Healthcare Reform Threatens Biotech Coverage and Access

Biotech companies fear comparative effectiveness analysis will emphasize product costs over value.
Jun 01, 2008
Volume 21, Issue 6

Jill Wechsler
As the 2008 election campaign moves toward its final stage, healthcare reform remains a high-profile issue. Both Democrat and Republican candidates have rolled out reform plans to expand access to healthcare through broader government programs plus tax breaks and incentives to help individuals obtain coverage. All these programs are costly and will require additional efforts to cut spending, prompting proposals for making the nation's healthcare system more efficient.

The candidates envision large savings from adopting electronic medical records, encouraging prevention, and better coordinating care for patients with chronic conditions. These proposals, however, are likely to boost spending in the short run, prompting White House hopefuls to propose curbs on outlays for prescription drugs. A related strategy is to identify which therapies have sufficiently high value to warrant high price tags.

Sen. Barack Obama promises to provide Americans with access to the "exact same drugs in Europe and Canada" that pharmaceutical companies sell at half the price as in the US. He plans to save up to $30 billion by repealing the ban on government price negotiations for drugs purchased by Medicare and wants to increase the use of generic drugs by government health programs.

Similarly, Sen. Hillary Clinton promises to hold down fast-rising drug prices by removing barriers to generics competition, allowing Medicare to negotiate lower drug prices, and boosting oversight of drug advertising, "marketing excesses," and inappropriate financial relationships between manufacturers and providers. A major theme is to create a pathway for biogenerics competition—to end "the monopoly currently enjoyed by large biopharmaceutical companies" and thus save $5–7 billion each year.

While Democrats have long touted such tactics to curb drug prices, it's surprising to hear similar antipharma rhetoric from the presumptive Republican candidate, Sen. John McCain. He regards efforts to promote generics competition and to permit drug reimporting as compatible with his free-market approach to health reform. McCain wants to develop "routes for safe, cheaper generic versions" of drugs and biologics and "safety protocols that permit re-importation to keep competition vigorous."


In addition to attacking drug prices, health reformers want to steer spending to medical treatments and products demonstrating real-world effectiveness. Rising US healthcare spending is building support for more comparative effectiveness (CE) analysis of the quality and effectiveness of healthcare procedures and products. Such research promises to provide information that will help patients and their doctors choose the most appropriate care options, which ideally would include high-cost treatments that have data indicating higher benefits.

The Medicare Payment Advisory Commission (MedPAC) recommended in its June 2007 annual report that Congress establish an independent entity to sponsor "credible research on comparative effectiveness of healthcare services." In a January 2008 study, an Institute of Medicine (IOM) committee recommended establishing a national CE research program with "sufficient resources, authority, and capacity" to develop research standards and processes.

Not surprisingly, the presidential candidates have jumped on the CE bandwagon. McCain says that publicizing information on treatment options and developing national standards for measuring and recording outcomes can address rapidly rising healthcare costs. Clinton backs an independent "best practices" institute to provide better information on what works in healthcare and "how treatments compare to one another." Obama wants CE research on which drugs, devices, and procedures are the best for individual patients as one way to reduce the "considerable waste in our healthcare system."

Enthusiasm for CE research is boosting support in Congress for establishing a quasi-governmental effectiveness research organization. Senate Finance Committee chairman Max Baucus (D-MT) is looking to authorize such an entity as part of must-pass Medicare legislation needed to block a scheduled cut in payments to physicians. Some policymakers talk about expanding the CE program at the Agency for Health Research and Quality (AHRQ), which supports research to inform coverage and treatment decisions by Medicare and other government health programs.

The envisioned CE operation would be able to accept funding from private organizations and the federal government—an important consideration for raising the $200 million or so needed just to start such an operation. Any legislation adopted this year, however, is likely to establish only a placeholder to launch a CE program and not provide much more than the paltry $15 million that currently supports the AHRQ program.

Insurers and payers point out that the US is virtually alone among developed nations without an entity dedicated to comparing the effectiveness and value of new drugs, devices, and medical procedures. They look to the United Kingdom's National Institute for Health and Clinical Excellence (NICE) as a model for reviewing clinical and outcomes data to assess the added value of new medical technologies.

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