Marck McLellan: An 'A' for Advancing Expectations

Sep 30, 2011


Marck McClellan, MD
As head of both the Food and Drug Administration and the Centers for Medicare and Medicaid Services, Mark McClellan has been at the center of public policy affecting the pharmaceutical industry over the last decade. A physician and economist by training, he held high-level economist positions in the Clinton and Bush administrations, with stints at Stanford University in between. He became FDA commissioner in 2002, but left after a little more than a year to take the helm at CMS, where he was needed to establish the Medicare Part D prescription drug program, authorized by Congress in a hard-fought battle in late 2003.

At FDA, McClellan championed the Critical Path Initiative as a way to modernize drug development through more risk assessment and public/private partnerships. He believes that broader user fees and collaborations such as the Reagan-Udall Foundation are even more important today. "I don't see a viable alternative to expanding the scope of user fees," he says, "given how tight the agency's budget has gotten, and the importance of speeding up the process for developing new medicines."

McClellan is proud that Part D has a "pretty good track record" for controlling outlays on prescription drugs without relying heavily on price controls, and regards it as a model for government health and regulatory programs going forward. "The government can't do it alone; it doesn't have the resources and can't keep up with the diversity of these programs," he observes. Some Part D changes were not anticipated by industry, he notes, such as a huge increase in the use of generics and switching from non-preferred to preferred brands. "It's really ramped up pressure on manufacturers to do something to create new value," he says, particularly if they want to command premium prices.

Pharma companies are struggling with these changes, McClellan observes, by discontinuing research programs with limited track records, reducing organizational layers, and looking for ways to work more effectively with small, early-stage research companies. "The right models for organizing pharmaceutical companies are still very much in flux, and will continue to evolve." He advises industry to move away from the traditional Medicare model where providers get paid more for using more expensive treatment. "Those days are numbered," he asserts. If a company has a drug that some patients really benefit from, it needs to document how it can lower healthcare costs and improve outcomes in the real world. That will get us to the era of personalized medicine and value-based healthcare, he says. But if industry doesn't lead on this, he warns, "then the pharmacy benefit managers and insurers and healthcare providers will."

"We are going to find ways to slow down healthcare cost growth," McClellan predicts, "[but] the only unknown is how." The Affordable Care Act, he notes, pays for expanded coverage with broad cuts in provider payment rates. Industry has to deal with costs ahead of expanded coverage, he says, otherwise, "you're setting up a system where there's pressure for blunt instruments such as price controls and restriction on access to necessary treatments." While McClellan understands industry's opposition to the Independent Payment Advisory Board, he considers that approach shortsighted. Even if IPAB is blocked, he points out, we'll still have "really big cost pressures, combined with limited government resources, and the default is cuts in payments."

"If we don't take steps to find alternative ways to control costs, there will just be more pressure to squeeze down prices across the board," he explains. "We can do better than that. There are a lot of good ideas out there. It's just not easy. It's going to take real leadership and hard work." While he's skeptical that the "super" deficit reduction committee will solve current fiscal problems, he sees it as an opportunity to "put better, long-term solutions front and center." "This is just a small step down a tough road of things that need to happen over the next few years in terms of government spending," he advises. "And it really needs an aggressive focus by the pharmaceutical industry." – Jill Wechsler