Coverage Vs. Control - Pharmaceutical Executive


Coverage Vs. Control

Pharmaceutical Executive

Win Some, Lose Some

In what would represent a win for pharma, Congress may support biotech innovation in establishing a legal pathway for FDA approval of follow-on biologics (FOBs). The Senate HELP committee has approved an FOB measure with 12 years' market exclusivity—close to the goal of brand-name firms. That guideline will yield less savings than CBO's estimate of $7 billion to $10 billion over 10 years for FOBs with seven years exclusivity, but even a modest savings will be enough to spur negotiations and likely get an FOB measure into the final reform bill.

At the same time, policymakers may seek to encourage generics use by banning payments from brand-name firms to generics companies in order to delay competition. According to Federal Trade Commission chairman Jon Leibowitz, a curb on pay-for-delay settlements would save the federal government $12 billion over 10 years, and yield even greater savings for consumers and states. Leibowitz further supports a ban on authorized generics, but evidence that these products may actually lower drug prices could keep that issue out of healthcare reform legislation.

Pharma companies have also deflected early proposals to curb the corporate tax deduction allowed for drug advertising. Industry may be disappointed, however, with "sunshine" provisions that require disclosure of virtually all payments made to physicians and healthcare providers. Manufacturers had hoped that federal sunshine legislation would establish a national standard and common reporting requirements that would pre-empt a growing number of state disclosure policies. But that kind of relief could be compromised by opposition from Waxman and others. In its current form, the House bill permits states to enforce their own disclosure policies that differ from federal rules.

Additional reforms promise improvements in healthcare, but no real savings in the near term. For example, there is wide-ranging support for comparative effectiveness research (CER) to better inform medical treatment and ensure appropriate use of medical products, but there has been considerable disagreement over how CER should be governed and how the data should be used. (See "Comparing Costs," above.)

Yet another tricky issue for Congress to address is drug reimportation. In July, the Senate approved language in a budget bill that permits US consumers to purchase drugs from Canada through the Internet. However, it remains to be seen if the policy will make it through the whole Congress; Senate leaders may move to include an import proposal from Sen. Byron Dorgan (D-ND) in final legislation, especially if FDA devises a strategy to enhance import safety.

The important details in reform legislation will be hammered out on Capitol Hill in coming months by a committee formed to reconcile differences between House and Senate bills. Such negotiations will involve considerable horse-trading and maneuvering over health exchanges, public plans, tax reforms, and price controls, with all parties keeping a sharp eye on costs and coverage.

Comparing Costs

The push for more government funding of comparative effectiveness research has generated heated debate on Capitol Hill over how payers and insurers will utilize the resulting information. Democrats prefer to keep language on CER applications vague, while Republicans want explicit restrictions against using CER data to determine treatment and reimbursement; the alternative, they warn, is one-size-fits-all prescribing and healthcare rationing.

There has also been considerable disagreement over the structure of a CER governing body, as well as its authority. Some members of Congress propose to position a CER agency within the Department of Health and Human Services, while others prefer an independent public–private entity. Recent reports from both the Institute of Medicine (IOM) and the Federal Coordinating Council for Comparative Effectiveness Research emphasize the importance of building infrastructure to facilitate CER studies and to disseminate their findings. The IOM report lists a number of CER priorities that seek evidence comparing the effectiveness and costs of prescription drugs to other treatments. These proposals bolster those who consider cost-effectiveness a valid CER research subject.

Jill Wechsler is Pharmaceutical Executive's Washington correspondent. She can be reached at


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