• Halbig

    As Nick predicted, the DC Circuit vacated the prior opinion and will rehear the case en banc. See Jon Cohn for the plain language context.

    First round of briefing is due Oct. 3. Oral arguments Dec. 17. Order here.

    Expect a flood of amicus briefs. We will cover the interesting ones.


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  • Antibiotic prizes

    From the New Yorker article today on the economics of Ebola (introducing a new word, Ebolanomics):

    What people in the West need, health officials agree, is new drugs that we can keep in reserve against an outbreak that regular antibiotics can’t contain. 

    The article suggests prizes and delinkage (paying for R&D without linking revenues to volume), quoting me.

    Chatham House paper here (Chatham House website) or here (SSRN); Yale J Health Policy, Law & Ethics here; the Strategic Antimicrobial Reserve is also discussed in this 2010 Health Affairs paper.


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  • 4.683 million unanswered questions in Halbig

    Appeals will continue, but let’s take today’s Halbig decision at face value. How much will this decision cost the working poor? The amount varies with income and other variables, but for a 40 year old individual making $30,000 a year, the tax credit was estimated at $1345 (KFF estimate here). Retroactive tax bills under Halbig will be significant and everyone impacted will have trouble paying for health insurance going forward (about 57% of exchange participants were previously uninsured, according to a KFF survey).

    How many people will be hurt?

    At first glance: anyone receiving tax credits in the 27 states with federally facilitated exchanges (FFEs): (AL, AK, AZ, FL, GA, IN, KS, LA, ME, MS, MO, MT, NE, NJ, NC, ND, OH, OK, PN, SC, SD, TN, TX, UT, VA, WI and WY; KFF list here). But the government reports 36 states as having FFEs, including 9 additional states not included on the list above (ID, NM, AR, DE, IL, IA, MI, NH, and WV; more on this below). Using this broader definition, 4.683 million Americans may now have a surprising tax bill and be at risk of losing health insurance, being told retroactively that they didn’t qualify for tax credits after all. The breakdown of the 4.683 million at-risk enrollees by state (based on this ASPE report and these state-specific excel files):

    FFE statesWhy are the additional nine states included? Seven are partnership states and two (ID/NM) have short term agreements.

    Idaho and New Mexico couldn’t set up their IT in time and signed agreements to allow CMS to start up their exchanges until the states are ready to take over. Will 95,156 of their residents (69,780 and 25,376, respectively) have to refund their tax credits until the switch occurs?

    The data from ASPE includes as FFE the seven states with “partnership” exchanges (AR, DE, IL, IA, MI, NH and WV). Do these arrangements count as “an Exchange established by the State?” If so, 527,000 people don’t lose their tax credits today. But if this model works, why can’t any state negatively affected by today’s decision simply sign a quick “partnership” agreement with CMS? If this works prospectively (as was suggested at oral arguments before the 4th Circuit in a related case), what about the tax credits from 2014? Will Halbig just punish about 4.683 million working poor for 2014 – but not 2015 and beyond – if quick agreements are signed by CMS and the states?

    But some state-based exchange states are in flux, which could increase the totals above. Oregon is in the process of switching to a FFE because of an epic website failure. Does that mean that 54,663 Oregon residents lose their tax credits once the switch occurs in November? Maryland is also considering the federal exchange after start up troubles. In Maryland, the number at risk is not separately reported, but could be estimated at 58,271 (86% of 67,757; 86% is the overall percentage of FFE enrollees qualifying for financial assistance). No one has told the working poor in Oregon and Maryland that over 110,000 people could lose these tax credits.

    And what about states that might outsource their exchange to another state? (MA, MD, MN and NV are considering this). Does an exchange operated by another state qualify as “an Exchange established by the State” under IRC sec. 36B(b)(2)(A) (emphasis added)? Seem likely, but if not, up to another 170,000 are at risk.

    Some special situations deserve mention. In Utah and Mississippi, the state runs the SHOP exchange and the federal government runs the individual exchange. Does that mean that if you are insured through a small business in Biloxi or Provo you keep your tax credits, but if you purchased as an individual you owe a tax bill?

    In addition, consider the seven “plan management” states? (KS, ME, MT, NE, OH, SD, VA). Some functions in these FFEs are performed by the states by agreement with CMS. If these ostensible FFE states are actually “established by the State,” then 442,000 people keep their tax credits. (Kansas claimed in amicus briefs that their citizens will lose tax credits, which is inconsistent with this argument).

    ASPE also collected racial data:



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  • Crowd sourcing fraud detection

    Medicare and Medicaid have active fraud detection units that are setting records for recoveries. The HHS effort is not entirely in-house, but also partners with insurance companies and other stakeholders to detect fraud. And yet the programs suffer billions in “improper payments:”


    Source: GAO 2012

    We need some fresh ideas. Perhaps we could use crowd sourcing, like the work that Charles Ornstein at ProPublica is doing with Medicare biller data that was recently made public:

    On Friday, I emailed you my story about how a misdirected fanny pack unraveled a Medicare fraud scheme.

    I’m back today with another story that was buried in Medicare’s doctor data dump, about why Illinois leads the nation in group psychotherapy sessions for patients. I found three ob/gyns and a thoracic surgeon who were paid for more than 37,000 psychotherapy sessions in 2012—more than all providers in the state of California COMBINED…

    The billings for group psychotherapy reveal other unusual patterns. A Queens, N.Y., primary care doctor, Mark Burke, was paid for more sessions than anyone else in the country — 20,841. He accounted for nearly one in every six sessions delivered in the entire state of New York in Medicare, separate data show. He did not return messages left at his office.

    Another large biller was Makeba Gordon, a social worker in Detroit. She was reimbursed for nearly 5,000 group therapy sessions for her 26 Medicare patients, an average of 190 each. She also billed for 2,820 individual psychotherapy visits for the same 26 patients, who allegedly would have received an average of 298 therapy sessions apiece in 2012. Gordon could not be reached for comment. [see the Chicago Tribune].

    If we really wanted to jumpstart fraud detection, we’d give a reward for identifying cases like this. Whistleblowers can receive 25 – 33% of the settlement, but crowd sourcing (and investigative reporting like this) won’t qualify because the key data was public, hidden in plain sight.

    UPDATE: The FY 2013 improper payments numbers didn’t report Medicare Part D, but note how the estimates vary over time:

    2013 chartSource: GAO 2014

    UPDATE 2: Good points from twitter & email:

    1.  Not all “improper payments” are fraud. Fraud requires proof of intent; “improper payments” could be innocent mistakes – see the definition in the GAO reports (h/t Paul Van de Water)
    2.  Before we heap condemnation on the gov’t for high rates of “improper payments,” what is the rate for comparable private businesses? (h/t Ezra Abrams)
    3.  HHS has a small rewards program for information leading to recoveries, but it is capped at the lesser of 10% of the recovery or $1000. (Details here.) Remove the cap and publicize the program = crowdsourcing fraud prevention.” (h/t @FrankPasquale)


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  • Obama’s report on antibiotics

    Not to be outdone by the Prime Minister, President Obama’s Council on Science and Technology met this morning to approve their report on preserving antimicrobial effectiveness (PCAST webcast here; report won’t be public for a few weeks; my unofficial transcript is here: PCAST Transcript; I live tweeted #PCAST).

    Main points: we need surveillance, stewardship and new drugs. This is a “rate question” – we need to slow evolution and speed new drugs, balancing the two to protect public health.

    Recommendations to the President in bold, with my comments in italics:

    1. Stronger federal coordination on antimicrobial resistance, with cabinet-secretary level engagement and new responsibilities assigned to an existing White House office, overseen by a new Strategic Advisory Council. This seems a sensible plan, better than a new “bug czar” with no clear power.

    2. Surveillance: increased funding for state and local surveillance, praising existing CDC efforts. New efforts will expand use of whole genomic sequencing as a surveillance tool. We are operating blind without comprehensive surveillance. Excellent idea.

    3. New drugs:

    • Additional basic research funding. Absolutely essential. NIH funding for antibacterial resistance research is low and falling; we need to double real funding in this area over the next decade, giving researchers a sustainable research funding base.  

    US NIH Research Spending on Antimicrobial Resistance Research (FY 2010 – 2015, adjusted annually for US CPI, FY2010 base) (my data, not PCAST)


    • Streamlined clinical trialsThe FDA and EMA have already completed most of this work; this is an endorsement of that process. Antibiotic drug trial sizes are already quite small (n<200 in the treatment arm) and making them smaller will miss safety signals.
    • Build a national infrastructure for abx trials. Perhaps like the Duke Clinical Trials initiative?
    • “[T]remendous creativity” to develop alternatives to agricultural antibiotics. One way out of the political problem of agricultural use is to give US farmers cost-effective alternatives.
    • New economic models to decrease cost and risk, including:
      • BARDA-style grants. BARDA has been an important source of capital for antibiotic development and deserves more funding and a broader mandate.
      • Advance Market Commitments. A model from vaccine procurement, not really R&D.
      • Delinkage.  Don’t pay for antibiotics based on volume because of resistance. This is the focus of most of my academic work lately.
      • Tradeable vouchers.  A easily grasped but wrong-headed idea.
      • Prizes for diagnostics that shift clinical practice (mentions the UK Longitude Prize). A terrific idea, also one of the items modeled in the ERG Report.
    • Educate policy makers and the public on the need for increased public investment in these “partial public goods.Agreed. Continued antibiotic effectiveness are common pool goods, like fisheries.

    4. Stewardship: It is “time to use the levers of the federal government [CMS] ” to support stewardship. Need to require stewardship programs in hospitals, reporting measures, make federal grants conditional on stewardship. Did not mention increased funding or a “billing code” for stewardship or infection control.  Hospital CFOs see infection control as a cost center; help them do the right thing.

    5. Agriculture: This is a politically sensitive topic. Report concludes that we need more data on just how much of the problem is from agricultural use, but says we still know enough to act now with “judicious use” on the farm. Praises recent FDA voluntary action on label revisions for growth promotion, with the potential for additional action later, after seeing results. I was hoping for at least a discussion of something stronger, like a user fee on agricultural use to fund further R&D, or the Preserving Antibiotics for Medical Treatment Act.

    6. International cooperation: notes with approval the WHO Global Action Plan; did not mention the G7 process. The US has a global health security agenda for antibiotics. Right now, we have political mobilization at the highest levels ever seen. The US needs to build on that momentum and take Prime Mister Cameron up on his offer to address this at the G7 level, aggressively support this at the WHO; address resistance in the UN’s post-2015 development goals; and make it an important part of the global health security agenda. I should note that I’m a visiting fellow at the Chatham House Centre for Global Health Security, which has taken a leading role to address new business models for antibiotics, including the need for global cooperation.  


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  • New Massachusetts law on compounding pharmacies

    photo-11The NECC tragedy involving compounded drugs was the largest healthcare-induced public health tragedy in many years, killing 64 and sickening more than 700 others with vials contaminated with fungi (CDC). Massachusetts responded with a quick set of emergency regulations and inspections, but everyone knew more structured rules were necessary.

    Almost 2 years later, after careful study & following legislative action by Congress, the Massachusetts House and Senate passed an excellent new law (my NEJM profile of it is here), unanimously. Governor Patrick signed it this morning.

    The law is a model for the states, closing loopholes in a thoughtful way while effectively complementing the relatively weak new federal law. The only thing I’d change can be addressed in regulations: require compounding pharmacies to carry adequate insurance.


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  • Why the first GAIN Act antibacterial drug is underwhelming

    In 2012, Congress passed the GAIN Act to stimulate antibiotic drug development. Congress offered an additional 5 years of marketing exclusivity for “qualified infectious disease products” (QIDPs) (Prior TIE post). Dalbavancin is the first antibiotic approved with the new QIDP designation (FDA Law Blog). 31 more QIDP compounds are in the pipeline. Is this a sign that the 2012 GAIN Act was a success? The short answer is no.

    1. Pathogens.  With all the press and political attention that antibiotics are getting recently, remember which pathogens are the most urgent (CDC Threat Report):

    • Multidrug resistant Neisseria gonorrhoeae;
    Clostridium difficile; and
    • Carbapenem-resistant Enterobacteriaceae (CRE) and other gram-negative “ESKAPE” pathogens.

    And in countries that aren’t as wealthy, add:

    • Multidrug resistant (MDR) and extensively drug resistant (XDR) tuberculosis; and
    • Artemisinin resistant malaria.

    2.  Infections. We are particularly worried about blood stream and bone infections; ear aches and skin infections, not so much. From Nature Medicine:

    Brad Spellberg, an infectious disease specialist at the Harbor-University of California–Los Angeles Medical Center, says that accelerated approval for antibiotics for Staphylococcus aureus skin infections, for example, is simply not necessary. “We have so many of those [antibiotics] we don’t know what to do with them all,” he says. He estimates that there are about 20 drugs available for S. aureus skin infections, yet there are few to no options for bacteremia.

    3. Drug characteristics. We want a drug that is better than existing drugs in terms of safety, efficacy or administration. We prefer a drug from an entirely new class, with a new mechanism of action to delay resistance and give clinicians a powerful new choice.

    How does dalbavancin stack up?

    Dalbavancin is labeled to treat S. aureus ABSSSI – skin infections; in well-done pivotal trials recently published in NEJM, it was shown not to be inferior to vancomycin, a generic antibiotic that has been on the market since 1958. It is from the same class as vancomycin, with a similar mechanism of action. It targets gram positive bacteria, not the gram negative superbugs like CRE.

    The main advantage of dalbavancin is that it can be dosed once per week, which will allow patients to leave the hospital much sooner. This will undoubtably save hospitals money, prevent hospital-associated infections, and be much better for patients. But it won’t do anything to solve our antibiotic crisis.

    The problem lies in the design details in the GAIN Act, which weakened priority review standards to make it easier for products to obtain QIDP designations.

    In other words, we set low standards and got what we asked for. But this overstates the impact of the GAIN Act. Dalbavancin was in development for over a decade; the GAIN Act is 2 years old. Dalbavancin would have come to the market with or without the GAIN Act.

    Some will say the GAIN Act should be celebrated for small steps; before we build on the GAIN Act, we need to make sure those steps were in the right direction.



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  • Yet another major report on antibiotic resistance

    We are great at generating reports; on solving global collective action problems, not so good

    The House of Commons Science and Technology Committee report is out (ungated but no pdf yet), calling for more dramatic action to preserve antibiotic effectiveness. The Report focuses on stewardship, prevention and new treatments for bacteria (including vaccines & diagnostics). This comes on the heels of the Prime Minister’s announcement last week of a 2 year study commission on antibiotic incentives (TIE post here).

    Several research gaps were identified, particularly etiology from the agricultural and environmental sectors (pars. 45 & 51) and the need for basic data on use and resistance (par. 56).*  I was disappointed that the research gaps did not discuss long-term human capital investments to retain and build capacity to perform basic science in antibiotic resistance.

    The Report correctly noted the influence of health system structure and reimbursement in affecting stewardship and infection control. Health systems researchers should take note.

    The most uneven work was in economic incentives. The best section was on “decoupling” (or delinking) company rewards from sales volume (pars. 68-70). This is the focus of a Chatham House process started last year that I serve on (interim report here; next report due in October).

    The conclusion at par. 82 is undoubtedly correct that a menu of incentives will be needed, but the Report does very little to describe what those might be. In several places, this devolves into just a listing of various opinions without analysis of which ones are better supported by the evidence (par. 73 on patent extensions is an egregious example). While the Report notes the Prime Minister’s study commission, it hopes that action on incentives won’t have to wait for 2 years. Duly noted.

    The most puzzling omission in this section on incentives was the €6.2 million grant from the EU Innovative Medicines Initiative to study economic incentives in antibiotic use and creation (disclosure: I have a role on that grant). That effort (DRIVE-AB), involves a wide array of stakeholders across Europe, including many in England.

    * As bad as UK data are, data in the US are much worse, hamstrung by industry efforts to prevent public dissemination of fully transparent data on antibiotic use in agriculture. US resistance data in hospitals are good (NARMS) and will soon get better (ARM), but not in animals.


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  • New business models for antibiotics

    Prime Minister David Cameron announced a top-level review of UK policy yesterday, hoping to develop new business models for antibacterial development and use (UK Gov’t announcement here; reactions here by the FT (gated) and The Guardian).  Jim O’Neill (an economist!!), will lead the panel.

    The BBC asked for my views:

    In the US, we released the ASPE report on antibiotic incentives last month (TIE discussion here), and the PCAST antibiotics report to President Obama should arrive next week.  Many reports; fewer substantial actions. But I am encouraged by the high-level attention by the President and Prime Minister.


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  • Improving the quality of disseminated research, without violating the First Amendment

    Hobby Lobby is just the most recent example of the First Amendment on the move. As we’ve seen before, the First Amendment is a favorite deregulatory tool of the conservative majority in the US Supreme Court.

    So if we take that as a given, what are the implications for the FDA? How do they ensure that (only) high-quality data are disseminated to physicians and the public?  (This sounds like a mission statement for research-based blogging)

    The rules restricting off-label promotion of drugs are in the cross-hairs, and the FDA has reacted by backing off in recent guidance documents. The FDA has given up on actual rules, but is just issuing safe harbor guidance. Here are the practices the FDA prefers (but doesn’t mandate):

    In the recent guidance documents, the FDA recommended that scientific articles used for off-label promotion be scientifically sound, come from peer-reviewed journals, and be distributed in unabridged form with the approved labeling and a comprehensive bibliography. Clinical practice guidelines used for marketing should be based on a systematic review of the evidence and “be developed by a knowledgeable, multidisciplinary panel of experts and representatives from key affected groups.” The FDA also recognized the growing importance of social media, describing the situations in which a company is responsible for comments on Facebook and patient-advocacy websites focusing on specific diseases and treatments. In early June, the FDA expanded this guidance process to include communications about new risk data for existing drugs. The FDA is concerned that companies might use incomplete new information to weaken the impact of warnings on the approved drug label. (my Perspective from this week’s NEJM)

    Clinical trials transparency is an available tool that raises no First Amendment issues. Europe is moving towards much more transparent disclosure of the Clinical Study Reports on approved drugs and access to anonymized patient-level data so independent research groups can re-evaluate the data with different methodologies and statistical tools.

    The goal will be to drive out the bad information with high-quality data, created by the companies themselves, but currently hidden from researchers and the public.

    The full article & and audio interview are ungated at NEJM.


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