Washington Report: Cross-Agency Collaboration for Part D

Part D gives CMS more clout over coverage, pricing, and even drug development.
Feb 01, 2006

Jill Wechsler
The medicare prescription drug benefit, which began January 1, 2006, makes the federal government the largest purchaser of pharmaceuticals in the United States, and probably in the world. The Centers for Medicare and Medicaid Services (CMS) will spend more than $1 trillion on medicines over the next decadeā€”a volume that will influence the market broadly.

Although the media have focused on how much seniors will have to pay for medicines, and pharma is immersed in calculations of whether increased utilization will offset pricing pressures, this costly benefit promises to have an even more significant impact on the drug development and approval process. Less-noticed provisions in the Medicare Modernization

Act (MMA) support more research on comparative drug effectiveness, which aims to help CMS steer utilization to more cost-effective medicines.

As the "big gorilla in the corner," CMS concerns are beginning to color FDA policies, commented attorney Matthew Van Hook at a recent conference on FDA-CMS coordination, sponsored by the Food and Drug Law Institute (FDLI). He and others expect FDA market-approval decisions to appear more provisional in the future, as CMS limits reimbursement to products that demonstrate clinical advantage or cost-benefit over available medicines.

Getting Together?

CMS' expanded clout over the industry has generated talk about a more specific role for the Medicare agency in FDA regulatory activities. CMS Administrator Mark McClellan initiated closer cooperation between the two agencies during his stint as FDA commissioner, which ended two years ago. He hoped to help pharma and biotech sponsors generate research information that could support Medicare coverage decisions for Part B drugs and biologics, and also supported an FDA-CMS coordinated review of new drug-eluting stents. An FDA-CMS parallel review process for new medical technologies could speed access to some new treatments, but industry, as well as FDA officials, are leery of the idea. FDA Deputy Commissioner Scott Gottlieb commented at the FDLI conference that direct CMS involvement in application reviews could add to the already long and expensive development process. Pharma and medical device companies are also concerned about FDA sharing secret trade information with another government agency, particularly one charged with holding the line on healthcare spending.

However, CMS does not need to be formally involved in the FDA review process to cast a long shadow over industry's R&D. Biotech and medical device companies are consulting more often with CMS early in the development process to avoid surprise, last-minute information requests, like additional safety data for certain population groups. FDA is considering a pilot test of a more formal parallel review process for medical devices. Such an approach should be a "rare occurrence," reserved for unusual products that offer important clinical benefits, Gottlieb noted, but observers expect it could extend to drugs in the future.

FDA is also working more closely with CMS in preparing guidance on certain research issues, such as the use of pharmacogenomic tests with personalized medicine. And in case a sponsor wants FDA to share proprietary information with CMS to accelerate a coverage decision, the two agencies continue to talk about finalizing a long-discussed memorandum of understanding (MOU) that would permit FDA and CMS to share data.

Off-Label Coverage

A separate CMS initiative indicates how influential the agency may be in shaping drug development and utilization decisions. A new Coverage with Evidence Development (CED) policy permits Medicare payment for off-label uses of a new drug or device, provided that patients participate in studies to collect additional data documenting benefits for new patient populations or indications. Last year, CMS decided to cover four colorectal cancer therapies for off-label uses, but only for patients enrolled in certain clinical trials sponsored by the National Cancer Institute (NCI).

While CMS officials praise the CED policy as a way to extend Medicare coverage, patients and industry fear the agency will deny reimbursement of innovative treatments unless sponsors support post-approval studies. In response to voluminous criticism of the initial proposal, CMS Senior Advisor Peter Bach said CMS will issue a revised draft guidance describing a narrower focus for the CED program. At the FDLI conference, Bach noted the policy will only apply when a new drug appears "incredibly promising" for an extended population.

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