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FEDERAL CENTER Rx DRUG COST-EFFECTIVENESS ASSESSMENTS PROPOSED

Executive Summary

FEDERAL CENTER Rx DRUG COST-EFFECTIVENESS ASSESSMENTS PROPOSED by Vanderbilt University professor Wayne Ray, MD, would "conduct comparative evaluations of medications for both policy makers and clinicians"; use "these data to give manufacturers incentives to conduct the research"; and "fund and coordinate research where there are no manufacturer incentives." Ray proposed the concept at a Foresight Seminar on Technology Assessment for Pharmaceuticals in Health Care Reform in Washington, D.C. Dec. 10. Ray spoke of the proposed center as "an honest information broker," adding that "it could provide unbiased data to a spectrum of payers which would allow them to minimize costs while at the same time assuring that patients receive adequate therapeutic benefits." The center would protect "the public purse as well as the public health." One of his more specific points was that trial evaluation should be made "by a panel of experts just as there is for the FDA now." Following Ray's speech, HHS Agency for Health Care Policy Research Office of Health Technology Assessment Director Thomas Holohan, MD, said: "I didn't hear anything I disagreed with in what Dr. Ray said." Holohan stressed the need for reliable comparative trials of pharmaceutical and medical products, and said, referring to studies published in peer-review articles: "The majority of them are probably trash." He was in favor of the incentive approach as the best way to get industry to conduct the needed trials, saying: "The point is that there's a stick." Ray, in fact, said providing incentives would be the center's "main function." He noted that the center could make statements such as: "Lacking further data, expensive drug A has no advantage over inexpensive drug B; however, if data...were available, then the use of A might be justified." Ray did not spell out the medium through which such a statement would be made. The third panel member was Harold DeMonaco, director of pharmacy at Massachusetts General Hospital and chairman of the Pharmacy and Therapeutics Committee for Bay State Health Care/Blue Cross. Speaking as a "clinician-bureaucrat," DeMonaco said that in the absence of appropriate cost-benefit analysis, "very hard decisions [are made] essentially in a vacuum." One of the problems he cited was the tendency for analyses to be made of general populations, so clinicians lacked information on specific subgroup benefits. For DeMonaco, this problem cast doubt on the proposed center's value: "The patient population... is so diverse...that I'm not sure that a single methodology is going to work...in terms of a central authority." From DeMonaco's dual perspective, he could see that the situation was "extraordinarily complicated." He opined against intervention in the marketplace because "the market forces are hammering this issue out." It was unclear how the center would be funded in practice, but Ray stressed that the project "needs to be...federally funded." He opposed the idea of a consortium of payers providing the money because of conflict-of-interest reasons. Holohan addressed the issue of the cost-effectiveness of technology assessment itself, by giving an example: "We recently reviewed at Medicare's request lymphedema pumps...If the Medicare program were to put into practice the scientific findings of our review, they would save $14 mil. a year," which he claimed was more than the last three presidential administrations had spent on technology assessment. In October, Sterling Director of Pharmacoeconomics Robert Freeman estimated that about three-quarters of companies submitting NDAs now include pharmacoeconomic study data in their regulatory submission packages. FDA Commissioner Kessler noted that "in many cases, these studies lack rigor and sophistication" ("The Pink Sheet" Nov. 1, p. 8).

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