Filed under: Drug Pricing, Drugs & Medical Devices, Health Law, Seton Hall Law
Here at Seton Hall Law, the halls are filled with the sounds of students again, which means our summer-long blog hiatus has come to an end. We’re excited to get back to blogging at Health Reform Watch!
As always, the blog will feature analysis and commentary from Seton Hall’s health law faculty and Recommended Reading posts highlighting the health law scholarship we’ve been reading and enjoying. It will also include contributions from the students in our health law program as well as announcements of program activities.
Guest posts on health and pharmaceutical law and policy topics are welcome, so please contact me, Kate Greenwood, at email@example.com if there’s something you’d like to share.
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From the beginning, the content of Health Reform Watch has been driven by the diverse interests and expertise of Seton Hall’s health law faculty. In my case, that’s maternal and child health, drug and device law and policy, and, most especially, the intersection of the two. In recent months, I have focused on the regulation of orphan drugs (a video of me opining about the same can be found here), and so yesterday’s news that the Australian government has decided to pay the $110,000 per-course-of-treatment price for Bristol-Myers Squibb’s melanoma drug Yervoy caught my attention. What’s newsworthy is not Australia’s decision to pay – other countries are, too – but rather its plan for making sure it is getting its money’s worth. As reporter Wendy Carlisle explains, Australia’s Pharmaceutical Benefits Advisory Committee will for the first time be conducting its own epidemiological study.
As is the case with many orphan drugs, Yervoy was approved on the basis of clinical trials that were relatively small. A 2011 review conducted by Aaron Kesselheim, Jessica Meyers, and Jerry Avorn of all new oncology drug approvals from 2004 through 2010 in oncology revealed that “the FDA ha[d] approved alternative trial designs that allowed most orphan cancer drugs to be approved on the basis of single-group, nonrandomized trials that enrolled comparatively small numbers of patients.” EvaluatePharma recently estimated that regulators require a median phase III trial size of 528 patients, at an estimated average cost of $85 million, for orphan drugs, as compared to 2,234 patients, at an estimated average cost of $186 million, for non-orphan drugs.
When it comes to clinical trials, smaller is not better. As the chair of Australia’s Pharmaceutical Benefits Advisory Committee, Dr. Suzanne Hill, explains, “[i]f we are going to look at new products and try to judge them on the basis of smaller clinical trials – which is what is happening – then we are going to be less confident about the clinical trial data when we see them for making recommendations[.]“ To shore up the Committee’s confidence in Yervoy, it will be tracking “who gets prescribed it, what happens to them, how long do they get treatment for, how is the treatment … put in the context of other treatments that they have and what happens to the outcome?” The Committee’s ultimate goal is to determine whether “we get the survival benefit in the community that we saw in the trials[.]”
The number of orphan drugs, many of which cost in excess of $100,000, is climbing and is expected to continue to do so. EvaluatePharma estimates that “the worldwide orphan drug market is set to grow to $127 [billion], a compound annual growth rate of +7.4% per year between 2012 and 2018[,]” which “is double that of the overall prescription drug market, excluding generics, which is set to grow at +3.7% per year.” Given these expected trends, there is no doubt that regulators and payers will increasingly look to post-marketing studies to supplement the available clinical trial data about orphan drugs, whether they conduct the studies themselves, as Australia is doing, or require manufacturers to shoulder the burden. Care must be taken to ensure that manufacturers remain incentivized to develop treatments for rare diseases, but there is evidence to suggest that regulators have room to maneuver. EvaluatePharma reports that “[t]he current stock of Phase III/Filed orphan products is expected to yield a return on investment of x10.3,” while the current stock of non-orphan products is only expected to yield a return on investment of x6.0.
When patients undergo surgical or other medical procedures, they hope to receive optimal care provided by experienced physicians. They are rarely concerned about proper sterilization of surgical instruments and other medical equipment as it is likely assumed that the health care facility has applied this standard precaution. Unfortunately, however, not every medical center is adequately sterilizing its equipment, yet this is a crucial element of successful medical care.
According to a report by The Center for Public Integrity, a patient who underwent a routine rotator cuff repair surgery at a Texas hospital in 2009 was readmitted weeks later due to an infection from the deadly bacteria known as P. aeruginosa. An investigation conducted by the Centers for Disease Control and Prevention (CDC) and the hospital revealed that the arthroscopic shaver utilized for the surgery contained the deadly bacteria even after the sterilization process.  A more recent incident occurred in March of this year where a routine inspection at an oral surgeon’s office in Tulsa, Oklahoma exposed sterilization issues, including cross-contamination problems. The Department of Health stated, “more than 60 former patients [of the oral surgeon] tested positive for hepatitis and HIV.”
Medical device manufacturers originally sold “single-use” devices because of the demand for disposable equipment. In the late 1970s, hospitals began reusing medical devices intended for or labeled as “single-use” as a cost control measure. The FDA explains that “single-use” devices are to be used once or on one patient during a single procedure whereas reusable medical devices are those that can be reused to treat several patients.
Contaminated reusable medical devises can lead to infections but a method known as “reprocessing” involves meticulous sterilization intended to prevent infections. Reprocessing generally includes the following steps: 1) preliminary decontamination and cleaning in the area of use such as the operating room to inhibit drying of blood and other contaminants on the devises; 2) transfer of the devise to the reprocessing area where careful cleaning occurs and 3) final disinfection or sterilization to allow the devise to be reused. The FDA further explains that problems arise for reprocessing when sterilization instructions by the manufacturer are “unclear, incomplete, difficult to obtain from the manufacturer, or impractical for the clinical environment.”  Manufacturer designs that render proper cleaning difficult in addition to scantily paid sterilization technicians are other sources of concern.
There are some diseases that preclude the reuse of medical devices, specifically Creutzfeldt-Jakob Disease (CJD). CJD is a neurodegenerative disorder that causes rapidly advancing dementia, deteriorating memory, drastic changes in behavior, and coordination and visual issues. It is 100% fatal; patients with CJD usually die within one year of disease symptom onset. CJD results when normal brain proteins are transformed into abnormal and infectious forms known as prions. Infected pituitary hormones, dura mater transplants, cornea grafts, and neurosurgical instruments are some examples of materials that can transmit the disease to patients. Most disinfectant and sterilization procedures do not eliminate the infected prions. Importantly, although fatality normally occurs within one year of symptom onset, the disease has an incubation period of up to 50 years, it is not readily detectable until symptoms occur, and is seemingly capable of transmission to others during the incubation period.
The World Health Organization (WHO) released infection control guidelines for health facilities handling patients with CJD. Essentially, any reusable surgical instruments that come into contact with “high infectivity areas” including the brain, spinal cord, and eye should be disposed of and incinerated. But the difficulty, of course, is knowing who is infected with this infectious fatal disease with the disturbingly long incubation period.
Ensuring that hospitals follow proper sterilization is integral, but technician certification is also an important aspect of the overall sterilization scheme. As the director of sterilization at a healthcare facility in New York so accurately stated, “The people who do your nails, they have to take an infection control course before they can apply for a license …Yet the people who deal with lifesaving equipment, they are required to have zero education.” Currently, New Jersey is the only state that makes certification mandatory for sterilization technicians.
As the provision of health care becomes more transparent, patients not only have the ability to choose where to obtain services based on price and reputation of a facility, but they are also, presumably, able to learn about various quality measures. By filtering a search based on location or hospital name, the Centers for Medicare & Medicaid Services’ (CMS) Hospital Compare Website enables patients to view quality measures such as readmission, complication, and mortality rates. There, patients are able to examine the facility’s rates in comparison to the national average. Therefore, improper sterilization leading to increased infection rates will likely be exposed to the public, however attenuated, which could cause patients to seek care elsewhere—at least in time, among consumers able to bring choice to the equation (non-emergency, non-insurance dictated) and who have the ability to comprehend the data. But seemingly, more direct measures can be taken to ensure patient safety.
 http://www.publicintegrity.org/2012/02/22/8207/filthy-surgical-instruments-hidden-threat-americas-operating-rooms, http://www.today.com/health/today-investigates-dirty-surgical-instruments-problem-or-1C9382187
Recommended Reading: New Legal Scholarship from Ryan Abbott and Jennifer Herbst on Pharmacovigilance Topics
In his article Big Data and Pharmacovigilance: Using Health Information Exchanges to Revolutionize Drug Safety, which is forthcoming in the Iowa Law Review, Ryan Abbott argues that third parties, including academics, insurance companies, and rival drug companies, should be incentivized via an “administrative bounty proceeding” to analyze the large and rich datasets that will be generated by health information exchanges. Should a third party’s original statistical analysis reveal safety or efficacy concerns about a drug, Abbott suggests, it could submit the results to the Food and Drug Administration and be paid a taxpayer-funded bounty, the amount of which would be based on the value of the new information to the government in terms of health care dollars saved. If a drug’s manufacturer knew or should have known about the concerns brought to light by the third party, Abbott proposes that the manufacturer fund the bounty, the amount of which would be based on the drug’s sales; depending on its degree of culpability, a manufacturer could even be liable to both the third party and the government for damages.
Abbott believes that the bounty system he proposes would level the pharmacovigilance playing field in a way that would redound to the benefit of consumers. In his words: “The public deserves an advocate as equally committed to challenging the safety and efficacy of approved drugs as product sponsors are to maintaining these drugs on the market.” Writing about Abbott’s proposal at the Bill of Health blog, Dov Fox distills it down to the following provocative question: Are we “better off evaluating medicines under an inquisitorial system or an adversarial system”?
I also recommend Jennifer Herbst’s article How Medicare Part D, Medicaid, Electronic Prescribing and ICD-10 Could Improve Public Health (but Only if CMS Lets Them), which is forthcoming in Health Matrix: Journal of Law-Medicine. While the title might seem daunting, the article itself brings clarity to a murky, highly-technical area of the law with enormous significance for public policy. As Herbst explains, although both Medicare Part D and Medicaid limit reimbursement to drugs prescribed for “medically accepted indications,” this limitation is not enforced, at least not at the time of payment. And, while the government’s attempts to enforce it retroactively have led to headline-making settlements with pharmaceutical companies, they have not resulted in a significant dent in the rate of unscientifically-supported prescribing.
Herbst recommends that the government take advantage of the inroads made by electronic prescribing and require that patient diagnosis codes be made a condition of payment for outpatient prescription drugs. Linking drugs to diagnoses in this way would allow pharmacists to do a more thorough safety review of the prescriptions they fill and it would give the government a powerful pharmacovigilance tool. Of course, it would also allow the government to decline to provide reimbursement for drugs prescribed for indications that are not “medically accepted.” Herbst argues that this would be a mistake because it could lead to widespread miscoding – there’s a disconnect between what the government deems medically accepted and what providers consider sound medical practice – which would undermine the value of the data being collected. I wonder, however, whether it would be politically feasible for the Centers for Medicare & Medicaid Services “to continue its current policy of paying for all outpatient prescriptions not subject to prior authorization (contrary to the letter of the Medicare Part D and Medicaid statutes)” in the face of the data Herbst’s proposal would generate.
Expect to keep hearing more talk about health care cost cutting, despite charts like this. It’s an idee fixe of the Wall Street/Washington corridor, and will only be implemented more vigorously over time. So perhaps we should take stock of a few cost cutting initiatives. Medicare Part D, it seems, is coming way under its projected budget. But maybe that’s because of ”a sharp fall in the number of breakthrough drugs,” a sign that innovation in pharma is stalling. Cost cutting triumph, or logical outgrowth of a system that fails to reward actual contributions to health?
There’s also been a lot of pressure on skilled nursing facilities to hold the line on costs. What are we getting in return? Here’s a summary from OIG:
Skilled nursing facilities (SNF) are required to develop a care plan for each beneficiary and provide services in accordance with the care plan, as well as to plan for each beneficiary’s discharge. . . For 37 percent of stays, SNFs did not develop care plans that met requirements or did not provide services in accordance with care plans. For 31 percent of stays, SNFs did not meet discharge planning requirements. . . . [R]eviewers found examples of poor quality care related to wound care, medication management, and therapy. These findings raise concerns about what Medicare is paying for. They also demonstrate that SNF oversight needs to be strengthened to ensure that SNFs perform appropriate care planning and discharge planning.
I’m sure the health care cost cutters will use this evidence to demand the SNFs be paid even less–rather than, say, investing real funding in proper training and pay in this vital service sector. At some point, though, costs get cut so much that Medicaid will become little more than a meaningless plastic card, and “SNF” will stand for “Scarce Nursing Forever.”