Health Policy Report

August 29, 2016

The Week in Review

Last week, both presidential candidates sharpened their rhetoric against each other with Hillary Clinton seeking to link Donald Trump to white nationalism and the “alternative right” and Trump responding by casting Clinton as a “bigot.” While name-calling is hardly a new development in presidential campaigns, there is little doubt that Clinton and Trump are entering uncharted territory by directly assigning labels such as “racist” and “bigot” to their opponent. With three months still remaining before Election Day, it has become clear that both campaigns have engaged in an attack strategy that centers on the candidates’ unprecedented unpopularity.

Despite the ferocity of both campaigns, the polling needle has moved very little – Clinton has kept a moderate lead nationally and continues to lead in most swing states. The presidential debates may be the next event that can change the trajectory of the election, with the first one set to take place on September 26 at Hofstra University in New York.  Needless to say, the debates – typically a forum for policy-oriented, if not quite academic, discussion – will be captivating television as the candidates attempt to continue their attacks while also appearing presidential. 

The Week Ahead

One week of congressional recess remains before the House and Senate reconvene on Tuesday, Sept. 6, following the Labor Day holiday weekend. Congress is scheduled to be in session for five weeks before another month-long recess ahead of Election Day on November 8. 

EpiPen Company Roils Drug Pricing Concerns

Pharmaceutical company, Mylan, is the next “victim” in the latest headlines of the drug pricing public relations war as the company has come under fire for its systematic increase in the price of EpiPens, a potentially life-saving medication for those facing allergies that has little real competition.  While Mylan announced Thursday that it would offer a $300 savings card – roughly half the $600 price of its Epipen which went for $56.64 wholesale for a two-pack in 2007 – for consumers whose insurance coverage requires a higher out-of-pocket expense, members of Congress are none too impressed. Lawmakers instead renewed their calls for investigating the root causes of high pharmaceutical costs, as the Judiciary Committee questioned the Food and Drug Administration (FDA) Wednesday as to what steps the agency could take to increase competition for EpiPen.  Following Mylan’s announcement, Sen. Richard Blumenthal (D-CT), member of the Senate Judiciary Committee and former state attorney general, dismissed the coupon, calling it a “special break for people who are in particular health plans and have the extra hours in their work day to navigate a bureaucratic labyrinth of discount.” Furthermore, Sen. Chuck Grassley (R-IA), echoed critics’ concerns that the coupons don’t necessarily make their way to all the people who would benefit from them. “When drug companies offer patient assistance cards, it’s usually not clear how many patients benefit,” he said in a statement.

Meanwhile, Democratic Presidential Nominee Hillary Clinton called on the pharmaceutical company to immediately reduce the price of EpiPen Wednesday, saying there is no apparent justification for the cost. She touted her plan to invest in private comparative value and benefits research and use the results to hold drug companies accountable for justifying their price hike. She stressed that price hikes under her drug-pricing plan would have to be justified by the product’s benefits. Furthermore, Clinton stressed her plan to boost competition. “In addition, when it comes to treatments like delivering epinephrine that have been available for decades, my plan encourages the production of alternative products. That's how we can harness the power of competition to keep drug prices at a level that all Americans can afford,” she said.

Despite all of the bad publicity, Mylan will not likely face any real economic pressure to lower the price of EpiPen for at least another year. That’s because the company's injector currently faces no direct competition in the United States. A similar epinephrine auto-injector from Sanofi was recalled in October 2015 over concerns that it wasn’t injecting accurate doses. In March 2016, rival generic drug-maker Teva Pharmaceuticals had an application for its EpiPen clone rejected. This is because while the FDA's standard for generic drugs is to demonstrate that it is equivalent to the original drug, a complicating factor for potential competitors to EpiPen is that they must do more than replicate the drug itself, epinephrine. In this case, for the generic competitor to win approval, it would also need to accurately mimic the delivery device – the pen – and demonstrate that it delivers the drug at the exact same rate and in the exact same way.

CMS Reveals Mixes Results for Medicare ACOs

On Thursday, the Centers for Medicare and Medicaid Services (CMS) released its 2015 performance year results on the Medicare Shared Savings Program (MSSP) and pioneer accountable care organizations’ (ACO) financial and quality performance, revealing mixed results. According to the agency, savings across all ACOs totaled $466 million, however fewer than one-third of them qualified for bonus payments. Commentators pointed out last week that shared savings payments to providers amounted to more than the program saved overall. Medicare spent $683 million on shared savings bonus payments, $217 million more than the $466 million in reported savings. CMS disagreed with characterizing the results as a loss, emphasizing the $466 million savings figure and noting quality improvements across the initiative.

CMS officials characterized the 2015 results, the third year of the program, as an improvement over prior year results. In 2015, 404 ACOs “generated Medicare savings” of $466 million, compared to the 420 ACOs that generated $411 million in savings the previous year. In the first year of the MSSP, 53 of the 220 ACOs in earned bonuses and another 52 reduced Medicare costs but not by enough to share in savings. CMS officials also noted that in 2015, over 91 percent of ACOs in a second or third performance year increased their overall performance score through Quality Improvement Reward points in at least one of four measure domains. Meanwhile, results from other ACO demonstrations are not yet available. The next generation ACO demo was launched in January, and CMS will have performance results for that model next year. Results from the dialysis ACO, which began in October 2015, will be released later this year.

HHS: ACA Plans Will Be Affordable Despite Insurer Exits

In an effort to demonstrate that news of multiple insurers pulling out of the Affordable Care Act (ACA) and reports of skyrocketing premium rates will not tank the exchanges, the Department of Health and Human Services (HHS) released analysis Wednesday that shows that expected increases in premiums for 2017 plans in the ACA exchanges will not make the plans unaffordable. Specifically, the issue brief from HHS' Office of the Assistant Secretary for Planning and Evaluation proposes a scenario in which all individual and small-group premiums increase by 25% in 2017 and finds that more than 70% of consumers could find coverage for $75 or less a month. The new HHS analysis suggests that plans will be affordable regardless because consumers can shop around for the best deal and because tax credits to consumers will increase along with premium rates. According to the agency, of those enrolled in the marketplace in 2015 who re-enrolled in 2016, 43% switched plans and saved an average of $42 per month in premium costs. The issue brief notes that the premium subsidies, “play an important role in ensuring that health insurance coverage is affordable for consumers.” According to its data, 85% of 2016 marketplace plan selections in states using the federal health insurance exchange website,, were with a premium subsidy. The brief also explains that when premiums rise faster than expected, more consumers qualify for and receive a tax credit.

FDA, Device Industry Agree on User Fee Goals

Last week, following more than a year of consultation, the Food and Drug Administration (FDA) announced it had reached an agreement in principle with the device and lab industry on proposed recommendations for medical device user fee amendments (MDUFA) reauthorization, MDUFA IV. The five-year reauthorization would allow the FDA to collect $999.5 million in user fees plus inflation adjustments beginning in October 2017. According to FDA officials, the increase in funding will enable the agency to hire and train reviewers and make other improvements to its existing device review processes. Furthermore, according to a joint statement from a number of medical device stakeholders, other key components of the draft agreement include two independent analyses of the FDA's process: one at the beginning and one at the end of MDUFA IV, and process enhancements, such as a requirement to provide companies with the rationale behind a deficiency letter and FDA commitment to relay feedback to device makers at least 5 days before a pre-submission meeting.

Notably, the draft agreement includes plans for a pilot program that calls for user fees to enable use of real-world evidence for premarket decision-making, something that medical device stakeholders strongly opposed during talks leading up to the agreement. However, the FDA had argued that the plan was worth the needed $50 million investment the agency proposed, citing that it would allow for fewer standalone clinical trials, shorter or smaller clinical trials because of more efficient enrollment, easier patient follow-up, and harmonization with other national and international data. The agency also said using evidence from clinical experience would also allow greater use of shifting data from the premarket to post-market setting, which would give patients earlier access to devices while collecting information to validate the device's safety and effectiveness or substantial equivalence, or to support expanded use. However, it is unclear if the pilot mentioned in the tentative agreement is smaller in scope than FDA's original plan.  FDA eventually hopes to build a system that links and improves the regulatory quality of real-world evidence data sources, such as data from electronic health records, healthcare claims and registries.

The draft agreement would be the fourth reauthorization of the Medical Device User Fee and Modernization Act initially passed in 2002 with the goal of improving the FDA’s review process for medical devices. It was most recently reauthorized in 2012 for $595 million, in an agreement that, for the first time, included metrics for cutting total review times and an independent outside review of the agency’s review process. According to the FDA’s statement on the MDUFA, the draft agreement which has yet to be posted will be released for public comment in the “coming weeks” and final recommendations will be delivered to Congress in January 2017.