Washington. Healthcare. Translated.

Acthar Gel: from 10,000 Feet

There’s a lot of attention going to Acthar Gel and how Medicaid has stripped it of its favorable rebate status, retroactively. Folks ask me, who really cares about a Medicaid rebate case – is this different? And I’ll now say… YES, this case is different.


This Acthar Gel situation can inspire a lot of cynicism. (Especially for a world-class cynic like me.) Acthar’s regulatory history isn’t the cleanest case for building broad policy lessons, but I feel the current situation signals some important trends in healthcare. There’s fallout for other drugmakers, healthcare delivery systems, and pipeline drugs themselves. I blogged on the basics last week.


What happens, for example, if CMS makes good on its threat and excludes Acthar from the Medicaid program? Here’s how the dominoes fall. First, the company’s entire line is kicked out of Medicaid because Medicaid rebates are “all or nothing” from a drugmaker’s full product line. Next falls Medicare, because without a full-line Medicaid agreement, the company can’t sell under Medicare. (That’s the law.) Then, without Medicare, say goodbye to VA, 340B, etc. There’s no selling to federal healthplans at all. Which is over half of all Acthar prescriptions, meaning the company’s basically facing death.


As I said in my earlier Acthar blogpost, high prices aren’t always bad. CMS allowed a higher net price (via a reset of the base price) because the drug legitimately took big R&D money to prove the science to current standards. This is often healthy: we gain new treatments and new insights into existing uses. We see this now with shortage drugs, with opioid abuse treatments and more.


CMS taking the higher price away, retroactively, sends a bad signal for R&D. Acthar might not be the poster child of good behavior over the years, but in this case the whole classroom might get hurt because of one class clown.




The victims aren’t just the drugs with huge price hikes. I’m talking about important shortage drugs, orphan drugs, chemo, generics, biosimilars. This is a public health problem, not a MNK problem. This case is incredibly important to anyone trying to improve the profile of an existing drug. It’s a case everyone in pharma needs to understand and incorporate.


I am NOT saying CMS is being vindictive or discriminatory. Not at all! But this is an area where there’s enforcement discretion, public health concern and even a CMS webpage proclaiming proudly its role in the Trump White House move to lower drug prices. MNK is going to need a lot of friends to survive.


And that’s where I see risk to other drugmakers. Their all need more vigilance against legal violations and also need to maintain friendships across the policy continuum. Friends to come to their policy rescue in the event CMS someday throws some “enforcement discretion” your way.




When it comes to policy-based solutions in Washington, it’s not a good idea to go it alone. The best policy outcomes take into account any number of players, and they should all be at the table.


Why should Congress fix the Acthar problem unless it hears from doctors that the drug is essential? Better yet, from the mother of a sick child who’s grateful for the life-saving intervention. Where is the rest of industry to say, “we need AMP price updates to bring better cures to American patients.” Where are the pharmacists to say how much harder it is to make Acthar under FDA purity rules (GMP) compared to ACTH from another source, justifying its price. Where are the patients, the disease societies, the free trade special interests?


Acthar doesn’t have many friends. Not in Congress. Or in the White House. Or even amongst clinicians. Or payers. I think that’s part of the picture here – it’s easier to “get a meeting” with CMS if your friends intervene. Needing to file suit might mean they have no friends in Washington – no parents of sick children, no doctors clamoring for this treatment option, not even the local member of Congress defending a job-provider.




It’s hard to get a meeting with CMS if you don’t have friends in the right places. No friends, no meeting. That’s not some terrible “pay to play” scenario where only the powerful get attention. Agency officials don’t have a lot of free time, and they’re more likely to give it to multi-discipline groups promoting a broad and fair agenda not limited to one pricing decision.


Frankly, if MNK can’t get THIS meeting with CMS and had to sue, it might not be able to get a meeting in other important situations, either. THAT’S a problem. And that’s what I’ll whisper in the ear of any healthcare CEO who’ll listen: you can’t get by without a little help from your friends. A good lesson for all of pharma as we enter a political season guaranteed to target a 98 pound weakling in the pharma industry to kick around to make a leap in the polls.