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Executive Summary

The national Blue Cross and Blue Shield Association "can no longer rely" on FDA approval as a basis for drug reimbursement decisions, Blue Cross/Blue Shield Medical Necessity Program Director David Tennenbaum told a recent Frost & Sullivan conference on drug reimbursement issues. "It has become increasingly clear to private third party payors that, unlike in the past [when] we were able to rely on the FDA approval process as adequate evidence that a drug was considered efficacious . . . as a consequence of the push to get the drug out sooner and under investigative study, we can no longer rely on that FDA approval," Tennenbaum said. He noted that plans are "beginning to evaluate the drugs themselves, a phenomenon that certainly has not occurred before." For example, Tennenbaum cited FDA's expedited approval process under which Phase II and Phase III studies are consolidated and follow-up studies are conducted in the patient population as Phase IV. What that signals to third party payors, he explained, is "that the FDA readily acknowledges that a drug may be investigative but, in fact, has allowed [companies], under limited conditions, to get the drug out to individuals." Speaking at the April 17 conference, "Advanced Therapeutics: Overcoming End-User Barriers," Tennenbaum said Blue Cross/Blue Shield and other third party payors see three major issues complicating their drug coverage policy decisions: off-label uses of approved drugs; Treatment INDs; and National Cancer Institute (NCI) protocol treatments. Regarding off-label uses, Tennenbaum said that FDA "is not particularly asking or wanting the drug industry to come back with additional approvals for different or new indications." That, Tennenbaum added, presents "a troublesome decision for us." The Blues are also "feeling pressure" from subscribers and patient advocacy groups -- AIDS and oncology groups in particular -- to cover drugs the association does not consider to have been proven efficacious, Tennenbaum noted. These drugs include agents under Treatment INDs and in NCI trials. According to Tennenbaum, approximately 50,000 patients per year are enrolled in Phase I-III NCI-sanctioned studies. "NCI has made it very clear to us that they are only prepared to pay for the drug itself or the research and data gathering, but that the actual patient care and hospitalization costs are not something that the federal government is prepared to bear," he said. Blue Cross/Blue Shield is "increasingly . . . being pressured to pay for those kinds of services," he observed. Outlining the national association's role in determining reimbursement policy, Tennenbaum explained that the Blues have set up a medical advisory panel comprised of local plans' medical directors. The panel evaluates evidence of efficacy for a new technology and makes a recommendation to local plans on whether a device or drug or procedure is "considered investigative or eligible for coverage consideration," Tennenbaum said. He emphasized that "each individual plan ultimately makes their own coverage policy." The panel makes its decisions based on three fundamental principles and five criteria. One of the three principles is "that only prescription drugs that have been approved by FDA will be allowed for benefits," he said. The second principle is the "experimental investigative clause." Tennenbaum explained that under this concept, "the plan will only provide benefits for care that is deemed to be efficacious or standard medical practice . . . technology that has only passed some kind of threshold, some evidence that it has moved from some kind of investigative stance to something that is efficacious or generally accepted." The third principle, or "medical necessity provision," provides for payment only "for care that is deemed to be medically necessary." Tennenbaum pointed out that the five criteria followed by the advisory panel place "a very heavy reliance on published peer review literature to demonstrate that a technology is considered efficacious . . . and an emphasis on health outcome." While the criteria have been applied mostly to medical devices, they could apply equally well to drugs, he noted. Technologies that meet the criteria "are recommended for coverage; technologies that don't are considered to be investigative," Tennenbaum said. He explained that under the five criteria, the technology should: * "have final government approval . . . to market for those specific indications and methods of use that the association is evaluating. . . . Approval to market refers to clinicians for commercial distribution. Any other approval that is granted as an interim step in the FDA regulatory process . . . is not sufficient;" * "have scientific evidence which permits conclusions concerning the effect of technology on health outcome. The evidence should consist of well-designed and well-conducted investigations published in peer reviewed journals. The quality of the body of studies and the consistency of the results are considered in evaluating the evidence. . . . Opinions and evaluations by national medical associations, consensus panels or other technology evaluation bodies are evaluated according to the scientific quality with supporting evidence or rationale;" * "improve the net health outcome" i.e. the benefit should outweigh the risk; * "be as beneficial as any established alternative;" and * have results that are obtainable outside the investigational setting. To respond further to the increasing independence of the local Blues plans with regard to drug coverage, the national Blue Cross/Blue Shield Association "will be formulating a policy this year and recommending [it] to the plans," Tennenbaum reported. He pointed out, however, that "that policy is truly advisory to them and we expect that the plans will ultimately make their own policies." A national Blue Cross/Blue Shield official said last fall that the association was beginning then to revise its approach to drug coverage and would be "going into a rather major process to re-evaluate what our policy should be" ("The Pink Sheet" Sept. 19, T&G-8). Lee Mortenson, executive director of the Rockville, MD-based Association of Community Cancer Centers, maintained that health insurance carriers have tightened coverage requirements to such an extent that they are denying coverage for all investigational oncology drugs and off-label indications even if those non-label uses are well established. Mortenson explicitly placed the blame for coverage denial on independent carriers. He charged: "It's no longer the big guys that are setting the policy, it's the little ferrets running around their heels who are going for market share: the small HMOs, the PPOs . . . who are setting national policy about what will be paid for because they don't pay for anything they can get away with. And then the Blues have to compete with that and that makes it a much tougher field."

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