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Message to Drugmakers: It's Time to Get Serious About ACA

By Mari Serebrov
Washington Editor

WASHINGTON – Biopharma has a lot at stake as the political theater continues around the Affordable Care Act (ACA). But rather than waiting on the edge of their seats to see what happens in Congress, drugmakers need to start planning now for the consequences of the law.

The ACA's direct impact on brand drugmakers will average about 2 percent to 3 percent of net revenue, but its indirect impact could reach about 14 percent, due mainly to increased pricing pressures and formulary restrictions, Ralph Marcello, a principal at Deloitte Consulting, said at a recent BioNJ webinar.

The biggest pricing pressure will be in the retail acute and chronic disease areas, which account for two-thirds of the U.S. branded drug market, Marcello said. As the pressure builds, there will be an increased demand for comparative-effectiveness trials, shifting pipelines away from "me-too" drugs to true innovation in less saturated disease areas.

The concerns about drug price have been growing for a while, as governments struggle to rein in their budgets, Shire Inc. CEO Angus Russell told BioWorld Today. But as the pressure intensifies, companies will need to demonstrate the value of their drugs and how they are differentiated from existing therapies, he said.

To do that, they should engage patients, payers, physicians and policymakers much earlier in the drug development process, he added.

However, Marcello cautioned that drugmakers should be prepared for a different relationship with physicians, whose role is changing under the ACA. The health care law essentially gives doctors less autonomy, placing a focus on set protocols. That change could affect drugmakers' traditional marketing to physicians.

Both the ACA and the recently passed FDA Safety and Innovation Act encourage more patient involvement in the drug development process. That involvement could have a positive impact on reimbursement, Russell said, as patients can talk directly about the value of a therapy in concrete ways, which can be compelling for payers and other stakeholders.

"If patients talk about differentiated treatments and the value that they bring to their lives beyond just the taking of 'the pill,' then this makes for very powerful advocacy when tough decisions have to be made about the cost of health care," Russell said.

Responding to pricing pressures and the demands of the ACA will require a mindset shift for drugmakers, both in how they approach their pipelines and their business plans, Marcello said.

While drugmakers are figuring out how to implement the realities of the ACA into their business strategies, some lawmakers are still trying to repeal all or parts of the law. Last week, the House voted, for the second time, to repeal the ACA in its entirety. The 244-185 vote, mostly along party lines, mirrored an effort in January 2011 when the House, newly under Republican control, moved to repeal the law. Both votes were more of a symbolic move as the Democrat-controlled Senate is unlikely to take up the measure.

But the sentiment behind the repeal effort is showing up in other bills. For instance, a House Appropriations subcommittee marked up a budget bill Wednesday for the Departments of Labor, Health and Human Services (HHS), and Education that would defund much of the ACA. The proposed $68.3 billion HHS budget includes no funding for ACA provisions such as the Independent Payment Advisory Board or the Patient-Centered Outcomes Research Institute. (See BioWorld Today, March 23, 2010, and July 14, 2011.)

Also missing is additional funding for the Health Insurance Reform Implementation Fund (HIRIF), which was given $1 billion to cover all the federal regulatory and other administrative costs associated with implementing the ACA. That $1 billion will have been fully obligated by Sept. 30, according to a new Congressional Research Service report. But the costs, mostly at HHS and the IRS, are expected to continue, so the president had requested another $1 billion for HIRIF in his 2013 budget.

The full House Appropriations Committee is expected to vote on the funding measure next week.

NIAID Looks for Next HIV PrEP

ViiV Healthcare Ltd.'s HIV drug Selzentry is being put to the test as a possible pre-exposure prophylaxis (PrEP) in a clinical trial funded by the National Institute of Allergy and Infectious Diseases (NIAID).

The two-year NEXT-PrEP study builds on the results of the NIAID-sponsored iPrEx study, which found in 2010 that the daily PrEP regimen of Gilead Sciences Inc.'s Truvada (emtricitabine/tenofovir disoproxil fumarate) reduced the risk of HIV infection in men who have sex with men (MSM) by nearly 44 percent.

Truvada was approved this week as the first drug to help reduce the risk of HIV-1 infection. (See BioWorld Today, July 17, 2012.)

The new study, to be conducted in 12 cities in the U.S. and Puerto Rico, will enroll 400 HIV-uninfected MSMs, who will be randomized into one of four 48-week regimens: Selzentry (maraviroc) alone, maraviroc plus Emtriva (emtricitabine, Gilead), maraviroc plus Viread (tenofovir disoproxil fumarate, Gilead) and Truvada.

The fact that all the PrEP regimens tested so far involve tenofovir alone or in combination with emtricitabine has led to concerns about potential toxicity and the development of drug resistance, according to the National Institutes of Health. Unlike tenofovir and emtricitabine, which interfere with HIV replication after the virus has infected a cell, maraviroc prevents HIV from entering cells.

PTO Issues AIA Rules

The Patent and Trademark Office (PTO) released the final rules to implement the pre-issuance submission provision of the America Invents Act (AIA). Aimed at bringing prior art to a patent examiner's attention as early as possible, the rules explain how a third party must submit patents, published patent applications or other relevant publications related to someone else's pending patent application.

Although the pre-issuance submission provision won't become effective until Sept. 16, it will apply to patent applications filed before that date.

The PTO said it expects to release final rules in the next few weeks for other AIA provisions that take effect in September, including the inventor's oath/declaration, supplemental examination, inter partes review, post-grant review and covered business method review.