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Pink Sheet – “Lame Duck” Congress Has High Stakes For Pharma Companies

Pink Sheet – “Lame Duck” Congress Has High Stakes For Pharma Companies

Executive Summary

Industry faces an uphill fight in a last-ditch effort to reverse the Medicare “donut hole” changes enacted at the start of 2018. At the same time, a stand-off over OTC monograph reform could have ripple effects on the plans to modernize the US


An eleventh hour stand-off in the US Senate between two GOP members is threatening to derail the enactment of two bills important to segments of the pharmaceutical industry – and the fallout could include disruption in the roll out of the new structure for FDA’s Office of New Drugs.


The two pending bills are the OTC monograph reform bill, which could revitalize the non-prescription drug sector by providing incentives for development of novel formulations of older ingredients, and the reauthorization of the Pandemic and All-Hazards Preparedness Act, which supports biodefense and other public health preparedness research activities. Both passed the House by voice vote, indicating the essentially consensus nature of the legislation.


According to press reports, Sen. Richard Burr (R-NC) has placed a “hold” on the OTC bill. Burr was the lone “no” vote on the OTC bill in committee. Burr has voiced concerns about FDA’s accounting for user fees, and therefore can ground his objection in the fact that the OTC bill would create a new user fee program for monograph ingredients. (A#PS120371])


However, his primary goal appears to be to exert pressure on FDA to change its approach to tobacco regulation – and especially the agency’s recent steps to restrict sales of flavored products.


In retaliation, Sen. Johnny Isakson (R-GA) – the lead author of the OTC reform bill in the Senate – has placed a hold on the PAHPA reauthorization, for which Burr is the lead author. (Also see “Biodefense Bill Moving In Senate; Still Debate Over Best Approach For Flu” – Pink Sheet, 4 Jun, 2018.)


Meanwhile, the clock is ticking down, with the current Congress set to adjourn by mid-December – and with most attention in the lame duck focused on the overarching issue of funding the government past December 7.


Having to restart the process on OTC monograph reform and PAHPA reauthorization in 2019 would be a setback for industry groups and the affected public health agencies. However, there may be a larger complication for biopharma companies if the stand-off interferes with the roll out of the proposed OND reform.


Center for Drug Evaluation and Research Director Janet Woodcock unveiled a proposed new structure for OND earlier in 2018, but made clear that its implementation depends in part on Congress authorizing resources for enhanced non-prescription drug reviews.

(Also see “Office Of New Drugs Reorg Is Bigger Than Expected: US FDA Adds 11 Review Divisions ” – Pink Sheet, 4 Jun, 2018.)


During the Prevision Policy/Friends of Cancer Research Biopharma Congress Nov. 14, Woodcock reiterated that FDA is still counting on the OTC reform bill to allow the Office of New Drugs plan to move forward.


“We have been working with the Congress on OTC reform, and that OTC reform is part of the basis of for the OND modernization,” Woodcock said. “If we don’t get the reform, then we are going to have to pull back and redo the OND modernization, because we were hoping that we would have a very strong OTC office that could clean up this huge backlog we have and get a more modern system for OTC.”


As proposed by Woodcock, the new OND structure would include an Office of Non-Prescription Products with three review divisions solely focused on OTC applications. Currently, non-prescription drug reviews are lumped into a review office with medical-imaging drugs and pediatric/maternal health review division.


The need for compromise on the monograph/PAHPA reauthorization is competing for industry attention with a higher-profile but probably less winnable fight to reverse the recently enacted changes to the Medicare Part D “donut hole” discount.


As part of the Bipartisan Budget Act at the start of 2018, the mandatory discount on brands in the Part D coverage gap (a.k.a., the “donut hole”) is set to increase from 50% to 70% next year. The pharmaceutical industry has been fighting to reverse that change since it was enacted, and appears ready to accept a different drug pricing related measure – the CREATES Act, which would attempt to eliminate perceived abuses of restricted distribution programs to delay generic entry. (Also see “The Budget Blindside: Did Pharma Fight The Wrong Battle?” – Pink Sheet, 21 Feb, 2018.)


The lame duck session is almost certainly the only chance to reverse the donut hole cut. Even though there are strong policy arguments that the change undercuts the overall goal of increasing price competition in Part D, the reality that the change hits industry profitability makes it exceedingly unlikely that the newly Democratic House will revisit the issue next session.


CREATES, on the other hand, will still be very much on the table for enactment in 2019, especially since the Senate Judiciary Committee leadership will be transitioning as well, with one of CREATES’ prime sponsors – Iowa Republican Sen. Chuck Grassley – taking the gavel. (Also see “Democrat-Controlled House Will Turn Up The Volume On Drug Pricing” – Pink Sheet, 7 Nov, 2018.)…