IPAB Will Make CMS More Relevant In Parallel Reviews With FDA, Former Official Gottlieb Predicts

BALTIMORE – Decisions by the soon-to-be-created Independent Payment Advisory Board could make CMS participation in parallel review of drugs with FDA much more meaningful than it would otherwise be, assuming the health care reform law remains intact, former CMS and FDA official Scott Gottlieb said.

Initially, Gottlieb did not see the proposed parallel review process – where, upon the request of the product sponsor, FDA would review a product for marketing approval at the same time that CMS would review the product for Medicare reimbursement – as meaningful, particularly for drugs (Also see "CMS Guidance On Desired Data Might Meet The Goals Of Parallel Review More Reasonably, Former Official Gottlieb Suggests" - Pink Sheet, 13 Jan, 2011.). But after further analysis of the impact of the Affordable Care Act, in particular its creation of IPAB, Gottlieb sees the potential for CMS to have a significant role in parallel review.

He spoke May 23 during a panel session at the International Society for Pharmacoeconomics and Outcomes Research’s 16^th Annual International Meeting. Gottlieb, formerly FDA deputy commissioner at FDA and senior policy advisor at CMS, is a resident fellow at the American Enterprise Institute.

Gottlieb explained that his original view grew out of a “perception that you are dealing with a very weak authority in CMS when it comes to coverage, coding and payment. They have very few tools and their ability to use those tools is limited by the political environment.” In the current environment, Gottlieb said there is little utility in seeking a reimbursement review by CMS during the drug development process, a view shared by the pharmaceutical industry (Also see "FDA/CMS Parallel Review: Firms Lack Incentive To Participate, Lawyers Say" - Pink Sheet, 13 Dec, 2010.).

“But this is going to change, and I think it’s going to change fairly quickly,” he added, because of the potential for IPAB to give CMS new authority over drug reimbursement.

IPAB was created to make recommendations for reducing Medicare spending when Medicare spending per beneficiary grows at a rate equal to the GDP per capita plus 1%. It is supposed to be ready to make its first recommendations in 2014. The White House recently proposed to lower the trigger to 0.5% (Also see "Obama Deficit Reduction Plan Takes Aim At Drug Costs, Strengthens IPAB" - Pink Sheet, 13 Apr, 2011.).

Gottlieb expects IPAB to confer two significant authorities on CMS within the next five years – the ability to use reference pricing and least costly alternative reimbursement tools.

Medicare previously had a least costly alternative process in place, which limited payment for therapeutically equivalent drugs to the lowest-price drug in that class. A lawsuit led to CMS rescinding that policy (Also see "Medicare Part B Drug "Least Costly Alternative" Policy Rescinded By CMS" - Pink Sheet, 7 May, 2010.).

“If CMS had these explicit authorities … I think the need to come into CMS earlier [in the drug development cycle] would increase exponentially. I think it is inevitable that CMS is going to be granted these authorities if the current legislative constructs stay in place.”

He further qualified his five-year prediction on the notion that it is likely going to take that long for FDA and CMS to work out all the details on conducting parallel reviews (Also see "CMS/FDA Parallel Review: Agencies Weighing Process For Planning Trials That Satisfy Both" - Pink Sheet, 20 Sep, 2010.).

Tunis: Parallel Reviews A First Step

Speaking alongside Gottlieb, Center for Medical Technology Policy Founder and Director Sean Tunis said he views the parallel review process as a first step to getting to a point where trials can be meaningfully designed for both approval and reimbursement. Tunis is a former CMS chief medical officer.

“It’s an important fist step, but most importantly, it’s going to provide some useful case studies to better understand what the evidence gaps are between what regulators consider to be safe and effective and what payers consider to be medically necessary, and in the case of CMS, what’s reasonable and necessary,” Tunis said.

“Parallel review is just the first step to realizing that parallel review barely begins to address the problem we are really faced with, which is that the current paradigm of clinical research is highly focused on regulatory [approval] and leaves unanswered many important questions that are beyond the regulatory concern.”

In particular, Tunis noted that a lot of data gathered in clinical trials rarely satisfies the information needs of payers, as well as patients. “If we are going to have anything meaningful to improve the efficiency of the clinical development process to satisfy regulators and payers, you have to have this conversation long before the phase III trials are designed.”

However, while the conversation might occur before phase III trial design, he also suggested that in the long run, data collected to answer payer questions likely will come after approval.

“In order to create the additional sorts of evidence that CMS and other payers are going to want, which is going to include head-to-head comparative studies as well as longer-term outcomes that are traditional for regulatory studies, six months and 12 months rather than eight to 12 weeks of primary outcome,” Tunis said. “Those kinds of studies are probably not going to be doable under the phase III regulatory trials.”

In that context, Tunis highlighted the importance of comparative effectiveness research and health information technology as facilitators of generating the kinds of data that will be important to satisfy payers.

“To have anything that is remotely feasible to generate that kind of information is going to have to take advantage of electronic medical record systems and other kinds of non-experimental methodologies that are in the process of being built here in the U.S. and elsewhere as part of the whole comparative effectiveness research program,” Tunis said.

Tunis also suggested that it will be extremely difficult to develop broadly applicable guidance in this area, which could complicate addressing the gaps in evidence needed by regulators and payers.

“These would have to be done on a technology- or therapeutic area-specific basis,” Tunis said. “You can’t talk generally about aligning methodology between regulators and payers.”

Tunis added that FDA ultimately is going to have to adapt its regulatory framework to be more respectful of quality of life than it currently is.

How Much Evidence Is Enough?

For developing drugs that will challenge existing products, even if the payer community is involved in the drug development conversation, the likelihood of obtaining consensus on what constitutes enough evidence could represent a hurdle in itself, particularly in the U.S., where there are thousands of payers with individualized needs.

Speaking during a May 24 panel at ISPOR, Robert Epstein, chief clinical research and development officer at pharmacy benefit manager Medco Health Solutions, highlighted how diverse the market is, including within the PBM community.

In the U.S., the payer community is diverse, including companies that self-insure, fully funded health plans and plans that are related to government, labor and unions.

“The kinds of information that each of these groups may require for making decisions may differ,” Epstein said. “For example, many of the technology assessment groups servicing health plans typically want to see randomized controlled trials. … Self-insured employers and government/labor/unions may not hold the same standard necessarily.”

Two areas Epstein said are no longer valid in terms of evidence for making coverage decisions are anecdotal evidence and mechanism of action.

Epstein said that as recently as five months ago, an executive from a pharmaceutical manufacturer came to him to talk about getting more favorable coverage for a particular drug. The exec presented anecdotal evidence about physicians saying it was a better drug, but had no other evidence to support the claim.

Regarding mechanism of action, Epstein noted that five to 10 years ago, this was something that may have presented a compelling case for coverage, but now, simply having a different mechanism of action is not enough to base coverage determinations on.

Epstein also suggested that clinical trials that use a placebo as the comparator will have less weight than they typically have had, assuming there are other drugs for the same indication on the market.

“The payer environment is not a placebo environment,” he said. “Even if all you’ve done in phase III are placebo comparisons, we’re going to be forced to compare across trials.”

About 50% of trials used in the drug approval process since 2000 have included an active comparator rather than just placebo (Also see "CER Has Been A Part Of CMS Coverage Decisions In Recent Years – Avalere" - Pink Sheet, 9 May, 2011.).

Epstein also said that a brand drug with incremental benefits “is not something that’s great in a generic universe,” adding that a small incremental benefit might not be enough to land a drug in a favorable formulary location.

Finally, Epstein said that even if you can come up with compelling evidence, it still may not be good enough if the drug is facing competition from existing drugs that do well in treatment for their indications. He suggested that drug developers focus more on unmet needs rather than going into a therapeutic area where needs are being met.

Generally speaking, Epstein said that providing certain types of evidence will be more highly regarded among payers, including comparative evidence versus usual care, evidence of cost offsets and relative risk information. He also stressed the importance of getting as much data as possible onto the FDA label, which can be a key negotiation point when clients are seeking to have the PBM cover certain drugs.

He also noted that politics can sometimes play a role in getting things covered, even when the evidence is lacking.

“Even if it’s crummy evidence, if it’s evidence that scares a payer that they will wind up on the Wall Street Journal even if one person is denied access to something,” that could be enough to get something covered, Epstein said.

By Gregory Twachtman