1:26 PM
Jul 11, 2018
 |  BC Extra  |  Politics & Policy

More scrutiny for value-based CAR T models

A letter from Rep. Elijah Cummings (D-Md.) to Office of Management and Budget Director Mick Mulvaney on Wednesday has increased concerns that biopharmas could face greater scrutiny when negotiating value-based pricing arrangements with CMS.

Cummings cited a conflict of interest between the office's associate director, Joseph Grogan, and CMS negotiations of a proposed demonstration project by Novartis AG (NYSE:NVS; SIX:NOVN) for CAR T therapy Kymriah tisagenlecleucel. Grogan was previously an employee of Gilead Sciences Inc. (NASDAQ:GILD), which also develops CAR T therapies.

The letter comes two days after CMS said it had canceled the Novartis pilot this year.

In his letter, Cummings said Grogan’s employment history at Gilead and his role on the Kymriah demonstration project while working at OMB violated the Trump administration's ethics pledge.

Grogan's actions "raise serious concerns about whether President Trump’s drug pricing policies are intended to benefit drug companies rather than American consumers."

Prior to joining OMB in March 2017, Grogan led Gilead’s Federal Affairs Division, where his duties included lobbying OMB, HHS and other federal agencies on matters such as pharmaceutical reimbursement, oncology products and access issues, Cummings wrote.

Gilead acquired CAR T company Kite Pharma Inc. in October 2017. According to SEC filings, Gilead and Kite had informal discussion about an acquisition as early as 2015.

Grogan notified his supervisor of the potential conflict on Aug. 28, 2017, the day Gilead announced its proposed acquisition of Kite. The following day he was recused from the project, according to Cummings.

The demonstration project would have tested an indication-based pricing model for Kymriah. A CMS spokesperson told BioCentury on Monday that the agency "reviewed Novartis’s proposed demonstration and then decided to go in a different direction" (see "Kymriah Deal to Stay Despite CMS Shift on Proposed Pilot").

A July 9 story in Politico reported that CMS dropped the pilot due in part to concern from HHS lawyers that Novartis was influencing the arrangement.

Cummings requested from OMB all documents related to the development of a demonstration project for Kymriah or any other CAR T; all communications between any official at OMB and individuals associated with Novartis, Gilead or any other pharmaceutical company; all communications between OMB officials and Michael Cohen; all communications between Grogan and any FDA officials about the approval process for any CAR T product; all documents provided by Grogan to OMB ethics officials; and all communications between Grogan and OMB ethics officials regarding potential conflicts of interest, recusals or ethics waivers.

Avalere Health LLC Founder Dan Mendelson thinks that the actions by Cummings and decision by CMS won't negatively affect the long term testing and implementation of value-based pricing arrangements for drugs.

"These inquiries, while distracting for those involved, should have little effect on the future of value based payment arrangements with Federal programs. Value based payment has tremendous potential for reducing cost and improving patient quality for Medicare and Medicaid, and the Administration has indicated clearly that they are interested in pursuing further such relationships," he told BioCentury.

James Scott, president and CEO of consultancy Applied Policy, agreed and suggested that one option could be for CMS's Center for Medicare & Medicaid Innovation (CMMI) to issue a call for value-based proposals from biopharma companies and other interested parties. "It could provide those manufacturers that participate in that process with assurances that they were engaging with the agency properly," he said.

In May, CMS announced a National Coverage Analysis for CAR T therapies, which was requested by UnitedHealth Group Inc. (NYSE:UNH) (see "CMS Initiates National Coverage Analysis of CAR T Therapies").

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