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TREATMENT IND AND PARALLEL TRACK DRUGS: INSURANCE COVERAGE

Executive Summary

TREATMENT IND AND PARALLEL TRACK DRUGS: INSURANCE COVERAGE could be more likely if those products are viewed as having "provisional approval," D.C. attorney Donald Beers (Arnold & Porter) suggested at the annual meeting of the Regulatory Affairs Professionals Society Oct. 15. "I believe that the system is ultimately better served if this Treatment IND or parallel track approval is regarded as what it is -- in fact, a provisional approval," Beers said. He added: "Drug companies should, at that point, be permitted to charge for the drug" at post-approval levels and "third-party payers, including the government, should pay for the drug." Beers, a former FDA associate chief counsel for drugs, pointed out that a company with such a drug candidate has two choices: it can provide "the drug free to potentially large numbers of patients for a potentially very long time" or it can seek "permission to sell the drug in a situation in which the FDA claims the authority to determine whether or not the price of the drug reflects the manufacturer's cost and no more." If a company decides to charge for the drug, Beers asked, "should it agree to set one price that reflects costs for some pre-approval period and then go to a higher price that reflects both costs and a reasonable profit afterwards?" He pointed out that if the price is too high before approval, there is likely to be a general outcry for FDA to review the pricing decision. "If the preapproval prices are traditionally low, however, a rise in price after approval would be taken as proof that the price after approval is largely attributable to profit." Beers suggested that the free-of-charge distribution of drugs for life-threatening diseases could be a major disincentive for drug companies to invest in research and development of these drugs. He added that "small companies in particular will be driven from the field by the high costs involved." The former FDAer stated that "in general, the world would be a better place...if these drugs could be priced by the pharmaceutical industry as they would be after formal approval." If the full cost of these drugs is charged, Beers suggested that the pharmaceutical industry probably "would have no problem with a requirement that the drug company involved has some kind of indigent program to ensure that the drug gets to those that cannot afford it, and who have no third-party insurance, and are not able for some reason to qualify for government assistance."
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