Manthei says ‘Valley of Death’ may come up in user fee reauthorization legislation

November 17, 2016 – 12:33 PM | By Omar Ford | No comments yet

By Mark McCarty, Regulatory Editor

The election of real estate mogul Donald Trump to the presidency of the U.S. may or may not have upended the Washington establishment, but the policy implications of the election for the life sciences are as yet unknown. John Manthei of Latham & Watkins said on a Nov. 9 conference call that one important issue to device makers, the lag time between device approval and Medicare coverage known as the Valley of Death, may be tackled in legislation used to reauthorize the user fee programs.

Manthei remarked at the outset of the conference call that the 21st Century Cures program “is a priority” for the impending lame-duck session, and he noted that Senate majority leader Mitch McConnell (R-Kentucky) has said that federal spending bills and passage of Cures legislation are top priorities for the remainder of 2016.

According to Manthei, among the legislative proposals that will be under consideration as the user fee bills go through Congress is “the three-year period on average” between FDA clearance/approval of medical devices and Medicare coverage of that device. This lag is “referred to as the Valley of Death by emerging medical device companies,” he remarked, adding that device makers will push for legislative language that will require CMS and the FDA to coordinate more closely on several points, including the sharing of data related to device applications.

The lame-duck session will run from mid-November to mid-December, and Manthei made note of a recent letter from 13 groups to Congress regarding the Cures program, authored by a list he said includes the Center for American Progress and the AFLCIO. He said the signers made the argument that “there shouldn’t be any action on Cures unless drug prices are addressed during the lame duck,” but Manthei commented that legislative action on drug prices “will be difficult if not impossible to do over that time period.” As an aside, California Proposition 61 – which would have required the state of California to pay the same rates for drugs as are paid by the Department of Veteran’s Affairs – failed to pass.

Manthei said the reauthorization of the major FDA user fee programs will come under consideration in the House and Senate in April 2017 with the expectation that those bills will pass and be on the Oval Office desk by the time the August recess arrives next year. He predicted the Cures legislation will likely resurface as part of the user fee discussion should that legislation stall during the lame-duck session.

Regarding the FDA’s off-label dilemma, Manthei said FDA “has been cautious and has not addressed those decisions,” in reference to recent court cases such as Caronia. Still, he said, “as First Amendment cases increase and pressure from industry [rises] to clarify what the requirements are, I think you’ll see a lot of these issues come into play” while user fee legislation undergoes a congressional scrub-down.

As for the FDA’s impact on drug pricing, Manthei remarked that Hillary Clinton had discussed FDA pre-approval of drug ads and a reduction of biotech exclusivity from 12 to seven years. Candidate Clinton, he said, also made the case for an expedited review program for bioequivalent products, and said, “I would expect others in the House and Senate would put forth those proposals” as well as the drug user fee agreement is reviewed on Capitol Hill. Another item of interest is a proposal to require that imported drugs be subjected to the same standards for safety as imposed by the FDA.

In response to the results of the election, Mark Leahey, president and CEO of the Medical Device Manufacturers Association (MDMA), said, “now that the 2016 elections are behind us, medical technology innovators remain committed to help improve patient care and provide solutions to the ongoing challenges facing the health care delivery system.”

Leahy said industry has had “a strong tradition of broad, bipartisan support to advance issues important to the med-tech community such as suspension of the device tax,” along with reauthorization of the device user fee and protection of intellectual property rights. He concluded, “it is abundantly clear that the United States needs more life changing cures and therapies that will improve patient outcomes while driving down the cost of health care. This can only be accomplished when the proper policies are in place to foster the development of medical technologies that can rise to these challenges.”

Scott Whitaker, President/CEO of the Advanced Medical Technology Association (AdvaMed) said the association congratulates Trump on the outcome of the election, adding that policymakers “will be dealing with a number of important policy issues” in the next year, including authorization of the next device user fee agreement and repeal of the medical device tax.

Whitaker said another policy priority will be to ensure “that the coverage process allows patient access to the latest innovations,” and said industry “stands ready to work with President Trump, his administration and the new Congress on pro-innovation policy solutions to address the health care challenges facing the country and to ensure all Americans have timely access to the latest medical technologies, devices and diagnostics.”
The election of real estate mogul Donald Trump to the presidency of the U.S. may or may not have upended the Washington establishment, but the policy implications of the election for the life sciences are as yet unknown. John Manthei of Latham & Watkins said on a Nov. 9 conference call that one important issue to device makers, the lag time between device approval and Medicare coverage known as the Valley of Death, may be tackled in legislation used to reauthorize the user fee programs.

Manthei remarked at the outset of the conference call that the 21st Century Cures program “is a priority” for the impending lame-duck session, and he noted that Senate majority leader Mitch McConnell (R-Kentucky) has said that federal spending bills and passage of Cures legislation are top priorities for the remainder of 2016.

According to Manthei, among the legislative proposals that will be under consideration as the user fee bills go through Congress is “the three-year period on average” between FDA clearance/approval of medical devices and Medicare coverage of that device. This lag is “referred to as the Valley of Death by emerging medical device companies,” he remarked, adding that device makers will push for legislative language that will require CMS and the FDA to coordinate more closely on several points, including the sharing of data related to device applications.

The lame-duck session will run from mid-November to mid-December, and Manthei made note of a recent letter from 13 groups to Congress regarding the Cures program, authored by a list he said includes the Center for American Progress and the AFLCIO. He said the signers made the argument that “there shouldn’t be any action on Cures unless drug prices are addressed during the lame duck,” but Manthei commented that legislative action on drug prices “will be difficult if not impossible to do over that time period.” As an aside, California Proposition 61 – which would have required the state of California to pay the same rates for drugs as are paid by the Department of Veteran’s Affairs – failed to pass.

Manthei said the reauthorization of the major FDA user fee programs will come under consideration in the House and Senate in April 2017 with the expectation that those bills will pass and be on the Oval Office desk by the time the August recess arrives next year. He predicted the Cures legislation will likely resurface as part of the user fee discussion should that legislation stall during the lame-duck session.

Regarding the FDA’s off-label dilemma, Manthei said FDA “has been cautious and has not addressed those decisions,” in reference to recent court cases such as Caronia. Still, he said, “as First Amendment cases increase and pressure from industry [rises] to clarify what the requirements are, I think you’ll see a lot of these issues come into play” while user fee legislation undergoes a congressional scrub-down.

As for the FDA’s impact on drug pricing, Manthei remarked that Hillary Clinton had discussed FDA pre-approval of drug ads and a reduction of biotech exclusivity from 12 to seven years. Candidate Clinton, he said, also made the case for an expedited review program for bioequivalent products, and said, “I would expect others in the House and Senate would put forth those proposals” as well as the drug user fee agreement is reviewed on Capitol Hill. Another item of interest is a proposal to require that imported drugs be subjected to the same standards for safety as imposed by the FDA.

In response to the results of the election, Mark Leahey, president and CEO of the Medical Device Manufacturers Association (MDMA), said, “now that the 2016 elections are behind us, medical technology innovators remain committed to help improve patient care and provide solutions to the ongoing challenges facing the health care delivery system.”

Leahy said industry has had “a strong tradition of broad, bipartisan support to advance issues important to the med-tech community such as suspension of the device tax,” along with reauthorization of the device user fee and protection of intellectual property rights. He concluded, “it is abundantly clear that the United States needs more life changing cures and therapies that will improve patient outcomes while driving down the cost of health care. This can only be accomplished when the proper policies are in place to foster the development of medical technologies that can rise to these challenges.”

Scott Whitaker, President/CEO of the Advanced Medical Technology Association (AdvaMed) said the association congratulates Trump on the outcome of the election, adding that policymakers “will be dealing with a number of important policy issues” in the next year, including authorization of the next device user fee agreement and repeal of the medical device tax.

Whitaker said another policy priority will be to ensure “that the coverage process allows patient access to the latest innovations,” and said industry “stands ready to work with President Trump, his administration and the new Congress on pro-innovation policy solutions to address the health care challenges facing the country and to ensure all Americans have timely access to the latest medical technologies, devices and diagnostics.”

Cures bill no shoo-in for lame-duck session

Drug and device makers see a lot to like in programs such as the 21st Century Cures program, and some observers see this legislation as having a smooth path during the last few weeks of the 114th Congress. However, Joe Antos of the American Enterprise Institute says he’s not at all sure the Cures agenda will pass before 2017, citing concerns over drug prices and rushed drug and device approvals as among the sticking points.

Medical Device Daily asked whether Antos saw the Cures program as legislation that will pass by the end of the year, but Antos said, “I don’t see it moving that fast. My interpretation has been that Democrats have been holding it hostage to get things they want” in reference to legislative action on drug prices and other considerations. “Unless they decide to drop their demands, it’s not going anywhere,” he predicted.

One of the mainstays of the campaign of president-elect Donald Trump was the promise to repeal and replace the Affordable Care Act, but Antos said that would be a tough slog. “I think he’s under some obligation to push for a bill that repeals,” Antos said of Trump, but Antos remarked, “straight repeal isn’t going to fly because every member of Congress can point to quite a few provisions that benefit their constituents.”

Antos said Congress may have to start such an effort with a bill that provides the two chambers with a deadline for development of an alternative plan, but he noted there would have to be a way to transition enrollees from the ACA to its replacement. “You’re going to have to either wean them off it or find a substitute, and none of that can be done quickly,” Antos said, pointing out that the ACA is six years in the works “and its still not done.” He said an alternative “will easily take four years, maybe longer” to implement.

Even though the medical device tax is suspended through the end of 2017, Antos said, “in the short term, its going to stay.” He added, “I don’t think any of the revenue provisions [of the ACA] are going to be touched right away,” although Antos suggested the next president might have little concern about the device tax, at least not in terms of its impact on the budget deficit.

“Does [Trump] feel obligated to worry about CBO scoring? I would guess not,” Antos mused, stating that fiscal conservatives are not so worried about CBO scoring, and are more concerned about “far more relevant things like productivity reductions” in Medicare payment, which would do more to ease Medicare spending.

“I don’t see anybody doing anything about it until at least next fall,” Antos said of the device tax.

On the issue of prices for Medicare Part B drugs, Antos said he is not sure the Trump administration “would be allergic at all to the idea of reducing payment rates,” which Antos reminded is a feature of a Part B demonstration project for prescription drugs. Constraining Medicare costs typically means paying less to providers and suppliers, thus the idea of lowering payment rates to drug makers may not be particularly repellant to the next administration, Antos observed.

Antos said that while Trump may think the government is lousy at negotiations, Trump believes he is good at negotiations and hence the next president “might say the new government can make a really good deal.” Thus drug price negotiations “might well be on the agenda” in 2017, Antos commented.

Conversations about least costly alternative (LCA) dot the rhetorical landscape once again, and one way of looking at LCA is that the Independent Payment Advisory Board (IPAB) may recommend it to suppress future Medicare inflation. However, IPAB does not have a lot of friends on Capitol Hill, and Antos said an IPAB repeal bill could pass quickly.

All the same, Antos said LCA “strikes me as a potentially useful tool.” He pointed out that Trump is not beholden to any part of the health care industry, so he has a considerable amount of leeway in terms of hiring for the job of CMS administrator. “The message will be that their job is to slow down health spending,” Antos said of the next CMS chief, adding that industry “will figure out how to get around” the LCA dilemma by one means or another.

Drug and device makers see a lot to like in programs such as the 21st Century Cures program, and some observers see this legislation as having a smooth path during the last few weeks of the 114th Congress. However, Joe Antos of the American Enterprise Institute says he’s not at all sure the Cures agenda will pass before 2017, citing concerns over drug prices and rushed drug and device approvals as among the sticking points.

Medical Device Daily asked whether Antos saw the Cures program as legislation that will pass by the end of the year, but Antos said, “I don’t see it moving that fast. My interpretation has been that Democrats have been holding it hostage to get things they want” in reference to legislative action on drug prices and other considerations. “Unless they decide to drop their demands, it’s not going anywhere,” he predicted.

One of the mainstays of the campaign of president-elect Donald Trump was the promise to repeal and replace the Affordable Care Act, but Antos said that would be a tough slog. “I think he’s under some obligation to push for a bill that repeals,” Antos said of Trump, but Antos remarked, “straight repeal isn’t going to fly because every member of Congress can point to quite a few provisions that benefit their constituents.”

Antos said Congress may have to start such an effort with a bill that provides the two chambers with a deadline for development of an alternative plan, but he noted there would have to be a way to transition enrollees from the ACA to its replacement. “You’re going to have to either wean them off it or find a substitute, and none of that can be done quickly,” Antos said, pointing out that the ACA is six years in the works “and its still not done.” He said an alternative “will easily take four years, maybe longer” to implement.

Even though the medical device tax is suspended through the end of 2017, Antos said, “in the short term, its going to stay.” He added, “I don’t think any of the revenue provisions [of the ACA] are going to be touched right away,” although Antos suggested the next president might have little concern about the device tax, at least not in terms of its impact on the budget deficit.

“Does [Trump] feel obligated to worry about CBO scoring? I would guess not,” Antos mused, stating that fiscal conservatives are not so worried about CBO scoring, and are more concerned about “far more relevant things like productivity reductions” in Medicare payment, which would do more to ease Medicare spending.

“I don’t see anybody doing anything about it until at least next fall,” Antos said of the device tax.

On the issue of prices for Medicare Part B drugs, Antos said he is not sure the Trump administration “would be allergic at all to the idea of reducing payment rates,” which Antos reminded is a feature of a Part B demonstration project for prescription drugs. Constraining Medicare costs typically means paying less to providers and suppliers, thus the idea of lowering payment rates to drug makers may not be particularly repellant to the next administration, Antos observed.

Antos said that while Trump may think the government is lousy at negotiations, Trump believes he is good at negotiations and hence the next president “might say the new government can make a really good deal.” Thus drug price negotiations “might well be on the agenda” in 2017, Antos commented.

Conversations about least costly alternative (LCA) dot the rhetorical landscape once again, and one way of looking at LCA is that the Independent Payment Advisory Board (IPAB) may recommend it to suppress future Medicare inflation. However, IPAB does not have a lot of friends on Capitol Hill, and Antos said an IPAB repeal bill could pass quickly.

All the same, Antos said LCA “strikes me as a potentially useful tool.” He pointed out that Trump is not beholden to any part of the health care industry, so he has a considerable amount of leeway in terms of hiring for the job of CMS administrator. “The message will be that their job is to slow down health spending,” Antos said of the next CMS chief, adding that industry “will figure out how to get around” the LCA dilemma by one means or another.

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