Cures Act: An important mile marker in the journey to treat disease

Health Care Current | April 18, 2017

This weekly series explores breaking news and developments in the US health care industry, examines key issues facing life sciences and health care companies and provides updates and insights on policy, regulatory, and legislative changes.

My Take

Cures Act: An important mile marker in the journey to treat disease

By Greg Reh, Vice Chairman, US and Global Life Sciences Leader, Deloitte LLP

On April 17, more than 30,000 people ran, walked, or wheeled the famed 26.2-mile route from Hopkinton, Massachusetts to Boston. Among them were people who used the event to raise money for charities focused on finding new and more effective treatments for diseases such as cancer and Multiple Sclerosis.

Like a marathon, the road to winning approval for ground-breaking pharmaceuticals and innovative medical devices can be arduous. But the 21st Century Cures Act (Cures), which became law last December, has the potential to change that by modernizing development, evaluation, and approval processes for drugs and devices. The new administration’s focus on reducing regulatory burden could spur agencies toward a more collaborative and adaptive approach when approving and regulating therapies, and could prompt regulatory flexibility that also supports patient access and public safety.

As discussed in Deloitte’s forthcoming report, 21st Century Cures: The future of product innovation and approval, while the law has potential to become a monumental mile marker, there could be some early roadblocks with funding and shifting priorities. The law, which had strong support from both Republican and Democratic lawmakers, allocates $6.3 billion in funding for the National Institutes of Health (NIH) and the US Food and Drug Administration (FDA) over the next 10 years, beginning in fiscal year (FY) 2017. The bulk of the funding ($4.8 billion) is directed to the NIH for cancer research, brain research, precision medicine, and regenerative medicine. That organization’s budget had experienced years of belt-tightening, but the new funding could change that. The law also allocates $500 million to the FDA to help the agency modernize systems that lead to faster drug and device approvals. Other provisions target health IT and certain public health priorities.

Congress appropriated the funding through Cures, but there are no guarantees. The budget blueprint released last month by the White House calls for the NIH budget to be cut by $5.8 billion for FY2018. Further, the current FDA user-fee program agreements — five-year pacts with drug, biologic, and device makers that provide about half of the FDA’s annual budget — expire this September. Without the user-fee funding, the FDA would likely have to let hundreds of employees go, leaving the agency short-staffed to approve new therapies.1 Without proper funding for FDA and NIH, Cures could lose momentum.

The new administration, however, is focused on shearing red-tape and reducing regulatory burden, which could encourage increased collaboration between FDA and other agencies involved in approving therapies. Congress is reviewing separate user-fee agreements for branded drug makers, generic drugs, biosimilars, and medical devices, and eventually plans to package them into a single bill for reauthorization.

During an April 5 confirmation hearing before the Senate Health Education, Labor and Pensions Committee, Scott Gottlieb, MD – the White House’s pick to head FDA – said one of his top priorities would be to accelerate the approval of new drugs, and use authorities granted by the Cures Act to “develop a template to lean forward” in using new technologies to treat disease.2




Cures gives patients a louder voice

Who is likely to know more about the effectiveness (or ineffectiveness) of treatments than the patients who live with the illness? Reliance on patient experience and real-world evidence (RWE) are integral themes woven throughout Cures. Through “patient-focused drug development,” the patient will likely have a louder voice in the drug approval process. The concept, which is not new to the life sciences industry, requires the FDA to issue guidance on how manufacturers and the agency can include patient experience in assessments of benefit and risk for drugs and devices. Allowing greater flexibility in the types of evidence used will likely allow these companies to take greater advantage of recent advances in data analytics.

Our conversations with life sciences stakeholders corroborate a growing reliance on the integration of RWE and patient experience data in drug development and approval. In many ways, the drug and device development and approval process of yesterday is over. Life sciences companies may risk being out-of-date if they fail to take advantage of the newer breakthrough, priority, or accelerated pathways of the future.

Strategies for life sciences companies

Some industry stakeholders are encouraged by provisions that clarify breakthrough device pathways, which builds upon the Expedited Access Program (EAP) that the FDA established in 2014 and published guidance on in April 2015. The EAP aims to reduce the time to develop a device and expedite access for patients with serious conditions whose medical needs are unmet by current technology.

Many issues will be top of mind for biopharma and medical device companies as they seek to capitalize on the evolving regulatory landscape. Leaders at these companies should likely consider:

  • Engaging in early discussions with the FDA to design clinical trials that incorporate surrogate endpoints and other tools to shorten drug development timelines
  • Expanding capabilities to access, collect, and analyze RWE and patient experience data
  • Continuing to work with the FDA, patient advocacy groups, and provider organizations to delineate pathways for patient and caregiver involvement
  • Expanding the dialogue on economic evidence between biopharma and medical device companies and health care stakeholders, including payers
  • Taking advantage of additional regulatory clarity by investing in breakthrough devices, point of care diagnostics, drug-device combination products, and regenerative medicine
  • Advancing the conversation on the regulation of medical software in collaboration with the FDA and other industry stakeholders

If treating diseases were a marathon, we’re still lacing up our shoes on many fronts. Of the thousands of illnesses that affect us — some estimates put the number at 10,000 or more — we have developed treatments for just 500 of them.3 The shift toward prioritizing new kinds of data, adopting a more patient-centered focus, and incorporating the value paradigm of patients, providers, and payers, will likely continue to shape the strategic choices life sciences companies make. As the industry strives to meet the evolving needs of stakeholders – patients, providers, and health plans – additional regulatory flexibility could help drive both approval and market access.


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1 Derrick Gingery and Ferdous Al-Faruque, “A burning FDA hiring freeze question: What about user fee-supported staff?” Pink Sheet, January 24, 2017
Senate HELP Committee, opening statement of Scott Gottlieb, MD
3 The 21st Century Cures Discussion Document, House Energy Commerce Committee

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In the News

CMS releases final market stabilization rule giving plans more control

Last week, the US Centers for Medicare and Medicaid Services (CMS) released the final market stabilization rule for individual and small group plans, which implements the changes included in the proposed rule (see the February 21, 2017 Health Care Current). CMS said it aims to help stabilize the individual and small group markets and improve the risk pool by changing enrollment requirements and giving plans more flexibility in certain areas.

A few of the highlights include:

  • Shortening open enrollment: 2017 open enrollment ran from November 1 to January 31, 91 days. 2018 open enrollment will run from November 1 to December 15.
  • Tightening special enrollment rules: Many health plans have said that consumers take advantage of the special circumstances that allow for enrolling outside of open enrollment. The final rule requires consumers to verify they qualify for special enrollment. Qualifying life events include loss of health coverage, moving, getting married, having a child, and more.
  • Requiring consumers pay outstanding premiums before re-enrolling in coverage: Plans have said that many consumers stop paying premiums at the end of the year and then re-enroll in coverage with no penalty. Now consumers will be required to pay any outstanding premium dues before re-enrolling.
  • Adding actuarial flexibility: ACA plans must meet certain actuarial value (AV) standards, which dictate the overall cost-sharing exposure for enrollees. For example, a silver plan must cover 70 percent of costs. But, HHS allows plans to offer silver packages that cover from 68 to 72 percent of costs. Under the new rule, plans will have more flexibility; for example, silver packages will now be able to cover 66 to 72 percent of costs.
  • Conducting outreach: The administration committed to conducting some level of outreach during open enrollment.

Stakeholder reaction to the rule was mixed. Some said that making it harder to enroll might mean that more people maintain coverage and spread risk. But, others said it could limit how many people, especially young and healthy individuals, purchase coverage. Additionally, the tax credits people use to buy plans on the exchanges are based on the cost of silver plans. Making the silver plans leaner could also reduce how much financial assistance people receive. The deadline for plans to file for the 2018 benefit year is June 21, 2017, and CMS will provide final notices to health plans by October 12, 2017.

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Administration considers the future of cost-sharing reductions and S&P reviews long-term stability of the exchange market

The administration has been weighing options for the future of the cost-sharing reduction (CSR) payments provided for low-income beneficiaries on the public exchanges. The program costs roughly $7 billion a year; around 7.1 million people selecting exchange plans for 2017 qualified for cost-sharing subsidies, roughly 58 percent of the people enrolling in plans this year. While the administration has not announced its plans, many health plans, patient advocates, and physician groups, have asked for the payments to continue, claiming they will encourage health plan participation in public exchanges, reduce premiums, and increase stability in the market.

Funding for CSRs has been a controversial issue since the policy was created by the ACA. The ACA requires health plans to offer low-income exchange enrollees cost-sharing reductions, but Congress never appropriated funds for CSRs. HHS paid health plans for the CSRs, and House Republicans challenged the legality of these payments during the Obama administration. Now the case, House v. Price, is on hold in the US Court of Appeals as the administration decides whether to pursue the lawsuit. If the White House chooses not to defend the suit, the lower court ruling will stand and HHS will not fund CSRs.

Related: Standard & Poor’s Global Ratings looked at the performance of Blue Cross Blue Shield (BCBS) health plans participating in the exchanges and found that many are financially stable. Medical loss ratios (MLRs), or the percentage of collected premiums that a health plan pays out in claims, fell from 106 percent in 2015 to 92 percent in 2016. When an MLR falls below 100 percent, it indicates that the health plan has revenues that exceed its medical expenses. While this does not necessarily indicate the plans have positive margins (since it does not take into account administrative and profit spending), it could mean the market is showing signs of stabilizing.

The authors credit better risk calculations, significant premium rate increases, and the ACA’s reinsurance program for the increased stability. Reinsurance, one of the three premium stabilization programs included in the ACA, provides payments to health plans with high-cost beneficiaries. While the report concludes that most BCBS plans can expect to break even in the 2017 coverage year, many will remain below their target profitability levels until 2018-2019. According to the authors, external disruptions (such as the pending CSR court case and potential legislative changes) could make the market less stable.

(Source: Standard & Poor’s Global Ratings, “The U.S. ACA Individual Market Showed Progress In 2016, But Still Needs Time To Mature,” April 2017)

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SCOTUS will hear arguments on biosimilar review pathway

Next week, the Supreme Court of the United States will hear arguments in a case that will likely affect some aspects of biosimilars approvals and sales in the US.

The two questions under review in this case are:

  • Does a biosimilar applicant have to wait for FDA approval of its product before providing the reference product’s manufacturer notice of bringing the product to market?
    The Federal Circuit Court ruled that manufacturers must wait until they have FDA approval before filing the 180-day notice of intent to bring the product to market. Biosimilar manufacturers say it gives branded biologic manufacturers an additional six months of market exclusivity.
  • Do biosimilar manufacturers have to participate in a patent-sharing process with the manufacturer of the reference biologic product?
    The Federal Circuit ruled that biosimilar applicants do not have to participate in this process. Patent sharing is a five step process intended to resolve any patent disputes. It begins when the biosimilar manufacturer provides the reference product sponsor with copies of its application and manufacturing information. This process was designed to reach a preemptive agreement between the reference product and biosimilar manufacturers on a list of patents, if any, that may be subject to infringement actions by the sponsor.

Amgen, the maker of the original biologic, is challenging the lower court’s rulings because it argues that the ruling weakens the statute’s protections of the reference product. The Supreme Court will also consider whether the judiciary branch has the authority to enforce either of these provisions under the statute in BPCIA.

Background: Supporters of biosimilars have said that approving more of these products could help reduce the cost of biologic treatment for patients. Unlike generic versions of branded small-molecule drugs, biosimilar products do not have to be structurally identical to their reference products. FDA has designed and implemented a different review and approval pathway for biosimilar biologics than for generics. Currently only four biosimilar products are approved for use in the US.

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New York and Maryland pass bills to limit drug prices

New York: Earlier this month, Governor Andrew Cuomo signed a bill to extend the budget for two months to avoid a New York government shutdown, which included provisions to limit drug costs in the state. New York became the first state to limit prescription drug cost growth in Medicaid. The bill creates a drug utilization board to assess drug prices. If drug manufacturers increase prices over a certain threshold, the board may require manufacturers to pay rebates to the state. Additionally, the legislation gives the board authority to limit reimbursement for prescription drugs with prices that are high relative to their therapeutic benefits‎.

Maryland: Maryland lawmakers approved a bill that grants the state attorney general the authority to sue generic drug makers that sharply raise prices without justification. It also gives the Medicaid program the authority to refer certain generic drug price increases to the attorney general, who then can request that drug companies justify the increases. If a company cannot justify the increase or fails to comply with the rules, the attorney general can freeze the price of the drug at its previous rate for a year or fine the manufacturer $10,000 for each violation.

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PTAC recommends two payment models to HHS for review

Last week, the Physician Focused Payment Model Technical Advisory Committee (PTAC) recommended two new physician focused payment models (PFPMs) to HHS for consideration as alternative payment models (APMs). PTAC recommended both models for testing, rather than full implementation.

PTAC said these models illustrate the committee’s priorities for innovative payment models under MACRA. Project SONAR, as a specialty-based medical home model, provides specialist physicians with an opportunity to participate in APMs, which has been limited so far. The ACS-Brandeis model, unlike other episode-based payment pilots, does not require an acute inpatient stay or hospitalization to trigger an episode. At the opening of the meeting, HHS Secretary Tom Price encouraged more physician groups and health plans to propose payment models as the health system would benefit from a diverse set of models.

Background: PTAC, created by MACRA, solicits and reviews proposals for APMs. Once a proposal is submitted to PTAC, the committee assigns a Preliminary Review Team of three committee members (including at least one physician) to work with the stakeholder who submitted the model and develop preliminary recommendations. The full committee may vote to:

  • Not recommend the PFPM to HHS for APM consideration
  • Recommend the PFPM to HHS for limited scale testing (or pilot demonstrations)
  • Recommend the PFPM to HHS for APM consideration
  • Recommend the PFPM to HHS for priority review APM consideration

Once PTAC makes a recommendation, HHS will further evaluate the model and decide whether it can be considered an APM under MACRA.

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Report: Maryland’s remote patient monitoring pilot program shows promise

The Maryland Health Care Commission found that three programs it funded have reduced readmissions though use of remote patient monitoring. Best-practices from the three telehealth pilot projects will allow for telehealth services to be implemented state-wide in Maryland.

  • Lorien Health Systems: Lorien is a skilled nursing facility that used telehealth services to prevent hospital readmissions among patients discharged from a short-term stay. Researchers found that program reduced patients’ average annual hospital admission rate from 2.27 to 0.95 per year per client, a 58 percent reduction. The program saved an estimated $372,672 before considering the $64,500 investment in technology and labor.
  • Union Hospital of Cecil County: The hospital used tablets and other devices to remotely monitor discharged patients. Based on average readmission rates, researchers calculated that this program avoided 44 potential 30 day readmissions. Based on this, researchers estimate that after spending $60,000, the program saved $248,000.
  • Crisfield Clinic: Crisfield, a rural physician’s practice, used mobile health (mHealth) devices to help middle school and high school aged patients manage chronic conditions. The organization used a community health worker to act as a care plan manager to improve population health and reduce emergency room visits. While it did not show quantitative results, the researchers concluded that mHealth devices will be self-sustaining under current reimbursement models for chronic disease management monitoring.

The researchers found that increasing patient engagement is fundamental for participation in RPM technology and that RPM is more likely to succeed when care managers provide ongoing support. Nursing homes and hospitals found that patients were more likely to participate if they were introduced to RPM prior to discharge. Also, monitoring devices should incorporate the use of social activities, such as secure messaging, video calls, and the sharing of pictures, to increase consistency.

As of February 2017, MHCC has awarded over $450,000 in telehealth grants to eleven organizations. As a part of Maryland’s all-payer model, the state aims to reduce hospital readmissions, improve patient care, and decrease health care costs through the use of non-traditional care delivery models.

(Source: Maryland Health Care Commission, “Remote Patient Monitoring Telehealth Grants: Brief and Final Reports,” March 2017)

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MACPAC: Total Medicaid payments to hospitals are comparable to or higher than Medicare payments

According to a new report from the Medicaid and CHIP Payment and Access Commission (MACPAC), overall Medicaid payments to hospitals, which include supplemental payments, are comparable or higher than Medicare payments for common Medicare condition-based billing codes.

Supplemental payments include federal and state Medicaid payments to providers in addition to base payments for services provided. These include payments to hospitals who see a large number of low-income patients and payments made to designated classes of providers, (e.g. state-owned hospitals or care facilities to individuals with intellectual disabilities).

The analysis found that taking into account these types of payments, Medicaid payments were, on average, 6 percent higher than Medicare payments for 18 common condition billing codes studied. Additionally, the average Medicaid payments were higher than those from Medicare for all but two of the 18 selected conditions in the study. Medicaid payments for the 18 selected conditions were higher than Medicare payments in 25 states, and lower than Medicare levels in 22 states.

To conduct this analysis, MACPAC used 2011 hospital-level payment information for the 100 most common Medicare condition-based billing codes. Researchers then compared this information to Medicaid Analytic Extract data, and accounted for supplemental payments made on behalf of Medicaid beneficiaries. According to the report, supplemental payments made up 49 percent of total Medicaid hospital payments in FY 2015, but are often excluded in total payment analyses, because states do not have consistent accounting systems for supplemental payments.

The Commission stated that this analysis reinforces the need for additional payment and financing data from the Medicaid program at the hospital level. Additional data would help evaluate links between payment, access, and quality, and help inform decisions about the program’s value.

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Florida will receive almost $1 billion in Low Income Pool funding

Last week, Florida Governor Rick Scott, HHS Secretary Tom Price, and CMS Administrator Seema Verma announced that the administration will give Florida almost $1 billion in supplemental funding for the state’s Low Income Pool (LIP). The announcement brings total funding for the program to $1.5 billion for the new fiscal year, which begins July 1. According to Governor Scott, Florida will have increased flexibility for using LIP funds, which he says will help improve quality and access to health care for Florida’s vulnerable populations. Hospital associations and provider groups in the state expressed broad support for the increased funding.

The LIP funding goes to hospitals and health providers for services provided to patients who are either uninsured or underinsured. However, the program is not a health coverage program or considered a part of Medicaid expansion. Originally approved by CMS in 2005, Florida’s LIP was part of an 1115 demonstration waiver, intended to support federally qualified health centers, community health centers, and other safety net providers. The program also provides funding to the state’s Graduate Medical Education programs. Originally set to expire in 2015, funding for the program was scaled back from $2 billion in 2014 to $608 million in 2015.

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Breaking Boundaries

Can digital innovations in clinical research help recruit participants?

Low clinical trial recruitment rates can be a barrier for developing new treatments for certain conditions and patient populations. For patients, the clinical trial system can be tough to navigate; it can be difficult to find open trials, or figure out the patient criteria and what choices are available. These recruitment barriers can slow research progress and add costs for life sciences companies, limit the type of findings, or lead to the trial being stopped prematurely. A recent analysis of cancer trials registered on, the registry and results database of publicly and privately supported clinical studies of human participants conducted around the world, shows 20 percent of the 7,500 Phase II and III studies were not completed between 2005 and 2011. The most common reason for this was the inability to recruit participants.

Some patient advocate groups are taking on the challenge of developing tools and programs that are patient-focused and help patients navigate the research process. The National Brain Tumor Society (NBTS), a nonprofit focused on the brain tumor community in the United States, recently launched a clinical trial finder tool on its website, with the goal of connecting brain tumor patients with open trials that might be appropriate for them to consider. The tool aims to help patients navigate through the available trials easily. Someone who had previously battled a brain tumor led the web development and design. The NBTS says that the tool is the first phase of a major patient engagement program it is rolling out, to help support patient-centered research and drug development; empower patients to play an active role in the research and treatment process; and improve brain tumor clinical trials.

University of California at San Francisco (UCSF) also recently deployed a clinical trial finder tool that distills information from and makes it more user-friendly for patients who might be interested in enrolling in a trial. UCSF is hosting more than a thousand trials, with more than 600 open and recruiting patients. The tool makes it easier for the public to understand which trials are open, the criteria, and enrollment instructions, including explaining hard-to-understand consent forms. The university has also developed a process to identify eligible study participants using the electronic health record and let patients know about available studies.

Another innovation in clinical research is in asthma at the Icahn School of Medicine at Mount Sinai. A team of researchers used the ResearchKit from Apple Inc. to study if the use of smartphones aided in recruitment and data collection. The ResearchKit is medical software designed to streamline patient recruitment and data collection. The Mount Sinai team created a mobile application to gain new insights into people diagnosed with asthma.

The team launched the study in 2015, and more than 50,000 mobile phone users downloaded the app in the first six months. More than 7,000 completed the consent process and enrolled in the trial. Approximately 2,300 users completed the consent process, enrolled in the trial, and completed regular surveys to answer questions about their condition and how symptoms affected their daily lives. The team found that an increase in daily asthma symptoms in Washington state was concurrent with an outbreak of wild fires occurring in the area, and provided feedback to patients around air quality alerts and symptom management. The study demonstrated that mobile health tools can be useful in clinical research to recruit participants, inform clinical practice, and improve patient care.

Analysis: The drug and device discovery, development, and approval journey for life sciences companies has never been static or straightforward. The shift towards prioritizing new kinds of data, including real-world evidence, and adopting a more patient-centered focus, will likely continue to shape the strategic choices life sciences companies make. As researchers and the industry adapt to these changes, the health care system as a whole is driving toward delivering value in a digital environment, an increased focus on making processes easier for the consumer, and an emphasis on measurement and performance. Researchers and companies that invest in digital platforms and approaches may see faster recruitment, and improved patient engagement and retention in clinical studies, that may in the long run reduce costs and improve patient experience.

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