9-18-2013 - RPM Report - Covering Breakthroughs: Payors in New Territory | Friends of Cancer Research

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9-18-2013 - RPM Report - Covering Breakthroughs: Payors in New Territory

9-18-2013 - RPM Report - Covering Breakthroughs: Payors in New Territory

September 18, 2013

By Laura Helbling, Sue Sutter

FDA has granted more than two dozen “Breakthrough Therapy” designations. Not everyone is sure that’s a great thing. Payors, in particular, are getting “nervous” about what hyperfast development of hyper-expensive therapies will mean.

It seems like FDA’s new “Breakthrough Therapy” pathway has everybody excited.

The agency has received nearly 100 requests to designate pipeline projects as “Breakthroughs,” and had granted more than two dozen (26 as of Sept. 6). That is a lot of activity in the first year of a new program. (“Breakthrough” was created by the FDA Safety & Innovation Act; the pathway took effect in July 2012, but the first designation wasn’t granted until November.)

Biotech start-ups crow when they receive the designation, but even the largest companies, like GlaxoSmithKline PLC and Pfizer Inc., are issuing press releases when they received designations.("FDA’s “Breakthrough” Exceeds Expectations; Will It Break The Bank?" — The RPM Report, August 2013)

But not everyone shares that enthusiasm. Payors, in particular, are nervous about what the actual impact of these “Breakthroughs” will be. That, at least, is how Aetna Inc. National Medical Director of Oncology Solutions Michael Kolodziej characterized the situation at a conference sponsored by Friends of Cancer Research and Alexandria Center for Life Science. ("Will Breakthrough Therapies Face Reimbursement Challenges?" — "The Pink Sheet," Sep. 16, 2013)

The meeting focused on a Friends of Cancer Research proposal to address the role of companion diagnostics for FDA “Breakthrough Therapies.” Since most of the products gaining the designation are targeted therapies, there is a growing need for internal FDA process changes to assure that companion diagnostic reviews keep pace with the “all hands on deck” approach envisioned by the new program. ("Companion Diagnostics For Breakthrough Drugs Also Getting Swift Attention, FDA Says" — "The Pink Sheet," Sep. 16, 2013)

Amid the enthusiasm voiced by industry and FDA officials for the proposed improvements in diagnostic review, Kolodziej offered a note of caution. Although payers “love” companion diagnostics because they identify the appropriate patient population for a given drug, “the whole breakthrough diagnostics stuff frankly makes us a little bit nervous,” he said.

That nervousness is understandable: new diagnostic tests can be relatively expensive—especially if they are used to screen a relatively large patient population (like non-small cell lung cancer) for a relatively rare mutation (like ALK). Moreover, in an era where six-figure price tags for novel cancer therapies are routine, payors are certain to wonder if rushing dozens more to market is necessarily a good thing. ("The Zaltrap Price Debate: Less Than Meets The Eye" — The RPM Report, November 2012)

But there is a deeper issue as well: payors have learned the hard way that limiting a “targeted” treatment to a specific subpopulation is often much easier in the context of clinical trial analysis than in the practice of medicine.

That’s not a new concern: ever since the concept of “personalized medicine” first gained currency almost a decade ago, payors have worried that the “targeting” wouldn’t hold up in practice, and that they would end up paying for therapies in settings where the biomarker was negative. ("Reimbursing Designer Drugs" — The RPM Report, October 2006)

In other words, the “Breakthrough Therapy” has not yet led to a breakthrough in the dynamics of payor attitudes towards specialty medicines.

 "We Love Companion Diagnostics"

Payors do see significant potential for companion diagnostics, and Kolodziej sees them as a key to ending (or at least sharply curtailing) off-label use of medicines in oncolgoy.

“There’s a history here in terms of off label use in oncology,” Kolodziej said. “Them days is over guys.”

That’s why “we love companion diagnostics. They’re great for us.” He said if someone tries to ask Aetna to pay for a BRAF test on a colon cancer patient, “we better say no” because that test doesn’t work in colon cancer. And if you have both melanoma and colon cancer – that’s a bad prognosis.

“What I’m proposing to you is reasonable value-based approach to this,” he said. However, “we have huge gaps in our data.”

On the one hand, “we recognize unmet need,” and “we recognize the therapies that are being thrown at these diseases are not very effective,” Kolodziej said. “We would like much more effective treatment.”

“We are not fools, however, and there are no new drugs to come to market that are cheaper than old drugs.… So, we have to find the way to get the right drug to the right patient.”

Watching CMS on Breakthough Therapies

Payors are also waiting to see how breakthroughs play out in the public payor space, Kolodziej said.

“The “Breakthrough” designation is new,” he said. “We have a long history of knowing how to deal with traditional FDA approval. We know what Accelerated Approval means, and we know how CMS handles that. We want to see how this is going to play out. What is CMS going to do with this?”

The reference to Acclerated Approval is instructive. When that pathway was new (in the early 1990s), there were questions about whether such drugs would be reimbused. FDA worked to emphasize that the new pathway was not a form of “conditional” approval, and that drugs approved via AA met the same standard for safety and efficacy as traditional approvals.

As with Accelerated Approval, FDA is wading into the discussion of reimbursability with “Breakthrough.” In fact, Center for Drug Evaluation and Research Director Janet Woodcock argues that in this case, reimbursement decisions should be simpler, not harder.

Woodcock pointed out that “Breakthrough” therapies go through the same review processes as any other drug—including, potentially, Accelerated Approval. Thus, the actual terms of the approval shouldn’t be novel or different.

Moreover, “what we expect from Breakthrough therapies that actually deliver their early promise is they will be much better than the drugs that we’re using now.”

She acknowledged that some agents designated as Breakthroughs will not be approved because of significant toxicities, while the efficacy of some others ultimately will be comparable to that of drugs previously approved for a given condition. “But we expect that a fair percentage of the drugs that we give Breakthrough designation [to] will turn out to have activities that have not been achieved before with other drugs.”

FDA is being judicious in giving out designations, with only about one-third of requests being granted.

As with other new technologies, approved Breakthrough therapies will be expensive, Woodcock acknowledged. However, they are not “going to be kind of mediocre and expensive in general,” given the high standard for a “Breakthrough” designation. “And they certainly won’t have lower approval standards than other drugs.”

"If It Works, It Will Be A Covered Benefit"

The uncertainty about Accelerated Approval also reflected the somewhat ad hoc nature of the policy, promulgated via regulation (after early precedents with HIV therapies). “Breakthrough” was enacted via statute, and the status of any resulting products as “fully” approved should not be in much doubt.

On the other hand, third-party reimbursement is much more common in 2013 than it was in 1992 and so more payors have more at stake in reacting to the process. And, as Kolodziej made clear, what a typical new drug cost in 1992 is very different than the likely price of a “Breakthrough” in 2013.

“Companion diagnostics are frankly the least of our problems because what to do with paying for the drugs are the most of our problems,” Kolodziej said. “We are looking to wiser people to inform us.”

Kolodziej noted what he calls a misconception that payors “look at price tag first and evidence of benefit second.” He says it’s the other way around.

“First is the analysis of the evidence that it works,” he said. “And if it works, it will be a covered benefit. The evidence shop is separate from the contracting shop,” he declared. “They say we think there’s great evidence this works – then they send it to the contracting guys and they figure out how we’ll pay for it.”

“We don’t not cover something because it costs too much money,” Kolodziej said. “We don’t cover because there’s no adequate evidence.”

“Another hurdle will be introducing value, especially when there are multiple choices at a certain cost. “This isn’t decision Aetna is making. It’s societal,” Kolodziej said. “The starting line is evidence.”