Tag: Scott Gottlieb

Gottlieb: We Can Still Address Rebate Safe Harbors Through Congress

During his time as FDA Commissioner, Scott Gottlieb, MD, was an ardent proponent of the biosimilar industry. He, along with Health and Human Secretary Alex Azar, introduced several proposals to improve biosimilar access and competition for biologics in an effort to reduce the cost of these expensive complex molecules.

biosimilar naming
Scott Gottlieb, MD

Now, as a Resident Fellow of the American Enterprise Institute, Dr. Gottlieb is still pressing for a biosimilar-friendly environment. A column in the Wall Street Journal continues to advocate for several of the initiatives he introduced at FDA, including those comprising the Biosimilar Action Plan.

The proposal that may have caused the most disruption to the biologic status quo was the removal of the safe harbor for pharmaceutical rebate contracts. The safe harbor protected drug makers from the antikickback statute (section 1128B[b] of the Social Security Act) and helped proliferate rebate contracts between pharma and the payers, distributors, and health systems, usually in exchange for preferred positioning or even nonpreferred formulary coverage.

As discussed in this space in previous months, several stakeholders besides the biosimilar manufacturers (including payers) were heartened by the prospects for removal of the safe harbor. However, fears of rising Medicare premiums for beneficiaries pulled the plug on hopes for the repeal of the safe harbor.

Peter Bach, MD, at Mount Sinai Medical Center, New York, co-authored a recent commentary in the same newspaper, expounding on the belief that price controls on biologics beyond their marketing exclusivity term would be a more effective and efficient tool than biosimilars to save money for the health system. In response to this column, Dr. Gottlieb raised the notion that Congress could raise the safe harbor repeal from the dead.

“Among other dangers, this could trigger shortages of the drugs,” he wrote of Dr. Bach’s proposal. “It would also discourage investment in manufacturing.”

Dr. Gottlieb also pointed out that biosimilar development could be assisted by prohibiting biologic manufacturers from withholding samples of their agent from prospective biosimilar makers through either astronomical pricing or claiming that a REMS program prohibits this type of distribution. These actions would help encourage very early stage biosimilar development. They would do little to help encourage competition (and thus lower prices) once a biosimilar is approved, however.

On the other hand, if drug rebates were taken off the table, biosimilars and biologics would have to compete on list price and discounts solely, a move that would decisively even the playing field. It would also remove the heavy incentive payers currently have to maintain existing formulary coverage for reference biologics.

Barring the removal of the safe harbor and thus the rebate tool, biosimilar manufacturers would have nothing to convince payers to cover them other than tremendous price discounts. In a marketplace like that for the G-CSFs at present and the very crowded trastuzumab marketplace in the near future, this will inevitably mean a race to the bottom in pricing and withdrawal of some competitors. That will result in far less interest in developing biosimilars for newly expiring biologics.

FDA’s Gottlieb Announces Important Changes to Biosimilar and Biologic Naming

A statement by the Food and Drug Administration (FDA) departing commissioner, Scott Gottlieb, reinforced a key aspect of biosimilar naming and provided important updates to the use of four-digit suffixes for biologics and biosimilars.  

biosimilar naming

In his statement, Dr. Gottlieb said, “In January 2017, the FDA published a guidance document in which we sought to balance these concerns by using a distinguishing suffix to the proper names of biological products, including not just biosimilars, but originator products as well. By applying this policy to originator and biosimilar products alike, the FDA sought to advance the goal of patient safety—which the suffixes promote—without creating a misimpression that products with such suffixes are somehow inferior to those without. In addition, the FDA announced in that guidance that the agency was considering the process to retrospectively change the names of biological products already on the market, to begin adding distinguishable suffixes.”

In its updated draft guidance, the FDA announced that it (1) has decided not to add a 4-digit suffix to biologics that have already been approved under the Public Health Service Act, (2) transitioning products, such as growth hormone or insulins, will not be given a 4-digit suffix, (3) the FDA will continue to assign a suffix to biosimilar agents, and (4) any biosimilars that are designated interchangeable will have the usual 4-digit suffix, which will be “devoid of meaning.” In other words, the suffix will not distinguish an agent as interchangeable from one that is not.

The guidance states, “FDA has determined that the core objectives of the naming convention—pharmacovigilance and safe use—can be accomplished by applying the naming convention to biological products 170 at the time they are licensed under section 351 of the PHS Act, and without applying it to licensed biological products that do not contain a suffix in their proper names. This approach is intended to minimize the potential burden for sponsors and the healthcare systems, and to avoid potential confusion for healthcare providers and patients, given that the nonproprietary names of drugs seldom change postapproval.”

The addition of a 4-letter suffix for new biologics is problematic, as the FDA had begun assigning them for at least a couple of years. So far, FDA has given 27 new originator biologics these unique designations, and it seems that to avoid even greater confusion, new biologics will continue to receive the suffixes.

The continuing use of the 4-letter suffix is controversial not only because of the reason stated by Dr. Gottlieb, but also because these designations have not been used to any significant extent in safety reporting. As stated here and in Biosimilar Development, these suffixes have been reported in fewer than 5% of all drug safety reports filed with the FDA to date (but without causing issues as to which biosimilar was associated with an individual report). The updated guidance reaffirms the FDA’s commitment to the use of these suffixes.  

Dr. Gottlieb stated, “This framework will help secure pharmacovigilance so that the FDA can effectively monitor all biological products in the post market—originators and biosimilars—and promote patient safety. To aid in adverse event report tracking, originator, biosimilar and interchangeable products will have nonproprietary names that are distinct from each other.”

The problem with this frame of thought is that the suffixes will not achieve a greater level of security in terms of pharmacovigilance in practice. The suffixes are extremely difficult to recall: I know, I find myself today looking for references to nonproprietary names I’ve written about a hundred times. That is precisely why they will not generally be used in drug adverse event reporting.

Will the Government Shutdown Slow Biosimilar Approvals?

The partial federal government shutdown is having specific effects in various important areas of government, but it may not be particularly troubling for FDA user-fee funded activities.

Scott Gottlieb, MD, Commissioner of the FDA, has been especially busy on Twitter, trying to inform the public how the government shut down is affecting FDA operations. He made it clear that the agency is prioritizing its efforts on ensuring consumer safety.

During an extended tweet storm (the past 7 days), he has not directly addressed the effect of the shutdown on current drug approvals. However, since the pharmaceutical companies have paid into the drug approval activities of the Center for Drug Evaluation and Review, there may be sufficient funds and resources for ongoing approval activities. In a tweet last week, Dr. Gottlieb mentioned that FDA was bringing onto staff several new user-fee funded staffers. Yet, in a January 7 tweet, he promised additional information on how the shutdown would affect biosimilars; this has not yet been addressed.

In terms of biosimilars, two trastuzumab drug makers are expecting FDA decisions this quarter (Pfizer and Samsung Bioepis). However, Pfizer’s biosimilar launch is subject to a licensing agreement with Genentech (Roche), the maker of the reference product Herceptin®. Therefore, if there was a short delay in FDA approval, it will not likely have a material effect on availability for prescription. We anticipate that Pfizer will also be hearing from the FDA on its rituximab biosimilar in the second quarter.

This could raise a secondary problem with the shutdown: Will the current furlough cause a chain reaction of delays in the evaluation of existing biologic licensing applications? How long might it take the full FDA staff to catch up, if that is the case?

In a January 13 tweet, Dr. Gottlieb said, “The lapse in funding represents one of the most significant operational challenges in FDA’s recent history. But as an agency, we’re committed to fulfilling our consumer protection mandate, to the best of our abilities, under our current configuration.”

In other biosimilar news… A January 10 story in The Pink Sheet reported that Leah Christl, PhD, Associate Director of Therapeutic Biologics at FDA intends to depart the agency in the near future (a specific date was not given).

New Biosimilar Guidances From the FDA Announced by Commissioner Gottlieb

On December 11, the Commissioner of the Food and Drug Administration (FDA), Scott Gottlieb, MD, issued a far-ranging statement on actions to be taken by the federal government to improve access to biosimilars and to begin the transition of insulins, growth hormones, and other selected drugs to biologic status, under section 351 of the Public Health Service Act.

“Today, we’re taking additional actions to advance this framework,” stated Dr. Gottlieb. “Among them, we’re issuing four new draft guidance documents today. The first two guidance documents provide greater clarity on scientific and regulatory considerations for the development of biosimilar and interchangeable products. We intend to update these new guidance documents regularly, to address development issues as they evolve.”

FDA Commissioner Scott Gottlieb

These actions were first signaled by the announcement of the Biosimilars Action Plan earlier this year.

Hiding Behind REMS to Deter Access to Samples

These guidance documents, created in question-and-answer format, address specific issues, some of which get to the heart of biosimilar development and access. For example, one section speaks to abuse of limited distribution systems requirements, in connection with Risk Evaluation and Mitigation Strategy (REMS) programs. These programs have been used as a way to “delay or derail access to reference product samples that biosimilar sponsors need for testing to support their applications for a biosimilar product.” Dr. Gottlieb said, “While the limited distribution programs can have a role in promoting patient safety, too many branded products are still misusing these programs as rhetorical smokescreens to hide anti-competitive behavior.”

Dr. Gottlieb said that FDA will, upon request only, “review study protocols submitted by biosimilar applicants to assess whether their protocols contain comparable safety protections to those in the REMS for the reference product they’re trying to reference.” The FDA will be willing to state in a letter to the reference manufacturer “that comparable protections exist, and that the FDA won’t consider it to be a violation of the branded drug company’s REMS to provide the biosimilar sponsor with a sufficient quantity of the reference product to perform testing necessary to support its biosimilar application.”

He also reiterated that it may be possible for biosimilar developers to obtain EU-licensed samples for use in comparative studies. Dr. Gottlieb indicated that the FDA was still evaluating this option.

New Routes of Administration for Biosimilars not Allowed

Another Q&A would put to rest the notion that a biosimilar maker can produce a new formulation or route of administration for an approved biosimilar product under the 351(k) pathway. The guidance states, “An applicant may not seek approval, in a 351(k) application or a supplement to an approved 351(k) application, for a route of administration, a dosage form, or a strength that is not the same as that of the reference product.” This would mean development of a subcutaneous form of infliximab, for example, would not be possible under the biosimilar regulatory pathway, because Remicade® is only available as an intravenous infusion.

On the Road Toward Interchangeable Insulins

One of the key provisions of the BPCIA is that insulins, growth hormones, and other agents for which reference products were not available under the FD&C Act, will be transitioned to the biologic regulatory pathway (under the Public Health Services Act) by 2020. The FDA has begun to consider just how this will occur.

Transition drugs

Starting in March 2020, this transition will take place. “Today, we’re laying out our policy on how these products will transition from the drug pathway to the biologics pathway, and in so doing, how we intend to use this new framework to promote competition,” said Dr. Gottlieb.

Under the “Deemed to be a License” Provision of the Biologics Price Competition and Innovation Act of 2009,” the final guidance from the FDA specifies that these newly deemed biologics will be subject to the same regulations as today’s biosimilars. “Anti-evergreening provisions under the biosimilars legislation—meant to prevent sponsors from being able to game the exclusivity provisions to forestall biosimilar entry—will apply to these newly deemed products, including insulin.”

Furthermore, these agents will not gain any additional exclusivities because of the transition (they will not get any additional exclusivity). It is assumed that once they are transitioned, and if their patents have expired, biosimilar competition can begin at once. This could mean far greater pricing pressure on insulin products (not simply glargine), and potentially even interchangeable designations that can be automatically substituted at the pharmacy.

As part of this transition, Dr. Gottlieb explained, biological products that have been approved under section 505 of the FD&C Act will be removed from the FDA’s Orange Book on March 23, 2020, based on the agency’s position that these products are no longer ‘listed drugs.’ That means that a follow-on applicant won’t be able to rely upon these NDAs for approval. They have to go down the biosimilars path after the transition.”

Anti-kickback Safe Harbors, Drug Rebates, Biosimilars, and FDA

Over the next couple of weeks, I’ll be issuing a series of posts to further analyze some of the Food and Drug Administration’s (FDA’s) new Biosimilars Action Plan.

Drug rebate contracts Outside of patent litigation, the greatest barrier to biosimilar access is the current drug rebate contracts agreed to by pharmaceutical companies, health plans, and pharmacy benefit managers (PBMs). This contracting system persuades payers to maintain coverage of a heavily rebated biosimilar rather than providing access to a lower retail priced drug. Scott Gottlieb, MD, FDA Commissioner, has said that payers will need to start considering whether their rebate revenue on originator biologics are more valuable than the viability of the biosimilar industry overall. The real question is, what can the federal government do about drug rebate contracts?

Dr. Gottlieb believes that they are anticompetitive and cause higher drug prices over time; drug rebate contracts may be in direct conflict with the intent of the federal anti-kickback statues that allow them in the first place. In May, he and Health and Human Services (HHS) Secretary Azar indicated that they may ask for a review of the safe harbors provided for drug rebates.

Anti-kickback Safe Harbors and Drug Rebate Contracts

The anti-kickback statute has been in place since 1971, but these specific safe harbors, protecting drug companies from anti-kickback laws, were introduced more than 2 decades ago. The federal government provides an excellent resource for information about these safe harbors at the Federal Register website. In brief, the safe harbors define exceptions to situations where organizations are receiving “remuneration” for providing goods or services. A rebate given as an incentive to provide a drug (i.e., on formulary) or to utilize more of a product (i.e., “performance rebates”) would currently qualify for safe harbor protection.

Last week, HHS moved on this issue, filing the proposed rule “Removal of Safe Harbor Protection for Rebates to Plans or PBMs Involving Prescription Pharmaceuticals and Creation of New Safe Harbor Protection.” Although the content of the filing has not yet been released, the title and previous statements on the matter by Secretary Alex Azar, do not bode well for drug rebate contracts and payers and the PBM industry tied to them.

America’s Health Insurance Plans, a national trade group for payers, supported a study supported that disputes one of these assertions. The study, conducted by Milliman, concludes that among part D plans studied, rebates did not independently cause higher drug costs. The greatest rebates were found in drug categories with the most competition from other brands (not generics). Instead, Milliman found that the use of rebates was in direct proportion to the degree of competition in a drug category. “Over the four-year period from 2013 to 2016, brand drugs with manufacturer rebates in 2016 had higher price trends than brand drugs without rebates,” according to the report. In other words, the rebates helped mitigate the price increases.

Although a bold move by the Department of Health and Human Services, removing drug-rebate safe harbors will be tricky. It will threaten the bottom lines of the PBM industry. Rebates comprise a significant portion of their revenue. Health plans also receive a portion of that revenue; they claim that these rebates are used to hold down premium costs. In any case, plans and insurers will need to evaluate how to account for less rebate monies but perhaps lower drug prices. For these reasons, we can expect quite a pushback from these sectors should the federal government proceed.

Specialty Drugs Mostly Under the Medical Benefit

Furthermore, all biosimilars (approved and investigational) are classified as specialty drugs by their cost, storage needs, and/or route of administration. This means that they are more likely covered under the medical benefit than the pharmacy benefit. It is thus also likely that the PBM’s specialty pharmacy units or their specialty pharmacy partners will be directly affected by any biosimilar-targeted changes in the anti-kickback laws.

The Trump administration also indicated the desire to move several drugs from coverage under Medicare part B to part D. Whereas Medicare does not currently negotiate prices with pharmaceutical manufacturers, private Medicare insurers can. This may enable price negotiation under part D providers and Medicare Advantage plans. Ironically, might this be a rebate-related negotiation?

Would Biosimilar Approvals With Limited Indications Alter the IP Discussion?

Over the next couple of weeks, I’ll be issuing a series of posts to further analyze some of the Food and Drug Administration’s (FDA’s) new Biosimilars Action Plan.

The Biosimilars Action Plan contains several important components. One of the more interesting items FDA Commissioner Scott Gottlieb mentioned in his remarks at the Brookings Institution webinar on Wednesday, July 18, involved modifying the intellectual property (IP) discussion with biosimilar approval for limited indications.

Originator drug makers have erected a so-called patent maze or patent wall over time to protect their IP and thus their marketing exclusivity as far into the future as possible. Patents can be filed for product composition, manufacturing techniques, new formulations, delivery systems, and indications. Often, the biologic products facing potential biosimilar competition have several indications. Adalimumab, for instance, is approved for use in nine unique conditions (I’ve included Crohn’s disease and pediatric Crohn’s as one disease state).

Dr. Gottlieb said that the FDA will be “updating guidance to provide additional clarity on how biosimilar manufacturers can carve out indications from their labels where a branded drug maker might still maintain some IP.” He continued, “And we’re going to describe how these indications can be efficiently added into a biosimilar label once that IP on the branded alternative has lapsed.”

This component was not spelled out in the Biosimilars Action Plan. Limited indications may indeed be an avenue to work with originator manufacturers to help reduce patent litigation that is barring patient access to biosimilars. One would assume that it would take some level of negotiation with the manufacturer of the originator. However, biosimilars with limited indications may be a hornets’ nest for reference manufacturers like AbbVie.

This gets back to the entire issue of extrapolation. From the outset, patients and providers recoiled at the notion of approving a biosimilar product for use in a disease state in which no clinical studies were done. The FDA has been pretty liberal in granting extrapolation to several or all indications for the 11 approved biosimilars. If FDA explored this option as a mechanism for getting biosimilars to the market sooner, it would be sending a new message. That is, the biosimilar drug may be expected to yield similar outcomes compared with the reference drug based on the totality of the evidence, but we’re unwilling for other reasons to give it our approval for those other indications.

Biosimilar Indications Laws or regulations do not exit to prevent doctors from prescribing a biosimilar for a nonapproved indication. Furthermore, health plans and insurers have consistently reported in our own market research that they would not discourage use of a biosimilar for other indications for which only the originator biologic was approved. This assumes the biosimilar is sufficiently less expensive than the originator. As a result, drug makers like AbbVie may be very wary of the limited-indication approach to improve biosimilar access.

Still, some way must be found to break the logjam of litigation on IP. This is a specific target of Commissioner Gottlieb’s. He may take even more creative approaches.

 

 

 

 

 

 

FDA’s Gottlieb to Health Plans: Move Away From Short-Term Rebates on Reference Drugs to Enhance Long-Term Biosimilar Savings

According to Food and Drug Commissioner Scott Gottlieb, MD, the managed care sector’s willingness to accept larger rebates from manufacturers of originator biologics to preserve formulary coverage may seriously hinder the long-term success of the biosimilar industry. And more importantly, the ability to control biologic costs through competition.

FDA Commissioner Scott Gottlieb, MDIn remarks made to a national meeting of America’s Health Insurance Plans’ (AHIP) in Washington, DC, Dr. Gottlieb worried that biosimilar manufacturers may start to believe that “the system is rigged against them.”

In terms of patent litigation, that certainly may seem true. However, Pfizer’s complaint that Janssen is undercutting its discounts by providing plans and insurers additional rebates would seem to be a practice that big pharma has used for years (Pfizer included). Therefore, Dr. Gottlieb is asking payers to turn aside those rebate offers and instead cover the biosimilars, at least for new patients.

He stated that the FDA is “invested in making sure that the new biosimilar pathway works, and that we can help facilitate a robust market for these products. So, we take note when we see market practices that can reduce the incentive for sponsors to invest in the development of biosimilars in the first place.”

Dr. Gottlieb put it to health plans succinctly: “Payors are going to have to decide what they want: The short-term profit goose that comes with the rebates, or in the long run, a system that functions better for patients, providers, and those who pay for care…Do they want to continue to benefit from monopoly rents today, or help generate a vibrant biosimilar market that can help reset biologic pricing—and drug pricing more generally— through competition.”

He suggested that payers help increase biosimilar uptake by lowering or waiving copays for biosimilars or removing prior authorization requirements when biosimilars can be prescribed. “FDA has a strong interest in seeing the biosimilar market grow,” he reiterated, “but some of that is going to be up to the choices you all make.”