Insulin Makers May Be First In Crosshairs Of DeGette Rx Pricing Investigation

Rep. Diana DeGette, new chair of US House Energy and Commerce Committee's Subcommittee on Oversight and Investigations, said insulin is a good example of problems with drug pricing and promised to call drug company CEOs to hearings.

Insulin manufacturers seem to be Rep. Diana DeGette's first target for upcoming drug pricing investigations.

As the newly named chair of the House Energy and Commerce Committee Subcommittee on Oversight and Investigations, DeGette, D-Colo., said drug pricing inquiries are part of her health care agenda, which she said will focus on making health care more accessible and affordable for more people. And it appears that rising insulin prices likely will be among her priorities.

DeGette, co-chair of the Congressional Diabetes Caucus, said during a Jan. 16 Alliance for Health Policy briefing that at least one of the subcommittee's drug pricing hearings will cover diabetes. She suggested that a report on insulin pricing that she co-authored last fall with Rep. Tom Reed, R-N.Y., may provide a roadmap for the upcoming investigation, saying that much of the work for its insulin investigation already has been completed.

"I think insulin is a good example (of pricing problems)," DeGette said. "It's sort of a case study for what can happen when you get a marketplace that's not transparent and then you get every middle man's profit tied to the list price."

"I think any drug that is not an experimental drug or a new drug, something that's been around for a long time and suddenly spiked up in price, there's a question about why we would have those spikes," she added.

DeGette also said that she planned to call company CEOs along with federal officials to the subcommittee as part of drug pricing investigation undertaken.

"I don't think that all drugs are like insulin, but I do think that report could give us a template for sort of looking at other types of prescription drug pricing," she said.

In the report, DeGette and Reed recommended encouraging value-based contracts between insulin manufacturers and PBMs, replacing rebates with unit-fee or volume-based models, and many other changes.

There now appear to be multiple ongoing inquiries on insulin prices. Insulin makers Eli Lilly & Co., Novo Nordisk AS and Sanofi, who control the bulk of the US insulin market, received letters from the House Oversight and Reform Committee requesting information on company communication about price increases, research and development investments and corporate strategies to preserve market share and pricing power. (Also see "House Oversight Drug Pricing Hearings Will Begin With Expert, Patient Witnesses" - Pink Sheet, 14 Jan, 2019.)

DeGette said her subcommittee is coordinating with Rep. Elijah Cummings, D-Md., the new oversight committee chair, as well as House leadership, to prevent a duplication of efforts. But DeGette also added that the Energy and Commerce Committee is in a unique position for drug pricing investigations because it has a broad and deep knowledge on health care issues.

Cummings will officially open hunting season on Rx pricing complaints in the new congress with a Jan. 29 hearing. (Also see "Democrats’ Drug Pricing Bills Echo Trump Ideas But Broad Republican Support Unlikely" - Pink Sheet, 10 Jan, 2019.)

DeGette Supports Generic Insulin Market Entry

FDA likely will play a primary role in DeGette's drug pricing efforts. She said her insulin study found that a lack of generic insulin is one factor that could be affecting prices and indicated support for pushing generics to the market. In the insulin report, DeGette and Reed also encouraged development of follow-on insulin products and allowing generic manufacturers to produce older off-patent formulations to help develop a generic market.

In a twist typical of the byzantine dynamics of Rx pricing, FDA thinks it can accelerate competition in the insulin market by eliminating the possibility of generics.

FDA Commissioner Scott Gottlieb specifically identified insulin as a benefactor when the agency released new guidance on the so-called "deemed to be licensed" transition process that will occur in 2020. Under it, proteins such as insulin that had been regulated as drugs will become licensed biologics. (Also see "When Drugs Become Biologics: US FDA Guidances Explain 'Transition Provisions'" - Pink Sheet, 11 Dec, 2018.)

Under the new rubric, competitors won't be able to file ANDAs, but can seek to be become biosimilars, and Gottlieb expects that interchangeable insulin would be attainable following the transition. Insulin was originally approved by FDA before the BLA pathway was created and is thus regulated as a drug, but the complexity of the hormone has so far prevented the development of generics through the traditional small-molecule regulatory route. 

Gottlieb noted that existing insulin products, some of which have been on the market for decades, will not receive any additional exclusivity as part of the transition.  (Also see "US FDA's Gottlieb Shuts The Door On Exclusivity For 'Transition' Biologics" - Pink Sheet, 11 Dec, 2018.)

Broader E&C Focus Includes Part D Negotiations, Evergreening

DeGette’s focus on insulin prices as head of the oversight panel dovetails with the Energy and Commerce Committee’s broader drug pricing agenda under the chairmanship of Rep. Frank Pallone, D-NJ.

Speaking at a Jan. 16 launch event for the Coalition Against Patent Abuse (CAPA), Pallone suggested the committee’s early hearings would focus on allowing Medicare to negotiate drug prices in the Part D program, and innovator tactics aimed at delaying generic competition.

Delay tactics include misuse of Risk Evaluation and Mitigation Strategies to prevent generic companies from obtaining reference product samples need for bioequivalence testing, Pallone said, noting that he has championed the Creating and Restoring Equal Access to Equivalent Samples (CREATES) Act.

The bill would allow a generic drug company to sue a reference product sponsor that fails to provide sufficient quantities of its brand product on commercially reasonable, market-based terms. Despite bipartisan support and a favorable Congressional Budget Office score, CREATES has been stymied by opposition from the brand industry.  (Also see "Will CBO Score CREATE Momentum For Generic Bill's Passage?" - Pink Sheet, 19 Sep, 2018.)

“The other tactic that I will mention is evergreening or product hopping,” Pallone said. “We see so many examples of where the brand name’s patent is about to expire, and they will tweak it and come up with something that’s basically the same that they get a new patent for.”

“That’s certainly something that we will have hearings on as well,” Pallone said.

CAPA describes itself as a coalition of healthcare providers, consumer groups, patient advocacy organizations, free market advocates, employers, and others fighting abuses of the patent system that lead to extended monopolies and high prices for branded products. The group’s members include the Association for Accessible Medicines (AAM), American’s Health Insurance Plans (AHIP) and Kaiser Permanente.