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October 22, 2018

Dueling Daredevils and Drugmakers

Ever feel like you need a little superhero strength to get through your Monday? We’ve got you covered! Actually Marvel does, with a video short that calculates the healthcare costs Daredevil has incurred from his injuries as compared to everyone else he’s brawled with. Think we’re joking? You can check it out here. Let’s just hope his nemeses in Hell’s Kitchen have some serious health insurance!



Daredevil may not be so worried about healthcare costs, but by the looks of this week’s headlines, he’s the exception to the rule. It was another week of healthcare news dominated by pricing coverage, driven by the Administration’s announcement about DTC advertising on Monday. The New York Times said the industry is gearing up for a mid-term outcome in which Dems and the Administration may align on drug pricing, and the WSJ profiled John Arnold’s war against drug prices. Phew, it’s never dull. Read on as we break down The Week That Was.

►ICYMI: HEALTHCARE HEADLINES FROM THE WEEK
  • Show me the savings: NPR investigates whether private insurers are “earning” their Medicaid checks. NPR posited companies hired to administer Medicaid benefits had little evidence that they improved patient care or saved the government money.
  • Watch out Pharma – Trump & Dems may be coming for you: The New York Times reported this weekend that healthcare lobbyists are scenario planning for a mid-term outcome in which Democrats prevail and align with the White House on drug pricing reforms. 
  • State power: In the latest state-based action on drug prices, Massachusetts Gov. Charlie Baker is working on a plan that seeks to lower drug costs by imposing direct state-to-manufacturer negotiation and pricing hearings. Baker considers drug prices “the single biggest driver, at this point, to the rising cost of health care in Massachusetts” and he cited “thirty drugs account for $600 million, or 30 percent of our total pharmacy spend." Baker’s latest move comes after Massachusetts and CMS could not agree upon a waiver to let the state close its formulary.
  • Billionaire’s campaign against drug pricing: The Wall Street Journal profiled John Arnold’s campaign against drug pricing. Arnold, who made his fortune at his hedge fund, and prior to that, energy-trading at Enron, spoke about his investments in ICER, mid-term funding and investing in the third-party group, Patients For Affordable Drug Pricing. 
  • Paying for transformative medicines: Scrip reports on strategies that cell and gene therapy developers are pursuing with payers to ensure transformative medicines can be paid for.  Among developers and payers alike there is some consensus: 1) conversations must start earlier, 2) outcomes-based agreements offer some certainty for experimental medicines and 3) pursuing high-risk pools for these patients may help offset the risk to the payer if a patient changes plans shortly after taking expensive treatment.

►LIST PRICES IN DTC: THE DAY-TO-DAY, PLAY-BY-PLAY

The week was off to a particularly busy start, with the trade association PhRMA and HHS Secretary Azar dueling over direct-to-consumer advertising policies. Azar took a hard line, with a proposal that would make good on the Administration’s Blueprint promise last spring to list the list price of drugs in DTC ads. Meanwhile, PhRMA, manufacturers, advertisers and media poked holes in the Administration’s proposal, asking some critical questions: Does this violate the First Amendment? Why focus on list prices given that’s not what the public pays? How will this be enforced?

The debate hasn’t stopped since! Here’s a day-by-day, play-by-play on the discussion:

Monday morning: Round 1

  • PhRMA starts the week by declaring its members will voluntarily disclose pricing information on websites, including expected patient out-of-pocket expenses.
  • Sec. Azar comes out swinging, saying PhRMA’s proposal is insufficient: “Our vision for a new, more transparent drug-pricing system does not rely on voluntary action.” Ouch!

Monday afternoon:

  • In a speech to the National Academy of Medicine, Azar announced a proposal to require manufacturers to include the list price for any drug paid for by Medicare or Medicaid in DTC TV ads.  

Tuesday: Round 2

  • On an earnings call, Jennifer Taubert, head of J&J pharma came off the ropes, noting: "…we need to be careful of things such as list price alone – it’s not the full extent of the information, and we’d worry about patients not going to their doctor."
  • The Association of National Advertisers weighed in on the industry’s corner: arguing the Administration’s plan, has “substantial First Amendment issues,” and “it is far from clear that this information will further a substantial government issue nor is it clear they are overcoming any sort of deception in the advertising.” 

Wednesday: Round 3

  • The Ref (aka Ed Silverman at STAT) calls the Administration’s proposal a “non-starter,” criticizing the focus on list prices and the lack of enforcement of the policy.

►OUR TAKE
While manufacturers may be getting air cover from some vocal skeptics of the proposal, keep in mind the intention behind Azar’s actions on pricing. All the polls show that the American public is craving transparency, and meeting that desire will resonate well on both sides of the aisle. What this means: price pressure from the Administration and Congress isn’t likely to abate before or after the midterms.

For manufacturers, remember that any upcoming milestones (product approval, price increases, end of market exclusivity, DTC ad launch) are likely to draw more scrutiny. Beyond near-term milestones, start thinking about what level of transparency and visibility is right for your company in the years ahead. Companies that have a true North on transparency and access – driven by internal, cross-functional agreement – are more likely to engender goodwill with stakeholders, regardless of where federal policy lands.

►ICER: INSTITUTE OF [CONSULTANTS] AND ECONOMIC REVIEW?
In other pricing news, we learned this week that ICER is considering consulting services that offer drug developers early advice and guidance on clinical trial design, for a fee. According to an ICER representative, the idea stems from the routine requests ICER gets from drugmakers seeking advice on how to structure their trial designs to measure outcomes. ICER also pointed to its ex-US peers, like NICE in the U.K. and Canada’s Agency for Drugs and Technologies in Health, who also consult with early stage trial design.

►OUR TAKE
Hmm… does anyone think this could be a potential conflict of interest? While the evolution of ICER’s role – from watchdog to advisor – offers the potential for more constructive industry collaboration, it also raises obvious ethical questions. For a group that has built its reputation on being “tough on pharma,” what will happen when it comes time for a review of a category/candidate that ICER had previously consulted? How will ICER keep a church and state relationship that ensures its consulting services do not favor clients in value assessments? And for non-ICER clients, how can you guarantee that you are not disadvantaged by your lack of prior engagement?

Bernstein analyst Ronny Gal nailed it: “This funding mechanism is (respectfully) inherently problematic for an organization whose mission is to become the fair arbiter of drug value.”


Finally, as our parting gift, a friendly reminder to go get your flu shot. Despite one of the worst flu seasons happening just last year, vaccinations in children are on the decline. Need convincing? Read this. Already got your shot and trying to stay healthy? Check out GSK’s new Theraflu pods for your coffee maker.

About the Author:

We are a team of healthcare communicators, policy-shapers and crisis response specialists. Drawing upon professional experiences from Congress, CMS, HHS, hospitals, and health technology—and our collective work in rare disease, oncology, diabetes, gene therapy, pain management and infectious disease—we provide unique solutions to the evolving messaging challenges in today’s healthcare industry. We support our clients with evidence-based approaches to preventing pricing pushback, protecting brands from modern activism, establishing and communicating clear policies surrounding expanded access to medicines, and a proactive approach to value frameworks. Our offerings also include product safety, litigation, regulatory risks, ex-U.S. considerations and policymaker investigations.

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