On Sept. 17, the FDA and CMS jointly issued a Federal Register (FR) notice that they were establishing a process for overlapping
evaluations of premarket, FDA-regulated medical products when the product sponsor and both agencies agreed to such parallel
review. The notice also announced their intent to create a pilot program for parallel review of medical devices.
Why are the agencies launching such a milestone undertaking? According to the FR notice, the agencies are concerned about
adequate resources being available for companies to translate the "recent boom in basic science discoveries" into new therapies
and medical devices. The question of resources is indeed a concern. The research-based pharmaceutical industry is facing up
to a 75 percent drop in sales by 2015 with the patent expiration of top-grossing products. And Wall Street once again is calling
on those companies to hedge their bets by diversifying into non-innovative sectors, such as generics and consumer products.
Predictable Market Access
The agencies see "the reluctance to embark on new product development" as in part linked to "the limited predictability of
market access"—in other words reimbursement by CMS. If successful, they say their parallel track exercise could bring back
venture capital and the willingness to invest by making market access more predictable. The predictability would come from
Medicare initiating the national coverage determination (NCD) process during the premarket review at FDA. Once FDA approved
the product, an NCD could issue shortly thereafter.
At first blush this may sound like great news for Big Pharma as well as the more vulnerable smaller biotechs. CMS reimbursement
more or less ensures coverage by private insurers too. A company could begin earning a return on investment without the months
now lost waiting for the NCD process to run its course after FDA marketing approval or clearance. Apparently this also sounds
good to the venture capital sector, with some believing that the parallel review collaboration with FDA is the most important
thing CMS could do.
However, there are concerns about the implications of the process for the two agencies and industry. The two agencies may
both reside within the Department of Health and Human Services, but they have different and even conflicting public mandates—hence
different cultures. FDA's mandate is to ensure safety, efficacy, and quality; whereas CMS must ensure value for the public
dollar spent. Moreover, value is determined differently by each agency. FDA balances the health benefit against the risk.
How CMS determines value remains somewhat unclear.
To entice volunteers for this new adventure, both agencies claim that the proposed parallel review process can overcome the
differing mandate issue by "educat[ing] developers regarding clinical study designs that are more likely to simultaneously
address both FDA and CMS questions." FDA approval, however, does not guarantee a positive CMS reimbursement decision. The
ongoing Provenge vaccine coverage discussion with CMS is a case in point: Preliminary assessments by CMS staff indicate that
there is only a modest survival benefit, which must be weighed in context to its very high acquisition costs to Medicare—an
average of close to $100,000 per patient for a full course of treatment.
Perhaps the biggest concern is that cost of therapy issues could migrate over time into FDA decision-making, through this
collaborative effort. Cost was included as a factor in CMS determination of value in rulemaking that the agency proposed a
decade ago. The proposed rule was subsequently withdrawn by CMS, but it is unlikely that cost as a factor has been forgotten.
Weighing cost versus benefit may yet resurface as a precondition for CMS reimbursement given the staggering federal budget
deficit that will be the focus of the newly elected Congress. Certainly the new Independent Payment Advisory Board (IPAB)
established under the reform bill enacted in March to effectively cap Medicare expenditures at the underlying growth in the
economy will be receptive to this line of argument.
A further issue is the challenge that the recent boom in science poses for the both agencies. FDA recognizes that it needs
to upgrade what it calls its "regulatory science capabilities" in order for it to be able to effectively assess the safety
and effectiveness of new cutting-edge products. That's why FDA announced a new Regulatory Science Initiative about the same
time as the notice for the FDA/CMS parallel review collaboration.
The success of the Regulatory Science Initiative is of critical importance if FDA is to maintain a pivotal role in encouraging
new drug development as part of its regulatory mission. Given that neither the Critical Path Initiative (2004) nor the Reagan/Udall
Foundation (mandated by FDAAA in 2007) has delivered on expectations, the fate of this new initiative remains to be seen.