Who Will Pay for New Drugs? - Pharmaceutical Executive


Who Will Pay for New Drugs?

Pharmaceutical Executive

Comparing data

Part D and Competition
A perennial issue is whether FDA and other regulators can assist in bringing new drugs to market by encouraging the inclusion of outcomes assessments in pre-approval trials. The opening session at ISPOR addressed whether the current regulatory paradigm should be modified so that it's easier for sponsors to study patients with co-morbidities, to compare alternative therapies, and to assess outcomes relevant to patients in Phase III studies. Sean Tunis acknowledged that trials with active comparators are more expensive and take longer, and that many quality measures are not well validated. Former FDA commissioner Mark McClellan, now at the Brooking Institution, noted that rising costs and new healthcare delivery systems support CER, but that the legal standard for new drug approval remains safety and effectiveness, not comparative effectiveness. Trials can be modified to provide additional information, said FDA senior advisor Vicki Seyfert-Margolis, but FDA requires adequate and well-controlled studies to approve new drugs.

A goal for William Crown, president of UnitedHealthcare's OPTUMInsight Life Sciences and ISPOR president-elect, is to further refine CER methods so that the conclusions from observational studies are more reliable. "We need to raise the sophistication of the discourse surrounding randomization and observation," he says.

Variations in results from randomized trials and observational studies were further explored at the annual CER symposium sponsored by the Agency for Healthcare Research and Quality. Analysts described the differences between efficacy and effectiveness studies for evaluating healthcare delivery systems, understanding responses of diverse populations and variable care settings, and comparing different treatment modalities and interventions.

Assistance in improving the quality of CER may come from the new Methods Report from the Patient Center for Outcomes Research Institute. A preliminary draft, which is scheduled to be finalized in November, outlines 60 standards to guide researchers in assessing heterogeneity, handling missing data, accessing data networks, utilizing adaptive strategies, establishing data registries, and assessing diagnostic tests.

Part D success

Mark McClellan proposed at ISPOR that changes in healthcare delivery systems through ACOs and other models can help measure quality and costs to achieve savings and improve outcomes, as experienced with the Medicare Part D drug benefit. A recent report from the Kaiser Family Foundation (KFF) documents how government outlays for Part D have been about 30 percent lower than originally projected by the Congressional Budget Office, during a period when overall Medicare spending has skyrocketed. The savings arise from a number of factors, said analyst Jack Hoadley of Georgetown University at a KFF briefing: lower enrollment in Part D than expected, a general slowdown in total spending on prescription drugs, fewer new drugs coming to market, and, most notably, a huge rise in generic drug prescribing.

Karen Ignagni, president of America's Health Insurance Plans, credited the savings to the ability of Part D plans to apply a range of medication management tools to drug utilization, including tiered formularies that encourage patients and prescribers to switch to generics. Even economist Marilyn Moon, a well-known advocate for consumer protection in healthcare, acknowledged that private plans have been able to use financial incentives to push beneficiaries into generics—something that would be hard for the federal government to do.

But Moon noted that Part D plans have "a very good deal" because the doughnut hole structure relieves insurers from covering very high-cost patients. The program's reinsurance system, plus subsidies for seniors also on Medicaid, reduces the pressure on plans to manage spending on high-cost medicines. That may change, though, if the emergence of more pricey critical therapies raises overall costs for Part D and other public and private drug benefits.

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


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