Balancing Drug Costs, Access, and Innovation: 2 Obama Administration Officials Weigh In

A former FDA commissioner and the former head of CMS from the Obama administration jointly penned an editorial in JAMA last week about the balance needed to ensure access to therapies and doing away with financial toxicity while allowing for innovation to continue.

“The path forward requires a sustainable, fair payment system in which drug prices reflect the value provided and reward innovations that improve outcomes,” wrote Robert M. Califf, MD, and Andy Slavitt.

It will take a combination of solutions to overcome the problem, but the alternative—including disparities borne by those with low incomes, which plays into the lower average life expectancy in the United States compared with similar nations—“is intolerable and demands action,” they wrote.

Such an effort will require an approach that includes the closing of patent loopholes that prevent biosimilars from reaching the market with direct negotiation, importing certain drugs from other countries under certain circumstances where monopolistic pricing exists, and ending “nonscientific” costs such as those that have to do with pharmacy distribution (such as rebates under pharmacy benefit managers, or PBMs).

Slavitt and Califf were commenting on proposals discussed in Viewpoints in the same issue, as well as one from March of this year, about the issue of US drug pricing.

While noting that the current administration has taken steps to address some aspects of drug pricing issues, as has the FDA, efforts to address pricing of innovator therapies has lagged. In addition, the current system allows makers of older biologics to continue charging high prices indefinitely, when less expensive biosimilars could be available, they said.

But the subject is taking on greater urgency as the number of expensive, life-changing biologics is increasing, but which, at 6-figure price tags, could price the therapies out of reach.

It’s not only biologics that face rising prices, however. For example, the FDA has under priority review a Pfizer small-molecule drug, tafamidis, for the treatment of transthyretin amyloid cardiomyopathy, a rare, genetic, fatal heart condition. It has a projected annual price falling in the $150,000 to $300,000 range, according to Jerry H. Gurwitz, MD, a geriatrician and the executive director of the Meyers Primary Care Institute of Worcester, Massachusetts, and Steven D. Pearson, MD, the head of the Institute for Clinical and Economic Review.

“In providing care for the expanding older population, ‘What matters most?’ cannot mean any therapy at any price,” wrote Gurwitz and Pearson in their discussion about evaluating the price, value, and affordability of novel new therapies for an aging population.

Califf and Slavitt endorsed the idea of using realistic measurements of benefits and costs of new treatments when trying to determine what “value” means.

However, 3 of the 4 proposals discussed in JAMA—importing drugs from other countries, reforming PBMs and administrative costs, and allowing direct negotiation by Medicare for pharmaceuticals (as does the Department of Veterans Affairs)—fall short of what is needed, the 2 authors said. They are “partial remedies” that would not provide access for many, while not strongly incentivizing a vibrant market for innovative therapies.

But a value-based payment system would encourage continued development by concentrating rewards on innovations, if administrative costs are reduced and drug prices are set based on “demonstrated risk-adjusted costs of development and actual measured value.”

What is needed now is “efficient way to assess risks, benefits, and effectiveness in clinical practice,” they wrote. Our current drug development process is not set up to understand “actual effects on longevity, function, and quality of life,” they wrote. Such a system would require “longer intervals, relevant direct comparisons, and broader populations.”

Anything less than that means that determining value becomes a guessing game. But “combining rigorous methods with data from existing digital records” as can be done in certain government programs currently shows that effectiveness research is possible at a lower cost, they said.

Reference

Califf RA, Slavitt A. Lowering cost and increasing access to drugs without jeopardizing innovation. 2019. JAMA; 321(16):1571-1573. doi: 10.1001/jama.2019.3846