Harbingers of Change - Pharmaceutical Executive


Harbingers of Change

Pharmaceutical Executive

The trial is also a precedent for nonpharmaceutical entities to fund head-to-head clinical trials when pharmas are not willing. Although the costs are high, they're miniscule compared to the potential savings from avoiding widescale use of Lucentis. Until now, the problem for payers, policymakers, and prescribers was that funding head-to-head trials has been prohibitively expensive. However, if real-life data from healthcare utilization databases can be used to make head-to-head comparisons routine, Pandora's box will be opened.

But questions remain. In supporting this trial, the NIH is effectively funding Avastin's off-label use. Should the trial results support Avastin for wet AMD, there is no clarity yet on whether there will be a move to give it a label for this indication—or who would do so. Genentech has emphasized that it undertook intensive, meticulous, and expensive research to develop Lucentis specifically for the eye. The unintended consequences of this trial could lead to a hesitance in Big Pharma to pursue important R&D if payers are unwilling to share the cost of development.


A Win-Win for Access to Market and Treatment

It's been 133 years since Aaron Montgomery Ward, founder of the world's first dry-goods mail-order business, broke with the tradition of caveat emptor ("let the buyer beware") and offered customers their money back if they weren't satisfied with their purchases. The money back guarantee remains special today because life holds few guarantees. As actor Clint Eastwood once said, "If you want a guarantee, buy a toaster." Now the same may be true for pharmaceuticals.


After the UK's National Health Service (NHS) declined to pay for Johnson & Johnson's leukemia drug Velcade, J&J proposed an arrangement whereby NHS need only pay for the treatment in patients for whom it proves effective, as evidenced by a blood test. In the absence of such proof, the treatment for that patient will be discontinued, and J&J will reimburse the NHS for the entire treatment cost. With proof that the patient is responding sufficiently, the treatment will continue, and NHS will continue to pay. The cost of treating a patient up to the point of the go/no-go blood test is about $24,000.


In the past, companies have had to contend with conditional reimbursement on the part of payers based on discount pricing, sliding-scale partial-reimbursement schemes, and temporary price cuts. This is the first time that a pharma has issued a performance-based, money back guarantee. With this pledge, J&J has promised not merely to share the risk, but to bear it completely. J&J has thus become more invested than ever before in the actual practice of medicine.


It's not surprising that the initial case of risk transfer to a pharma manufacturer involves an oncology treatment. Sales of oncology products in the UK increased from $500 million in 2002 to $1.5 billion in 2007, growing at an average compound rate of 18.9 percent (in constant US dollars). Finding a way to afford oncology treatments—and to justify the expense—has become a struggle for payers.

The Velcade deal is likely not the last of its kind. The situation underscores the point that manufacturers must present compelling evidence of the value of their medicines when seeking reimbursement. If payers remain unconvinced by clinical trials and outcomes research, they are ready to deny coverage. This elevates the need to agree on the standard of proof. In the J&J/NHS agreement, the parties ultimately agreed that a 50 percent reduction in a protein produced by the tumor suggests that the drug is working sufficiently for it to be covered.

Agreements such as this suggest that pharmas may seek to be more engaged in what happens with their products after they're shipped. To ensure the optimal outcome for the patient, a medication must be prescribed properly, be taken as prescribed, and be part of a treatment plan that includes the right ancillary support.

If the J&J/NHS agreement plays out as expected, more UK patients will have an opportunity to try Velcade. But some will have to stop their treatment at the therapy midpoint if they do not respond fast enough. In theory, this is easier to explain to a patient than flatly refusing to cover a treatment from the beginning.


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