Drug Approval Reforms Ineffective Without Payer Reforms, Tunis Argues
Executive Summary
Granting payers more conditional coverage authority may be necessary for legislation to succeed at accelerating biomedical innovation, the former CMS CMO argues, but industry may not be on board.
Legislation to accelerate more drugs to market is unlikely to succeed without provisions that allow payers to ensure the products fulfill post-marketing research commitments successfully or face coverage withdrawal, former CMS Chief Medical Officer Sean Tunis said.
Such provisions could actually reduce payment uncertainty and lower risk for investors and innovators, Tunis added in testimony to the House Energy and Commerce Committee Subcommittee on Health May 20.
“It seems to me like it virtually has to become automatic that every time there is something that comes through an accelerated process at the FDA it ought to be paid for with some requirements imposed by the payer that it is only going to be paid for as those additional studies are being done,” Tunis said in an subsequent interview.
“And probably there shouldn’t be a lot of use in patients who are not contributing data to help answer those questions.”
The Energy and Commerce Committee has been considering a number of proposals that would get new therapies to patients faster as part of its 21st Century Cures Initiatives, which aims to produce legislation that would modernize and speed U.S. biomedical innovation (see related story, (Also see "Where’s Upton? 21st Century Cures Take Temporary Back Seat To The Internet" - Pink Sheet, 26 May, 2014.)).
On the legislators’ radar are:
- Increased use of accelerated approval;
- New limited population approval pathway that would permit approvals based on smaller data sets with indications for specific patient subgroups; and
- Adaptive approvals that would allow for evidence generation across the life cycle of a drug granting approvals in iteratively expanded patient populations as additional evidence is collected (Also see "Accelerated Approval Could Be Even Faster With Intermediate Clinical Endpoints" - Pink Sheet, 20 May, 2014.).
Tunis told “The Pink Sheet” he is supportive of promoting innovation by accelerating regulatory review, but argued reform that stops at drug approval is half-finished. “It’s probably not going to be very successful unless we think about how the back end is set up to make it viable.”
These approval pathways, which shift more of the clinical evidence requirement to the post-market space, have implications for the health care delivery system that “need to be thought through more carefully,” Tunis, founder and CEO of the Center for Medical Technology Policy, warned.
“We don’t want to create a super highway of innovation for the regulatory space and then have a gravel road for those in the reimbursement space,” Tunis told Congress.
The push for less premarket data comes just as payers are being pushed in the other direction – to make coverage decisions on stronger datasets to improve health outcomes while lowering costs.
Health care reform and broader economic forces are “putting pressure on payers and providers and health systems to have more evidence of comparative effectiveness and value in order to be able to look for high quality efficient care. So we’ve got some tension between what we are trying to do on each end of the policy spectrum,” Tunis said.
“From a payer perspective it is not particularly reassuring to consider the prospect of increasing numbers of new drugs being approved more rapidly … with less extensive data on safety and efficacy,” he added in written testimony.
Insurance companies have already expressed skepticism about coverage of products approved under FDA’s new “breakthrough” designation (Also see "Will Breakthrough Therapies Face Reimbursement Challenges?" - Pink Sheet, 16 Sep, 2013.).
Giving Payers More Control = Minimizing Headwind To Industry?
Tunis stressed the importance of including payers in the 21st Century Cures discussion, noting they are often left out.
“We don’t want to create a super highway of innovation for the regulatory space and then have a gravel road for those in the reimbursement space,” he said.
Tunis’ comment that payers often get left out of these innovation discussions received praise from Rep. Michael Burgess, R-Texas, who said that “we want to avoid the public relations disasters that were Avastin and Provenge from a year or two ago” (Also see "What Will CMS Do With Avastin In Breast Cancer?" - Pink Sheet, 1 Feb, 2012.).
Tunis proposed three strategies that could “minimize the potential headwind to innovation” due to the quality, cost and efficiency pressures of payers. They are based on recommendations made in a report to the White House led by Stanford University’s Clinical Excellence Research Center:
- Expand use of conditional payment mechanisms where coverage is conditional on collection of additional data post-market
- Payers create consistent and explicit standards of evidence for effectiveness and value
- Improve clinical research infrastructure within the delivery system so post-market data can be easily collected for payers
Conditional payment could allow for earlier payment for products that have substantial potential for reducing cost and improving outcomes, that insurers might otherwise turn away, Tunis said.
It will give industry more assurance their products will get coverage despite limited clinical datasets.
Such assurance could be crucial as industry and payers are increasingly at odds over the high costs of new innovations, with insurance companies pressing for more price transparency and demonstration of value. The debate has gained new fuel due to the high price tag of Gilead Sciences Inc.’s hepatitis C treatment Sovaldi (sofosbuvir) (see related story, (Also see "In Drug Price Debate, Pharma Turns Focus To Coverage, But Insurers Want Price Transparency" - Pink Sheet, 26 May, 2014.)).
“The perfect world would be just pay for the stuff when FDA’s through with it. That’s not going to happen. The payers, the health system just isn’t able to absorb that much more expensive new stuff,” Tunis said.
“Nobody has the power to eliminate the downward pressure on spending that causes health systems and payers to be a lot more cautious about adopting particularly expensive new technologies. … There is no scenario that says the payers are going to continue to pay like they have for the last 20 years,” Tunis said in an interview.
“The perfect world would be just pay for the stuff when FDA’s through with it. That’s not going to happen. The payers, the health system just isn’t able to absorb that much more expensive new stuff.”
And of all the realistic options he believes his may be the best for pharma companies – better than placing drugs on fourth tiers with high copays, or using stringent utilization review criteria.
Payers Don’t Want To Subsidize R&D
Private insurers may need some convincing on the benefits of Tunis’ reforms.
While CMS already has a coverage with evidence development mechanism, Tunis said the process is almost never used for drugs because they tend to be automatically reimbursed without having to go through any national coverage process.
And Tunis doesn’t think private payers are particularly thrilled with CMS’ coverage with evidence development program as it stands now.
“To a large degree the payers’ view is that the policy mechanism really involves paying for something before it’s really been shown that it’s ready to be paid for. … Their view is we should just wait until the evidence meets our medical necessity standards and then we’ll cover it and it shouldn’t be the private payer’s responsibility to subsidize R&D for the life sciences industry.”
However, Tunis thinks payers will come around as FDA approves more drugs through accelerated pathways and they are hit with the pressure to cover these products.
As those drugs start to enter the market, “it is going to be very difficult for payers to say ‘no’, even though the evidence that was provided to the FDA isn’t at the level that they usually expect.” Forced to cover the products in some way, insurers would then prefer to offer coverage that generated additional data rather than providing unconditional coverage.
As part of this process, Tunis also believes payers should be more explicit in the types of evidence they need to see from industry to warrant coverage for both traditional and accelerated approvals.
HHS agencies should engage in public-private partnerships to standardize the evidentiary requirements for demonstrating the effectiveness and value of new biomedical technologies, Tunis said. This would allow innovators to clearly understand what studies would be adequate to demonstrate effectiveness and value.
Transparency and consistency in evidence requirements among both public and private payers “would significantly reduce payment uncertainty for investors and innovators, decreasing the risk, cost and duration of clinical programs,” Tunis said.
Because there are serious political challenges of withdrawing coverage once it is provided, Tunis said having clearly defined agreements with pre-defined outcomes and cost targets for retaining coverage are critical to the success of conditional payment programs.
The data needed by payers will not necessarily mimic the data collected by FDA post-marketing requirements, and some of these studies and policies would need to be coordinated across multiple private payers to make them large, efficient and cost-effective, Tunis said.
To generate the evidence that will inform payer decisions, the delivery system should be leveraged as a platform for research. Investments should be made in improving the research infrastructure and life sciences companies should be able to contribute and use the infrastructure to improve their own clinical studies.
Programs like the Patient-Centered Outcomes Research Institute’s (PCORI) PCORnet, a national patient-centered clinical research network, have the potential to provide the practice-based research infrastructure to generate evidence of drug effectiveness and value, Tunis said (Also see "PCORI To Fund Development Of Data Networks For CER, Clinical Development" - Pink Sheet, 23 Apr, 2013.).
BIO Pushes Back
Industry may be a hard sell for Tunis’ suggestions. Firms are already prepared to make the case that faster approvals don’t equal inferior treatments.
Biotechnology Industry Organization Executive VP of Health Sara Radcliffe told “The Pink Sheet” that because products approved through an expedited review pathway must meet the same evidence standards of other approved products, they must be treated the same as treatments approved under a traditional pathway for coding, coverage and payment purposes.
Radcliffe, who also presented her own suggestions for the 21st Century Cures initiative May 20, said “It is important that the FDA-approved label not send mixed messages to payers that a product approved under expedited review pathways is anything less than a full approval that meets FDA’s substantial evidence standard.”
“Any suggestion that a product is a ‘conditional approval’ or has not fully demonstrated clinical benefit could result in non-coverage of the product by an insurer, which would undermine the stated intent of expedited review and approval to improve patient access to treatments for serious and life-threatening conditions.”