YOUR GO-TO SOURCE FOR ANALYSIS OF ISSUES AFFECTING THE PHARMA & BIOTECH SECTORS

Last month, the Russian government passed a decree (the Decree) amending the rules on state regulation of ceiling prices for drugs included into the Vital and Essential Drugs List, which is approved annually.

Under the Decree, foreign originators are required to constantly keep their prices in Russia in line with the lowest price in any of 12 foreign reference states, while the prices of generics and biosimilars should follow the prices of their reference drugs, less a reduction coefficient (except for orphan generics and biosimilars).

In addition, the Decree requires foreign and local pharmaceutical companies to go through a one-time mandatory ceiling price adjustment for all essential drugs in 2019-2020, except for immunobiological drugs, narcotic and psychotropic drugs, and drugs in the low-price segment (i.e., if the price does not exceed 100 Russian rubles), which are produced in the Eurasian Economic Union. A failure by the producer to go through the mandatory ceiling price adjustment will debar its drug from sale from January 1, 2021.

Read the full LawFlash.

FDA issued a draft guidance, Demonstrating Substantial Evidence of Effectiveness for Human Drugs and Biological Products (Draft Guidance), on December 19, 2019, as an expansion of its 1998 guidance, Providing Clinical Evidence of Effectiveness for Human Drug and Biological Products (1998 Guidance). The 1998 Guidance provided examples of evidence that FDA could consider to be confirmatory evidence to potentially support FDA approval of a marketing application based on one adequate and well-controlled clinical trial. The new Draft Guidance provides further detail on clinical trial design considerations, as well as forms of confirmatory evidence that sponsors may consider when proposing to rely on a single adequate and well-controlled clinical trial.

As part of the US Food and Drug Administration’s (FDA’s) overall reorganization of the Office of New Drugs, the former Office of Hematology and Oncology Products (OHOP), the FDA office responsible for approving cancer therapies, was recently restructured and renamed the Office of Oncologic Diseases (OOD).

Per Dr. Richard Pazdur, the acting OOD director, the reorganization will allow for greater stakeholder engagement and streamline the drug review process. OOD is now composed of six divisions, including three divisions of oncology.

US President Donald Trump signed a pair of appropriations bills into law on December 20, including bipartisan legislation intended to facilitate the development of generic and biosimilar products. The bill, previously known as the CREATES Act (H.R. 965/S. 340), allows developers of 505(b)(2) New Drug Application (NDA) and Abbreviated New Drug Application (ANDA) products, as well as biosimilar products, to sue companies holding NDAs or Biological License Applications (BLAs) (each, a License Holder) that refuse to provide “sufficient quantities” of an approved reference drug or biologic on “commercially reasonable, market-based terms.” “Sufficient quantities” are those the developer determines it needs to conduct testing and other regulatory requirements to support an application. “Commercially reasonable, market-based terms” are defined as (1) the nondiscriminatory price at or below the most recent wholesale acquisition cost (WAC) for the product, (2) a delivery schedule that meets the statutorily defined timetable, and (3) no additional conditions on the sale.

FDA on September 23 issued a Drug Supply Chain Security Act (DSCSA)-related compliance policy stating it will not take enforcement action against wholesalers that do not have systems in place to verify product identifiers of saleable returned product prior to further distribution until November 27, 2020. FDA’s decision was necessary because existing drug distribution systems are not prepared to handle and verify the large volumes of returned product in the supply chain in the United States. The extended compliance period also allows wholesalers to issue transaction statements for returned product without certification statements concerning verification processes.

Now is the time for pharmaceutical manufacturers to review their Open Payments/Sunshine Act internal compliance procedures, data collection forms and databases, and reporting and recordkeeping templates for payments and transfers of value made to healthcare providers. On August 14, 2019, the Centers for Medicare and Medicaid Services (CMS) published a Proposed Rule seeking to expand the Open Payments program, including the number and types of covered recipients and payment categories. As a result, drug manufacturers have at least two reasons to quickly conduct a comprehensive internal examination of their Open Payments program.

The Trump administration has issued a fourth set of proposed tariffs on an additional $300 billion of goods related to China, this time adding a range of commercial goods across industries. This round affects medical devices and their components, certain chemicals and precursors that are in pharmaceuticals and dietary supplements, and other FDA-regulated products. The administration continues to try to use tariffs as a means of balancing the trade deficit with China and to bring the Chinese government to the negotiating table on a longstanding set of issues related to intellectual property (IP), cyber, and technology transfer. There are two steps to the tariff process:

  1. At the proposed stage, parties can submit comments on why the proposed tariffs are damaging to US interests while not addressing the root cause of either the trade imbalance or China’s policies in the IP, cyber, and technology transfer areas. The Office of the United States Trade Representative (USTR) (and other government agencies) will consider the rationale for the comments and factor into the finalization of the tariffs whether the changes proposed in the comments would meet the US government’s objectives. Generally, this administration finds tariffs to be a useful tool,
  2. Once the tariffs are implemented, parties can request “exclusions” for their particular products. Exclusions require a party to indicate why application of the tariffs to its product would be damaging to US interests, disrupt the supply chain, significantly adversely affect the industry, or prevent a US company from providing products, services, or technical assistance based on the cost of the products under the tariff. Other fact-specific arguments can also be presented.

The CMS draft guidance for state survey agency directors on hospital co-location arrangements offers insight into how CMS will evaluate hospitals that partner with other providers under the Medicare conditions of participation, or CoPs. Co-location occurs when two hospitals or a hospital and another healthcare entity are located on the same campus or in the same building and share space, staff, or services. Areas that CMS will review when surveying co-located facilities include staffing, contracted services, distinct and shared spaces, and emergency services.

In an unanticipated but welcome move, CMS is soliciting comments on the draft guidance by July 2. Stakeholders should be sure to use this opportunity to raise their compliance concerns associated with the proposed rules governing shared space and staffing arrangements under the Medicare program.

Read the full LawFlash for more details on the draft guidance.

The PRC Ministry of Finance has announced it will audit 77 randomly selected drug makers in China, examining the companies' costs and profits to determine the reasonableness of their drug pricing mechanisms, in a bid to drive down medical costs. The audit will include some of the largest domestic drug makers as well as Chinese subsidiaries of three international pharmaceutical conglomerates.

Read the full LawFlash for more insight on the audit's key areas of focus. This initiative marks the first time the Ministry of Finance has launched a nationwide audit specifically targeting pharmaceutical companies, and it could be expanded if evidence is found to suggest issues are prevalent across the industry.

The Administration for Market Regulation of Jing’an District in Shanghai (AMR) on May 7 announced an administrative penalty decision against the Shanghai branch of a multinational pharmaceutical company for speaking fees it paid to physicians. According to the decision, the AMR found that the speeches in question never actually occurred and that the “speaking fees” were actually bribes. The AMR held that the physicians had utilized their official positions to unduly influence patients to purchase medical products promoted by the company branch, and that the payment of the fees constituted commercial bribery in violation of Article 7, Section 1(i) of the Anti-Unfair Competition Law of the People’s Republic of China.

The payment of speaking fees in the pharmaceutical industry has attracted heightened scrutiny from the Chinese government in recent years, and this case is not the first time the Shanghai AMR has targeted the practice. Read the full LawFlash for more details.