Wednesday, October 31, 2018

October 2018: Milken Institute Conversation with Scott Gottlieb

Word document in the cloud, here.

Scott Gottlieb, Commissioner, U.S. Food and Drug Administration
Tanisha Carino, Executive Director, FasterCures, Milken Institute

Tanisha Carino:               Hello, everyone. I'm delighted to be here with Commissioner Gottlieb. For those of you that don't know Scott ... Can I call you Scott?
Scott Gottlieb:                 Yes.
Tanisha Carino:               Scott is a physician, a policy wonk, an investor, an industry expert, former investor, a cancer survivor, a husband, and a father. Now, he's the 23rd Commissioner of food and drugs. Over the last 18 months ... This is your third tour of FDA?
Scott Gottlieb:                 That's right. Yeah. Yep.
Tanisha Carino:               In your first year, you approved more new drugs, more generics. You also have had a very aggressive public health agenda that included limiting nicotine levels, regulating e-cigarettes, getting dangerous opioids off of the market. You're responsible for the fact that if I go to a McDonald's, I know how many calories I eat with a Big Mac.
Tanisha Carino:               For those of you that haven't been following the news as closely, this past week Scott was voted Time Magazine's one of 50 most influential leaders. You are accomplished, you're influential, and people also think you're a fashionista.
Tanisha Carino:               For those of you that don't follow our commissioner on Twitter, I highly suggest that you do so. Because I knew I was going to be next to him on stage today, I made sure to absolutely dress up my shoes today. I hope that I'm beating Scott at his sock game today.
Tanisha Carino:               Let's jump in because I know we don't have that much time with you. Over the course of the last 24 hours, we've heard a lot about the future of health. If there is one thing that has been a consistent theme throughout this summit, it's been that the greatest disruption and the greatest source of innovation is the idea of being patient-centered and really listening to what patients actually need.
Tanisha Carino:               You've been on three different tours of the FDA. Over the last few years, the FDA has been an incredible leader of what it means to be patient-centered. I'd love for you to first start by reflecting on how that's changed and what it means to the FDA and is this really a values-oriented strategy or how you think about that.
Scott Gottlieb:                 I think it certainly is a values strategy. I know Janet touched on some of those issues today about the changing orientation of the agency and the sense that the clinicians really go to the house that their medical officers working in medical endeavors in the pursuit of trying to improve outcomes of patients but I think we've done discrete things to try to incorporate patient perspectives into our regulatory decision making and inform our policy making, things like patient-reported outcomes, building them in as measures and as the outcomes in clinical trials.
Scott Gottlieb:                 But I think that the other big opportunity, in addition to trying to find discreet ways to bring patients into the dialogue, bring patient perspectives into the regulatory decision making process is some of the tools that we were going to have available to us to actually measure things that are meaningful to patients.
Scott Gottlieb:                 We're going to be promulgating in a couple of weeks a platform for how you can incorporate digital health tools in the context of the approval of a drug. You could get approval for a drug digital health tool delivery system, if you will. These are going to be digital tools that could help with patient compliance, could measure patient symptoms, or maybe could measure outcomes, measure physical performance in a way that it could be used for either post-market surveillance, post-market commitments, or future regulatory decision making, trying to collect information that can be used for supplement mental indications.
Scott Gottlieb:                 Right now, for example, we use a six-minute walk test as a standard measure of physical performance for a lot of clinical trials particularly for neurodegenerative diseases in children, mucopolysaccharide diseases. That's not a really great measure all the time of physical performance. Someone can come to the doctor and just have a bad day. They come in once a month or once every two weeks for a checkup and being measured on a walk test on a treadmill.
Scott Gottlieb:                 We know that, we have watches now that could potentially measure our physical performance on a daily basis and better track if we're improving, if our physical performance is improving. Obviously these need to be validated, these kinds of tools, but those are the opportunities I think that we're going to have and our goal is to try to build up out regulatory frameworks that enable these tools to come to market.
Scott Gottlieb:                 An example of looking at digital tools that could be used in conjunction with drugs, what we're looking to do there is incorporate the digital tools into the product labeling in a way that they could be regulated in the post market as part of the promotional labeling, as opposed to just having to be regulated as a pre-market medical devices and undergo pre-market review. This is going to help facilitate the development of more of these kinds of tools.
Tanisha Carino:               Scott, for us, we had a session yesterday on the future of data disrupting health. One of the aha moments was the transition from having what is unstructured data or some people called it dirty data into data that is going to be meaningful and useful. It sounds like this is the type of innovation from a regulatory perspective that's going to create more understanding of how to integrate this. Is that a fair way of understanding the path that you all are on?
Scott Gottlieb:                 I think it is. I think that if you look at a lot of the outcomes, there's objective outcomes like tumor shrinkage, objective outcomes in oncology but a lot of the measures that we use in clinical development measure physical performance or measure how patients experience symptoms.
Scott Gottlieb:                 I think that there was ways to incorporate technology that's going to allow us to gather that information in a much more objective fashion more reliably, perhaps more quickly so that if you have better tools that are more sensitive for measuring change in physical symptoms, of physical performance, you can potentially get an answer more quickly than if you have a tool that's measuring physical performance that's highly variable so you need a larger data set, you need more patients to account for the variability statistically. You need to follow them for long because you don't have a sensitive tools, so in order to measure a decline in function you need to you need to follow patients longer. Unfortunately, you're watching someone decline in function in the context of the clinical trial in order to prove something work.
Scott Gottlieb:                 I think that we're going to have more of these opportunities. If you look at what we did in Alzheimer's where we change the guidance to, before, in order to have a drug approved for Alzheimer's, you had to both have an effect on cognition as well as performance. The notion being that you had to decline enough in cognition so that it had an effect on your physical performance but the problem was, by the time your cognition declined in that setting, you were pretty advanced in the disease. By the time it declined enough to affect your physical performance, you were pretty advanced in the disease. It mitigated against trying to develop a drug for early Alzheimer's before the decline in cognition had an effect on physical performance. We put out new guidance that said that you only need to now in certain settings hit on cognition if you can measure changes in cognition.
Scott Gottlieb:                 One of the things that facilitated our ability to do that was the advent of better tools for measuring changes in cognition, not just better surveys that we used to measure cognition but better tools for actually collecting the data where we now had digital platforms for doing that, so you can collect them in a more reliable fashion and have better quality control in terms of how you collecting that information.
Tanisha Carino:               That's great. One of the questions that, for faster cures, we've been focused on this idea of patient engagement. We've been incredibly impressed with the FDA has done in terms of all of its listening sessions it's held over the last few years. Now, there's been a real surge in activity by almost every group that's out here from a patient perspective and wanting to really own the future of what is meaningful to them.
Tanisha Carino:               When you think about your review staff and you think about the talent that you have at the FDA and what's happened, do you see a meaningful difference and how they're really considering the patient and how has it really changed the culture even within the FDA?
Scott Gottlieb:                 I think the bottom line is it has changed the culture, the engagement, and the formal structures that we put in place to try to bring patients into the process has changed the culture of the agency.
Scott Gottlieb:                 The other thing we're trying to do with how we're restructuring the Office of New Drugs and the review process itself is, a medical reviewer right now at FDA does a lot of different things. They're not just doing clinical evaluation. They're not just trying to develop new guidance and be thought leaders within their fields. They're also, when the review package comes in to the FDA right now, they're the ones taking the raw data and putting it in charts and analyzing the data in statistical packages.
Scott Gottlieb:                 A medical officer shouldn't be doing that. We should be having experts who are expert in data analytics doing the initial analysis. We should have people who know how to format data, doing the formatting and assembling into standardized presentations that then the medical reviewer can use.
Scott Gottlieb:                 What we're trying to do with the reform that we're undertaking with the Office of New Drugs is actually free the Medical Review staff and create more cross-agency functions to do some of the technical aspects of the review process so that the clinical officers can be a clinical house staff so that they can focus on the clinical portion of the review so that they have more time to engage with patients and so that they have more time to engage as thought leaders within their fields.
Scott Gottlieb:                 That's the key element of what we're doing with the OND reform. I literally talked to reviewers who will explain to me that they spent a whole day trying to assemble data into a chart. There's a lot of people who know how to do that. Most of them are under the age of 25. We shouldn't have a physician doing that.
Scott Gottlieb:                 We're trying to create these kinds of cross-function units to do some of the structural work the analytical work that goes into the review. I think that's going to also ... We estimated that it's going to improve productivity by about 20% but what we're trying to do with that improved productivity now is facilitated development of many more disease-specific guidances. We committed to put out hundreds and do disease-specific guidances and also free our house staff to engage more with the external community. You're starting to see that now but that's the long-term vision.
Tanisha Carino:               I remember the days when you would never be able to meet or review stuff. Now, you have them spending all day at meetings about what's meaningful to patients in all sorts of different ways.
Tanisha Carino:               I want to touch on the fact that you spent 15 years as a resident fellow at the American Enterprise Institute. There's a long body of writing that you've done on the role of government in creating a transparency and being a force in creating efficient markets. One of the keys to transparency is the availability of information.
Tanisha Carino:               As the FDA Commissioner, how do you feel like you've moved forward in terms of the transparency the agency can have to be a good steward of what's happening in public health and inform the public of what's happening?
Scott Gottlieb:                 I actually published 826 articles. I know that only because the Senate collected them all at my confirmation hearing. The best part of my confirmation hearing was when I handed them all in, I had a hand in a list of every article I ever published. I inadvertently, and it was completely inadvertently, left three off and they found them.
Tanisha Carino:               Now, you have the exact number of what was that?
Scott Gottlieb:                 Now, I have them all.
Scott Gottlieb:                 One of the things that I talked about, the reform of the new drug approval process. One of the things that we're doing right now is creating a more structured review. You're going to start to see this first on the safety side in terms of how we review safety data coming into the agency. What we're trying to do is across all the different therapeutic divisions look at data the same way so when data comes in, we're going to have those cross-functional units analyze the data in a similar fashion, assemble the data in charts that are preferred.
Tanisha Carino:               Paper charts?
Scott Gottlieb:                 No. Digital charts that are preferred to FDA. What's facilitating this is the fully-electronic submission of data right now. We're now going to make more of the bottom line data from the review process available publicly. We started that as a pilot. Companies have been opting into it but we're going to try to make more of the bottom line data available as part of the review memo that gets ultimately promulgated.
Scott Gottlieb:                 But part of what a structure review is going to enable is that at the end of the review process, when a drug's approved, we're going to be able to make information about how and why we made our decision available much more quickly, within probably 48 hours. Then, it's going to be more of a problem-
Tanisha Carino:               Just for context for the audience, what is it now? Is 48 hours exponentially faster?
Scott Gottlieb:                 Yes. It's much faster. It could take weeks until you have that level of detail. There's some initial information for public but in terms of the level of detail we're going to make available, it's going to be much more quickly.
Scott Gottlieb:                 The review memo, so right now, the review process is you have a lot of people who are consultants to the review process, each developing their own review memos. It's a lot of cut and paste. If you look at different review memos as part of the standard review package, it's a lot of cut and paste. What we're going to do is have the different disciplines that are part of the review teams collaborating around one digital review template, much like you probably all do in your corporate jobs. We don't do that right now at FDA. We're going to have one review memo. The review memo's going to be more of a problem based review memo. What were the questions what were the critical questions we needed to answer as part of making a decision and how did we resolve those questions?
Scott Gottlieb:                 It's going to be a much more accessible document I think to providers to patients to people on the outside who want to review our work.
Tanisha Carino:               This will all be, at least part of it in the public domain [crosstalk 00:13:53]?
Scott Gottlieb:                 This is all going to be in the public domain and the place where we're implementing this approach first is around the safety portion of the review.
Tanisha Carino:               Mm-hmm (affirmative). In your past budgets, you've put in for a knowledge management system. Is this related knowledge management? Tell us a little bit about what that request really is about and how that plays into the notion of predictability or transparency.
Scott Gottlieb:                 Right. Right now, if someone came to me and asked me how many times has FDA approved an oncology drug based on a measure of effectiveness against this specific biomarker, the way I would answer that question is I'd try to assemble everyone in a room to ask them. I'd usually start with Bob Temple because he's been there the longest.
Scott Gottlieb:                 We don't have the ability to query our own decisions. We don't have the ability to look across our own decisions to try to extract from them where we made decisions based on common elements. All of our historical precedents is embedded in people's minds. Literally, when we're developing new guidance documents, where we're trying to consolidate collected knowledge over time, those are developed by bringing together big teams of people and trying to query them.
Scott Gottlieb:                 What we wanted to do is develop a knowledge management system that allows us to incorporate our own precedent and query it in a real-time fashion. This is something that a lot of knowledge enterprises have. We don't have it. We don't have it anywhere in the agency right now. We have a Google search bar. We want to develop this kind of a system. The budget request that we had in 2019 has a specific request for this. The requests were made in 2020 as well.
Tanisha Carino:               How urgent of an issue is this? Are you like most federal agencies that's looking at a tsunami of retirement. Now, you don't have those people in the room?
Scott Gottlieb:                 I'm worried about retirements because, like a lot of federal agencies, we have a cohort of people who came aboard at a certain time. A lot of our leadership is reaching retirement age but I'm not worried about retirements from this perspective. I think this is something that a lot of government agencies don't have but most government agencies are pass-through agencies, where we pass through very few dollars. Our money's spent at FDA developing intellectual capital and evaluating information.
Scott Gottlieb:                 We're an information enterprise. The fact that we don't have the ability to catalog and easily query our own decisions is a challenge especially as those decisions become more complex and we want to bring regulatory consistency across how we make decisions and ultimately if we built this tool, this would be a publicly accessible tool. There's companies on the outside, database companies that make a living developing databases that you can query around specific aspects of regulatory decision making. No one's built anything that would be a comprehensive tool on the order of what we want to develop.
Tanisha Carino:               For product sponsors as well as just patients, I would think that that's something that predictability is something we count on.
Scott Gottlieb:                 Yeah. The other thing is, on an ad-hoc basis, we, for example, will on certain safety reviews, consolidate safety datasets across multiple product reviews. This is a very touchy issue because companies claim that their data from their packages is commercial confidential information. If we're consolidating that into a data set to make regulatory decision making across a class, we need to be very mindful how we do that in a way that doesn't abrogate their intellectual property in those respects but we do do it. People know we've done it. We've been public about it but when we do it. those data sets aren't available publicly.
Scott Gottlieb:                 Where we are making decisions by putting queries against a consolidated data set that people on the outside can't query to see if we've made the right decision or to adjudicate their own decisions. That's not an enviable position. If we're going to be developing that kind of intellectual capital and property and make decisions based on it, we need to make that available.
Scott Gottlieb:                 This is another thing that, if you had a knowledge management system and help facilitate the consolidation of this information and make it publicly available, it's another opportunity that we'd be able to provide.
Tanisha Carino:               That's great. For those of you that don't often listen to the FDA Commissioner, one of the most important points to make is that Scott and his agency actually regulate, is it 20 cents on every dollar spent so 20% of the economy is regulated in some [formal way 00:18:33]?
Scott Gottlieb:                 It's a growing 20%.
Tanisha Carino:               Mm-hmm (affirmative). Tell us. There are all sorts of new areas of science. You just talked about areas that you're in selling gene-based therapies we've talked about. When people say you're moving towards a risk-based approach for a regulation, what does that mean and how are you thinking about how the regulatory frameworks keep up with the speed of the science?
Scott Gottlieb:                 I think we've always talked about trying to have a risk-based approach to regulation. I think when we think about that, that means trying to apply our regulatory tools in the areas of highest risk. The most palpable place to get a sense of what it means to be a risk-based system is in the post-market setting when you're doing foreign inspections or inspections of manufacturing facilities.
Scott Gottlieb:                 We inspect on the basis of risk and we have models to identify facilities that we think represent more risk based on where they're located, past history, the kinds of products they're manufacturing, what we found on past inspections, what we know about the proprietors of those facilities. We will go into certain facilities more often than other facilities. Some facilities we won't inspect on a regular schedules. Others we will. That's a risk-based model.
Scott Gottlieb:                 If you look at the Department of Agriculture, and this isn't to cast aspersions on my colleagues at the USDA, but the way they inspect meat and poultry is they have an inspector in every plant. We don't put an inspector physically in every plant. We go into facilities based on risk models. When we inspect those facilities, we're looking at things based on knowledge about where the points are that could create risk to consumers. That's the essence of what it means to be a risk-based model.
Scott Gottlieb:                 I think, as we advance those approaches, the opportunities come from having more information to better target how we do what we do.
Tanisha Carino:               Tell us how that philosophy has permeated even in things like your digital health strategy or things like cell and gene-based therapies.
Scott Gottlieb:                 Yeah. With respect to digital health, I think one of the things that marks this time in science and the regulatory challenges we face is that we are facing the advent of entirely new areas of technology and innovation where the old regulatory models don't apply real well when it comes to gene therapy, when it comes to regenerative medicine, when it comes to digital health tools, laboratory tests. If we tried to retrofit the existing regulatory paradigm onto these new areas, we would stifle innovation. In some cases it's going to require us to seek new legislative authority. You saw us provide about 70 pages of technical assistance to Congress around what we think would be an optimal approach to the regulation of laboratory-developed tests and diagnostics. In digital health, I think that that's a very palpable example where he had to come up with a new regulatory paradigm for how we would approach that.
Scott Gottlieb:                 Digital health tools are highly iterative. You're trying to make constant changes to them, to iterate them to improve those tools. You think about an app on your phone or on your smartwatch. If we required companies to come in and file five 10K supplement every time they wanted to push out an update on a medical app, it just wouldn't happen. We've taken what we're calling a firm-based approach the regulation of lower risk digital health tools, where tools that meet the definition of being a medical device and are subject to FDA's regulation, rather than regulating each specific product, what we're going to do is validate the underlying architecture of the software and allow firms that meet certain requirements in terms of their own SOPs to come to market with new products and new iterations of their existing products without requiring pre-market clearance each time. They'll be subject to post-market evaluation.
Scott Gottlieb:                 But when you look at the level of validation that some of these companies are engaging and I don't want to be company-specific but I've seen what some of these companies do. They're undertaking an enormous amount of validation. If we can go and inspect them, see their SOPs, understand the level of validation that they're requiring before they put their products in the market and it's an otherwise low-risk product, we can allow them to go to market and just be subject to post-market exercise of regulation.
Scott Gottlieb:                 If you look at the Consumer Product Safety Commission, this is how they regulate. They put out standards. People manufacture products subject to the standards. When a problem's identified in the marketplace, they issue a recall. They could take other remedies.
Scott Gottlieb:                 There's very few things in commerce that are subject to pre-market approval where you need pre-market approval before you can go to market with the product. Medical products are one, pesticides, aircraft engines. It's not a long list of things where you need the government's permission to be able to go to market. Putting the app on my watch on that list, we need to decide whether that meets the level of risk where we need to acquire that level of oversight. The answer has been more recently no. We don't we don't need to apply that level of oversight even if it's meeting the definition of being a medical device. We could think differently about how we apply regulation.
Tanisha Carino:               Right. I want to switch to the fact that FDA is now on track to approve more products than you did last year, which was a record year, where you'd approve 46 products. About 40% of products, it's almost holding steady year-over-year, have been really for orphan designations, orphan drugs.
Tanisha Carino:               Yesterday we had Harvard economist Amitabh Chandra come to us and talk to us a little bit about his research. One of the data points he gave us was that the public health needs and where R&D pipelines are are not a match.
Tanisha Carino:               Just as an example of that, in mental health, the burden of disease is 15%, whereas the R&D pipeline is less than 2%. Knowing that FDA isn't the only actor and what's needed for either pull or push incentives, what do you think is the role of the FDA to re-energize the innovation that needs to happen in these large big public health disease classes?
Scott Gottlieb:                 On the issue of the statistics, last year was a record year for the number of novel medical devices we approved, novel drugs and generic drugs will probably break all three records this year. We just approved the first new antiviral drug for flu in 20 years. I think that now we might have now surpassed the record number of approvals of all time. It's only October. We'll see how we do between now and at the end the year.
Scott Gottlieb:                 I have multiple concerns in this realm. I have a concern that it's become too hard to innovate in areas where there's so-called good enough generics and some of the primary care areas. I think that there's been such a focus on significant unmet medical needs that we've lost sight of the palpable public health improvement that comes from something that provides increments of additional efficacy for something that's an otherwise ordinary condition.
Scott Gottlieb:                 If you could shave 10 hours off of the common cold, when you aggregate 10 hours of relief from the common cold over a population of tens of millions of people who are going to get a cold each year, the overall public health impact of that could be enormous and productivity improvements and things like that.
Scott Gottlieb:                 I think that we've we've lost sight of the public health gains that come with small increments of improvement in therapeutics that treat otherwise common conditions that aren't necessarily life-threatening but where the symptoms do impact people's lives. It's become hard to run clinical trials in those settings because the expectation of safety has grown over time. I think there is nothing wrong with that.
Scott Gottlieb:                 I always say that if you gave me the choice between driving a 2002 Honda Accord with 200,000 miles on it or a 1980 Corvette that's been on cinder blocks and never driven, has zero miles on it, I would take the 2002 Honda Accord because it's a safer car. It has airbags. It has anti-lock brakes. It has dual suspension. I can go on. If I get into things I don't understand but the expectation for safety has grown over time. The regulatory process has built in more oversight to meet those expectations. I think that that's appropriate. As technology gets better, we should be using it to improve what our expectations are about both the benefits and the risks of the products we take but that can't come at the expense of creating inordinate hurtles.
Scott Gottlieb:                 I think in some therapeutic areas, the hurdles are very high right now. The clinical trial requirements are very big. That's where you have to look at I think the kinds of tools that can make it easier to collect information in a fashion that is just as rigorous but perhaps less onerous, things like collecting information through real world performance of people, every day measuring real world performance of, to measure lung function, to measure physical performance, things like that.
Scott Gottlieb:                 I'm also worried about, on the reimbursement side at the other end of that barbell, when you're looking at the drugs targeted to rare diseases, I think we have a highly nimble, highly innovative paradigm for drug development and medical product development and an ossified paradigm for reimbursement. There are places where I'm extremely worried that if we don't adapt the approach to reimbursement soon, we may foreclose therapeutic opportunities.
Scott Gottlieb:                 I was around and you were around too when we didn't get the reimbursement for the radiopharmaceuticals right. There were some good drugs at the time that worked and they're not used anymore. We not fully destroyed but we really shrunk the opportunity for radiopharmaceutical development in this country by underpaying the hospitals and forcing them to lose money on the application of radiopharmaceuticals.
Scott Gottlieb:                 We're doing the same thing with [Carty 00:28:17] right now. I think we have a window of opportunity to think about how we're going to reimburse that appropriately. There's things FDA can potentially do in terms of how we label the products but we're going to need to think about what an appropriate reimbursement approaches to some of these novel therapeutic areas if we want to see these sustained.
Tanisha Carino:               Many people observe that you're one of the few commissioners that has been very vocal about payment issues, drug pricing. Do you feel like that is something that is critical now that you're advancing science, you're on the forefront of knowing what's in pipelines, but the payer community by and large doesn't have the same point of view or the capacity to really be that in deep on every scientific advancement.
Tanisha Carino:               What is the FDA's role in bridging between the payers?
Scott Gottlieb:                 I think I've stuck to my knitting. I think that when you look at the issues of drug pricing. There's product competition. There's price competition. When it comes to price competition, you think about you know the reimbursement constructs that are exercised by Medicare or how PBMs and health plans are organized. When you think about product competition, you think about making sure there's timely generic entry when exclusivities and patents have lapsed on branded drugs and making sure their second and third to market innovation in some of these novel indications.
Scott Gottlieb:                 We've been focused on trying to bring more product competition to the market with the hope that if there's more products available within categories, the payment system is either going to use that to create price competition or hopefully adapt to figure out how to use that to create price competition in places where there's a lack of price competition based on product variety like in Medicare Part B, for example.
Scott Gottlieb:                 That's where we've been focused. I think one of the places you're going to see us focusing more going forward aside from high-value generic opportunities is second and third to market innovation in some of these highly novel classes. We now have data that we will put out soon that shows that the time in which it takes to get second to market innovation as some of these unmet medical needs, these novel orphan categories and third to market innovation is taking much, much longer. In many cases, we're seeing product categories remain monopolies in perpetuity.
Scott Gottlieb:                 I think that there is a sense in the product development community. I've been on the other side of this, on the venture side although I'm a little dated right now, having been out of it for a few years, but I think there is a sense that if you're going to be if you think you'll be third to market, you pull out. We're seeing less competition in these categories.
Scott Gottlieb:                 To the extent that innovators are having monopolies for longer periods of time or in perpetuity, that's not just creating an environment where prices stay higher longer but it's also foreclosing the opportunity for therapeutic variety within these categories. We know that therapeutic variety is important from a clinical standpoint. Patients sometimes have a differential response to drugs, even if they're largely similar molecules.
Tanisha Carino:               Right. I know we're almost out of time. I'm going to give you last question. Everybody who's been on the stage has been able to talk about what the future of health is. For you, what do you think is the most exciting thing that we have to look forward to in terms of health?
Scott Gottlieb:                 I'll tell you, the thing that I'm focused on right now the most is what we're doing on tobacco, quite frankly. I think that we have and I know it's not necessarily the answer that ties to some of these technology issues but I think that we have an opportunity when I came into FDA, we saw that smoking rates were declining in this country. I think if we get our policies right over a short period of time, we have the chance to dramatically accelerate the decline in smoking in this country. That's going to have a more palpable public health impact than perhaps any single product introduction that I can contemplate in any reasonable period of time.
Scott Gottlieb:                 It's going to require us, thank you, to more rapidly migrate adults off of combustible tobacco products onto products that have reduced risk. We have to embrace the concept of modified risk nicotine delivery products including e-cigarettes. It's also going to require us to make sure that those e-cigarettes, if we make them available for currently addicted adult smokers, don't become tools for addicting a generation of youth on nicotine. That's what we're seeing right now.
Tanisha Carino:               Got a lot of fans in the room for that.
Scott Gottlieb:                 We will have much more to say about this in about four weeks.
Tanisha Carino:               Thank you for spending your day with us, Scott, I know it's been a busy day. Please join me in thanking the commissioner.
Scott Gottlieb:                 Thanks a lot. Thank you.
Conrad Kiechel:               Thank you, everybody and good afternoon. Thank you also for your insights and your time to Scott Gottlieb.
Conrad Kiechel:               In just a few minutes, we're going to be serving the rest of lunch and our main course, which is our chairman Mike Milken's presentation 25 Years: The Quest to Create More Healthy, Lengthy, and Meaningful Lives, but before the meal we wanted to take a moment to give thanks.
Conrad Kiechel:               First, thank you for joining us here at the Milken Institute Future of Health Summit. We've had great feedback in the last couple of days from many of you. We hope that the insights and the inspiration connections you've garnered here will help inform and inspire the work that you continue to do.
Conrad Kiechel:               The Future of Health Summit would not have been possible without the work and commitment of many, many people, some of whom are in this room. In addition to our partners at the Baker Group, Vision Matrix and our host here at the Ritz-Carlton, please join me in thanking our dedicated wonderful staff at the Milken Institute. Thank you, staff. Thank you. Thank you for Mr. Milken.
Conrad Kiechel:               There are also some very important people, some of whom are in this room, some of whom are not. Those are our sponsors who make the work of the Milken Institute possible not just for the summit but year-round. We're having a special reel to thank them as well. Thank you and enjoy your lunch. Bye.

Thursday, October 25, 2018

Trump Drug Pricing Transcript October 25

Thank you very much, thank you. It's a big day. It's a very important day. Thank you, please. Thank you very much, secretaries that are here for your tremendous leadership. This really is an important day for me. I've been talking about drug price reductions for a long time and now we're doing things that nobody was, let's say, 'cause I'm speaking on behalf of all of us bold enough to do and they're gonna have a tremendous impact.

I also want to thank FDA Commissioner, Scott Gottleib. Scott, stand up Scott, you've done such an incredible job. Really incredible job. And CMS Administrator, Seema Verma for joining us. Seema, thank you very much Seema, great job, great job.

I'm thrilled to be here at the Department of Health and Human Services and I want to thank everybody. I understand that's it's been decades since the last President came here and I'm very surprised that President Obama didn't come here for Obamacare, explain that one to me. But he didn't. But it's a great honor to be here. You do an incredible job, you really do an incredible job. So I thank you.

Since the day I took office, I have made reducing drug prices one of my highest priorities. Last year, the FDA approved more than 1000 low cost generics, the most in the history of our country. This year, we beat that record, approving even more generics. These new approvals are leading to cheaper, competitive alternatives for our life-saving drugs like the EpiPen, saving Americans almost 9 billion dollars a year last year alone.

Since releasing my drug pricing blueprint in May, 16 drug companies reduced their list prices, rolled back increases or froze their prices for the rest of the year. We called a few of those companies recently where they raised their prices and I guess maybe it was one of the times that I realized how powerful the presidency is because they immediately rolled their prices back to where they started. And those companies know who we're talking about and we appreciate it very much.

Earlier this month, I signed two bills to lower the cost of prescription drugs. The Know the Lowest Price Act, Know the Lowest Price Act, it's a big thing and the Patient Right to Know Act and by the way, put those two together and you have a complicated deal. Sounds simple, but that one's not, ending the unjust gag clauses once and for all. Where you go into a drug store and the pharmacist wouldn't even be allowed to talk about alternatives or pricing. How ridiculous is that? Think about it, how ridiculous. That's not going to take place anymore and actually the pharmacists are very happy about it.

Patients now have the right to know the lowest price and the most affordable alternative available at their pharmacy. Today, we are here to announce another bold and historic action to bring down the price of prescription drugs. With the action I am unveiling today, the United States will finally begin to confront one of the most unfair practices, almost unimaginable that it hasn't been taken care of long before this, that drives up the cost of medicine in the United States.

We're taking aim at the global freeloading that forces American consumers to subsidize lower prices in foreign countries through higher prices in our country. And I've seen it for years and I never understood. Same company, same box, same pill, made in the exact same location and you'll go to some countries and it would be 20% the cost of what we pay and in some cases, much less than that and I'd say, why is this? I never knew that I would be able to stand here before you and have a chance to fix it and that's what we're doing, we're fixing it. That's called real life experience I guess.

For decades, other countries have rigged the system so that American patients are charged much more and in some cases, much, much more, for the exact same drug. In other words, Americans pay more so that other countries can pay less, very simple. That's exactly what it is. It's wrong, it's unfair, it's not surprising. I've seen trade deals where it's far more costly to us then even this, and we're changing them also.

Foreign countries even threaten to disrespect our patents if they are not given cheaper prices on drugs. So they're not going to even look at the patents. They've been very, very disrespectful previously to our country and to all of the things we stand for. And especially they would disrespect patents when it came to American made drugs. The American middle class is effectively funding virtually all drug research and development for the entire planet. So we are paying for it. We are subsidizing it, everybody else is benefiting and they are paying nothing toward research and development.

The world reaps the benefits of American genius and innovation while American citizens and especially our great seniors who are hit the hardest, pick up the tab. But no longer. Here are just a few examples. For one, eye medication that helps prevent blindness. Medicare pays over 1 billion dollars a year. If we paid the prices other nations pay, we'd bring the 1 billion dollars down to 187 million dollars a year. It's pretty amazing isn't it? We spend more than a billion dollars a year on two drugs to treat bone disease but we could save more than 800 billion dollars, think of that, 800 billion dollar saving for our seniors by paying the prices other countries pay. [Note, more likely $800 million]  Nothing special. Just the prices that other countries pay. That's the way the United States has been disrespected for too long in too many ways.

One common cancer drug is nearly seven times as expensive for Medicare as it is for other countries. This is a highly used and very effective drug and it's seven times more expensive, not fair. This happens because the government pays whatever price the drug companies set without any negotiation whatsoever. Not anymore. Under our new plan, the Department of Health and Human Services, would allow Medicare to determine the price it pays for certain drugs based on the cheaper prices paid by other nations. Some people call it Favored Nations Clauses. We have them in business. We have them in a lot of different contracts that I've seen over the years and been part of. Favored Nations. So think of that. So we're paying a price based on the price that other nations are paying. That's what we're going to pay. No longer seven times more. No longer 10 times, 11 times, even 12 times, I've seen examples. Paying the same price. Talking about billions and billions of savings to people, to people.

We will no longer accept the inflated prices being charged to our seniors. I had a Congressman, respected Congressman come to the Oval Office and say, "Sir, for my constituents, drug pricing is more important than healthcare." And I said, "Explain that to me." But he actually said, "Drug pricing," I've never forgotten the expression, drug pricing, we know how important healthcare is. Drug pricing is even more important for my constituents.

At long last, the drug companies in foreign countries will be held accountable for how they rigged the system against American consumers. This is a revolutionary change, nobody's had the courage to do it or they just didn't want to do it. And this is a change for the people. This is not a change for industry or for companies or for pharma. This is a change for the people. It will be substantially a reduction in drug prices for our people and our senior citizens. Tremendous, tremendous difference.

Our plan will also fix a broken payment system where doctors are reimbursed more if they prescribe a much more expensive drug. Under our new proposed payment system, doctors will be paid a flat rate. Now when you think of it, it's like being a contract or anything else. If it's an expensive drug or a less expensive drug, it's the same, doesn't take anymore and I think this will be good. In terms of the pricing of the drug, it will be fantastic for that. But it'll also be much better for patients and it very well may be better for doctors.

This follows other significant actions that we've taken to protect Medicare for our great seniors. We have given the plans that serve more than 45 million seniors on Medicare Part D and 20 million seniors on Medicare Advantage, new tools to negotiate lower prices. Thanks to our actions, this year premiums for both Medicare Part D and Medicare Advantage have, and I'll give you a word that you haven't ever heard, ever heard, have gone down. You've never heard that word. True, gone down and now they're going to go substantially down.

Sadly a majority of Democrats in the House of Representatives have cosponsored a very Socialist Healthcare plan that would destroy Medicare, terminate Medicare Advantage and outlaw the employer sponsored healthcare plans of 157 million Americans. We think that they're going to actually come along with us when they see what we're doing, we think, we hope. It's something that makes no sense any other way. So we really think they can be bi-partisan. It happened to be a Democrat that told me how important drug pricing was. It wasn't a Republican in this case, it was a Democrat.

Under this administration, we will always protect Medicare for our great seniors and we will always protect Americans with preexisting conditions, always. In every action we take, we are putting America first and this is very much about putting America first. We get tired of having people go to other countries to literally fill prescriptions and you know where I'm talking about. We're fighting for lower drug prices which will now be automatic, it will be automatic and very substantial. Lower premiums, where we've done a really good job with healthcare in bringing the premiums down to a much lower level, much more acceptable level and we're going to be soon announcing somethings that will really have a tremendous and positive impact on healthcare also. And better healthcare, very importantly for every single American.

So I just want to thank everybody in this room, you're outstanding people. I know how hard you work. I know how important your work is. How brilliant you're work has to be and how complex a job you have. You have a very complex job. You have everything. You have probably every single element of life in the work you do. But I just want to let you know the American people very much appreciate, have great respect for you. I think they'll even have more. That'll go up very significantly when they see their drug prices falling. They're going to say, "What's happened? They must've made a mistake." It's true. They're gonna go up to the counter ... Did you make a mistake? Some won't say that, they'll just think it. And some might say, "Did you make a mistake?" But you're gonna see a big reduction.

I wanna thank everybody very much. It's an honor to be here, thank you very much, thank you.

Friday, October 19, 2018

10/2018: Final Gapfill Pricing, Comments View (For CY2019)

0001U  $                        720  Red blood cell antigen typing, DNA,  Contractors looked at payment rates for similar tests on the CLFS (i.e. 81403) and also payment amounts derived from outside payer of the service.
0002U  $                          25  Oncology (colorectal), quan assessment of 3 urine metabolites  Contractors used the cost per test as indicated by the company, minus the cost of shipping and sales/education and 18% discount already offer by the laboratory.  Other contractors based recommendation on similar urine assessment tests on the CLFS.
0009U  $                        107  Oncology (breast cancer), ERBB2 (HER2) copy number by FISH  Contractors used the payment amount based on HER2 FISH code 88367 as a similar test.  Some contractors adjusted the fee to reflect 2018 RVUs.
0010U  $                        427  Infectious disease (bacterial), strain typing by WGS  Some contractors used the payment amount of a similar test on the CLFS (87153) and adjusted the fee to reflect 2018 RVUs. Other contractors recommended code 87153 as a similar test but recommended a multiplier of 3.  
0012U  $                    2,516  Germline disorders, gene rearrangement detection by WGS  Some contractors used payment rates of a similar test on the CLFS, code 81445.  Others used commercially available service rates of $349.00.  Other contractors used information from a similar code being gapfilled, 81425, to estimate a payment rate recommendation.  They reasoned that since 0012U  examines the whole genome, but only detects large scale mutations, the payment rate should be estimated at 81425 x 0.5.
0013U  $                    2,516  Oncology (SO neoplasia), gene rearrangement detection by WGS  Some contractors used payment rates of a similar test on the CLFS, 81445.  Other contractors used information from a similar code being gapfilled, 81425, to estimate a payment rate recommendation.  They reasoned that since 0012U examines the whole genome, but only detects large scale mutations, the payment rate should be estimated at 81425 x 0.5. 
0014U  $                    2,516  Hematology (hematolymphoid neoplasia), gene rearrangement detection by WGS  Some contractors used payment rates of a similar test on the CLFS, 81445.  Other contractors used information from a similar code being gapfilled, 81425, to estimate a payment rate recommendation.  They reasoned that since 0012U  examines the whole genome, but only detects large scale mutations, the payment rate should be estimated at 81425 x 0.5.
81327  $                        192  SEPT9 (Septin9) methylation analysis  Contractors used the average of two similar tests on the CLFS.  Specifically, they used the payment amount provided by a laboratory for code 81287 and the commercially available payment amount provided by a laboratory for code 81288.
81471  $                        914  X-linked intellectual disability dup/del, 60 Genes  Contractors used the average of the payment amount for a similar test on the CLFS, 81433, and the payment amount recommended by the laboratory. 
81470  $                        914  X-linked intellectual disability (XLID) 60 Genes  Contractors used an average of the payment rate for a similar test on the CLFS, 81445, and a publically recommended payment amount.  
81551  $                    2,030  Oncology (prostate), profiling by real-time PCR of 3 genes  Recommended payment rate based on company information and applied a 15% discount that was being offered by the provider.
0004M  $                          79  Scoliosis dna alys  Contractors based payment rate recommendation on commercial lab charges.  Contractors further explained that resources required for this test are comparable or relevant from labs with similar tests.
0006M  $                        150  Onc hep gene risk classifier  Contractors based payment rate recommendation on commercial lab charges.  Contractors further explained that resources required for this test are comparable or relevant from labs with similar tests.
0007M  $                        375  Onc gastro 51 gene nomogram  Contractors used 50% of the publically available rate.  No data were received from the laboratory when requested.  
0009M  $                        133  Fetal aneuploidy trisom risk  Contractors used 50% of the publically available rate.  No data were received from the laboratory when requested.  
81425  $                    5,031  Genome sequence analysis  Some contractors based initial recommendations on laboratories with similar test with charges of $349.00. Upon further review, however, several contractors revised their recommendations.  Some contractors looked to similar tests on the CLFS, specifically 81415, a Whole Exome Sequencing code, and adjusted the payment rate based on input from several laboratories.  Other contractors simply followed public recommendations to use CPT 81415 as a similar test on the CLFS to recommend a payment rate.   
81426  $                    2,710  Genome sequence analysis, each comparator genome  Some contractors based initial recommendations on laboratories with similar test with charges of $349.00. Upon further review, however, several contractors revised their recommendations.  Some contractors looked to similar tests on the CLFS, specifically 81415, a Whole Exome Sequencing code, and adjusted the payment rate based on input from several laboratories.  Other contractors simply followed public recommendations to use CPT 81415 as a similar test on the CLFS to recommend a payment rate.   
81427  $                    2,338  Genome re-evaluation  Initially, several contractors felt this code represented interpretation only and thus averaged two comparable codes (G0452-26 and 88291).  Upon further review, some contractors followed public recommendations to use CPT 81417 as a similar test on the CLFS. Others did not recommend this similar payment rate and instead estimated a professional labor rates for the code.