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$50M for Drug Comparisons Could Produce Valuable Results

MANAGED CARE April 2004. © MediMedia USA
Legislation & Regulation

$50M for Drug Comparisons Could Produce Valuable Results

The Medicare amendment adopted late last year contains a provision that could help P&T committees, not to mention consumers, evaluate competing drugs.
John Carroll
MANAGED CARE April 2004. ©MediMedia USA

The Medicare amendment adopted late last year contains a provision that could help P&T committees, not to mention consumers, evaluate competing drugs.

John Carroll

In all the brouhaha over the Medicare reform bill, one provision of the new law slipped into effect with barely a ripple: a $50 million authorization for the head-to-head testing of existing drugs.

On the surface, that wouldn't appear to be too controversial. But if you made a drug that costs considerably more than the competition, head-to-head comparisons could provoke some heavyweight opposition. And as the prices of new drugs continue to surge, the sensitivities over any kind of direct comparisons have grown increasingly intense.

Case in point

Many biotech drug developers furiously attacked a Medicare requirement passed in 2002 that allowed the federal agency to pay the same for a new drug as it paid for an existing one, provided it was deemed functionally equivalent. Blindsided by the rule, the drug companies vehemently maintained that the measure endangered innovation, that new drugs were massively expensive to develop, and that higher prices were needed to recoup their costs in bringing a drug to market. Congress backed off in the newly enacted Medicare amendments, stripping Medicare of any power to negotiate drug prices.

The administration, meanwhile, has yet to fund the head-to-head pharmaceutical studies, which are to be coordinated by the Agency for Health Research and Quality, and Amgen — for one — doesn't think it should ever be provided.

George Morrow, executive vice president for commercial operations at Amgen, told the New York Times recently that new provisions in the Medicare bill make any head-to-head tests pointless.

Observers have pointed out that Amgen also has a lot at stake. Amgen is the manufacturer of Aranesp, a cancer drug that costs $1,300 a vial, compared with Johnson & Johnson's Procrit, which sells for a little more than a third of that figure.

A spokesman for the industry trade group Pharmaceutical Research and Manufacturers of America says it has no problem with government sponsored, head-to-head drug research — provided that it is being designed to improve care and not just as a tool to cut costs.

"We support it," says PhRMA spokesman Court Rosen, "given the pluralism of studies that need to be performed in cooperation with the private sector. But we need to make sure the goal is improved patient care and efficiency, not just budget cutting."

Some in the managed care industry, though, say that head-to-head testing has never been more important — precisely because consumers and providers, as well as MCOs, need the data to help control costs.

"It is horrendously important," says Sharon Levine, MD, associate executive director of the Permanente Medical Group, representing Kaiser's Northern California physicians. "Given the costs to provide and deliver health care today, as they increase, the need to look for every opportunity to extract value has become much more important. We are in a time when more and more people are saying, I can't afford access to the promises that medical science is delivering. The miracles of modern medicine are faint solace if more and more people can't access them."

A different story

In some countries, such as Norway and Australia, head-to-head testing is a basic standard required for approval. But in this country it's a different story. "It's been spotty at best and it's been controlled by the drug companies to date," says Mark Gibson, deputy director of the Portland, Oregon-based Center for Evidence Based Policy. Gibson's center has specialized in"research synthesis" (weighing the information for thoroughness and accuracy and then providing the results to members, who are primarily Medicaid officials looking to see how drugs compare when negotiating which drugs will be provided at what cost to the state.)

Gibson says that nine states have signed on so far. State drug budgets for Medicaid have been hemorrhaging, and Gibson says there's a big demand for better clinical information for the drugs in the marketplace.

For Kaiser Permanente, says Levine, head-to-head studies would give it a chance to sift through hard clinical data that would influence how its pharmaceutical panel recommends drugs for the MCO's drug formulary.

"We look for opportunities to say that for the majority of patients, this will be a good therapeutic choice," says Levine. But this can be an enormously complex field, and one that is fraught with a high degree of uncertainty in the best of circumstances. Often, she says, physicians end up prescribing drugs "knowing that 10 percent to 30 percent of the time, you'll need another drug."

Increasingly, managed care companies like Kaiser Permanente are evaluating the effectiveness of drugs in a crowded field of competing medications. But the FDA requires multiple clinical trials of drugs in comparison to placebos alone. Investigational drugs, she says, are being compared to nothing. And in the rare instances when there has been head-to-head testing, adds Levine, the information is often of little use in actually comparing drug effectiveness.

Take the recent trial between Lipitor and Pravachol. By the time the study was completed, the trial compared a full dose (80 mg) of Lipitor to a half dose (40 mg) of Pravachol. It showed that lowering cholesterol was extremely important in the health of patients, says Levine, but it served little use as a head-to-head comparison of two drugs in an increasingly crowded field of medications.

That's where the government can make a huge difference. "The government's role is important in terms of having the resources to do it," says Levine. "The manufacturers don't want this, they don't want to go head to head against other drugs."

Given the swelling government deficit, it's not hard to see why the administration hasn't provided the funding for the tests, says Gibson. But they're going about it all wrong.

"Instead of not funding, they ought to repeal the part of the bill that says the government can't use outcome information to get the drug companies to negotiate on price," he says. "When you can't bargain, you're not looking for a functional marketplace, but charging what drug companies believe the market will bear."

Of course, in a world where drug companies spend hundreds of millions of dollars to get a treatment through the FDA's approval process, $50 million isn't a lot of research money.

"I think it's a start," says Levine. "It's enough to open the door, and it's enough to show, if it's well done, what it can accomplish."

She adds: "It's the only way to force manufacturers to compete for the business. I know there's a hue and cry about 'me-too' drugs, but if we didn't have more than one drug in a category, there would be no competition and no opportunity for therapeutic enhancement."

Expensive new drugs

Drug comparisons will grow in importance, says Levine. A new generation of biotech companies has been developing expensive new drugs — like rheumatoid arthritis medications — that cost tens of thousands of dollars a year.

It's the kind of information that facilitates a functioning marketplace, agrees Gibson. A market based on such information would be more efficient than reimportation. "Pharmaceutical companies have ways to make sure that doesn't work very well. But when larger purchasers get aggressive about competition, there will be far more savings, long-term and sustainable."

John Carroll is a freelance writer living near Austin, Texas. He's been a contributing editor to Managed Care for three years.

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