Drug Affordability Review By National Academies Kicks Off With Lower Profile Than Expected

A National Academies of Sciences, Engineering and Medicine project on drug access and affordability is kicking off with a very different political backdrop for its deliberations than the one that seemed likely when the working group was selected in late October; its work may still end up mattering a great deal, if and when innovator pricing is back on the table for serious policy review.

The inaugural meeting of the National Academies of Sciences, Engineering & Medicine Committee on Ensuring Patient Access to Affordable Drug Therapies Nov. 14 was a lower profile event than it might have been.

The 15-member committee is charged with a broad scope to inquire into all aspects of drug pricing, pharmaceutical spending trends, and drug insurance design. The goal is to “issue a report with findings and recommendations for policy actions that could address drug price trends, improve patient access to affordable and effective treatments, and encourage innovations that address significant needs in health care.”

When the committee was formally appointed by NASEM (formerly IoM) at the end of October, the projected timeline of 15 months meant a report would come out at the end of 2017 – potentially coinciding with legislative debate over drug pricing issues in a Clinton Administration.

With the surprise victory of Republican candidate Donald Trump, coupled with Republicans retaining control of the House and Senate, the likelihood of near-term federal legislation addressing drug pricing has all but disappeared. (Also see "The Trump Rally: GOP Sweep Is Good News For Biopharma – But Don’t Get Carried Away" - Pink Sheet, 10 Nov, 2016.)

That made for a fairly sparsely attended event to kick off the project – but arguably sets up a more suitable role for National Academies to have an impact on the pricing debate over time.

Indeed, the sudden transformation in the expected political landscape after Election Day means that the committee’s work will end up aligning more closely with the original expectations when the project was proposed at the start of 2016: providing a menu of options for longer term consideration in shaping drug pricing policy. The project was originally scoped out in January, with a timeline that would have delivered a report early in the formation of the next Administration.

Committee on Ensuring Patient Access to Affordable Drug Therapies

• Norman Augustine - (Chair) (Lockheed Martin Corporation [Retired])
• Jeff Bingaman (U.S. Senate [Retired])
• Rena Conti (The University of Chicago)
• Kay Dickersin (Johns Hopkins Bloomberg School of Public Health)
• Stacie Dusetzina (University of North Carolina at Chapel Hill)
• Martha Gaines (University of Wisconsin-Madison)
• Rebekah Gee (Louisiana Department of Health and Hospitals)
• Victoria Hale (Medicines360)
• Michelle Mello (Stanford University School of Medicine)
• Eliseo Perez-Stable (National Institute on Minority Health and Health Disparities)
• Charles Phelps (University of Rochester)
• Michael Rosenblatt (Flagship Ventures)
• Diane Rowland (The Henry J. Kaiser Family Foundation)
• Vinod Sahney (Northeastern University)
• Peter Sands (Harvard University)
• Alan Weil (Health Affairs)

National Academies of Science, Engineering & Medicine

However, the first phase of the project – naming the study committee – was not complete until Oct. 17 (and, technically, is still ongoing with two proposed members awaiting conflict of interest clearance).

That meant that the kick off meeting for the project came the week after election day, setting up the potential for a very different role: with the committee essentially offering an appealing backdrop to lend academic heft to arguments focused primarily on the political debate rather than the eventual NASEM report.

Indeed, some elements of the meeting had an element of what-might-have-been. For example, during the public comment period at the start of the day, a representative of the Fair Pricing Coalition offered a preview of the group’s upcoming recommendations for action on drug pricing during “the first 100 days” of the new Administration. Those ideas are now far more likely to end up as NASEM recommendations than as legislative or Administrative accomplishments in the next year.

Based on the make-up of the committee – and the overall tenor of the initial discussions – the pharmaceutical industry is probably lucky that the meetings will be relatively low profile events.

The initial meeting probably lacked some balance because the committee member most closely tied to industry – former Merck & Co. Inc. Chief Medical Officer Michael Rosenblatt – did not attend in person. Among the 14 members who were present, the tone of the questions and discussions emphasized themes critical of industry practices.

The committee is notable for having relatively few members who are widely known in the biopharma sector. Among the most prominent members is former New Mexico Democratic Senator Jeff Bingaman, who is very familiar to the biopharma industry as a relatively moderate Democrat who played an important role in drafting the Affordable Care Act as part of the “gang of six” in the Senate. Since leaving the Senate in 2013, Bingaman has worked on the faculty of Stanford Law School, focusing primarily on energy policy. (See box for a list of all the panel members.)

A Tale Of Two Panels

The first two formal sessions set up what will likely be the main dynamic for the project, with one panel calling for a focus on drivers of increased drug costs while the second focused more on exploring avenues to improve availability of highly effective therapies.

The first panel featured Brigham & Women’s Hospital researcher Aaron Kesselheim, who offered a broad framework of potential considerations for policy interventions to address drug costs. The panel also featured speakers from the Government Accountability Office, the Institute for Medicaid Innovation, and the UN High Level Panel on Access to Medicines.

Kesselheim urged focusing the topic on sets of recommendations targeted at three different aspects of product lifecycles:

• Brands with patent protection. Kesselheim noted that the “most effective way” to intervene on pricing for those products would be set prices directly. “That won’t happen,” he said, “and really, really won’t happen now” in light of the election results. Instead, Kesselheim argued, the focus should be on a number of other areas like giving government purchasers “more latitude,” eliminating copay cards and coupons, addressing DTC advertising and product sampling, and encouraging more integrated health care delivery like ACOs.
• The brand-to-generic transition. Here, Kesselheim said, the focus needs to be on reining in “evergreening” or “product-hopping” strategies. He called for a “moratorium on new exclusivity incentives,” action to address “pay-for-delay” deals and enhanced funding for FDA’s generic drug reviews.
• The “patent-free” period. Kesselheim argued for greater attention to “sole generics” and for allowing importation of competing products in the context of excessive price increases.

Kesselheim captured the tone of the meeting for those who had been hoping for a new Administration ready to focus on new policies to address drug pricing: “don’t give up hope,” he said.

The second panel featured Pfizer Inc. Chief Medical Officer Freda Lewis-Hall, offering an industry perspective on the issues, including arguments intended to put the drug cost issues in a broader context of health care spending and global norms. She argued for a focus on improving insurance coverage and changing policies that inhibit value-based contracting.

Lewis-Hall’s appearance at the NASEM panel continues Pfizer’s role to stake out a leadership position in reframing the pricing debate. CEO Ian Read has begun talking about rebates having outlived their usefulness as a component of pharmaceutical distribution, while the company has simultaneously been advertising around the value of innovation. (Also see "Pfizer’s Read Criticizes Rebates Amid Changing Market Dynamics" - Scrip, 1 Nov, 2016.)

Cancer Cost-Effectiveness

The second panel also included an intriguing cost-effectiveness presentation by Columbia University economist Frank Lichtenberg. He presented an analysis purporting to show that new oncology drugs (those approved in the last 15 years) were responsible for a net increase of 689,000 life years in 2014 in the US.

That suggests an extremely high value for new cancer drugs, given that total spending on oncology therapies that year was $32 billion, or about $50,000 per life year gained. (Lichtenberg made the case for an even higher cost-effectiveness level, given that new drugs were only a portion of the $32 billion in total spending, and that – he argued – there would be additional cost savings from reduced hospitalization.)

Lichtenberg’s data could become a very important component of the pharmaceutical industry’s arguments in support of innovation-focused policies if they are vetted and generally accepted.

From the editors of the RPM Report.