Of Pens, Delays, and Balloons

Some stories in the life sciences are years in the making while others take a more swift course to resolution. Below are three stories of varying degrees of persistence, but it may be that we have not heard the last of any of them just yet.

EpiPen Settlement a Sore Spot for Some

The EpiPen settlement between Mylan and the Department of Justice is finally in the books, but there were several interesting developments involved in this action, which has spanned at least the better part of a decade. The company has agreed to pay $465 million to settle these allegations, but there are indications that this matter is not finished.

To recap, the EpiPen controversy was already the subject of federal government interest in 2009, when the Office of Inspector General at HHS cited the Epipen as a product of interest in a report on the accuracy of drug prices for Medicaid rebates. The Aug. 17 DoJ statement announcing the settlement said Mylan had “violated the False Claims Act by knowingly misclassifying EpiPen as a generic drug to avoid paying rebates,” but the DoJ nonetheless stated that the claims “settled by this agreement are allegations only, and there has been no determination of liability.”

The department’s announcement lists only one relator in this qui tam action, Sanofi-Aventis, but Ven-a-Care of Key West, Fla., was also on board. Ven-a-Care is purportedly a pharmacy, but some see the company as more of a bounty hunter, given the frequency with which its owners avail themselves of large sums for similar cases. Thus, the Mylan case was driven by two relators rather than the more typical single relator, suggesting the data provided by Ven-a-Care and Sanofi were substantially different.

Another interesting facet of this case is that non-governmental 340B drug programs will enjoy rebates from the action, which is not ordinarily the case. In any event, this settlement might not be the last word on the controversy as Sens. Chuck Grassley (R-Iowa) and Richard Blumenthal (D-Conn) have criticized the amount of the damages as grossly inadequate.

The drug pricing controversy is providing plenty of whiplash for Valeant as well. Recently, Valeant investor Lord Abbett & Co. filed suit in New Jersey with the argument that Valeant’s actions violate that state’s Racketeer Influenced and Corrupt Organizations law. Should a judge accept that argument, Valeant could face treble damages.

340B Final Rule Delayed Again

In spite of all the consternation about drug prices, the Department of Health and Human Services has announced that it will once again delay a rule that would have dinged drugmakers for overcharging several types of institutions, including safety net hospitals.

The related provisions of the Affordable Care Act had expanded the types of institutions eligible for participation in the 340B program to include children’s hospitals and free-standing cancer centers, but the latest 340B final rule would have hit drugmakers with a $5,000 fine for each instance in which the charge for a drug exceeded the ceiling price. This is the third time the implementation date of this final rule has been pushed back, which is now suspended until at least July 2018. The move was blasted by a number of affected entities, but there are rumblings that the 340B reporting portal administered by the Health Resources and Services Administration is not fully operational.

Rates for Drug-Coated Balloons may Crater

A Medicare advisory board will recommend that the Centers for Medicare & Medicaid Services allow reimbursement for drug-coated balloons (DCBs) to lapse to the rates paid for standard angioplasty of the lower limbs. The decision flew in the face of clinician input, but whether CMS will go along with the advisory panel’s recommendation is not yet clear.

The Medicare advisory board for the outpatient prospective payment system said the rates paid for DCBs – such as Medtronic’s Admiral InPact and the Lutonix by C.R. Bard – should be allowed to fall to the rates paid for standard angioplasty balloons used in the femoral and popliteal arteries. DCBs enjoyed a higher reimbursement rate under the Medicare new technology pass-through program, but these devices have used up their eligibility for the program. This predicament leaves Bard and Medtronic facing a rate as low as $4,999 in calendar year 2018, a rate that clinicians said would impede access and possibly trigger a spike in the amputations DCBs are credited with preventing.

Physicians have argued that the use of a DCB requires both pre- and post-dilatation of the target vessel with a plain balloon to achieve the desired effect on vessel patency, a necessity that boosts both procedure time and costs. An industry representative suggested a rate closer to $8,000 for DCBs, but the panel clearly was not amenable. The panel endorsed a proposal that CMS track costs and utilization of these devices in CY 2018 in order to evaluate whether a new ambulatory payment classification code is needed to account for the costs associated with DCBs, but that proposal leaves patients and physicians with a 12-month question mark.

In the meantime, hospitals and other institutions will have to decide whether to take the financial hit for these devices in an effort to avoid readmissions, which are squarely in CMS’s crosshairs via several well-known health care delivery reform programs.

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