Candidates Target Pharma

June 1, 2008

Pharmaceutical Executive

Volume 0, Issue 0

US presidential hopefuls look to comparative effectiveness analysis to address price and access issues

As the 2008 presidential campaign moves toward its final stages, healthcare reform remains a high profile issue, with each candidate rolling out plans that promise to expand coverage while improving quality of care. The presidential contenders have also focused attention on increasing the effectiveness of healthcare in order to reduce costs.

Jill Wechsler

For Democrats, the goal is universal coverage, whether immediately mandated or phased-in. Senators Hillary Clinton (D-NY) and Barack Obama (D-IL) have both proposed tax breaks and other incentives to help individuals obtain health insurance, as well as calling for expansion of Medicaid and the State Children's Health Insurance Program (SCHIP) to cover more children and low-income adults.

Interestingly, Sen. John McCain (R-AZ) is the real radical in the debate, having suggested a shift from employer-based coverage to a system that relies on individuals to obtain insurance. McCain proposes to end tax advantages for employer health benefits, and use the savings for tax credits and subsidies that make coverage more affordable. The GOP leader also backs "means testing" for Medicare, and wants to scale back the program's drug benefit to reduce government subsidies for "the Warren Buffets of the world."

Cutting costs

The candidates' proposals to expand health programs and extend tax breaks will be expensive, carrying price tags in the range of $150 billion to $200 billion a year. The White house hopefuls say they'll pay the bill by cutting healthcare costs, but most of their plans carry high price tags. [See sidebar, pg. 38.]

Consequently, the candidates are talking about reducing expenditures for prescription drugs. Obama has called for US consumer access to the "exact same drugs" sold in Europe and Canada at half the price, and wants to "prohibit big name drug companies from keeping generics out of the market." He expects to save up to $30 billion by repealing the ban on government price negotiations for drugs purchased by Medicare—a policy he described during the Pennsylvania primary campaign as a congressional payoff to Big Pharma.

Similarly, Clinton vows to hold down fast-rising drug prices by removing barriers to generic competition and allowing Medicare to negotiate lower drug prices. In addition, she wants to boost oversight of drug advertising and "marketing excesses," including public reporting of "inappropriate" financial relationships between pharma and providers, and curbs on sale of physician prescribing data to manufacturers. Clinton also proposes creating a pathway for biogeneric competition and increased funding for FDA's Office of Generic Drugs.

Anti-pharma rhetoric is coming even from McCain, who sees generic competition and drug re-importation as being compatible with a market-based healthcare system. The presumptive Republican nominee wants to increase the number of routes for "safe, cheaper generic versions of drugs and biologic pharmaceuticals" to come to market, and develop safety protocols that permit re-importation to keep competition vigorous.

Seeking Evidence

Politicians have also suggested tying cost control strategies to "objective" and "accurate" information about the effectiveness of medical treatments in real-world care settings. McCain says that publicizing information on treatment options and developing national standards for measuring and recording outcomes will help address the rapidly rising cost of US healthcare. Clinton advocates independent research to compare the effectiveness of treatments, in order to address the huge growth in prescription drug use. Obama wants competitive effectiveness (CE) research on the value of drugs, devices and procedures for individual patients to reduce the "considerable waste in our healthcare system."

Indeed, the campaign for CE enjoys broad support. In June 2007, the Medicare Payment Advisory Commission recommended that Congress establish an independent entity to sponsor "credible research on comparative effectiveness of health care services." [See PE, "Washington Report," June 2007.] And in January 2008, an Institute of Medicine (IOM) committee backed a national CE assessment program with "sufficient resources, authority and capacity" to develop research standards and processes. An IOM Roundtable on Evidence-Based Medicine provides a forum for discussing ways to improve medical evidence and its use.

A key factor driving the clamor for CE is the emergence of new biotech therapies and medical diagnostics with potential to improve public health and save lives—but at very high prices. The promise is that effectiveness data will target new medical technology to patients most likely to benefit, and deflect calls for price controls and coverage denials.

Pharma companies acknowledge that objective CE research could increase drug utilization and prevent safety problems arising from inappropriate drug use. The industry fears, however, that misuse of such analysis could block rapid acceptance of new treatments. Drugmakers want payers to cover all medicines that FDA deems safe and effective, and keep cost out of the calculations. The Biotechnology Industry Organization (BIO) issued a white paper last year questioning whether CE research methods are sufficiently developed to deal with the complexities of biotech therapies and the wide variation in individual response.

At an April briefing sponsored by the Alliance for Health Reform, David Nexon, senior vice president of medical device association AdvaMed, raised concerns that CE research might be used to support a "cheapest is best" approach. CE studies are "rarely slam dunks," said Nexon, noting that different treatments often work better for different patients.

Yet the fact that more effective (and limited) use of medical technology could save billions of dollars is too attractive for payers and insurers to ignore. It "makes no sense" to establish best treatment processes and then not look at that information when making coverage determinations, according to Karen Ignagni, president of America's Health Insurance Plans (AHIP). While CE analysis might not lead an insurer to deny coverage, a plan could put a more costly drug that lacks clear advantages in a higher formulary tier. Nevertheless, cost must be a consideration. "Taking cost out of the equation is putting your head in the sand," says Ignagni.

Creating a Program

Enthusiasm for CE is boosting congressional support for a quasi-governmental CE research organization distinct from the Agency for Health Research and Quality (AHRQ). This division of the US Department of Health and Human Services has been expanding its CE research portfolio to support coverage and treatment decisions for Medicare and other government health programs. But many CE advocates believe that an independent research organization, less subject to political control, is what the industry needs. A central entity would also reduce duplication of efforts by insurers and private groups developing their own CE data.

Senate Finance Committee chairman Max Baucus (D-MT) is looking to authorize such an entity as part of pending Medicare legislation to delay a cut in payments to physicians. Any legislation adopted this year is likely to establish a "placeholder" to launch the program, and not provide much more funding than the paltry $15 million that currently supports the AHRQ program.

Meanwhile, the debate is escalating over how such a research entity would operate. Key issues are who controls and pays for the program, what treatments it would evaluate, and what standards would provide a basis for analyses. CE research appears to be more an art than a science, with big differences in how economists value "quality of life years" and other data.

Drug and device makers want CE studies to deal with total healthcare delivery, not just medical products; they want a seat at the table in setting research priorities, standards, and methods. The National Pharmaceutical Council (NPC) is positioning itself to represent pharma interests in the debate, with a new focus on how best to conduct and utilize evidence-based analysis in making drug coverage decisions.

What remains clear is that while CE advocates say they will focus on effectiveness and tiptoe around the spending issue, cost management will be central to the success of any CE research program.

Jill Wechsler is Pharmaceutical Executive's Washington correspondent. She can be reached at jwechsler@advanstar.com

Savings Elusive

To pay for reform, the 2008 Presidential candidates are all proposing to make the US healthcare system more efficient through increased preventive care, coordinated care for high-cost patients, reducing obesity and smoking, and less emergency care. Unfortunately, these "soft" strategies require resources, and savings are elusive. Electronic health information systems can eliminate errors, but are very costly in the short term. Chronic care coordination and disease management promise to improve quality of care, but generate added costs as well as savings. Universal coverage may be more equitable, but it's costly because insured individuals tend to spend more on health services. Even the CE research institute everyone wants has an initial price tag of at least $200 million.

However, real cost-cutting measures—such as higher consumer cost-sharing, benefit curbs, cuts in provider fees, and limits on access to new technology—are not popular with voters, so they don't make it into stump speeches.