Drug reimportation into the U.S. is gathering steam in Congress. But an act of Congress isn't needed to make it happen.
A trio of senators this week reminded Tom Price, the new secretary of the Department of Health and Human Services (HHS), that he has only to say the word and then the FDA can exercise the authority it already has to allow pharmacists and wholesale retailers to import cheaper prescription drugs from Canada. The agency also could grant waivers permitting individual patients to import drugs for personal use.
Sens. Chuck Grassley (R-Iowa), John McCain (R-Ariz.) and Amy Klobuchar (D-Minn.) urged Price to use the leeway granted him under the 2003 Medicare Prescription Drug Improvement and Modernization Act to address drastic price increases by opening the door to reimportation. Under the law, Price would have to certify that the import would impose no additional risk to patients' health and safety and that it would result in significant savings.
Price should immediately consider making such a certification, the senators said, when a drug:
• is off patent or no longer marketed in the U.S. by the company that developed it;
• has significant and unexplained price increases;
• has no direct competition in the market;
• is produced in another country by the brand manufacturer that developed it or by a well-known generic manufacturer that commonly sells prescription drugs in the U.S.
The senators noted that in many instances, cheaper Canadian drugs are made by a reputable generic company or by the same manufacturer as the pricier one sold in the U.S. market. For instance, Mylan NV's Epipen (epinephrine) auto-injector was selling in Canada at $131 for a two-pack when its U.S. list price was $608. (See BioWorld Today, Aug. 26, 2016.)
Even with a company-issued savings card, U.S. patients were paying $200 to $300 for an Epipen two-pack. And the company's plans to launch an authorized generic at about half the U.S. brand price still has U.S. patients paying more for the product than their Canadian neighbors. (See BioWorld Today, Aug. 30, 2016.)
HHS and the FDA could structure a reimportation policy so it wouldn't hurt innovator companies that invested in the development of a drug, the senators said. How that would play out for a company like Marathon Pharmaceuticals LLC, which invested in the testing of an old drug so it could be approved by the FDA to treat Duchenne muscular dystrophy, would depend on how the policy was crafted. (See BioWorld Today, Feb. 15, 2017.)
The senators also asked Price to consider a fast track approval process for imported drugs. "Fast track approval is key," the lawmakers said in a letter to the HHS secretary, "because regulatory costs can deter market competition."
Past reimportation efforts have raised concerns about counterfeits and substandard drugs turning the U.S. into a "buyer beware" market. And Canadian officials, worried about their own drug supplies, have spoken out against their country becoming the "drug store of the United States." (See BioWorld Today, Jan. 18, 2005.)
NTAP REFORM NEEDED
Several reforms are needed to Medicare's new technology add-on payment (NTAP) program for drugs and medical devices, Richard Price, vice president for payment and policy at the Advanced Medical Technology Association, said at a NTAP town hall meeting this week.
Created in 2001 to provide Medicare beneficiaries in inpatient settings timely access to new technologies that demonstrate a substantial clinical improvement and meet specific cost thresholds, the NTAP includes Medicare's standard diagnosis-related group reimbursement for treating a specific indication, plus an extra payment of up to 50 percent to help defray the cost of the new technology.
For starters, that add-on payment level should be increased to 80 percent to encourage innovation and improve access, Price said. He cited an Avalere Health study that showed hospitals received $45 million in NTAP-related payments between fiscal 2006 and 2013 and $23 million in outlier payments on the same cases. The outlier payments demonstrate that the NTAP ratio is too low to cover a hospital's costs of using new technologies, Price said.
In determining whether a new technology offers substantial clinical improvement, officials at the Centers for Medicare & Medicaid Services (CMS) should consider outcomes such as reduced length of hospital stay and improved quality of life, according to Price.
Another needed reform would be to prohibit Medicare administrative contractors from denying coverage of a device or drug that's been awarded an NTAP. Too, manufacturers should be able to appeal a negative decision for an NTAP, and any resulting administrative review "should not preclude a modified resubmission at a later time," Price said.
CMS approved five of seven NTAP applications for fiscal 2017 – the largest number approved in any one year. Since 2003, the agency has approved about a third of the 72 NTAP applications it's received. Most of those have been for devices. In 2012, Optimer Pharmaceuticals Inc.'s Dificid (fidaxomicin) was the first antibiotic and oral drug to get an NTAP. (See BioWorld Today, Aug. 6, 2012.)
In addition to potential reforms, more than half a dozen NTAP applications for fiscal 2018 were discussed at the town hall meeting. One of those was for Kite Pharma Inc.'s KTE-C19, an anti-CD19 chimeric antigen receptor (CAR) T-cell therapy that has yet to be approved by the FDA. Intended to address an unmet need for aggressive B-cell non-Hodgkin's lymphoma, the biologic has received breakthrough therapy and orphan drug designations. (See BioWorld Today, Sept. 27, 2016.)
HEALTH SPENDING ON THE GROW
The growth in U.S. health care spending will outpace the average growth in the country's gross domestic product by 1.2 percent from 2016 through 2025, CMS projected Wednesday.
As a result, the health sector is expected to account for nearly one-fifth of the U.S. economy by 2025, up from 17.8 percent in 2015. That projection is based on an average 5.6 percent growth in health care spending, provided no legislative changes affect that spending.
The growth will be driven by projected increases in medical prices, from a historic low of 0.8 percent in 2015 to nearly 3 percent by 2025, CMS said.
While growth in the use and intensity of medical services is expected to slow from that seen in 2014 and 2015 when the Affordable Care Act expanded enrollment in Medicaid and private insurance coverage, changes in the country's age and gender demographics could contribute about 0.5 percent to the growth in health care spending per year.
"Irrespective of any changes in law, it is expected that because of continued cost pressures associated with paying for health care, employers, insurers and other payers will continue to pursue strategies that seek to effectively manage the use and cost of health care goods and services," said Sean Keehan, the first author of the CMS study.
According to the study, the largest projected slowdown in 2016 among the major goods and services sectors was prescription drug spending, which was projected to have grown 5 percent during the year compared with a 9 percent growth rate in 2015. CMS attributed the slowdown largely to the decrease last year in the use of hepatitis C drugs.
That slowdown won't last long. Since fewer brand drugs will be losing patent protection in the next few years, the growth in prescription drug spending is anticipated to accelerate from 5.7 percent in 2017 to an average of 7 percent for 2018 and 2019.