americans to navigate. This cardiologist recalls such problems throughout his career, as experts failed to reach agreement on treatment strategies for critical conditions. And today, when FDA makes a regulatory decision, it draws comments from all corners of the world, he notes, which ends up providing the public with a “sea of information” that’s difficult to navigate.

Califf’s response is to establish a “better evidence generation system” in the United States, with expert networks devoted to developing reliable information and to checking facts to overcome misleading statements. He recognizes that there is a highly effective clinical trial system in the US, where pre-approval studies produce needed data on product safety and effectiveness. But problems arise in postapproval confirmatory studies, where answers can take years, even decades, to emerge. To gain needed evidence, Califf would like to see clinical trials embedded in care and utilizing information systems that can tap larger samples of patients to answer questions very quickly.

Clinical research has experienced some success is becoming more diverse in several ways, Califf believes, as seen in “tremendous progress” in including children in research, a group that he saw completely left out of clinical trials in the past. He would like to see similar gains in bringing research to rural America, where inadequate health care has reduced life expectancy notably. Califf would like clinical research to address disparities between urban and rural areas, as well as differing treatment responses of ethnic and racial populations.

A continuing challenge for FDA is the use of expedited clinical research approaches to accelerate the development and approval of treatments for lethal and rare diseases. The agency’s accelerated approval pathway has raised questions about abbreviated testing methods and chronic delays in follow-on trials. Califf indicated that while abbreviated, single-arm trials may be appropriate for testing new therapies for untreated cancers and rare diseases, randomized trials with proper controls may be more acceptable in providing evidence for treating conditions with approved therapies.

In addition to addressing the harmful effects of medical misinformation, Califf faces a host of regulatory and policy crises across the board. Not the least is the looming loss of funding due to delays in Congress reauthorizing user fees and a new budget for 2023.

In addition, a broad overhaul of the agency’s oversight of tobacco and related products is a top priority. With 30 million Americans still using tobacco, plus a rise in vaping products, Califf sees FDA entering a new era in tobacco product oversight, with key decisions looming on menthol cigarettes and reduced-nicotine products. Califf anticipates “major disagreements” no matter what FDA does but hopes that transparent communications will build support.

Opioid addiction remains a critical challenge. Califf seeks new strategies for providing education and oversight of prescribing and access to regulated opioids, while also dealing with a huge increase in illegal high-dose fentanyl pills sent through the mail. FDA is preparing a plan for more collaborative approaches to address these issues, but Califf recognizes there is “no magic bullet” for dealing with this ongoing national crisis.

Califf also has launched a broad review of food oversight and regulation by the agency, spurred in part by the recent infant formula crisis. FDA seeks better funding and improved hiring authority for its food programs, as well as a broader assessment of the impact of changes in how food is grown and distributed in the US. And the sudden drop in infant formula supplies has highlighted the need to diversify sources and increase US production of such critical products.

Califf observed during these briefings that when he decided to return to FDA for another stint as commissioner, he anticipated there would be very serious challenges, but not as many as have erupted. But he re-upped for the job because he also recognized that heading FDA would “take someone with not much at stake.” His long experience overseeing clinical trials has made clear to him the importance of good evidence and strong collaboration in organizing programs and making sound decisions, and he continues to work to apply such approaches to the complexities and diversity of FDA.

Better clinical data are needed, as well as strategies for tackling opioid abuse, tobacco use, and food safety. 