D.C. Diagnosis is STAT’s weekly newsletter about the politics and policy of health and medicine. Sign up here to receive it in your inbox.
It’s been a very rocky year for the Biotechnology Innovation Organization
When Michelle McMurry-Heath took over BIO, the sprawling organization representing some 1,000 drug companies in Washington, she vowed to transform the organization’s image in this town. That transformation threatened to tear the organization apart.
In a new story for STAT, I dive deep into BIO’s 2020, which includes layoffs, lobbyist turnover, debates among member companies over everything from voting rights to drug pricing policy, and the organization’s explicit attempts to differentiate itself from the larger drug industry lobbying group in Washington, PhRMA.
I uncover, too, the monumental task that was facing McMurry-Heath when she took on BIO’s top job last spring. BIO’s prognosis at the start of 2020, I learned, was far bleaker than the group previously publicly let on. The organization was battling internal distrust between two factions: a small group of politically progressive CEOs and the organization’s larger, more conservative, members. The organization was split, most notably, on how to approach drug pricing policy in Washington — more progressive CEOs wanted to endorse the drug pricing package crafted by then Sen. Grassley and Wyden, while larger companies were adamant that drug makers should not “negotiate against themselves” and let the drug pricing package fizzle out on its own.
For all the tumult, BIO insists that the organization is in a far stronger position than it was this time last year. But not everyone is so sure. As one former BIO staffer put it: “It is, I think, very much an organization at a crossroads, and I’d be lying if I told you I knew which way it was going to go.”
For more on the tumultuous effort to revamp BIO, check out my new story here.
‘The main purpose of this is to be outside of the FDA’s regulations’
Last week, the FDA announced it was ordering some 55,000 vaping products with flavors like Cinnamon Toast Crunch off the market. But already, one of the companies affected by that order, aTexas-based vape shop called Vapor Salon is openly touting its use of a loophole to stay in business.
Vapor Salon will now switch to synthetic nicotine products — essentially, nicotine products that are made in a lab rather than from tobacco leaves — to avoid FDA regulation, the company announced via a sharply worded Facebook post Monday.
“The main purpose of this is to be outside of the FDA’s regulations,” the company wrote. “F*** the FDA and their over-reaching, over-burdensome regulations that small businesses were never ever going to be successful in completing.”
Vapor Salon and its potty-mouthed owner, are not the first to utilize the loophole. Puff Bar, the e-cigarette maker popular with teens, has been selling synthetic nicotine products since at least March. But Vapor Salon’s post, which was first reported by the industry publication Filter Magazine, is the most explicit acknowledgement of the loophole by vape companies.
The move gives credence to warnings from tobacco control groups who have said since 2018 that tobacco companies would use synthetic nicotine to evade FDA regulations that only apply to products “derived from tobacco.” Tobacco control advocates have urged the FDA to regulate synthetic nicotine as a drug, given the difficulty they’ll have regulating it as traditional tobacco.
HHS’s oversight firepower for hospital Covid-19 funds gets a turbo boost
Health care providers have been pleading for seven months with the Biden administration to send out more of the $50 billion in leftover Covid-19 relief money, but the agency hasn’t. What HHS has done is hire five firms to police and audit how providers are using the money, my colleague Rachel Cohrs reports.
The contracts, which have not previously been reported, are a sign that the federal government is beefing up enforcement on the grants that were intended to help health care providers recover from the pandemic. The real ramp-up will begin after the first financial reporting deadline on Sept. 30.
HHS also will formalize the structure around the fund by creating a Provider Relief Bureau within the Health Resources and Services Administration to deal with program policy, operations, customer support, data analytics and oversight. HRSA had an office that performed most of these functions before, but the entrenchment is a sign that this issue isn’t going away anytime soon.
Why Biogen’s new plan to give away Aduhelm could backfire
Biogen is giving away its controversial costly Alzheimer’s drug, Aduhelm, while Medicare decides whether to pay for the drug, Reuters reported yesterday.
It seemed a smart move from the company, which is likely dealing with hordes of patients that want access to the $56,000 drug but can’t get their insurer to pay for it. But the move is risky, and if it’s not structured with the proper guardrails, it could potentially run afoul of a federal law meant to prevent bribery in Medicare, several health care attorneys and experts told STAT.
A federal law known as the anti-kickback statute sets strict rules on when a drug maker can or cannot provide “assistance,” like free drugs, to patients under Medicare. The program also prevents so-called “seeding” programs, where drug makers provide a drug for free to get patients hooked before it’s eventually billed to Medicare.
It’s not clear whether Biogen’s program will run afoul of the law, or even if the HHS fraud watchdog will review the program. And no attorney I interviewed was willing to say definitively that Biogen’s program is illegal. But what was abundantly clear in STAT’s conversations was that whether a program like Biogen’s runs afoul of the anti-kick back statute is never clear cut, and usually based on government lawyers’ analysis of minute details, like whether the program could lead to “overutilization” of the drug, or whether providers benefit financially from the free drugs.
“Because of the nature of the [kickback law] there’s really no way to say that something is/is not ‘legal.’ But I would say that, while there may be ways to structure this permissibly, it does raise some red flags for me,” Joan Krause, a professor at UNC School of law, told STAT.
STAT stories you may have missed
The Biden administration hired several outside contractors to police the billions in Covid-19 grants it sent to hospitals and health care providers, federal records show.
Shot: The Theranos scandal cast a pall over self-testing. The pandemic is giving the industry another shot.
Opinion: It’s easy to judge the unvaccinated. As a doctor, I see a better alternative.
Inside Pfizer’s labs, ‘variant hunters’ race to stay ahead of the pandemic’s next twist.
Flagship, Orbimed, ARCH, Alta top list of high-performing biotech venture capital firms.
Will breaking apart Google’s health bets give them a better shot at success?
Covid-19 vaccines flirted with perfection at first. Reality is more complicated.