Gottlieb to Face User Fees, De-Regulation Pressures

Mar 14, 2017

The biopharmaceutical community breathed a loud sigh of relief last week when the Trump administration announced the nomination of an experienced Washington hand, Scott Gottlieb, as the next FDA commissioner.  As a former FDA official and resident fellow at the conservative American Enterprise Institute (AEI), Gottlieb was the clear choice of industry, as well as many research and patient groups. Despite strong ties to pharma and his role as a partner at New Enterprise Associates, he compared favorably to other widely-discussed candidates from Silicon Valley and the venture capital world who were quick to blast FDA operations but lacked any experience likely to lead to positive improvements.

Gottlieb, 44, benefits from an unusual combination of medical training, experience in the federal government, and insider knowledge of the financial investment community. He served as deputy commissioner for medical and scientific affairs at FDA from 2005 to 2007, following an earlier stint as a senior advisor to the commissioner. At FDA, he was involved in developing the generic drug user fee program, AIDS combination dosage forms, and biodefense countermeasures. He is a member of the Federal Health IT Policy Committee and advised the Trump transition team last year.

He also has strong ties to pharma. Public disclosures indicate that GlaxoSmithKline, Daiichi Sankyo, Vertex Pharmaceuticals, and other firms have paid him various fees in recent years for serving on advisory boards and other programs. He is a prolific writer on health policy, providing regular commentaries on drug development and FDA operations to the Wall Street Journal, Forbes magazine and other publications. A main theme is the need for less costly, more efficient drug development and approval, particularly for complex generic products, to inject more competition into the market and lower drug prices. He supports priority review vouchers and greater use of surrogate endpoints and other strategies to avoid longer, more expensive clinical trials.

Although some consumer and patient groups object to his strong ties to industry, the cancer research community gives him high marks. As a cancer survivor, he won plaudits from the Friends of Cancer Research, which has worked with Gottlieb on developing the breakthrough therapy designation program and FDA’s new Oncology Center of Excellence (FOCR). Ellen Sigal, chair of FOCR, predicted that Gottlieb will continue to “direct the agency to be patient-centric and science-driven” and urged speedy confirmation by Congress.

Pricing and transparency

In the area of drug pricing, Gottlieb has not been a vocal supporter of popular Trump proposals to allow more drug importing and Medicare negotiation of drug prices. He is more enthusiastic about changing how Medicare Part B reimburses for medicines administered in doctors’ offices and changes in Medicaid policy to encourage pharma companies to develop value-based reimbursement models.

Gottlieb also is a fan of increased transparency in drug pricing practices, as well as FDA review decisions. He has expressed support for FDA releasing complete response letters, something that FDA officials have proposed in the past, but have failed to move forward.

At a conference on biomedical R&D in October 2016 sponsored by NDA Partners, Gottlieb explained how the shift toward specialty drugs and to insurance policies with very high deductibles and closed formularies fueled the drug pricing debate by exposing consumers to much greater drug costs. At a time when Washington analysts anticipated a push for single-payer health care under a Clinton administration, Gottlieb urged a shift to more value-based or outcomes-based pricing. This would require changes to Medicaid best-price rules and anti-kickback provisions, as well as in FDA regulation of commercial speech.

Gottlieb also told Pharmaceutical Executive at the meeting that more efficient drug development, as proposed in the 21st Century Cures legislation, could help lower drug costs, as could fast, bi-partisan action on Prescription Drug Use Fee Act reauthorization. He also put on his venture-capitalist hat and commented on how the cost of capital and its relation to expected return-on-investment could be affected by efforts to lower the cost of drug development. Drug makers make a big mistake in trying to justify high prices on the need to support R&D, he observed, urging more discussion about how R&D risks raise the cost of capital and resulting margins.

If confirmed, Gottlieb will have to drop all industry affiliations and financial interests. Democrats will predict dire consequences from appointing such an industry insider to the agency responsible for food and medical product safety, but they are unlikely to generate much support.

Once confirmed, the hard work will begin. Top priorities for commissioner Gottlieb are to implement the many provisions of the 21st Century Cures Act and to move new user fee reauthorization bills through Congress, which will be burdened by new proposals to streamline FDA regulations and programs, and to “do something” about drug costs. He also will have to deal with multiple non-drug issues:  FDA regulation of clinical laboratory tests, oversight of cellular and genetic therapies, food from gene-edited animals, and blood supply safety, to name a few.

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