Healthcare Reform Proposals Challenge Manufacturers - Pharmaceutical Technology

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Healthcare Reform Proposals Challenge Manufacturers
Comparative-effectiveness analysis aims to promote appropriate pharmaceutical spending.

Pharmaceutical Technology

Industry concerns

Experiences such as these raise concerns among medical-product manufacturers that CE analysis could be manipulated to favor a cost-cutting agenda, as opposed to promoting high-quality care, and could block rapid acceptance of new treatments. A key contributor to the CE clamor is the emergence of new biotechnology therapies and medical diagnostics that could improve public health and save lives but are fairly expensive.

Pharmaceutical companies acknowledge that objective CE research could increase safe drug use. At the same time, industry leaders maintain that payers should cover all medicines that FDA deems safe and effective, and disregard costs in effectiveness calculations. Additional research requirements for sponsors, moreover, could be costly: prospective studies cost hundreds of millions of dollars and are vastly different from relatively low-cost retrospective data reviews. A white paper issued by the Biotechnology Industry Organization last year questions whether CE research methods are sufficiently developed to deal with the complexities of biotechnological therapies and the wide variation in individual response.

At an April briefing in Washington sponsored by the Alliance for Health Reform, David Nexon, senior vice-president of the medical-device association AdvaMed, raised concerns that CE research might be used to support a "cheapest is best" approach. CE studies are "rarely definitive slam dunks," he said, noting that one treatment often works better for certain patients than another one.

But the prospect that more effective (and limited) use of medical technology could save billions is too attractive for payers and insurers to ignore. "It makes no sense to us" to establish best treatment processes and then ignore that information when making determinations about coverage, said Karen Ignagni, president of America's Health Insurance Plans, which represents insurers and health plans. While CE analysis might not lead an insurer to deny coverage, a health plan might put a more costly drug without a clear advantage in a higher formulary tier, Ignagni noted. "But taking cost out of the equation is putting your head in the sand," Ignagni observed.

Refining the process

Pharmaceutical manufacturers want policymakers to examine several other strategies for reining in healthcare costs, including initiatives to reduce medical errors, curb hospital-acquired infections, adopt value-based purchasing, and create information-technology systems. Industry leaders also want a seat at the table in setting research priorities, standards, and methods. The National Pharmaceutical Council is positioning itself to represent pharmaceutical interests in the debate with its expanded focus on how to use evidence-based analysis to make drug-coverage decisions.

Drugmakers are leery of a multibillion-dollar agency sponsoring comparative studies that Medicare and other payers would use to make product-coverage and reimbursement decisions. And added study requirements could erect higher hurdles to marketing new drugs. Yet the comparative-research approach may be preferable to price controls in the guise of government negotiations for the Medicare drug benefit, coverage denials, and limits on access to new technologies.

In Washington This Month

  • Presidential candidates urge cuts in drug spending to finance expanded healthcare.
  • Democrats and Republicans support increased generic drug competition and drug reimporting.
  • Advocates argue that a comparative-effectiveness research organization will promote more appropriate care.

Jill Wechsler is Pharmaceutical Technology's Washington editor, 7715 Rocton Ave., Chevy Chase, MD 20815, tel. 301.656.4634,


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