This sponsored supplement was produced by Focus Reports.

In some ways the Australian medicines industry is going through the same restructuring and challenges as the industry is globally: the country is dealing with patent cliffs, companies are cutting back staff, an ageing population forces the government to rethink healthcare expenditures, and big originator companies are reforming. And just like internationally, that is forcing the industry to rethink traditional ways of doing things. Only, the Australian pharmaceutical industry has been rethinking its role in such an innovative way that it is slowly floating from down under to the center of attention of the global industry. 

A young female client of the Adult Mental Health Rehabilitation Unit at Sunshine Hospital, Victoria, Australia, Courtesy of Janssen-Cilag  

During a visit to Australia in February 2012 Sir Andrew Witty, then still in his tenure as CEO of GlaxoSmithKline, quoted the Australian industry as an example of how the global industry should modernize itself and win back society's belief in its readiness to change, "whether that is through employment, contribution to savings, or delivery of remarkable medicines."

And indeed the Australian pharmaceutical industry is undergoing several remarkable developments. Its pharmaceutical manufacturing industry, not too long ago having been seemingly doomed to disappear as rationalization reigned, is reinventing itself as a high value added manufacturing hub. With USD4.19 billion it is now Australia's biggest exporting industry, before the car and wine industry, the country's traditional export strongholds. 

Mark Fladrich, Managing Director, AstraZeneca 

AstraZeneca, for instance, recently decided to invest USD80 million in its existing Australian production capabilities to provide the Chinese market with its asthma treatment medicine.  

"For many lower value added manufacturing processes decisions are made every day to move manufacturing to India as an alternative to producing in Europe or Australia," AstraZeneca's managing director Mark Fladrich said. "The opportunity for AstraZeneca here is that technology that is used to support our medicines is complicated," he continued. 

Dr. Brendan Shaw, Chief Executive, Medicines Australia 

Furthermore, the notion of a disconnect between the country's research capabilities and big pharma's research investments, oft-heard when Focus Reports first visited Australia in 2008, is quickly turning obsolete. While big pharma mainly tended to focus on leveraging Australia's clinical research capabilities in the past, today the world's innovative companies are roaming Australia's research institutes and its Melbourne-based biotech industry to find ammunition for their pipelines. In 2012, the combined worth of Australia's publicly listed biomedical companies was actually higher on a per capita basis than is the case for such companies in the US, according to Mark Metherell, health correspondent of the Sydney Morning Herald. 

AstraZeneca manufacturing plant in North Ryde, Australia 

"The pharmaceutical industry is high-skilled, high-wage, high-tech, export- and innovation- oriented, low carbon footprint industry," said Dr. Brendan Shaw, Chief Executive of Medicines Australia, the association representing the discovery-driven pharmaceutical industry in Australia. "On top of that Australia has a fantastic base of medical research, public infrastructure, hospitals, universities that national and international companies can plug into." 

These promising developments led Medicines Australia to unfold a highly ambitious agenda. The vision is to double the manufacturing output from AUD7 billion (USD7.34 billion) in 2012 to AUD14 billion (USD14.68 billion) over the next decade and to establish a number of highly specialised bio-manufacturing plants, to double exports from AUD4 billion (USD4.19 billion) to AUD8 billion (USD8.39 billion); and to double R&D investment from AUD1 billion (USD1.05 billion) to AUD2 billion (USD2.1 billion), to create many more high-skilled jobs and increase the number of Australians accessing clinical trials to 30,000. 

Some doubt, however, whether the nation is sufficiently aware of the value of this highly innovative industry to generate the support needed to realize these plans. Making the importance of the industry clear can be especially challenging against the backdrop of a massive natural resource-driven economic boom that made Australian per capita GNP overtake the US' in 2011 (USD49.130 for Australia and USD48.620 for the US) according to World Bank data. This led the International Monetary Fund in April 2012 to predict that Australia would be the best performing major advanced economy in the world over the next two years. 

Robert Hendriks, Managing Director, Genzyme

"We need to keep our policy makers understanding that booms in minerals and coals come and go; we need to balance that with industries built on brains, and the Australian medicines industry has shown that it can fulfill a balancing role," said professor Warwick Anderson, CEO of the National Health and Medical Research Council (NHMRC), Australia's medical research-funding organ that is responsible for handing out AUD0.8 billion in subsidies in 2012.  

Paradoxically, today's biggest challenge to Australia's pharmaceutical industry indirectly comes from the nation's rapidly ageing population. The Australian government is looking to contain soaring health expenditures through reform of its pharmaceutical reimbursement system. 

In the case of Australia, the reforms of this reimbursement system, the Pharmaceutical Benefits Scheme (PBS), have been about control of the supply chain to combine a rise in generics share with a drop in its prices in order to create headspace for reimbursement of new innovative medicines. Whether the PBS reforms are reaching their goals is up for serious debate. Many industry players are asking whether the government can afford to use the efficiencies that it has gained from generics to increase spending on new products. 

Albert Spanos, General Manager, Celgene Australia 

One of the industry representatives that questions the reforms is Robert Hendriks, managing director of Genzyme. "Statistics of PBS approvals of innovative medicines show that a decreasing percentage of submissions are approved. The central question today is: should the focus be on cost containment to the extent we see today, or should the focus shift more towards assessing real health outcomes?" 

Genzyme encounters a specific reimbursement challenge with its rare disease portfolio, for which it has to apply to obtain reimbursement on the life-saving drug program. The life-saving drug program gives a set of criteria, one of which is showing substantial life-saving benefit. This is extremely difficult for products that treat rare diseases: "we treat few patients, which makes it difficult to set up clinical trials, certainly when they are life-saving," said Hendriks. "Is it ethical to have a double blind randomized placebo-controlled trial? You might consider that at the beginning of the development of your drug, but if you are further down the path and clinicians are convinced that your drug works, how are you going to set up a trial that would allow patients to shorten their life-span?" 

Such hard-to-meet standards across Australia's reimbursement programs could even put future investments of research-driven pharmaceutical companies at risk, thinks Hendriks. "I sincerely hope that government understands the harm it does to Australia's image as an attractive investment destination in the eyes of the global pharmaceutical industry," Hendriks said. 

Dr. Suzanne Hill, Chair, Pharmaceutical Benefits Advisory Committee 

Already, job losses of Medicines Australia-members in 2012 number around 300 on a total of 14.000 employees, with five major companies affected: Sanofi, Pfizer, MSD Australia, Eli Lilly and GlaxoSmithKline. The redundancies are considered to be related in part to medicines coming off patent and in part to price cuts that resulted from the latest PBS reform. 

"Whilst the stated aims of PBS reforms related to efficient generics pricing and transparency to ensure cost-effective pricing are well on the way to being realised, the structural reforms related to serving the future needs of patients with the introduction of new innovative medicines still leave much room for improvement," said Albert Spanos, general manager of Celgene Australia,  "both from a pricing and timing perspective, which is definitely having a material impact on industry investment in Australia, illustrated by the loss of 300 industry jobs in 2012." 

In a response to industry criticism, Dr. Suzanne Hill, chair of the Pharmaceutical Benefits Advisory Committee (PBAC), the statutory committee that advises the Ministry of Health and Ageing as to what drugs will be listed on the PBS, explained how the reforms are changing the demands to the industry. "It is going to be demanding of the industry, because they will have to put a lot of effort into clinical trials that actually show that their products are really better, and that difference in efficacy or effectiveness can be translated into a difference in price," Dr. Hill said, adding that "The usual drug development by industry is incremental in its gains and development, and that is going to be a real challenge."  

Looking at the growth of expenditure through the PBS, about one percent in an economy growing 3.2 percent in 2011, the reforms already seem to have the intended effect. Nonetheless, the end is not in sight. "I suspect that the government is going to look for a lot more savings before it allows more expenditure," said Dr. Hill. 

In this environment—"one of the most demanding in the world when it comes to data, cost-effectiveness proof, etc.", according Veronique Toully, managing director of UCB Australia and former vice-president in charge of pricing & reimbursement—a player's competitiveness is determined by several factors.

Veronique Toully, Managing Director, UCB Australia 

"The companies that have had loss of exclusivity issues, a concentrated portfolio, and do not have a strong pipeline are really struggling," said Andy Jackson, general manager IMS Australia and New Zealand. "Those three dynamics together all hitting in one go plus a relatively unfavorable economic environment provide serious challenges."  

Andy Jackson, Managing Director, IMS Australia

"Still, there are companies that are growing very well in this market, mainly companies with a specialist portfolio or from generics," according to Jackson. One example of a company that is doing well in the changing environment is Novartis. Recently appointed country head and managing director Jason Smith is confident that he will be able to lead the company to the top of the commercial rankings on the back of Novartis' research success and its pipeline. 

Jason Smith, Country Head & Managing Director, Novartis 

Except for Toyota, no other company worldwide invests more money in R&D than Novartis. "This commitment to research allows us to focus more and more on unmet medical needs in the therapeutic areas in which we have experience and ensures the longevity of our robust pipeline," said Smith. "That means that as we bring newer products to market, they should be more likely to meet the bar for approval and reimbursement in a country like Australia." 

George Varkanis, Vice President Asia Pacific, Celgene

On top of that, Novartis is developing products with companion diagnostics which are used in the clinical development process. According to Smith, this helps to personalise treatment, to identify those who respond well and those who do not respond well to treatment, which then means discovering better patient outcomes at the start. 

PILOTING AUSTRALIA INTO THE ASIAN CENTURY

While one could argue that PBS reforms are limiting access to the newest innovations to the Australian pensioner after a hardworking, taxpaying life, PBS reforms are also forcing the industry to do something totally new rather than tweak existing products. 

"Registration and reimbursement processes in Australia should be approached as a trigger for creativity, to come up with ways to successfully commercialize your drug," said George Varkanis, vice-president Asia Pacific for Celgene. Australia was purposely meant to be a pioneer market for Celgene in Asia Pacific, a role that it has fulfilled with verve. Australia was among the first in Celgene's global portfolio to successfully launch key brands Revlimid and Vidaza. 

Multi-Ethnical; Cross-Sectoral; George Clinical 

In a success story similar to that of Celgene, the Australia-affiliate of Belgian chemical company-gone-biotech UCB was the first in the Asia-Pacific region to launch the company's three new brands—Cimzia, Neupro, and Vimpat. "Australia is thus a pilot country in the region," said Toully. 

"Australia is much closer to European markets than to Asia-Pacific markets in terms of launching timelines and the overall way in which the industry operates," she continues. "At the same time, because we have this strong geographic link and also because the doctors here have very strong connections with Chinese, Japanese, and Korean doctors we are a close partner of UCB affiliates in Asia-Pacific and we can actually share a lot with them and support their launches," she said. 

It’s All About Pharmacy Baby! continued

Articles

Country Report

In some ways the Australian medicines industry is going through the same restructuring and challenges as the industry is globally: the country is dealing with patent cliffs, companies are cutting back staff, an ageing population forces the government to rethink healthcare expenditures, and big originator companies are reforming.

Country Report: Australia

With the allure of EU accession and an aggressive commitment to making local firms globally competitive, Turkey for the past decade has been a totemic symbol of the promise—and pitfalls—of the emerging markets. A growing middle class with health purchasing power has led to more opportunities for foreign innovative drug makers, but there is a down side too, in the form of interventionist trade and regulatory practices as well as a subtle trend toward xenophobia as the prospects for Turkish membership in the European Union fades. What's next? A new attitude more open to the industry's potential, if the right policies are followed.   

Turkey is a banquet for healthcare investors. Drug multinationals started flocking to the country in the late 1990s, establishing low-cost manufacturing and production hubs to feed their businesses in Europe and the Arab region. Mature local companies such as Bilim Ilac, Dr. F Frik, and Biofarma began catching the eye of Big Pharma—acquisition and consolidation were daily buzzwords as the market reached its peak growth in 2005. By then, around 300 pharma companies were operating in Turkey, more than 50 of these were multinationals, including most of the Big Pharma top 20; in 2010, the Turkish pharma market was ranked the sixth largest in Europe and 14th in the world. With a population of 67 million, consumption rose to around $3 billion, establishing Turkey as the biggest pharma market in the Middle East and the fastest growing in the Mediterranean region. 

The boom times also saw an unprecedented series of government reforms—including the introduction of a universal health insurance scheme—that reshaped Turkey's healthcare markets. The number of people covered by the public insurance system grew from 50 percent in 2000 to 86 percent in 2011, with the goal to hit 100 percent last year. Consumption soared: physician visits per capita increased from three visits in 2002 to eight in 2011, leading to increased satisfaction with the health service, which posted an 81 percent favorable rating in 2011. From 2003 to 2011, average life expectancy in Turkey increased by 2.5 years, from just under 72 to over 74 years. 

This nationwide effort to boost access and quality in healthcare imposed a hefty cost on the growing pharma business. With government spending on pharmaceuticals increasing from $2.3 billion to $8.7 billion between 2004 and 2011, drug price cuts were inevitable. But, having established in 2004 a cross-national reference pricing system pegged to a basket of prices that included low-price countries like Spain, Italy, Portugal, and Greece, as well as France, Turkey found itself locked in footstep with the economic crisis in Europe in a way that was out of proportion with its potential for long-term growth. 

In December 2009, an across-the-board pricing decree slashed the prices of both original and generic drugs. The decree set the sale price to the wholesaler of original drugs with a similar generic on the market at a maximum of 66 percent of the reference price; similarly, generic drugs could only be sold to wholesalers at up to 66 percent of the original drug's reference price. Further price cuts were imposed in 2010 and 2011; and by that point at least two of Turkey's price referencing countries were on the verge of bankruptcy. The result was that by 2012 Turkey had the lowest per capita health expenditure amongst OECD countries, and drug prices were 30 percent to 50 percent lower than the lowest European prices.  

Yet the Turkish economy was still growing at a healthy pace. Real GDP growth for 2010 to 2015 is predicted at around 4 percent, sustaining the trend between 2004 and 2009, and still way above EU rates. While cost containment and budget control are legitimate concerns, many observers interviewed by 

believe the government overreacted. "It was going into Greece mode," said Jeff Kemprecos, Executive Director, Public Policy and Corporate Responsibility at Merck. "You could understand in 2007 and 2008, during the global economic crisis, that Turkey would want to ensure its pharma healthcare budgets weren't exploding, but by 2011 the country had been growing at a pretty good clip."  

Nevertheless, by 2012, with the country's per capita drug spending far below historic norms, the Turkish pharma sector's prospects were in free fall. The drugs sector is estimated to have contracted by 25 percent in real terms since the 2009 pricing decree. Kemprecos observes that the contraction meant that international industry executives, while still interested in Turkey, "started to discount it as a major country in their portfolios." For Murat Yesildere of Egon Zehnder International, the situation led to international companies beginning to see Turkey more as a commercial sideline than a regional hub or manufacturing base where it is necessary to put down real roots. The preference right now is to "just ship their products in and get their margins without committing to a strong investment base. If they need to move out tomorrow, they can." Most of the foreign company manufacturing hubs established a decade ago, he explains, have now been abolished, divested, or closed.  

As for the domestic companies that had big growth plans, the cuts depressed their values and left them vulnerable to takeover. A lot of the Turkish players—Mustafa Nevzat, Dr F Frik Ýlaç, Yeni Ýlaç, Cenovapharma—have been bought up by foreign companies. Turkey's Association of Research Based Pharmaceutical Companies (AIFD) predicted in 2008 that the sector would achieve annual inward investment of $1 billion from foreign companies by 2015. Last year, the actual investment was below $50 million. "The situation is not sustainable for our industry," AIFD told 

 late last year. The focus should be on structural reforms and making savings in areas of healthcare other than drugs, such as hospital treatment. After all, AIFD added, "there is not much left to cut in pharmaceuticals." 

There are also continuing problems with Turkey's recognition and enforcement of intellectual property. According to Kemprecos, industry executives view Turkey as seriously behind the rest of Europe in protecting commercially sensitive data. Turkey currently only offers six years' of data exclusivity, and that is dated from the registration of the product in Europe. "This has acted as a drag on investment in the innovative medicines sector," Kemprecos adds, "because it is perceived as yet another important policy area where Turkey is not fully harmonized nor globally competitive." 

The issue has long been a bone of contention with regard to Turkey's plans for EU accession, negotiations on which began in 2004. But by 2012 the issue of accession itself looked like something of a damp squib. That's not altogether surprising, given the spreading eurozone crisis and the European Union's less-than-inspiring handling of the fiscal and debt crisis in Ireland, Portugal, and Greece. As Murat Yesildere points out, the reason Turkey wanted to join the European Union in the first place was for prosperity, jobs, money—"but that is now wavering." Candan Karabagli, CEO of Turkey's leading pharma company Abdi Ibrahim, adds that the country is resigned to the fact that the rest of Europe doesn't want it to join. Either way, it certainly seems unlikely now that accession will happen before 2020. 

Pharmaceutical exports from Turkey have steadily risen since 2000 

Still, there is a consensus that the detailed, chapter by chapter preparations for accession—whether it happens or not—have been good for Turkey. Says Karabagli, the country has been required to "upgrade its democracy, upgrade its human rights, upgrade its regulations." For pharma, the negotiations have meant a strengthening of regulatory infrastructure to protect IP and to conform to international norms on drug safety and manufacturing. In the last decade Turkey has set up more than 20 civil and criminal IPR courts and established an EU-Turkey Working Group on IPR; starting in 2005/2006 Turkish pharma companies began adopting the Common Technical Document (CTD) format for registration, and in 2009 the country adopted the EU directive on good clinical practice (GCP). 

Turkey still has a lot of work to do to satisfy the European Union, however. AIFD research last year revealed that the regulatory approval procedure in Turkey—with an average waiting time for drug approval of 772 days—is still a long way behind Europe; the mandated EU timeframe for regulatory approval is set at a maximum 210 days. Accession, says AIFD, would bring things up to EU standards "in terms of openness and accountability of public policies, as well as increasing access to pharmaceutical products."  

But Kemprecos believes that the country needn't take the accession route in order to become a global player. Turkey "could adopt or even improve on the best standards in Europe today as part of its competitiveness agenda for the innovative biotechnology and research-based industry," he says. He points to Switzerland, which, like Turkey, isn't a member of the European Union but which has "taken on board the best of Europe in terms of standards, particularly in the regulatory area." As an accession candidate country, Turkey is not tethered to Brussels' agenda or the woes in Europe. "While the country is obligated to implement certain standards, we believe that Ankara retains the kind of policy-making flexibility where Turkey could put in place reforms that could give it a leg up on the global competition." 

The problem of the last few years has been a lack of cohesive, holistic thinking around the industry. This was not due to bad intentions, says Kemprecos; rather, a lot of the time governments fail to appreciate the complicated nature of the industry. "The health ministry doesn't necessarily inform the views of the finance ministry, and the finance ministry doesn't appreciate the special taxation concerns of R&D-intensive industries such as the life sciences industry." Candan Karabagli echoes the sense of frustration: "It's a Catch 22; you need to reduce the burden as well as ensure the industry is sustainable. The government listens to us, but the number of things they can do for us is limited." 

Yesildere believes, however, that opportunities can arise from the constraints. The recent pricing pressures have "motivated most of the players to be more creative," he says. There are an increased number of new commercial models being implemented. "Companies are exploring different ways of approaching customers, doctors, and key opinion leaders, through digital networks, for example." He cites Abdi Ibrahim as a prime example of a local company that is "eager to go its own way" and launch new initiatives—"not government-led initiatives, but projects supporting their own ambitions." 

Indeed, having accepted that growth is difficult in the domestic market, two years ago Abdi Ibrahim established Vision 2021, an initiative aimed at sustaining its leadership in the Turkish market, by, Karabagli says, "adapting and being ahead of the innovation curve." Also key was a new strategy to foster globalization. Karabagli adds: "We would like to be a regional player. We've chosen the immediate area surrounding Turkey, the Middle East, North Africa, and have been developing more business in these countries in order to spread the risk." And in 2010 and 2011 Abdi began exporting to 20 new countries, including Poland, Portugal, France, Italy, Germany, Netherlands, Greece, Korea, and the United Kingdom. While conceding that the price deflation at home is "very challenging and happening a little too quickly for us to keep up with," Karabagli is firm in noting "we have to make our own destiny." 

In early 2012, with the industry in the doldrums, AIFD and the government looked to be at an impasse on key strategic policy issues. But after AIFD publicly accused the government of not doing enough to encourage investment and focusing too much on cutting drug prices, it seems that the government may have finally taken notice. An early public indication of this was at the BIO International Convention in Boston in June last year, when AIFD Vice Chairman Kadir Tepebasi announced that AIFD was "very happy and excited" that the government and the research-based industry now appear to have the "same long-term targets and approaches." When, in September, the AIFD report "Turkey's Pharmaceutical Sector: Vision 2023" called on the government to "implement the necessary structural changes" to enable the country to become a major pharma competitor at the global level, it wasn't so much agit prop as mutual agreement—the report followed recent AIFD talks with the government aimed at establish ways to make Turkey a regional production center for pharmaceuticals serving Europe, Central Asia, and the Middle East.  

AIFD's report provides a roadmap for the industry, outlining goals to strengthen the sector's "infrastructure" and "ecosystem" to enable the country to receive more international investment, increase production and export, make a positive contribution to the foreign trade balance, and offer patients high-quality service at international standards. It recommends the adoption of a central research policy on life sciences, a roadmap for life science clusters, implementation of clinical research regulations, increase of access to R&D financing resources, and the strengthening of the collaboration between universities and the pharma industry. It also calls for tax incentives for "international life sciences executives," more promotion of Turkey as an attractive investment option, and new regulations to effectively and adequately  protect intellectual property rights. Should such measures be adopted, the report concludes that, by 2023, "a Turkish pharmaceutical sector with production exceeding $23 billion and exports of more than $8 million, and a foreign trade surplus and R&D investments of about $1.7 billion per annum, is not just a dream." 

In conjunction with AIFD's roadmap, in late 2012 the government issued a consultation on a new "strategy and vision" for the innovative medicines sector from 2013–2016. For Kemprecos, this consultation provided an encouraging signal that policymakers now appear to be "committed to a rebalancing to accommodate growth and encourage innovation". This April, Turkish Health Minister Recep Akdag will announce the final details of the 2013–2016 strategy—including the promise of further R&D assistance, investment in human resources, and more backing for drugs exports—at the BIO annual meeting in Chicago. 

While Kemprecos has long believed that both local and international companies will continue to grow in Turkey, he counters that this would not be at the same rates as the larger, fast-growing markets and, for many companies, not at a rate that would justify significant new investment. But in light of the events of the last few months, he adds: "This all could change very quickly if the government moves ahead with conviction to execute its new strategy." So, after a decade of troubles, it seems at least that the dialogue between industry and government has entered a positive new phase. How quickly the government acts on its new "strategy and vision" remains to be seen, of course. But Kemprecos, for one, is more optimistic than he was a year ago. In recent months, he says, pharmaceutical executives have been hearing the term "holistic approach" much more frequently in Ankara. Perhaps, for pharma, Turkey is on its way back to its formerly exalted position as the land of Eastern promise.  

's European Editor. He can be reached at 

Features

After a decade of strife, the dialogue between industry and government appears to have entered a positive new phase. Julian Upton reports.

Turkey: A Promise Restored?

The Food and Drug Administration hit a 16-year high in approving 39 new drugs in 2012, building on a continued rise in commercial INDs (investigational new drug applications) filed with the agency and provisions of the FDA Safety & Innovation Act (FDASIA) that encourage innovation and improve review operations. FDA had already approved more than 30 new molecular entities (NMEs) by early December, and eight more positive decisions emerged before year-end, including treatments for cancer, a rare leukemia, chicken pox, and drug-resistant tuberculosis. 

Moreover, there's no more drug lag with Europe, according to John Jenkins, director of the Office of New Drugs in the Center for Drug Evaluation and Research (CDER), noting that more than 80 percent of last year's NMEs were first approved in the United States. And a continuing influx of INDs promises more new drugs in the future. 

Prescription drug user fees authorized by FDASIA provide the agency with more resources to assist sponsors in proposing appropriate research programs and in filing more complete applications, a key metric in achieving more first-cycle approvals, Jenkins noted at Elsevier's FDA/CMS Summit in December 2012. FDA processed more than 70 percent of priority applications in one cycle in 2012, and 60 percent of standard NMEs. It helps that many of the applications were for targeted drugs with large effect size and for rare disease therapies with clear benefit/risk ratios.  

A further stimulus for the development of more medicines for critical diseases may come from guidance in the works that will clarify the opportunities and requirements created by FDA's various expedited approval pathways—fast track, breakthrough, priority review, and accelerated approval. And new liaison staffers can provide assistance in navigating the FDA review system, which should be particularly helpful for the growing number of "emerging sponsors" filing their first new drug applications.  

Bob Temple, CDER deputy director for clinical science, noted at the Elsevier conference that it's not new for FDA to approve highly innovative products based on limited clinical evidence, but that FDASIA is helpful by clearly instructing CDER to facilitate approval of "drugs with impact." The rise in new drug approvals, he observed, reflects an increase in very well-targeted cancer drugs with "huge effects" in specific populations, an approach that he hopes can be applied to other conditions, such as asthma. 

Temple also is looking to wider use of enrichment strategies in clinical trials to accelerate drug development, as described in a December guidance outlining methods for decreasing heterogeneity and for selecting patients likely to respond to treatment. Temple has supported such study designs for years and anticipates that the guidance will encourage smaller, faster clinical trials that can speed critical drugs to patients. "While enrichment won't save a drug that doesn't work," Temple notes in an FDA blog, "it will help find one that will." 

While FDA approval of more new drugs is welcome news for patients, providers, and pharma companies, that success also is intensifying efforts to save money by uncovering fraud and waste in federal and state drug benefits. Several leading senators are demanding greater scrutiny of waste in Medicare Part D outlays. And it could get much worse, as pharma companies contend with a host of new "compliance challenges," notes Paul Keckley of Deloitte Center for Health Solutions. The list includes changes to the Medicaid Average Manufacturer Price (AMP) definition, expansion of drug classes subject to Medicaid rebates, pricing changes for 340B entities, the new Branded Prescription Drug Fee now applied to revenues from government contracts, and pending "Sunshine" payment disclosure requirements.  

Law enforcement agencies also are revving up scrutiny of drug manufacturing activities. Most high-profile pharma legal cases in recent years have targeted off-label marketing and related pricing and promotional activities. That will continue, as seen in a wave of late-2012 settlements: Pfizer agreed to pay nearly $100 million to resolve federal and state charges for illegal off-label marketing; Amgen settled charges related to violative marketing of several leading therapies for $762 million; and Sanofi paid $109 million to resolve kickback charges related to an injectible treatment. These fines are paltry, though, compared to earlier billion-dollar settlements, with GlaxoSmithKline's $3 billion fine in July 2012 topping the list. While prosecutors expect more violative marketing cases, there may be a slow-down as lawyers and litigators digest the impact of the recent Caronia case and whether that undermines FDA's authority to limit a marketer's ability to discuss off-label claims that are not false or misleading. 

Consequently, the feds anticipate a rise in legal actions involving lax adherence to current good manufacturing practices (cGMPs) that result in adulterated products. With manufacturing problems linked to devastating drug shortages and deaths associated with contaminated compounded injectibles, drug quality issues have become more prominent on the law enforcement radar screen.  

 lawyers with evidence of violations related to GMPs for drugs and biologics, observed former Department of Justice (DoJ) official Eugene Thirolf at the December enforcement conference sponsored by the Food and Drug Law Institute (FDLI). In deciding whether or not to bring a case, DoJ's consumer protection branch looks to assess how bad was the misconduct, whether it was condoned by management, whether the alleged activity affects the integrity of the drug regulatory process and the broader impact of GMP enforcement on consumers. The feds don't expect settlement payments in GMP cases to be as large as those from off-label marketing suits, but manufacturing issues raise the possibility of charges against individual corporate executives, including penalties that exclude an individual from doing business with the government. 

is Pharm Exec's Washington correspondent. She can be reached at 

Column

More new medicines gained market approval in 2012, but marketers face resistance from payers looking to cut healthcare spending, writes Jill Wechsler.

Breakthrough Year for New Drugs

Pharma is familiar with a lot of US government acronyms—HHS, FDA, CMS, SEC, DOJ, OIG, OPDP, and many more—but NHTSA (pronounced "nitzah") may not ring a bell. It stands for the National Highway Traffic Safety Administration, an agency housed within the US Department of Transportation. After years of asking questions and convening panels, NHTSA is moving closer toward the goal of establishing a "structured, standardized protocol for assessing the driving-impairment risks of drugs," pharmaceutical, OTC, and illicit.  

The issue of driving on meds gained greater visibility in early January, when FDA announced that it would require lower recommended doses of zolpidem, an atypical benzodiazepine best known as the sleep drug Ambien, and its generic predecessors. Pharmaceutical drugs, of course, aren't illegal when taken as prescribed, and they don't show up on a breathalyzer during a traffic stop. There isn't (yet) an FDA drug label that prohibits driving while using a prescription drug. But that doesn't mean patients taking certain antihistamines, antidepressants, benzodiazepines, and other therapies aren't driving around under these drugs' influence, to an extent that demonstrably increases the chances of a fender-bender, if not a full-blown crash. 

The miniSim, a PC-based driving simulator, evaluates levels of impairment.			

In November 2008 and again in March 2009, NHTSA convened a panel of international experts including behavioral scientists, epidemiologists, pharmacologists, toxicologists, and traffic safety professionals to determine whether medications, or classes of medications, could be designated as safe or unsafe for driving. If this determination could be made, the information would lead to better-informed prescribing practices, a more rational selection of medications by patients, and ultimately, fewer crash-related fatalities on American roads and elsewhere, according to the report. 

The panel's findings, described in NHTSA's "Drugged Driving Expert Panel Report: A Consensus Protocol for Assessing the Potential of Drugs to Impair Driving," dated March 2011, suggest a tiered protocol for a standardized and validated way to assess different kinds of impairment. In addition to pharmacological, toxicological, and epidemiological review, a drug must ultimately be put to the road test. Enter the $80 million National Advanced Driving Simulator (NADS), a warehouse-sized simulator completed in 2001 and located at the University of Iowa. This state-of-the-art simulator is one of the most advanced and immersive driving simulators in the world, but it's not exactly convenient, logistically, for use in clinical trials.    

The NADS miniSim, a lower-cost PC-based simulator, however, was designed with clinical applications in mind, and isn't stuck in Iowa. In fact, Gary Kay, one of the NHTSA expert panelists, and formerly director of the neuropsychology division of the neurology department at Georgetown University's School of Medicine, now heads a company called Cognitive Research Corporation, which has a worldwide exclusive license to use the NADS miniSim for pharmaceutical, food, and beverage clinical testing. Kay has served as principle investigator on clinical trials studying the effects of pharmaceuticals on cognition, mood, and psychomotor performance (he also invented CogScreen, a cognitive screening test used by, among others, the FAA, to assess the cognitive capabilities of pilots).   

Kay says FDA is interested in looking at other medicines and therapies (in addition to Ambien) and their effects on driving, and Cognitive Research Corporation is already working with major pharmaceutical players in the development of new drugs, and also in post-market research on existing products with the potential to impair driving. Generating data around a product's effects on driving can prove, in a validated, standardized way, that a product is safe (or safer than the competition), which could deliver a valuable selling point in crowded therapeutic areas, like sleep drugs, for example. Simulation isn't the same as "real-world" driving, of course, but hopefully it will help prevent drugged drivers in the real world from crossing into your lane. 

After years of asking questions, the National Highway Traffic Safety Administration (NHTSA)is moving closer to a protocol "for assessing the driving-impairment risks of drugs". Ben Comer reports.

NHTSA Addresses "Drugged Driving"

Don't bank just yet on putting your marketing muscle behind the safe and effective off-label uses of your FDA-approved drugs, or defending your next mass consumer class action on First Amendment grounds. But you can start giving those multi-billion dollar prospects some serious thought, because constitutional winds are blowing through the Code of Federal Regulations. 

What got the storm brewing was a freshman state representative in Concord, NH, who, in May 2006, succeeded in persuading her colleagues to adopt the first law in the nation to stop pharmacies from selling information gleaned from prescriptions. Over time, this had become a very big business, since the information revealed the prescribing habits of doctors. Drug makers could use the information to guide their sales forces.  

This legislator believed the information was driving up Medicare and Medicaid costs needlessly by helping pharma persuade doctors to prescribe the most expensive new medicines irrespective of their benefits, but she presented no research to determine whether this was so. 

Data mining companies challenged the law on First Amendment grounds, arguing that mere fear of the truth cannot warrant its suppression, and that it was more likely that the information was improving health and safety than harming it. Sources talking to reporters, and pharmacies selling data to manufacturers, represent two examples of communicating information that could be used for important purposes; the First Amendment protects both. 

Notwithstanding the challenge, Maine and Vermont passed similar laws and the data miners challenged them too.  

Five years and many legal briefs later, the Supreme Court handed down 

 in 2011, holding that Vermont's law (and by implication those of Maine and New Hampshire) did indeed violate the First Amendment, because the data it restricted was truthful, the state could not show its suppression prevented any harm, and the state had other means of keeping costs down without suppressing truthful speech.  

Now the FDA is feeling the full force of that decision as it tries to defend its own truth-suppressing regime. In 

 the Second Circuit Court of Appeals relied on 

 in a 2-1 decision to invalidate the conviction of Alfred Caronia for conspiracy to introduce a misbranded drug into interstate commerce.  

because Vermont and its supporters had argued that if Vermont's law could not stand, then neither could the FDA's off-label marketing ban. The argument was designed to scare the Supreme Court into upholding the Vermont law. It worked on just three of the nine justices. Justice Breyer, writing for himself and two others, warned in his dissent that "the same First Amendment standards that apply to Vermont here would apply to similar regulatory actions taken by other states or by the federal government acting, for example, through Food and Drug Administration (FDA) regulation."  

Under Justice Breyer's view, the FDA can "control in detail just what a pharmaceutical firm can, and cannot, tell potential purchasers about its products." He added that "[i]f the court means to create constitutional barriers to regulatory rules that might affect the content of a commercial message, it has embarked upon an unprecedented task—a task that threatens significant judicial interference with widely accepted regulatory activity." The cited regulations were the FDA rules on off-label marketing.  

Because Caronia challenged his conviction soon after 

was decided, his lawyers had little work to do. They simply pointed to Justice Breyer's remarks forecasting invalidation of the FDA off-label rules.  

But dissenting opinions are sometimes unreliable predictors of how the majority will rule in a different case. Dissenters often take the logic of the majority a step or two beyond where the majority would go. That might be the case here, because 

 presents bad facts for defending the speech at issue. Indeed, the case might be regarded as presenting the worst facts imaginable for those hoping to dismantle the FDA's approach.  

Caronia was marketing Xyrem, a powerful and fast-acting central nervous system depressant. It was approved by FDA to treat narcolepsy patients, but required a black box warning, the agency's most stern form of safety notification. Xyrem's active ingredient, gamma-hydroxybutryate (GHB), had acquired the infamous street names Grievous Bodily Harm, Liquid Ecstasy, and Georgia Home Boy due to its frequent use in rapes, and it had been federally classified as the "date rape" drug. Caronia's employer, Orphan Medical, Inc., had been acquired by Jazz Pharmaceuticals, a name suggesting that its products might have greater recreational than medicinal value.  

To promote Xyrem, Caronia teamed with Peter C. Gleason, MD, a psychiatrist paid by Orphan to appear at its events for doctors. After the government secretly recorded Caronia and Gleason pitching Xyrem for off-label uses, a grand jury indicted Caronia, Gleason, and Orphan. Gleason and Orphan both pled guilty. Jazz agreed to settle, for $20 million, civil claims against it and criminal fines against Orphan. Gleason then committed suicide.  

One of the few "good" facts in the case was that the government did not claim Caronia was trying to persuade doctors that Xyrem is a great icebreaker at frat parties. He asked them to consider it for insomnia, fibromyalgia, restless leg syndrome, and Parkinson's. The government argued Caronia was guilty only because the FDA had not approved those uses, not because the drug would be unsafe or ineffective for those uses or that this marketing was a subterfuge for the promotion of unsafe uses.  

Neither the bad nor the good facts played much of a role in how the Second Circuit viewed the case. Judge Denny Chin, for the 

 majority, ruled the conviction could not stand because the government had not shown how prohibiting manufacturers from promoting off-label uses would directly advance public safety or health given that physicians and academics lawfully can advocate those same uses. He also noted that the FDA could combat perceived ill effects of the promotion through its own warnings or requiring disclosures without restricting manufacturer speech.  

Judge Chin also acknowledged the possibility that misbranding prosecutions still could be brought if the government relied on off-label promotion only as evidence of intent to misbrand rather than as a crime itself.  

Judge Debra Ann Livingston dissented. She argued the FDA's regulations drive manufacturers to get FDA-approval for all new uses and that this itself prevents doctors from being duped by manufacturer claims that neither have been FDA reviewed nor approved.  

Both judges applied a slippery First Amendment standard that gives judges a good deal of leeway to disagree, not the strict standard that ensures reporters cannot be gagged even when they have a story wrong or the story is expected to do much harm. The Supreme Court had used the same slippery standard in 

to invalidate the Vermont law and ducked the broader question of whether the First Amendment requires the strict standard in all cases.  

 presents a case in which bad facts could push the Supreme Court in the FDA's favor if the slippery standard is used. If that happens, the Court finally may be forced to decide a question that has been long in the making—whether commercial speech warrants full First Amendment protection. Under strict scrutiny, speech is protected against regulation unless the regulation advances compelling interests and no other means are available to do so. Even a good deal of false speech is entitled to First Amendment protection under this standard.  

Whether the Supreme Court would take this path is suggested by Justice Anthony Kennedy's opinion for the 

majority. He wrote that 'a 'consumer's concern for the free flow of commercial speech often may be far keener than his concern for urgent political dialogue'...that reality has great relevance in the fields of medicine and public health, where information can save lives." He added, "The choice 'between the dangers of suppressing information, and the dangers of its misuse if it is freely available' is one that the First Amendment makes for us."  

 case, the government chose not to seek rehearing in the Second Circuit, and it now has through March 4, 2013 to decide whether to seek Supreme Court review. It would not be surprising if the government chooses to live with the lumps it got from the Second Circuit. It has a lot more to lose in the Supreme Court. 

 are lawyers in the Miami office of Hunton & Williams LLP.  They designed and litigated the First Amendment challenge to the law invalidated by Sorrell v. IMS Health Inc.   

Caronia decision shows the staying power of Sorrell v. IMS Health.

Fortuity and the First Amendment

PE, February 2013 Cover Image

TODAY'S MOST IMPORTANT PUBLIC HEALTH STORY is the advance in our understanding of the biology of cancer—a disease so deeply associated with major death and disability that the long search for a cure has been framed through the rhetoric of all-out war. What the new science is saying about cancer is something different. Cancer is not that monolithic curse of unrelenting discipline but rather a collection of small—even rare—conditions driven by the distinct characteristics of every individual's inherited DNA. Seen this way, it's probably a stretch to claim that success against cancer requires military style mobilization. In fact, a key question is whether the way we treat and manage cancer is appropriate to its changing scientific profile. Are we ready to leverage our mastery of the genetic codes for cancer with the treatment systems and standard of care that can really deliver personalized medicine to the patient?  

 provides some thoughtful answers to this question, itself part of a larger dilemma facing the healthcare community. Providers and payers, not to mention patients, are wrestling with the issue of how quickly the practice of medicine, and the often cumbersome process of delivering and financing care, must accommodate to advances in medical innovation. Cancer care is on the front lines of this issue, so 

 convened a panel of oncology experts—drawn from industry, academia, and the nonprofit sector—to consider ways to balance the sometimes conflicting goals of quality, efficiency, cost, and outcomes in evaluating the growing number of treatment options available to patients. 

The group's discussion emphasized the vital role that treatment guidelines and pathways play in providing a semblance of order to the cancer space. Concerns about pricing and costs are beginning to override the cancer community's traditional deference to physician judgment, which makes it more important that therapeutic decisions be grounded on good evidence. The best means to accomplish this is through flexible, independent, physician-led standards linked to consensus-based, transparent metrics around performance; in this latter case, while acknowledging there are choices to be made on costs, the reference point should always be the impact of a particular intervention on outcomes overall.  

It was noted that increased collaboration among stakeholders will be required to keep these standards fresh and relevant, with a pertinent example being the joint Value Pathways project just launched between McKesson Oncology Research and the leading independent source of physician-led guidelines, the National Comprehensive Cancer Care Network (NCCN). The Value Pathways are designed to assist oncologists in managing care for 19 cancer tumor types, but their real novelty is in addressing head on the complex, sensitivity-laden notion of "value"—by building in a peer reviewed evidence rationale for every cost incurred.  

While the growing sophistication of guidelines and pathways is a welcome trend, there are institutional challenges that threaten to impair their effectiveness. These include the difficulty of compiling convincing clinical data on outcomes for many cancers; reconciling the standardized protocol approach against the growing scientific capacity to deliver treatments tailored to an individual's unique genetic profile; contradictory regulations, as represented by the actions of many US states to limit the legality and scope of privately-sponsored guidelines; and the sheer proliferation of activity around guidelines, which ultimately poses a redundancy problem. Again, the cancer community may be best positioned to resolve these roadblocks, since historically it has moved further and faster than other specialties in relying on guidelines and other evidence-based tools to set the standard of care for patients.  

Such optimism is underscored by the group's conviction that many cancers are going to be not just treatable—but beatable—within the next decade or so. Scientists are learning more about the special characteristics of cancerous stem cells, promising over time a new way of avoiding tumor metastases. The fight against HIV is producing insights that may yield new immunotherapy treatments for cancer, and there is a small but budding research agenda around cancer prevention, which could accelerate if issues around securing a better return from investments in prevention are resolved.  

Finally, the old adage that perception drives reality was reinforced through a survey conducted by Eli Lilly & Co. that found more than half of patients today believe cancer is one disease—and thus can be defeated with one cure. Is it just a coincidence that regulators still tend to address the approval process in the same way, with little if any focus on devising enhanced registration benchmarks for very small drug indications? Cliché or not, the future of cancer is not macro, but micro. 

From the Editor

Today's most important public health story is the advance in our understanding of the biology of cancer, writes Pharm Exec Editor-in-Chief William Looney.

In Cancer, Process Drives Progress

Cancer is a disease of endless reinvention, one that is increasingly understood as a collection of rare—and mostly treatable—conditions rather than the impregnable, death-dealing monolith portrayed in popular culture. Advances in our knowledge of the biology behind cancer are leading to new options for treatment, the most important of which is precision targeting of therapies tagged to the genetic profiles of individual patients. The array of new tools presents an enormous opportunity, but there is also the burden of complexity: to find and then transform all this new science into technologies that deliver clinical results to patients, demonstrate value to payers, and lead to the broad public health outcomes that society expects. To help address this challenge, 

 recently convened a cross-section of industry experts to review current and pending efforts to turn great science into good practice. The sum of the discussion, presented in the following Q&A: Not just courage but coordination, with a heavy dose of cooperation, is required to defeat the proliferating ethos of the cancer cell—biology's ultimate non-conformist. 

Managing complexity: the pathways prescriptive  

Numerous surveys find that oncology is the therapeutic segment where it is most difficult to demonstrate value to payers. Several of our participants today—including McKesson Specialty Health and the National Comprehensive Cancer Care Network [NCCN]—are working closely with providers, payers, and other stakeholders to improve the transparency of these relationships and strengthen standards for evidence-based, high quality care. Can we review quickly what initiatives are underway and determine their strengths and weaknesses in shaping institutional behavior? 

 The treatment of cancer is highly dependent on innovation. The drive to leverage personalized medicine, investigate the increasing number of potential therapeutic agents, and better utilize technology has led to significant cost increases in care management. The annual cost of cancer care is now $150 billion in the United States alone, and it continues to rise. Drugs account for a highly visible share of the total, which can leave our industry exposed. However, we are also part of the solution, by contributing to the efficient, affordable use of resources in a way that leads to the best outcomes. The value we bring has to be grounded in evidence, observed and measured in real time, under active clinical practice. You cannot do that without keeping the focus squarely on the individual patient: if medicine is now personalized medicine, then the therapies we offer must be targeted therapies.  				

This is good for the patient—but it comes at a cost. Targeted therapy is representative of a new, much more complex business model, where the imperative is to conduct more and more clinical studies around a precisely differentiated patient base that adds to the recruitment burden, making trials more expensive and challenging to conduct. In working with the industry to bring 43 anti-cancer agents to market over the past few years, we know that the overarching priority is to find better ways to screen these patients efficiently. US Oncology Research is investing heavily in technology to help find these narrower patient populations. We use a model that allows research sites to open where those patients are actually receiving treatment, so we can leverage the scale of the 900 experienced physicians affiliated with us. Investments in companion diagnostics that match patients with the right drug are also critical when we are making the case to payers.  

There is a larger dimension too, in moving the research forward to help patients and providers make better choices—to build in greater clinical precision, relevance and value—at the actual point of care. We have done that to date through Level I Pathways, and in the future will be continuing this effort through our new Value Pathways powered by the National Comprehensive Cancer Care Network [NCCN], the output of our recently announced collaboration with them. Level I Pathways are a series of refined guidelines, developed by physicians and clinicians from our US Oncology Network, to help oncology practices assess the most effective and least toxic care options for patients using standardized, evidence-based software analytics. Physician specialists lead the initiative, with additional input from the clinical pharmacy community. The pathways represent a careful balancing of the science—including efficacy and toxicity—with a broader value assessment that incorporates cost and leaves room for consideration of factors unique to the individual patient. We refer to this latter element as the 80/20 rule, with the 20 percent being the weight each pathway gives to the physician's judgment after weighing all the scientific evidence. The absence of a "one size fits all" mandate is one reason why physicians have really bought in to the process. They see us as one of their own.  

As noted, this year we are launching an expansion of the pathway initiative with the NCCN. The US Oncology Network and NCCN are jointly developing a "Value Pathways Powered by NCCN" program of peer-reviewed disease management protocols for 19 tumor types, with additional plans to support cancer detection, diagnosis, biomarkers recommendations, treatment, and supportive care. Each will build on existing NCCN Guidelines—the gold standard for clinical practice in oncology—to add the value-based metrics, including cost evaluations, developed previously for our Level I Pathways. In addition, the Value Pathways Powered by NCCN can be accessed through software designed to be integrated with the electronic health record and other data workflows of practices or hospitals, creating a new standard for content and technology, and helping providers focus on the best way to enhance outcomes for their patients. Most important, the Value Pathways will rely on the timely input and expertise of 2,000 practicing oncologists and researchers affiliated with the NCCN Guidelines Panels as well as some 1,000 community physicians active in the US Oncology Network.  

Lyn Fitzgerald, National Comprehensive Cancer Care Network:

 This collaboration addresses a need that state oncology societies have identified relative to our guidelines, which is helping the oncologist community use the guidelines effectively. What is particularly useful about the McKesson collaboration is the power of the technology and the Value Pathways Powered by NCCN, both of which supplements the content of the NCCN Guidelines, thus providing the necessary tools and information that meet the increasing evidence requirements of the payer. The technology will empower them with the evidence based information to interpret, act and do what's right for each patient, all at the point of care and within normal work flow. 

Neelima Denduluri, Lead Investigator, McKesson US Oncology Research 			

Dr. Neelima Denduluri, Virginia Cancer Specialists:

 I am a practicing oncologist and member of The US Oncology Network Pathways Taskforce and Breast Research Committee. The Value Pathways project advances the idea that scientifically-based standards of care actually increase the autonomy of the physician and safeguard the interests of the patient. When members contract with payers, we do so with the capacity to demonstrate that having more options and flexibility in treatment is actually a cost saver because it leads to better outcomes. The standards are there, but are not so rigid as to allow payers or other stakeholders to dictate the terms of engagement. We can show that when physicians are allowed to police themselves, excess and waste—crazy things—don't take place.  

The Value Pathways are a reflection of how rapidly the financing and delivery model in oncology is changing, uprooting the traditional relationship between a passive payer, segmented providers and powerless, information-poor patients. Is the industry ready and prepared to help facilitate application of the Pathway model? What "influencers" might be missing to ensure this new tool is used most effectively? 

 The objective of a treatment guideline is to try to change physician behavior. You can apply the carrot, or the stick. I'm interested in how these pathways promote practitioner compliance with the standardized parts of the package—what you refer to as the 80 percent of the pathway that is prescribed decision support. Physicians clearly prefer being autonomous and acting on their own discretion, so is there any "punishment" for not staying compliant within that 80 percent?  

 We don't believe in negative incentives like penalties. The pathways are structured to advance excellence in patient care first and foremost as well as build confidence and foster a spirit of partnership between providers and payers. Involvement of the NCCN and incorporation of its extensive information base is crucial to this process. To the payers, we can show that the standards we set are sufficiently stringent because they are based on hard evidence drawn from the literature and actual clinical experience. We can furnish data on just where the pathways have yielded lower costs and similar or better outcomes. This in turn allows us to tell the network physicians that compliance with the standards means that payers will be more willing to negotiate higher payments. It's positioned so that both sides see a benefit in upholding their core interests.  

 Internal peer pressure also keeps the practice community aligned. One of our network practices, Rocky Mountain Cancer Center, monitors performance of its oncologists around the pathways and requires physicians with variations against the norm to answer to the other physicians in the group why that is the case. There is no sanction against the physicians' judgment, bar the fact that they must explain to their peers why their performance is out of range. The transparency keeps people honest and encourages predictable, fiscally responsible behavior.  

 How will you position these new Value Pathways in tandem with the different evidence based guidelines, based on the US Oncology Network Level I Pathways, and especially the relevant NCCN Guidelines?  

 The two information streams actually complement each other. The Value Pathways built from the previous Level I Pathways include a focus on economic issues pertinent to providers and payers. The NCCN Guidelines continue to provide a panel of evidence-based treatment options, but do not assess costs to patients and payers and lack a "how-to-do" framework on the actual administration of care. McKesson Specialty Health, which supports The US Oncology Network, has a useful electronic health record, iKnowMed, which integrates these different strands of evidence. Between iKnowMed and the new quality support tools in development with NCCN, we can put changes immediately into effect throughout the community practices. 

 I am curious how your pathways address the situation—quite common in the oncology space—where there is absent or unconvincing clinical data to weigh against the high cost of a particular therapy. On what basis then do you determine what might be the recommended or most cost effective treatment option?  

 If there is no evidence of real clinical benefit from trial data and the cost of the drug is in the six figure range, then we do not include it on the pathway, and usually dissuade any prescribing of that treatment; exceptions are made on a selective basis, and we make sure the drug payments are pre-authorized.  

 If the evidence is built around the patient, do you provide specific metrics to evaluate his/her quality of life? More specifically, are patient reported outcomes part of your assessment?  

 Yes. We are looking at many aspects of this important issue, such as trying to measure the relationship between proper drug utilization and patient quality of life. Since this is a physician-driven effort, we recognize that costs have to be evaluated in a broader context that gives credence to when a patient is able to carry out normal functions and maintain the lifestyle to which he or she is accustomed. 

 I believe the drug industry would be supportive of building clear metrics around the linkage between the cost and effectiveness of treatments, as payers and health technology agencies are interpreting this relationship to render important judgments about market access. Right now, decisions are being made that make companies very anxious about whether approved treatments will actually be obtainable by patients in the clinical setting.  

The larger issue here is reconciling the concept of a practice guideline —which by definition relies on a population-based metric—with the move toward individualized treatment, now being facilitated by the progress in understanding genetic variations in tumor growth and in the application of diagnostics. It's a dichotomy we struggle with throughout the compound development process; payers too are trying to find the right way to be fair in deciding what treatments are reimbursed.  

 NCCN Guidelines must tackle this dichotomy if they are to maintain status as the standard of care in oncology. We have just launched a biomarker compendium and, as the technology and understanding of tumor heterogeneity advances, our NCCN Guidelines will need to incorporate this evidence. There is no choice: the market dictates. When the NCCN compendium was formally recognized in 2008 by United Healthcare and CMS, coverage decisions for millions of patients were now driven by the compendium. Today, however, insurers are contracting separately with multiple for-profit pathway companies that have the effect of limiting provider choices in applying our guidelines. This is one reason why NCCN is contracting with McKesson on the Value Pathways Powered by NCCN and the decision assist tool based on the NCCN Guidelines. The fact that it is devised and managed directly by physicians for physicians gives the profession an alternative to just accepting what the payers are putting forward.  

 From my perspective, guidelines are only a starting point. While they work well for a large proportion of patients, where there is an existing good base of evidence that can be applied, what is necessary is more definitive and precise guidance on how to use them in the clinical setting, including more subjective factors like patient satisfaction and quality of life as well as cost effectiveness. There must be clarity and transparency in the methodology used in making the transition from the evidence-based guidelines of NCCN to the point-of-care issues that are covered in Level I Pathways. We don't want a situation where it all comes down to direct costs [e.g., drug acquisition], which can be very misleading and leads to frustration for providers and their patients. Clarity in the process will allow pharmaceutical companies to ensure that they generate the right evidence to support appropriate positioning and inclusion of their medicines in Level I pathways. 				

A physician-driven standard that enforces compliance through peer pressure is a good way to engage around these issues. If you succeed in convincing payers at the macro level that your practicing physicians are providing good care that is also cost effective, then you avoid a whole host of problems. One is that there will be less demand for prior authorizations, where access to a medicine can appear to be determined arbitrarily, and impacted by things like a patient's particular benefit plan or his/her home zip code.  

Much of what we have been discussing so far relates to uptake—translating the evidence so that it is "cooked in" to the pathways and then pushing this out to shape decisions taken at the bedside. Are the conditions ripe for widespread acceptance of pathways as a benchmarking tool that will produce consensus in making patient welfare the focal point of treatment? Oncology does seem to be one of the few therapy areas where pathways and guidelines are actually making a difference in resolving distortions in practice patterns.

 In the case of cancer care, I think we are indeed ahead of the curve. The McKesson decision support technology is going to accelerate our progress. Where I see danger is the complexities of the US health reform agenda may lead to more efforts to "reinvent the wheel." We already have a guidelines/pathway redundancy issue in this country.  

 I've heard several times today that the NCCN Guidelines and the collaborative Value Pathways with NCCN will never put cost over efficacy. That's a guarantee certain to be tested over time, as we all know that for oncology drugs it's a steep hurdle to gauge overall survival benefits. Efficacy alone can be an ambiguous metric. A drug might post a spectacular improvement against existing therapy in a small number of patients, but because of crossover effects performance in a larger trial set is muted. This is evident in the international setting, where there is even less consensus on how a benefit is defined and measured. Drug costs will also continue to rise, particularly in specialty areas like cancer, because of the complexity of the follow up—not only in how drugs are administered, as part of the continuum of increasingly personalized care, but in the post-marketing studies and trials that industry must commit to in responding to regulator concerns about safety.  

 There is a discrepancy too in the fact that diagnostics have a lower burden of proof in making the case for regulatory approval. Yet all our guidelines panels want the same level of evidence, whether it is a drug, a device or a diagnostic. Industry must develop evidence recognizing that stakeholders may require a different value proposition: what the FDA wants is one thing; what the physicians or the payers want may be another.  

 Pressures on innovators are coming from all points. Data that we generate to obtain a market license is not always going to be sufficient to get a product supported on a pathway, while the very existence of a pathway can hinder the generation of the real-world evidence that might lead to additional understanding of effectiveness. It's important to remember that cancer progress almost always has occurred in a step wise incremental manner—often based on insights in the real world of practice. 

Robert Martell, Tufts University Medical Center			

Dr. Robert Martell, Tufts University Medical Center:

 It follows that, as personalized medicine takes root, indications for oncology drugs are becoming smaller. This puts significant strain on the process and cost of obtaining regulatory approval. You can build down from an approved indication for ALK positive lung cancer because the eligible patient population is large. But when you have a relatively smaller indication and then seek approval for a still smaller sub-set of that, how do you do it at a cost commensurate to the potential size of the market? You can't be funding 600 trials in such a situation. The system has to adjust: you might have a lower hurdle in winning initial approval, followed by a structured, step-by-step process to better understand how an additional indication might add to the disease fighting armamentarium, perhaps in combination with other therapies. Over 80 percent of oncology drugs are initially approved as single agents, yet clinical exposure tells us that their best use comes as combinations. In fact, the NCCN Guidelines for the top 10 malignancies recommend combinations as primary treatment in most situations.  

Guidelines have to adapt to a world where the financing and delivery of healthcare is changing. Industry too must do more to understand what the decision-makers driving system reforms really want. Accountable Care Organizations [ACOs], an alternative to traditional fee for service payment, are being incentivized under the new health reform law. In this new structure, the ACO chief financial officer may be the person who is key to assessing evidence and deciding that therapies end up on formulary.  

 The mindset of the industry is already moving in this direction. Celebrating approval has shifted to celebrating reimbursement, because that is what gives our medicines access to the market. Our registration work has to begin with an understanding what it will take to obtain a positive nod from the CMS, and quickly, as time to market is a competitive differentiator. The bad news is all the additional tradeoffs we have to invest in to get to this decision. Such tradeoffs must be incorporated into the drafting of guidelines or pathways, because without including the perspective of the payer these texts will not survive in the real world.  

Is it time for the industry to embrace a multi-stage approach to registration, what the European Medicines Agency [EMA] calls "adaptive licensing," that requires a medicine to demonstrate its value in the clinical setting, after the initial licensing authorization? 

 Novartis is intrigued by the idea. If you can get a product on to the market earlier, and then accumulate evidence that we can agree on to demonstrate the creation of value for the health system, it has the potential to be a "win win" for us and for the regulator. It is certainly a trend that is building, so we will need to consider it seriously.  

 I am concerned about the impact that adaptive licensing might have on the integrity of the physician-patient relationship, which is at the center of the pathways model we are discussing today. Industry is likely to have little control over what a regulatory authority sets as ground rules for re-examining the status of an approved medicine. What would the criteria be for deciding if a therapy is effective, especially relative to other medicines? What would be the comparator? I think that for any system to be personalized around the patient, the physician must manage the process. This is what the pathways are for. Why do we need the regulator to come in once again and make a judgment about value? The market will decide. 

 The Affordable Care Act [ACA] poses a challenge to patient access in its own right. The new insurance exchanges and the delineation of "essential health benefits" may mean that enrollees will have little discretion in obtaining services not prescribed in a plan or the list of benefits. It could make this discussion of physician-led pathways an academic exercise.  

Despite the challenges of high development costs, payers' willingness to reimburse, and sharp variations in patient access, the science of cancer continues to improve. What are the most important advances that will enhance treatment options for patients? 

The application of anti-cancer stem cell therapy to treat metastatic cancer is a field that is evolving rapidly. Bob Weinberg of MIT, one of the founders of my company, has developed a process for identifying a stable population of cancer stem cells that in turn makes it possible to test a large number of drugs to find the few with sufficient potency and selectivity to limit the cancer stem cells' capacity to reproduce the cancer through the body. These drugs focus on fighting the cancerous stem cells rather than the bulk of the tumor itself. By mid-2013 we will have three clinical test programs underway—one is for mesothelioma—that will try to pair these drugs with conventional chemotherapeutic treatment regimens designed to attack the tumor. The interaction between cancer stem cells and tumor cells is fascinating and hopefully this work will guide our understanding of how these two lines interact in pulling the trigger on metastases. This is important to cancer survival rates, as most of the progress in cancer treatment to date has been in eliminating cancer at the early stage; once a tumor becomes metastatic, we are not so good at stopping it.  

 The success rate for oncology drug development has been stuck for years at about five percent. A contributing factor may be lack of predictability of pre-clinical efficacy models. For example, we rely on killing tumors in animal populations, which may not be the best predictors of outcomes in humans. So finding novel ways of screening drugs that don't depend on tumor shrinkage may improve the odds, even though the naysayers will tell you that there is almost no example of an approved drug that did not show this kind of effect.  

Pharm Exec recently convened a cross-section of industry experts to review current and pending efforts to turn great science into good oncology practice.

Pharmaceutical Executive-02-01-2013