MAY 11, 2012

NIH announces unprecedented deal with big drug makers
By John Reichard, CQ HealthBeat Editor
May 3, 2012

The National Institutes of Health announced a landmark agreement with drug-makers under which the agency will award millions of dollars in grants to academic researchers to try to develop new uses for experimental medicines that pharmaceutical companies have shelved. If the drugs pan out, the university investigators and the companies, not taxpayers, will split the profits.

The federal Treasury would not get a share of the sales, nor would NIH, except if an “intramural” NIH researcher was a recipient of the grant in question, officials said. Nor, according to Health and Human Services Secretary Kathleen Sebelius, would federal officials play a role in trying to negotiate pricing for new products marketed as a result of agreements.

But federal officials clearly regard the trade-offs in the agreement as well worth making. They said it will lead to new and potential breakthrough treatments that otherwise would never be developed in an era of tight budget constraints.

“One of the driving forces that all of us think about every day is how can we speed up the opportunities to bring new treatments to patients whose hopes depend upon it,” NIH Director Francis Collins said at a morning news conference announcing the agreements with Pfizer, Eli Lilly, and AstraZeneca.

“Especially now when resources are quite tightly constrained, for both the public sector and the private sector, coming up with creative ideas about how we can do this more efficiently and more cost-effectively is something we think about every day,” Collins added. “I am just delighted that we’re here today.”

It’s not far-fetched to think that drugs tested and found wanting for one purpose can later turn out to be medical breakthroughs if tested for another use. For example, AZT, the first drug the Food and Drug Administration (FDA) approved that was shown to lengthen the lives of people with AIDS, was first developed for cancer, but was not effective.

Another example is thalidomide, which was developed as an anti-nausea treatment for morning sickness, a use that led to limb deformities in babies born to women who used the drug. Subsequent research showed it to be useful in treating a type of cancer called multiple myeloma.

NIH helped to fund studies of the use of AZT to suppress the HIV virus that causes AIDS. However controversy erupted when the company that marketed the drug, Burroughs Wellcome, charged a high price. AIDS activists slammed federal officials for not pressuring the company to price it lower.

Collins said that researchers now know the molecular basis of 4,500 diseases but have effective treatments for only about 250 of them. “Clearly, we need to speed the pace at which we are turning discoveries into better health outcomes,” he said.

The three drug makers are providing about 20 compounds for study. All have been found safe by the companies in early human testing. The types of compounds have not been revealed. But Collins said officials are particularly hopeful that uses will be found to treat diseases of the central nervous system.

“I don’t think NIH has had this scale of collaboration with the private sector in the past,” said Kathy L. Hudson, acting deputy director of the newly formed National Center for Advancing Translation Sciences (NCATS) at NIH. “Assuming that other companies join, this will be really profound” in its impact.

Hudson said the center will provide USD 20 million in fiscal 2013 for eight to 10 initial grants. It plans to offer another USD 20 million in fiscal 2014 and USD 20 million more in 2015. The money would partially pay for clinical trials. If a drug tested showed early signs of being effective, the company that owns it would be expected to step in and fund final testing and work out an agreement with the academic researcher or institution on royalties from subsequent sales.

Hudson said the NCATS money could be a catalyst for other institutes at NIH to expand the pool of grant money. For example, if a grant application seeks to fund a promising cardiovascular use of a drug, the NIH National Heart, Lung and Blood Institute might decide to use some of its funding for one of the proposed studies, she said.

Under the agreements, the drug company retains ownership of the drug while the researchers retain intellectual property rights to the studies and can publish the results of their work.

Collins lauded the three drug makers “for thinking outside the box and providing unprecedented access to their compounds. We at the NIH hope this is just the beginning of many more great things to come, that the pioneering spirit shown by these companies will inspire others to join us in this important effort.”

Patient advocacy groups have complained in the past about high prices charged for drugs developed, at least partially, with NIH funding that are later marketed by private companies that make big profits.

Comments by Sebelius however, suggested that HHS won’t put pressure on its partners when it comes to pricing.

“In terms of launching the drug in the marketplace, we don’t set prices, we don’t control prices,” she said. “That’s really up to the industry partner.” Collins added that “there is no intention as part of this program to intervene in pricing. That is something which NIH over 15 years ago was asked to get a bit more engaged in, and it became quite clear that that was a non-starter in terms of productive relationships with the private sector.”

Michael Manganiello, a patient advocate who has HIV, said the types of agreements announced can save lives, adding that AZT has done so along with other medications in his case. He praised the three drug companies for stepping forward. But, he said in an interview after the press briefing, AZT pricing was “a gigantic issue” in 1987 when the drug was approved.

“We actually raised such a ruckus that the prices were lowered,” Manganiello said. He said his “cautionary tale” for drug makers today in such agreements is to partner with patient advocacy groups ahead of time to involve them in pricing discussions. He said patient advocacy groups are going to be “completely aware” that the federal government is funding a second look at the drugs and will use that fact to pressure companies to charge affordable prices. “If I were them, I’d be talking to these patient groups to avoid all the bad publicity.”

analysis
	Ray Fabius MD DFACPE Chief Medical Officer, Thomson Reuters		Michael L. Taylor, MD VP & National Business Medical Leader, Thomson Reuters
	Michael R. Udwin, MD, FACOG Medical Director, Analytic Consulting and Research Services, Thomson Reuters		William Bithoney, MD, FAAP National Business Medical Leader, Thomson Reuters
Ray Fabius, Michael L. Taylor, Michael R. Udwin and William Bithoney of Thomson Reuters answer questions from Dena Bunis, CQ HealthBeat Managing Editor. Q. What do you think of this agreement between NIH and the pharmaceutical industry? Fabius. The latest innovative theme on Capitol Hill as well as state governments is private–public partnerships. This is another example of this arrangement – one that offers great promise. Taylor. This may prove to be an efficient way to bring new drugs into the marketplace, since these shelved products have already been tested for safety in humans. I believe there is a need to prioritize the drug development and approval process, tying federal funding to the most relevant needs of the U.S. population. Udwin. Government fostered collaboration between academia and industry is commendable. With tightening budgets and patient-lead advocacy, especially for severe conditions that affect only a proportionally small segment of the population, such initiatives can be an important driver of new and innovative treatments. Bithoney. The industry can routinely spend several hundred million dollars to get drugs to the point where they have been tested on humans in clinical trials and determined to be safe. Large (and small) pharma companies do not shelve a drug they have tested without deep deliberation. It is highly unlikely that they would spend more to develop these drugs for alternative purposes without further incentives. Even if the drugs are found to be useful for other diseases, the markets may not be large. Therefore, to further constrain profits would be a challenge for the federal government. In general, this program is a wonderful idea, and the NIH is to be commended for its work to date. Q. What do you think of the cost-sharing agreement – one that doesn’t return any profits to the national treasury? Fabius. A successful blockbuster medication will provide significant tax revenue for the national treasury from job creation alone. It is not necessary to establish profit sharing arrangements. Taylor. I understand most of the cost will be borne by the drug development and the academic centers, but it would be helpful to return the initial development grant money back to the program to fund further research. Udwin. It is not unreasonable to question why profits are not returned to the treasury. Yet, to do so could potentially dampen interest in these initiatives. Ultimately, the development of treatments that would have been abandoned benefits us all. Bithoney. Of course, it is always preferable to have funds returned to the treasury. If the program is a financial success, perhaps in the future it can be modified for the fiscal good of the country. At this point such a constraint might well squelch the program before it even gets started. Q. What is the likelihood that any of these compounds that were stalled at the drug-maker level will end up becoming marketable medicines? Fabius. There is a reasonable possibility that at least one of the drugs under consideration will demonstrate efficacy. Research can focus on effectiveness, since they have all been shown to be safe. Taylor. I think it is quite possible that some of the medications might be found useful in areas not initially studied. There are many examples of a medication proving to be valuable in treating diseases not originally envisioned by the researchers. As the field of genomic medicine develops, I expect to see novel uses for many drugs currently in the pipeline or at some point in the development cycle. Udwin. It is never easy to speculate on the number of “shelved” drugs awaiting a new purpose or indication. Optimism is not unwarranted, given the current move to abandon pharmaceutical research if results are not quickly apparent or the treatment population too narrow. Bithoney. It is far from clear. For each drug that found a “second life” and was used for another purpose there are hundreds if not thousands that languish after failing their initial trials. It would be impossible to make a clear comment on this without review of the potential pipeline of possible molecules to be evaluated.

Back to top

House Republicans so detest the healthcare law’s prevention fund that they recently moved to kill it twice in two days, voting in one measure to use the money to maintain a reduced interest rate for student loans.

It was one more sign of the way a fund designed for the seemingly benign purpose of keeping Americans from getting sick has become one of the most hotly debated pieces of the healthcare law. Senators could try to tap all or part of the fund when they take up the student loan bill this week. In the meantime, localities across the nation have received millions of federal dollars from the fund for everything from quit-smoking phone lines to children’s immunizations.

The fund, however, has its protectors. The Obama administration threatened to veto a bill which the House approved, 215-195, on April 27, that would use USD 6 billion from the Prevention and Public Health Fund to pay to extend a break on student loan rates. In the Senate, Democratic Senator Tom Harkin of Iowa, one of the health fund’s authors and fiercest defenders, announced he would oppose the measure. Majority Leader Harry Reid, Democrat of Nevada, has filed for cloture on a bill that would finance the student loan rate extension by ending a corporate tax break.

Advocates of prevention and public health efforts have now fought off more than a half-dozen attempts at repeal or cuts. They suffered a defeat when earlier this year USD 5 billion was taken from the fund to pay for Medicare physician reimbursements. Both Republicans and the Obama administration agreed to that deal.

Hundreds of public health groups have signed letters to Congress in support of the fund and its goal of keeping Americans from contracting chronic illnesses that raise healthcare costs. “I think there’s been more than a pound of flesh taken out of the fund,” said Richard Hamburg, deputy director of the Trust for America’s Health, a health prevention advocacy group.

Investment fund or ‘slush fund’?

The fund was designed as a consistent, mandatory and long-term mechanism to send federal money to states and communities with hard-hit public health budgets. “For the first time in history, we have decided not just to pay lip service to prevention and wellness, but actually invest in wellness and prevention in a very robust way,” Harkin said in 2010. “By dedicating resources to preventing obesity, preventing diabetes, preventing heart disease, and other very costly conditions and diseases, we have a tremendous opportunity both to improve the health of the American people and to restrain healthcare spending.”

But Republicans call it a “slush fund” because the Health and Human Services secretary controls how the money is spent. Congress could influence fund allocations through HHS appropriations bills, but that has not happened under the Republican-controlled House.

The healthcare law provided for USD 15 billion over 10 years for the fund to pay for preventive care programs – with funding eventually rising USD 2 billion a year. However, to pay for the physician fix, Congress reduced the fund’s automatic spending levels and delayed, until fiscal 2022, the time when it would get USD 2 billion a year. In fiscal years 2012 through 2017, the fund was supposed to receive USD 1 billion a year.

Democrats have said that attempts to kill the fund amount to an attack on women’s health because the administration proposes to use it to pay for breast cancer screenings in fiscal 2013. Other initiatives in the 2012 fiscal year budget include money for anti-smoking media campaigns, community projects to reduce cancer, stroke and diabetes, public awareness of Alzheimer’s and promotion of healthful eating and physical activity. Hamburg said media campaigns to promote “quit lines” to help people stop smoking are particularly successful.

But Republicans said initiatives can go too far. The top Republican on the Senate Homeland Security and Governmental Affairs Committee questioned whether Centers for Disease Control and Prevention grant guidelines require recipients to lobby states and localities for policy changes on food or tobacco. Senator Susan Collins of Maine said she is worried about the “appearance of impropriety” in such actions. HHS officials said they’re committed to the “proper use of appropriated funds.”

Other Republicans said they are concerned that previous CDC-funded prevention programs, such as urban gardens in Boston and bike trail signs in Pitt County, N.C., they regard as wasteful, will also be included in future prevention fund grants; that is why they want to kill the prevention fund now.

House Republicans also said the HHS Office of Inspector General is probing the prevention fund. The OIG’s 2012 work plan, which covers many HHS programs, said that at least three audits will include the fund, a spokeswoman confirmed.

As the Senate weighs in and Republicans possibly push for cuts in the fund, look to Harkin to try to ride to the rescue from his perch as chairman of the Senate Health, Education, Labor and Pensions Committee. “I don’t know when we’re going to learn that our mothers were right: An ounce of prevention’s worth a pound of cure, and that’s true in healthcare,” Harkin said.

analysis
	Ray Fabius MD DFACPE Chief Medical Officer, Thomson Reuters		Michael L. Taylor, MD VP & National Business Medical Leader, Thomson Reuters
	Michael R. Udwin, MD, FACOG Medical Director, Analytic Consulting and Research Services, Thomson Reuters		William Bithoney, MD, FAAP National Business Medical Leader, Thomson Reuters
Ray Fabius, Michael L. Taylor, Michael R. Udwin and William Bithoney of Thomson Reuters answer questions from Dena Bunis, CQ HealthBeat Managing Editor. Q. What do you believe will be the future of the prevention fund and what should it be? Fabius. Congress is challenged to spend our money as wisely as possible. This requires that they look critically at money allocated but not spent yet and make difficult decisions. For these reasons the prevention fund is at risk. The understanding that investments in wellness and prevention can have significant returns is not universally accepted despite the overwhelming evidence. For some leaders this fund appears to be highly discretionary and not necessary. However, the peer-reviewed healthcare literature can support the statement that keeping well people well is more efficient and effective than having to treat those already ill. Taylor. As this fund becomes more politicized, there is a real risk that the fund will not have enough budget to deliver on its mission: improving prevention programs and increasing evidence-based cancer screening programs. It was not a good precedent to use this fund for physician pay increases, as it has opened the door to the further diversion of funds away from their intended purpose. This fund should be used to pay for health promotion and screening programs in the public health sector where it can be utilized by the population without insurance; these are often the poor and most vulnerable – those who do not currently receive the needed screenings. Udwin. Though controversial, elimination of the fund seems unlikely due to the national interest in preventive health. Ideally, a vibrant population requires investment in developing and maintaining a healthy lifestyle, which includes routine screening. Commercial and government funding is recognized as a source of such efforts. Bithoney. It will most likely survive this year given the President’s support as well as its strong backing in the Senate. However, it may well be pared down again for student loan support or another equally worthy project. It remains highly controversial in spite of its laudable goals. Q. Should Congress have a larger role in deciding how prevention fund money is spent? Fabius. Under the assumption that Congress will spend the money on prevention – yes. Perhaps by deliberating on this, they will gain a better appreciation for the value of maintaining health and wellness. To create true healthcare reform, Congress must be informed of all facets of population health in order to craft the best law to elevate the health status of all Americans and retard the escalation on medical costs, especially within the federal and state entitlement programs. Taylor. I would rather see the money allocated based on the public health need and administered by a non-partisan entity. The CDC or NIH might be good choices and would be preferable to the Congress. Udwin. Congressional oversight is an important and necessary function and should apply to this program. Yet, care must be taken to ensure funding is based on need and impact across the country. Bithoney. It would be far better if there was a uniform definition of what “prevention” means. Are prevention funds only legitimately spent on medical screening? Vaccinations? Should prevention be only primary prevention i.e. preventing disease or secondary prevention—curing diseases that have begun or even tertiary prevention? Should there be a clear definition of the return-on-investment (ROI), above which prevention funds may be used? Congress needs to give the Secretary clear guidance: these funds may only be spent on primary prevention programs such as vaccines and health screening. This will make the fund seem less “slushy” and make the Secretary’s discretionary spending seem less quixotic or arbitrary. Q. If the prevention fund is killed, what will fill the void in terms of getting needed resources to localities for prevention? Fabius. We will likely return to allocating small portions of existing health funding for prevention. As a nation we spend less than 2 percent of our healthcare dollars on keeping people well or picking up illness early. If we continue to spend our healthcare dollars this way, we will continue to see unrelenting increases in cost and chronic illness. Taylor. Unfortunately the discussion seems to concern abuses on the use of the money, not on how to solve the problem of inadequate funding. The rhetoric on the Hill seems to be how to get rid of the fund, not how to best meet the needs of this population. I have not seen proposals for a viable alternative. Udwin. If funding is eliminated, private-public partnerships could partly fill the void. Because of regional variations, a tailored approach, based on need and capabilities, may be the best solution. With tightening local budgets, fulfilling such a mission may be difficult without federal assistance. Bithoney. There is no other federal program of this size to fill the void. There are programs that target immunizations and other specific prevention issues in various branches of the federal government, but none can match what was envisioned for this program. With greater clarification of its goals and perhaps a willingness to compromise on the dollar amounts, this program is certainly a worthy one.

Back to top

Skeptics question Federal official about plan to move frail patients into managed care
By Rebecca Adams, CQ HealthBeat Associate Editor
May 1, 2012

The federal official who oversees care for those eligible for both Medicare and Medicaid faced tough questions about an Obama administration plan to allow states to move up to 2 million patients into managed care.

States are eager to try the program because, if it saves money, they get to keep part of it. So far, 27 states have asked to participate. The program, which will affect 2 million of the 9 million beneficiaries who are dually eligible for Medicare and Medicaid, will start in January.

But critics told Melanie Bella, director of the federal Medicare-Medicaid Coordination Office, that she is moving too quickly to shift this population into managed care. Bella spoke at a panel discussion at the American Enterprise Institute.

“These people have rights,” Federation of American Hospitals president and CEO Chip Kahn told Bella. The beneficiaries have paid payroll taxes into Medicare, Kahn said, and should be able to choose how to get their care just as other Medicare seniors do. In Medicare, beneficiaries typically can choose whether to stay in the traditional fee-for-service Medicare program or enroll in a Medicare Advantage managed care plan.

“This is really a version of premium support,” Kahn said, referring to a contentious plan to cap spending for Medicare beneficiaries. House Budget Committee Chairman Paul D. Ryan, Republican of Wisconsin, has proposed a particularly controversial version of the idea that critics said would significantly cut future beneficiaries’ benefits.

Kahn’s argument was backed by an unlikely ally, panelist Judy Feder, a Democrat who does not always agree with Kahn.

“Chip’s point — that this low-income population is being treated differently because it is a low-income population — is without dispute,” said Feder, a Georgetown Public Policy Institute professor.

Earlier in the discussion, Bella addressed similar concerns that were raised at an April 5, Medicare Payment Advisory Commission (MedPAC) meeting. MedPAC commissioners suggested that later in the year they might send a letter to federal officials about their concerns.

“Wherever I go, I get a group of people telling me we’re moving too slow and a group of people telling me we’re moving too fast,” Bella said. “We’re not going nationwide in these next two years, but we do feel some urgency,” a sentiment that Bella said lawmakers share.

Bella said that in some states, seniors might be automatically enrolled. But, all of the beneficiaries will have a chance to opt out of the program if they wish.

She also said that it is clear that the current system isn’t working well for the group that receives both Medicare and Medicaid. The population is the sickest, frailest population in the federal health program. Their care accounts for a disproportionately large amount of spending, about 80 percent of which is paid by the federal government. Dual eligible beneficiaries include nursing home patients with several chronic conditions and younger people who have severe illnesses or are developmentally disabled.

Some of these patients have to navigate three separate systems, with different rules and even different identification cards: Medicare, Medicaid, and the Medicare Part D prescription drug program.

“It doesn’t feel like there are very many protections in a fragmented fee-for-service system” that the patients use now, Bella said. Different medical providers who care for the same patient don’t share information, she said, and the structure of the current system doesn’t ensure that beneficiaries will have access to care.

The goal of the new program is to give patients more seamless and integrated care, she said. If the program succeeds in better coordinating patients’ care, that coordination could prevent medication errors or avoidable hospital admissions.

Bella also took issue with the idea that states are only interested in using the new program in order to reduce their Medicaid spending.

“I’d caution against assuming this is all being driven by savings,” Bella said. “It really is about rebalancing the system.”

States can use either capitated managed care or managed fee-for-service plans. This summer, Centers for Medicare and Medicaid Services officials will sign memos of understanding with the states, which will provide more details about how the programs will work in each area. Beneficiaries are expected to get information about their options in October.

analysis
	Ray Fabius MD DFACPE Chief Medical Officer, Thomson Reuters		Michael L. Taylor, MD VP & National Business Medical Leader, Thomson Reuters
	Michael R. Udwin, MD, FACOG Medical Director, Analytic Consulting and Research Services, Thomson Reuters		William Bithoney, MD, FAAP National Business Medical Leader, Thomson Reuters
Ray Fabius, Michael L. Taylor, Michael R. Udwin and William Bithoney of Thomson Reuters answer questions from Dena Bunis, CQ HealthBeat Managing Editor. Q. Should these Medicare and Medicaid recipients be automatically enrolled in managed care plans? Fabius. Dual eligible patients are fragile and often have a significant burden of illness. Studies demonstrate that the present system does not serve their needs well. If there is a population that requires and that can benefit greatly from special oversight, it would be this one. Taylor. This population is the most frail and chronically ill segment of the population, and the fragmented fee-for-service model has not served them well. This is exactly the type of patient who would benefit from a coordinated care model such as a patient-centered medical home. I think it is reasonable to develop an opt-out managed care plan, so the patients have a choice but the default is the managed care option. If done properly, the managed care option will improve the quality and the safety of the medical care they receive. Udwin. To the extent that managed care plans deliver on the promise of truly integrated care that reduces adverse drug events and minimizes avoidable trips to office or hospital, this plan is to be commended. Of course, it will be important to ensure that resources are not withheld and choice is sustained. Bithoney. Automatic enrollment has been used with Medicaid recipients for years. There is routinely dissatisfaction in the beginning of such a program. The key to making this program work is intelligent assignment of patients to providers who are capable of handling them. Healthcare providers should be adequately vetted prior to joining the program. Primary care providers caring for such patients should operate as patient centered medical homes either at level 1, 2 or 3. They should have adequate resources and specialists in their networks to care for the sickest patients, who are also often destitute. They need to demonstrate outreach abilities and patient navigation competencies. The key to the success of this program, as described in earlier issues of this newsletter, is intelligent assignment of these patients to providers who can care for them competently rather than just a random assignment. If this is done, the program will likely succeed. Finally, allowing patients to opt out of this program should allay the fears of both the patients and their advocates that we are going too fast. Tackling this problem is long overdue. If successful, this program will both improve health and cut costs. Q. Advocates are painting this as a rights issue for the beneficiaries. Do they have a point? Fabius. Patients should always have the opportunity to opt out of any program. Advocates should be pleased that dual eligible patients are not required to participate and can opt out if they wish. On the other hand, if these managed care plans can successfully coordinate the care needs of this fragile population, patient advocates will likely demand that this service be available for other complex patient populations. Taylor. I don’t think so. An opt-out program with the managed care program as the default does not infringe on anyone’s rights. Patients do have a right to expect high-quality care, and that is not often occurring under the fee-for-service payment model. Udwin. It is not hard to see how patients may perceive this as a loss of autonomy. Consequently, the ability to maintain continuity of care with current providers and secure needed treatments should be a high priority. Alternatively, should efficiencies of care not be implemented, the current system may result in diminished access to providers and needed treatments. Bithoney. If patients can opt out, the rights issue is at least partially obviated. Q. Is putting these patients in managed care plans the best way to assure them continuity and coordination of care? Fabius. The label that we use for increased oversight and care coordination should not be emphasized. Any care plan that can provide this service at this scale should be considered. It just so happens that managed care plans have a longer history of providing this support to patients with high burdens of illness. Taylor. There are not many viable options for this population. Fee-for-service models clearly have not worked well for them. This population typically has a heavy burden of chronic disease and should benefit from a more highly coordinated care delivery model. The promise of managed care, as practiced in 2012, is better outcomes and higher value. Udwin. There are many ways to ensure continuity and coordination of care, with managed care just one approach. Access to resources, maturity of information technology and care coordination efforts differ dramatically around the country. Managed care may be optimal for one area but not necessarily ideal for the entire nation. Bithoney. A great physician once said that “the secret of patient care is to care (for the patient).” Managed care as practiced in the 1990’s was not and never has been the answer. Care management delivered via patient centered medical homes with adequate specialty support, acute and post-acute resources and quality incentives is the only potential answer we have.

Back to top