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Teaching Hospital Update - April 23-27, 2012


Email Alert

April 27, 2012

By Allison Cohen*

FDA User Fee Reauthorization Is Approved by Senate HELP Committee

A U.S. Senate committee easily advanced legislation Wednesday to reauthorize the U.S. Food and Drug Administration's (FDA's) user fees programs, amid concerns from lawmakers over prescription drug prices and pharmaceutical fraud.

The Health, Education, Labor, and Pensions (HELP) panel gave voice-vote approval to the draft bill, which would grant a five-year reauthorization of the FDA's user fees programs. The agency uses the programs to help fund its reviews of prescription drugs and medical devices. The measure would also create user fee programs for generic drugs and generic biologic drugs. The current authorization (PL 110-85) expires September 30.

The panel adopted by unanimous consent a manager's amendment by HELP Chairman Tom Harkin (D-IA) and ranking Republican Michael Enzi (WY) that would permanently reauthorize two programs aimed at encouraging manufacturers to conduct pediatric studies on their products. "This language will push to make sure that children are never an afterthought when it comes to the safety and effectiveness of our nation's drug and medical devices," said Senator Patty Murray (D-WA) in a statement released after the bill's approval.

Murray cowrote the pediatric studies language with Senators Jack Reed (D-RI), Lamar Alexander (R-TN), and Pat Roberts (R-KS). A draft user fee bill released last week by the House Energy and Commerce Subcommittee on Health and slated for markup May 8 also would permanently reauthorize the pediatric programs. The House panel's markup was originally scheduled for Wednesday, but Republicans delayed it in an effort to secure broader Democratic support for the proposal.

The Harkin-Enzi manager's amendment also includes language that would set up an approval process for certain medical gases. Another provision would require FDA to withdraw guidance that it issued to companies regarding when the agency must be informed that a change has been made to certain medical devices that are already on the market.

The panel approved by unanimous consent Orrin Hatch's (R-UT) amendment that would strike a provision allowing FDA to destroy, without the opportunity of export, any drugs that may be dangerous. Harkin lauded Hatch for tackling the issue and said the proposal addresses an "important question about the nature of due process."

After the bill was approved, the committee continued consideration and discussion of several amendments that were later withdrawn.

Elham Khatami, FDA User Fee Reauthorization Is Approved by Senate HELP Committee, Congressional Quarterly (April 25, 2012) (note: registration is required to access this article).

Medicare to Add Hospital Efficiency, Patient Safety to Payment Formula

Medicare is proposing a significant change in how it decides on hospital reimbursements, adding two measures of patient safety and a financial assessment of whether hospitals are careful stewards of Medicare's money.

The changes represent a broadening of the way Medicare plans to pay hospitals through its value-based purchasing program, which is set to begin in October. Medicare has already decided that in the initial year of the program, it will pay more to hospitals that follow clinical guidelines for recommended care and do better than average in patient surveys of their experiences.

Hospitals that fall short will get less money, initially losing up to 1% of their regular Medicare reimbursements, with even more at stake in 2013 and beyond.

In the second year of the program, Medicare has already decided to adjust payments based on mortality rates of patients as well. The proposed rule Medicare released Tuesday expands the role of outcome measures starting in October 2014. The proposed new measures that Medicare will take into account are:

  • Rates of blood infections patients get from catheters inserted into their arteries. More than 18,000 patients developed a central-line-associated blood stream infection in 2009, according to government estimates;
  • Rates of serious complications that could have been avoided. This "patient safety indicator" combines a hospital's frequency of punctured lungs, blood clots after surgery, wounds that split open after an operation, bedsores, catheter and bloodstream infections, and broken hips from falling after surgery. The accuracy of the measure has come under criticism from teaching hospitals and some independent quality experts; and
  • The amount Medicare spends on an average hospital beneficiary, not only during the person's stay but in the three days preceding it and the thirty days afterward. This "efficiency" measure is intended to reward hospitals that make sure its patients don't cost Medicare excessive amounts, especially after they are discharged.

Medicare also proposed adding, in the future, new measures on its Hospital Compare website. These include hospital readmissions of patients who received total hip or total knee arthroplasty. In addition, it will analyze readmission rates for all of a hospital's Medicare patients. Medicare already analyzes readmission rates for three common conditions: pneumonia, heart failure, and heart attack.

The new rule lays out the way Medicare intends to penalize hospitals with high readmission rates under a separate program. That penalty, like value-based purchasing, was created by the 2010 federal healthcare law.

In addition, Medicare proposed to begin analyzing and publishing quality measures for hospitals that specialize in cancer patients.

The Centers for Medicare & Medicaid Services will accept comments on the rule until June 25 and issue its final rule by August 1.

Jordan Rau, Medicare to Add Hospital Efficiency, Patient Safety to Payment Formula, Kaiser Health News (April 24, 2012).

CMS Actuary Cites Short-Term Medicare Savings From Health Law

The healthcare overhaul will save Medicare more than $200 billion through 2016 largely through provider and Medicare Advantage (MA) payment reductions, the Centers for Medicare & Medicaid Services (CMS) Office of the Actuary says in a report released on Monday.

The law (PL 111-148, PL 111-152) would save $85 billion in "improved productivity" by tying provider payments to the growth of the economy at large, the report says. Affected providers include hospitals, home health providers, skilled nursing facilities, and hospices, among others. An additional $68 billion in savings comes from reductions in payments to MA plans, which have been paid about 14% more per patient than under traditional Medicare. "The Affordable Care Act levels the playing field by gradually eliminating most of this excess in payments to Medicare Advantage plans compared to Medicare's costs for beneficiaries in the traditional program," the report said.

The estimates come as the Medicare Trustees on Monday set an insolvency date of 2024 for the Hospital Insurance Trust Fund, the same forecast as last year's. But, the trustees stress, despite some short-term stability in the program's finances, action is needed to strengthen them over the long term.

While CMS says the overhaul extends the life of the fund by an additional eight years, savings under the act were questioned in a report released last month by a Republican trustee. The report author who works for the George Mason University Mercatus Center said the overhaul would add more than $340 billion to the deficit. The claim was disputed by White House officials, who said the report author used a different set of assumptions than those used by the Congressional Budget Office (CBO). CBO estimates the act will reduce the deficit.

The CMS report outlines $41 billion in savings through expanded benefits, lowered payments for hospital-acquired conditions, readmission reductions, and adjustments to premium subsidies under the overhaul. Efforts to improve patient safety would save an additional $10 billion through 2013. Fraud- and abuse-reduction efforts and changes to durable medical equipment payments would net $7.8 billion in savings.

In addition to reducing program outlays, the law will decrease costs for beneficiaries in traditional Medicare by $60 billion through 2016 and $208 billion through 2021, according to the U.S. Department of Health and Human Services Assistant Secretary for Planning and Evaluation.

CMS says the overhaul also lays the foundation for sustained changes to the healthcare delivery system that will continue to reduce costs. Many of the efforts are conducted through the CMS Innovation Center "which has already launched initiatives involving more than 50,000 healthcare providers that will touch the lives [of] Medicare and Medicaid beneficiaries throughout the nation."

Among demonstration programs cited by the report are those that provide higher payments to primary care providers and a variety of pilots to test different payment arrangements, encouraging home care, and improving care coordination. It also cites pay-for-performance arrangements, chronic disease prevention programs, and initiatives to reduce pre-term labor.

Among programs cited is the "five star" plan bonus system for MA Plans, an arrangement the U.S. Government Accountability Office recently blasted for costing $8.6 billion.

Nellie Bristol, CMS Actuary Cites Short-Term Medicare Savings from Health Law, Congressional Quarterly (April 23, 2012) (note: registration is required to access this article).

New NIH Center Will Stretch Dollars to Help Spur Innovation

Sometime this summer, researchers funded by a new center at the U.S. National Institutes of Health (NIH) will begin trying to construct a new tool to test whether drugs are likely to be safe in humans. If successful, the technique could significantly shorten the time it takes for drug developers to figure out whether a product can pass the first test facing a proposed therapywhether it will end up hurting the patients that it's intended to help.

Now, most proposed drugs are tested first in animals and then in humans, a lengthy process that can take years while patients wait to see whether a potential cure will be safe and effective enough to win U.S. Food and Drug Administration (FDA) approval and result in a useful treatment.

But under the NIH plan, scientists would get money to combine human cells with a computer chip. Federal officials hope that the tissue-on-chip tests would be not only faster than animal trials but also cheaper and more accurate.

The initiative is overseen not only by NIH and FDA, but also by the Defense Advanced Research Projects Agency (DARPA), the Pentagon arm known for funding blue-sky scientific experiments. NIH officials will provide $70 million during the next five years for the parts of the project focused on human physiology, and DARPA officials are offering the same amount to finance the engineering of structures that can support the human cells.

The project is just one of many that will be supported by a new center created at NIH in December known as the National Center for Advancing Translational Sciences (NCATS). NIH Director Francis Collins pushed for the establishment of the center out of frustration at the long delays in transforming scientific findings from gee-whiz discoveries into practical drugs, diagnostic tests, or vaccines. Collins said the majority of NIH's overall $30 billion-plus budget will continue to go toward funding basic science but that the new $575 million center will help coordinate and focus efforts to help push research from the lab to the hospital or doctor's office. NCATS will stretch its dollars by collaborating with other agencies and with private companies or academic institutions with the aim of spurring innovation.

Not everyone is convinced that a new institute is needed. At hearings in the U.S. House and Senate in March, some lawmakers worried that the initiative will take on tasks usually done by drug or biotech companies. Others complained about proposed cuts to other NIH efforts and worried that the new program would drain resources from well-established institutes.

A big part of Collins' job over the next year, as NCATS begins its work as one of twenty-seven full institutes and centers at the agency, is to persuade appropriators and other lawmakers not to undermine the new program. Lawmakers have made it clear that they will be watching.

At a House Appropriations subcommittee last month, several members raised concerns. "Congress did not provide or envision NCATS or NIH to have authority to compete with industry or become a drug-developing organization," said Representative Denny Rehberg (R-MT), the Montana Republican who chairs the panel that writes the first draft of the annual NIH budget. He repeated the statement for emphasis.

Rebecca Adams, Healthcare: From the Lab to the Patient, Congressional Quarterly (April 23, 2012) (note: registration is required to access this article).

Cancer Drug Effective in Relapsing MS

Alemtuzumab (Lemtrada, Campath) dramatically reduced multiple sclerosis (MS) relapses in patients with long-term diseasewith just once-a-year treatment, researchers reported.

The annualized relapse rate was reduced 49% among patients taking alemtuzumab once a year compared with patients treated with interferon beta 1a (Rebif) three times a week, said Jeffrey Cohen, MD, professor of neurology at the Cleveland Clinic Lerner College of Medicine of Case Western Reserve University.

Among the patients receiving alemtuzumab, the annualized relapse rate was 0.26 a year compared with 0.52 a year among those on subcutaneous interferon (P<0.0001), Cohen told attendees at the annual meeting of the American Academy of Neurology. Alemtuzumab was given as a five-day infusion the first year and a three-day treatment the second year. Methylprednisolone was co-administered with alemtuzumab.

After two years of therapy, 65% of the patients assigned to receive alemtuzumab were free of relapses compared with 47% of the patients taking the interferon regimen, a difference significant at P<0.0001, Cohen told the standing-room-only session.

In the co-primary endpoint, the time to sustained accumulation of disability was experienced by 12.7% of patients on alemtuzumab after two years compared with 21.1% of those on interferona reduction of 42%, which also achieved statistical significance (P=0.0084), Cohen said.

When Cohen and colleagues scrutinized results based on the Expanded Disability Status Scale, they determined that patients assigned to alemtuzumab had achieved a 0.17-point reduction in scores, while those on interferon had experienced a 0.26-point increase on the scale. The difference was statistically significant at P<0.0001.

Imaging studies also significantly favored treatment with alemtuzumab, Cohen said.

"Alemtuzumab provides a favorable benefit/risk balance in patients who have relapsed on prior therapy, a group with high unmet need," he said.

"This report is certainly promising," said a professor of neurology at the University of California-San Francisco, who moderated the session at which the trial data were presented.

However, she said, "it would be nice to see longer-term studies" to make sure that long-term autoimmune complications do not emerge. She thinks such trials are underway.

Ed Susman, Cancer Drug Effective in Relapsing MS, MedPage Today (April 25, 2012).

*We would like to thank Allison M. Cohen, Esquire (Washington, DC), for providing this week's update.

AHLA Teaching Hospital Updates are intended to provide quick summaries of cutting-edge issues of interest to teaching hospitals and their counsel. Additional information and more in-depth coverage on these topics may be available from AHLA Health Lawyers Weekly and appropriate AHLA Practice Groups.

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