Recently, three operators of a Wisconsin CBD dispensary were arrested and are awaiting felony drug charges after failing to comply with the state law. The investigation into the dispensary began when two minors consumed a CBD-related products their parents had purchased from the dispensary. According to the sheriff’s department, several of the CBD-related products, including Delta-8-tetrahydrocannabinol (“Delta-8”) containing products, had THC level in excess of 0.3% set forth by the Agriculture Improvement Act of 2018 (“2018 Farm Bill”), and in turn, violated the state law.
The dispensary’s owner stated that the store was targeted “because we’re pushing a lot [of Delta-8] onto the market.” Wisconsin State law permits the sale of CBD products so long as the products contain no more than 0.3% THC level, consistent with 2018 Farm Bill. Notwithstanding, the legal status of Delta-8 is unclear largely due to the conflict between 2018 Farm Bill and a Drug Enforcement Administration (“DEA”) regulation. More specifically, the 2018 Farm Bill essentially removed all hemp-derived cannabinoids including Delta-8 from schedule I of the Controlled Substances Act (“CSA”) while DEA’s Interim Final Rule indicated that “[all] synthetically derived tetrahydrocannabinols remain schedule 1 controlled substances.” Thus, Delta-8 manufactured from hemp-derived CBD is considered a controlled substance under the federal law. In a similar vein, Delta-8 has not been directly addressed byWisconsin State law. However, we can glean from the current law, i.e., 2019 Wisconsin Act 68 on the State’s perspective on Delta-8. According to the Act 68, “cannabidiol product” is defined as a derivative or extract of the plan Cannabis sativa L. that contains cannabidiol and a THC concentration at a level without a psychoactive effect.
How Frier Levitt Can Help
Regulation of hemp and its derivative products remains mired in a jumble of conflicting and unclear state and federal law. Also, 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. If your company handles hemp and its derivatives, contact us today to speak to an attorney.
In the first of a series of interviews for the Frier Levitt Government Affairs blog, Executive Director Ron Lanton, Esq. speaks with Brian Lehman, Director, Medical Account Management and Strategic Alliances for Sandoz Inc. about everything Biosimilars – the current biosimilar marketplace, PBMs and biosimilars, and opportunities in the biosimilar marketplace.
Ron Lanton: How have recent FDA policies affected the biosimilars marketplace?
Brian Lehman: My perspective from working with pharmacy benefit managers (PBMs), health plans and employer groups, these stakeholders would benefit from being included in the U.S. Food and Drug Administration’s (FDA) biosimilar education and outreach efforts geared towards patients and the providers who treat them. We included this suggestion in our comments to the FDA Notice of Hearing entitled Facilitating Competition and Innovation in the Biological Products Marketplace.
The need remains for additional FDA-driven, educational efforts to enhance biosimilar understanding among these groups. Doing so could benefit decision making on formulary and utilization management programs.
The FDA has stringent requirements and regulations for the development and approval of all reference biologics and biosimilar medicines.1 The FDA’s authority has the power to help increase payers’ confidence that a biosimilar matches the reference biologic in terms of safety, efficacy and quality via rigorous development and testing processes.
The economic impact for real-world evidence and simulation models is compelling. Approximately $100 billion worth of biologics are expected to be off patent by 2020, which present a substantial opportunity for biosimilar medicines to create savings for the US healthcare system[i]. Biosimilars may help to provide millions of patients with more affordable and accessible treatment options. They create the potential to save the US healthcare system an estimated $54 billion over 10 years[ii].
RL: What types of obstacles are there for biosimilars in the marketplace?
BL: Only 1 in 18 biosimilars in the U.S. market is currently a success story, and that’s Sandoz Zarxio® (filgrastim-sndz) – the first biosimilar to surpass its reference biologic in market share[iii]. To that end, several health systems, integrated delivery networks and payers have realized savings when switching to Zarxio – including Yale New Haven Health System, Robert Wood Johnson Barnabas Healthcare System and Carolina Blood and Cancer Care[iv],[v],[vi],[vii]. Many obstacles for biosimilars in the U.S. exist along the path that begins with discovery and development; continues with the process of obtaining regulatory approval; and ends with patients accessing their biosimilar for treatment. Of those 18 FDA-approved biosimilars, only seven are available for use.
We’ve observed significant obstacles barring biosimilar medicines getting to market, which hinders patient access and is detrimental to healthcare savings.
It is beyond time that all stakeholders work together to overcome the gridlock and provide additional incentives so more patients can access these important medicines.
RL: Will doctors or PBMs be the deciding factor for how fast biosimilars make it into the market?
BL: All stakeholders play a significant role in fast-tracking the adoption of biosimilars into the US healthcare system. Actions taken by providers, professional societies, payers, healthcare plan administrators, patients and policy makers send signals back to manufactures on why it is important to continue investing in biosimilars. Positive signals in support of biosimilars and removal of barriers will favorably impact how the US is able to realize savings in healthcare spending and improvements in patient access – now and for the future.
In order to increase support of biosimilars, we need a multi-channel approach focused on amplifying education. The FDA, along with professional organizations, patient advocates and manufacturers play an essential role in educating our community about biosimilars to help earn an equitable level of trust that they expect with reference biologics.
RL: With increasing political scrutiny on high-priced medications such as insulin, are there opportunities for biosimilars within this space?
BL: Yes- there is a clear unmet need for people with diabetes. Each year, 1.4 million Americans are diagnosed with diabetes. Approximately six million Americans with diabetes use a form of insulin[viii]. Among adults diagnosed with diabetes, some may struggle to afford their insulin, putting them at risk of disease-related complications that drive up healthcare costs.
The good news is that the FDA released guidance to help reframe the narrative. Starting in March 2020, medicines that include insulins will be regulated as biologics versus drugs or small molecules. This will allow manufacturers to file for approval of their insulin medicines via the biosimilar similar pathway. That makes a big difference because currently it is not possible to submit an application for a biosimilar to insulin in the US – a transformative move to promote competition[ix].
We hear a lot about the problem of skyrocketing healthcare costs, but very few are doing something about it. The future of insulin biosimilars will be significant due to the increase in competition that will help bring down prices for patients and the healthcare system. Anticipating the growing needs for insulin biosimilars, Sandoz entered into an agreement to commercialize biosimilar versions of insulins used in patients with type 1 and type 2 diabetes. (Press release source: https://www.sandoz.com/news/media-releases/sandoz-enters-commercialization-and-supply-agreement-insulin-biosimilars). This will ultimately result in increased access, adherence and reduced complications for individuals who use insulin.
*Zarxio and Erelzi are registered trademarks of Novartis AG.
References:
[i]GBI Research. $100 billion of revenues up for grabs for drug manufacturers by 2020 as patents for key biologics expire [press release]. March 13, 2017. https://drug-dev.com/100-billion-of-revenues-up-for grabs-for-drug-manufacturers-by-2020-as-patentsfor- key-biologics-expire/. Accessed December 14, 2018.
[ii]Mulcahy AW, Hlávka JP, Case SR. Biosimilar cost savings in the United States: initial experience and future potential. Santa Monica, CA: Rand Corporation, 2017. Available at: https://www.rand.org/pubs/perspectives/PE264.html.Accessed February 27, 2019.
[iii]IMS Health Institute for Healthcare Informatics. Delivering on the potential of biosimilar medicines: the role of functioning competitive markets. https://www.iqvia.com/-/media/iqvia/pdfs/institute-reports/delivering-on-the-potential-of-biosimilarmedicines.
pdf?la=en&hash=7705453CF0E82EF41402A87A44744FBF8D84327C&_=1518722219951. Accessed December 14, 2018.
[iv]Evans M. Barnabas and Robert Wood Johnson sign deal to form biggest New Jersey health system. Modern Healthcare Website. Available at: http://www.modernhealthcare.com/article/20150714/NEWS/150719965. Published July 14, 2015. Accessed October 5, 2018.
[v]Data on file. RWJBH Raw Sales Data. Sandoz Inc. March 2018.
[vi]Davio K. Oncologist sees biosimilars playing a role in the oncology care model. The Center for Biosimilars Website. Available at: http://www.centerforbiosimilars.com/news/oncologist-sees-biosimilars-playing-a-role-in-the-oncology-care-model. Published April 12, 2018. Accessed June 11, 2018.
[vii]Leber MB, Abdelghany O, Miller L. Biosimilar adoption: health system challenges and strategies for success. Poster presented at: 2016 Vizient Clinical Connections Summit, Dallas, TX, September 29, 2016.
With the list price of newer drugs rising, policy makers are continuing to debate the cost savings biosimilar medications may offer. To date there are 17 FDA-approved biosimilars targeting various disease states. While biosimilars could slow the dramatic rise in the overall drug spend, many questions about them remain such as litigation, interchangeability, and how they will be integrated into the market. The last question is the most intriguing, and it is heavily dependent on the decision of pharmacy benefit managers (PBMs) about their formularies.
PBMs are third-party healthcare plan administrators that manage benefits on behalf of payers. They have the ability to negotiate prescription drug pricing with manufacturers and pharmacies, establish a network of pharmacies to fill prescriptions, and process and pay insurance claims. PBMs are industry middlemen. However, over a relatively short time frame, these middlemen have morphed from claims processors into a few large corporations that control the pharmacy benefits of more than 253 million Americans, as just three PBMs now control 78 percent of prescription drug benefit transactions in the U.S.1
In theory, PBMs are supposed to lower drug costs and increase generic utilization via their formulary controls and negotiated price concessions in which realized savings are passed on to the consumer. Currently, the PBM revenue model of manufacturer rebates, supply chain administrative fees, and pharmacy spread pricing — the difference between what they pay for drugs from a pharmacy and what they get paid by the insurer — has caused an unavoidable conflict in PBMs’ duties to consumers. A product’s placement on a PBM’s formulary is calculated carefully through the gauntlet of these decisions. However, the current dearth of transparency, as well as a lack of consistent regulatory state and federal oversight, has greatly contributed to the increase in prescription drug costs. This leads to the question of whether increased PBM transparency — and the efforts being developed to introduce greater pricing transparency — will positively impact biosimilars.
Several Model PBM Legislation Efforts
With PBMs playing such a major role in biosimilars and their potential formulary placements, are any policies regarding PBM transparency being discussed? The most discussed and arguably most aggressive form of PBM policy making has come from the National Council of Insurance Legislators (NCOIL). In December 2018, NCOIL approved their model PBM bill to address several marketplace concerns regarding PBMs. The model bill:
• prohibits gag clauses
• outlines several issues an insurance commissioner can regulate including maximum allowable cost list, medical loss ratio (MLR) abuses, prohibited market conduct practices, and network adequacy requirements
• requires a PBM to obtain a license from the state insurance commissioner, and allows the commissioner to perform oversight functions to ensure compliance with the model act
• does not provide an Employee Retirement Income Security Act of 1974 (ERISA) exemption for PBMs.
According to my conversations with NCOIL, the organization highly encourages state legislatures to use its model language and is lending its expertise if any opportunities to share its findings with state legislators present themselves.
In addition to NCOIL’s work on PBMs, the National Academy for State Health Policy (NASHP), a nonprofit, nonpartisan forum of state health policy leaders, has been actively engaged in this issue by drafting a model PBM bill. NASHP has developed two PBM models: model A enables states to directly regulate PBMs and gives states flexibility to identify which agency should oversee PBMs, while model B allows states to regulate PBMs through their state insurance departments. Model B is modeled after Montana’s Senate Bill 71, which was introduced this year. It addresses similar issues of outlawing gag clauses and providing transparency about conflicts of interest and information about rebates. The goal is to hold PBMs more accountable to interested stakeholders such as pharmacies, payers, and the general public for their actions.
The ultimate question is whether these efforts at creating PBM transparency will benefit biosimilars. I believe the answer is yes, but only because biosimilars may be an accidental beneficiary. As more biologics are introduced onto the market, whether rightly or wrongly, the perception is that this class of drugs will be higher in price due to improved outcomes and more intense manufacturing protocols. It can be argued that biosimilars may have the wind at their back with PBM formulary preference since they are expected to bring down biologic prices as a result of competition. While we are waiting to see if this hypothesis plays out, the push for PBM transparency is on, and these policies pushed by NASHP, NCOIL, and others could force additional insight into how products are priced and placed on formularies. If the goal of PBM transparency is to force prices down and level the playing field for market participants, this would also likely be a net positive for the use of biosimilars. This is all provided that biosimilar manufacturers actually price their products lower, similar to what the market expects from generic drugs; although generics and biosimilars are quite different from one another.
Additional Efforts Promoting Transparency In Drug Pricing
While PBMs will likely be the main driver of biosimilar utilization in the marketplace, another source is quietly gaining a lot of influence in the market on whether drug prices are becoming too expensive. The Institute for Clinical and Economic Review (ICER) is an independent nonprofit research institute that produces reports analyzing evidence on the effectiveness and value of drugs and other medical services. ICER has been increasing its comments on drug values over the last several months and recently surprised many in the industry with the announcement of its collaboration with the Department of Veterans Affairs (VA) Pharmacy Benefits Management Services to support VA coverage and price negotiations with drug manufacturers. Not many expected the government to utilize a group like ICER to determine whether a drug’s price was justified. With the administration pushing for more opportunities for the government to negotiate drug pricing, ICER could potentially spread its influence into other government programs such as Medicare Parts B and D, which could upend our current reimbursement structure.
ICER has an important public comment period that just closed on drug prices. Their draft protocol titled the “Unsupported Price Increase” (UPI) report analyzes significant prescription drug increases and looks to determine whether new clinical evidence exists that could be used to support those increases. Once finalized, the protocol will guide the development of the first of these annual reports, currently scheduled for release in October 2019.
The ICER process for this is interesting. According to the draft protocol, “ICER proposes to generate an annual report of up to 13 drugs that have experienced substantial price increases over a two-year time period. ICER will review changes in the evidence base for these drugs, and report on whether potential evidentiary support for price increases was found.”2 Further, ICER states, “These UPI reports are not intended to determine whether a price increase for a drug is fully justified by new clinical evidence or meets an ICER value-based price benchmark. Instead, we will focus the analysis on whether or not substantial new evidence exists that could justify its price increase.”3
Manufacturers will have an opportunity for input. “Specifically, ICER will ask each manufacturer for the following information [which may be submitted under ICER’s policy on academic-in-confidence data]:
• New clinical evidence over the prior 36 months that demonstrates improved clinical or economic outcomes
• New evidence relating to comparator therapies that the manufacturer believes indicate new evidence of relative clinical advantages of their drug
• Other potential justifications for a price increase, including information within the prior 36 months related to:
– a large increase in costs of production
– large price savings attributable to the drug in other parts of the health system
– all other reasons deemed relevant by the manufacturers.
Additionally, manufacturers will have four weeks from time of notification to provide input.”4 Overall, I believe reports like these will play a key role in determining whether a biologic — or biosimilars — will be priced too high based on the clinical value it provides.
The market has recently witnessed an acceleration of several new classes of drugs that were approved by the FDA. With specialty drug spending showing no signs of slowing down and the drug pricing debate raging in Congress, what are the current drugs in the specialty pipeline that stakeholders can take advantage of? Most importantly what policies are being developed that will govern accessibility and reimbursement for manufacturer, specialty and home infusion stakeholders?
In this recorded webinar, Ronald W. Lanton III, Esq., Executive Director of Frier Levitt Government Affairs, discusses:
• Overview of current policy
• Discussion of upcoming possible blockbuster medications
• Examination of market trend opportunities
• Guidance on next steps
By the end of this presentation, participants will be able to:
• Understand the current policy in place
• Identify new possible blockbuster medications in the specialty pipeline
• Comprehend new developing policies that will govern accessibility and reimbursement for manufacturer, specialty and home infusion stakeholders
This article was originally posted on Specialty Pharmacy Times.
We are living during a time in which we are witnessing the possibilities of curative medications and their significant improvement on patient outcomes. However, these breakthroughs have come at the price of higher-cost medications, leading to a vigorous debate about the value of improved outcomes in terms of time and spending.
One way that policymakers and industry insiders have constantly considered to lower drug prices has been through importation. This would theoretically lower drug prices by allowing market players from outside the United States to compete. Although this idea is intriguing, there undoubtedly are obstacles, such as safety concerns and federal law. However, this has not stopped the recent activity we have seen in Congress and on the state level.
Let’s consider the latest policy ideas on the subject of importation.
First, let’s examine the current law for importation, as this subject depends on whether a medication is manufactured as an unapproved drug versus an unapproved drug imported via a consumer. The FDA’s enforcement on unapproved medications intended for commercial use is evident within its guidance. The United States Federal Food, Drug, and Cosmetic Act prohibits interstate shipment of unapproved new drugs, including importation. The act allows the FDA to refuse admission of any drug that “appears” to be unapproved, which forces the importer to prove the desired drug has been approved by the FDA or be subject to FDA enforcement actions.1
However, the FDA’s viewpoint on personal importation of unapproved drugs is different, with several factors considered by agency personnel when determining whether to enforce the act or take action against the importer.
The FDA will allow importation of a drug when its intended use is unapproved for a serious condition that does not have an effective treatment available domestically through commercial or clinical means, there is no known commercialization or promotion to US residents by distributors of the drug, the drug is not considered to pose an unreasonable risk, and the individual seeking to import the drug affirms in writing that it is for personal use—typically in quantities under a 3-month supply—and provides the name and address of the US-licensed doctor responsible for treatment or proof that the drug is for the continuation of a therapy that began in a foreign region.
Thus, although the FDA does have preferences on commercial versus personal importation of unapproved prescription drugs, the law is flexible on allowing for certain situations.
Recently, the FDA weighed in on the idea of importation. FDA Commissioner Scott Gottlieb, MD, who has been very aggressive in implementing new policies in an attempt to lower costs across the supply chain, last year announced a new working group that would examine importation. Gottlieb’s approach is to consider importation through the lens of alleviating drug shortages from single-source manufacturers.
“We want to examine whether, under these narrow conditions, the additional market competition from the short-term importation of foreign versions of the drug may complement the FDA’s current efforts and help meet near-term patient need in the [United States] until new competition is able to enter the domestic market,” Gottlieb wrote in a statement on the FDA website in July 2018. “To pursue these considerations, we’re forming a work group to explore various policy frameworks that, through the exercise of enforcement discretion or otherwise, would involve the importation of drugs under circumstances that meet these criteria and that would be suitable substitutes for the FDA-approved version of the medically necessary drugs. We will consider whether and how the foreign versions of these medicines can be imported with adequate assurances of safety and effectiveness.”2
Gottlieb added that a policy involving importing drugs would be a temporary measure until adequate competition enters these categories and any resulting policy would need to be structured to eliminate the risk of counterfeit or unsafe drugs entering the US supply chain.
Congress already has a few initiatives on importation:
• The Affordable and Safe Prescription Drug Importation Act would instruct the HHS secretary to issue regulations allowing wholesalers, licensed US pharmacies, and individuals to import qualifying prescription drugs manufactured at FDA-inspected facilities from licensed Canadian sellers. After 2 years, the secretary would have the authority to permit importation from countries in the Organisation for Economic Co-operation and Development that meet specified statutory or regulatory standards that are comparable to US standards. The bill would not permit importation of controlled substances, anesthetic drugs inhaled during surgery, or compounded drugs.
• The Safe and Affordable Drugs from Canada Act would permit the importation of prescription drugs from approved pharmacies in Canada.
• If enacted, HR 447 would allow for the importation of affordable and safe drugs by wholesale distributors, pharmacies, and individuals.
The Food and Drug Administration (FDA) is out with a new proposed rule targeting pharmaceutical manufacturer and specialty pharmacy stakeholder interests. With the new proposed rule, the FDA is looking to amend its regulation that defines “biological product” to incorporate changes made by the Biologics Price Competition and Innovation Act of 2009 (BPCI Act), and provide an interpretation of the statutory terms “protein” and “chemically synthesized polypeptide.” Under this interpretation, the term “protein” would mean any alpha amino acid polymer with a specific, defined sequence that is greater than 40 amino acids in size. A “chemically synthesized polypeptide” would mean any alpha amino acid polymer that is made entirely by chemical synthesis and is greater than 40 amino acids but less than 100 amino acids in size.
The comment period for the new proposed rule on biologics is now open. The deadline to comment is February 25, 2019.
Biologics is a cutting-edge sector within the healthcare industry. Since biologics are not traditional drugs, they will need their own classification as they become more utilized. Reimbursement and regulatory oversight involving safety of biologics will depend on how the term “biological product” is defined in this proposed rule. Pharmaceutical manufacturers and specialty pharmacy stakeholders can participate in this decision by submitting comments. Contact Frier Levitt Government Affairs today to have your voice heard on this very important topic.
