No Quick Fix for Comparative Effectiveness

This month’s Science Matters column in START-UP looks at a recent assessment of characteristics of the clinical trials recorded in the US-based registry ClinicalTrials.gov, and suggests that the questions raised in that paper for interventional trials also hold for other strands of clinical research, notably those focused on comparative effectiveness.

The authors of the assessment, which was reported in the May 2 issue of the Journal of the American Medical Association, noted that ClinicalTrials.gov suffers from defects in methodology and standardization. The problems are even more acute with comparative effectiveness research (CER), and one reason FDA places scant value on observational studies, at least as currently conducted.

Addressing those issues -- in both realms -- is critical. “In our traditional evidence development framework, we were trialists or observational scientists but rarely both,” Richard Gliklich, president of the Outcome unit of QuintilesTransnational, told attendees at the annual Post-Approval Summit held earlier this month at Harvard Medical School. “In the emerging framework, this false dilemma is no longer affordable. There are too many questions to answer, too many settings, too many populations.”

It’s easy to find examples of CER methodologies causing confusion rather than creating clarity. A recent CER-skeptical story in The Wall Street Journal led with two studies using the same UK patient database drawing very different conclusions about whether osteoporosis drugs increased the risk of esophageal cancer. It’s also easy to try to draw a dividing line between efficacy and effectiveness research. But the discussion is more nuanced. As Gliklich said, both approaches are needed. In each realm, data need to be gathered using methodologies that allow for apples-to-apples comparisons.

Gliklich made his remarks introducing Summit keynote speaker Michael Rosenblatt, CMO at Merck, who went on to highlight many of the key challenges around CER. For example, if a data set is biased, “you can get the wrong answer, but with great precision,” he said: in many cases it may possible to detect very small changes in risk estimates, but not understand whether they are clinically significant or not. Plus, “something you would think would be clear-cut like a diagnosis of a myocardial infarction, where you have cardiograms and a blood test, still has about a 15% miscoding rate,” he said. In such a case, comparing one drug’s side effect to another’s where one drug might have a meaningful but small percent difference in efficacy, would be impossible.

Making a CER framework valuable is a formidable challenge. Health care provider systems all do things differently: can they rely on outside studies, even the best from places, or does the analysis still have to be done institution by institution? And if so, do they have the resources? We put that question to Kevin Tabb, CEO of Beth Israel Deaconess Medical Center in Boston, a panel participant at a May 18 symposium held at the MIT Sloan School of Management on health care costs, following the meeting. “It still has to be done institution by institution,” he said. “It’s incredibly expensive and we don’t have the tools to do it.”

In his opening remarks to the MIT Sloan gathering, Massachusetts Governor Duval Patrick referred to the 2006 Massachusetts health care reform legislation. That a solution is not perfect is not a reason to not do anything, he said: “It’s [not a matter of] a perfect solution versus no solution.”

We hope that observation holds for the newly formed, high-profile Patient-Centered Outcomes Institute, the entity charged with enabling much of the US’s future CER efforts.

PCORI has spent much of its first year debating and drafting methodological guidelines and standards, which will be posted in draft form next week. (For more on PCORI’s preparations for the release of its methodology report, look here.) But industry groups have criticized PCORI (as reported here and here, for example) for its timing and the lack of specificity of its proposed research agenda, which will be a considerable departure from the more familiar investigator-led study design format. Its start-up was at first deliberate, as befits a public-private partnership trying to obtain a popular buy-in to CER without stirring up fears of drug rationing. Now, however, PCORI seems to be in a more frantic hurry-up mode as it seeks to dole out an initial $120 million in research funding by the end of 2012 -- only issuing guidelines for its initial funding announcements after a Board of Governors meeting May 21.

PCORI's invocations of the value of patient-centeredness have sounded simplistic at times, like Dorothy following the yellow brick road to the wonderful land of Oz.  We know that's not the case, and that it's easy to take shots, like the WSJ did, at CER in any form.  But we also know the road ahead is unpaved and will be bumpy, requiring serious and careful navigation. Duke's Rob Califf, first author of the JAMA paper on ClinicalTrials.gov, made the case more succinctly and pointedly perhaps than PCORI itself has managed. Establishing that a drug has some efficacy in a clinical setting does not answer the real-world questions of how to use it, when to use it, how long to give it and how to compare it with others, he told us. “That’s what comparative effectiveness is all about and where you need the spectrum of different kinds of observational studies and randomized trials."

Deals of the Week Considers Another Blockbuster

"If you guys were the inventors of regorafenib, you'd have invented regorafenib." It may not have much of a ring to it, but that's the line a Bayer executive might have spoken if screenwriter Aaron Sorkin had scripted the company's tiff with longtime partner Onyx Pharmaceuticals. And like the spats Sorkin brought to the silver screen in The Social Network last fall, the Bayer-Onyx quarrel resulted in a settlement.

What could have shaped up as a cinematic tale of betrayal ended with a handshake this week, as Onyx agreed to drop its lawsuit against Bayer, several days into a trial in U.S. Federal District Court in San Francisco. The agreement resolves litigation that has persisted since May 2009 and restores peace to a partnership that dates back to 1994.

At stake were the rights to Phase III candidate regorafenib, a cancer-fighting compound that bears a strong resemblance to Nexavar (sorafenib), the nearly-$1-billion-a-year oncology drug on which Bayer and Onyx have collaborated since the mid-90s. ("You know what's cool? A billion-dollar drug.") Onyx had charged that Bayer developed the newer molecule in secret, violating the companies' agreement to disclose research of other compounds related to Nexavar. Regorafenib's chemical structure is almost identical to Nexavar's, substituting one fluorine atom for a hydrogen atom.

Rather than simply cutting a check or handing over equity, as Zuck did for both the adversarial Winklevii and his former friend Eduardo Saverin, Bayer has resolved to move forward with its partnership with Onyx, while restructuring some elements. Onyx gets 20% of worldwide sales of regorafenib in oncology, and it won't shoulder any costs for its late-stage development; Bayer will handle that. Bayer will also pay Onyx fees if they agree to co-promote the drug inside the U.S., where it has been tested in metastatic colorectal cancer and gastrointestinal stromal tumors.

Cash changes hands right away, too: Bayer is buying out Onyx's rights to Nexavar royalties in Japan for $160 million, giving Onyx additional funds as it readies another Phase III cancer drug, carfilzomib, for regulatory approval. Moreover, Bayer agreed to waive the change-of-control provisions that would have required Onyx to give up Nexavar profits in the event Onyx is sold, thereby freeing up its merger-and-acquisition options.

It's a good deal for Onyx, which gets timely cash and potential downstream money from a drug it won't have to develop itself. And although the companies have insisted that it's been business as usual between them all along, they appear to have patched things up without much damage to anyone's reputation; Bayer admitted no wrongdoing in the process.

If they never make a movie about regorafenib after all, well, we've got Contagion, haven't we? And also...

 

Pfizer/Humana: As fans of both the Philadelphia Phillies and the New York Yankees well know, the only post-season outcome that matters is a World Series victory. In the less glitzy world of pharma, outcomes -- particularly data that track real-world outcomes and measure a drug's effectiveness relative to competitors -- could mean the difference between drug launches that sparkle and others that fall flat. With payors now wielding greater control, pharmas need access to the breadth of data required for more informed drug development or post-marketing product plans. Hence, the rise of a new kind of partnership in 2011: the pharma-payor collaboration. AstraZeneca and Sanofi were the first to jump on the bandwagon, inking deals with Wellpoint's HealthCore and Medco's United BioSource respectively. This week it's Pfizer's turn: In a five-year partnership, the world's biggest pharma is teaming up with insurer Humana and its research affiliate Competitive Health Analytics to use real-world outcomes data and comparative effectiveness. The partnership addresses three chronic disease areas affecting the elderly: pain, cardiovascular disease, and Alzheimer's disease. The companies didn't disclose financials and whether or not the relationship is exclusive. Presumably Pfizer is providing some kind of upfront money to support research by the two groups over the length of the agreement. What kind of "skin" Humana has in this particular game remains unknown. For instance, if Pfizer worked with Competitive Health Analytics to show a particular Alzheimer's drug were better than a rival's, could such data spark a reimbursement commitment from the parent company? We're guessing not. But that raises the question: is this multi-year collaboration a true partnership or a fee-for-service arrangement that gives Pfizer data access? What's clear is that, as in the AZ/HealthCore and Sanofi/Medco deals, Pfizer anticipates using the data to improve uptake of already launched products and to help the R&D crew make better decisions about the kinds of studies to conduct with pipeline products to win a stamp of approval not just from regulators but payors as well. -- Ellen Licking

Teva/Par: Generic drug seller Par Pharmaceuticals is shaping up to be the beneficiary of a Federal Trade Commission consent order requiring Teva Pharmaceuticals Industries to divest itself of two products totaling $200 million in annual sales, as a condition for Teva to acquire Cephalon. If the consent order is approved, Par would acquire the generic versions of transmucosal cancer pain lozenge Actiq (fentanyl citrate) and muscle relaxant Amrix (cyclobenzaprine) from the combined company for an amount to be determined. Teva will also supply a year's worth of generic Provigil (modafinil) to Par after its patent expires in 2012. Teva held 43% market share of generic Actiq, while Cephalon and Watson Pharmaceuticals jointly held 40% of an overall generic Actiq market worth $173 million. Amrix is not marketed in the U.S. as a generic, but the FTC determined that both Teva and Cephalon were on a short list of suppliers who could launch a generic version quickly. The consent order is subject to public comment until Nov. 7, after which time the Commission will decide whether to make it final, potentially greenlighting the $6.8 billion all-cash deal announced in May. -- Brenda Sandburg & P.B.

Pfizer/GlycoMimetics: Pfizer deepened its foray into rare diseases by taking worldwide exclusive rights to a sickle cell disease treatment currently in Phase II. In a deal announced October 11, Pfizer will pay up to $340 million to GlycoMimetics of Gaithersburg, Md., for GMI-1070, which has received orphan drug and fast-track status from the FDA. The drug aims to treat painful episodes of vaso-occlusive crisis, a complication of sickle cell anemia that causes obstruction of blood flow and can lead to organ damage. It is the major cause of morbidity and mortality for patients with the rare genetic disease, which occurs more commonly in people or descendants of people exposed to malaria. In the US, 1 of roughly 500 African-Americans are born with sickle-cell anemia, according to the Centers for Disease Control. To date, veno-occlusive crisis episodes have been treated with hydration, pain medication, and blood transfusion, usually requiring up to a week of hospitalization -- over 75,000 a year, according to GlycoMimetics. The firm says that GMI-1070 is thought to inhibit an early step in the inflammatory process that leads to leukocyte adhesion and recruitment to inflamed tissue. GlycoMimetics will be responsible for continued Phase II development, after which Pfizer will take the reins. Beyond the $340 million potential total, the details of the deal were not disclosed. The total does not include sales royalties if Pfizer brings the drug to market. The deal should provide further motivation to venture backers who see rare diseases as a fruitful investment area. Pfizer isn't the only active acquirer or in-licensor; GlaxoSmithKline, Shire, and Sanofi have all made significant investments in the area, and startups such as Ultragenyx Pharmaceutical and Orphazyme have benefited by attracting lavish venture dollars. -- Alex Lash 

Bayer/Yunona Holdings: Bayer has signed a preliminary agreement with Russian pharmaceutical maker Yunona Holdings to set up manufacturing, distribution and sales of drugs in Russia. Under its two-year-old Pharma2020 program, the Russian government has put in place incentives to increase the percentage of drugs sold in Russia to be made in that country, from 23% currently to 50%. A key driver is giving locally-made drugs more favorable reimbursement. As a result, foreign firms such as AstraZeneca, Novartis AG and Novo Nordisk are rapidly committing to build plants in the country, mostly in collaboration with local companies. It’s not clear what drugs Bayer plans to make in Russia, but Yunona is involved in diverse businesses, including oncology drugs and insulin. Analysts consider the country to be one of the major emerging markets for pharmaceuticals. Yunona, which is based in Yekaterinburg in the Sverdlovsk region, represents the Ural Pharmaceutical Cluster, which the Russian government has described as a high-tech complex of production and infrastructure capabilities. The cluster is earmarked for $860 million in government funding between 2010 and 2015. In addition to Yunona, the cluster includes the Ural division of the Russian Academy of Sciences and the Ural Federal University.  -- Wendy Diller

Guest Post: Moving From The CER Wilderness To The Promised Land

By Richard Gliklich, MD, President and CEO, Outcome

We all know, broadly speaking, the mission of comparative effectiveness research (CER), now sometimes called patient-centered outcomes research. Such studies should inform clinical and health policy decisions made by physicians, payers, and regulators to help determine treatment guidelines, coverage policies, and the therapeutic value of new therapies relative to standard-of-care in real-world settings.

But dive deeper, and it’s clear there remains an uncomfortable level of confusion as to what CER will actually be used to do. So complicated is CER that even US federal agencies can’t agree on a unifying definition. Indeed, look across the various Health and Human Services websites and related entities such as the Patient-Centered Outcomes Research Institute (PCORI) and you’ll discover slight differences in emphasis that have big potential impact on CER’s implementation.

For example, the U.S. Federal Coordinating Council defines CER as the conduct and synthesis of research comparing the benefits and harms of different interventions and strategies to prevent, diagnose, treat and monitor health conditions in “real world” settings. But the U.S. Agency for Healthcare Research and Quality defines CER as a type of health care research that compares the results of one approach for managing a disease to the results of other approaches – for instance the utility of drug A relative to drug B or procedure X to procedure Y or drug A to procedure X.

And according to the new Patient Centered Outcomes Research Institute Methodology Committee, CER seeks

“to understand and improve the effects of healthcare and prevention services on outcomes important to all persons with disease or at risk for disease considering individual perspectives, needs, preferences, biological, environmental, behavioral, and cultural determinants of health.”

Well, that seems to include just about everything.

Certainly it's a lot of high falutin’ language to digest – and for manufacturers hoping to bring new products to market, it’s critical they get fluent in CER as soon as possible. No matter how its defined, CER IS NOT going away.

Investment by the U.S. government in the concept is soaring.The Patient Protection and Affordable Care Act (PPAC) created the Patient Centered Outcomes Research Institute (PCORI) with hundreds of millions of dollars in funding. It is inevitable that the importance of PCORI will grow and its impact on drug and device discovery as well as post-approval monitoring will become more and more apparent.

So if the different definitions spark confusion, we offer this piece of advice. The best way to think about CER is the audience it serves.While classic research questions arise from intellectual curiosity of scientists, CER informs decisions made by a diverse group of stakeholders across the industry – especially regulators, payers, patients and providers.

Thus, this real-world pragmatism changes the way CER questions are defined and answers are pursued. It also means decision makers will accept complementary forms of evidence to bolster their arguments, not just traditional ‘experimental’ studies. These data span the gamut from prospective observational studies to retrospective analyses of existing clinical or administrative data -- and even include sophisticated models based on such data sets.

Still, it’s one thing to have evidence; it’s another to know which evidence is sufficient to answer key questions. As Sir Michael Rawlins, Chairman of the National Institute of Health and Clinical Excellence (NICE) in the United Kingdom has stated, it is clear the traditional evidence hierarchies are limited when it comes to understanding how effectively drugs and devices work in the real-world. Those limitations have sparked working groups, like the longstanding GRADE (formed in 2000) and the relative newcomer GRACE (started in 2007), which aim to redefine what constitutes “good” research based on the quality of the methods and results and contextual matters.

With no ready answers to what constitutes appropriate CER, drug makers need to spend more time earlier in the drug development cycle considering the kinds of evidence they need to gather. That’s especially important given that going forward non-traditional trials will likely be equally important – if not more important – than the randomized double blind placebo controlled studies preferred by regulators for approval.

What it all boils down to is this: CER involves much more than just the research. As important, it is a process that includes setting priorities, generating evidence, synthesizing said evidence, and disseminating it to the right audiences.We’re starting to move down the path, but it’s still going to be a few years before we really get "there."

In January 2011, PCORI formed a methods committee to help industry chart a map through the CER wilderness. The goal? A translation table to help both decision makers and researchers know what types of studies are appropriate for different types of questions. What is the best way to compare a drug to a procedure in urology in the real-world? Or, given the existing evidence, what more information is needed to make a decision about a health intervention?

Undoubtedly, the guidelines won’t be so succinct they can be etched on two tablets; nor will PCORI have Charlton Heston able to lead us out of this information desert into the promised land.

Let’s just hope it doesn’t take the same 40 years it took for the Israelites to find their way out of the desert. With healthcare costs rising and CER the most frequently cited cure to the impending insolvency of Medicare, we’ll need some more timely answers than that.

Founded in 1998, Outcome, a spin-out of a Harvard affiliated research laboratory, is a leading provider for patient registries, studies and technologies for evaluating real-world outcomes. For more information about Outcome, please contact Renee Hurley: rhurley@outcome.com.

Preparing for the CATT Study: Will Makena Controversy Have an Impact?

The first public presentation of data from the National Eye Institute’s head-to-head study of Lucentis vs. Avastin in macular degeneration will take place this weekend. The Comparison of Age-Related Macular Degeneration Treatments Trial (CATT) is sure to go down as an early landmark in the era of comparative effectiveness research—though exactly how it will be remembered is less clear.

We have written extensively about the unusual situation Genentech faces with the CATT trial—basically a government run study designed to prove that one Genentech product (Avastin) is just as good as another (Lucentis) at a vastly lower cost. The study was initiated and designed completely without Genentech’s help, prompted by outrage among providers who had been using Avastin off-label for AMD who experienced sticker shock when Lucentis was launched at a price of about $1,500 per dose, compared to $50 for the unapproved, microdose of Avastin.

It took a very long time to get the study off the ground, thanks in part to a series of administrative hurdles posed by the unusual circumstance of conducting a study in the Medicare population without the support of a willing sponsor. The planning for the trial began in 2005, but it didn’t really get going until 2008.

Now, at least, it is wrapping up—and in a juicy irony the study results will be reported right on the heels of a completely different controversy over an attempt by a sponsor to sell a product at $1,500 a dose to providers comfortably using an unapproved alternative that costs about $50 a dose. That, after all, describes the situation with KV Pharmaceuticals’ pre-term labor drug Makena.

The situations aren’t perfect parallels of course. KV launched Makena earlier this year, becoming the latest sponsor to pursue a strategy of obtaining FDA approval for a widely used unapproved medicine, in this case, the pharmacy-compounded ingredient 17P. Makena received an Orphan Drug designation, the only exclusivity KV can count on since the active ingredient is long off-patent. The application itself was an abbreviated one, referencing clinical studies conducted by the National Institutes of Health demonstrating a benefit in delaying pre-term labor in high risk women. (Though the NIH study wasn’t enough for a full approval; Makena received an accelerated approval with the sponsor committing to demonstrating a clinical benefit in the health of newborns.)

Lucentis feels very different. The active ingredient is a modified version of the monoclonal antibody known as Avastin, optimized (Genentech says) for use in the eye. Avastin itself is high science, the quintessential biotech breakthrough, an angiogensis inhibitor whose benefits were demonstrated at high cost and high risk by Genentech.

But the controversy around the two therapies is essentially the same: providers reacted to a de facto 3,000% price increase by complaining to anyone who would listen. Congress took note and pushed federal agencies to respond.

The nature of those responses has been very different. For ophthalmologists, use of Avastin is now common practice, especially for uninsured patients or in any circumstance where securing reimbursement for Lucentis may be in doubt. And the CATT study is supposed to help preserve the status quo by demonstrating non-inferiority between the two treatments.

For Makena, the key response came from FDA, which announced March 30 that it would not clamp down on compounders who continue to make 17P. (You can read more in “The Pink Sheet,” here.)

That simple action, coupled with CMS’ same day “reminder” to state Medicaid directors that they can continue to pay for compounded 17P if they choose, dramatically changes the commercial picture for KV, and the company reacted by slashing its price. The rest of the story has yet to be written, but we suspect KV will ultimately drive compounders out of the market and that will be that.

But the considerable attention generated by Makena should mean that the CATT study will garner even more interest than it already commands.

The question is, exactly what will that interest lead to?

That is where another connection to Makena comes into play: the question of how safe it is to use unapproved alternatives to an FDA approved therapy. Roche/Genentech has stressed that issue as a key concern with off-label use of Avastin all along, and the company sponsored a review of Medicare claims data that suggests there are indeed more adverse outcomes associated with that use than with Lucentis.

And recent comments by Center for Drug Evaluation & Research Director Janet Woodcock about the Makena controversy may shed light on how FDA views the issue.

Woodcock spoke at the Food & Drug Law Institute annual meeting in early April, less than a week after FDA issued the public statement on compounding and Makena.

It was therefore inevitable that she would be asked about the issue. Inevitable, and also a bit unfair. The controversy over Makena is clearly a political issue, with Ohio Democratic Senator Sherrod Brown spearheading an all out campaign for federal agencies to do something to address what he (and plenty of provider groups) felt was an outrageously high price for the drug. So FDA’s announcement that it would not clamp down on compounding of Makena clearly began at a level much higher than the CDER director.

Moreover, any drug regulator is bound to feel strongly that an FDA-approved product is safer than a pharmacy compounded product. Woodcock, who has devoted considerable energy to upgrading quality control in (regulated) pharmaceutical manufacturing, probably has stronger feelings on that score than most.

But it is Woodcock’s job to defend agency policy, and defend it she did.

She began by stressing the importance of placing the issue in the context of conflicting societal pressures. In the case of Makena, Woodcock suggested, the agency’s decision aimed to find that balance. In its March 30 public statement, FDA stressed the “unique” circumstances surrounding Makena, underscored the importance of assuring sterility in the injectable product, and noted that FDA may revisit its enforcement discretion at any time.

“We want a lot of things as Americans,” Woodcock noted. “We want orphan incentives. We definitely want people to study drugs in pregnant women, which they don’t do. We want affordable drugs. We want high quality parentals that are not contaminated with bacteria and killing people.”

“Sometimes all these wants conflict with each other. The question is, with all these different societal desires, how do we define a balance amongst them?”

Moderator Daniel Kracov (Arnold & Porter) suggested that the issue is whether it is appropriate for FDA to “play that role” of arbitrating among those competing desires.

Woodcock responded by stressing the limits on FDA’s ability to regulate compounding—not just questions about the scope of its authority, but practical limitations on its resources.

“In general, our enforcement policy on compounding has been that we are taking a risk-based approach and we are going after compounders that are having contaminated drugs.” She cited a recent outbreak of septic meningitis associated with total parenteral nutrition compounded by a pharmacy in Alabama. (Coincidentally, FDA issued a safety alert tied to that outbreak on March 30, the same day it announced its Makena policy.)

In addition to focusing on cases of contamination, “we will also go after serious health fraud,” like if a pharmacy is offering some substance as a replacement for insulin. “We have the risk-based approach down from that, but those are the primary objectives right now in compounding, because we have many many tasks that we have to enforce against.”

Panelist Nancy Buc (who recently retired as a partner at Buc & Beardsley) pressed Woodcock, noting that her own priority lists highlights injectable products as a priority. “One of the things that Makena brings us is GMPs and presumably sterility. Are you going to inspect the people who are compounding more than one dose for sterility?”

“I would ask you are we going to inspect people who are compounding drugs that are injected directly into the epidural space, or into the cerebral spinal fluid,” Woodcock responded.

“There are many concerns here. There are many, many compounded drugs that are intravenous. That poses a higher risk than the intramuscular injection” that is used for Makena and 17P compounds. “If you start talking about risk, I think there is a hierarchy. The greatest concern to me would be drugs injected into the eye, or into the central nervous system. Next would be drugs that are injected intravenously…then would be drugs that are injected intramuscularly.”

That’s right: drugs injected into the eye are the highest risk in the CDER directors view.

Was the CATT study already on her mind? Not really. “I wasn't thinking of Avastin in particular,” Woodcock told us when we contacted her about her remarks.

In fact, “I believe the division of Avastin vials is considered repackaging not compounding.”

“However,” Woodcock stressed, “I believe injection in or near the CNS is one of the highest risk situations for sterility problems.”

When weighing the impact of the CATT study findings, it seems safe to say that whatever impact they have, it won’t result in FDA issuing a statement saying it has no problems with widespread off-label use of Avastin.

Sex, Payers & Product Development

OK – the title is a bit of a come-on, I’ll admit. Still, there’s a certain logic to it, if you’ll just bear with me.

To start with the sex part: I read in The Atlantic that men are doing a great job of making themselves irrelevant while women, economically speaking, are fast making up for lost time.

One big problem for the guys, says Hannah Rosin, the author of The End of Men: they aren’t willing to retrain when they have to.

Maybe she’s right; maybe women are more willing to learn new stuff. But it seems to me both sexes fail on that front. And particularly in that little niche of presumed intellectual flexibility, venture capital and the broader start-up world.

Like the broader economy, the health-care business is undergoing a vast economic disruption. And as the giant pharmas and device companies and insurers twist this way and that to figure out just how they’re going to continue to make money in an outcomes-focused economy, start-ups and their VC supporters are among the tiny creatures getting shmushed.

One has to be sympathetic given just how much work a start-up has to do. God knows the clinical and regulatory worlds are complicated enough to exhaust any mere mortal’s brain – and expensive enough to exhaust most wallets, too. Particularly because Big Pharma is asking for later-stage data before they’re willing to pony up significant purchase and licensing fees for a piece of one of those start-ups.

And yet the further a start-up goes down the development path, the more it’s making reimbursement choices – even if it doesn’t recognize it’s doing so. Because just as Big Pharma is learning: the data gathered in clinical trials is not necessarily the data payers want.

Ask Lilly after their huge Phase III Effient trial. Or Merck (or perhaps more appropriately, Schering-Plough) for both Saphris and Bridion. Or Bristol-Myers Squibb and AstraZeneca for Onglyza. All of those drugs passed muster with regulators (in Bridion’s case, European regulators) but payers have simply turned up their noses.

The inattention to payer-focused endpoints is not just a pharmaceutical problem. My bet is that discovery-intensive diagnostic companies like Genomic Health, CardioDx, and XDx would have seen success far earlier had they accelerated their efforts to jibe clinical and reimbursement endpoints.

Managed care increasingly wants to see drugs developed and proven for patients that can’t be served by generics – where PBMs, at least, make most of their money.

(And with PBMs staring out at the very visible end of the big series of patent expirations – which has been almost as lucrative for them as it’s been disastrous for Pharma – they’re trying to figure out innovative ways of using generics in place of proprietary drugs. Medco’s trial comparing Effient just to the 70% of people who respond well to Plavix is a case in point: Medco is looking forward to the genericization in 2012 of Plavix and didn’t want doctors switching willy-nilly to Effient, which had proven modest superiority to Plavix, at least in part because it was comparing itself to a population in which 30% of patients didn’t fully metabolize Plavix). I’m also curious to see how Medco uses its developing pharmacogenomic understanding of warfarin dosing and response as Boehringer Ingelheim’s Pradaxa and the Xa inhibitors that follow it come to market. But I digress.)

Those development decisions need to be made early – and making them requires an understanding of both what managed care wants and how it works. Certainly it’s possible to come to market having proven a drug, as pharmas by and large are wont to do, basically comparable in a broad population to an existing brand. But then gaining market share with such a product, which is to say displacing the Tier 2 player, will require heavy rebating. And then companies should be asking: could they have spent less on a smaller trial showing dramatic benefit for an underserved targeted population, doubled or tripled the price to reflect the value, and ended up with a higher NPV?

In this new world -- our world today – physicians have been demoted from key decision-maker to stakeholder while payers have gone from stakeholder to key decision-maker.

The implications for start-up financing and exits are significant. Because they’ve got the money, and because they see that regulatory risk continues to rise, Big Pharma is requiring more than mere clinical proof-of-concept for the products they in-license or buy from start-ups. But because Big Pharma is also getting the message about payers (increasingly hard to ignore it after having been hit over the head with the formulary problems of their most important launches over the last two years) they also are beginning to ask for proof of reimbursability. They know that gathering that pharmacoeonomic data after approval, and waiting for insurers to make their own judgments, eats away at the economics of the product – which lowers its value.

Start-ups still by and large don’t spend a lot of time worrying about what payers might want from a clinical trial. Understandably. Their managers and investors have spent their professional lives learning how to prove discovery and clinical value to pharmas, and developing an extensive network of scientific and medical contacts to help them do so. Now they have to learn a brand new language, understand the dynamics of a new business, and develop a new set of contacts?

Oh, there’s plenty of lip service paid to the importance of payers. All the VCs and start-up execs I talk with tell me they know their products have to prove value to payers. And yet when I probe just a teeny bit deeper, virtually none of them know anything about how formularies work, which formularies matter, which non-traditional endpoints (both clinical and non-clinical) matter most to the most influential payers. Or seem to be doing much to figure it out. As one VC admitted to me: he knows five people to call when it comes to assessing a Phase II diabetes drug – but nobody when it comes to judging the criteria likely to win that same drug Tier 2 status or the implications if it gets Tier 3 but with no restrictions on its use…or Tier 3 with step-edits, prior authorization, and quantity limits.

From my conversations with them, most VCs and senior start-up executives still haven’t met more than a few medical directors from payers, let alone pharmacy directors (whose variable comp often depends on how well they manage the formulary budgets, which itself depends on how well they negotiate what goes onto the formularies in the first place).

I’ve also heard that while a deep understanding of payers might be important for companies developing me-too products, it’s unnecessary for those coming out with breakthroughs. Payers will have to pay for them. And that’s probably true. But the definitions of breakthroughs are getting tighter (my guess is that Effient would have been a breakthrough had it come out in 2005). And in any event, breakthroughs are rarer than hens’ teeth. Particularly breakthroughs that remain breakthroughs long enough to capture the full value of their development (the first-generation protease inhibitors against Hep C will certainly be breakthroughs when they arrive next year – but not after the next-gen protease inhibitors or the nucleoside polymerase inhibitors arrive in the definitely foreseeable future).

I’m not saying that any of this is easy. Or will guarantee results. Like regulators, payers can change their minds later (“I might have told you back then to prove such-and-such, but now, in order to pay for this, I want you to prove something else.”) But unlike regulators, there is no single reimbursement reviewer – a payer willing to pay for a cost-effective drug or device should attract additional business. And just as I don’t think it’s sensible to dismiss the regulators’ development advice just because they might change their minds later, I’d argue it’s probably not sensible to ignore – or forgo soliciting – payers’ advice because their requirements might change down the road.

Certainly, proving reimbursability makes everything more expensive (trial sites will have to gather more data, case-report forms will grow longer and more complex, and on and on and on). I don’t doubt that fewer companies will get started.

But there are a whole host of start-ups going now. And if we don’t want all that investment thrown away, then it’s time for the boys to go back to school. And any of the girls who want to play with them.

Roger Longman, a founder of Windhover and later head of the pharma group at its acquirer, Elsevier Business Intelligence, is CEO of Real Endpoints LLC, a new company focused on helping payers and drug and device companies create greater value from new and existing products in an outcomes-focused health-care economy.

image from flickr user truthout.org used under a creative commons license

What’s In A Name? The Semantics of Comparative Effectiveness

Somewhere, Senate Finance Committee Chairman Max Baucus (D-Mt.) is smiling.

Baucus may be making inroads on his effort to relabel comparative effectiveness research as something a bit more patient – and industry – friendly.

As congressional debate on creating a public/private entity to conduct such research was heating up, Baucus decided that the term "comparative effectiveness research" was becoming too much of a lightning rod for controversy and changed the term in health care reform legislation to "patient-centered outcomes research."

CER, it seems, had become too linked to issues such as whether research data would limit physician's latitude for prescribing and whether costs might play a determining role.

HHS apparently jumped on the terminology bandwagon with its Sept. 1 announcement of grants to build up research capabilities in health facilities, with a focus on diverse populations. The announcement says the $17 million in awards will go toward "patient-centered outcomes research" or PCOR. Interestingly, the entire release eschews the loaded CER terminology, save for a link for more information on "about patient-centered and comparative effectiveness research" in the second to last sentence.

CER/PCOR stakeholders are now eagerly watching for HHS to name the first board members of the Patient-Centered Outcomes Research Institute, created as part of the health reform initiative. One key issue facing the group is how to effectively disseminate research findings. Who knows? Perhaps research branded as PCOR will be more effective than that branded as CER.

PCOR may hold one advantage over CER – it won't be easy to sub in "cost" for "centered" in the same way opponents of CER fueled resistance for the approach by calling it "cost-effectiveness research".

Not everyone has gotten with the new lingo, of course. A variety of health policy groups are sticking with CER, including the New England Healthcare Institute. And the HHS Agency for Healthcare Research and Quality "Effective Health Care Program" today announced an upcoming conference featuring topics such as "The Role of CER in Health Care Improvement" and "Examples of Incorporating CER Into Clinical Practice."

Only time will tell if Baucus will have the last laugh and get everyone to adopt his vision of patient-centered outcomes research.

- Gregory Twachtman

Image courtesy of flickrer dullhunk used with permission via a creative commons license.

DOTW: Biogen Deal Means Sunshine and Rainbows For Knopp Investors

It's tough times for biotech investors, not much disagreement there. But in covering one of the deals of the week, we found a bright spot. The deal was Biogen Idec's purchase of rights to Knopp Neurosciences' Phase II ALS treatment for $80 million upfront, a sum comprised of a $20 million license fee and $60 million for equity in the privately-held Pittsburgh firm.

Knopp told our Pink Sheet colleagues that the $80 million was in essence more than it needed for its ongoing operations. Its lead drug, KNS-760704 for ALS (also known as Lou Gehrig's disease -- although a new study questions whether Gehrig had his eponymous disease or something else) is now in Biogen's hands, and the smaller firm is back to discovery work.

Instead of squirreling away the extra cash for a rainy day, however, Knopp gave it back to its investors, which are a mix of low-profile institutional investors, angels and family foundations. "Ah!" we thought, our little reptilian deal-brains churning, "An exit via license! How exotic!"

But no. The investors who got the distribution kept all their equity. Every last dime, according to Tom Petzinger, a former Wall Street Journal-ist who runs the firm's business development and public affairs. It wasn't an exit, and it wasn't a share buyback (or a private version thereof). Nor did shareholders sell to Biogen, whose $60 million equity purchase was from the company itself. It was, basically, a one-off dividend, or as Petzinger put it, "taking care of our investors."

Indeed, it was a case of Knopp saying this is your money, not ours. Petzinger said there was no quid pro quo, either. If and when Knopp finds itself in need of cash, the investors are under no obligation to re-up.

But he and the rest of management like to think that their gesture today will create investor goodwill in the future. "It might be a highly unusual move, but it doesn't mean it's not highly appropriate or strategic," Petzinger said.

Imagine that: a biopharmceutical startup in 2010 happily giving up cash that, for now, it doesn't need.

by Alex Lash

Medco/United BioSource: Any doubts about the importance of outcomes-based research in the post-health care reform era, look no further than Medco’s August 16 announcement that it plans to acquire the Bethesda, Md-based information services company United BioSource Corp. (UBC) for $730 million. The tie-up gives the pharmacy benefit manager a new business capability--drug outcomes based research for biopharma companies--that's likely to be a valuable service in the comparative effectiveness era in which we now reside. Among other things, UBC is the market leader in designing and conducting risk evaluation and mitigation strategies (REMS) for new medicines. UBC says it has been involved in the design, implementation and/or assessment of more than 60 REMS and predecessor programs, known as risk minimization action plans. In addition to safety and risk management, UBC focuses on health economics and outcomes research, including drug cost-benefit and cost-effectiveness analyses. UBC also brings Medco the capacity to conduct post-approval research in Europe and Japan. Medco's deal with UBC is more strategic in nature than recent moves by CVS Caremark and Express Scripts, PBMs which have aimed to add volume by acquiring large chunks of business from insurers. In July, CVS Caremark announced a 12-year contract with Aetna to manage duties previously handled by the insurer's internal PBM covering 9.7 million plan members. That followed Express Scripts' outright purchase of WellPoint's internal PBM, NextRx, which handles pharmacy benefits for about 25 million.—Cathy Kelly

Aspen/Sigma: The beleaguered Australian-based health care firm Sigma finally bought its way out of a jam, inking a deal this week with South Africa-based Aspen Pharmacare. Under the terms of the deal, Sigma, which is the largest pharmaceutical manufacturer by volume in Australia, will sell its its pharmaceutical group to Africa’s largest drugmaker for 900 million Australian dollars ($811 million). In hiving off the branded and generics drug unit and its most profitable division, Sigma will once again become a wholesale distributor; it will also be able to retire its total debt burden of A$785 million ($654 million). Sigma ran into trouble after spending $2.2 billion to acquire generics maker Arrow in 2005, with write-downs associated with that transaction resulting in a A$389 million loss for the 12 months to January 31, 2010. Interestingly, even though Aspen already has operations in Australia, the company has also commited to a long-term supply, distribution and logistics agreement with Sigma. According to sister publication PharmAsia News, opinions about the deal’s value vary, in part because the continued relationship between the two companies carries execution risks for Aspen. There are risks for Sigma as well, including whether the Aussie company’s new CEO Mark Hooper can find growth in a generics-free company. —Daniel Poppy

BioMarin/ZyStor Therapeutics: In a move to bolster its orphan drug pipeline, BioMarin Pharmaceutical has acquired enzyme replacement specialist ZyStor Therapeutics of Milwaukee for up to $115 million in upfront and milestone payments. As with many recent buyouts of private startups, the deal is back-end loaded, with a modest upfront payment of $22 million plus a $93 million earn-out. As part of the deal, announced August 17, BioMarin gets ZyStor's ZC-701, a novel therapy to treat the inherited enzyme deficiency Pompe disease, as well as a platform to create additional future enzyme replacement therapies. BioMarin says ZC-701 features a faster development timeline and lower projected development costs than its in-house candidate for Pompe disease, BMN-103. (Both compounds are in pre-clinical development.) The deal illustrates the new math currently in operation at many venture-backed companies. In order to advance ZC-701 through proof-of-concept, ZyStor would have had to raise a much larger round of capital; instead ZyStor’s backers, chiefly a syndicate of Midwestern venture firms, chose to sell. Given the $22 million upfront, ZyStor investors got their money back, but only just. The step-up multiple was a meager 1.5x, meaning the deal value was only 50% more than the amount of cash raised privately. Add in the earn-out, and the multiple could rise to 7.9x, higher than the average return for private biotechs acquired in 2009. Alas, BioMarin wouldn't discuss the duration of the earn-out or the timing of specific milestones, except to say that one $13 million payment will be made when the first patient is enrolled in ZC-701's Phase III trials.—Paul Bonanos

Novartis/Quark: Novartis has agreed to pay Quark Pharmaceuticals $10 million for the option to later in-license QPI-1002, a systemically delivered synthetic siRNA currently in Phase II for prevention of acute kidney injury in patients undergoing major cardiovascular surgery and for prophylaxis of delayed graft function in patients receiving kidney transplants. The companies revealed few details of the Aug. 18 agreement. The exercise fee and milestones for '1002 could reach $670 million but Quark CEO Daniel Zurr was not able to break down those biobucks more specifically or say when Novartis' option kicks in. Of course there are royalties on net sales too--if a drug ever reaches the market. In an interview with The Pink Sheet DAILY Zurr could only say he was "quite happy" with the royalty rate. (Gives you the warm fuzzies doesn't it?) Also left unanswered is what this week's tie-up means for Novartis' ongoing collaboration with Alnylam, under which the two companies are developing RNAi candidates in a variety of therapeutic areas. Originally a three-year agreement, Novartis has extended the Alnylam partnership twice for one year, with a termination date coming in October. At that time, Novartis will have to decide whether to non-exclusively license the Alnylam platform and further increase its ownership stake in the RNAi pioneer.--Joseph Haas

Life Technologies/Ion Torrent: This week’s acquisition of Ion Torrent by Life Technologies, for $375 million in cash and stock, continues the flurry of recent activity among gene sequencing instrument providers, who are continuing their march into the next generation of technological innovation. Seven weeks ago, Roche’s 454 Life Sciences bought up rights to IBM’s nanopore-based single molecule sequencing program, and just before that, Pacific Biosciences aligned itself with Gen-Probe. PacBio subsequently completed a $109 million Series F, including $50 million from Gen-Probe, and this week it also announced an IPO filing. Another player, Complete Genomics, filed for an IPO at the end of July and also just raised $39 million in a Series E. Did someone say “Building a war chest?” Unlike its more visible competitors, Ion Torrent’s Personal Genome Machine (PGM), which should hit the market in 2010 and sell for less than $100,000, is still kind of a black box: its capabilities are largely unknown. The heart of the PGM is a novel chemical detection system that directly measures the change in pH after a nucleotide incorporates into target DNA, using what is basically a semiconductor chip layered with an ion sensor. The company, founded by 454’s founder Jonathan Rothberg, gave a splashy demonstration of its machine at the February 2010 Advances in Genome Biology and Technology meeting on Marco Island. But it has not provided specs for the PGM, nor has there been any public third-party validation of the system from early access users. Nonetheless, because of the PGM’s novel detection system and semiconductor-based manufacturing, Ion Torrent has created quite a buzz, fueled in part by its LeBronian unveiling at Marco Island. Unlike PacBio and Complete Genomics, for example, which use optical detection, Ion Torrent could create a different set of users for gene sequencing. “For reasons of cost and footprint, I think that chemical detection-based sequencers can extend toward the clinical setting,” says Leerink Swann director of research, John Sullivan. That said, according to Life Technologies, the initial application for the PGM will be the life sciences [research] market.—Mark Ratner

Abbott/SkyePharma: Back in January FDA declined to approve Skye’s Flutiform fixed-dose combination asthma product, instead issuing a complete response letter. After a June meeting with the agency it became clear the companies would need to conduct additional clinical trials. On August 20 the other shoe dropped, with Abbott backing out of the Flutiform deal (one originally signed by Kos back in 2006 for $25 million up-front and renegotiated slightly by Abbott in 2008), penalty free. Skye hasn’t given up on the project, according to a statement, but won’t be taking home a break-up fee to keep it warm during those cold English summer nights, either. The therapy remains under review in Europe, where--perhaps luckily for Skye--“the regulatory approach is different from the United States,” the release notes. If Skye sees a path forward in the US it’ll try to sign up another marketing partner. For now, nobody seems surprised by Abbott’s decision – yet SkyePharma’s shares still slid 5% on the news.--Chris Morrison

Image courtesy of flickrer pinksherbet used with permission through a creative commons license.

Musical Chairs on CER: Industry Picks in Tune, But Who Will Represent Government?

There is plenty of interest in industry in the question of who, exactly, will be overseeing the launch of a new federal comparative effectiveness research effort in the US.

Under the health care reform law, that effort will be overseen by a public/private partnership called the Patient-Centered Outcomes Research Institute.

With the June 30 nomination deadline past, it turns out that the pharmaceutical industry's two biggest trade associations--the Biotechnology Industry Organization and the Pharmaceutical Research & Manufacturers of America--are on more-or-less the same page when it comes to who should serve.

As we report in "The Pink Sheet" DAILY, BIO and PhRMA each nominated the same four candidates, with BIO's slate including two additional choices to serve on the board of governors of PCORI.

Of course, they won't all get seats: by law, PCORI will have three industry reps, and they are supposed to represent the pharmaceutical, biotech and device sectors. So figure on two of the six PhRMA/BIO nominees actually getting seats.

The choice, incidentally, is to be made by the Comptroller General of the US, otherwise known as the head of the Government Accountability Office. That is currently Gene Dodaro, who has been acting CG since David Walker stepped down in March 2008. Congress is supposed to send a bipartisan list of nominees to the President for selection of a successor--but Congress couldn't agree on a list and now it isn't clear when or if Obama will pick a permanent head. That should make everyone in BIO and PhRMA proud that they were able to agree on a relatively short list of nominees.

Settling on the industry reps will be fun, but there is an even more interesting choice to be made in rounding out the board of governors.

PCORI's 19 member board has only four slots reserved for government officials, and two of those are filled by statute (National Institutes of Health Director Francis Collins and Agency for Healthcare Research & Quality Administrator Carolyn Clancy). That leaves only two open slots for the board--and way more than two interested government agencies.

Remember: the Federal Coordinating Council for Comparative Effectiveness Resarch that was formed a year ago had 15 representatives, all from government. The FCC was dissolved upon enactment of the health care reform law. That means that when the music stops, 11 members of that team will not have seats on the PCORI board.

Who gets the two vacant seats for government agencies? Easy. The Food & Drug Administration and the Centers for Medicare & Medicaid Services, right?

Not so fast. We are hearing that the Department of Veteran's Affairs is sure to take one of the slots. That may not be intuitively obvious to us regulatory-centric types, but it is perfectly logical: VA operates a massive, fully integrated health care system and claims to have pioneered the field of CER.

So that leaves one slot open, and 10 people still standing. Should be an interesting choice....

Comparative Effectiveness Research and Alternative Medicine: Bring it On

The debate over a federal comparative effectiveness research institute in the US was one of the big issues for biopharma companies early in the health care reform debate, and one of the first flash points for hyperbolic, partisan disagreement over the direction of reform. (Before the “death panels,” there was the “rationing” debate.)

Like so much in the final health care reform law, the outcome of CER was pretty much as good as industry could hope: a federal institute relying on a public/private partnership model rather than a federal agency akin to the UK National Institute for Health and Clinical Excellence. (You can read much more on the background of this debate here.)

Still, it is fair to say that the potential impact of CER on biopharma companies makes plenty of people in industry nervous. It is all-too-easy for a pharmaceutical sponsor to imagine a federal study pitting its biggest product against something else head-to-head in a setting where the sponsor has no input or control—and maybe the deck is stacked against the drug to start with.

But is that really how it is going to work out?

After all, love ‘em or hate ‘em, pharmaceuticals at least have mountains of evidence to work with. There is plenty of room to argue about whether a given drug works better than something else, but at least—thanks to those pesky regulators at FDA—you can basically be sure that the drug works for something.

Isn’t it at least possible that CER will focus on determining whether other commonly used therapies meet even that baseline standard?

So rather than thinking of CER as a threat to big pharmaceutical brands, maybe there is an alternative vision for how it might work. Literally: as a tool to test the value of so-called “alternative” medicine.

We were struck by how HHS Secretary Kathleen Sebelius responded to a question during her appearance at the National Press Club April 6. Sebelius was asked about the role of alternative medicine in health care reform—whether things like acupuncture or homeopathic remedies will or should be covered.

Sebelius diplomatically avoided taking a stand on the value of alternative medicine, and stressed that private plans—not the feds—will decide what to cover.

“I anticipate there will be plans offered in the new exchanges, which will give patients a wide variety of choices,” she said. “While there's likely to be a definition of what is a preventive care plan, insurers are likely to compete based on having a more wide range of choices for consumers.”

Fair enough. But then she continued by noting the role for “our comparative effectiveness research.”

“I think our comparative effectiveness research will continue to look at variety of alternatives for expensive care, whether or not earlier interventions, or more homeopathic therapies, or a variety of choices, are ones that really do lead to better health outcomes at a lower cost. And I think those are often consumer choices, and also wise healthcare choices.”

Now, that may sound pretty ominous. There is no doubt that plenty of alternative medicines are “less expensive” than, say, Avastin. And it is certainly possible that a federal center could conclude that acupuncture is in fact more effective than opioids for some forms of chronic back pain, or something like that.

But don’t let Sebelius’ astute political sensibility cloud the issue too much: politicians have learned that you don’t get very far by questioning the value of alternative medicine as a whole.

Government scientists are less reticent when you get specific. Here is what HHS has to say about alternative therapies when it comes to the H1N1 flu pandemic.

"The first and most important step to prevent the flu is to get vaccinated. Vaccination stimulates an immune response using a killed or weakened virus that uses the body’s own defense mechanisms to prevent infection. CDC's current
recommendations to protect against 2009 H1N1 virus do not include natural
remedies as a sole prevention method. If you want to use a natural remedy to
reduce symptoms, CDC recommends that you talk to your healthcare provider about options.

“Alternative medicine should not be used as a replacement for proven conventional care, or to postpone seeing a doctor about a medical problem. The National Institutes of Health (NIH) provides information…on specific alternative options, including scientific information, potential side effects, and cautions for each.

“The Federal Trade Commission (FTC) warns consumers to be cautious about products that claim to prevent, treat, or cure 2009 H1N1 influenza, specifically products like pills, air filtration devices, and cleaning agents can kill or eliminate the virus.

“The U.S. Food and Drug Administration warned consumers to use extreme care when purchasing any products over the Internet that claim to diagnose, prevent, treat or cure the H1N1 influenza virus.”

Those are the types of views likely to emerge in the context of CER run through the new federal center.

The day after Sebelius spoke, a somewhat less politic politician—former Vermont Governor Howard Dean—made similar points during a panel discussion at the DTC Perspectives national conference in Washington. (We'll have more on Dean's presentation in an upcoming post).

Dean, a critic of pharmaceutical DTC, was asked whether he thinks other forms of medical communication should be restricted. Rather than talk about pharmaceutical marketing practices, he talked about alternative medicine, noting his views as a physician and as a governor.

“Medical doctors and chiropractors fight a lot, and as Governor I had to come to terms with that because there are a lot of people who like chiropractors and think that they should be covered,” Dean began. But “there were two chiropractors who were promoting the idea that children shouldn’t be vaccinated. I just went through the roof.”

“I do think that what is good for the goose is good for the gander,” Dean said. He praised the approach taken by Senate Health Committee Chairman Tom Harkin (D-Iowa), who is an advocate for alternative medicine but who sponsored legislation mandating “a fundamental study of alternative medicines with the view that they wanted to cover alternative medicines if they worked, but if they didn’t then they shouldn’t have to cover them.”

“We need to hold alternative health care to the same standards that we hold ‘regular’ medicine or whatever you call us,” Dean said.

Alternative therapies shouldn’t be dismissed just because “we don’t know why they work. We have to be more open minded. Just because we don’t know why something works, doesn’t mean we shouldn’t let people use it.”

“But I don’t think you ought to be able to advertise stuff that is hocus pocus. Whether it is the medical stuff that is hocus pocus or the alternative stuff that is hocus pocus. There ought to be some standard that applies to everybody.”

That is a vision of CER that biopharma companies can get behind.

image by flickr user KayVee.INC used under a creative commons license

What's in Your Pipeline? The Feds Want to Know

The Agency for Health Care Research & Quality (the US government's de facto comparative effectiveness research center) is slowly but surely funneling out its portion of the $1.1 billion in stimulus money set aside for comparative effectiveness research last year.

Remember the stimulus money? It is supposed to be a down payment on health care reform--though lately it looks more and more like it may BE health care reform, for now at least.

Among the recent announcements, this one caught our eye: a request for bids to create a "horizon scanning system" for the agency.

No, this isn't some fancy pair of binoculars. AHRQ defines horizon scanning as "(1) the identification and monitoring of new and evolving healthcare interventions that are purported to or may hold potential to diagnose, treat or otherwise manage a particular condition; and (2) an analysis of the relevant healthcare context and landscape in which these new and evolving interventions exist in order to understand their potential impact on clinical care, the healthcare system, patient outcomes and costs."

The goal of the project is to "provide AHRQ with a systematic process to identify and monitor healthcare technologies that are likely to have a high clinical, system and cost impact in the US."

In other words, what is in the pipeline that we need to know about today to make sure that our comparative effectiveness research anticipates innovative technology.

This is a pretty big deal, if AHRQ can pull it off. The agency's director, Carolyn Clancy, explained the idea during The RPM Report's FDA/CMS Summit in December. "What I find amazing is that no developed country has figured out how to do this well so we are going to try to build a science in this area."

The goal of horizon scanning is not "academic navel gazing," she stressed. Rather, the agency wants "to anticipate what is on the horizon in the next three to five years and what kinds of questions might we be working to understand, even before the product is on the market, which patients are likely to benefit."

That may sound scary to some: Will the federal government be working to restrain uptake of new technology? It may also sound like an opportunity: if you have a breakthrough that truly transforms a treatment paradigm, maybe the feds will become champions for early adoption. For Clancy, it is the latter: This is "not intended in any way to discourage innovation," she told the FDA/CMS Summit. "Quite the reverse."

Whether horizon scanning is a threat, an opportunity, neither or both, we can't say for sure yet. But this we do know: if you aren't building comparative effectiveness research into your drug development plan, the federal government will try to do it for you.

image from flickr user Matti Mattila used under a creative commons license.

Stealth Comparative Effectiveness in U.S.

Are you sitting down?

The FDA is practicing stealth comparative effectiveness.

Or at least that's one of the claims to come out of a lively panel discussion that attempted to grade the regulatory agenda of the new leadership at FDA during the first day of The Pink Sheet's annual FDA/CMS Summit.

The discussion was sparked some provocative data released by the Director of the Office of New Drugs, John Jenkins, during his status report on new drug approvals. (You think he only took industry to task for submitting incomplete applications? Guess again.)

In an effort to silence critics who charge the FDA is becoming more conservative, approving fewer drugs because of its safety first initiatives, Jenkins and his team parsed applications data for the past 17 years, looking at the percentage of new molecular entities approved on first action during five-year increments. Here's what they found: NMEs with priority review did pretty well; in the most recent period, 68% of the compounds won approval, up from 58% in the previous time period. But for standard NME applications, the story was far different: 70% of the medicines were not approved on first action.

Calling this failure rate "a huge burden on the system," Jenkins challenged the drug industry to do some more navel gazing. "The industry needs to ask itself why the failure rate [for standard NMEs] is so high," he says.

It's not like execs haven't been asking that question. Perhaps the only issue causing more hand-wringing than comparative effectiveness is the lack of R&D productivity in the industry. That's why folks at Lilly, for instance, are aiming to expand their highly publicized Chorus experiment, which aims to identify earlier--and more cheaply--whether new compounds even have a shot at becoming viable medicines.

Mary Pendergast, the former deputy FDA commisioner and now President of Pendergast Consulting looked at Jenkins' data and came up with one possible answer that takes some heat off the industry. Maybe one reason it's so much harder to get the second, third, fourth, and fifth drugs in a class approved these days stems from FDA's desire to see superiority data. "What we are seeing--and should be paying attention to--is [the emergence of] stealth comparative effectiveness," she claims.

Note that current laws stipulate explicitly that FDA does not have a mandate to practice comparative effectiveness. But in Pendergast's view, the emphasis on superiority data "is a tiny loophole that the FDA is driving a truck through."

Better that than a camel through the eye of a needle, eh?

Image courtesy of flickrer (cup)cake_eater used with permision through a creative commons license.

Plavix Label Change: Good For Effient Now, Bad For Brands in the Long Run?

The Food & Drug Administration's public health alert on Plavix is, as we point out in "The Pink Sheet" DAILY, a nice boost for Eli Lilly and Daiichi Sankyo, who market the competing platelet agent Effient.

But the back story to this regulatory action merits closer attention by all pharmaceutical sponsors. This is no ordinary labeling change, and the implications of how the regulatory response came about only underscore how difficult it will be for all sponsors who hope to sustain (or revive?) the blockbuster model in the years to come.

This labeling change suggests a model for application of pharmacogenomic research that biopharma companies will find very threatening: it sure looks like sponsors hoping to build blockbuster franchises are at a huge disadvantage against payors hoping to limit those opportunities.

And that's why this labeling change may end up being bad news for all brands in the long run--very much including Effient.

First, the news: FDA has revised Plavix labeling to emphasise that the Bristol-Myers Squibb/Sanofi Aventis blockbuster doesn't work too well in patients who are poor metabolizers of the drug. In particular, FDA is concerned about impairment of the CYP2C19 metabolic pathway, whether because of genetic variations or coadministration of other drugs, including the widely used proton pump inhibitor omeprazole (Prilosec).

Okay, none of that is actually news. FDA first issued the warning in January, and quietly modified Plavix labeling in May.

What is news is that FDA has decided that information is now a formal warning, rather than a milder precaution--and, more importantly, the agency chose to amplify that warning (especially regarding PPI use) via a media conference call.

It is easy to see why Lilly and Daiichi would be pleased: anything that complicates the decision to prescribe Plavix will help them make the case that doctors should prescribe Effient (and, as we've already pointed out, they need all the help they can get).

Okay, so this sounds almost reassuringly like a classic story of head-to-head competition in a blockbuster class, and how the regulatory process can play to one side's advantage. Plavix is dinged, Effient benefits.

But this is nowhere near that simple.

Because there are third parties involved: payors and pharmacy benefit managers. The interaction between PPIs and Plavix was first publicized by Aetna and by Medco, both of whom used claims data to suggest an association between PPI use and diminished outcomes for patients treated with Plavix.

Its not just that payors capitalized on a safety issue: they really drove the regulatory response and the application of a newly discovered pharmacogenomic marker. In Medco's case at least, Chief Medical Officer Robert Epstein told us, the whole idea was to find a way to test the emerging theory that CYP2C19 genotyping may predict Plavix response. Since Medco didn't have genotyping data on patients in its database, it looked at concomitant use of omeprazole instead, since the PPI is a known inhibitor of the 2C19 pathway.

FDA's first public health alert followed the Aetna and Medco claims studies; the latest one came after Bristol and Sanofi conducted a drug interaction study confirming the observational results. That's certainly not a regulatory model sponsors are eager to consider--especially since we would be willing to bet that the observational research that triggered the warning cost Medco much less than the clinical trial the sponsors were forced to conduct to confirm it.

Medco, at least, isn't done. As we reported here, the company is now taking the next step, conducting a large scale observational study to test the hypothesis that the superior efficacy demonstrated by Lilly in its head-to-head study of Effient vs. Plavix can be explained by the inclusion of poor metabolizers of Plavix in the comparator group.

And Medco's interest most definitely is NOT in helping either brand in this class.

Medco's interests include advancing the company's positioning as a leader in therapy management, particular as it comes to applying pharmacogenetic knowledge. And Medco certainly wants to work with its payor clients to make sure insured members receive the best possible care.

But what Medco wants above all is to carve out a long term market for generic clopidogrel--and in effect limit Effient's share (as well as the share of all future brands in the class)--to whatever slice can't be held for the generic.

The study design, as Epstein explained to us, is simple: Medco will (at its own cost) run a genetic screen on patients prescribed Plavix to identify those who properly metabolize the drugs. It will then compare 14,000 of those patients to 14,000 Medco members who receive Effient, and see if there is a difference in cardiovascular outcomes.

Medco clearly expects to demonstrate that there is no meaningful difference between the two.

Now this whole thing could backfire on Medco. Its data could end up suggesting superior outcomes even when the comparison arm is enriched for Plavix response. (And Medco has registered the trial on ClinicalTrials.gov, so while we doubt they would trumpet that result, they can't just bury it either.)

And the study could by itself end up promoting the launch of Effient. Certainly, Lilly and Daiichi are only too happy to have Medco's support in spreading the message that their drug is active regardless of that specific genomic marker.

Indeed, as part of the screening effort, Medco is likely to drive some conversions from Plavix to Effient: patients who are genotyped as poor metabolizers will be informed of that status (as will their physician). Medco will not make any recommendations, but it is safe to bet that many identified as poor responders to Plavix will switch therapies. Given that 30% or so of the population has the genotype in question, Medco is likely to notify about 6,000 people that they may not be getting the full benefit of their antiplatelet therapy with Plavix.

But that only underscores the bigger point. Medco is willing to make a relatively big investment--and even to help grow a potential blockbuster franchise in the short term--in order to help limit the size of that market in the long run.

And it will cost Medco far less to do that than it costs for sponsors to bring potential blockbusters to the market in the first place.

Now, Epstein wasn't willing to disclose how much this undertaking will cost, but he did suggest it isn't terribly expensive. Medco collects the outcomes data already, so the only cost will be running the genotyping program. Medco will be doing the tests in house, via its own CLIA-certified lab test, so that expense will be kept as low as possible.

All in all, that is not a trivial expense for a pharmacy benefit management company to take on spec, but we're willing to bet it is less than 1% what it cost for Lilly to "prove" the superiority of Effient in a head to head trial.

Which is why, when it comes to trying to establish blockbusters in an era of high payor influence and ever advancing knowledge of the heterogeneity of drug response, it seems like the odds are stacked in favor of those who want to keep market sizes small.

Look for much more on this topic in an upcoming issue of The RPM Report.

image from flickr user mafleen used under creative commons.