Follow-On Blackjack: Place Your Exclusivity Bets

What will be the length of the brand exclusivity provided as part of a possible follow-on biologics pathway? At the moment, it looks like the generic camp is holding the low cards, but pharmaceutical firms should always watch their chips when Henry Waxman's at the table.

This week will see a lot of cards being shown; the Senate HELP committee mark-up that seemed like it would never end actually just voted on follow-on biologics and endorsed the 12 years of brand exclusivity offered by Sen. Orrin Hatch, R-Utah. Hatch apparently had a better hand than Sen. Ted Kennedy, D-Mass., who had endorsed 12 years last year but recently offered language starting with only nine, building up to 13.5 in exchange for additional studies, and Sen. Barbara Mikulski, D-Md., who had offered slightly lower numbers. They both ended up voting for Hatch's amendment.

On the other side of the Capitol, it feels like the Commerce Committee markup might never start. Brand firms feel that Chairman Waxman, D-Calif., who offers only a total of six years of exclusivity, is dealing from the bottom of the deck. Meanwhile, Rep. Anna Eshoo, D-Calif., is offering the brand jackpot of 14.5. President Obama, for his part, prefers lucky number seven.

It's enough to challenge even a seasoned card counter, so we thought we'd open the prognosticating up to you. Tell up how long you think the reward for innovation will end up being. If a health reform bill with FOBs does pass, we'll pick one of the winning entries at random to receive a framed, signed copy of this blog post. (Note: To receive the prize, winner will need to print this post, buy a frame, and forge the IVB signature.)



Email Subscribers: if you can't see the IVB Poll, click here to visit the post on-line.
image from flickr user waffler used under a creative commons license

Baucus Takes Pole Position in Upcoming Health Reform Debate

Senate Finance Committee Chairman Max Baucus is ensuring himself a prominent and visible seat at the health reform table with a white paper outlining his legislative proposal.

The white paper, “Call to Action: Health Reform 2009,” was unveiled on Nov. 12 and represents a culmination of discussions both in Congressional hearing rooms (10 hearings including one scheduled for Nov. 19) and behind closed doors with key stakeholders.

“The need is so great, we have to act now. There is no choice,” Baucus said during a same-day press briefing on why the economic situation should not delay acting on broad—and expensive—health reforms. “If we wait, the costs will grow.”

Baucus said the next administration and Congress will not repeat two mistakes made by the Clinton Administration in reforming health care: waiting too long and conducting the process from the top down.

In other words, Congress will want to show that it will act quickly after the Jan. 20 inauguration and key lawmakers and committees will be heavily involved in the legislative process from the very beginning.

The Baucus plan is a clear play by the Montana Democrat to get out in front of the health care debate ahead of a number of Democratic heavyweights looking to make health care their signature issue. The Finance Committee has jurisdiction over Medicare, Medicaid, the State Children’s Health Insurance Program (SCHIP), and all tax policy changes including those affecting health care.

There’s a strong sense among lawmakers, industry representatives and policy wonks that the first term of an Obama Administration is the time to move on sweeping health reform, with universal health coverage for all Americans the crown jewel of Congressional efforts.

Carving Out A Position

But two key questions are making the rounds in Washington: 1) What will the final plan look like? and 2) Who will get credit?

President-elect Barack Obama touted health care for all as a legislative priority closely behind an economic stimulus plan for the middle class during his campaign. Sen. Hillary Clinton (D-NY) made universal health care the cornerstone of her domestic agenda during her bid for the White House. Clinton led the failed effort to create one federal health care system in 1993.

During his speech on the final night of the Democratic Primaries in June, Obama singled out Clinton as a key figure in the fight for universal coverage. “You can rest assured that when we finally win the battle for universal health care in this country, she will be central to that victory.”

Senate Health, Education, Labor & Pensions Committee Chairman Edward Kennedy has been leading the fight for universal health coverage for decades and has made it his cause for the 112^th Congress.

“This is the cause of my life: new hope that we will break the old gridlock and guarantee that every American, north, south, east, west, young, old , will have decent, quality health care as a fundamental right and not a privilege,” Kennedy said on the first night of the Democratic National Convention in Denver.

Kennedy has been working behind the scenes for months with physician organizations, patient groups, and insurers to craft universal health care legislation ready for introduction at the beginning of the next session.

The Baucus proposal, though, essentially cuts off the Kennedy legislation and steals some of the Massachusetts Democrat’s thunder. Still, Baucus says he plans on working with Kennedy and other leaders, naming Republicans Chuck Grassley (Iowa) and Michael Enzi (Wyo.). “I received a call this morning from Sen. Kennedy. It was a very complimentary call…I was truly touched.”

Those feelings may not last, however, as discussions heat up over what a reform bill will include and whether there will be two Senate bills or one. “I’m less concerned with that. I’m more concerned about getting the job done.”

The Baucus press briefing was a show of power for Baucus with a packed room of media attending, including every major national newspaper and more focused trade publications. The whitepaper was also previewed to the national press the day before in order for stories to show up in headlines on the front pages of mainstream newspapers.

The formal presser was followed by a backgrounder for press with a half dozen top Baucus health staffers. Immediately after the backgrounder, Baucus’ policy team was slated to meet with staff from other Congressional members to brief them on the plan and provide specifics on some of the more technical aspects of the white paper.

The Baucus Plan: Walking a Moderate Line

In jockeying for position among reform-minded Democrats, Baucus is carving out a moderate one as his own.

“Some people say the US should have a single payer system—I disagree with that,” Baucus said. The Finance Committee Chairman is casting his proposal as a moderate call for reform that blends private and public coverage to create a “uniquely American system” for universal health care.

Three examples of Baucus’ more moderate approach to reform:

1) The white paper establishes a low threshold of reporting physician relationships with medical product and drug manufacturers but doesn’t go as far as prohibiting gifts to physicians.

2) The proposal notes that the Medicare Payment Advisory Committee estimates Medicare Advantage (MA) insurers are overpaid by 13% more than if the same beneficiaries remained in the traditional Medicare fee-for-service program. However, Baucus calls for a more nuanced approach to MA payments in order to avoid “severe underpayments” by “reducing payments to high-use areas and increasing payments in low-use areas.”

3) The Baucus plan avoids discussion of drug price controls but does address Medicare Part D cost savings by bringing Medicare rebates for dual-eligible beneficiaries in line with the rebates states are able to secure under the Medicaid program, according to Baucus policy staff.

Priorities and a Mix of Ideas

The white paper bases reforms on three overriding principle: meaningful coverage for all Americans; insistence that any coverage expansion be coupled with higher quality care and cost savings over time; and an “absolute commitment” to eliminate waste and overpayments.

The Baucus plan would make health coverage immediately available for Americans between the ages of 55 and 64 years old and begin a phase-out of the two year wait for Medicare coverage for individuals with disabilities. The plan would also strengthen the role of primary care—a theme Baucus hit on multiple times during his remarks—and chronic care management, and increase investments in comparative effectiveness research and health IT infrastructure.

Baucus and his staff drew from ideas from a number of different sources in developing their comprehensive proposal. For example, Baucus policy staff say they had discussions with administrators of the Massachusetts universal coverage “Connector” plan, something Kennedy and his staff have been doing for some time.

The Finance Committee Chairman’s call for the creation of a national Health Insurance Exchange (HIE), which would sell and oversee the administration of coverage, was the centerpiece of Obama’s health proposal.

The Medicare Part D dual-eligible rebates reform plan is a key piece of legislation that House Committee on Oversight and Government Reform Chairman Henry Waxman (D-Calif.) is planning to introduce.

Baucus allowed that certain elements would be implemented quickly, citing expansion of SCHIP, while others, such as HIE and the creation of a Comparative Effectiveness Institute, would take longer to phase in.

image detail from Penguin Classics's edition of Hazlitt's essays

Kennedy's 2009 Mission: Universal Healthcare

If you have any doubts about Massachusetts Sen. Ted Kennedy's mission when he returns to the Senate in January 2009, he put them to rest with his speech at the Democratic National Convention.

In a very brief emotional speech that focused on the theme of hope, dreams and change, Kennedy mentioned only one specific legislative battle: universal healthcare. Here's what he said:

"For me this is a season of hope, new hope for a justice and fair prosperity for the many, and not just for the few--new hope.

And this is the cause of my life: new hope that we will break the old gridlock and guarantee that every American, north, south, east, west, young, old , will have decent, quality health care as a fundamental right and not a privilege."

Kennedy is reportedly working with ranking Senate Health Committee Republican Michael Enzi (Wyo.) on a universal healthcare proposal ready to be introduced early next year, just after the inauguration. If Sen. Barack Obama wins in November, it could be Kennedy, not Hillary Clinton, leading the healthcare reform charge.

Personalized Medicine: Kennedy Weighs In

So now, even Ted Kennedy is talking about personalized medicine.

The Dean of the Senate stopped by a policy breakfast put together by The Hill newspaper and sponsored by AstraZeneca at Johnny’s Half Shell near Capitol Hill on April 8. He had some encouraging words for the personalized medicine enthusiasts out there.

“A new era of personalized medicine” is coming, Kennedy said at the breakfast. “And those are words we’re going to hear a great deal more about.”

He added: “The opportunity is unlimited.” AZ CEO David Brennan later echoed Kennedy, “the point Senator Kennedy made about personalized medicine is an important one.”

If the senior Senator from Massachusetts is aligned with the pharmaceutical industry on the future of medicine, ladies and gentlemen, break out your checkbooks, call your broker and start buying up biopharma concerns.

Kennedy’s comments were brief, so I don’t want to give the impression that his talk was a treatise on customized medicine. However, he made it a point to highlight the approach, along with prevention and disease management, as one road that should be well-traveled as the nation seeks solutions to the “health care crisis.”

Brennan related a story of meeting with the health minister of a foreign country and the minister said to him, “what we really need are the big breakthroughs.” Brennan shot back, “so do we.”

The AZ CEO continued: “Our experience with innovation is it’s incremental. We didn’t go from the Model T to the Mercedes 500 class in one step.... The bar for scientific innovation has been raised significantly.”

Personalized medicine—the right therapy for the right patient—is quickly emerging as one answer to various health challenges, including the innovation conundrum (incidentally, Brennan pointed to better science allowing companies to “kill products earlier” in the development cycle as a major reason for the low number of new molecular entity approvals over the last several years. Do with that what you want).

While there is still a lot of skeptical noise about turning a buzz word into real commercial success, it’s undeniable that the idea of customizeable therapy is gaining steam. HHS Secretary Michael Leavitt has made personalized medicine an agenda priority. Here is what he said during the Personalized Medicine Coalition’s annual meeting last March:

“It’s clear to me, and to many others in government and throughout the health care enterprise, that we’re on the threshold of a new era made possible by phenomenal leaps forward in two areas: first, new discoveries in bioscience, especially human genomics; and second, new tools in the computer age – meaning health information technology. These great leaps will enable us to give better care to all patients – by targeting the unique biology of every patient.”

HHS also issued a comprehensive report on the opportunities of personalized medicine last year to kick start the initiative. To read the full report, click here.

One thing I’ve found interesting is that a number of personalized medicine proponents are also comparative effectiveness proponents. Kind of odd since the two ideas are diametrically opposite each other. One looks at having the right medicine for the right patient while the other looks at comparing one therapy to another as they relate to a broad population and typically assigning a value to that comparison. Right? If you can better explain the relationship, click here to email me and I’ll blog about your response(s).

Kennedy mentioned comparative effectiveness as a tool in the health care debate but it was hardly a ringing endorsement. “If we’re going to have a debate about health care cost issues are going to be front and center,” but said “it’s not enough to analyze one treatment for another.” He discussed regional disparities in cost for care, something Congressional Budget Office director Peter Orzag often cites on his personal campaign for a comparative effectiveness infrastructure.

It’s a funny scene seeing Ted Kennedy, arguably the drug industry’s most vocal critic in Congress over the course of the last 30-some years, standing up in front of an AstraZeneca banner essentially saying ‘we’re here to solve America’s health problems together.’ And it’s not just paying lip service. Kennedy is putting words into action by providing a roadmap for the drug industry to get more of their drugs approved at FDA with provisions in the FDA Amendments Act, as well as serving as a driving force for a fair and balanced approach to follow-on biologics.

He's not done either: "I'm committed to enacting genuine health care reform in the coming year."