How Government Decisions Are Actually Made: Exparel

As previously reported, in that massive July 31 proposed rule (“CMS to Pay Extra for Exparel in ASCs, Not Hospitals,” Orthopedics This Week, October 9, 2018), the Centers for Medicare and Medicaid Services (CMS) singled out one pain medication, the drug Exparel, for extra reimbursement under the bundled-payment system for outpatient surgeries such as total knee arthroplasty (TKA).

The proposed rule offered to pay separately for Exparel in ambulatory surgery centers (ASCs) but not in hospital outpatient surgery suites under the Outpatient Prospective Payment System (OPPS).

In comments on the proposal, Pacira Pharmaceuticals, Inc., the manufacturer, cited studies concluding that Exparel, a liposomal injection of bupivacaine, is an effective alternative to opioids for the immediate post-operative period.

Other studies either equivocate on or dispute the conclusion that Exparel is any more effective than older, 10x cheaper generic versions of bupivacaine or ropivacaine. Examples: this April, 2017 study published in The Journal or Arthroplasty, “Effectiveness of Bupivacaine Liposome Injectable Suspension for Postoperative Pain Control in Total Knee Arthroplasty: A Prospective, Randomized, Double Blind, Controlled Study,” and this June 2017 study published in Medicine, “Liposomal bupivacaine versus traditional bupivacaine for pain control after total hip arthroplasty – A meta-analysis.”

However, these other studies do not seem to have been brought to the attention of CMS in the 2,982 comments on the proposed rule.

One comment CMS did receive was from Scott A. Sigman, M.D. of Orthopedic Surgical Associates, Lowell, Massachusetts. His letter is usual in a docket which, like most comment dockets on federal rules, is crammed with poorly researched pleas for exceptions and predictions of apocalyptic harm if said proposed rules were to go into effect.

Dr. Sigman’s letter contained statistics and observations on his own experience with Exparel, and cited studies, making it the sort of input which can grab the attention of rulemakers. Also, it meshed very well with CMS’ goal of finding alternatives to prescribed opioids.

The typical busy surgeon doesn’t find the time to compose such a carefully-written, focused letter.

However, in one way, Dr. Sigman isn’t “the typical busy surgeon.” He is also a paid advocate for Pacira. According to the CMS Open Payments database, he received $68,663 from Pacira in 2015-2017 for consulting fees, speaking fees, travel, and food and beverages.

Scandalous? Not at all. Such payments are routine and would only be a scandal if the physician knew the praised product didn’t perform as advertised.

But the payments to Dr. Sigman and his letter vividly illustrate a key marketing strategy for drugs and devices. Pacira paid orthopedists a total of $3,212,461 in the years 2015-2017 for their advocacy. During that time, it paid all physicians a total of $13.6 million in speaking fees, consulting, and meals and travel, and $14 million for research.

The outcome: Pacira won two-thirds of a complete victory. In the final rule, CMS affirmed its July 31 proposal to cover perioperative drugs for surgery in ASCs—and noted that Exparel is the only currently qualifying drug. However, it denied Pacira’s and Dr. Sigman’s requests to separately reimburse for Exparel under OPPS.

The proposal and subsequent final rule have been a windfall for Pacira shareholders. On July 25, the day the CMS proposal became public, its shares closed at $36.25. The next day, the stock price closed at $40.80, and it has been rising ever since. On November 8, the closing share price was $51.13. With 41 million shares outstanding, that’s a gain in value of $610 million, making $13.6 million in advocacy payments over those three years look like a pretty good investment.

The other third: CMS had also asked for comments on whether to separately pay for other, non-drug perioperative and postoperative pain management devices and approaches which might compete with Exparel.

Finally, CMS thanked everyone who had submitted comments on these other alternatives.

And said ‘no’.