Deborah Abrams Kaplan

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Amazon is poised to continue its 2022 expansion in more than just e-commerce sales. It’s about to become the largest U.S. carrier for delivery services. Yes, larger than the U.S. Postal Service, UPS and FedEx. That may sound unrelated to healthcare, but it really isn’t. That infrastructure is helping Amazon deliver their own branded PCR COVID-19 tests. It’s helping them deliver pharmaceuticals through PillPack. And it may help them become an even bigger player in the home health arena.

With Amazon, “their movement is large, but it’s also really long,” says Robin Gaster, a visiting scholar at George Washington University Institute for Public Policy and the author of “Behemoth, Amazon Rising: Power and Seduction in the Age of Amazon.” Amazon observers such as Gaster expect Amazon’s current healthcare endeavors to grow this year but don’t anticipate a big, splashy announcement for a new service or product. The moves into healthcare are likely to be more subtle, with entry into new markets for current offerings, or an expansion in capabilities.

One of Amazon’s main healthcare moves right now is primary care. Just as Amazon built Amazon Web Services for its own data storage use and then commercialized it, the company is positioning itself to do the same thing with Amazon Care. “They build something for themselves and then sell it to others,” Gaster notes.

Amazon Care rolled out in 2019 as a service for the company’s Seattle employees, followed by an expansion to its Washington state employees in 2020. Last year Amazon extended virtual care to its employees in all 50 states. This year, employees in 20 major U.S. cities can access in-person healthcare services, including home or office visits, plus telehealth.

With low reimbursement rates to providers and few procedures to bill for, primary care has long been a problematic area for American healthcare and its providers. Primary care is, in theory, a bargain, partly because preventive services can reduce the utilization of expensive acute care. But it is also hard to please the patients who want convenience and affordability. This presents an opportunity for Amazon, as the “customers” are not especially well treated in primary care, Gaster says. “It’s a place where Amazon’s focus on the customer could pay big dividends.”

In 2022, Amazon may start turning healthcare into an engagement vehicle to make employees happier while improving health outcomes and potentially shaving costs for employers. With the pilot venture and national expansion under its belt, Amazon Care signed up fitness company Precor, its first outside employer client, in May 2021. The app-based primary and urgent care was offered to a subset of Precor’s Washington state employees. The hospitality company Hilton signed on next, in November 2021. All U.S. staff members enrolled in the corporate health plan will receive this benefit in 2022, including texting services, virtual healthcare visits and house calls, depending
on the location.

Although Amazon did not try to draw a lot of attention to its entry into COVID-19 testing, the company began offering PCR tests online in 2021. “I thought it would be antigen tests, but it makes more sense for PCR, as it lays into their logistics infrastructure,” says Tom Kiesau, leader of digital health at The Chartis Group, a healthcare advisory firm. “Amazon has the logistics to easily drop the test off and pick it up again, bypassing the clinic setting,” adds Kiesau, “and they have the data infrastructure to quickly share the results faster than many other organizations.”

The Amazon Halo isn’t new, but it may gain capabilities in the next few years to make it more of a player. The diagnostic tool and fitness tracker caters to that relatively narrow niche of quantified-self adopters — people who enjoy monitoring their activity levels, heart rate, sleep, body fat percentage and vocal tone, which can be analyzed for signs of stress. Consumers may find some of these functions useful, notes Kiesau, but “I don’t necessarily see a direct (patient) benefit” at this point. It needs more capabilities to create good value, he says.

Those additional diagnostic capabilities might be tools to manage diabetes and heart disease, and to do it more effectively than it’s done now. “Those are the diseases that are bankrupting the health system,” says Gaster. If Amazon can find ways to significantly reduce the costs by lowering testing costs and making tracking more effective, clinicians could perhaps intervene earlier and head off hospitalizations and other kinds of expensive healthcare.

Alexa, Amazon’s virtual digital assistant, already has a library of advice for breastfeeding, first aid and issues including improving medication management and adherence. But this year Alexa will continue making inroads in the home setting, particularly for the older population. Amazon sees Alexa as the hub of home care with the potential for knitting together an at-home care model comprising family members, clinicians and expert caregivers as well as the people needing care, many of whom are seniors.

In October, Amazon announced that Alexa Smart Properties would be used at senior living providers such as Atria Senior Living and Eskaton and at hospitals such as Boston Children’s Hospital, Cedars-Sinai, Houston Methodist Hospital and Baycare Health System. They will use Alexa to connect residents and patients, providing information and entertainment. Amazon is banking on the Echo devices making caregivers more efficient with the Drop In feature, which allows others to connect with residents or patients without having to enter the room. “With the Drop In capability, if I’m a health system, I can have a virtual entry point into almost every patient home,” Kiesau says. Patients talking to their local clinicians may be more comfortable with the service. For now, Amazon is just in charge of the logistics, with the clinical expertise left to the healthcare organizations. It will be interesting to see whether Amazon moves into the care portion in the future.

Alexa Smart Properties complements Amazon Together, a subscription service allowing loved ones to remotely check on older adults or those needing monitoring. “It’s a pretty smart solution to a growing problem,” Gaster notes, with so many parents living away from their grown children. The tool allows those given access to monitor the person’s activities and potential falls, and to call for assistance when needed. It solves a problem, as “there’s an extreme shortage of nurses and people to work in home and congregate care,” Gaster says.

Amazon may move more into services and supportive care for patients with medical issues. In 2021, Penn State started offering supportive care to those with metastatic breast cancer, with Amazon Echo Show answering questions about symptoms such as pain, fatigue, sleep and mental health issues. It shares evidence-based interventions including cognitive behavioral therapy and guided meditation. Tools like this can help extend healthcare services into the home while freeing up clinician and staff time, and still provide value to patients.

The 2021 American Rescue Plan provided additional funding for home care for seniors and those with disabilities, and Amazon Care, Intermountain Healthcare and Ascension joined forces to form a healthcare coalition called Moving Health Home to advocate for expanding home-based clinical care. Kiesau said he was surprised to see two established healthcare provider groups partner with Amazon Care. However, the complexity of deploying a hospital-at-home solution involves distributed logistics, nursing, respiratory therapy, devices, lab studies, phlebotomy and devices. 

“There’s so much getting moved around,” he says, and it’s hard enough for hospitals to track it in their own facilities, let alone tracking it across a metropolitan area. “Amazon is pretty good at doing that. On my phone I can see where my package is on a map and it’s telling me, based on the driver’s projection, when (it’s) going to get there.” That ability and technology ecosystem make Amazon a logical choice as a partner in a home-based care program.

In mid-2021, Amazon launched Amazon HealthLake as a general service. The company already stored data through its AWS service, but previewed this service in 2020. Amazon HealthLake gives healthcare organizations a HIPAA-compliant service for analytics and visibility of both individual and overall patient populations. 

"This is a place where their technology and pretty insatiable thirst for data can come into play because they can provide services potentially at the top end of the healthcare system on the data side, all the way from managing clinical trials way down to patient data," notes Gaster. Through data, Amazon can gain or retain an edge with integration capacities helpful in providing services and acquiring data for and from partners. “In the world of machine learning and artificial intelligence, the one with the most data wins,” says Gaster.

During a preview period, several customers used Amazon HealthLake for different purposes. Rush University Medical Center used it to address health inequities in its COVID-19 response, to better understand how the organization was caring for patients with the disease. The center also extracted information from the medical records on the patients medications, previous conditions and diagnoses to provide more comprehensive information to providers. Cortica used the service to better track the progress of patients with autism. And CureMatch used it to help provide clinical decision support to oncologists for personalized cancer treatment options. With increased access to healthcare organizations in 2022, one can expect the use cases to expand.

Amazon starts a lot of pilot schemes. Not all of them have taken flight. The Haven healthcare venture, which Amazon, JPMorgan Chase and Berkshire Hathaway formed, shut down in early 2021. Although some in business said Haven failed because it’s difficult to disrupt healthcare, Kiesau has a different take. “One partner (Amazon) realized it didn’t need the other two partners,” he explains. JPMorgan Chase and Berkshire Hathaway make more sense as Amazon clients, he says. 

“Amazon pressed the accelerator owning this space,” and using the Amazon Care infrastructure it was creating for its own employees, the company is now selling it to others. It is notable, says Kiesau, that Amazon is using a more aggressive, disruptive approach than typical employee health programs.

In Gaster’s opinion, Amazon jumped ship from the Haven partnership because the project didn’t move fast enough, not because it failed. The company expanded its rollout of Amazon Care quickly after that. “Amazon tends to repurpose things they abandon,” he says.

In 2022, Amazon will likely continue building out offerings around care areas such as joint orthopedic management, pain management and sleep tracking, all with well-
established implications for other health issues, Kiesau says. The company may also partner with traditional healthcare providers to bring about a more comprehensive version of in-person care. Amazon may provide the infrastructure alone, or they may take over the wellness area.

“There’s not convincing evidence that Amazon knows how to do services, but it’s absolutely coming because Amazon needs the revenues,” Gaster says. That may not all occur in 2022, but “it’s emerging slowly out of the mist.”

Deborah Abrams Kaplan is a freelance writer who covers medical and practice management topics.

Articles

The company is expanding the reach of Amazon Care and partnering with health systems and senior living companies to support at-home care.

Is Amazon Primed to Take on a Bigger Role in Healthcare in 2022?

Ten months into the Biden administration and no one has been nominated to be the permanent FDA commissioner, let alone confirmed. The void reflects the high stakes involved in the position and the bramble of political tensions that have engulfed the federal regulatory agency. But those are some of the very same reasons the agency needs someone at the helm, say many observers and people in the industries that the FDA regulates. “All nominations to healthcare agencies are essential during the global public health crisis. They’re essential all the time, but even more so during this period,” says Alec Stone, public affairs director of the Oncology Nursing Society.

Mid-October, an apparent front-runner for the nomination seemed to emerge. Numerous news outlets reported that President Biden was getting ready to nominate Robert Califf, M.D., MACC. Califf would appear to be a relatively safe choice; he was one of the FDA commissioners during the Obama administration. But as we went to press, there was still was no official announcement, so uncertainty about who would be running the FDA lingered.

Janet Woodcock, M.D., has been the acting commissioner since Biden’s inauguration at the beginning of this year. Woodcock, who has worked at the agency for 35 years, was once considered among the finalists for nomination to be the permanent commissioner. Her backers credited her with speeding up the FDA’s drug approval process and getting more therapies approved, particularly cancer treatments. Her detractors flipped the script and accused her of lowering FDA standards and allowing questionable drugs on the market. Sen. Joe Manchin, among others, cast blame for the opioid epidemic on Woodcock. 

“The FDA has played a critical role in this overdose epidemic by overseeing continuous approvals of stronger and more addictive opioids since the initial approval of OxyContin in 1995 — and Dr. Woodcock has been there for all of it,” Manchin wrote in an open letter in June. The agency’s controversial approval of Aduhelm (aducanumab) for treatment of Alzheimer’s disease also possibly worked against Woodcock. Numerous media outlets reported in mid-August that the White House had decided against nominating her. “There have been little hiccups along the way, and everything is political,” Stone says. “I don’t think anyone is suggesting she’s not qualified and experienced.”

Technically, Woodcock was allowed to serve as acting commissioner for a period of just 210 days, which ended in mid-August. But the Federal Vacancies Reform Act of 1998 allows an additional 90 days of service if the vacancy existed at inauguration or became vacant in the 60 days following inauguration. That 90-day period ends Nov. 15. The clock restarts, though, if and when the Biden administration nominates a candidate for the permanent job, which would give Woodcock another 210 days until that nominee is confirmed, withdrawn, returned or rejected.

There are exceptions, such as Scott Gottlieb, M.D., and David Kessler, M.D., but throughout much of the FDA’s 115-year history, most of its commissioners have kept a relatively low profile. The pandemic changed that. Questions about whether the agency caved to pressure from the Trump administration clouded Stephen Hahn’s tenure as commissioner. The agency approved and then revoked an emergency use authorization for hydroxychloroquine, the antimalarial drug that former President Donald Trump promoted as treatment for COVID-19. Hahn also ended up apologizing for mischaracterizing the effectiveness of convalescent plasmas as treatment for the disease.

“It’s been an unusual Washington parlor game,” Stone says of the people who argued for or against Woodcock. Califf would be a “very solid choice,” in Stone’s view. He is familiar with the agency and having served in the Obama Administration means that he and Biden likely have a good working relationship, Stone says.


The FDA is probably best known for regulating drugs and vaccines, but it also has regulatory oversight of much of the food, cosmetics, medical device and tobacco products industries. By the agency’s own reckoning, FDA-regulated products account for about one-fifth of annual spending by U.S. consumers, which works out to be roughly $2.8 trillion.

How the agency wields its powers has changed over the years. Decades ago, the FDA was more of a policing organization to protect the public from potentially harmful drugs, says Sharon Ayd, Ph.D., MBA, an industry consultant. In the 1960s, Frances Oldham Kelsey, an FDA reviewer, was responsible for keeping thalidomide, a morning sickness drug that caused birth defects, off the market in the U.S.

But the agency started to work more closely with the pharmaceutical industry in the early 1990s partly because of the 1992 Prescription Drug User Fee Act, which, among other changes, set up a system of industry fees to support the agency’s drug approval process in exchange for speeding up that process and setting deadlines.

Ayd credits Gottlieb, who was commissioner from 2017 to 2019, with bringing more change to the agency by fostering a constructive working relationship with drug developers. FDA officials now start talking and working with drug discovery companies earlier. The culture of remaining open to new ideas and science continues, she says, “and that’s a great thing.” The FDA now allows practices that it once frowned upon if not prohibited, such as allowing some compounds to go into patients earlier for dose-escalation studies and companies to use surrogate markers to prove effectiveness. And with adaptive clinical trial design, trials can happen in parallel with FDA data review. 

“That’s why Operation Warp Speed was possible,” Ayd says. Otherwise, developing a vaccine can take up to 30 years and still not be effective. “But the reason it worked was because the red tape got taken away, and the government, from the president’s office and probably from the head of the FDA, said ‘Don’t worry about making a mistake.’ But other than a pandemic, we always worry about making mistakes.”

But the approval of Biogen’s Aduhelm is seen by many as evidence that the agency has become too accommodating of drug developers and permissive in its approvals. Aaron Kesselheim, M.D., J.D., M.P.H., a professor at Harvard Medical School and director of the Program On Regulation, Therapeutics, And Law at Brigham and Women’s Hospital in Boston, called the Aduhelm approval “probably the worst drug approval decision in recent U.S. history” in his resignation letter from the advisory committee that had recommended against approval. 

Stat reported on a history of unusual contact between FDA and Biogen officials when Aduhelm was foundering. After the approval, Woodcock requested an investigation from the U.S. Department of Health & Human Services’ Office of Inspector General, citing concerns about those contacts.

But the FDA and its commissioners are not exactly strangers to politics and controversy. Kessler, for example, was pilloried for promoting a “nanny state” because of steps he took to regulate the food and tobacco industries and by AIDS activists for not pushing the agency to approve drugs faster. 

Ned Sharpless, M.D., director of the National Cancer Institute, served as acting commissioner for six months and was touted as a successor to Gottlieb instead of Hahn, but it was widely reported that the Trump White House crossed him off the list partly because he had contributed to the campaigns of Democrats. Gottlieb faced criticism for taking a tough stance on vaping.

Nor is the lack of permanent leadership without precedent. During the George W. Bush administration, the agency was headed by a series of interim commissioners for the better part of two years. “A continuous ‘interim director’ at FDA is like a babysitter left in charge of the children indefinitely — you don’t want to leave important decisions to that person,” said an influential congressman at the time.

“The FDA and professionals who work there have their goals and missions in their respective centers, promoting safety and efficacy,” says Stone. That said, a permanent commissioner would help solidify the agency’s priorities and long-term agenda. Those outside the agency are worried about the long-term agenda. “This is a major appointment in the healthcare environment, and many provider and advocacy groups are looking forward to a permanent commissioner. It’s not about tomorrow. It’s about next year,” Stone says.

Obviously, Biden officials want a nominee with enough votes in the Senate to win confirmation, so Manchin and a handful of other senators have more leverage. “In a 50-50 Senate, finding a nominee who will garner bipartisan support is the goal, even required,” notes Stone. Califf might fit the bill. He was a low-key FDA commissoner during the Obama administration and was in the job for just 11 months.

The FDA commissioner’s job is to walk that fine line between following the evidence and staying independent while being attuned to time constraints, stakeholder concerns and, yes, politics and public attitudes. With social media and a 24-hour news cycle, “it’s easy to pick up on anything and sensationalize it,” Stone says. “There are more hurdles today, more eyes watching. There’s a balance between what they need to do and what they’re being pushed to do from the outside, whether approving drugs faster or slowing down the process because we’re not sure what the evidence is.” 

Plus, the pandemic has brought to the surface beliefs and attitudes that dismiss science and conventional medicine. As an agency that depends on science and evidence, the FDA and its commissioner may need to combat those formerly fringe ideas.

“There’s a bit of a disconnect with the American public in understanding the roles of agencies with oversight,” says Stone.

Deborah Abrams Kaplan writes about medical and practice management topics.

The agency has been in the spotlight because of the pandemic, questions about its independence and the approval of Aduhelm. The stakes are high and the politics, fraught.

Why Doesn’t the FDA have a Permanent Commissioner? 

Cigna members who switch from Cosentyx (secukinumab) or Remicade (infliximab) to an approved biosimilar will receive a $500 debit card, per a policy introduced in July by the insurance carrier. It’s marketed as an effort to lower prescription drug costs through the Shared Savings Program. Cigna is alerting treating physicians and the 7,000 affected patients individually. 

Offering physicians $500 to prescribe biosimilars over name-brand drugs would clearly be unethical and likely illegal, says Leonard Fleck, Ph.D., professor at the Center for Bioethics and Social Justice at Michigan State University. But it is potentially ethically acceptable to offer the funds to patients under certain circumstances, he says. In the larger picture, financial incentives for using certain pharmaceuticals may contribute to wasteful administrative costs and does not benefit the patient, in Fleck’s view.

But Cigna estimates that in the short term, its clients will save at least 10% of Remicade’s cost for each patient who switches, with savings growth as biosimilars gain traction. “Biosimilars can save patients, their employers, health plans and the healthcare system billions of dollars over the long term,” Steve Miller, Cigna’s chief clinical officer, told 

Cosentyx is used to treat psoriasis, psoriatic arthritis, nonradiographic axial spondyloarthritis, and ankylosing spondylitis. Remicade is a treatment for arthritis, psoriasis, Crohn’s disease and ulcerative colitis. Patients on Remicade can switch to Avsola (infliximab-axxq) and Inflectra (infliximab-dyyb). Cosentyx doesn’t have an approved biosimilar so if patients switched, it might be to different biologic, such as Taltz (ixekizumab).

The offer could be seen as ethical if Cigna is respecting patient autonomy in deciding the best treatment. “We ought to respect patient choices in that regard,” says Fleck. However, “these drugs are called biosimilars for a reason. They are not perfect replications of the drugs they’re intended to replace.”

Biosimilars aren’t likely to negatively affect most patients, Fleck says, but it might be problematic for some. “You’re encouraging patients to make a medical decision about something they would not fully understand, and they would look at it as an economic transaction. There is a potential problem there.” The switching is arguably for Cigna’s benefit. “Then again, you can see from the perspective of a larger consumer group — everybody who has insurance through Cigna — that it could bring down overall healthcare costs for pharmaceuticals, and that’s not a bad objective,” says Fleck.

A person’s economic situation also has to be considered. For someone who is well off, a $500 debit card may not be worth switching medications, especially if the current one works well. But for someone who is economically disadvantaged, $500 is a lot of money. “That comes closer to being a coercive bargain,” says Fleck.

Patients on long-term treatments are usually told to consult with a physician before making any changes in their regimen. In this case, physicians would be consulted because a new prescription is needed. “But patients will put pressure on physicians to write the new script, which may or may not have medical consequences,” Fleck says.

Copays and formulary tiers involve financial incentives to use certain drugs. But is Cigna’s offer of a $500 debit card in a different category?

Is Cigna’s $500 offer to Patients for Switching Ethical?

Increased digital access in healthcare was already in the works when COVID-19 hit. But the pandemic turbocharged the trend, showing providers, payers and PBMs how they could improve service and efficiency by using more digital tools. 

, vice president of industry relations and government affairs for CoverMyMeds, spoke at the 2021 Pharmacy Benefit Management Institute® Annual National Conference today about some of these tools and what they can do.

Patients are looking for innovative partners to help them identify and afford the best treatment, Diehl-Boyd said, and COVID-19 complicated patients’ abilities to receive vital medications. During the pandemic, approximately 20% of patients, a majority with chronic conditions, experienced delays receiving their medications because of shortages or restrictions, according to results of a 2020 CoverMyMeds survey.

“We do know that even pre-COVID-19, patients were making considerable sacrifices to afford medications and therapies,” Diehl-Boyd said. Results of another CoverMyMeds survey showed that more than one-third of patients went without treatments or medications to pay other bills.

One of the COVID-19 success stories was rapid adoption of telehealth by providers and patients. “After COVID-19 hit, telehealth soared, peaking at a 6,000% increase compared (with) 2019,” Diehl-Boyd said. “That innovation helped patients be able to acquire the care they needed for chronic and acute conditions.” This was especially important for patients who already had trouble with adherence and access to care due to social determinants of health (SDOH) issues.

Diehl-Boyd outlined five areas of future change:

 She noted the growth in the high-deductible health plans and growing enrollment in Medicaid and ACA plans.

Telehealth and other digital transactions soared because of the pandemic and the relaxation of regulations. Although use of telehealth has slacked off some, Diehl-Boyd said "telehealth is more than temporary trend." 

Pharmacists will build on their role administering vaccines and become more central to the delivery of healthcare

Healthcare organizations are tackling the 

ocial determinants of health and also looking for long-term solutions.

Providers are continuing to take on risk and are looking to reduce the financial risk fee-for-service exposure.

Diehl-Boyd also outlined the effects of two rules designed to bring out interoperability and "data fluidity" in health care, the Office of National Coordinator's 21st Century Cures final rule and CMS' final rule on data. The rules will force payers and providers to share information and equip patients with more information, particularly with respect to cost and coverage. "Health plans should be prepared for a radically empowered consumer," Diehl-Boyd said.

The pandemic allowed pharmacists to expand their roles by administering vaccines and testing for COVID-19. “We will see pharmacists as a growing part of the care continuum team,” Diehl-Boyd said. “They’ve continued to show their value through the pandemic.” More than two-thirds of pharmacists took on new responsibilities during the pandemic, such as checking with patients for adherence and refills, finding ways to help patients save money and starting prescription home-delivery programs, according to a 2020 CoverMyMeds pharmacist survey.

Diehl-Boyd said she anticipates that PBMs and payers will focus on ways to transform member experiences beyond government regulations, providing more consumer-driven products. They can use technology to identify patient healthcare risks to develop prevention and intervention programs for a more holistic view of patient treatment. This potentially could result in fewer duplicated services. By using data to innovate for more holistic care, PBMs and payers can improve retention and loyalty.

The Biden administration is focused on addressing inequities, Diehl-Boyd said during her presentation. Several federal departments are focused on evolving the healthcare landscape to introduce better transparency and address SDOH. That dovetails with the rise in prescription deliveries, which help patients without transportation or who live in a pharmacy or clinician desert. The administration also released its drug pricing plan last week.

True interoperability is a goal at federal and state levels. With adoption of newer standards such as the National Council for Prescription Drug Program Real-Time Prescription Benefit Standard, the E-Prescribing Standard, the Prior Authorization Standard, and work happening under HL7’s Da Vinci project, the community is seeing greater peer-to-peer exchange in surfacing clinical information so that clinicians, care team and plans can have clinical information in real time, Diehl-Boyd said.

“We’ve seen this evolution in technology to bring about real time, clinical and administrative data exchange. We will continue to see that evolution tracking to payer-to-payer exchange, payer-to-consumer exchange, provider-to-provider exchange and provider-to-payer exchange,” she said.

Diehl-Boyd, who has been working in this area of healthcare for 25 years, said, “Sometimes I feel like I’m still talking about same things I was talking about 10 years ago.” She thinks the healthcare system is on the right path and wants to see changes in healthcare costs. However, “we can’t sustain the costs that we have in our systems. I’m hopeful that as we take a holistic view of patients, that we can bring down the cost of total care and really focus on the individual needs of the patient,” she said.

Government regulations are designed to encourage data fluidity in healthcare, which could "radically empower" consumers, said Kim Diehl-Boyd, CoverMyMeds vice president of industry relations and government affairs, at the 2021 Annual National Conference of the Pharmacy Benefit Management Institute.

Digital Tools, New Standards Will Change Healthcare and Pharmacy Access

The world of oncology treatment may have just course corrected — slightly. The change? The FDA is signaling to pharmaceutical companies a shift from maximum tolerated dosing (MTD) to optimal dosing.

What’s at stake for pharmaceutical companies is lower doses that could affect pricing and income. Drug developers may also need to tweak clinical trial designs. For patients, a new framework based on optimal dosing may mean fewer side effects and same efficacy. For payers, there is the prospect of lower drug costs.

The FDA sent a strong signal about optimal dosing in the first half of 2021 when Amgen sought approval for its KRAS inhibitor Lumakras (sotorasib) as therapy for adults with non-small cell lung cancer whose tumors have a KRAS G12C genetic mutation and who have received at least one prior systemic therapy. The FDA granted approval in late May 2021 but required the pharmaceutical company to conduct a post-approval randomized clinical trial comparing the approved dose of 960 mg daily with a 240-mg dose. 

The FDA’s director of the Oncology Center of Excellence, Richard Pazdur, M.D., also stated during 

’s recap of the 2021 meeting of the American Society of Clinical Oncology that the agency wants other pharmaceutical companies to conduct randomized phase 2 trials such as this prior to registration studies. The goal would be for phase 1 trials to identify the range of doses to study in later trials, instead of just identifying the MTD. This move toward closer study of dosing is a win for the Optimal Cancer Care Alliance (OCCA), which has been pushing for several years for the medical community to find ways to avoid relying only on the MTD as a dosing strategy. 

Optimal dosing used to be called interventional pharmacoeconomics, explains Mark Ratain, M.D., OCCA treasurer and director of the Center for Personalized Therapeutics at the University of Chicago. The group has been pushing stakeholders to develop new oncology dosing regimens. \The strategies include lowering dosing, less frequent dosing, shortening the duration of treatment and, in some cases, substituting one therapy for another.

The oncology community has been slow to accept the optimal dosing concept. Clinicians prefer to adhere to the prescribing guidelines, according to Ratain.

“Oncologists believe in the dogma that more is better,” Ratain says. “The FDA finally said more is not better.”

Although the post-approval dosing trial for Lumakras was a new mandate, there are other obvious candidates for testing lower doses, Ratain says. Those include Opdivo (nivolumab), Keytruda (pembrolizumab), Imbruvica (ibrutinib) and Tecentriq (atezolizumab), for which, Ratain says, “doses are excessive.”

Challenges exist for lowering doses in a manner supported by data from trials. The biggest issue involves paying for the trials. “Pharma certainly is not going to fund them,” Ratain says. “The NIH (National Institutes of Health) has not shown any interest in funding these trials. The people interested in developing new drug treatments aren’t interested.” But NIH would be a reasonable funder, Ratain says. Research of this kind has been funded by the United Kingdom’s National Health Service. Ratain says the trials would pay for themselves because of the savings in drug costs, which would benefit payers and healthcare systems such as Kaiser Permamente.

FDA approval of Lumakras was contingent on a trial testing lower doses. It could usher in a new era of optimal dosing instead of the maximum tolerated dosing.

Optimal Dosing Gets a Look 

The good news is that generic drug prices are continuing to decrease. As for the rest of the news about generics and biosimilars and their practices, it is complicated. For some classes of drugs, generics remain a price-lowering, cost-saving success. For others, prices are so low that manufacturers may leave the marketplace, creating an opportunity for monopoly pricing. For still others, there is an untapped opportunity for cost savings. “You cannot look at the generic drug and biosimilar markets as homogenous marketplaces,” says Martin VanTrieste, president and CEO of Civica Rx, a nonprofit company formed in 2018 to manufacture generic drugs.

For many generics critical to patient care, there are no more savings to squeeze out, says VanTrieste: “If we continue to do that, they will go away.” Some manufacturers already produce them at a loss, he adds. But for drugs just coming off patent, “there’s a great opportunity to drive the price down to a more affordable level.” Generic manufacturers need to file extensive FDA abbreviated new drug applications (ANDAs) and potentially fight off patent lawsuits from brand-name manufacturers first.

Then there are biosimilars, with a more extensive FDA approval process requiring clinical trials, and a more expensive manufacturing process. That lemon is not yet squeezed.

Almost 40 years ago, the Hatch-Waxman Act, known formally as the Drug Price Competition and Patent Term Restoration Act, ushered in a new era at the FDA, speeding up approvals and creating a pathway for approving generic medications. Before Hatch-Waxman, less than 20% of prescribed drugs were generic. Generics now comprise 89% of all prescriptions, according to the Association for Accessible Medicines, a trade group for the generics and biosimilars industry. The FDA has approved some 16,000 generic drug applications since passing the Hatch-Waxman Act. Amendments to the law in 2012 that created a user fee program for generic approvals have also been a major factor in getting more generics on the market.

Generics saved the U.S. healthcare system $293 billion in 2018 alone, according to the FDA, and various other tallies show the savings over the past decade as totaling almost $2 trillion. Although prices have shifted over the years, the Express Scripts overall Price Prescription Index showed generics prices falling 37% between 2014 and 2018, while branded drug prices increased more than 60%. According to 46brooklyn Research, a nonprofit drug pricing research organization, generic drug prices have fallen this year compared with last, notwithstanding some predictions that the pandemic would have the opposite effect. 46brooklyn says driving the overall trend are falling prices for Concerta (methylphenidate), Colcrys (colchicine), Suboxone (buprenorphine-naloxone) and Tamiflu (oseltamivir suspension).

Not surprisingly, supply and demand have an influence on generic drug pricing. An FDA report showed that if the generic has no competition, its average manufacturer price — the price that wholesalers pay to manufacturers — is 39% lower than its brand-name equivalent. If there are two generic competitors, the prices are 54% lower and with four, 79% lower.

There’s a common misperception that a brand-name drug’s price drops when a generic is coming on the market, says Leigh Purvis, director of health care costs and access at the AARP Public Policy Institute. Instead, the brand usually increases its price or stays the same. “That makes it even more important to switch to the generic, because there’s an even greater price differential,” she says.

One reason for the brand increase is that companies sometimes raise the price of the brand-name drug in the months before the generic is available. As a result, the generics may end up with higher pricing than that of the brand-name drug, according to an analysis by GoodRx.

In the generic marketplace, about one-third of generic drugs lose money, one-third break even and one-third make money, according to VanTrieste. “The ones that are losing money still make those products to absorb capacity in their manufacturing plants to spread overhead around. It’s better to lose a little than lose a lot.”

But as soon as they can produce a money-making product, they’ll stop manufacturing the
money-losing one. That can cause drug shortages. Avoiding drug shortages is one of the reasons seven health systems and three philanthropies teamed up to start Civica in 2018.

“Civica produces on a cost-plus basis,” VanTrieste says. “Our prices are completely transparent and every member in Civica pays exactly the same price.” The organization works with other manufacturers to produce 41 generic medications in multiple dosage forms, with a goal of manufacturing 100 drugs by 2023.

Drug pricing in general is a black box, Purvis says, with little to no transparency in what it costs to produce drugs and how pricing is determined. It’s also difficult to pinpoint why prices increase. Prices may be driven up because of higher ingredient pricing or a shortage of ingredients, or prices are raised because the product would not be financially viable to produce otherwise. These and other factors affect generic availability and pricing.

The FDA’s Drug Efficacy Study Implementation (DESI) and Unapproved Drugs Initiative programs offer an optional abbreviated FDA approval process for generics that entered the market before 1962. In return for the approved application, the manufacturer is awarded a monopoly on marketing the product. Although initially companies did not abuse the program, some eventually increased prices to resemble branded pricing, according to VanTrieste. 

Generics competitors can file an ANDA, but he says it takes about a year to get the paperwork together and another year for the FDA to process it. That gives the initial manufacturer an artificial monopoly for at least two years. Some manufacturers find ways to extend that monopoly, exclusively contracting with all active ingredient manufacturers, for example. Companies making DESI-approved products sometimes lower the product price when competitors are gathering their FDA application data, so they won’t have a profit motive. “Knowing that will happen, other generics don’t enter those markets,” VanTrieste says. One example of the jump in pricing is vasopressin. In the hospital sector, vasopressin costs rose almost 700% between 2014 and 2018, after getting DESI approval in 2014.

More than 500 drugs without patent protection have no generic competition. “Because they (are for) small populations, there may not be enough incentives to create a generic version. They have a monopoly forever because the generic manufacturers aren’t attracted to that product,” Purvis says.

When the patent life runs out, companies may look for ways to continue their monopoly. “If anything, companies are getting more innovative in finding ways to extend their monopoly,” Purvis says. AbbVie obtained more than 100 U.S. patents for manufacturing processes and other issues with Humira; the initial patent expired in 2016. The company mounted legal defenses against companies that wanted to launch biosimilars to Humira for alleged secondary patent infringement for the drug’s formulation or delivery. Six biosimilars for Humira have been approved by the FDA, but none of them will be on the market until 2023 because of legal settlements with AbbVie.

Some companies change their brand-name drug formulations in attempts to maintain market share. That works for some manufacturers, says David Ridley, Ph.D., a professor and faculty director for health sector management at Duke University’s Fuqua School of Business. But “payers and pharmacy benefit managers have been tougher on the drug markets by declining to put drugs with small tweaks on formulary. The games that drugmakers have tried in the past have been thwarted by some of the managed care practices,” he says. There are exceptions, including Teva Pharmaceuticals’ Copaxone, a daily injection for patients with multiple sclerosis. Teva changed the 20-milligram daily injection to a 40-milligram dose, injected three times a week. “They were able to hold on to much of the market and hold off competitors,” he says.

In June 2020, New Jersey’s attorney general and a multistate coalition sued 26 drug companies, alleging conspiracy to artificially inflate the prices of 80 topical generic drugs. The lawsuit claims a violation of federal and state antitrust and consumer protection laws. This is one of at least three price-fixing lawsuits filed in recent years. “It’s not worth it (to collude) because you’re going to get caught and your company will be embarrassed and have to pay a massive fine,” says Ridley. “When you defraud the federal government, you face potentially enormous penalties. They can threaten to exclude you from doing business with the government, which is a major customer in healthcare.”

Biosimilars are the equivalent of generics for monoclonal antibodies and other large-molecule medications. But the biosimilar market and the dynamics of competition on price have been slow in developing for many reasons, including the “patent thickets” that drugmakers have used to protect their brand-name products and to keep biosimilar competition at bay. Since 2015, 29 biosimilars have been approved for nine reference products and 20 are on the market. “Biologics are living organisms and are substantially more expensive” than other drugs, says Purvis. “A lot of what’s coming on the market are products that won’t face generic competition in the way we’re used to seeing it.” 

The biosimilar market has been slow to grow, partly because the FDA was slow to give manufacturers guidance, she says. Although costs are generally lower for generic biosimilars compared with the brand, prices are still high. If a drug is $100,000, dropping it by 90% still means a $10,000 bill. “It’s not like where people can get their $5 generic,” Purvis says. The highest discount she’s seen for a biosimilar is 30%. That may change as more biosimilars come on the market and there’s more competition. 

FDA approvals for biosimilars require the manufacturer to complete a drug trial. “Although that is costly and painful for the biosimilar manufacturers, it’s good for them in the long run because it helps persuade providers and patients that the products are truly safe and effective,” says Ridley. Longer term, the FDA might relax those requirements, especially if technology allows molecular comparisons to show they’re sufficiently similar. Physicians and other providers currently don’t have much of an incentive to select a cheaper biosimilar when administering drug. Value-based payment models and other payment changes could alter the incentive so use of biosimilars would be to their advantage.

Is there more juice to squeeze from the generic lemon? Yes for biosimilars. Yes to artificial monopolies. Yes to those on extended patent protection. But no to standard generics. “Payers have done an exceptionally good job at driving patients toward generics when available,” Purvis says.

Low prices and some gaming of regulations can drive out competitors and create monopolies that allow generic makers to jack up their prices. Experience has shown that it often takes multiple generics to achieve the promised-for downward pressure on prices.