FDA in the Twenty-First Century by I. Glenn Cohen

Author:I. Glenn Cohen
Language: eng
Format: epub
Tags: BUS079000, Business & Economics/Government & Business, LAW001000, Law/Administrative Law & Regulatory Practice
Publisher: Columbia University Press
Published: 2015-09-21T16:00:00+00:00

D. Downstream Impact on Funding Decisions

The movement toward niche markets and the life-cycle approach will have important downstream impacts on how drug funding decisions are made, particularly since both trends may give rise to significant pressures to fund drugs for general distribution on the basis of a reduced evidence profile. Obtaining funding coverage is an increasingly important step in the uptake of new drugs, particularly for high-cost niche market therapies that few patients can afford to pay for out of pocket. Consequently, there is increasing interest in coverage with evidence development (CED), a funding arrangement where population-level payment or reimbursement is tied to prospective data collection in an attempt to gather more evidence and reduce decision uncertainty around funding coverage (Garrison Jr. et al. 2013). The increasing number of expensive niche market therapies with uncertain evidence profiles is placing pressure on funding authorities to enter into innovative risk-sharing approaches with drug sponsors (Owen et al. 2008).

CED may prove to be a natural complement to the life-cycle approach: both systems acknowledge that drug approval decisions should not be strictly binary but rather should be managed incrementally and continuously reassessed. Both recognize the uncertainty around premarket data and contribute toward ongoing evidence generation in the postmarket phase in an effort to deal with this uncertainty. Both facilitate a more incremental approach to the diffusion of new drug products into the market by limiting or attaching conditions to approval or coverage to prevent the drug from being widely prescribed before sufficient data on safety and efficacy have been gathered. Finally, both mandate more prospective data collection in an attempt to reduce decision uncertainty and better inform approval and coverage decisions.

Nonetheless, CED is also subject to many of the same challenges that may hinder the life-cycle approach, namely uncertainty around where to set the evidentiary bar for initial approval and how to ensure effective evidence generation and compliance with conditions of coverage once approval is granted. Discontinuing funding can be politically very difficult, even in light of new evidence of increased risks or questionable efficacy (Bishop and Lexchin 2013). For these reasons, CED must also be approached with caution—arguably even more so given that funding authorities bear the financial consequences of their approval decisions in a way that regulatory authorities do not. In this vein, there is increasing criticism of the often exorbitant prices demanded for many niche market therapies and of the industry’s traditional justification that these prices reflect the need to recoup the high cost of development across a smaller population base. However, major questions are now arising about the research and development costs claimed by industry and, by extension, the prices demanded for many new drugs. Light and Warburton (2011), for example, point to various inflationary tactics used by industry to pump up estimated research and development costs and thus they reach a much lower estimate of average drug development costs than the billion-dollar-plus figures routinely claimed by industry sources—figures that are largely based on confidential industry data. Again, the importance of transparency and better oversight mechanisms also becomes apparent in the funding context.

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