When the Payer IS the Player - Pharmaceutical Executive


When the Payer IS the Player
As Medicare, Medicaid, and the nation's vast web of private payers consolidate and gain market power, how can pharma stay ahead of the cost-containment curve? Pharm Exec hosts a conversation between two experts on each side of the payer and pharma divide

Pharmaceutical Executive

PE: How will the implementation of healthcare reform complicate the pharma/payer relationship?

TS: That's exactly what everyone is trying to anticipate. Most eyes are on Medicare and CMS. Technically, Medicare is concerned with cost containment but, legally, it's not allowed to take cost into consideration when making a coverage decision. That doesn't mean that people at CMS won't find other characteristics of a product to focus on, in lieu of cost. In the past, what pharma has most feared is the "national coverage determination," which occurs when CMS determines if an agent or procedure is reasonable and necessary.

Under the evolving new healthcare system, comparative effectiveness is the biggest issue. Some organizations are being set up now to run the comparative effectiveness research that can be used. Technically, under the current law, that research can't be used as the only reason to make a coverage decision. There has to be at least some other justification for restricting access to a drug, and also, comparative effectiveness, by definition, doesn't really take cost into consideration.

In oncology, for any major changes in how access is managed in the US to be successful, it will require collaboration between payers and physicians—and the buy-in of the oncologists and clinicians, because they're not a group who will fade away quietly if access is restricted.

JH: There are several ways of looking at the potential impact of comparative effectiveness. The typical model is, you put two agents head-to-head in a clinical trial, see which one comes out better, and then do your evaluation of the cost of treatment. Those kinds of head-to-head studies are less often done in the US than in Europe, particularly in oncology. You always go back to old-fashioned chemotherapy, and only recently have people started to do trials of the newer agents. Unfortunately, in testing a very new agent against the standard of care, there often isn't that much of a difference in terms of overall survival. And that brings up the question of the cost of a few extra weeks of survival.

TS: To some degree, comparative effectiveness is harder to realize in an area like oncology, because things change so quickly. It's interesting that in certain tumor types, like breast cancer, there have been amazing advances over the past 10 years in terms of life expectancy. Products like Herceptin, which was started in a fairly late-line population, has again and again proven its benefit, moving into earlier lines of therapy and really changing that disease state.

There's still a lot of room for improvement, but I think we'll be seeing more and more new agents that actually have active comparators in their arms. For example, new product X versus Herceptin on top of standard background therapy. But in metastatic prostate cancer or metastatic melanoma, it's much more difficult—and essentially unethical—to have comparative effectiveness trials like that, because it would involve withholding standard of care from patients. So in these cases, as well as the more competitive cancers like CML, you may see more comparisons between different trials, as opposed to within trials.


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