The past year has seen a number of important changes in the legislative and policy landscape for biopharmaceutical companies of all sizes: Passage of the 21st Century Cures Act in December and PDUFA VI as part of the FDA Reauthorization Act (FDARA) in August, as well as the confirmation of Dr. Scott Gottlieb as FDA Commissioner, who has set an ambitious agenda for the agency. Continued talks on Capitol Hill on how best to fix the health insurance markets, and wider discussions about how to move towards value based payment systems are also important issues as we move into next year.
Looking ahead as to how these issues will affect innovative biopharmaceutical companies was the topic of a lively panel today at the 2017 BIO Investor Forum in San Francisco, California. Moderated by Dr. Cartier Esham, BIO’s Executive Vice President for Emerging Companies, the panelists included:
- Jacques Bouchy, Senior Vice President Business Development and Corporate Communications, Kineta, Inc.
- Sara Radcliffe, President and Chief Executive Officer, California Life Sciences Association (CLSA)
- Brian Rye, Senior Healthcare Policy Analyst, Bloomberg Intelligence
- Diana Shineman, PhD, Vice President of Research and Medical Programs, Tourette Association of America
- Joel White, President, Council for Affordable Health Coverage (CAHC)
Value based payment arrangements – in which payment for a treatment is tied to the outcome it produces, rather than simply the volume of product sold – were a big topic of discussion.
“Value based contracting holds huge promise for us to focus the system on value, but some of the best examples of this so far have really been between specific companies and specific health plans. I think the details can be very difficult to pin down in a generalized way that would apply across many different arrangements. So as far as moving the concept of value based contracting forward with regard to what criteria govern these, myself I would look more toward advances in the private sector for that, but from the Federal government perspective, I think there’s a huge role in moving obstacles.”
Those obstacles include the Physician Self-Referral Law (“Stark” law) and the Federal Anti-Kickback statute, which could be interpreted to prohibit drug companies from providing discounts and rebates for their products based upon the performance of a drug in a given patient or class of patients. “Both of these laws really present some obstacles to innovative value-based contracting, and so that’s where, at least at CLSA, we’re really trying to think through ‘what proposals can we make to really remove those obstacles?’” Radcliffe continued.
Bloomberg’s Brian Rye also named Medicaid’s “Best Price” requirement as a barrier to value based contracting. “When you start talking about outcomes based or indication based pricing, if you have as a component of that a very low price for one indication, if that all of a sudden becomes the benchmark for all of Medicaid, that’s an issue,” said Rye, one that “Congress will have to grapple with.”
But despite these barriers, CAHC’s Joel White argued that it will be worth the effort for Congress and other policymakers to make the systemic changes needed to facilitate greater uptake of the arrangements. “We’ve done a budget impact of this and an economic analysis of making these changes. We estimate $71 billion dollars of annual savings once fully implemented. $71 billion a year…. That’s real money, even in Washington.”
Another theme touched upon by several panelists was an increased push in recent years to collect data that will demonstrate value and allow drug companies to make a strong pharmacoeconomic case when negotiating with payers for reimbursement of their products – in addition to the data needed to prove a drug’s safety and efficacy to the FDA.
Dr. Diana Shineman of the Tourette Association of America noted that patient groups are also increasingly striving to collect data to quantify the impact of diseases upon patients. “For Tourette and tick disorders, we have prevalence numbers, but they’re not really great. We think they’re grossly underestimated – it’s estimated that about 1 in 100 are affected by Tourette or a related tick disorder, but we don’t really have any baseline data on socioeconomic impact of the disorder. So that’s something that we’re really prioritizing because we see that we as a patient community need to have that data: how is this affecting people’s lives, how is it affecting their ability to work, their contribution to society, and our hope is that if we can show the impact that that will drive innovation and drive interest from biotech and pharma to invest in new therapies.”
To read more coverage of the 2017 BIO Investor Forum, visit www.biotech-now.org/tag/2017-bio-investor-forum