White House Task Force Echoes Pharma Proposals

Industry influences working group’s deliberations, report contends

Kaiser Health News (KHN) has examined documents that shed light on the activities of a White House working group that meets regularly to discuss the cost of pharmaceuticals. The documents reveal that the group’s behind-the-scenes deliberations may be unduly influenced by the pharmaceutical industry. The group is led by Joe Grogan, Associate Director of Health Programs for the Office of Management and Budget (OMB). Until March, Grogan served as a lobbyist for Gilead Sciences, the pharmaceutical company that priced its hepatitis C drugs at $1,000 per pill.

To solve the crisis of high drug prices, the group discussed strengthening the monopoly rights of pharmaceuticals overseas, ending discounts for low-income hospitals, and accelerating drug approvals by the FDA, according to the KHN report.

The working group initially met on May 4 in the Eisenhower Executive Office Building and has since gathered every two weeks. In addition to the OMB, the group includes officials from the White House National Economic Council; the Domestic Policy Council; the Department of Health and Human Services; the FDA; the Federal Trade Commission; the Department of Commerce; the Office of the U.S. Trade Representative; and the Department of Justice.

According to the documents obtained by KHN—the latest of which was dated June 1—the working group focused on the following “principles” and “talking points”:

  • Extending the patent life of drugs in foreign markets

This would “provide for protection and enforcement of intellectual property rights” and would ensure “that American consumers do not unfairly subsidize research and development for people throughout the globe,” according to the meeting documents.

Extending monopoly protections for drugs overseas has been one of the pharma industry’s top priorities since the Trans–Pacific Partnership was defeated last year, KHN says.

  • Promoting competition in the U.S. drug market

This would be accomplished by “modernizing our regulatory and reimbursement systems” and by limiting the “barrier to entry, including the cost of research and development,” according to the documents.

The working group also discussed two broad policy ideas that have been championed by the pharma industry, according to sources familiar with the process:

  • Promoting value-based pricing

Value-based pricing is when pharmaceutical companies keep the list prices of drugs unchanged but offer rebates if patients don’t improve. It’s unclear who would audit the effectiveness of these drugs; what criteria they would use to evaluate them; and who would receive the rebates, the KHN report notes.

Grogan invited Robert Shapiro—an adviser for Gilead Sciences and former secretary of Commerce under President Bill Clinton—to brief the working group on value-based pricing on May 18. Shapiro is the chairman and co-founder of Sonecon LLC, a Washington, DC, firm that consulted with Gilead, Amgen, and the Pharmaceutical Research and Manufacturers of America (PhRMA), a powerful lobbying group, according to his curriculum vitae.

  • Issuing 10-year U.S. Treasury bonds to drug manufacturers

Grogan and Shapiro also discussed issuing 10-year U.S. Treasury bonds to drug manufacturers to pay for expensive hepatitis C drugs, such as Sovaldi (sofosbuvir, Gilead) and Harvoni (ledipasvir/sofosbuvi, Gilead), under Medicare and Medicaid, to avoid rationing drugs to the sickest patients, KHN says. A 2015 Senate investigation, for example, found that although Medicaid spent more than $1 billion on Sovaldi, only 2.4% of Medicaid patients with hepatitis C were treated.

After the working group’s first meeting on May 4, Grogan distributed detailed policy recommendations on expediting generic drug approvals, creating a new tax credit “of up to 50%” for investments in generic drug manufacturing, distribution, and research and development. The documents also propose scaling back the 340B program, which requires drug manufacturers to provide some medicines at a discount to hospitals that treat low-income patients.

Brand-name drug prices—which account for 72% of drug spending in the U.S.—go untouched in the handouts, said Fiona Scott Morton, a Yale economics professor and former attorney with the Justice Department’s antitrust division.

Some of the text in the document is taken directly from policy papers published by PhRMA.

Under the subtitle, “Encourage Use of 21st Century Tools for Drug Evaluation, Review and Approval,” one handout proposes that the FDA use less-rigorous clinical trial standards to speed drug approvals.

The handout cites a PhRMA paper from March 2016 that includes an identical subtitle, “Encourage Use of 21st Century Tools for Drug Evaluation, Review and Approval,” and recommends that the FDA implement less-rigorous clinical trial standards.

Another section—which recommends giving the FDA more discretion to evaluate generic copies of complex drugs—closely resembles a National Law Review article written by two lobbyists in the pharmaceutical division of Foley & Lardner, whose clients include generics drug makers.

The handouts further recommend allowing drug makers to supply data and off-label information to insurers and pharmacy benefit managers during the clinical trial period, before they secure FDA approval.

That’s a “terrible idea,” Jerry Avorn, a professor at Harvard Medical School, told KHN. “That’s why we have the whole approval process, to determine what’s actually true,” he said.

Source: Kaiser Health News; June 16, 2017.