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Controversy Surrounds the Most Expensive Drug in the World

By: Kevin Brady, Esq.

 

In May of this year, the Federal Drug Administration (FDA) approved the most expensive drug in the world, Zolgensma. The drug was developed by Swiss drug maker, Novartis, and costs $2.1 million for the one-time single dose. The drug maker will spread the burden of the high cost by allocating payments for the drug over a 5- year plan at $425,000 a year.

 

Zolgensma is a new gene therapy drug used to treat spinal muscular atrophy (SMA). SMA is a rare, genetic neuromuscular disease caused by a defective or missing gene. Infants with the missing or defective gene will lose motor function control and are likely to lose the ability to breath, speak, swallow and walk. Essentially, Zolgensma can be used to treat all types of SMA in newborns and toddlers up to age two (2).

 

Not only is this the most expensive drug in the world, the drug maker, Novartis, has recently come under scrutiny by the FDA for allegedly manipulating pre-clinical data prior to FDA approval. For now, the FDA is not inclined to take Zolgensma off the market, as they still believe in the safety and efficacy of the drug. However, the FDA is likely to take action against the drug maker, most likely in the form of civil and criminal penalties.

 

With all the scrutiny around this new drug, plan sponsors should be aware of the high-price tag associated with this drug and the alleged misrepresentations of data by the drug maker in its seeking of FDA approval. Plan sponsors should carefully consider their options when drafting their plans. Gene Therapy is always a hot topic as it is typically associated with a high cost. For Zolgensma, while there may be a high up-front cost, if the drug is effective, most importantly, it will save lives and potentially years of expensive, demanding, and less effective alternative treatments.


FDA Chief Resigns – Why It’s A Loss for Self-Funding

By: Brady Bizarro, Esq.

When President Trump nominated Scott Gottlieb to be commissioner of the Food and Drug Administration (“FDA”) in March of 2017, critics were quick to point out his deep ties to the pharmaceutical industry. They had little hope that he would have the wherewithal to overcome perceived conflicts of interest and challenge the industry on important issues facing consumers and payers. Scott Gottlieb, however, proved to be a rarity, seemingly immune to regulatory capture. He received bipartisan praise as one of the administration’s most effective regulators. His departure in April will be a loss for the self-funded industry and for healthcare cost containment as a whole.

Dr. Gottlieb focused his efforts in three key areas: rising drug prices, the opioid epidemic, and the underage use of e-cigarettes. Under his leadership, the FDA worked to strengthen and speed up the review process for generic drugs. In 2018, first-time generic approval grew by 24%. In all, the FDA approved 971 generic drugs in 2018, an all-time high. With respect to the opioid crisis, which has killed some 85,000 people since 2017 and led to an enormous spike in treatment costs to payers, Dr. Gottlieb took a hard stance on opioid prescribing limits and approved a mobile app to help those with substance use disorder recovering through outpatient treatment. Finally, under Gottlieb, the FDA cracked down on teen vaping by announcing rules to restrict the sale of flavored e-cigarettes, supported banning menthol cigarettes, and reduced nicotine levels in cigarettes.

Soon after he announced his departure, the Trump administration named an interim replacement, Dr. Ned Sharpless, who now heads the Cancer Division of the National Institutes of Health (“NIH”). The search for a permanent replacement is still underway.


What Does FDA CBD Approval Mean For Self-Funded Plans?

By Patrick Ouellette, Esq.

The Federal Drug Administration (FDA) recently issued the nation's first approval for medicine derived from marijuana-based compounds, cannabidiol (CBD). Given this news, the next reasonable question for the self-funded industry is how it will impact health plans’ coverage and exclusions of medicinal marijuana.

This has been and continues to be an unsettled area of law between federal and state statutes. Up until now, medicinal marijuana was not approved by the FDA and thus typically would either not fall under a plan document’s definition of a drug or otherwise be excluded. Traditionally, a plan offering CBD as a benefit had, on the surface, appeared to violate federal law because marijuana has been illegal at the federal level. Simultaneously, CBD was considered legal in many states, creating a conflict between federal and state law.

The FDA approval will likely not affect plans that want to continue to exclude all types of marijuana; if such plans have not already, they would only need to broaden their plan document exclusion language a bit to account for medical marijuana. Plans that do want to cover medical marijuana, however, may now see less risk in doing so now that a CBD product has been approved by the FDA. From a statutory perspective, these plans have the authority to dictate whether or not they want to cover FDA-approved CBD. Importantly, despite the fact that these plans will now have more flexibility to cover CBD, there are still administrative consequences to consider.

You can reach out to the Phia Group Consulting team here to discuss the effect of the FDA’s approval on your plans or clients.