Despite the scope and breadth of the new US health reform law, it contains little that observers see as likely to curtail the rising cost of care. This conclusion may be premature; the bill passed by Congress (PL 111-148) in March includes significantly increased funding for comparative effectiveness research (CER). This comes at the same time as a range of initiatives from private payers to drive a tighter link between evidence comparisons and treatment decisions. For Big Pharrma, CER will require a stronger focus on price and access, as it changes the scenarios which must be evaluated when determining what drugs and what evidence programs to fund. Early-stage intervention is critical, as medicines that might be viable if launched today (with a particular evidence package) may fail commercially in the environment we will be faced with five years down the road.
Evolution of CER: New Opportunities and RisksComparative effectiveness research in the US has entered a new phase with the establishment of the Patient-Centered Outcomes Research Institute (PCORI). This element of the healthcare reform law follows the previous allocation of $1.1 billion for CER in last year's stimulus bill. The law places limits on the use of formal cost-effectiveness measures, particularly the cost-per-QALY metric favored by the UK's National Institute for Health and Clinical Excellence (NICE). Nevertheless, in Section 6301 of the reform law, PCORI is given freedom to set a research agenda based on a broad set of criteria, which includes "impact on national expenditures." Inevitably, the budget impact associated with innovative therapies will play a role in the priorities for CER.
The impact this new research agenda will have on reimbursement and marketplace outcomes is not yet clear. With respect to Medicare, limits on cost-based decision making remain in place, and experts such as Louis Jacques, director of the Coverage and Analysis Group in CMS's Office of Clinical Standards and Quality, suggest that research generated by PCORI will not be a "game-changer." However, some analysts have proposed that Medicare link reimbursement with comparative effectiveness determinations, making payments equal for services with evidence of comparable clinical effectiveness and higher for those with evidence of superior clinical effectiveness.
The use of evidence of comparative clinical effectiveness to inform healthcare decision making has advanced furthest in oncology. The National Comprehensive Cancer Network (NCCN) is currently piloting its Comparative Therapeutic Index (CTI), categorizing products as "preferred," "appropriate," or "acceptable." Given the influential nature of the NCCN guidelines, this approach to implementing comparative effectiveness evaluations may have significant impact on treatment decisions.
In other therapy areas, the private sector has moved more aggressively than statutorily limited federal Medicare administrators. WellPoint is moving to an outcomes-based formulary process, which includes explicit determination of whether a drug is favorable, comparable, or unfavorable compared to another drug. Pharmacy benefit managers such as Medco are funding comparative studies on their own to help drive coverage decisions. Most recently, US private payers have begun to adopt indication-based tiering, reflecting inputs from comparative effectiveness research, in which patient copayments are used to limit usage to specific indicated patients. A recent survey of 20 managed care organization pharmacy directors revealed that a few have already linked tier status to indication, as will several more in 2011. Therapeutic areas with multiple biologics on market, and an array of indications, are scenarios where this approach is likely to emerge first.
Looking forward, it remains unclear how rapidly and to what degree decisions such as these will influence commercial success in both US and global markets. Prudent innovators, though, will consider scenarios in which comparative effectiveness decision-making is adopted widely and aggressively. With the right evidence, this environment is one in which products can achieve greater success with potentially less post-market commercial investment. But the risk of losing ground for lack of appropriate comparative evidence will be high in those areas facing the greatest scrutiny.
In our observation, the keys to adapting CER decision making at biopharmaceutical companies include:
» Understanding what CER is—and is not—and building scenarios for how it may evolve to influence specific areas of medicine relevant to the company;
» Creating a framework for semiformal assessment of the CER impact on portfolio molecules—primarily to foster shared understanding across scientific and commercial groups and to stimulate consideration of development options at early stages; and
» Integrating CER risk/opportunity into more formal portfolio and financial decision making—once an agreement has been reached on the importance of comparative effectiveness research.