How The Feds Discourage Prescription Drug Competition

Print 08 July 2015
Scott Gottlieb / Forbes

There’s a growing refrain among those who pay for healthcare services that they want new products to deliver more value. When it comes to prescription drugs, this is usually interpreted to mean medicines that provide more benefit, at lower costs per increment of clinical advantage. Drugs that deliver more bang for the buck.

But pharmaceutical competition usually turns on claims of absolute efficacy rather than the relative and comparative merits of a medicine. There is one obvious reason.

Drug companies can rarely make claims around the value of their medicines.

Economic information of greatest interest to purchasers like P&T committees or payers often is derived from meta-analyses, uncontrolled observational studies, and other similar sources. Yet under current regulatory practices, these studies are typically not considered sufficient to support statements in FDA-approved labeling.

As a result, manufacturers, no matter how rigorously they conduct their studies, cannot share the resulting information. The end result is that there is less incentive to develop this data in the first instance. Even if drug makers had rigorous data looking at the comparative risks and benefits of their medicines against cheaper alternatives, it’s unlikely they could share the economic aspects of these results under current FDA rules. Even when the data is being shared only with payers.

This is directly impacting the ability for drug companies to generate this information. For the first time, an analysis gives an indication of how just how much the current regulatory framework dissuades drug makers from developing information that they can’t promote or speak about. The survey was conducted by Avalere Health; a healthcare consulting firm where I serve as an advisor.

Setting aside the question of whether the current rules restricting this speech are constitutionally permissible, or violate First Amendment protections, the fact is that the rules and enforcement chill the free exchange of health economic information.

Drug companies can only make claims around benefits, and usually relative to a placebo. As a consequence, resources are plumbed into trials that will enable the kinds of information and results that government rules allow drug makers to share.

In the end, the market is left less competitive, not only because there is less information, but also the data that gets reported can be skewed to one side of the debate about value. Manufacturers can’t put forward data arguing the value of their products, but those with economic incentive to control access to products can.

At the same time, government policies are deliberately seeking the development of this kind of economic-based information that speaks to aspects of a product’s value. The Affordable Care Act specifically instructs government agencies to disseminate research findings “with respect to the relative health outcomes, clinical effectiveness, and appropriateness of . . . medical treatments [and] services.”

To these ends, the Patient Centered Outcome Research Institute, created by the ACA, is devising a research agenda to support the development of data that compare treatment options. PCORI is creating standards for the conduct of real-world evidence studies and other trial designs that are unlikely to meet the standards for sharing under FDA rules, including systematic reviews and observational studies.

Here you have the strange specter of the federal government funding the creation of information that the feds then bar certain parties from speaking about.

Meanwhile, there’s widespread recognition that this information helps inform decisions of intermediaries who are making purchasing decisions on behalf of consumers – even while the FDA has not wanted to allow drug makers to produce and share this sort of data. The agency has largely disregarded a section of the 1997 FDA Modernization Act (known as FDAMA 114) that was meant to create a safe harbor for drug makers to share health economic information. The FDA’s neglect of that provision was so glaring, that Congress is attempting to re-codify the original language as part broader FDA reform legislation now winding through the House.

The purpose of the Avalere survey was to determine the extent to which FDA’s current policies was restraining the ability of sponsors to develop and share information about the economic value of their products. It’s a useful data point in the larger debate over how much FDA policies pertaining to what drug makers can promote has a chilling effect on what information is eventually generated.

The survey was based on 15 responses representing 14 companies. The majority of respondents indicated that lack of FDA guidance or regulations outlining what economic information drug makers can share have impacted their organizations’ development of that information in the first place. The research chiefs cited concern about enforcement actions and lack of clarity on whether FDA respects FDAMA 114, which was meant to create a “safe harbor” for the sharing of economic information.

With additional guidance implementing the safe harbor that was intended by FDAMA 114, 86% of organizations said that they would invest in more studies to support development of healthcare economic information.

When designing studies, the drug makers also said that their own product label does not only limit them, but they are also limited by their competitor’s label. As a practical matter, this forbids many interesting comparative questions that could be explored through research, since under existing constructs both products would need the identical indications for FDA to allow drug makers to draw comparisons.

Coupled with issues around the feasibility of conducting head-to-head studies, manufacturers have been challenged to respond to evidence demands and generate studies that would be both acceptable to FDA and meaningful to providers.

FDA’s reluctance to embrace healthcare economic information stands apart from the changing basis of how clinical decisions are made and who makes them — increasingly formularies, P&T committees and other intermediaries.

Moreover, it doesn’t comport with the increasing need by these drug purchasers for information on relative economic value of treatments. Or the changing demands of cost conscious consumers exposed to high deductibles and closed formularies.

Policymakers say they want cost and value to be factors in how decisions are reflected in healthcare. Should they be comfortable with a landscape where sponsors are discouraged from generating this data about their products, and as a consequence prohibited from competing on these important domains? Or where the information and speakers are biased in favor of one side of that debate?

Since FDAMA 114 was passed almost two decades ago, it seems as though FDA’s enforcement activities in the intervening years have already effectively written that provision out of the statute. FDA has become less supportive of sharing economic information about drugs – making FDAMA 114’s usefulness extremely low. Yet the importance of enabling the generation and sharing of economic information about drugs is only increasing. The market is demanding more of this information.

Absent a viable path to share this information, it follows that there will simply be less of it. This will reduce competition, and leave consumers, physicians, and the entities that purchase medicines with less information to inform their decisions.

If we’re truly honest about seeking greater value in how drugs are pursued and used, then we should be earnest in wanting a market with more information that speaks to these attributes, and more competition in pursuit of these elements.

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