Formulary Files

Who'da Thunk It? Pharma Warms Up To FDA Taking Economics Into Consideration


Krishna Rutvij Patel, PharmD

Pharmaceutical industry executives used to dread the prospect of FDA factoring economics into their approval decisions. Now close to half support the idea, according to a survey conducted by PwC, the consulting company.

When PwC surveyed 100 C-suite executives and managers whose responsibilities include dealing with the FDA, 43% said they support having the FDA evaluating a drug’s economics as well as its safety and efficacy, compared with only 14% in 2010.

Industry respondents’ opinions on whether drug approvals should depend on both economic and clinical value

Source: “The FDA and industry: A Recipe for Collaboration in the New Health Economy,” PwC Health Research Institute, 2015

What happened between 2010 and 2014 to cause this change in attitude? The momentum away from fee-for-service to value-based payment started to build. Pharma executives recognize that the market conditions for their products—conditions that are putting a new emphasis on cost and outcomes—are changing. Another factor: The unwelcome attention that the industry is getting for drugs with high price tags. The PwC report on the survey also points out that pharmaceutical companies are now global enterprises. Other countries require economic analysis of new drugs, so companies have experience making the value case for their products.

The attitude shift may also reflect that pharma executives have fewer complaints about the FDA these days. Review times have been cut almost in half. Many drugs are now reviewed in an expedited manner. The FDA has set up various tracks—priority review, accelerated approval—that have sped up the approval process for innovative drugs, particularly those that address an unmet need.

Yet pharma executives know that speed and innovation only go so far. Once a product emerges from the FDA, it must get through a gantlet of increasingly skeptical payers and prescribers. The FDA stamp of approval on the economic benefits of their new wares might be an advantage for drug developers and manufacturers.

FDA approvals that consider economics would also help payers looking to lower costs. Patients might benefit from greater access to expensive specialty drugs.

Pharmaceutical companies have been on a wild ride lately. Federal health care reform, as well as other regulatory and economic changes, has shaken up their present-day reality. Uncertainty cloaks their futures.

But it does seem that the days when pharma developed drugs more or less on its own are numbered. Instead, we’re going to see collaboration—with the FDA, payers, prescribers, and patients—so the companies will bring to market products that are cost-effective and truly address an unmet need. That’s an optimistic vision. Let’s hope it turns out that way.