Wednesday, June 13, 2018

FDA Policy Land Grab? FDA Uses Guidance Announcement as Trojan Horse for Price Paradigm Positions

Generally, both in US and Europe, there is a sharp line between regulatory authorities who approve drugs and payers who set up policy and pricing systems for coding and reimbursement.

This week, FDA used a routine press release to make a major land-grab on new paradigms that CMS might float, in the future, for drug payments.    This goes a great deal further than the usual FDA positioning, which is (for example) to support faster biosimilar and generics approvals because that eventually improves competition.

See Endpoints News here, and the original FDA press release here.

The entry point for the press release is a new guidance document (arising from 21st Century Cures Act) for antimicrobial drugs for limited populations (here; comment period to early August).  This is the "LPAD" pathway and provides several approval and postmarketing benefits for qualified drugs.

The press release, however, was positioned specifically as a "Statement from FDA Commissioner Gottlieb" and about half of it discusses long term economic issues with advanced antibiotics and proposed an entirely novel payment paradigm in some detail, commenting that it FDA is "currently discussing [it] with other agencies such as the Centers for Medicare and Medicaid Services (CMS)."  In brief, the proposal is that certain rare antibiotics would be licensed on a per click annual basis by hospitals rather than conventional payment.   Since only a small fraction of all infectious disease patients are FFS Medicare patients, the plan would have to be nationalized across Medicaid and other payers to be impactful for early investors. 


Antibiotics face major hurdles, leading to efforts such as the BARDA-sponsored public private partnership CARB-X, which awards substantial but early stage funds to antibiotic startups (here).  CARB-X is headed by a very sharp Boston University professor, Kevin Outterson, whom I heard speak at a health innovation conference in Berlin a few weeks ago.   We want pharma to develop new high risk next generation antibiotics, and then ideally, they'll be shelved and not used for years (to avoid resistance mutations) as patents expire.  In short, if you don't do something drastic, the current reimbursement system is highly toxic to antibiotic development.   Someone, if not the Presidential Advisory Commission (PAC-CARB), needs to be sure novel ideas are launched into action.  It's also a good fit to the new HHS interest in high octane public private partnerships for better policy and healthcare (here).

HHS' leader, Alex Azar, previously a high profile corporate attorney and pharma business leader, has a vision for bigger and better collaboration between HHS's star divisions, FDA, CMS, and NIH.   And Scott Gottlieb understands CMS and business economics far better than a typical FDA leader.   The press release intrigued me, though, and left me wondering which of these two scenarios apply:

(A) The press release was planned top-down.  A major announcement of potential new policy was given to the FDA's leader, not the CMS leader or Azar.  This could either show new levels of inter agency idea sharing or giving a reimbursement policy topic directly to FDA for variety, somewhat like giving the cello player a solo he wouldn't ordinarily have. 
(B)  Gottlieb knew the policy was being discussed, and FDA used the passing press release as a good vehicle to own the idea and get it out into the public media.   Even though, FDA wouldn't try to get ahead of CMS in CMS's own reimbursement regulations.

To put the comment in perspective - and it's worth reading the press release twice - imagine the CMS administrator proposing a new way to organize and process drug approval departments and claims at FDA, then noting "he was talking to FDA about his idea too." 

To my eye, nothing in CMS reimbursement, especially for hospitals, forbids this type of contracting.  A patient has sepsis, CMS pays $25,000 for the sepsis DRG, and CMS doesn't really get involved in how, when, or why the hospital acquires the needed drugs or equipment for the healthcare.  And as already noted, Medicare must handle only a small proportion of all US sepsis patients on rare antibiotics, so if the policy involved CMS fee for service patients alone, it wouldn't make a big dent in the overall commercialization and incentive system.

See a 2017 PAC CARB white paper on incentives, here.  Historically, CMS presentations at PAC CARB haven't mentioned out of the box issues like new payment paradigms; see Ling.

The press release was timed to the last day of the ASM MICROBE 2018 conference in Atlanta.

In February 2018, FDA issued a report to Congress on its (internal, regulatory) efforts on antibiotics; here.

This is an extremely rich policy areas, with countless proposals, white papers, and review articles.  For some additional current online resources see here.