Tagged Pharmaceuticals

White House Unveils Finalized Health Care Price Transparency Rule

Hospitals will soon have to share price information they have long kept obscured — including how big a discount they offer cash-paying patients and rates negotiated with insurers — under a rule finalized Friday by the Trump administration.

In a companion proposal, the administration announced it is also planning to require health insurers to spell out beforehand for all services just how much patients may owe for out-of-pocket costs for all services. That measure is now open for public comment.

“What is more clear and sensible than Americans knowing what their care is going to cost before going to the doctor?” said Joe Grogan, director of the White House Domestic Policy Council.

The hospital rule is slated to go into effect in January 2021. But it is controversial and likely to face court challenges.

It is part of an effort by the Trump administration to increase price transparency in hopes of lowering health care costs on everything from hospital services to prescription drugs.

When that rule was first proposed in July, hospitals and insurers objected. They argued it would require them to disclose propriety information, could hamper negotiations and could backfire if some medical providers see they are underpriced compared with peers and raise their charges.

Shortly after the final rule’s release, four major hospital organizations said they would challenge it in court.

“This rule will introduce widespread confusion, accelerate anticompetitive behavior among health insurers and stymie innovations,” according a joint statement from these groups, which made clear their intent to soon “file a legal challenge to the rule on the grounds including that it exceeds the administration’s authority.” The statement was signed by the American Hospital Association, the Association of American Medical Colleges, the Children’s Hospital Association and the Federation of American Hospitals.

Insurers also pushed back. “Tthe rules the administration released today will not help consumers better understand what health services will cost them and may not advance the broader goal of lowering health care costs,” said Scott Serota, president and CEO of the Blue Cross Blue Shield Association, in a statement.

Requiring disclosure of negotiated rates, he said, could lead to price increases “as clinicians and medical facilities could see in the negotiated payments a roadmap to bidding up prices rather than lowering rates.” The rule, he added, could confuse consumers.

It’s also a potentially crushing amount of data for a consumer to consider. However, the administration said it hopes the data will also spur researchers, employers or entrepreneurs to find additional ways of making the data accessible and useful.

The amount of information the rule requires to be disclosed will be massive — including gross charges, negotiated rates and cash prices among them — for every one of the thousands of services offered by every hospital, which they will be required to update annually.

In a nod to how hard it might be for a consumer to add up items from such an a la carte list of prices, the rule also requires each hospital to include a list of 300 “shoppable” services, described in plain language, with all the ancillary costs included. So, in effect, a patient could look up the total cost of a knee replacement, hernia repair or other treatment.

Insurers, under the proposed rule, would have to disclose the rates they negotiate with providers like hospitals. They would also be required to create online tools to calculate for individual consumers the amount of their estimated out-of-pocket costs for all services, including any deductible they may owe, and make that information available before the consumer heads to the hospital or doctor.

It would go into effect one year after it is finalized, although it is not known when that will occur.

Although consumer advocates say price information can help patients shop for lower-cost services, they also note that few consumers do, even when provided such information.

Earlier this year, the administration ordered drugmakers to include their prices in advertisements, but the industry sued and won a court ruling blocking the measure. The administration has appealed that ruling.

Nonetheless, Health and Human Services Secretary Alex Azar said the administration is confident.

“We may face litigation, but we feel we are on sound legal footing for what we are asking,” Azar said. “We hope hospitals respect patients’ right to know the prices of services and we’d hate to see them take a page out of Big Pharma’s playbook and oppose transparency.”

He and other officials on a call with reporters admitted they don’t have any estimates on how much the proposal would save in lowered costs because such a broad effort has never been tried in the U.S. before.

Still, “point me to one sector of the American economy where having pricing information actually leads to higher prices,” said Azar.

Azar cited some studies that show that when prices are disclosed, overall spending can go down because patients choose cheaper services. However, such efforts also generally require financial incentives for the patient, such as sharing in the cost savings.

The proposed rule for insurers urges them to create such incentives, said Seema Verma, who oversees the federal government’s Center for Medicare & Medicaid Services.

George Nation, a business professor at Lehigh University in Pennsylvania who studies hospital pricing, called the final rule and the insurer proposal “exactly a move in the right direction.”

Among other things, he said, the price information may prove useful to employers comparing whether their insurer or administrator is doing a good job in bargaining with local providers.

Today, “they just see a bill and a discount. But is it a good discount? This will now all be transparent,” said Nation.

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Must-Reads Of The Week From Brianna Labuskes

Happy Friday! Well, friends, we have apparently arrived in the “post antibiotic era” (according to some), which any reader of the Breeze will know is up there with eyeballs and ticks on my list of phobias. I have no solace to offer you in this trying time beyond distraction: Here is what you might have missed this week (in case you were busy paying attention to historic hearings or something like that).

A California high school became the latest mass shooting site this year after a 16-year-old gunmen opened fire on students, killing two and injuring three others before he turned the gun on himself. “We are one of those schools now,” one student said to the Los Angeles Times. “Just like Parkland.” There have been a total of 84 incidents of gunfire on school grounds in 2019.

Los Angeles Times: A 16-Second Spasm Of Violence Leaves 2 Dead At Saugus High School

Earlier in the week, Attorney General William Barr unveiled the Department of Justice’s plan to address gun violence. The proposal focused mostly on strengthening partnerships with law enforcement, agencies and community organizers in an effort to better enforce existing law. It was met with swift disappointment from advocates who said there were no new tangible policies in it.

The New York Times: Justice Dept. Unveils Gun Plan, Sidestepping A Preoccupied Washington

And even earlier in the week, the Supreme Court handed gun control advocates a win when the justices denied a bid to block a lawsuit against Remington, the maker of the gun used in the Sandy Hook shooting. The case, which has survived a roller coaster of twists and turns, has been closely watched because gun-makers have enjoyed broad immunity from prosecution under the 2005 Protection of Lawful Commerce in Arms Act. Although the suit started out making a different argument, it now hinges on whether Remington marketed the military-style guns for use by civilians.

NPR: Supreme Court Allows Sandy Hook Families’ Case Against Remington Arms To Proceed


No one gets any credit for predicting this correctly: Health law sign ups dropped 20 percent from where we were last year at this point. But with a lawsuit on the Affordable Care Act’s constitutionality looming, a chipping away of any enrollment outreach services, and just general confusion about where the law stands these days, the decrease seems all but inevitable.

CNBC: Obamacare Early Enrollment Rate Drops 20% Amid Trump-Backed Lawsuit


The Wall Street Journal dropped a privacy bombshell with its reporting that Google has been amassing health data on millions of patients without their knowledge. Privacy experts say “Project Nightingale” is perfectly legal (because business partners can share information with each other). But that doesn’t address the “ick factor” of something that may be totally above board legally but is kind of creepy anyway. Doing so is going to be a challenge for lawmakers.

The Wall Street Journal: Google’s ‘Project Nightingale’ Triggers Federal Inquiry

Politico Pro: Google’s New Partnership Might Creep You Out. That Doesn’t Mean It’s Illegal.


It’s been a quiet week health-wise on the campaign trail, but I’m certain they’ll make up for it at next Wednesday’s debate. Meanwhile, Sen. Bernie Sanders (I-Vt.) nabbed a coveted endorsement from a big nurses union that went hard for him in 2016.

The New York Times: Big Nurses Union Backs Bernie Sanders And His Push For ‘Medicare For All’

How do you sort out all the contradictory claims about “Medicare for All”? It’s tricky now that the policy has become so entangled with political rhetoric, but The New York Times offers some guidance.

The New York Times: Examining Conflicting Claims About ‘Medicare For All’


More details are emerging about the communications contracts Seema Verma, the administrator for the Centers for Medicare & Medicaid Services, gave to outside contractors—including a longtime ally of hers who was greenlighted to bill as much as $425,000 for about a year’s worth of work. The decision to pay so much on a communications strategy that in part was meant to burnish her personal brand stands in stark contrast to Verma’s views on Medicaid spending and waste.

Politico: Federal Health Contract Funneled Hundreds Of Thousands Of Dollars To Trump Allies

Elsewhere in the administration, the Environmental Protection Agency is preparing a rule that at first glance might not catch your attention but could have major repercussions. The proposal, which the administration says is meant to increase transparency, would require scientists to disclose all their raw data (including medical records) before research can be considered by the agency while it’s making rules. But what that means is that the EPA doesn’t have to consider older studies that were done under the promise of medical confidentiality.

If that all still seems a little obscure, here are some the topics of those older studies: lead causing behavioral disorders in children; mercury from power plants impairing brain development; and air pollution leading to premature deaths. The proposal would be retroactive.

The New York Times: E.P.A. To Limit Science Used To Write Public Health Rules


There was a breakthrough this week in scientists’ scramble to find the root cause of the mysterious vaping-related lung illness (officially called EVALI, but between you and me I don’t think that’s caught on at all). It appears that Vitamin E oil might be one of the main culprits. Apparently it turns sticky like honey and coats the inside of vapers’ lungs. Why is it in the products at all? Sellers use it to thicken the vaping fluid or dilute the THC used, boosting their overall profits.

The New York Times: Vaping Illnesses Are Linked To Vitamin E Acetate, C.D.C. Says

Meanwhile, a hospital announced that it successfully performed a double-lung transplant on a teenager who was facing “certain death” without it.

The New York Times: Facing ‘Certain Death,’ Teenager With Vaping Injury Gets Double Lung Transplant


The Food and Drug Administration sent a warning letter to the Dollar Tree for selling over-the-counter medications from companies that failed to ensure the drugs were safely manufactured and tested. One such company was found to have had rodent feces throughout its facility.

Stat: FDA Slams Dollar Tree For Purchasing Drugs From Suppliers With Checkered Safety Records


In the miscellaneous file for the week:

• Hate crime murders in the U.S. reached a 27-year high in 2018, according to a new FBI report. “We’re seeing a leaner and meaner type of hate crime going on,” said one expert, referring to the fact that crimes on people themselves had increased while things like vandalism had gone down.

CBS News: FBI Hate Crimes Data Released Today: Hate Crime Murders Hit Record In 2018; Crimes Targeting Transgender People Soar

• Self-harm is prevalent among young people, but there’s little actual research out there on the behavior itself. Often the reaction from loved ones if fear and panic, and an assumption that the teen was attempting suicide. That might not be the case, though.

The New York Times: Getting A Handle On Self-Harm

• This is a fun David and Goliath story about a little pharmacy with only 14 employees that is holding big drug companies’ feet to the fire over the safety of their products.

The Washington Post: A Tiny Pharmacy Is Identifying Big Problems With Common Drugs, Including Zantac

• Kaiser Permanente CEO Bernard Tyson died unexpectedly in his sleep at age 60. Here’s a look at the legacy he left behind.

The Wall Street Journal: Death Of CEO Comes At A Time Of Expansion, Big Bets For Kaiser Permanente


That’s it from me! Have a great weekend.

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KHN’s ‘What The Health’: Spending Bill Slowdown


Can’t see the audio player? Click here to listen on SoundCloud.


The fiscal year started a month and a half ago, but Congress has still not agreed on an annual spending bill for the Department of Health and Human Services – or any of the other annual spending bills that fund the government.

Meanwhile, Congress IS moving on efforts to further restrict tobacco and vaping products, particularly to limit their marketing to underage users. The Trump administration has been vowing to use its own authority to crack down on a youth vaping epidemic, but so far has not acted.

The administration is moving on the drug price front, however, filing a lawsuit against drugmaker Gilead for allegedly infringing a government-owned patent on a drug regimen to prevent HIV.

This week’s panelists are Julie Rovner from Kaiser Health News, Rebecca Adams of CQ Roll Call and Alice Miranda Ollstein of Politico.

Rovner also interviews Dan Weissmann, host of the podcast “An Arm and a Leg,” about why health care costs so much and what patients can do about it. KHN is co-producing the podcast’s new season.

Among the takeaways from this week’s podcast:

  • Among the partisan arguments holding up the HHS funding bill are disagreements on spending for family planning programs and the amount of an increase for HHS as a whole.
  • A House subcommittee this week approved new regulations that would limit flavors for vaping and other tobacco products. But that comes as the administration appears likely to step back from Trump’s earlier vow to outlaw flavored products.
  • Some lawmakers and administration officials suggest that any legislation to prohibit flavored e-cigarette products should include carve-outs for some groups, including small businesses that cater to vapers and to members of the military.
  • The recent revelation that Google is working with a major health care system to analyze patient records is raising concerns about consumers’ privacy. That and other recent issues surround health care tech may signal that the federal privacy law, HIPAA, needs to be updated.
  • The Trump administration’s suit against Gilead seeking to bring down costs of its HIV pre-exposure prophylaxis drug may signal that the government is ready to take on other companies with high price tags on drugs developed with federal support.

Plus, for extra credit, the panelists recommend their favorite health policy stories of the week they think you should read, too:

Julie Rovner: The Philadelphia Inquirer’s “A Philly woman’s broken back and $36,000 bill shows how some health insurance brokers trick consumers into skimpy plans,” by Sarah Gantz.

Rebecca Adams: CQ Roll Call’s “Surprise billing fight highlights hurdles for bolder health care changes,” by Mary Ellen McIntire.

Alice Ollstein: Politico’s “Trump allies received hundreds of thousands of dollars under federal health contract,” by Dan Diamond and Adam Cancryn.


To hear all our podcasts, click here.

And subscribe to What the Health? on iTunesStitcherGoogle PlaySpotify, or Pocket Casts.

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Voters Say Congress Needs To Curb Drug Prices, But Are Lawmakers Listening?

House Democrats are poised to pass sweeping legislation to lower drug prices using strategies President Donald Trump has endorsed. A Trump aide urged the Republican-controlled Senate to vote on a different package curbing drug prices that was drafted by a senior Republican.

But at least right now, neither measure appears likely to attract enough bipartisan support to become law.

Nearly 8 in 10 Americans say the cost of prescription drugs is unreasonable, with voters from both parties agreeing that reducing the cost of prescription drugs should be one of Congress’ top priorities, according to a poll last month by the Kaiser Family Foundation. (KHN is an editorially independent program of the foundation.)

With such broad and bipartisan support, why do the odds look grim for Congress to pass significant drug pricing legislation this year?

Because whether it’s sharing the credit for a legislative victory with the other party or running afoul of the powerful drugmaker lobby, neither Democrats nor Republicans are sure the benefits are worth the risks, according to several of those familiar with the debate on Capitol Hill.

Complications From ‘Medicare For All,’ Impeachment 

Senate Majority Leader Mitch McConnell, who is a Republican and controls what legislation gets to the Senate floor, has said he will not allow a vote on the House Democrats’ legislation. Among other things, the bill written by House Speaker Nancy Pelosi and other Democratic leaders would enable federal health officials to negotiate the prices of as many as 250 of the most costly drugs. Although Trump has endorsed that tactic, most Republican lawmakers oppose it because they are philosophically opposed to interfering with the market.

On Friday, Trump’s chief domestic policy adviser, Joe Grogan, said any drug pricing legislation would need bipartisan support, saying of Pelosi’s plan: “It is not going to pass in its current form.” He said the White House supports the bipartisan package drafted by Sen. Chuck Grassley (R-Iowa), who chairs the Finance Committee, and the committee’s top Democrat, Sen. Ron Wyden of Oregon.

But many Senate Republicans in particular are uncomfortable with one of the bill’s key provisions: a requirement that drugmakers not raise their prices on drugs covered by Medicare faster than the rate of inflation.

Asked whether the White House supports the inflation caps, Grogan said they were “not the administration’s proposal, but they are the product of a bipartisan compromise, and they are the route to a bipartisan bill, in our opinion.”

In a recent interview, Grassley spokesman Michael Zona dismissed the call from other Republicans to eliminate the provision. “There’s no need,” he said. “The bill passed with a bipartisan two-thirds majority in committee, and support’s growing for the bill every week among Republicans.”

While the Senate Finance Committee did vote 19-9 in July to send the Grassley-Wyden bill to the full Senate for consideration, some Republicans who voted to advance it cautioned then that they may not ultimately vote for the bill.

While considering the bill, all but two of the committee’s Republican members voted to kill the provision to prevent Medicare drug prices from rising faster than inflation. Grassley, however, got Democratic support and it stayed in the bill.

But it’s not clear if the bill will come to the floor. McConnell is known to be unwilling to corner Senate Republicans with votes that could be politically risky during campaign season, whether due to criticism from Democrats or pressure from the drug industry.

In addition, the push by some progressive Democratic presidential candidates for a government-controlled “Medicare for All” health system has not made it more appealing for Republicans to work with Democrats on health care issues, said Kim Monk, a health care analyst and partner at Capital Alpha Partners who used to work for Republicans in the Senate.

“Why would Republicans stick their neck out while Democrats are fighting over Medicare for All?” she asked.

And Senate Minority Leader Chuck Schumer of New York, a Democrat, has drawn a line insisting any health care legislation come with protections for those with preexisting conditions. That’s a risky conversation for Republicans, because a federal appeals court is considering a lawsuit brought by Republican states seeking to throw out the entire Affordable Care Act, which guarantees those with medical conditions can get coverage.

Still, polling suggests that the issue of drug pricing has the power to motivate voters to support one party or the other, and that is likely to motivate lawmakers.

There are more Senate Republican incumbents up for reelection next year than Democrats, and several are considered vulnerable.

Meanwhile, Democrats might be able to argue that they sought to tackle the issue of prices, but Republicans backed away from it.

The decision by House Democrats last month to pursue an impeachment inquiry against Trump has no doubt poisoned the waters between the parties. But the prospects have not looked promising anyway for a comprehensive, bipartisan package of solutions to rein in escalating drug costs.

A Third Legislative Option 

Acknowledging their problems with the Pelosi and Grassley-Wyden proposals, some Republicans are touting a modest measure that has failed to become law in the three years since it was introduced: the CREATES (Creating and Restoring Equal Access To Equivalent Samples) Act.

The CREATES Act does not take a direct approach to lowering prices. Nonetheless, based on political opposition to the larger packages, it could be some of the only drug-pricing legislation that passes this Congress. The bill would crack down on tactics used by brand-name drug manufacturers to dissuade generic competitors, aiming to eliminate anti-competitive behavior and allow the free market to bring down prices.

Specifically, it would empower generics manufacturers to sue brand-name drugmakers that block them from obtaining the samples needed to conduct studies and get Food and Drug Administration approval of their versions. It would also give the FDA more leeway to approve alternative safety protocols for high-risk drugs. Currently generic drugmakers are required to join with the brand-name manufacturers in a shared safety system for those drugs, but some brand-name companies refuse to negotiate with the generic companies, thus delaying their ability to get FDA approval.

It is the rare piece of legislation with support from the likes of progressive Sen. Sheldon Whitehouse (D-R.I.) and conservative Sen. Mike Lee (R-Utah).

But the bill has hit snags before. The brand-name drug industry trade group, the Pharmaceutical Research and Manufacturers of America, has opposed the CREATES Act in the past. With its heavy spending on lobbyists, advertisements and campaign contributions for lawmakers, it has been a powerful opponent.

Opposition softened earlier this year, though, when executives from seven of the world’s biggest drugmakers told the Senate Finance Committee they are in favor of the bill.

“We support the overall intent of the CREATES Act,” Holly Campbell, a PhRMA spokeswoman, said in an email. She added that drugmakers “should not withhold samples with the intent of delaying generic or biosimilar entry.”

Facing the prospect that Congress could fail to pass bigger fixes like the Pelosi or Grassley-Wyden plans, some say CREATES could be used to offset the cost of health care programs like community health center funding that will soon expire if Congress does not extend them.

In July, the Congressional Budget Office estimated that the CREATES Act could save the federal government $3.7 billion over 10 years.

But even some of CREATES’ supporters say it is not enough to lower drug prices.

“The idea that Congress is going to lower prescription drug prices without reforms to Medicare is nonsensical,” said Zona, Grassley’s spokesman. He added that the CREATES Act, which Grassley originally co-sponsored, is important. “But it’s only one piece of the puzzle.”

House members are home in their districts this week, and when they return, they expect to focus on passing spending bills before a Nov. 21 deadline to advert a government shutdown, before voting on Pelosi’s plan.

In the meantime, some are cautious in their predictions about whether Congress can pass significant drug pricing legislation before 2020, when the election campaign may prompt lawmakers to retreat further into their respective partisan corners.

Chip Davis, the chief executive of the generic drugmakers’ Association for Accessible Medicines, said that even though there is increasing agreement that the government needs to act to help curb drug price increases, the two parties are approaching it in very distinct ways.

“It remains to be seen,” he added, “whether those differences of opinion can be reconciled into a package that can get enough support in both chambers.”

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Listen: HHS Files Challenge Over Rights To Gilead’s HIV-Prevention Drug

KHN’s Shefali Luthra spoke with Jeremy Hobsons, host of WBUR’s Hear & Now, about the Trump administration’s lawsuit over sales of the HIV-prevention drug Truvada.

You can read the text of the lawsuit here.

Check out this earlier, related KHN story: Out-Of-Pocket Costs Put HIV Prevention Drug Out Of Reach For Many At Risk (Luthra and Gorman,7/3/2018).

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FDA Keeps Brand-Name Drugs On A Fast Path To Market ― Despite Manufacturing Concerns

After unanimously voting to recommend a miraculous hepatitis C drug for approval in 2013, a panel of experts advising the Food and Drug Administration gushed about what they’d accomplished.

“I voted ‘yes’ because, quite simply, this is a game changer,” National Institutes of Health hepatologist Dr. Marc Ghany said of Sovaldi, Gilead Science’s new pill designed to cure most cases of hepatitis C within 12 weeks.

Dr. Lawrence Friedman, a professor at Harvard Medical School, called it his “favorite vote” as an FDA reviewer, according to the transcript.

What the panelists didn’t know was that the FDA’s drug quality inspectors had recommended against approval.

They issued a scathing 15-item disciplinary report after finding multiple violations at Gilead’s main U.S. drug testing laboratory, down the road from its headquarters in Foster City, Calif. Their findings criticized aspects of the quality control process from start to finish: Samples were improperly stored and catalogued; failures were not adequately reviewed; and results were vulnerable to tampering that could hide problems.

Gilead Foster City doesn’t manufacture drugs. Its job is to test samples from drug batches to ensure the pills don’t crumble or contain mold, glass or bacteria, or have too little of an active antiviral ingredient.

Recent news reports have focused public attention on poor quality control and contamination in the manufacturing of cheap generic drugs, particularly those made overseas. But even some of the newest, most expensive brand-name medicines have been plagued by quality and safety concerns during production, a Kaiser Health News analysis shows.

More disturbing, even when FDA inspectors flagged the potential danger and raised red flags internally, those problems were resolved with the agency in secret ― without a follow-up inspection ― and the drugs were approved for sale.

Erin Fox, who purchases medicines for University of Utah Health hospitals, said she was shocked to hear from KHN about manufacturing problems uncovered by authorities at the facilities that make brand-name products. “Either you’re following the rules or you’re not following the rules,” Fox said. “Maybe it’s just as bad for branded drugs.”

The pressure to get innovative drugs like Sovaldi into use is considerable, both because they offer new treatments for desperate patients and because the medicines are highly profitable.

Against that backdrop, the FDA has repeatedly found a way to approve brand-name drugs despite safety concerns at manufacturing facilities that had prompted inspectors to push to reject those drugs’ approval, an ongoing KHN investigation shows. This happened in 2018 with drugs for cancer, migraines, HIV and a rare disease, and 10 other times in recent years, federal records show. In such cases, how these issues were discussed, negotiated and ultimately resolved is not public record.

For example, inspectors found that facilities making immunotherapies and migraine treatments didn’t follow up when drug products showed evidence of bacteria, glass or other contaminants. At a Chinese plant making the new HIV drug Trogarzo, employees dismissed “black residue” found to be “non-dissolvable metal oxides,” assuming it “did not pose a significant risk,” federal records show.

Without a follow-up inspection to confirm drugmakers corrected the problems inspectors found, these medicines eventually were approved for sale, and at list prices as high as $189,000 a month for an average patient, according to health data firm Connecture. The cancer drug Lutathera was initially rejected over manufacturing problems at three plants but was approved a year later without a fresh inspection and was priced at $57,000 per vial.

John Avellanet, a consultant on FDA compliance, said data integrity problems, like those at Gilead’s lab in Foster City, should have sparked further investigation, because they raise the possibility of “deeper issues.”

Dr. Janet Woodcock, the director of the FDA’s Center for Drug Evaluation and Research, said an inspector’s recommendation to withhold approval can be “dealt with” without a follow-up. Woodcock said the agency can’t comment on specifics, and companies are reluctant to discuss them because the details of the resolution are protected as a corporate trade secret.

“That doesn’t mean that there’s anything wrong with the drug,” Woodcock said.

Dinesh Thakur, a former drug-quality employee turned whistleblower, called the secrecy a “red flag.” A follow-up inspection is critical, he said: “I’ve seen many times paper commitments are made but never followed through.”

What worries Fox is that a faulty drug could get through and nobody would know.

“In general, very few people suspect that their medicine is the problem or their medicine is not working,” Fox said. “Unless you see black shavings or something horrible in the product itself, the drug is almost the last thing that would be suspect.”

The Market Beckons

If the FDA finds problems at preapproval inspections for generics, the agency is likely to deny approval and delay the drug’s launch until the next year’s review cycle, according to industry and agency experts.

In fact, just 12% of generics were approved the first time their sponsors submitted applications from 2015 through 2017.

The calculus appears different for heralded new therapies like Sovaldi. In 2018, 95% of novel drugs ― the newest of the new ― were approved on the first try, the FDA said.

Woodcock said the agency has “the same standards for all drugs,” but she emphasized that many of the manufacturing issues “are somewhat subjective.”

For new brand-name drugs, she said, the FDA “will work very closely with the company to … bring the manufacturing up to snuff.”

The manufacturer submits written responses and commits to resolve quality concerns, but the details are kept confidential.

An estimated 2.4 million Americans have hepatitis C and, before Sovaldi, treatment came with miserable side effects and a strong chance it wouldn’t work. Sovaldi promised up to a 90% cure rate, though it came with an eye-popping $84,000 price tag for a 12-week course, putting it out of reach for most patients and health care systems.

But corporate pressure to get such therapies into the marketplace is also considerable.

Pharmaceutical firms pay hefty fees for FDA review and lobby the agency to speed products to market. For Gilead, time lost is money.

“If approval of sofosbuvir were delayed, our anticipated revenues and our stock price would be adversely affected,” Gilead wrote in an SEC document filed Oct. 31, 2013, using the generic name for Sovaldi.

Since its debut in 2013, Sovaldi has been widely criticized for its price but recognized as a medical breakthrough. Gilead has never recalled it.

However, hundreds of patients who have taken the drug have voluntarily reported cancer or other complications to the FDA’s “adverse event” reporting database, including concerns that the treatment doesn’t always work. One in 5 Sovaldi patients and health care professionals who reported serious problems to federal regulators said the drug didn’t cure the patients’ hepatitis C.

“The FDA approved these products after a rigorous inspection process, and we are confident in the quality/compliance of these products,” Gilead spokeswoman Sonia Choi said.

Problems at Foster City

Gilead’s Foster City facility has been cited for an array of problems over the years. In 2012, FDA inspectors said the facility had failed to properly review how the HIV drugs Truvada and Atripla became contaminated with “blue glass” particles; some of that tainted batch was distributed. The company “made no attempt to recover” the contaminated drugs, according to FDA inspection records.

Gilead had just filed its application for Sovaldi’s approval when FDA inspectors arrived at Foster City for an unrelated inspection in April 2013. Inspectors slapped the facility with nine violations in what’s called a 483 document and said that the reliability of the site’s methods for testing things like purity were unproven and that its records were incomplete and disorganized, according to FDA inspection documents.

As a result, the FDA initially rejected two HIV drugs, Vitekta and Tybost. Gilead had to resubmit those applications, and it would take 18 months before the FDA approved them in late 2014.

On Sept. 19, 2013, FDA officials met to discuss Sovaldi with Woodcock, agency records show. Meeting minutes show inspectors recommended hitting Gilead Foster City with a formal warning letter based on the April inspection. (A warning letter is a disciplinary action from the FDA that typically includes a threat to withhold new approvals or place a foreign facility on import alert and refuse to accept its products for sale in the U.S.)

At the same meeting, FDA inspectors said their recommendation to approve Sovaldi would be “based on” removing an unnamed drug ingredient manufacturer from the application and “a determination that Gilead Foster City has an acceptable cGMP [current good manufacturing practices] status.”

Records show the FDA didn’t issue a warning letter or otherwise delay the approval process when Foster City failed its inspection.

Instead, the Sovaldi preapproval inspection started four days later and lasted two weeks. At the end, inspectors issued Foster City another 483, this time with 15 violations, formally outlining problems and requiring a written plan to fix them. Inspectors said they couldn’t recommend Sovaldi’s approval.

FDA officials gave Gilead two options during an Oct. 29 teleconference: Remove Foster City, a “major testing site” for Sovaldi, from the application, and use a third-party contractor instead; or use Foster City but hire another firm to monitor the site and sign off on its testing work.

Gilead was optimistic. “Based on recent communications with the FDA, we do not expect these [inspection] observations to delay approval of sofosbuvir,” the company said in its Oct. 31 SEC filing.

Gilead chose to replace the Foster City plant with a contract testing site, federal records show. By December, Sovaldi was approved for distribution, and the company soon announced its $1,000-per-pill price tag.

Not Just Generics

Recent media reports, and the ongoing recall of the widely used blood pressure medicine valsartan, have led consumers ― and members of Congress ― to question whether generics are manufactured safely. Valsartan pills made in China and India were found to contain cancer-causing impurities.

Branded-drug quality, in large part, has been spared from congressional scrutiny. But many factories ― overseas and in the U.S. ― make branded and generic drugs.

In January 2018, FDA inspectors hit a Korean manufacturing plant that makes Ajovy, a migraine drug, with a warning letter. With the problems still unresolved in April, an agency reviewer recommended withholding approval. When they returned in July, inspectors wanted to give the plant the worst possible classification: “Official Actions Indicated.” Among other problems, inspectors found that glass vials sometimes broke during the manufacturing process and that the facility lacked protocols to prevent the particles from getting into drug products. The FDA’s Office of Manufacturing Quality eventually downgraded the inspection to just “Voluntary Actions Indicated.”

The drug was approved in September 2018 and priced at $690 a month. FDA records indicate no further disciplinary action was taken. Teva, the maker of Ajovy, did not respond to requests for comment.

Similarly, when FDA inspectors visited a contract manufacturing facility in Indiana used to make Revcovi, which treats an autoimmune disease, they noted that a redacted drug lot had failed a sterility test because the vials tested positive for a bacterium called Delftia acidovorans, which can be detrimental even in people with healthy immune systems, studies show. But the drug-filling machine stayed in use after the contaminant was discovered, the FDA determined. Inspectors recommended withholding approval.

The drug was approved in October 2018 even after another inspection turned up problems, with a list price of $95,000 to $189,000 per month for an average patient, according to health care data firm Connecture.

Revcovi’s manufacturer, Leadiant Biosciences, said through an outside public relations firm that its contract manufacturer’s written responses to the FDA observations were considered “adequate” by two FDA offices, adding, “We do not have any more information to share with you at this time as pharmaceutical manufacturing processes are confidential.”

Problems with drugs can take years to discover ― and then only after patients are injured. So, many health researchers say, more caution is warranted.

“They’re doing so few of these [FDA] inspections pre-market,” said Diana Zuckerman, president of the nonprofit National Center for Health Research. “The least they can do is listen to the ones they’re doing.”

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