Wednesday, October 31, 2018

Consortium Paper Sets High Water Mark for a Diagnostics Strategic Landscape (Case Study: AST)

A new paper in Nature Reviews Microbiology sets a high standard for thinking about the dynamics and strategies of commercialization of a class of novel diagnostics.

It's a case study based on an active area of innovation, antibiotic sensitivity testing.  However, I'd emphasize the the scope and logic of the thinking applies to other kinds of diagnostics (or even other kinds of medical innovation) as well.

  • Nature Reviews open access paper here.
  • Nature Reviews tweet here.
  • Blog by coauthor John Rex here.

Tuesday, October 30, 2018

Very Brief Blog: Bay Area "Business of Personalized Medicine Summit" - December 6, 2018

Thursday, December 6, 2018, is the 15th Annual Business of Personalized Medicine Summit, to be held at the SFO Westin.

Sponsors include Foley Lardner, Personalized Medicine Coalition, Analysis Group, Deloitte, BIO, and Slone Partners.

See the home page here and the agenda page here.   (I'm speaking on a panel in the afternoon). 

Highlights include:

  • Keynote by Helmy Eltoukhy, Co-Founder, Guardant Health
  • Investments and Exits, Jonathan Norris, Silicon Valley Bank
  • Finance and VC Panel
  • Big Data Panel
  • Disruptive Innovation Panel
  • FDA & Regulatory Panel
  • Payment and Reimbursement Panel
  • Clinical Integration Panel
  • Closing Keynote: Harry Glorikian

Register here.

Very Brief Blog: CAP Today Highlights Revenue Cycle Management

With the excitement of the World Series behind us, we can turn attention to the excitement of revenue cycle management.

One of the most remarkable statements I've seen in 2018 was a quote in the Foundation Medicine final investor report before it was wholly absorbed into Roche:
"Most of the commercial third party payors that reimburse us do so based upon CPT codes, or based on other methods such as percentages of charges or other formulas that, to our knowledge, are not specific to us and not made known to us." 
Pretty amazing financial facts for a company being bought for $2.4B !

Addressing rationale responses to the bizarre world of laboratory economics and claims processing, see a detailed article in CAP TODAY for October 2018 - "Revenue Cycle Services," here.   

The article focuses on one industry player, Telcor, but the pains are industry wide.   Good article.


Parts of the article reminded me of Jonathan Bush's 2014 book, "Where Does It Hurt," about founding the large company Athena Health based on building up software and rulebooks that understood the bizarre world of payer claims processing.  In October 2018, Athena's market cap was about $5B, revenue $1.2B.

ISPOR Value in Health Journal: Six Article Set on NGS and Value

Value in Health is the official journal of ISPOR, the international society for pharmacoeconomics and outcomes research.   (See their international conference in Barcelona November 10-14, 2018).

The September 2018 issue has a special six-article set on next generation sequencing and clinical value.  (Subscription required).  See the home page for Value in Health, September 2018, here.   
The articles are headlined by an op ed by Kathryn Phillips PhD, head of the TRANSPERS NIH-funded program at UCSF for translational genomics. 
For more on precision medicine in health policy, see also the special issue of Health Affairs, which appeared May 2018.
I'll be highlighting some of these publications in a webinar on value in genomics, November 27, here.

click to enlarge

Very Brief Blog: DHealth Conference for SoCalBio - November 9, 2018

SoCal Bio, an LA-focused biotech and medical device association, holds its second annual Digital Health conference on November 9, 2018, in Long Beach.   (Last year's first annual conference, held at USC, was outstanding).   The theme is medical grade wearables.

The conference website is here and the extensive online agenda is worth checking out.

Very Brief Blog: California Clinical Lab Association Meeting; MolDx Speakers

The California Clinical Lab Association annual conference will be November 7-9, 2018, in Costa Mesa, California [Orange County].   See the conference website here.   Download the agenda here.

The October-30-version agenda is below; check for updates.    Both of the new MolDx medical directors, Dr. Bien-Willner and Dr. Gerrard, are on the agenda for Thursday November 8.  They are also speaking the prior day, November 7, in San Diego at the AdvaMed Dx West Coast Summit (here).   

On a separate note, November 9 is the SoCalBio digital health 2nd annual conference, to be held in Long Beach; last year's first annual DHealth conference was excellent.

October 30 Version (click to enlarge)

Thursday, October 25, 2018

Very Brief Blog: MolDx Posts Job Opening for Another Medical Director

The MolDx program recently brought on MD-PhD molecular pathologist Gabriel Bien-Willner as medical director (here).  As circulated within AMP and elsewhere, MolDx (part of South Carolina BCBS) has posted a position for another medical director who is a pathologist.

BCBS job posting here.  I've clipped text below the break.

Trump, Azar Propose Lower Drug Payments in US Medicare - Original Documents

In an October 25, 2018, press briefing, President Trump and Secretary of Health Alex Azar proposed for public comment several new programs to lower drug payments in Medicare, such as simply and directly benchmarking Part B prices to an international drug price index.
  • See New York Times here.  Business Insider here.  The Hill here.  Axios here.  MedCity here.  Fiscal Times here.  "Who Loses Most," at BioPharmaDive, here.  Late follow up at Stat, 12/10/18, here.
  • See CMS quite detailed press release here.
  • See 12-page Federal Register PDF of "advance notice of rulemaking" here.
    • This federal document specifically introduces the program as fulling President Donald Trump's vision.
    • Public comment will be taken for 60 days.  
    • Document CMS-5528-ANPRM, RIN 0938-AT91, 83 Fed Reg 54546-61.
  • See also the 19-page HHS ASPE report on international drug prices, vis a vis US prices, here and here.
  • Update: For a May 2019 Health Affairs article on bringing international prices to Medicare, Yang et al., here.
  • Trump speech on Youtube at this link, here [13 min].

One feature of the programs will be to create a reference price list, the International Pricing Index Model, IPI, based on a range of other countries.  This is not proposed rulemaking; it is a generalistic description of a model that will be posted soon for official comment, and might, at the earliest, lead to CY2020 implementation.  Actual rulemaking would likely be extremely complex.

The program will be enacted through the wide-ranging authority of the Center for Innovation (CMMI) to conduct demonstration programs that waive existing Medicare law.*   The Obama administration proposed less sweeping changes to drug pricing, via CMMI, which were canceled weeks after the Trump election, though before the inaugural.

For the Drug Pricing on TV regulation, here.


In his 13-minute comments, Trump thanks Secretary Azar, and called out attendees Seema Verma and Scott Gottlieb.  He noted that it "had been decades" since a President came to HHS and noted that Obama never gave a speech there.  He referred to the May 2018 Drug Pricing Blueprint and noted the accelerated approvals of more generics at FDA.  He also referred to the new Know the Lowest Price act.   He noted that Americans are benefiting from the new drugs but other countries have them too at far lower prices.  (He did not mention that American companies might choose not to release the drugs elsewhere at too-low prices.)

He noted that for "an eye drug that prevents blindness" Medicare pays $1B but at international rates would pay $187M.    He referred to "a cancer drugs that is seven times more expensive" in the US.  He noted another part of the new system will be paying doctors a flat rate when delivering expensive drugs (not a price-based supplement).  He noted that Part D and Part C/Medicare Advantage premiums are going downward and "this is a word you haven't ever heard" in healthcare.  He decried a socialistic health plan in the House and by Dems that would destroy Medicare and Medicare Advantage (presumably the Medicare for All ideas.) 

On a separate note, he dropped a comment "we will always protect pre-existing conditions."  He summarized by characterizing the work of HHS staff as "brilliant and complex."
  • Senator Kefauver in the 1950s began Senate drug industry hearings because he was appalled at the high and uniform prices charged in his local pharmacy for antibiotics (about $5); these hearings later morphed into the FDA Act of 1963.

The CMMI program would initiate new federal contractors who would be paid a fixed (e.g. European) price to acquire drugs in the US and provide them to doctors for Medicare patients.   It appears that sales from biopharma to these contract venders at low Euro benchmark prices would be voluntary.   (However, biopharma might actually be incented to undershoot the federal price to give the venders margin and drive utilization....)   Doctors would be required to collect copays from patients (based on the Euro benchmark price times 20%) and return the copays to the venders.   The pilot program would be regionalized, raising the possibility that large health systems might get full prices on one side of a zip code or county line and much lower prices on the other side. 

The proposal notes that it builds on prior public comment on the May 2016 Drug Pricing Blueprint and the July 2018 Outpatient Proposed Rule CY2019, which requested input on drug pricing models. E.g. see the Pew Foundation response supporting CAP and other approaches to cutting Medicare prices, as telegraphed in summer rulemaking.

In a separate scenario, earlier this week FDA admnistrator Scott Gottlieb spoke at a Washington symposium and expressed concern over CMS policies that pay only a fraction of the cost of CART drug payments.  He noted this could stifle new entrants and leave CMS and the US, ironically, with only monopoly pharma providers.  

ASPE Screen Shot - and Azar tweet -

The logo for the presentation was "American Patients First."

Of related interest, the WSJ recently covered the Arnold Foundation's high multi million dollar investment in various entities and NFP's which aim to reduce high drug prices - here.

   For an essay, "Why Does Humira Cost Less in Europe?," here.

   For an Endpoints blog about US biosimilars and drug pricing, here.

   For a November 2018 update on US 340B policy changes, here.


Later, around November 26, CMS posted new proposed rules allowing plans more leverage in Part D pricing management, trade press here.  CMS announcement here.


* Recall that in 2016, Hill Republicans were asserting that CMMI's authorities exceeded the constitution and ought to be canned.  Times change.  Here.

Wednesday, October 24, 2018

National Webinar November 27: "Genomics Beyond The Hype"

I'm please to be invited to be a co-presenter on November 27 (1 ET, 10 PT) for a webinar,  Beyond the Hype: Where Genomics is Having an Impact on Outcomes.  

It's cosponsored by Quest.   Speakers include Drs. Patrick James and Felicitas Lacbawan of Quest, and myself.   The full website and registration enrollment are online here.

Monday, October 22, 2018

Very Brief Blog: MolDx Deletes Its "Excluded Test" Spreadsheet (M00047)

The MolDx program has special webpages for "covered tests" and "excluded tests," in addition to those coverage decisions memorialized as LCDs.

For several years, at least, through October 2017, MolDx had an online Excel spreadsheet listing hundreds of "excluded tests."  This was their document M00047.   The most recently download I have is from October 2017; I wrote about the Excluded Tests policies in detail in January 2015 (my article here, cloud spreadsheet here.)

As of October 2018, MolDx does still have a webpage for an online collection of articles about "excluded tests."  Here.  However, this page no longer appears to display the excel spreadsheet M00047, which was many of hundreds of entries long.

All of the articles about excluded tests on today's MolDx website refer to articles in the CMS MAC article database, with CMS document numbers (such as "A53457.")  No spreadsheets.

The last version of the former spreadsheet that I have on file - 10/2017, "M00047, V15" - has some 1,200 entries naming excluded tests.  Some 600 were named examples of Tier 2 codes (within 81400-81408) that were non covered.

JPEG of October 2017 file copy of M00047 - no longer displayed by MolDx

Saturday, October 20, 2018

Very Brief Blog: New Report that Medicare's New Diabetes Prevention Counseling is Underfunded

Last year, CMS finalized rulemaking to create a novel national benefit for diabetes prevention counseling classes for qualified and at-risk patients (e.g. borderline blood sugar or obesity).   This is one of the first projects completed by the Medicare Center for Innovation, and although the idea is simple enough, executing it took literally hundreds of pages of rulemaking spread over two years.  Enrollment (for a novel class of pre-diabetes education providers) began in April 2018.

A new report suggests the program may be so underfunded as to be hard for the service to actually be delivered.

See a trade journal report at Health Payer Intelligence here, and a peer-reviewed, open-access economics article here.   The authors delivered a real-world diabetes prevention program to underserved beneficiaries from 2013 to 2017; real costs averaged $800 per participant, but the current funding level and rules would net a provider only $138 per participant. 

Since this is a 2018 program, following the agency's routine data practices, Medicare might not have to release annual national Part B utilization data for the new DPP codes until November 2019, or release provider-specific code use until May 2020.

Virtual DPP?

Medicare declined to allow CDC-accredited DPP providers who use virtual classes and materials to participate in its program. 

Likely, that technology may be more cost-effective than the brick and mortar classes described by Ritchie et al.  See an article on Virtual DPP here.   (Disclosure: I've worked as a consultant for Omada, which probably has the best-validated virtual program in the Medicare-age population.)

This isn't the first negative spin on the program.  Early press in Spring 2018 carried headlines like "Diabetes Program Stumbles at Roll-out," here, here.

Friday, October 19, 2018

CMS Posts Final Gapfill Codes for CY2019: Whole Genome Raised from $349 to $5031

On Friday evening, October 19, 2018, CMS published the final contractor gapfill pricing, which are effective 1/1/2019.  (Proposed prices had been released in early June with comments due in early August). 

The 18 codes were placed into the gapfill process last fall; some were codes with no pricing through PAMA and a few were new codes that couldn't be assigned a fall 2017 crosswalk.
  • On the CMS CLFS webpage here, see the final "2018 Final Gapfill Determinations."
CMS provided summary rationales for each price.  MACs varied more from one another in the final price proposals than in the preliminary ones in June.  However, the final price is set by the median, which is controlled by MolDx-system MACs which essentially act as a voting bloc of 30 states.

Most of the codes being gapfilled were either "PLA" (new rapid) codes, ending in "U" such as 0001U, or administrative MAAA codes (ending in M, such as 0001M).  See table below.

Whole Genome Analysis

The biggest price change was for whole genome analysis (81425), sibling/family member analysis (81426), and reanalysis (81427).   These rose from a uniform first recommended price of $349 (?!) to $5031, $2709, and $2337, respectively.   (Over 20 comments letters were submitted to CMS, if I can summarize, generally portraying the $349 price as ridiculous.) 

The whole genome price of $5031 is a little higher than the whole exome price of $4780, as set by market rates under PAMA.  Use of these tests is likely to be rare in the Medicare population but a growing literature has documented the usefulness of whole genome in special cases including gravely ill newborns.

How the different MACs priced WGS-related codes is shown in the next table.   By my count, 32 MolDx-related CLFS zones proposed $5031 for 81425.  Novitas and FCSO had 14 zones, at $4780.   NGS MAC had 12 zones at $349.   See table:

click to enlarge
These are "final gapfill prices" but CMS is "accepting comments" until November 19 at .  Elsewhere CMS refers to this as an (ill defined) chance to "appeal" the gapfill final amounts.  If CMS takes any action on such "appeals" there is not much outside evidence of it other than the final prices on the 2019 CLFS in November would be different than those shown here in the "final gapfill" values.  (And note that the November 19 deadline for comment means it is very close to the lockdown of 2019 fee schedules anyway).   This is in contrast to an appeal of a final crosswalk value, which kicks the whole code back into the next summer public meeting again.

Disclosure:  I served as a consultant this summer to several entities working to raise the median price from the initial $349 to $5000 or better.


See the original CMS spreadsheet at the link early in the blog.  I've put a slightly tricked-out Excel with highlighted tabs for short summary views and comments views in the cloud, here.

MAC rationales for 81425, 81426 were stated to be:

Some contractors based initial recommendations on laboratories with similar test with charges of $349.00. Upon further review, however, several contractors revised their recommendations.  Some contractors looked to similar tests on the CLFS, specifically 81415, a Whole Exome Sequencing code, and adjusted the payment rate based on input from several laboratories.  Other contractors simply followed public recommendations to use CPT 81415 as a similar test on the CLFS to recommend a payment rate. 

MAC rationales for 81427 were stated to be:

Initially, several contractors felt this code represented interpretation only and thus averaged two comparable codes (G0452-26 and 88291).  Upon further review, some contractors followed public recommendations to use CPT 81417 as a similar test on the CLFS. Others did not recommend this similar payment rate and instead estimated a professional labor rates for the code. 


The average price of clinical grade WGS was $5225, almost the CMS price for 81425, in a 2018 Harvard study (here).


DTC testing on Amazon - for you and maybe your dachshund too...

Very Very Brief Blog: The Rise and Fall of a Valuation Bubble for Q-IHC, FISH

This blog, posted on October 19, 2018, reflected data in Summer 2018 CMS proposed rulemaking, as well as data collated and posted by CAP.   The data proposed a marked increase in some CPT codes such as 88360, 88365 and others.  This was due to a Medicare-proposed spike in supply payments.

In the final rulemaking, November 1, it looks like most of the "bubble" has been unwound.  I haven't done a full analysis, but one screen shot from CMS final rule carries most of the message.   For example, SL493 Estrogen Receptor Cocktail, spiked from $14 to $322 and then final downward to $16.  Another reagent, SL497, DNA Probe Cocktail, spiked from $8 to $420 and back to $8.  CMS table here:

The original October 19 blog is left as-is below, describing what CMS proposed before we knew what CMS would finalize.



This past summer, CMS announced a massive revamping of capital equipment and supply inputs used to value Part B services in relative value units (RVUs).   This follows 2018 law in PAMA Part 218, allowing CMS to commission or require a wide range of information resources to value capital equipment and supplies.   The massive new pricing system was announced fairly briefly in July 2018 proposed rulemaking, but engendered comments by many groups.

College of American Pathologists published a chart showing that some selected ISH and FISH codes are proposed to rise sharply in price between CY2018 and CY2019:

For example, the payment  for 88360 rises from $136 to $289 (+112%) and the technical component of ISH, 88365, rises from $137 to $304.


RVU prices are based on incredibly complex "bottom up pricing" that includes line items for minutes of physician time, minutes of staff time, minutes of use of capital equipment, and all supplies large and small (e.g. a surgical tool one time use supply might be $800 while an alcohol swab might be one-half penny).

While it's not elegant Excel, below I show a snippet of the supply inputs for 88360.  This previously used 2 units of estrogen receptor monoclonal antibody SL493 at about 2x14 ($28.94), and now uses two units at a new unit price of $91.45, or $192.41.   Just a few of the supplies used to total $49.91, but now total $206.33, or about +$156.

(Note that there is some significant price compression before these item prices are converted to CMS payment RVUs. Through complex math and rules, the prices are stored in dollars, converted to RVUs, and then multiplied by about $30 per RVU to convert back into dollars).

For 88365, similarly, EBER DNA Cocktail Probe rises from $13.71 to $178.31, along with some other increases.

In 2017 data, code 88360 had about 110,000 uses, so at +$150 per payment, total payments would rise by about $16M.

With apologies they are very simplistic, I store the Excel worksheets I used in the cloud here.

Very Brief Blog: New Medical Director at MolDx Program, Dr. Bien-Willner

This past summer, MolDx positioned a new medical director, Dr. Paul Gerrard (blog here).   Dr. Gerrard continues to work on MolDx issues, and MolDx has added a full time medical director, a molecular pathologist, Dr. Gabriel Bien-Willner.

Dr. Bien-Willner's Linked In page is here.   He started as MolDx medical director in September, 2018.   He became chairman of the molecular pathology practice, Bien Willner Physician Group (BWPG), in 2015.   He served as Executive Medical Director for Molecular Health GmBH from June 2014-May 2018.

Bien-Willner holds an MD-PhD from Baylor and completed his residency and molecular genetic pathology fellowship at Washington University.

See an interesting ten-page interview with Dr. Bien-Willner, conducted in November 2016, at American Journal of Managed Care, here.

Very Brief Blog: MolDx Retires LCD for LDT Lung Cancer Tests; "Obviated by NCD"

On September 24, 2018, MolDx posted a notice that it was retiring its LCD for gene panel testing in non small cell lung cancer, effective 10/1/2018.   A link to the retired LCD is here.  Several key screen shots are listed below.

In March 2018, CMS released an NCD covering FDA-approved gene panel tests (NGS tests) in advanced cancer.   However, MACs are allowed to write their own LCDs for LDT-type tests that are not FDA approved, if they choose to. 

Based on publicly available announcements, Foundation Medicine's Foundation One LDT test was covered under this Palmetto LCD when the LDT test was run at Foundation's North Carolina center.   The non-FDA FMI LDT test was discontinued on September 28, 2018, according to an FMI announcement.

See screen shots below.

Rationale: Need for LCD obviated by NCD.

Wednesday, October 17, 2018

Very Very Brief Blog: CMS and FOIA (Freedom of Information Act)

The usual cliche' about getting Freedom of Information Act materials from CMS is that "it takes forever - it takes years."   In the past year, I've gotten several document sets from CMS (or a MAC) and typically in a couple months.  They require submission of FOIA requests by mail - on paper and with a postage stamp.

Each MAC has a FOIA process page.  CMS also has a rather gaudy consumer-facing FOIA page, here.

What I had never noticed, CMS has a "FOIA Reading Room" with some interesting documents.  It's here.  There is a 26-page PDF guide to the CMS FOIA process, here.   Requests can be escalated higher in the agency, if denied. 

From the opposite perspective, avoiding information release under FOIA,  CMS's 26-page PDF discusses exemptions from release (primarily FOIA exemption #4, trade secrets or confidential information.  Stamp your documents accordingly.)   However, DOJ has a webpage stating that courts expect FOIA exemptions from release (under 5 USC 552(b)) to be narrow, not wide (here).  National Parks v Morton, 1974, et seq.   You can't gratuitously claim that everything you send to CMS is exempt confidential information.

What caught my attention this morning, CMS maintains public line item FOIA logs monthly back to 2015.  For example, the most recent is a FOIA log for June 2018 (here).  It looks like they get over 150 requests a month.  Requests come from law firms large and small, newspapers, research groups, and other entities as diverse as the health plan Oscar, the Democratic National Committee, Buzzfeed, and Providence St Joseph health system.  In addition to the FOIA spreadsheet reports, the 26-page CMS PDF notes that "CMS receives the highest number of FOIA requests of any FY2011, CMS received over 52,116 FOIA requests."

click to enlarge
So if you do submit a FOIA request to CMS, within a short time, CMS will post your request in a table such as the one clipped above.


I've always heard that FOIA allows requests for existing documents (e.g. all emails with keyword X from person A to person B) but never requires the agency to undertake creation of new documents.


FOIA exemption 2 exempts "internal personnel rules and practices" from release.  I used to hear that this allowed an agency to refuse to release its own internal "deliberative" documents.   However, the CMS 26 page PDF (here) on page 10 informs us that based on a 2011 Supreme Court case, this exemption-from-release has now been read to apply solely and literally to personnel rules.   Thus, it now is understood as exempting release of [personnel rules and personnel practices] and no longer read as broadly allowing the agency to withhold [personnel rules and (internal agency) practices (of all types).]


FOIA responses aren't necessarily internally consistent.  I once asked MolDx under FOIA for its scope of work (statement of work), and received a reply this was a confidential internal agency document.  However, the very same request to CMS got me a copy of the MolDx statement of work in a couple weeks (here).

Monday, October 15, 2018

Very Brief Blog: CMS Issues One of the Most Unusual CMS Regulations Ever (Drug Pricing on TV)

UPDATE: Finalized May 2019 - here.

On October 15, 2018, CMS released proposed regulations that would require TV advertisements to include drug pricing information, if they are drugs that are covered under Medicare "directly or indirectly."
  • See a trade journal article here.  Follow-up trade journal here and here.
  • See the actual 42 page proposed regulation here
    • Seema Verma press release here.
    • Seema Verma same week at AHIP, here.
Since this new regulation is directed at consumer ads, it is a bit surprising to see it as falling under CMS's legal authority rather than e.g. some other part of HHS or maybe the FTC.   The regulations on price advertisement will be tucked among other routine CMS regulations at 42 CFR 403.1200ff.

CMS Works to Justify Why It Can Do This

Anticipating reactions between skepticism and surprise, CMS dives directly into a long and elaborate discussion of whether it has authority to regulate content of TV ads because it pays for drugs. 

Many pages of the regulation read like an overcaffeinated litigator's legal brief, citing a dizzying cascade of court cases and precedents.  For example, we learn that Massachusetts Law 94 295C requires retail dealers of motor fuel to public display on each pump the price per gallon.  Well, yes.  And that 7 CFR 59.301(a) and (b) require that meat packer processing plants must daily report to the Secretary of Agriculture the sale price for lambs.  (Quiz later.)   The authors reach back to a 42-year old economics article on drug pricing (by John F. Cady, then an assistant professor at Harvard MBA school and today still in service at Indiana University).

The authors then start running down a list of federal court citations like Colorado Indian River Tribe v Indian Gaming Commission 466 F 3d 134, 139, and Thorpe v Housing Authority of Durham, 393 US 268, 277 (see esp. n. 28).   At this, point, Lexis was threatening to overheat.

Pivoting the reader toward the argument on the table, that CMS can regulate the TV display of drug prices, CMS notes that Section 1102(a) of the SSA allows CMS to make "such rules and may be necessary to the efficient administration of functions" under the SSA.   Section 1871(a) allows CMS to "prescribe such regulations as may be necessary to carry out the programs."

CMS "has concluded that the proposed rule has a clear nexus to the Social Security Act."   They note that CMS spent $174B in 2016 on Part B & D drugs, and $64B on Medicaid drugs.  This $238B was 53% of $448B spent on "retail and non retail" prescription drugs.

Most of the CMS regulation is about consumer behavior and consumer advertising, something never directly addressed in the enabling legislation for Medicare and Medicaid.


There is a 60-day comment period (about December 15, 2018). The regulation is CMS-4187-P.


See a trade journal article in MedCityNews - noting that only New Zealand and US allow DTC drug advertising; here.  PHRMA had been discussing voluntary price disclosure guidelines.  For some additional ins and outs of drug price transparency, MedCityNews also here.   Fierce Healthcare notes that most DTC ads have pivoted away form the Lipitor's and Viagra's of the past and towards obscure specialty psoriasis drugs or cancer drugs, here.

Figure: Source here.

For a concurrent article about a Brookings Institute event on drug pricing, including Part B drug pricing, including speeches from Seema Verma and others, here.


Note that this isn't primarily about the drug prices - you can already get many drug prices for free by digging around the CMS website - it's about lifting those prices into TV ads.

CMS also requests comment on whether it should just make drug prices more transparent on its government websites (e.g. imagine  Yes, it could do a lot there, and very fast.

CMS argues that consumers will want to compare prices.  However, if drug prices are so hard to get, seeing the price of just ONE single drug in ONE ad is a terrible way to comparison shop for drugs for your disease.  Would you have to sit in front of a TV all day, all week waiting for the very very rare Crohn's disease commercials (at two a.m.?) and jotting down prices?

Would there be a boomerang effect?  Who dying of heart disease or cancer wants the cheapest drug?  Might they not assume that logically, the more expensive drugs will be the higher quality and more effective drugs they need? 

Very Brief Blog: Tracking Scott Gottlieb's 20-Tweet Tweetorial on Drug Price Competition

This past week, President Trump signed legislation on drug price transparency, including specific authorities for FTC to pursue companies that work to block market entry of biosimilars.  For entry points see CNN here and BioPharmaDive here, BioSpace here.

FDA"s Commissioner Scott Gottlieb is also active in public forums at promoting drug price competition.  This weekend, he released an elaborate 20-tweet "Sunday Tweetorial" on all the efforts he's promoting at FDA to increase U.S. drug price competition, here, by speeding the entry of generics.   Historically, and in most cases, prices fall once there are several generics in a market.
  • You should be able to see and read the Sunday Tweetorial here in sequence.
  • I've put a PDF of the whole tweetorial in the cloud, here.
    • Read as a 15 page PDF.   
  • This is Gottlieb's twitter feed.  @SGottliebFDA
    • As of today, 6220 tweets.

Gottlieb is often outspoken on market entry forces (and the government's role).  See his address on antibiotics policy in mid September 2018 (here) and his views on antibiotics pricing paradigms from June 2018 (here).


See the HHS Drug Pricing Homepage here including the Administration's May 2018 drug pricing blueprint ("Patients First," PDF, 44pp.)

Interestingly, given the rising billions of dollars in biologicals, the Biosimilars Competition Act received an "unofficial 10 year score" from CBO of only $100M, according to one source, here.  See the July House version HR 6478  here.   FDA Law Blog here.


The day after Sunday's Tweetorial by Gottlieb, CMS released proposed regulations requiring advertisements to include drug pricing information, if they are drugs that are covered under Medicare "directly or indirectly."   Since this is directed at consumer ads, it is a bit surprising to see it as falling under CMS's legal authority rather than e.g. some other part of HHS or the FTC.   Here is a trade journal article and here is the 42 page draft regulation in PDF.  The regualations on price advertisement would be tucked among other CMS regulations at 42 CFR 403.1200ff.

CMS dives directly into a discussion of whether it has authority to regulate content of TV ads because it pays for drugs.   CMS notes that Section 1102(a) of the SSA allows CMS to make "such rules and may be necessary to the efficient administration of functions" under the SSA.   Section 1871(a) allows CMS to "prescribe such regulations as may be necessary to carry out the programs."  CMS "has concluded that the proposed rule has a clear nexus to the Social Security Act."   They note that CMS spent $174B in 2016 on Part B & D drugs, and $64B on Medicaid drugs.  This $238B was 53% of $448B spent on "retail and non retail" prescription drugs. 

Wednesday, October 10, 2018

Very Brief Blog: ACLA's PAMA Lawsuit Tossed from Federal Court in September 2018

Last winter, ACLA filed a lawsuit against CMS for inappropriate implementation of the PAMA lab pricing law, resulting in underpricing of new median rates for lab tests.  The primary concern was that CMS had written, interpreted, or implemented the PAMA law's conditions in a way that nearly  excluded reporting by hospital reference labs. 

News sources reported circa September 24, 2018, that a US district court judge had dismissed ACLA's case on the grounds that the court lacked jurisdiction.
  • For the 33 page, December 11, 2017 complaint, see here.
  • For an open access 13 page PDF of the judge's dismissal, see here.
  • For open access reporting on the September 2018 dismissal, see MedTechDive here.  Fierce Healthcare here.  HealthLeaders here.  Seeking Alpha here ("Labcorp down 2%").  Becker's here.  Reuters here.
    • For coverage and quotes at 360DX, here.
  • For ACLA's statement on the dismissal, here.
  • For CAP's statement lamenting the dismissal, here.
  • Follow up: On October 19, ACLA issued a press release that it filed "notice of appeal" with the court. here.

The judge's decision is readable and hinges on Congress's statute that shields PAMA 216 from judicial review.   ACLA had attempted to parse the procedures for setting up the rules (which they object to) from the actual fee schedule rates, which were clearly shielded from judicial reviews.  Judge is dismissive of ACLA's position, and uses quotations from the law to show (in her view) the shield from judicial review applies to all of PAMA 216.   This follows an earlier discussion that "federal courts are courts of limited jurisdiction" and rather like a person is innocent until proven guilty, cases are assumed to be outside judicial review until proven they are inside it.   There is an interesting twist on page 12 (that Congress required PAMA implementation through notice and comment rulemaking, so it is inconsistent to shield that rulemaking from judicial review, as it enabled the Secretary potentially to undertake reckless (but required) notice-and-comment rulemaking with no later recourse for stakeholders).*  However, this interesting side-road does not change the decision.

Separately: for ACLA's comment on Summer 2018 Part B rulemaking, which includes extensive comments on PAMA, see here.  AMP's 5-page letter on Part B rulemaking is here.  CAP's website for CMS letters appears to list its September 2016 and September 2017 PFS comment letters but not its September 2018 letter. CAP does have webinar slides on the PFS 2019 proposals (here).


As a non-attorney working full time on federal policy, I've always been puzzled by laws written by Congress which include a clause stating the implementation of the law is "shielded from judicial review."  Checks and balances?

According to news reports, the judge's dismissal hinges on lack of jurisdiction.  Even if the judge had jurisdiction, the section of law regarding which labs can report (with a 50% rule regarding Medicare Part B billings) is (or was or remains) problematic to craft around the issue of hospital labs.  ACLA  offers a mathematical solution on pages 9-11 of its comment letter.

CMS proposed to use 1450 claims forms in regard to its definition of hospital reference lab reporting.  AMP and ACLA seem to take diametrically opposed positions on the wisdom of this CMS suggestion.

From summer proposed rulemaking, 1799 documents to the 2019 rule (CMS 1693 P) cited "PAMA" (here).


* As quoted by judge:  ACLA wrote, "It would raise constitutional concerns of the highest order if Congress were to require the Secretary to promulgate substantive legislative regulations that directly regulate primary conduct on threat of civil penalties but then [also] attempt to insulate those regulations and the Secretary's enforcement of them, from any form of judicial review."   [Decision, page 12].

Tuesday, October 9, 2018

Very Brief Blog: Baker Tilly's Checklist for Medical Devices & Market-Facing Evidence

This week, MedCityNews runs an article on, "What can digital health companies learn from medical devices?" in terms of evidence and reimbursement success.  Here.

Inside that, find a link to a "Market Access Checklist" from Baker Tilly, presented as a one page PDF infographic.   Download it here.

While the checklist is commonsensical to reimbursement experts, it may be an eye opener to newer investors, CEO's, or board members.   Topics include:

  1. Clinical Evidence
  2. Economic Evidence
  3. Medical Society Guidelines
  4. Provider Communications
I would say....Yup.

Regarding communications, I ran across a quote from a 1976 booklet called "Thoughts of Jerry Brown."  Regarding the endless funding requests and justifications that crossed his desk as governor, he wrote:  "Even though they might be right, if they can't clearly state their case such that I can understand it, in the limits of time available, then I'm voting no.  That's my philosophy."   I'd suggest you assume the medical director at CMS or BCBS is thinking the same way.


Baker Tilly is a "full service accounting and advisory firm."  The cited MedCityNews articles is preparatory to a conference and features, among others, an interview with Baker Tilly's principal, David Gregory.  For his 2016 deck, "The Value Driven Provider," here.


If you enjoyed Baker Tilly's four-point evaluation program for market entry and reimbursement, consider these two posts.   The first is a "12 step program" for what VCs should consider when investing in healthcare technology.   The second is about medtech and payers.

Venture Valkyrie blog, 12 steps to VC investment due diligence, here.
Venture Valkyrie blog, medtech and payers, here.

Sunday, October 7, 2018

Very Brief Blog: $28M in All of Us Genomics Awards: Centers Span Coasts, Silicon Valley to Boston

On September 25, 2018, the NIH All-Of-Us program announced plans to sequence 1M genomes via initial funding at $28M to three genomics consortia.

The first brings together Boston's Partners Laboratory for Molecular Medicine, the Broad Institute, and Color Genomics in Silicon Valley. 

The second brings together Baylor, UT-Houston, and Johns Hopkins.

The third is run solo by University of Washington (Northwest Genomics Center). 

Click to enlarge.  Don't bother if you're in a flyover state.

  • See the NIH press release here.
  • See the Broad Institute press release here.
    • Color will analyze, interpret, and report results from the genomic data sequenced at Broad, working in collaboration with the Partners LMM, which will manage an expert team to address the most challenging genomic variants. 
  • Genomeweb here.
    • The funding announcement was issued in May 2018 (see technical Q&A here) with applications due in July 2018.
    • For a December 2017 report on what All of Us expected to be asking for (e.g. including its rising emphasis on exome/genome), here.
I'm not an expert on the greater Harvard system nomenclature, but my understanding is that Partners Lab for Molecular Medicine serves as a central germline clinical genetic center for Harvard-related hospitals.  According to Genomeweb, MLL director Heidi Reim "left for MGH's Center for Genomic Medicine" in August.


Collateral Ideas

If you're interested in All Of us collecting genetic and phenotypic data on huge numbers of people for future use, you might be interested in LunaDNA.  It's "the first people powered platform where you share data, advance science, and take part in the value created" and received $4M from Illumina Ventures (and others) in May 2018.  See a July 2018 article here. LunaDNA will be able to "issue company shares in exchange for genomic data," here.

If you're interested in Partners LMM as a cross-organizational hub for genetics in the diverse health system, you might be interested in the history of the MGH Pathology Department, where the chapters of a recent 300 page book are online as PDFs here.

For interests in The Broad Institute, a May 2018 podcast with Amalio Telenti (a pioneer in the area of molecular multi drug resistant bacteria) on his sabbatical at the Broad, here.

Thursday, October 4, 2018

Very Brief Blog: Guardant Health Raises $238M in IPO; Stock Reaches $33

According to Investors Business Daily and Yahoo Finance, Guardant Health garnered some $238M in an IPO. 

The projected or actual share price has moved upward.  Early estimates forecast an IPO at $15-17 a share, while the final IPO finally priced at $19 a share. Rising above that, the market opened at $27 a share, and during Day One, shares rose as high as $33. 

Market cap was $1.6B according to one trade journal (here).   I believe that's at the nominal $19 per share price.  That market cap value compares favorably to the circa $550M invested so far.

Guardant Health received Medicare coverage for its liquid biopsy gene panel test this past summer (here), for lung cancer patients.

Click to enlarge: Yahoo Finance screen shot

CMS Releases Widespread Changes to LCD Process !

On October 3, 2018, CMS released a 32-page PDF that lays out substantial changes to the LCD creation and review process.
  • See the actual CMS document here.  
    • It's filed as "Change Request 10901."
  • See Medicare's own summary of the change here at the CMS Fact Sheet center.
    • Administrator's Blog covers the change, here.
  • See trade press at MedTechDive here.
    • Headline is, "Speed access to medical technologies."
    • I don't see that.  Every acceptable LCD request (e.g. new info submitted) seems to require a full LCD publication, comment, and review process, including entering a formally named backlog.   If a MAC can do 15 LCDs a year and gets 100 requests that "qualify," then it has a ten-year-backlog right there.  A manufacturer might also complain that its product never-ever leaves the "backlog" for opaque reasons.
  • See trade press at HealthCareFinance News, here.
This change primarily implements new law in the 21st Century Cures bill from a couple years ago.  However, it incorporates some other changes CMS has been planning over a period of years.

Note that there is ANOTHER, NEWER piece of LCD law that was recently passed at the House and is sitting at the Senate, H.R. 3635.  This bill has been supported by AdvaMed, CAP, and other groups.   See entry points and links on that topic here.

Contractor advisory meetings will be open to the public and webinar access will be allowed.  There will be an option to request, not only to revise, an LCD (   Preliminary meetings with stakeholders are allowed but not required (  MACs will be required to have a standardized format for summarizing evidence.   Draft LCDs will expire after 1 year if not finalized.

No Pre-emptive LCDs?

The format seems to make it impossible to make pre-emptive LCDs with no further explanation.  For example, LCDs that simply add the names of 20 or 30 new AMA CPT category III codes to a listing of non-covered codes.  Doing that wouldn't meet the requirements for evidence review and explanation.

What Is An "Explanation?"

Come key points remain unchanged (although perhaps reformatted).  For example, a reconsideration request shall receive an explanation of why the request was invalid.  In the past, that explanation (sic) has been in some cases, a clear two paragraph discussion.  But in other cases, the "explanation" has been a mere preemptive phrase "Evidence not sufficient" (3 words).

Consider the NCD Format

NCDs have a now-classic format where, after a decision summary and some introductory material, there are two main sections.  The first is "Evidence Summary."  (Smith et al. 2015 is a 300 patient RCT showing A, B, and C with one year outcome data.)    The next section is "Analysis."   (Smith et al. is an RCT against the standard of care, but we believe a different standard of care would be an important comparator.  We see several risks for bias in the trial design, including X, Y, Z.)   Analysis supports a final "Conclusion."   The LCD content isn't quite the same but the NCD structure provides a backdrop.

LCD "Content" Bullets: Section 13.5.3
"In every proposed and final LCD, the MAC must summarize the evidence that supports coverage, limited  coverage, maintenance of existing coverage in cases of LCD reconsideration or non-coverage.  At a minimum, the summary should include the following:     • a complete description of the item or service under review; • a narrative that describes the scientific evidence supporting the clinical indications for the item or service;  • the target Medicare population; and • whether the item or service is intended for use by health care providers or beneficiaries. 
If the item or service is regulated by the FDA, and determined by the MAC to be reasonable and necessary, information regarding the use of the item or service subject to the FDA indication, as applicable, shall be included.   
In conducting a review, MACs shall use the available evidence of general acceptance by the medical community, such as published original research in peer-reviewed medical journals, systematic reviews and meta-analyses, evidence-based consensus statements and clinical guidelines.  Proprietary information, submitted by a requestor, not available to the public shall not be considered. Medicare data considered as part of the evidence review for an LCD shall be reported in the evidence summary."  [Also, MACs may consult associations or experts; 13.2.3).

Role for a "Dossier"

Depending on the topic, stakeholders may prepare a very long "Dossier" or evidence summary.  This is accepted practice in some circles, for example, new drugs, where there is a template for an AMCP dossier on the drug.   However, I have also seen cases where CMS medical directors pay very little attention to a "dossier" but simple set it to one side and focus instead on the submitted PDFs of published trials.   The new instructions say that "proprietary evidence submitted by the requester shall not be considered."

However, an earlier section also requires the request to "address the relevance, usefulness, clinical health outcomes, or medical benefits" and "fully explain the design, purpose, of the item or service and "a justification supported by the peer reviewed evidence."  That sounds like a "dossier."  So you have to write up a justification of the evidence and explanation, but not say any proprietary concepts or ideas while doing so since only published evidence is considered.


"MACs shall record (video, audio or both) the CAC meetings and as part of the LCD record, assure the recording is maintained on their contractor website." []   This is interesting in that some public CMS meetings are webcast, but, are as of now no longer archived on the CMS website or CMS youtube channel although CMS had done so in past years.  (My article on this, here).

Valid LCD Request => Reopening?

If I read this correctly, a "valid LCD request" results in a reopening of the LCD or putting the LCD on the MAC's waiting list.  [13.3.3]

This is a big change, since previously most reconsideration requests were handled by medical director staff resulting in a letter back to the requester.  This could also create a lot of confusion, since some reconsideration requests point out, for example, an omitted ICD-10 code, which the contractor would add to the LCD in a week or two, without a year's adventure in the LCD process.   I'm not sure I have interpreted this section correctly.

I think the "escape valve" (stated in the CMS press release) is that ICD10 codes and CPT codes are being moved OUTSIDE the LCD itself (as they are outside an NCD).   This could either allow a lot of flexibility, or a lot of mischief, depending on your level of paranoia. MACs must follow "the full reconsideration process for valid requests" but the code lists are no longer inside the LCD, so it is a bit of a puzzle.

Unintended Consequences?

Formerly, the LCD chapter had a clear statement of if and when an LCD had to be reopened through a public process.  Additions could be handled by simply expanding the LCD and posting it (no comment process).  Restrictions had to be handled through the full LCD posting and comment process.   Here, any requested changes (even a correction or minor expansion) appears to require the lengthy full LCD process.  The result could both delay coverage and create interminable backlogs, if I read it correctly.

Will the rules speed access or create a years-long LCD backlog list?