Today's News and Commentary

This week is the 37th annual JP Morgan Healthcare conference, a large meeting about the healthcare industry.

For updates and keynote addresses see this website

About pharma

FDA plans to create a new office to leverage cutting-edge science: The FDA will be launching a new 52-person group, called the Office of Drug Evaluation Science (ODES). It will be part of “the Office of New Drugs, which is itself part of the FDA’s Center for Drug Evaluation and Research [CDER}, which oversees the approval of new medicines.” Its tasks will include a cloud-based, standardized reporting mechanism for drug development and approval applications as well as patient reporting of side effects.

Read about the announcement

All seven of the FDA’s recent commissioners agree it should be independent — but not on how to accomplish it: The FDA is part of the Department of Health and Human Services (DHHS). Both the DHHS Secretary and FDA Commissioner are political appointees. The seven recent FDA commissioners recount how they faced political pressures in their job and call for an independent agency. While the likelihood of independence is slim, this important agency must be able to make decisions based on science rather than politics.

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Live Attenuated Influenza Vaccine: Will the Phoenix Rise Again? Every year, pharma companies try to anticipate the viral strains that will cause illness in the upcoming flu season. This projection allows for manufacture of appropriate vaccines. Many different vaccine versions are available. One of the differences among products is between the inactivated injected vaccine and the live attenuated version that is inhaled through the nose. Last year, the CDC did not recommend the inhaled version because it lacked effectiveness. For this flu season it is back on the approved list. This article (an editorial about the subject in Pediatrics) highlights the importance of annual evaluation of these vaccines. While I do not endorse one product over another, it has always been OK to get an inactivated form. The choice is yours in consultation with your physician. By the way, research is still ongoing for a “universal” flu vaccine that will not depend on the seasonal strain.

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Report: Drug prices drive up insurance premium costs: Yesterday I reported the California study about specialty pharmaceuticals causing rapid rise in drug prices. I mentioned that the situation was similar in other states. Coincidentally, this article verifies that assertion for Vermonters. “Using average wholesale prices as of January 2018, the care board found that prescription drugs accounted for $81.65 in monthly premium charges per consumer. That’s up 11.4 percent from the previous year.” Again, specialty pharmaceutical were largely responsible for those figures.

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Life, Death and Insulin: This article is a great piece of investigative journalism and commentary from the Washington Post. It summarizes what happens to diabetics when they can no longer afford their insulin. The problem is that the price of this essential medication has been rising rapidly. It raises the issue of what has been called value-based pharmaceutical benefits. Some advocate that life saving or sustaining medications should be available at no cost to patients. Other medications with less critical value should have graduated out of pocket spending requirements. Other countries (like Italy ) already tier their medication payments in such a fashion. Unfortunately this country does not even allow cost-effectiveness to be a criterion for drug approval. We have a long way to go before we are philosophically ready for value based payments.

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IPO bonanza as biotechs get in while the iron’s hot (or before it cools): For years, many viewed biotech companies as a separate industry from large pharma. Industry experts, however, knew they were just part of the business’ s spectrum. With more acquisitions, this expert opinion is becoming more obvious. Further, the recent stock market downturn has not seemed to dampen IPO interest. This article highlights some of the current and upcoming activities in this field.

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How Takeda's $62 Billion Shire Deal Reshapes Pharma World: Continuing the theme of large acquisitions was this announcement yesterday. The article is a nice summary of what is happening in the field and the new list of the biggest players..

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Measuring the return from pharmaceutical innovation 2018: One reason for the mergers and acquisitions is that R&D productivity had markedly declined and companies are looking outside for new products. This annual Deloitte report quantifies this problem: “R&D returns have declined to 1.9 percent, down from 10.1 percent in 2010—the lowest level in nine years. Returns have been impacted by the growing cost of bringing a drug to market which now stands at $2,168 million – almost double the $1,188 million recorded in 2010.” Are the benefits of these combinations sustainable or are they short-term fixes?

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Civica Rx adds 12 more health systems, including NYU Langone, Memorial Hermann: To combat rising pharmaceutical costs, last year some hospitals got together to form a generic drug company called Civica Rx. The number of participants is now up to 750. Read this summary of where this venture is now.

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Court Rejects Trump’s Cuts in Payments for Prescription Drugs: In 2005 the Medicare Modernization Act changed the way outpatient pharmaceuticals were paid- from an Average Wholesale Price basis to 106% of the drug’s national average sales price. Providers (such as hospitals and Federally Qualified Health Centers) who care for uninsured and large proportions of Medicaid patients can purchase pharmaceuticals from manufacturers at a large discount and bill insurers at retail rates under what is called the 340B plan. Last year the Trump administration unilaterally cut 340B payments from 106% to 77.5% of average sales price. Washington DC federal district court judge Rudolph Contreras ruled that this cut overstepped executive authority. According to the article: Under the Medicare law, Judge Contreras said, federal officials have the power to “adjust” reimbursement rates. But, he said, they abused that power and “fundamentally altered the statutory scheme established by Congress for determining” reimbursement rates. [HHS Secretary] Azar “may either collect the data necessary to set payment rates based on acquisition costs, or he may raise his disagreement with Congress,” but he may not circumvent the mandate of Congress… The government had acknowledged that it did not know the precise amount of the difference between what hospitals were paying for the drugs and what Medicare was reimbursing them.

“The court is still considering how to compensate hospitals for the money lost, estimated at $1.6 billion for last year.”

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About the public’s health

Medicaid plans cover doctor visits, hospital care—and now GEDs:Picking up on a theme I have mentioned before- social determinants of health- this article highlights another way insurers can help their members. “AmeriHealth Caritas, a Philadelphia-based insurer with 2 million Medicaid members in Pennsylvania and five other states, helps connect members with nonprofit groups providing GED test preparation classes, offers telephone coaching to keep members on track and pays the testing fees.” Maybe the model can be expanded.

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About quality

Association of Extending Hospital Length of Stay With Reduced Pediatric Hospital Readmissions: Readmission rates are a measure of hospital quality of care. This retrospective study looks at the association between length of stay and readmission rates for pediatric patients across diagnoses. Only 6 diagnoses were found to have higher 15 day readmissions with shorter initial hospital stays. However, the authors concluded that: “the number of additional hospital bed-days and costs needed to avoid 1 readmission may neither be reasonable nor cost-effective to pursue.” For example, for newborns with high bilirubin,  “134 additional hospital bed-days and $104 000 were required to prevent 1 readmission.” Their final recommendation was: “efforts to avoid readmissions should focus on other aspects of hospital discharge care.”

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Two-Year Evaluation of Mandatory Bundled Payments for Joint Replacement: Continuing the theme of cost/quality issues, this study looked at the Medicare program, which requires bundled payments for hip and knee replacement surgeries. The good news is that in the first two years of this initiative, “there was a modest reduction in spending per hip- or knee-replacement episode, without an increase in rates of complications.”

Read the study