Gottlieb Breaks Down FDA’s 2019 Priorities With Bloomberg Law

hi my name is Jackie Lee and I'm a reporter with Bloomberg law today we're here with dr. Scott Gottlieb the commissioner of the FDA Food and Drug Administration dr. Gottlieb thank you so much for joining us thanks for having me so obviously drug pricing has been a very hot topic this past year and although FDA doesn't specifically dictate to drug companies how they can price their products you have been very vocal about the need to lower costs for patients one method the FDA is use so far is to name branded companies its suspects of using the REM cycle to keep generic drug makers out of the market what's the FDA's next move in this space well we we don't regulate prices as you said and we don't have a role in in price competition CMS HHS tries to promulgate policies to try to create price competition what I see my role as is trying to create product competition trying to get more products on the market so that consumers have more choice and there's more competition in the marketplace for people who are purchasing drugs so we're going to look continue to look for ways to try to create more drug variety in the market and both on a generic drug side as well as a new drug side so in the generic drug side you mentioned the REMS we're continuing to look at ways that we think branded companies might be gaming the system to make it hard for generics to come on to the market which we're continuing to try to increase the overall efficiency of the generic drug abreu process I think one of the things we're going to be talking about a lot next year is trying to lower the cost of generic drug development so things that we can do to make the generic drug development process itself more efficient lower costs for generic developers one of the things that we've observed in the marketplace and the generic sponsors talk about this is that cost of generic development have gone up a lot and you don't see a lot of new entrants in the generic drug space you don't see new generic drug companies being formed because I think the barriers to entry have gone up and it was never intended that it would cost 10 or 20 million dollars to file a generic drug application when I was at FDA back in 2002 or 2003 we used to say that it would cost about a million dollars to two million dollars to file a drug application now we know it could cost upwards of 10 to 20 million dollars to file a single application and he used to be a generic drug category wimpy genericized until you reached about 10 million dollars in revenue for the category of medicines now now you look at categories where there's 50 to 100 million dollars in revenue for the incumbent product that has lost that exclusivity but you don't see generics coming in because it cost more to get in so we're gonna be looking at policies to make it more efficient to get in so things like reducing the number of multiple cycles of review that generic applications undergo we recently announced that we're moving towards more of a templated form for how we inspect generic facilities that produce sterile parenteral drugs or sterile injectable drugs to try to bring more predictability and efficiency to how we do generic manufacturing inspections those are the kinds of policies where we're going to be focusing a lot of attention still continuing to put energy into the places where we have last year but in 2019 looking at what we can do to make the generic development process itself more efficient for generic manufacturers so we get new entrants and the other thing we're looking at we announced a number of policies with respect to biosimilar so all of the policies that we promulgated to try to reduce gaming in the small molecule space so situations where sponsors branded companies are creating obstacles to the generic companies getting access to the to the doses they need with the REMS programs for example or not being willing to sell the the doses to the generic sponsors those same things are happening in the biosimilar space in a biologic space and so we're going to be importing some of the same policy approaches into that space as well because we see situations where branded companies are using REMS with the biologics to also inhibit biosimilar manufacturers from getting access to the to the doses of the drug that they need we're also going to look for ways to make it easier for biosimilar manufacturers to purchase the drugs that they need to do two studies in Europe where they might they might be lower cost mm-hmm and how would the FDA help with that last thing that you mentioned I'm helping them purchase the samples from the European right so there are situations where the drugs are the drugs that are sold in both the US and Europe are being produced in the same facility the branded companies drug its same drug same facility that's manufacturing it and the question becomes can we use the information that we know when we know they're produced in the same facility can we use that information to allow a generic manufacturer to purchase the drug in Europe and and basically do a comparability study with the biosimilar product as if the drug that they bought in Europe was the same as the drug they would buy and you know States in situations when we know it is but the fact that the brand-new company might be producing the drug for both the European mark in the US market out of the same facility might constitute commercial confidential information so we're looking at whether or not as a matter of law whether or not we can use that information in situations where everyone knows that it's the same facility but it's not it's not sort of widely known in the general public whether we can use that information and if not how much additional studies we'd require it to bridge the European data to the US data so if you are you know compare fear by a similar manufacturer comparing your your biosimilar drug to the branded company's drug and you purchase the Breton company's drug in Europe rather than us and you can't just automatically assume it's the exact same drug even in situations where it's produced in the same facility you might be able do a very efficient bridging study to sort of demonstrate that the European drug is the same as a u.s. drug and the question is what does that study look like at how efficient can it be so those are the kinds of ways the FDA can help facilitate the ability of biosimilar manufacturers to procure the drug in Europe those are two of the things we're looking at there's some others but those are two of the policy questions that we're looking at and what bugs that complicate that process at all no I don't see how it would okay and going back to the cost of generics traditionally in the space of drug pricing people usually talk about drug prices being too high and something I found really interesting that you mentioned a couple of weeks ago at a conference was for some generic drugs that their prices actually too low and it's particularly sterile injectables and that it it disincentivizes drug companies from investing in that space I'm curious what avenues the FDA can use to help those like through regulation or what-have-you to help those drunk companies reinvest in that space and is there any way that the FDA can't affect what the price of a generic is well so we're talking about drugs typically drugs that are sterile generic drugs so sterile parenteral drugs meaning they're used for intravenous infusion if you look historically about at where the drug shortages have been is typically been in this space and so the reason we're going learned about this space is because a lot of these drugs are still important medicines but they go in and out of shortage and the reason is is that there's been under investment in this space over a prolonged period of time so a lot of these drugs are sold sold so cheaply that you don't see companies getting into the space to produce these drugs and in the companies that are in this space don't invest a lot of money back in manufacturing because there's not a lot of profit margin so there's not a lot of money left over to do upgrades on manufacturing to ensure for example continuity of supply and the other thing we've seen is because these drugs are you know it difficult to produce and expensive to produce but there's not a lot of profitability in producing them the way to make money in this space is to do it at huge scale so there's been a lot of consolidation so if you look at what's happened in the sterile parenteral drug space you've had you've had under investment in manufacturing over many years because there's not a lot of profitability and not a lot not a lot of money left over to invest in manufacturing and you've had consolidation among a smaller number of manufacturers so it's the worst of both possible worlds you have a concentrated number of manufacturers that maybe haven't had the resources to invest in manufacturing to you know ensure continuity of supply ensure that that manufacturing processes are very modern and very efficient and so that's why you have shortages when something goes wrong now in a plan and things might be more likely to go wrong in this space because of the underinvestment in certain situations you don't just take down a single drug line you can take down multiple lines of drugs of sterile parenteral drugs and you can see shortages across multiple different drugs and so the question becomes how to resolve this and I think it's going to be probably some some compliment of you know potentially additional regulatory touch for some category of drugs where you say these drugs are so important from a public health standpoint we can't allow these drugs to go in shortage we have to take steps to prevent them going in gorge so you might want to say well you know we're gonna put in place certain and it might be voluntary certain voluntary requirements where companies might make certain guarantees about the continuity of their supply but at the same time we're also going to do something on a reimbursement side to make sure that reimbursement can adjust to reflect those added costs and and reflect the fact that these drugs are expensive to produce so we're really looking for solutions across FDA CMS multiple agencies and that's why the task force we formed doesn't just include FDA it includes CMS it includes the Veterans Administration includes the Department of Defense other payers we've met with to talk to them about what they think the solution should be because this is going to be a multi-agency approach I think and we've received a letter from Congress as you know from probably around 200 members bipartisan letter asking us to do this asking us to form a working group or a task force to look holistically at the whole issue and try to come up with a more enduring comprehensive solution to the drug shortage problem and that's what we're doing and it's I think at the end of the day where we're going to end up is probably some some recommendations that are both regulatory where we might say well these are the things we think manufacturers should do to ensure continuity of supply but in these circumstances for these narrower category of drugs where we say these drugs are so important we can't allow them to go into shortage we're also going to do something different on the reimbursement side to allow the companies to take price adjustments that reflect these added costs because we can't just if we if I just say to the companies you know what I think you should be doing these additional things and I know it's going to cost your money to do it that's going to be pushing this whole problem in the wrong direction because part of the reason why we got here with these drugs going in and out of shortage so frequently is because the costs in many cases in some cases the cost more to produce these drugs then then companies are recouping and so the last thing I want to do is impose more costs we're just going to see additional charges it's got to be coupled with a more comprehensive solution and what is the FDA in terms of authority what can the FDA do on a reimbursement well that's why we're the answer is not much and that's why we're partnering with CMS that's why they're part of the discussion because there are things that Medicare can do you know a lot of these these drugs are paid right now particularly in the hospital side they're paid on to DRGs so they're they're embedded in a DRG and sometimes the DRG doesn't adequately reflect the cost of the drugs but in the outpatient side they're paid under the same code if you will they're not paid under ASP so what happens is the lowest cost producer in the category will set the price for the whole category and even if that producer comes out of the market it's hard for the price to readjust if other producers you know have to produce it at a higher cost because they don't have the same efficiency as the the guy who is able to produce to the lowest cost so there the cost of the reimbursement reflects the lowest cost producer in the market who might not be around supply in the market anymore so these these codes get you know as I used to say they get busted in a way where the reimbursement gets set to the lowest cost producer that's the way it is in the generic world as well the lowest cost producer ends up setting the market price typically but when you're talking about a small molecule drug that's a pill you know it's relatively straightforward how to manufacture that kind of a product and so if the costs if the reimbursement reflects some small margin above the cost of goods for the product you can get away with that because it's it's you know not a high tech process producing a small molecule drug typically but with a sterile parenteral drug a sterile injectable drug where you know manufacturing it is not trivial the cost of manufacturing it isn't trivial the cost of goods that go into some of these products isn't trivial so for example some of these drugs have platinum and then they have commodity costs that that adjusts constantly you don't want to be reimbursing it at something you know just that cost of goods or slightly above cost of goods if you want to have a high quality manufacturing process where there's again margin left over to invest in you know manufacturing upgrades to make sure the facilities remain sterile and they put in place you know procedures to make sure things don't go wrong there's there's more margin for mistakes and error when it comes to injectable sterile drugs so kind of tweak maybe tweaking those codes and Medicare could be a potential tweaking the process I mean there's been some proposals before Congress about pulling some of these drugs out of the current reimbursement scheme and putting them in different reimbursement schemes you know that's gonna be part of what Medicare contemplates and ultimately is gonna be part of it's gonna have to come down to Congress I mean Congress is gonna need to you know have different considerations here but doing something different with the reimbursement not for all these drugs but you would define a category of drugs I mean you you would say you know I don't think you'd say all sterile injectable drugs but you'd say for a subset of sterile injectable drugs again where you continuity of supply is really important and I think part of what we're gonna try to do if we go down this path and I'm sort of you know speculating about where we might end up now based on some of the discussions we've had but you know part of what we might do our obligate might be to work with outside groups there are parties to define what that category is because it's not defined now what are what are the sterile drugs that are so critical that we don't want to have any change in continuity supply but we've seen them go in and out of shortage and there's probably a definable universe there if you know I don't know dozens of drug certainly not hundreds can't talk about priorities in the next year without discussing opioids is there anything you guys are any initiatives that aren't already in the opioid package that you guys are considering well we're going to continue to develop evidence-based guidelines next year we've talked about doing that we've already we've established our collaboration with the National Academies in medicine I think you're gonna see us continue to try to promulgate additional treatment guidelines and define what the appropriate dispensing and duration of use should be for different for opioid use within different clinical settings the one thing we're going to be implementing early with respect to the new legislation that passed is requiring the immediate release formulations of opioids to be dispensed in blister packs so drugs like vicodin and percocet to have them available in packs of maybe one or two days because most our data shows and we look at what the optimal dispensing should be are the appropriate dispensing based on indication the data shows that for most post surgical indications you really should be only dispensing one or two days supply of opioids and so we think that if we actually had blister packs available with one or two days supply more doctors would default to those packs and it would reduce overall exposure the key here from our standpoint from from one of our roles is to try to take steps to reduce overall exposure to opioids and that's going to ultimately translate into reducing the rate of new addiction formed within a medical setting we have a lot of other roles to play we're trying to do more to promulgate treatments for opioid addiction so there's a lot of things that FDA does across across the space but I think focusing on a new year what we're going to be doing early in the year we're going to be promulgating policy to require the blister packs in concert with treatment guidelines I think in many cases from any post surgical uses are going to suggest that really you should only be prescribing one or two days of therapy mm-hmm and those guidelines coming are those the indications specific guide they're indication based guidelines and the other thing we're talking about is developing policy around creating a population-based standard for the approval the consideration of new opioids for approval so you know how do we think about when we get an application for a new opioid how do we think about that new application in the context of all the other drugs that are on the market and should we be asking the question of whether or not a new new drug provides some additional benefit in order to be approved we it's very clear that Congress wanted us we don't do this in other clinical settings but it's very clear that Congress wanted us to think differently about opioids and so one of the things we're considering is whether or not we should have a different standard with respect to how we think about opioids and be looking at them within the context of the overall therapeutic armamentarium again probably something that we need to have conversations with Congress about but we're going to open up that discussion to be to ask the question of whether or not this is something we should be doing and having a public meeting putting that question after the public okay great and then finally I'm understanding the agency is making some changes to its medical device safety regulations what can developers expect in the coming year right so one of the what we're trying to do when it comes to medical devices we're doing a lot of things but one of the things we're focusing on which I think you're alluding to is how we modernize the 510 K approval process for demonstrating substantial equivalence to predicates and how we make sure that the predicates that companies are using as a basis for showing substantial equivalence reflect modern features for safety for functionality for materials because in the in the medical device spaces you know with the 510 K process and this has been some of the criticism or the process those cases responses are using very old predicates to as a basis for approval of Medi very modern products and the predicate doesn't isn't really approximating the performance standards of that new more modern device you think about radiology equipment for example that might be approved on the basis of a predicate from you know the late 1990s well a modern you know CT scan or x-ray scanner has many new features many new safety features so an old scanner isn't gonna isn't gonna have the same features the same safety parameters so the question is how do we move the industry towards the use of more modern predicates and so what we're doing is we're trying to make it more efficient to develop new predicates through that de novo process for example or the ability to use performance standards as a predicate showing substantial equivalence at the same time we're going to be looking at how we can go about advancing policy that would allow us to retire the older predicates and so we're going to be specifically looking at predicates older than five but in ten years and see if there's predicates that really are so out-of-date relative to modern standards that we should consider retiring them and then ask the question of whether or not we can do that on our own or we would need additional help from Congress but we're again opening up that discussion and so you've seen this already put out some of the policies on trying to make it more efficient to develop new product it's now with 2019 we're going to be focusing on looking at some of the older predicates and whether or not we should be pursuing a policy framework that would allow us to retire some old predicates particularly in situations where there's been safety questions around medical devices mm-hmm and so from a practical standpoint for developers should they like put in some more time should they expect it to take a little bit longer while you guys are making these changes no I don't think it's going to affect anything with respect to how we go about evaluating products right now and products but even even if a product was cleared you know next year or last year on the basis of a predicate that in the future we might consider retiring we wouldn't rescind that that approval the products approved and you know anything any effort to retire certain predicates is going to be a grandfathering period because you know certain companies will be in process using those predicates as a basis for approval so you need to allow period to transition so it wouldn't affect any of the current reviews that are underway or anything that's going to be reviewed over the course the next year these are just questions is the more fundamental questions that we need to start grappling with to think about how we update the overall framework remember this is a 40-year old statute and these predicates were established I think in 1976 or 1977 some of them are very out-of-date many of them aren't used anymore but there's some that are very old that are still being used and I think those are the ones we need to reevaluate

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