FTC’s First Monetary Sanctions Against Six CBD Companies
CBD ALERT: Criminal Charges Dropped Against NY CBD Manufacturer; Lessons Learned
By: Dae Y. Lee, Pharm.D., Esq., CPBS
Recent events signal the need for CBD manufacturers to have a clear game plan to address legal uncertainty and confusion by law enforcement and prosecutors. New York prosecutors recently dropped felony marijuana possession charges against a New York-based CBD manufacturer. The manufacturer was arrested in November for allegedly receiving 106 pounds of marijuana. However, the shipment contained hemp plants. Notably concerning, the shipment included documents verifying that the hemp contained 0.06% THC, which is lower than the 0.3% threshold set forth by the Agriculture Improvement Act of 2018 (2018 Farm Bill). Of note, any cannabis plant that contains more than 0.3 % THC would be considered non-hemp cannabis under federal law and would thus face no legal protection under the 2018 Farm Bill.
Law enforcement’s wrongful seizure demonstrates a lack of knowledge and understanding of CBD, which may lead to business interruption and financial loss. Stakeholders should make sure they have a Plan of Action to address wrongful seizure and surrounding criminal issues, as well as appropriate commercial insurance coverage to mitigate the economic risks.
New York is clearly making efforts to address uncertainty through legislation. New York Governor Cuomo signed a comprehensive hemp bill this month that allows and sets up a regulatory framework for the growth, sale, distribution, transportation, and processing of industrial hemp and hemp extracts including CBD in the state. Stakeholders should understand the contours of this new law.
Regulation of hemp and its derivative products remains mired in a jumble of conflicting state and federal law. Stakeholders, ranging from manufacturers to retailers, must remain compliant. If your company handles hemp and its derivatives, contact Frier Levitt today to speak to an attorney.
New York State Passes New Law Establishing Regulatory Framework for Hemp and Hemp Extracts, Including CBD
By: Adam S. Bloom, Esq.
On December 9, 2019, New York Governor Andrew Cuomo signed legislation that impacts the state’s cannabidiol (CBD) businesses. The law establishes a regulatory framework for the growth, sale, distribution, transportation, and processing of industrial hemp and hemp extracts, including CBD, with a THC concentration of not more than 0.3 percent on a dry weight basis. The law establishes licensing, good manufacturing practice standards, testing, and labeling requirements for the industry. Governor Cuomo also announced that New York State will host a hemp summit in January 2020 to further develop industry policies.
Under the law, retailers, wholesalers, manufacturers, and extractors of products derived from hemp extract – including CBD – must apply for a license from the New York Department of Agriculture and Markets. The Department will establish regulations governing this process as well as regulations covering the labeling and advertising of such products.
In addition, among other requirements, hemp extract products must be sold or delivered in containers with labels as may be required by the state, must be extracted and manufactured in accordance with good manufacturing processes pursuant to FDA good manufacturing practices, and every cannabinoid manufacturer and extractor must contract with an independent laboratory to test their hemp extract products.
While countless businesses await legal clarity regarding their ability to add CBD to foods, drinks, and dietary supplements, the New York law defers decision-making on this issue until a later date. The State appears to be waiting to see whether the Federal Food and Drug Administration (FDA) establishes regulations allowing for the marketing of CBD in foods and beverages and likely will follow FDA’s lead at that time.
Federal and state laws regarding hemp, CBD, and other cannabis-derived products are rapidly evolving and there are many potential pitfalls for operating in these markets without a thorough understanding of the complex regulatory environment. If you need assistance navigating the regulatory environment for hemp, CBD or other cannabis-derived products, contact Frier Levitt today to speak with an attorney.
The Current State of U.S. Biosimilar Policies – An Overview
This article was originally published on the Biosimilar Development website on October 17, 2018.
With the continued policy dialogue on how rising drug costs impact patient access, the theoretical cost savings that biosimilar medications may offer is intriguing to many policymakers as well as those in the industry. A recent IMS Institute Report found several interesting points regarding the potential of biosimilars:
– By 2020, biosimilars will start competing with original biologics that currently have sales of $50 billion annually.
– Biosimilar use in the European Union and United States may yield total savings of $56 to $110 billion over the next five years.
– Within three years, eight major biologic medicines are expected to lose exclusivity protection, including treatments for autoimmune disorders and diabetes.
– Healthcare systems, by opening markets to biosimilar competition, could realize a 30 percent reduction in price per treatment day compared with originator biologics.1
As the conversation about biosimilars and their potential cost savings continues, let’s examine what the U.S. Department of Health and Human Services (HHS), the Food and Drug Administration (FDA), and Congress have been doing recently to chart the developing course of biosimilar policies.
Trump Administration Takes Steps To Encourage Biosimilar Uptake
This spring, the administration released its blueprint to lower drug prices, “American Patients First,” which featured a discussion of greater biosimilar utilization. The blueprint called for key reforms in four areas: (1) improved competition, (2) better negotiation, (3) lower list prices, and (4) reduced out-of-pocket costs.
Unfortunately, we have yet to see any legislation out of the blueprint, but this could be due to where we are on the legislative calendar. Normally, toward the end of the year in a non-presidential election year, legislative activity tends to slow down, with only the most politically important issues maintaining momentum. Regardless of who wins control of Congress this fall, we could see much more biosimilar legislation driven by the blueprint, as well as the FDA, which continues to push for a cheaper prescription drug marketplace. This should be easier in 2019, as we will be more removed from election-driven politics.
Notwithstanding this, the blueprint described some actions that the Secretary of Health and Human Services can take to accomplish greater biosimilar utilization. According to the blueprint, thus far the administration has:
– Finalized “a policy in which each biosimilar for a given biologic gets its own billing and payment code under Medicare Part B, to incentivize development of additional lower-cost biosimilars. Prior approaches to biosimilar coding and payment would have created a race to the bottom of biosimilar pricing, while leaving the branded product untouched, making it an unviable market that few would want to enter.”
– Finalized “changes to the Medicare Prescription Drug Program in the 2019 Part C and Part D regulation,” allowing Medicare beneficiaries receiving low-income subsidies to access biosimilars at a lower cost.
The blueprint also alerted us to actions HHS may take as it continues to solicit comments on other policies it has under active consideration. One point to note is the difference between this administration and the last. The current administration has had its agencies rely more on requests for information rather than opting for the formalities within the regulatory process of proposing a rule.
A request for information is a tool used by agencies to solicit comments from interested stakeholders to provide the agency with the necessary technical aspects of complex topics. This allows agencies to determine if a formal rulemaking process will be promulgated on certain commonly commented on points. In this case, the comment period for the request for information ended in July 2018, with HHS currently reviewing the comments received. There is no anticipated date for next steps, so the public will have to wait until the next stage before discovering what the major points of interest are from the industry.
Specifically, HHS is seeking clarity from the industry on the following issues:
– Promoting innovation and competition for biologics. The FDA will issue new policies to improve the availability, competitiveness, and adoption of biosimilars as affordable alternatives to branded biologics. The FDA will also continue to educate clinicians, patients, and payers about biosimilar and interchangeable products as it seeks to increase awareness about these important new treatments.
– Samples for biosimilars and interchangeables. What actions should be considered to facilitate access to reference product samples by these companies?
– Resources and tools from the FDA: What specific types of information resources or development tools would be most effective in reducing the development costs for biosimilar and interchangeable products?
– Improving the Purple Book. What additional information could be added to increase the utility of the Purple Book?
– Educating providers and patients. What types of information and educational resources on biosimilar and interchangeable products would be most useful to healthcare professionals and patients to promote understanding of these products? What role could state pharmacy practice acts play in advancing the utilization of biosimilar products?
– Interchangeability. How could the interchangeability of biosimilars be improved, and what effects would it have on the prescribing, dispensing, and coverage of biosimilar and interchangeable products?
While all of these topics are important, in my opinion solid policies on interchangeability, biosimilar education, and formulary coverage would serve industry the best. First, having the clarity on whether interchangeability is feasible and what those points are will likely determine the speed at which we will see more biosimilars introduced into the marketplace. Second, educating physicians, pharmacists, and patients about the benefits of biological products will go a long way in ensuring marketplace comfort with these new protein-based medications. Last, understanding how payers and pharmacy benefit managers will manage these products is key in determining whether biosimilars will have an immediate impact on costs. Will payers and PBMs place these medications on higher tiers? How will rebates effect biosimilar utilization? Knowing this will help industry stakeholders determine their relevant pricing strategies to stay ahead of this emerging market.
Thus far, the FDA has been vocal about increasing biosimilar utilization as well. This summer witnessed FDA Commissioner Gottlieb release his Biosimilar Action Plan that addressed four key areas:
– Improving the efficiency of the biosimilar and interchangeable product development and approval process
– Maximizing scientific and regulatory clarity for the biosimilar product development community
– Developing effective communications to improve understanding of biosimilars among patients, providers, and payers
– Supporting market competition by reducing gaming of FDA requirements or other attempts to unfairly delay market competition to follow-on products
Additionally, the industry is closely watching the FDA’s direction for interchangeability, an important policy topic to address for market clarity, as it discusses how a biosimilar can be substituted for the brand biologic. Currently, there are still no interchangeable biosimilars, as the FDA continues to consider how to determine what biosimilar can be interchangeable with a particular biologic. At this point in time, it remains unclear when the industry will receive an answer on this.
Congressional Proposals On Biosimilars
So, what is Congress doing to address biosimilars? Congress has a few bills directly on point (listed below); however, it is questionable whether any of these will move due to the lateness of the legislative calendar.
– H.R. 6478, The Biosimilars Competition Act of 2018, seeks to enhance competition for prescription drugs by increasing the ability of the Department of Justice and the Federal Trade Commission (FTC) to enforce existing antitrust laws regarding biologic and biosimilar products. The act as proposed would essentially require biologic and biosimilar manufacturers to report “pay for delay” agreements, which are deals between biologic and biosimilar companies that ensure lower-cost medications are kept off the market for a certain time period. These deals, which have been frowned upon by the FTC and Congress, allow innovator companies to pay generic, or in this case biosimilar, companies not to bring cheaper alternatives to the market for a specified time. The federal government has been aggressively attacking these agreements as harmful to patient access to cheaper alternatives.
– S. 974/H.R. 2212, The Creating and Restoring Equal Access to Equivalent Samples Act of 2018, seeks to promote competition in the market for drugs and biological products by facilitating the timely entry of lower-cost generic and biosimilar versions of those drugs and biological products. This is another example of Congress going after pay for delay agreements to make more affordable drugs accessible to patients, assuming that biosimilar prices are proven to be consistently lower the biologics.
– H.R. 2051, FAST Generics Act of 2017, seeks to amend the Federal Food, Drug, and Cosmetic Act to ensure that eligible product developers have competitive access to approved drugs and licensed biological products, so as to enable eligible product developers to develop and test new products, and for other purposes. This bill is along the same theme as the aforementioned, as this bill echoes the attempt to provide patients access to lower-priced medications.
At this point, it seems that the Creating and Restoring Equal Access to Equivalent Samples Act of 2018 has the best chance of passing before the end of 2018, as it has been receiving the most favorable attention on Capitol Hill for quite some time. As mentioned above, however, the upcoming midterm elections make this highly unlikely.
It is very likely that we will see legislation addressing greater biosimilar utilization — either in the form of reintroduction of this session’s bills or entirely new bills — next year, regardless of who controls the House and Senate. However, with the uncertainty surrounding the midterms, it is difficult to predict which bills will emerge as “winners” next year. I also do not foresee any biosimilar policy development slowdown from either HHS Secretary Azar or FDA Commissioner Gottlieb, as greater biosimilar utilization remains a priority for them as a means to achieve lower prescription drug prices.
- “IMS Health: Surge in Biosimilars to Drive Significant Change in Health System Costs, Patient Access and Competition by 2020.” Business Wire. March 2016. https://www.businesswire.com/news/home/20160329005296/en/IMS-Health-Surge-Biosimilars-Drive-Significant-Change
Arkansas PBM Law Ruled Preempted By ERISA
In 2015, Arkansas enacted Arkansas Act 900, titled “An Act to Amend the Laws Regarding Maximum Allowable Costs Lists, To Create Accountability in the Establishment of Prescription Drug Pricing; And for Other Purposes.” Arkansas Act 900 requires Pharmacy Benefit Managers (PBMs) to make adjustments to pharmacy reimbursement when it comes to Maximum Allowable Cost (MAC) pricing changes. The law is one of over 30 MAC laws enacted by states on this issue regarding a MAC appeals process or the process for how MAC reimbursement should be adjusted when there are changes to multisource generic pricing. MAC appeal laws are designed to ensure that PBMs are fairly paying pharmacies and to avoid unreasonable reimbursement to pharmacies.
While MAC statutes are steadily being enacted across the country, the PBM lobby, Pharmaceutical Care Management Association (PCMA), a national association representing PBM interests, has zeroed in to challenge how MAC statutes were drafted in only two states—Iowa and Arkansas. Since no uniform model legislation on MAC laws has been developed, each state has been left to its own device, as well as its own resources and pharmacy advocacy make-up, to determine the wording of such legislation. While the laws received much support, federal courts unfortunately ruled that both Arkansas and Iowa were too aggressive in how their laws were constructed. Fortunately, attentive drafting of MAC appeal laws that carefully navigates related laws, can avoid PCMA’s successful challenge to state MAC laws.
A federal judge in Arkansas recently ruled against Arkansas Act 900. PCMA used a variety of constitutional arguments against further implementation, including preemption, violations of the commerce clause, due process, and the contracts clauses of the state and federal constitutions. Pharmacy organizations must learn from the shortcomings of the Arkansas Act 900 exploited by PCMA.
Ultimately, it was the Employee Retirement Income Security Act of 1974 (ERISA) statute that doomed Arkansas Act 900. The court ruled that the law interfered with national uniform plan administration by regulating the conduct of PBMs administering or managing pharmacy benefits pertaining to ERISA plans.
Additionally, the court ruled that Medicare also preempted the law since with respect to the Negotiated Price Standard, because:
- After an appeal, the resulting price could by the MAC Price, the Invoice Price, or the best price from the wholesaler higher than the MAC price
- The “decline to dispense” provision violated the requirements of the Pharmacy Access Standard, which requires that a certain percentage of beneficiaries live within a certain distance to a network pharmacy
The good news is that vulnerabilities to state MAC laws are avoidable.
Frier Levitt Government Affairs, LLC, works with organizations in different states on bills regarding healthcare and life sciences issues, including issues with PBMs. Having a bill drafted correctly, taking into account the current political and business climate, is essential to avoiding delays and litigation, which could result in wasting political capital. The Frier Levitt Government Affairs bill check process confidentially examines an organization’s proposed language, verifying the correct statute, while having it reviewed by our numerous clinician attorneys. Contact us today for assistance with your organization’s bill.
CMS Releases 2019 Medicare Part D Final Rule Addressing Important Issues for Pharmacies
On April 2, 2018, the Centers for Medicare and Medicaid Services (CMS) released the 2019 Medicare Part D Final Rule. The Final Rule addresses several Medicare Part D issues of importance to the community pharmacy industry, including:
- Direct and Indirect Remuneration (DIR)
- Standard terms and conditions
- Comprehensive Addiction and Recovery Act (CARA) Implementation
- Any Willing Provider
- Part D Formulary Changes
- Part D Tiering Exceptions
- Mail Order Definitions
- The interpretation of retail pharmacy networks
The Medicare Part D Final Rule presents many legal and policy options that can be used to argue against several issues that pharmacies confront with Pharmacy Benefit Managers (PBMs) and plan sponsors, including network participation, credentialing, and reimbursement changes based on dispensing history. Contact Frier Levitt Government Affairs today for help with the Final Rule.
New York Enacts New Law Protecting Pharmacies
As part of their state budget agreement, New York recently enacted NY State Assembly Bill A9507C, including much needed tools for community pharmacies to use in improving patient outcomes and lower healthcare costs, while also helping pharmacists achieve an even playing field against Pharmacy Benefit Managers (PBMs).
The new law’s provisions include fair pharmacy audits, the elimination of pharmacy gag clauses, and prohibitions on patient copay clawbacks, as well as expanded authority for pharmacists to immunize.
Governor Cuomo’s actions provide much-needed help for community pharmacies. If you or your pharmacy need assistance with Assembly Bill A9507C, contact Frier Levitt Government Affairs today.
Diabetes: Statistics, Policy and New Drugs to Fight It
It is no secret that diabetes is having serious repercussions on our country. According to the Centers for Disease Control (CDC), 30.3 million people in the United States have diabetes. 23.1 million people have been diagnosed with the disease thus far while 7.2 million people are undiagnosed. Additionally, the CDC’s 2015 statistics state that diabetes is also the 7th leading cause of death.
There are two types of diabetes; type 1 and type 2. Only 5% of the population has type 1 diabetes, as it is commonly diagnosed in children and was formerly known as juvenile diabetes. In type 1 diabetes the body does not produce insulin. Type 2 on the other hand is the most common. In type 2 the body does not use insulin properly. This is known as insulin resistance. The pancreas starts to produce more insulin to keep up with glucose levels in the body though over time it can not produce enough to keep glucose levels stable.
There are many policy aspects to diabetes. The first involves shadow pricing. Shadow pricing is when one company raises its wholesale price for a diabetes medication and then others follow suit over time. With insulin it started with a price hike of Lantus and then a similar increase for Levemir. This has caused several lawsuits to start against Eli Lilly, Novo Nordisk and Sandoz for their alleged dealings in price fixing. The plaintiffs in this case are accusing these three insulin manufacturers of raising list prices in order to gain favor among pharmacy benefit managers (PBMs). These lawsuits are now in Federal District Court as a class action suit. Also the federal government has started to investigate shadow pricing in Congress.
Medicaid and Medicare have been negatively impacted by the effects of diabetes. Medicaid is paying more for insulin and the price hikes for insulin are affecting dual eligible patients in regards to the Medicare donut hole. Many states are strapped for budgetary funds and may start to not cover certain insulin that is more expensive.
Additionally, there are no generics for insulin. Insulin is considered a biologic and not a small-molecule drug. Biosimilars are the only option here and are only up to 30% cheaper than the available brand in the market. Currently, there are only three major insulin manufacturers, which creates not only lack of competition but also issues with patient access.
The National Clinical Care Commission Act was signed into law this year and establishes a public/private commission. This commission will assess current federal programs that support clinical care for diabetes. The commission is also charged with finding inefficiencies and gaps in these programs and will provide recommendations to both Health and Human Services (HHS) and Congress.
Nevada’s approach to diabetes was an interesting one this year as the state passed its version of price transparency specifically targeted at the disease. The state’s new drug pricing law targets diabetes products and requires PBMs and manufacturers among other things to disclose certain pricing and rebate information. This law was signed into law after it was first vetoed by Governor Sandoval (R-NV), as the first draft had much stricter language against price gouging. Both PhRMA and BIO are currently suing the state by arguing that the law creates a constitutional violation and violates patent protection law and trade secrets by asking for price and rebate information. We’ll see how these arguments turn out.
There are Congressional bills currently on point:
H.R. 3124/S.1299 titled the Preventing Diabetes in Medicare Act of 2017 proposes to reduce the occurrence of diabetes in Medicare beneficiaries by extending coverage under Medicare for medical nutrition therapy services to such beneficiaries with pre-diabetes or with risk factors for developing type 2 diabetes.
H.R. 3271/S.1914 titled the Protecting Access to Diabetes Supplies Act of 2017 targets diabetic supplies within competitive bidding. Specifically, the bill requires the Centers for Medicare & Medicaid Services (CMS) to:
– Use specified data to determine whether a bid satisfies certain requirements related to volume of coverage with respect to such products
– Reject a bid if the bidder does not demonstrate its ability to furnish such products in a manner consistent with its bid
– Establish a process to monitor the extent to which an entity continues to cover the product types included in its bid
The Centers for Medicare and Medicaid Services (CMS) may terminate a contract if it determines that an entity, for reasons other than product discontinuation or market-wide shortage, fails to maintain ready access to such products included its bid. Additionally, the bill specifies that an entity furnishing such products to beneficiaries under the program: (1) must furnish to each beneficiary a brand of strips that is compatible with the beneficiary’s home blood glucose monitor, (2) may not attempt to influence or incentivize a beneficiary to switch the brand of either type of product, and (3) must contact and receive a request from a beneficiary no more than 14 days prior to dispensing a refill to the beneficiary.
H.R. 1617 titled the Promoting Access to Diabetic Shoes Act proposes to permit nurse practitioners and physician assistants to satisfy the documentation requirement under the Medicare program for coverage of certain shoes for individuals with diabetes.
Lastly, there are more medical advances on the way to help combat diabetes. The Food and Drug Administration (FDA) has approved Medtronic’s “artificial pancreas” which is the company’s first hybrid closed loop system. The system is the first to both monitor blood glucose levels and adjust insulin levels for type 1 patients. This is all part of the FDA’s plan to encourage development of an artificial pancreas device system, an innovative device that automatically monitors blood glucose and provides appropriate insulin doses in people with diabetes who use insulin. These are devices only and not an actual synthetic pancreas.
The FDA has also approved two combination products that contain long-acting insulin and glucagon-like peptide 1 (GLP-1) receptor agonists. These are the first of their kind of once a day injections to combine these drugs.
Jardinance is the first diabetes drug to be approved for the reduction of risk of cardiovascular death in relation to diabetes. No other diabetes medication has been approved for any sort of cardiovascular benefit, while Basaglar is the first biosimilar of Lantus that has been approved by the FDA. This is not a generic and is not available to be switched out for Lantus by the pharmacist. A physician needs to prescribe it directly and there are no interchangeable biosimilars at this time.
In conclusion, we will wait to see what will happen with the shadow pricing issue as well as how Congress will deal with higher drug prices. Additionally, next year could possibly bring a smaller budget for Medicare and Medicaid further affecting patients with this chronic disease.
Specialty Times: How Will Mobile Health Impact Specialty Pharmacy?
Ron Lanton III, Esq, Executive Director, Frier Levitt Government Affairs, LLC, explains how mobile health can affect specialty pharmacies.