A Look Back & Forward on Innovation

August 20, 2019
Lisa Henderson
Pharmaceutical Executive

Volume 39, Issue 8

In a sit-down with editors from our group publications, former FDA Commissioner Scott Gottlieb chatted with Pharm Exec on several topics, including the evolution of pricing and reimbursement for novel therapies-and the access fixes needed for future.

Former FDA Commissioner Scott Gottlieb, MD, was on-hand at our parent company’s headquarters to help promote his keynote participation in MJH Associates’ inaugural oncology event, the OncLive® Global Expo, to be held in Orlando in October. While there, Gottlieb met with editors from MJH Associates’ publications,

including Inside Digital Health, The American Journal of Managed CareMedical EconomicsPharmacy Times, and Pharmaceutical Executive. Some of our questions overlapped, especially in the areas of biosimilars and generics, and real-world evidence. The following is a brief summary of Dr. Gottlieb’s views and insights on other topics.

Gene Therapies. The first topic is especially relevant with our August issue focus of cell and gene therapies. Dr. Gottlieb was asked about the effect of CAR-T medicines on the healthcare system. He noted that the current delivery system for CAR-T, which is heavily dependent on the institution that hospitalizes the patient and delivers the reengineered cells back into patients, is in dire straits and there needs thorough and well-thought decisions to be made. “Currently, those institutions are being underpaid on these therapies, and that is not sustainable,” he said. Gottlieb pointed to the fact that Medicare pricing doesn’t have a “checkbox” for CAR-T, only for injections, which is not what this is. This billing issue will negatively impact the downstream success of CAR-T therapies.

In addition, Gottlieb touched on the overall pricing issues with gene therapies as a potential socioeconomic problem for the US. He explained that private market insurance is designed to financially absorb high-cost therapies and procedures vis-à-vislarge covered populations. On the other hand, Gottlieb said, if state Medicaid programs had to pay for one gene therapy administration of $1 million, as well as a heart transplant procedure in one year, that would be very tough on that state’s funds. Basically, private insurers can provide more access to newer therapies, but Medicaid, not so much. He said, “This could lead to a socioeconomic fracture. And that needs to be solved.”

A Short History on Innovation. Gottlieb elaborated on the foundation that paved the way for the current plethora of therapies in testing and available for rare and orphan diseases. And not just the Orphan Drug Act, which Gottlieb said allowed for additional incentives to develop those kinds of therapies. But he also drew from the knowledge accumulated during his tenure as a senior adviser to the administrator of the Centers for Medicare and Medicaid Services (CMS) in the early 2000s, when Part D benefit designs were being made. “Incentives were made in the way we designed the reimbursement model by creating a specialty tier in Medicare, which was done for a variety of reasons. But that specialty tier, where reimbursement was largely assured so companies could develop drugs targeted to rare, unmet medical needs that were going to be priced at a premium based on the value that they would deliver,” Gottlieb said. “By protecting that reimbursement, we drove incentives in the marketplace for product developers to design treatments targeted to those indications.” 

Gottlieb said these constructs were created at a time when the major complaint was that drug companies were just developing me-too products and new iterations of already marketed drugs, but not a lot of innovation. “We made deliberate decisions to preserve reimbursement if you developed something truly novel for an unmet medical need,” he noted. “What happened was investors were rational and investment capital went very quickly into those spaces. And now we are seeing the fruits of that through a lot of really promising innovation that’s delivering real practical benefits for patients. Now the flip side is that the products are very costly.”

Pricing. Besides the socioeconomic fracture, the current pricing problem also casts a negative public perception on pharma. To Gottlieb, the crux of the issue is high out-of-pocket expense for the patient’s prescription benefit. He said, “Prices have continued to go up and patients are facing high out-of-pocket costs that are irrational, because these costs-at least in Medicare Part D-are tied to list price, which is largely not a real price and it’s not what the payers are paying. But the patients are paying out-of-pocket costs based on the list price and their liability is uncapped. There is no limit on what their costs can be in Medicare Part D, and that’s causing a lot of hardship. We need to make sure patients aren’t priced out of the products they need.”

You can look for more interviews with Dr. Gottlieb on our video channel in the near future. In the meantime, learn more about the OncLive® Global Expo, a three-day educational, innovative meeting that brings together an inclusive group of oncology professionals to collaborate on emerging trends and technologies in cancer care and research. 

 

Lisa Henderson is Editor-in-Chief of Pharm Exec. She can be reached at lhenderson@mmhgroup.com. Follow Lisa on Twitter: @trialsonline

 

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