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Pricing of accelerated-approval drugs will cost Pharma's good reputation among the people

Brenda Lau, 12 Jun 2017
There has been much debate about drug pricing in the US ̶ mainly from the continued focus since President Trump's election campaign. At least for the past 18 months, many drug-pricing controversies have prompted politicians and the public to call for federal policies to hold down drug costs.

But, despite the commotion over drug pricing, a new survey this week found that the pharmaceutical industry actually has a strong reputation among most people.

The industry received a grade of 71.8 based on several different attributes such as innovation, performance, leadership, citizenship, governance, workplace, and products and services. Surprisingly of the eight countries included ̶ UK, Canada, Italy, Spain, France, Brazil, Germany and the US ̶ drug makers received their best reviews from US citizens.

“The results tell a very interesting story about the difference between the media picture of the pharma industry and the perception the informed general public have of the individual companies,” said Kasper Ulf Nielsen, an executive partner of The Reputation Institute, a consulting firm that carried out the ranking.

Should accelerated-approval drugs be so expensive?


However, it was important to note that the rankings were made up of an average of all companies, not an evaluation of the entire industry. As a result, Nielsen added, "it is also important to remember that not all companies are doing better this year. In each of the countries measured, some companies improved significantly while others did not do well and it could be argued that they might be punished for things such as pricing."

Now controversies stem from whether FDA accelerated-approval drugs should be priced as high as products that undergo the full scrutinising process. These drugs also usually do not have a strong evidence of efficacy and are advocated by desperate patients.

Two doctors have suggested that this need not be the case and published their ideas for bringing the costs of those drugs down until the manufacturers can prove they really work.

Most drugs later show no clinical benefits


Accelerated approval poses a problem as it forces Medicare and Medicaid to pay for drugs that can be expensive yet ineffective, argue Walid Gellad, associate professor of medicine at the University of Pittsburgh, and Aaron Kesselheim, associate professor of medicine at Brigham & Women's in their editorial in the New England Journal of Medicine.

At the same time, private insurers may also decline to cover those drugs, therefore slowing down patients' access to the drugs.

Yet, accelerated approval has been applied to many therapeutic classes, most notably cancer, where results have been "a little more of a mixed bag," said Gellad, citing a study of 15 cancer drugs approved under an accelerated path over a four-year period, of which six later proved to offer no survival benefit.

The authors also pointed to Sarepta's Exondys 51, which won accelerated approval to treat Duchenne muscular dystrophy last September based on a trial that the FDA itself acknowledged, did not show any clinical benefits.

Discounted price until confirmatory trials are complete, says doctors


Gellad and Kesselheim propose that drug manufacturers should be required to discount products until confirmatory trials are complete or hold the portion of the full price that they charge in escrow until results of the full trials are available.

However drugmakers could hike list prices to make up for those discounts, making it counter-effective, to which, the authors offer an alternative idea: Government payers would reimburse manufacturers for the cost of making the drug, including an consensus markup, until the confirmatory trials are finished.

Other ideas include that the FDA require confirmatory trials to be completed as soon as possible and subject drugs that cost more than USD100,000 per year to an economic analysis performed by the Centres for Medicare and Medicaid Services or the Government Accountability Office.

This would prove that the high cost of the drug is not causing "financial turmoil" in government-run insurance programmes.

“The point we make is," Gellad says, "should we be paying the same amount for a drug for which there is no clear evidence of clinical benefit, or should we wait until there is that final evidence of clinical benefit before we pay that full amount?"

"That’s why we discuss issues around whether there are different ways to pay,” he said. MIMS

Read more:
What is the US doing to bring drug prices down?
Can AI revolutionise drug pricing and supply the next generation of drug pipelines?
What does the Trump administration's budget cuts mean for national and global health?

Sources:
http://www.fiercepharma.com/regulatory/accelerated-fda-approval-and-pricey-drugs-make-a-rotten-combo-doctors-argue
https://www.statnews.com/pharmalot/2017/06/01/pharma-reputation-pricing/