VC Financing: Enter Comparative Trials and REMS Post-market Plans

In Washington, the policymakers and legislators are arguing over how to build comparative effectiveness research into the health reform bill.

Eleven miles away in the Maryland suburbs at the Food & Drug Administration’s new White Oak campus, the regulators are figuring out on a case-by-case basis how to apply their new authority to order post-approval education, distribution and testing programs for new drug approvals. under the Risk Evaluation & Mitigation Strategies authority.

But in the private capital markets removed from the political capital, these two issues are already moving from the conceptual, formative stages into real world requirements. Drug and biological entrepreneurs are learning that they better have answers to questions about both requirements when they go into venture capital firms for development funds.

VCs now expect companies seeking funding to bring in plans for comparative research during drug development and to recognize early what level of post-marketing controls FDA will require.

That’s what MPM Capital’s Gary Patou (in the picture above) told a session on successful drug development plans at the recent annual meeting of the Drug Information Association in San Diego. Clear plans for comparative effectiveness testing and post-marketing controls are becoming de rigeur parts of solicitations for funding from VCs, he says. (For a longer examination of the new de facto requirements for drug development plans from venture capital firms, see this story from The RPM Report.)

That means that the funding spigot from private capital will help enforce and establish the new government additions to drug development. Policy is made in DC, but practice is enforced by VCs.

Baucus CER Deal Under Stress

With a little help from its GOP friends in the Senate, the pharma industry could still fashion a bad agreement on CER out of the positive discussions that have been underway for over a year with Senate Finance Committee Chairman Max Baucus (D-MT).

Sens. Orrin Hatch, R-Utah, and Mike Enzi, R-Wyo., are temporarily keeping the Baucus approach to comparative effectiveness -- which could be called CER soft -- out of the Senate Finance Committee’s health care reform bill.

Hatch and Enzi are two of the longtime stalwarts of policy affecting the drug industry. They have a go/no-go status on CER because of a de facto arrangement with the ranking GOP member on Senate Finance, Charles Grassley, R-IA, who ceded decision-making on CER legislation in his committee to his colleagues on the Senate Health, Education, Labor & Pensions Committee.

CER is now traveling through the legislative process under a new pseudonym: patient-centered outcomes research, part of Baucus' amusing and practical effort to move his bill under whatever name seems most acceptable and non-inflammatory on Capitol Hill. The Baucus proposal for CER remains a separate legislative bill. The plan is to attach that bill to the developing Senate package for health reform, being melded together by the Senate Health, Education, Labor and Pensions Committee, Senate Budget Committee and Senate Finance.

Representing more adamant critics of CER, Enzi and Hatch are pushing for consideration of three issues. The danger of bringing the issues up again now is that the Baucus CER approach could fail to get on track to join the main activity on health care reform and less favorable approaches to CER could slip into the gap. In the name of layering on several more specific protections against the use of CER reviews to control treatment choices, the GOP members are risking creating an open field for other CER proposals to supplant the work that Baucus has been doing on the issue since early last year.

The Baucus staff preparing the CER bill have won praise from industry stakeholders for working with affected industries on the CER scheme. There may be more willingness by those seeking more protections against CER to seek changes to the Baucus bill because a separate approach is gaining interest in the House, sponsored by Oregon freshman Kurt Schrader (HR 2502). That effectively gives the proponents of a soft CER approach a second alternative to push.

Age Discrimination Leads List of Recent Complaints

At the top of the list of CER changes being sought by the GOP is an assurance that there will not be age discrimination in treatments based on CER determinations – i.e. that no decisions whether to accept CER information for treatment selection will be made based on the age of the patient alone. This is a major concern of one of CER’s most obdurate critics in the Senate, John Kyl, R-AZ. Kyl raised the issue earlier in the spring in April and re-introduced it on June 15 as S 1259 along with six GOP co-sponsors, including minority leader Mitch McConnell (Ky).

The GOP HELP members also suggested language to prevent establishment of a quality-adjusted life years threshold by the Centers for Medicare and Medicaid Services to determine coverage for a treatment.

Finally, the GOP took up the cause of some CER critics who argue that a new CER institute might establish a different, and confusing, level of evidence for approving or rejecting medical products that would supplant and damage the substantial evidence standard used by thee Food & Drug Administration. That could be further impacted should a recently introduced bill that opens the door for comparative effectiveness research to be put on drug labeling become law (“The Pink Sheet,” May 25, 2009, p. 4).

The GOP concerns slow down a process of incorporating CER into the Senate bill that had appeared to be moving along smoothly. The push for changes just before the Finance Committee’s self-imposed deadline for beginning consideration of CER on June 17 may also be a small part of a developing GOP effort to slow down the overall effort to get Congressional health care reform bills through each chamber before the August.

The current Baucus version of the comparative effectiveness bill, the Patient-Centered Outcomes Research Act of 2009, was introduced June 9 with co-sponsorship from Senate Budget Committee Chairman Kent Conrad, D-N.D. It is an update of legislation introduced in the last Congress and maintains the creation of a public-private entity to drive research and offers a set of standards that must be met in order for comparative effectiveness research to be incorporated into coverage decisions (“The Pink Sheet” DAILY, June 9, 2009).

If Senate Finance cannot resolve the GOP complaints and get the bill moving again, the only comparative effectiveness option that would be debated in the Senate would be the HELP proposal which would undo the extensive work between Finance Committee staff, the pharma and insurance industries and other stakeholders on the proposal. The HELP proposal is much less detailed and puts HHS in the driver seat in terms of guiding comparative effectiveness research (“The Pink Sheet,” June 15, 2009, p. 13).

Starting After the 4^th Is Not a Critical Blow To Legislative Schedule

While the comparative effectiveness options are not necessarily holding up the overall health care reform bill, they could be a contributing factor to why the committee has pushed back the markup on the full package until July.

Senate Finance will not start public consideration of the full health reform effort until after the Fourth of July recess. The delay is widely being attributed in Washington to a high preliminary score from the Congressional Budget Office on the most recent version of the Finance Committee proposal.

Reports are circulating that the Congressional Budget Office has scored the bill at $1.6 trillion, a number higher than the initial score of the incomplete HELP Committee health care reform bill. The Finance Committee held off introducing the draft chairman’s mark following the negative feedback that arose in the wake of CBO’s scoring of the HELP bill. The two-week delay in the Finance Committee consideration of health care reform does not preclude finishing a bill before the August recess, advocates say. The Senate leadership still has room in August to delay recess to get a vote if Finance starts consideration immediately after the Fourth of July break.

Senator Enzi, in a press release, commended the Finance Committee’s deliberative process that included members from both sides of the aisle, while criticizing the HELP Committee's start of consideration of its bill.

image from flickr user te.esce used under a creative commons license

Rebranding Health Care Reform

News flash: The debate over comparative effectiveness research is over!

No, nothing actually happened--its just that the sponsors of legislation to create a new comparative research agency have responded to the controversy surrounding the issue by re-branding it. As we report in "The Pink Sheet" DAILY, Sen. Max Baucus has introduced a new bill that follows closely on his comparative research proposal from 2008--but now calls it "Patient-centered outcomes research" instead of "comparative effectiveness research" or "comparative clinical effectiveness research." Or, "cost-effectiveness research"--except no one in politics EVER calls it that.

Baucus joked about the change during a keynote address at a policy conference hosted by Brookings June 9 that focused on comparative effectiveness research. (Brookings obviously didn't get the memo on the new branding.) The Finance Committee chairman quipped that he would call it "Fred" if it helped defuse the emotion around the issue.

And there is alot of emotion. As our colleagues at On The Road note, libertarians protested the Brookings event, comparing President Obama's health care reformers--and Obama himself--to Nazis.

Anyhow, CER is out, P-COR is in.

Re-branding is fun, of course. In fact, we think its well under way in the effort to create an abbreviated pathway for approval of biologics, where what was once a debate about "generic biologics" was rebranded as "follow-on biologics." That satisfied innovator companies concerned about the implication of interchangeability inherent in the word generic.

Now policy makers are concerned about evergreening, so "follow-on" isn't quite right anymore. Which is why the European term "biosimilars" is now coming to the fore.

Still, we can't help but think that Congress should get some professional help in all this. After all, no one does branding as well as pharma. So maybe comparative effectiveness could become "National Organization to Direct Research for Understanding Good Science" (NO-DRUGS).

That's CER industry could get behind....

Personalized Medicine vs. Comparative Effectiveness Mailbag

Better late than never. Readers of IN VIVO Blog responded to a previous post on whether proponents of personalized medicine can also be supporters of comparative effectiveness research. We asked readers to weigh in on that question. Their emails initiated a lively discussion on the future of healthcare so we’ve picked excerpts from the most noteworthy responses to share. Here they are:

“Here’s an example to answer your query: Drug A is generic, Drug B is not. Compare their effectiveness and B works “better” so we all pay more for the newer drug. However, Biomarker Q indicates that some people do not respond to A at all. Remove those people from the analysis and now A&B work the same except for in the people with Biomarker Q, who have to get Drug B, although most would benefit from the less expensive drug A.” -Amy Miller, PhD, public policy director, Personalized Medicine Coalition

“Sure they go together. Right now, we characterize the groups in whom we compare therapies for ‘effectiveness’ based on their clinical diagnosis. For example, in cancer research we might compare a new treatment with an older one in ‘breast cancer’ as diagnosed by a pathologist reading a biopsy slide of a breast mass.

In the future, the ‘groups’ will be characterized not by their tumor biopsy’s look under a microscope, but by the unique genes expressed by the tumor. It’s the grouping parameters that will change and that’s how personalized (or genomic) medicine assists comparative effectiveness research. Personalized medicine just means we have better tools.” -Leonard Zwelling, MD, University of Texas M. D. Anderson Cancer Center

“The end-goal of personalized medicine and pharmacogenomics (the right drug in the right dose for the right person at the right time – comprising multiple, different ‘right’ answers) is very, very different from so-called ‘evidence-based medicine’ or comparative effectiveness, which looks to find a single best answer across an entire population. And it’s surprising how often people mix up the concepts—after all, each is an approach to improving medical care, but the underlying unit of analysis (individual versus population) is completely different.” -Bryan Walser, CEO Perlegen Sciences Inc.

“I hardly see the two options as diametrically opposed. The key concern for any legislator is getting the most value for every healthcare dollar spent. Comparative effectiveness attempts to divine the best option among multiple treatment options. Personalized medicine does the same thing, albeit for a narrower subset of patients. If one concedes that personalized medicine will always focus on smaller and smaller subsets of patients, it is not hard to imagine that comparative effectiveness will always be one subset above.” -Howard Hechler, director of business development, XL TechGroup

“Consider that personalized medicine can never be unique for each individual patient. Rather, it will be various medicines aimed at specific subsets within a disease state. For instance, multiple genetic defects can be responsible for inhibiting the production of a specific vital protein. One drug can treat one specific defect, while another drug could be used when the defect is at another location within the same gene. We could end up with dozens of drugs to treat the same disease, yet each treats very different specific defects.” -Steve Evans

“Think of personalized medicine as The Promised Land. Even its biggest boosters concede that it’s some way out on the horizon. There’s still a lot of progress to be made on the biomedical, informatics, education and training, and economic fronts. So, while we’re still wandering around in the wilderness treating patients with one-size-fits-all drugs, comparative effectiveness trials seem like a good idea.” -Michael Goodman, VP research products, AVOS Life Sciences LLP

“Personalized medicine and comparative effectiveness may indeed be strange bedfellows as you say in your post. In some ways, though, I think they both represent the triumph of science over marketing, and that appeals to a certain segment of the health policy community. With both of those principles fully in place, drug firms couldn’t use promotional muscle to get scripts written; they’d have to use data. And while it’s true the generalizations of comparative effectiveness are the opposite of the specifics of personalized medicine, I don’t think CE advocates would really object to a step therapy formulary that would eventually bring patients to the treatment that’s best for them personally.” -Anonymous

“My understanding is that the concepts are consistent because both personalized medicine and comparative effectiveness are based on making the best use of available information. In some cases we have enough information to craft therapies to particular patient situations (e.g. we might know that someone with a certain gene will respond in a certain way). Whereas comparative effectiveness deals with those cases where we simply do not have enough specific information but we do have statistical averages suggesting what the best practice would be given no other information about the specific case. Sometimes that’s all the information we have.” -Jason Bradfield

“Perhaps the similarity is that both personalized medicine and comparative effectiveness medicine use comparative measures. The difference is that one is in an individual population, while one is in a “smeared” population. The lowest standard for the measure of the safety and effectiveness of personalized medicine is on a comparative scale to other therapies used within the broader population. A higher, and probably unachievable standard, is for personalized therapy to be measured on an absolute scale for safety and effectiveness within a single person. Because this former standard is the more achievable standard, the two proponents can align, at least for now.” -Anonymous

The Wacky World of Generics: Risperdal Edition

They don't call them atypical antipsychotics for nothing.

Here are two things that keep Big Pharma CEOs up at night: (1) the growing power of payors—actively encouraged by the Medicare program—to drive therapeutic substitution in blockbuster product classes; and (2) the potential for government run comparative effectiveness studies to undermine the market position of newer medicines.

However, if two of the biggest players in the atypical antipsychotic market are to be believed, the impact of the first major patent expiration in that class will stand those fears on their head.

Johnson & Johnson’s risperidone (Risperdal) goes off-patent in June and generics are lining up to enter the market. That will clearly be a big hit for J&J to absorb: Risperdal sales in the US were about $2 billion in 2007.

In other blockbuster classes, a major patent expiration has meant big headaches for other brands in the class. Think of how Lipitor has seen its market share erode and discounts soar since Zocor went generic.

So Lilly’s $2.2 billion olanzapine (Zyprexa) and AstraZeneca’s nearly $3 billion quetiapine (Seroquel) are in big trouble, right?

Not so, say those two companies.

First off, the Medicare program’s overall generics-first emphasis is more than offset by the Centers for Medicare & Medicaid Services requirements that managed care plans cover all products in the atypical antipsychotic class (and five other protected classes). So plans will be free to switch Risperdal patients to the generic, but will find it difficult if not impossible to drive therapeutic substitution from other brands, as we wrote here.

Or, as AZ CEO David Brennan put it during the company’s January 31 earnings call, “the antipsychotic market is quite unique. A product is a product. There is not a history of therapeutic substitution in that area, and we expect to continue to grow our Seroquel franchise.”

Lilly CEO-designate John Lechleiter took it one step farther, telling investors during a January 29 earnings call that Lilly plans to “retain the broadest possible access for Zyprexa” by emphasizing the “superior efficacy evident in CATIE the longer the duration of therapy.”

You remember CATIE, right? That is the government run comparative trial completed in 2005, with headlines at the time declaring it showed that older off-patent antipsychotics are just as good as the atypicals.

That interpretation, needless to say, has not won out in the marketplace, since Lilly, AstraZeneca and the other companies in the market astutely anticipated the negative headlines and worked diligently to develop alternative interpretations.

How successful were they? Well, less than three years later Lilly will be using CATIE to help support continued use of Zyprexa over a generic from the atypical class itself.

And there is nothing typical about that.

The Stakes Increase on Comparative Effectiveness

When the Congressional Budget Office released its long-awaited report on comparative effectiveness last month, its overall conclusions were pretty much what were expected, based on director Peter Orszag’s public previews.

A comprehensive, national effort on comparative effectiveness will eventually save the US health system money, CBO determined. But for the next 10 years or so, more money will be spent implementing the program than will come out the back end in savings. And, as Orszag stressed in public comments leading up to the release of the report, success will be largely enhanced if the results are tied to financial incentives.

The RPM Report has written extensively about the potential for a national effort on comparative effectiveness—you can read our stories here and here. So is this bad news or good news for the pharmaceutical industry? Well, that largely depends on who you talk to, and, dare we say, what products are in the pipeline.

Merck is one of the more outspoken supporters of comparative effectiveness, dating back at least a year to an editor’s note from CEO Richard Clark (pictured here) in The American Journal of Managed Care. In fact, Clark is so on board that Merck redefined its approach to R&D and marketing based on a “value proposition.” Importantly, he wrote, “it is no longer enough to say that a drug has a new mechanism of action.”

Clark echoed that sentiment with investors during last week’s Morgan Stanley CEO’s Unplugged conference, selling comparative effectiveness (or “health economics,” as he put it) as a way to address FDA’s higher approval standards for new products.

Merck acknowledges its endorsement of comparative effectiveness isn’t winning any popularity contests among its peers. Indeed, other pharma companies have been somewhat less receptive. During a recent Kaiser Permanente Health Policy Forum, Sanofi-Aventis public policy director Jean-Paul Gagnon argued that the lifespan of a comparative effectiveness review is only three to five months. Beyond that, he argued, any findings should be considered suspect, given the changing science. That’s not exactly a ringing endorsement for comparative effectiveness. (In fact, using that philosophy, you might ask whether it’s even worth it.)

But maybe comparative effectiveness is easier for Merck to push as a priority right now, given the flush state of its pipeline. With the failed development of Arcoxia safely behind it, Merck can point to products like the type 2 diabetes drug Januvia (thought to have fewer side effects than existing products) and Gardasil (the first approved HPV vaccine) as “breakthrough” products worthy of winning a comparative effectiveness test.

Merck is smart to be ahead of the curve. The CBO report endorsing comparative effectiveness is an important political step in creating a national effort. But Clark is right: comparative effectiveness will be the wave of the future regardless of whether Congress creates a national agency, for one simple reason: FDA’s approval standards will demand it.