Shutdown watch – POLITICO

PROGRAMMING NOTE: Prescription PULSE will not publish on Dec. 24 and Dec. 31. The next Prescription PULSE newsletter will publish on Thursday, Jan. 3.

Friday’s Obamacare ruling could have some big impacts on the drug industry. Meanwhile, a number of pharma and medical device bills are hoping to squeak through Congress in the waning days of 2018, but first: FDA’s shutdown watch.

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SHUTDOWN WATCH: FDA FUNDING IN JEOPARDY — FDA could be headed for a messy end to 2018. The agency’s funding, part of the annual agricultural spending bill, runs out Friday along with money for more than a half-dozen other federal agencies. The House and Senate don’t yet have a strategy to avert a partial government shutdown — and the House doesn’t come back until Wednesday.

Déjà vu: We’re in the same place we were two weeks ago, when seven spending bills were being held hostage by a Democrats vs. White House dispute over how much to give the Department of Homeland Security for President Donald Trump’s border wall. Congress kicked the can down the road with a two-week continuing resolution that expires at midnight Friday.

But there’s little indication the extra two weeks of negotiating time has led to any breakthroughs — in fact, the dueling parties appeared to have stopped talking, our Congress team reports. When the Housel return Wednesday evening, they will have just 72 hours to reach a deal. Potential options on the table include a continuing resolution through Dec. 26 or Jan. 3. As of Friday, Trump appeared to be leaning toward delaying the fight until early 2019. Another idea is a long-term spending freeze that would leave FDA to operate with 2018’s budget level for the rest of the fiscal year.

What goes on at FDA during a shutdown: Much of what the agency does can continue during a funding freeze, either because the work is considered essential to public health or because its funded by industry user fees, not specifically approriated taxpayer dollars . Nearly 60 percent of FDA employees would continue working during a government shutdown. The agency would respond to emergencies, deal with high-risk product recalls and work on criminal enforcement and civil investigations involving imminent threats to human health or life — all of it posted months ago in HHS’s fiscal 2019 contingency plans. (Other HHS agencies including NIH and CDC are already funded through a separate spending bill.) FDA also would continue inspecting imported products for health risks, and address drug shortages and outbreaks related to food and infectious diseases.

What stops: Some safety activities like routine inspections and compliance and enforcement will come to a halt, as will most non-urgent laboratory research that is necessary to inform public health decisionmaking. Companies with drug or device applications in the pipeline could face some delays despite the reliance on user fees. Some meetings with FDA could be postponed — meaning, for example, delays in clinical trial approvals.

Happy Monday and welcome to the last Prescription PULSE of 2018! We’re taking a short break for the holidays and will return with a special Thursday edition on Jan. 3. We’ll be tracking pharma news during a 10-day break, so keep send tips and your predictions for the drug world in 2019 to Sarah Karlin-Smith (via email or Twitter) Sarah Owermohle (email or Twitter).

PHARMA IMPACTS OF THE TEXAS OBAMACARE DECISION — On Friday a federal judge ruled that the entire Affordable Care Act must be struck down. While the Trump administration has said the law will remain in place during the appeals, it’s important to remember that the 2010 law is far more than the creation of a new individual marketplace for health insurance or Medicaid expansion. If the whole law goes so would the Biologic Price Competition and Innovation Act, which created a pathway for bringing cheaper versions of expensive biologic medicines to market. The biologics law also gave brand biologics 12 years of marketing exclusivity. Another part of the ACA, a sunshine act provision, created the CMS Open Payments database, which publicly tracks drug industry payments to doctors and hospitals. And without the ACA, we wouldn’t have the CMS Innovation Center, which is currently being used by the Trump administration for drug pricing reform the drug industry isn’t so fond of.

For seniors in Medicare Part D, the ACA closed the coverage gap by requiring drug makers to provide large discounts on medicines while patients are in the so-called “doughnut hole” phase of the benefit. In Medicaid, the ACA raised the amount of rebates drug companies must pay and required that these rebates also be available to Medicaid managed care plans. Obamacare also greatly expanded the 340B dug discount program, which requires drug companies provide steep discount on medicines to certain non-profit hospitals and safety net clinics. Plus the sweeping health reform legislation also ensured prescription drug coverage for many more people in the U.S. as individual and small group health plans must cover drugs as one of 10 essential health benefits. The ACA also made a number of vaccinations available without any patient out-of-pocket costs.

LAST MINUTE LEGISLATION? —If the fights over Obamacare and FDA funding aren’t enough to track, there are some other last-minute drug and medical device proposals that could squeak through Congress before the year ends — though none look too likely at this point. Here’s a list of what we’re tracking:

1. Over-the-counter drug reform, S. 2315 (115), and reauthorization of the Pandemic and All-Hazards Preparedness and Advancing Innovation Act of 2018, S. 2852 (115), both cleared the House but remain stalled due to a dispute between Sens. Richard Burr (R-N.C.) and Johnny Isakson (R-Ga.).

2. A House Republican tax bill would postpone Obamacare’s medical device tax until 2025. It also would delay two other ACA taxes and repeal a third. Getting the Democratic support in the Senate needed to wrap this up could be difficult.

3. A package of Medicaid bills that include new penalties for drugmakers who overcharge the government by improperly classifying their branded products as generics cleared the House easily last week. The IMPROVE Act, H.R. 7217 (115), awaits a potential Senate vote.

4. The drug industry is still pushing for lawmakers to partially roll back a February budget deal that put it on the hook for billions in additional Medicare payments. But Democratic opposition plus focus on the border wall drama make it unlikely that pharma will get the hoped-for $4 billion reduction in what it must cover when patients fall into the Medicare Part D coverage gap.

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CVS-AETNA PREP FOR FINAL FIGHT — The Justice Department and CVS submitted briefs late Friday night making the case for CVS’s blockbuster acquisition of Aetna to D.C. District Court Judge Robert Leon. The judge ordered the briefs earlier this month after he said that the pharmacy giant and insurer were treating him as a “rubber stamp” on their $69 billion merger.

Background: Leon’s role is limited to reviewing whether the Justice Department’s condition for approving the merger — requiring that the combining companies divest overlapping Medicare Part D businesses — was sufficient to address anticompetitive concerns. Leon cannot outright reject the deal, but he can conclude that the DOJ solution wasn’t sufficient, and order that the companies remain separate. The burden is on the Justice Department to explain its reasoning for the approval, James Tierney, an antitrust attorney with Orrick, told Prescription PULSE.

Making the case: DOJ’s brief outlined the limits of Leon’s role and questioned whether the Tunney Act — the law that gives the court the power to review Justice Department decisions — may itself be unconstitutional.

Meanwhile CVS argued in its brief that a hold-separate order would hurt new businesses already being launched by the integrating company, including preventive health and medicine adherence programs.

The hearing is set for Tuesday.

DIABETIC MEDICARE PATIENTS MOUNT HHS LAWSUIT —Beneficiaries with diabetes who were denied reimbursement for continuous glucose monitors filed a class action lawsuit against HHS Sec. Alex Azar demanding a federal mandate to cover the devices. Though CMS in January 2017 said it would start covering the monitors, its criteria essentially limited reimbursement to just one approved brand and did not retroactively apply to people who already spent thousands of dollars on the monitors, attorney James Pistorino told Prescription PULSE.

Pistorino said that between device parts, replacing sensors every week and transmitters every few months, patients spend roughly $3,500 a year. Yet HHS has previously denied claims on the grounds that the monitors — which attach to the skin to track glucose day and night, sometimes reducing the need for finger-prick testing — are not “primarily and customarily used to serve a medical purpose,” according to the complaint.

STEM CELL COMPANY PLANS TO USE RIGHT-TO-TRY — Therapeutic Solutions International said last week it plans to make its adult stem cell treatment available to patients with chronic traumatic encephalopathy and traumatic brain injury through the new right-to-try process, which lets patients request access to experimental drugs without FDA oversight.

The product, known as the Jadi Cell, is generated from umbilical cords, which are available in large quantities at inexpensive prices, the company said in a statement. The cells have demonstrated safety in animal models with brain injury and pilot human trials for chronic obstructive pulmonary disease. There are no human data for treatment of CTE or TBI, Thomas Ichim, who sits on the company’s board of directors told Prescription PULSE.

Ichim said the company has established an independent Institutional Review Board to evaluate whether patients should be given the product under right-to-try. The IRB will “make sure that it is a situation where we are not taking advantage of the patient,” that there is some rationale the treatment will help the patient and ensure there are no other options, he explained. Depending on the amount needed, the company will give some right-to-try patients the product for free, while others may be charged so the company can recover costs.

One of the primary reasons the company is going with right-to-try over FDA’s compassionate use process, Ichim said, is he prefers the liability protection offered to companies under right-to-try versus FDA’s pathway.

Regenerative medicine companies seem to be the main players gravitating toward right-to-try (at least those discussing it publicly). Among those planning to offer products under the six-month-old law, S. 204 (115), are Pluristem Therapeutics through WideTrial Inc. and Creative Medical Technologies. Meanwhile, Batu Biologics is working on technology that would help it match cancer patients with treatments under right-to-try. BrainStorm Cell Therapeutics had planned to provide its ALS treatment through the law but backtracked due to funding concerns.

Oregon regulator recommends drug monitoring overhaul — A state auditor reviewing Oregon’s prescription drug monitoring program recommended relaxing data-sharing limits, producing prescriber report cards and requiring prescribers to check the database before writing new opioid prescriptions. All this aims to address a core issue the auditor found: that the PDMP is either barred from or has difficulty sharing relevant prescription data with state licensing boards or law enforcement, our POLITICO e-health colleague Darius Tahir writes. That makes it hard for law enforcement to curb doctor shopping, according to the auditor. Read the full report here.

Oklahoma signs a third drug-outcomes contract — The state inked a deal with Johnson & Johnson’s Janssen Pharmaceuticals to provide its two schizophrenia drugs, Invega Sustenna and Invega Trinza, to Medicaid beneficiaries in results-based contracts emphasizing early treatment. Oklahoma announced in July it had negotiated a contract for Alkermes’ anti-psychotic drug in July — the first deal tied to outcomes that was approved by CMS — and another in September for an antibiotic that treats serious skin infections. Details of the J&J agreement are unclear, but Oklahoma Health Care Authority Pharmacy Director Nancy Nesser said it provides a significant opportunity to curb medical costs.

Pharma writing checks for patients’ meds — When copay coupons and prepaid cards aren’t an option for pricey medicines, drugmakers sometimes resort to a little-known method — writing a loyal patient a check. Direct reimbursements, as they’re called, are legal for private insurance plans, reports Kaiser Health News’ Sarah Jane Tribble. As insurers and lawmakers push back on copay programs, these direct reimbursement methods — which can be hard to track — could become more common. More here.

Suing for clinical trial transparency — A reporter, a physician and a former FDA official have come together to file a complaint against FDA, HHS and NIH alleging that the agencies are inconsistently enforcing a law requiring that clinical trial results be reported on ClinicalTrials.gov. The plaintiffs argue that the agencies chose an arbitrary start date for enforcing the requirement — and even then, only 60.8 percent of trial results get posted, FDA Law Blog explains. There has been criticism of lax ClinicalTrials.gov posting practices in the past, but this may be the first litigation focused on the topic, according to the blog.

Big pharma slashing pipelines — Pharmaceutical companies are culling wide-ranging experimental drug portfolios, focusing their energies and ballooning research budgets on select products that they believe are sure bets. The move represents a shift for an industry that used to see large pipelines as a mark of future prosperity — but is now focused on which drugs have a chance to progress through the costliest late-stage trials, writes Bloomberg’s John Lauerman and James Paton. GlaxoSmithKline and Novartis are just two drugmakers pulling the plug on dozens of projects. More here.

Scientists now questioning CRISPR baby claims — Last month’s sharp concern over a Chinese scientist’s announcement that he successfully edited human embryos is turning into skepticism from the science community, The Wall Street Journal’s Amy Dockser Marcus reports. There’s limited data to back He Jiankui’s claims and his work has not been independently verified. Meanwhile, it’s unclear how the edits affected the twin girls born shortly before he went public — and whether there are unseen effects still to play out. More here.

Roche Pharmaceuticals CEO Daniel O’Day will step down at the end of this month. Bill Anderson, currently CEO of Roche subsidiary Genentech, will succeed him on Jan. 1.

Carl Schmid, deputy executive director of The AIDS Institute, and John Wiesman, Washington state’s secretary of state, were named co-chairs of the Presidential Advisory Council on HIV/AIDS. The council has been vacant since late 2017, when President Trump fired 16 members. The other six had already resigned in protest of administration health care policies.

Researchers at the National Academy of Medicine discuss how to expand single-subject trial designs in the era of precision medicine.

FDA released draft guidance on building evidence for biomarkers to be used in drug development.

FDA issued a final rule codifying changes to the reclassification process for high-risk medical devices.

FDA rejected the new drug application for opioid Roxicodone, which developer Mallinckrodt said was designed to be abuse-deterrent.

The U.S. Preventive Services Task Force posted a draft research plan on preventing opioid use disorder, the first time that the panel will review related evidence. The focus is on interventions that can prevent initiation or minimize use of opioids.

FDA released guidance on data integrity in drug manufacturing.

The Institute for Clinical Evaluation and Research will assess the comparative clinical effectiveness and value of treatments for Duchenne muscular dystrophy, including Sarepta’s Exondys 51.

Amgen and pharmacy benefit manager Magellan Rx Management announced they will work together to identify clinical gaps in difficult-to-treat diseases. Initial projects will focus on improving patient outcomes for osteoporosis and migraine.

Could fentanyl be a weapon of mass destruction? — National security experts are concerned that fentanyl could be used as a weapon by terrorists, Anna Edney writes in Bloomberg. It’s not just science fiction: in 2002, the drug was used by Russian forces to incapacitate rebels holding hostages in Moscow. The opioid is so potent that an amount equal to a few grains of salt can be deadly — and could cause havoc if released into the air in a closed space, experts say. Or it could be placed on everyday objects that people touch, triggering a dangerous reaction if they then put their fingers in their mouths or rub their eyes.

Fentanyl is relatively cheap and easy to make, and poses challenges for first responders because multiple doses of naloxone are often required to reverse an overdose. The U.S. Biomedical Advanced Research and Development Authority has a $4.6 million contract with Opiant Pharmaceuticals to produce a better fentanyl antidote. Read Anna’s full story here.

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