Guest Blog, Modern Healthcare Editor Merrill Goozner: When it comes to pricing Sovaldi, how NICE of them

Merrill Goozner is the editor of Modern Healthcare. During 30 years as a journalist and educator, he has been a foreign, national and chief economics correspondent for the Chicago Tribune and professor of journalism at New York University. He was a keynote speaker at this year’s HSCA National Pharmacy Forum. This article originally appeared in Modern Healthcare.

Are the British agency's guidelines setting U.S. drug prices?

The first cost-effectiveness analyses of Sovaldi and other new drugs for treating chronic hepatitis C virus infections are in, and it appears the guidelines set by the United Kingdom's National Institute for Health and Clinical Excellence (NICE) have become the new ceiling for setting U.S. drug prices.

For those who have never heard of NICE, it is the advisory body that makes recommendations on the affordability of new therapies to the budget-constrained British National Health Service. When the price of a new drug goes over $50,000 per “quality adjusted life year” gained or QALY, NICE usually recommends the NHS look elsewhere for treatment options.

During debates over the Affordable Care Act, former Alaska Gov. Sarah Palin accused the Obama administration of backing British-style cost-effectiveness analysis to limit access to drugs. Coining the phrase “death panels,” which PolitiFact dubbed “the lie of the year,” the former vice presidential candidate stoked widespread fears the government would now apply a cost test to life-saving therapies.

Cost-effectiveness analysis made headlines again last year when Sovaldi hit the market at the budget-busting price of $84,000 per course of treatment, which amounted to about $1,000 a pill. In an editorial challenging the usual justifications for high drug prices (see “Why Sovaldi shouldn't cost $84,000”) and another debunking claims in the New York Times that it would save the healthcare system money over the long run (see “Sovaldi's cost-effectiveness is being overplayed”), I speculated that “the back of my envelope says its QALY cost will come in right around or slightly above the earlier treatments—and somewhat below the $50,000 threshold.”

I based that analysis on the fact that a cost-effectiveness analysis for another new drug that wasn't quite as effective as Sovaldi tipped the pricing scales at about $35,000 per QALY gained.

A study released yesterday that will appear in the journal Clinical Infectious Diseases confirms that speculation. It found that using sofosbuvir (Sovaldi) and ribavirin for HCV will cost $47,304 per QALY gained. In darts, that is pretty close to a bullseye.

The study's authors, affiliated with NORC at the University of Chicago and the U.S. Centers for Disease Control and Prevention, received funding for the study from the CDC foundation. But they also report they received other funding from Gilead Sciences, Inc., the maker of Sovaldi.

Sovaldi is now in a price war with newer treatments on the market, especially Viekira Pak from AbbVie. In the same NORC study, that combination pill's cost-effectiveness tipped the scales at $24,921. Pharmacy benefit managers Express Scripts and CVS Health have cut exclusive deals with the competing firms to help drive down the price, and it's likely that the market price for Sovaldi these days is as much as 40% below the original $84,000.

The final word isn't in yet on Sovaldi's cost-effectiveness, however. Another study that appeared today in the Annals of Internal Medicine pegged the drug's cost-effectiveness at $55,400 per QALY gained - higher than the NICE threshold. But like the earlier study, that is probably based on the original price – not the discounted price.

Perhaps the last word should go to NORC researcher David Rein, who wrote on the organization's Sparks blog that “limiting treatment access to patients with moderate and advanced disease has been offered as one possible solution to financing concerns. This strategy appears reasonable when one assumes no health impact from delaying treatment."

Unfortunately, physicians don't have research to support a medical decision to delay treatment and “studies examining this issue will not be available for several years,” Rein wrote.

GAO Releases New Drug Shortages Report for Drugs Containing Controlled Substances

The Government Accountability Office (GAO) recently released a new report on shortages of prescription drugs containing controlled substances. The report looked at trends in these types of shortages, potential causes, what effects they may have on patients and providers, the U.S. Drug Enforcement Administration’s (DEA) management of the quota process, and how interaction between the DEA and the U.S. Food and Drug Administration (FDA) can help mitigate the impact shortages and prevent future shortages.

The report notes that prescription drugs containing controlled substances are often used in various clinical settings and are very important for the treatment of patients with genuine medical conditions. The report also explains that it is the responsibility of the DEA to ensure that these substances are not diverted—which the DEA accomplishes in part by setting quotas on manufacturers. The DEA attempts to enact these quotas without inhibiting the supply of controlled substances needed for legitimate medical concerns.

Because the DEA necessarily puts quotas on these controlled substances, management of this system is an exceptionally important matter for public health, as these medications are often critical for patient care. The report notes that there has been a spike in shortages over recent years.

GAO recommended the Administrator of the DEA take five actions “to ensure an adequate and uninterrupted supply of controlled substances for legitimate medical use and respond to shortages of drugs containing controlled substances.” These five actions included:

• Establishing controls and data checks so manufacturer quota submissions and DEA decisions are accurate;
• Creating DEA performance measures to facilitate the uninterrupted supply of controlled drugs needed for medical use;
• Monitoring all data to assess DEA administration of the quotas;
• Designing internal policies for processing quota applications;
• Instituting policies and procedures to facilitate coordination with FDA in preventing drug shortages.
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GAO also suggested the DEA and FDA update their Memorandum of Understanding (MOU) to strengthen their ability to respond to existing and future drug shortages involving controlled substances.

For the full GAO report, “DRUG SHORTAGES: Better Management of the Quota Process for Controlled Substances Needed; Coordination between DEA and FDA Should Be Improved,” click here.

For information on what the healthcare supply chain is doing to help combat drug shortages, click here.

FDA Approves First Biosimilar Medicine in the U.S.

The U.S. Food and Drug Administration (FDA) recently announced its approval of Zarxio, the first biosimilar medicine in the United States. Biosimilars are therapies which have no clinically meaningful differences from innovator biologics—revolutionary medicines that treat chronic and life-threatening conditions. Biosimilars have the potential to significantly impact the healthcare system by increasing patient access to life-saving treatments while also reducing costs.

The Healthcare Supply Chain Association (HSCA) applauded the approval of Zarxio because it represents the first step in providing other biosimilars a pathway to market. Biosmilars will increase market competition for biologics, reduce costs and increase patient access to these vital medications. In fact, one study projects biosimilars could save the healthcare system as much as $250 billion over the next ten years.

HSCA President Curtis Rooney said the following on the approval of Zarxio:

“Biologic medicines have revolutionized treatment for many patients living with chronic or life-threatening conditions, but their high price has also created a barrier to access in many cases. Biosimilars promise to increase access to biologic treatments while also lowering costs for the entire healthcare system.”

For HSCA president Curtis Rooney’s full statement, click here.

For more information on HSCA, click here.

HHS Call for New Safe Harbors Demonstrates Ongoing Value to Federal Health Programs

Every year, the U.S. Department of Health and Human Services’ (HHS) Office of Inspector General (OIG) solicits recommendations for potential new “safe harbor” provisions under the federal anti-kickback statute of the Social Security Act. HHS recently announced the comment period, which runs through March 2nd, in the Federal Register.

So-called “safe harbors” under the Social Security Act exist because Congress was concerned that the range of activity potentially proscribed by the statute was so broad as to include innocuous and even beneficial commercial arrangements. Congress empowered OIG to create safe harbors to limit the statute’s reach and ensure that federal healthcare programs would continue to capture the benefits of legal business activity.

Safe harbors are now commonplace – there are currently 25 existing safe harbor provisions under the law. A broad array of business practices are now protected within federal healthcare programs by safe harbors, including price reductions offered in health plans, equipment rentals, replenishment of ambulance supplies, and referral arrangements in specialty services. Safe harbors have been enacted to protect the benefits delivered by cooperative hospital service organizations, ambulatory surgical centers, and healthcare group purchasing organizations (GPOs).

OIG codified the so-called GPO safe harbor to protect the billions of dollars in annual savings and additional efficiencies that GPOs deliver to hospitals, Medicare and Medicaid, and the healthcare system. The GPO safe harbor allows supply chain organizations to charge administrative fees to suppliers in order to help hospitals source life-saving products and to lower overall healthcare costs.

Healthcare Supply Chain Association (HSCA) member organizations go above and beyond the ethical business conduct contained in the GPO safe harbor. All HSCA members are also part of the Healthcare Group Purchasing Industry Initiative, an independent and voluntary organization dedicated to establishing the highest ethical standards and business conduct practices in the healthcare group purchasing industry. All HGPII member supply chain organizations must adhere to a strict Code of Conduct, report annually on adherence to these principles using an Annual Public Accountability Questionnaire, and participate in an Annual Best Practices Forum to discuss best ethical and business conduct practices with other supply chain organization representatives and interested parties.

In its annual review of safe harbors, the OIG considers a number of factors regarding the existing safe harbor provisions to ensure that practices are aboveboard and meet the agency’s strict qualifications. OIG then issues the report to Congress to ensure transparency. This process has repeatedly shown the value that safe harbor provisions continue to yield federal healthcare programs.

For in-depth analysis on the GPO Safe Harbor, read a full report from Richard P. Kusserow, former Inspector General of the HHS, here: Activities and Perspectives of the Office of Inspector General in the U.S. Department of Health and Human Services Regarding Group Purchasing Organizations (GPOs)

To read the OIG’s notice seeking comments for potential new safe harbors, click here.

Meet a Member of the 114th Congress: Bill Cassidy, MD (R-LA)

Inside HSCA examines members of the 114th Congress who have a background in healthcare or who could have an impact on the supply chain.

Dr. William “Bill” Cassidy won’t be a new face on Capitol Hill—but he will be in a new place.

The Louisiana Republican is leaving the U.S. House of Representatives for the United States Senate after recently defeating incumbent Senator Mary Landrieu in a December 6th election runoff.

Cassidy, who served as a Louisiana state senator before being elected to U.S. Congress in 2008, has been involved in healthcare his entire professional life. He started practicing medicine in 1983 and has taught at Louisiana State University Medical School since 1990. Furthermore, the Baton Rouge-based physician has undertaken many projects aimed at helping the uninsured and underinsured both in his community and overseas.

For example, Cassidy created a private-public partnership to vaccinate 36,000 children in the Baton Rouge area against Hepatitis B at no cost to parents; he co-founded the Greater Baton Rouge Community Clinic, which provides free health and dental care to individuals who work but lack insurance; and he provided medical treatment while travelling to Africa several times with his wife Laura, who is a surgeon.

Cassidy has also said that repealing and replacing the Affordable Care Act will be among his top priorities in the 114th Congress.

In a statement from his website, Cassidy says he has “always been committed to making sure all Americans have access to good health care,” and explains this should be achieved through free-market solutions that “give patients the power, not Washington DC bureaucrats.”

Cassidy has already been assigned a seat on the influential Senate Committee on Health, Education, Labor and Pensions (HELP), where he will use his background in healthcare to shape legislation when he joins the upper chamber in January.

A graduate of LSU and LSU Medical School, Cassidy lives in the Baton Rouge area with his wife Laura and their three children.

For more information on Senator-elect Bill Cassidy, visit his campaign website here.

Meet a New Member of the 114th Congress: Brian Babin, DDS (R-TX)

Inside HSCA examines new members of the 114th Congress who have a background in healthcare or who could have an impact on the supply chain.

Dr. Brian Babin has practiced dentistry for over 30 years, first in the U.S Air Force and later through his private practice. He will bring his extensive background in healthcare and public service to Congress as the next U.S. Representative of the 36th Congressional District of Texas.

Babin ran as a strong conservative and made water conservation, border security and healthcare reform the core messages of his campaign.

The dentist believes the Affordable Care Act should be abolished, stating that the legislation is “destroying jobs, the economy, and causing millions to lose their promised healthcare policies.” His plan for reform is to replace the Affordable Care Act “with federal tax credits and free market solutions.”

Before easily defeating Democrat Michael Cole in the general election, Babin fought through a difficult primary field—eleven other Republicans sought the seat vacated by Rep. Steve Stockman—to eventually defeat tea-party backed Ben Streusand for the GOP nomination.

What many say distinguished Babin in the crowded primary battle was his deep connection with the district, which was formed through years of community involvement.

In addition to running his successful dental practice in Woodville, Texas, Babin was also Mayor of the city, served as a City Councilman, is a deacon at his Baptist church and has held numerous board and advisory positions in the area. Furthermore, Babin has campaigned for state and national Republican candidates for decades, helping turn the one-time Democratic stronghold into a consistently Republican district. This established strong ties to the region’s politics and gave him a distinct advantage over his competition.

Babin earned his BS degree from Lamar University and his DDS from the University of Texas at Houston. He has been married to his wife Roxanne for over 40 years and has 5 children and 11 grandchildren.

For more information on Representative-elect Brian Babin, visit his campaign website here.

Meet a New Member of the 114th Congress: Mark Takai, MPH (D-HI)

Inside HSCA examines new members of the 114th Congress who have a background in healthcare or who could have an impact on the supply chain.

Lt. Col. Mark Takai is a member of the Army National Guard, former member of the Hawaii House of Representatives, and the next U.S. Representative for Hawaii’s 1st Congressional District. Takai has a deep healthcare background in both the public and private sectors.

Currently a Preventive Medical Officer with the Hawaii National Guard, Takai has previously served as the Hawaii Army National Guard Deputy State Surgeon and as a public educator for the state’s Department of Health. Takai also owns and operates Pacific First Health Solutions, a health insurance brokerage firm.

Healthcare featured prominently in Takai’s congressional campaign. On the trail, Takai continually stressed the need to improve access to care, reduce costs for Hawaiians and protect Medicare beneficiaries. Takai supports the Affordable Care Act, but also notes he will consider any “changes to the law that will provide better access to affordable health care.”

Takai won the seat in a close contest against Republican Charles Djou and will replace outgoing U.S. Rep. Colleen Hanabusa.

Takai is a veteran of Operation Iraqi Freedom and a 20-year member of the Hawaii House of Representatives, and he aims to make bipartisanship a staple of his first term in order to get “things done for middle-class families” and to “bring an end to the extreme rhetoric and partisanship that is dominating Washington.”

Takai earned a B.A. in political science and a master degree in public health from the University of Hawaii, where he was also a standout swimmer. He lives near Honolulu with his wife and two children.

For more background information on Representative-elect Mark Takai, visit his campaign website here.

Meet a New Member of the 114th Congress: Earl “Buddy” Carter (R-GA)

Inside HSCA examines new members of the 114th Congress who have a background in healthcare or who could have an impact on the supply chain.

Buddy Carter, a pharmacist and businessman from Pooler, Georgia, defeated Democratic opponent Brian Reese in the race for Georgia’s 1st Congressional District. Carter will be replacing outgoing U.S. Rep. Jack Kingston, who has held the seat for the past 22 years.

Carter has been a pharmacist for over 30 years and will be the only pharmacist in the 114th Congress. He owns and operates three pharmacies in his District and has also worked as a consultant for Omnicare, Inc.

One of Carter’s core campaign messages was focusing on healthcare reform, which he says starts with repealing the Affordable Care Act. In a statement on his campaign website, Carter notes the healthcare system can be improved by “bringing real conservative reform with market-driven solutions.” One way he plans on accomplishing this is by working to allow insurance companies to compete across state lines, which he argues will improve competition and lower costs.

In August, Carter said it is extremely important to have leaders who “have been in the trenches on healthcare issues before and [who] understand the importance of the relationship between a healthcare service provider and the patient.”

In addition to healthcare, Carter is interested in tackling the nation’s long-term debt and fixing the tax code when he gets to Washington.

Working on legislation that addresses these issues won’t be anything new for Carter—before running for the U.S. House of Representatives, he was a State Senator in Georgia from 2009-2014 and a State Representative from 2005-2009. Prior to that, Carter served as mayor of Pooler, Georgia, from 1996-2004.

For more background information on incoming Rep. Buddy Carter, visit his campaign website here.

GPOs Taking Steps to Help Hospitals, Healthcare Providers Combat Ebola Virus

The Healthcare Supply Chain Association (HSCA) recently released the findings of a membership survey detailing the actions that healthcare group purchasing organizations (GPOs) are taking to help hospitals, healthcare providers and suppliers prepare to treat the Ebola virus. All GPOs surveyed, including the five largest GPOs, reported taking action to help increase hospital and healthcare provider preparedness.

“GPOs are the sourcing and purchasing partners to virtually all American hospitals, and HSCA-member GPOs are each taking innovative, proactive steps to ensure that hospitals are fully equipped to handle Ebola-related issues,” said HSCA President Curtis Rooney. “From disseminating information on product availability and alternate product sourcing to governmental agency collaboration and 24/7 emergency support, GPOs are committed to enhancing supply chain preparedness so that hospitals can focus on treating and preventing the spread of this disease.”

Specific steps taken by GPOs to respond to hospital need and to help address the Ebola virus have included:

• Increased communication with members and suppliers to identify product availability and any potential shortages of supplies;
• Establishment of 24/7 emergency command center;
• Development of an Ebola Hemorrhagic Fever Clinical Resource Guide, which includes guidelines from the U.S. Centers for Disease Control (CDC) and World Health Organization (WHO);
• Around-the-clock monitoring of national situation;
• Collaboration with relevant government agencies at the Federal, state and municipal levels.

In addition, all or multiple GPOs surveyed reported taking the following steps to help address the public health threat of Ebola:

• Creating a centralized response system;
• Conducting full-scale exercises of emergency management programs;
• Working to ensures access to “just-in-time” supply chain products and services;
• Working with suppliers to identify product shortages or delays and with wholesalers and distributors to identify products in warehouses and potential shortfalls;
• Keeping members and customers updated on current CDC guidelines;
• Assessing and augmenting existing preparedness programs;
• Serving as a clearinghouse of product information, educational programs and treatment protocols.

“Emergency situations such as the recent Ebola crisis and the surge in demand for personal protective equipment following the change in the CDC’s baseline protection recommendations highlight the important role that GPOs play in helping to ensure access to critical products and services for healthcare workers,” added Rooney.

To learn more about HSCA and its GPO members, click here.