A Better Balance Between Accelerated Access And High-Priced New Drugs: A New Conditional Approval Option

This entry is reposted from Health Affairs Blog on March 20, 2017.

There are two different storms brewing in the pharmaceutical world. On the one hand there is increasing opposition to the very high prices of drugs. On the other hand there is ever more pressure to accelerate access to drugs for seriously-ill patients. President Trump expressed both of these very different concerns in his January 31st meeting with pharmaceutical executives, during which he called drug prices “astronomical” while also vowing to “streamline” the process of drug approval. It is vital that the cost of new drugs not overwhelm patients and the health care system. It is also important to get drugs to desperate patients as quickly as possible.

However, accelerated access allows a drug to reach the market quickly, based on clinical trials that measure surrogate endpoints, for instance time to cancer progression or observed tumor response rates, rather than survival rates. These surrogate endpoints frequently fail to predict whether patients will actually live longer or have a better quality of life, but are used because they can be measured within a relatively short period of time, while evidence as to the real effectiveness of a drug can take years to collect. At the same time, any reasonable approach to drug pricing requires substantial knowledge of a drug’s effectiveness for its value to be considered when evaluating the drug’s price and that knowledge simply is not available when a drug is approved before its performance is known on truly meaningful endpoints such as overall survival (in cancer) or long-term ability to function (in diseases such as Parkinson’s or Muscular Dystrophy. With Congress and the President both seeking to change the current system, there may be an opportunity to pursue a different approach to accelerated approval and, at the same time, take at least a small step towards reducing the costs of new, potentially life-saving drugs. One way to strike a better balance between accelerated access and limiting drug prices until their value is known might be a new form of “conditional approval” with prices discounted until full approval is warranted.

The Issues with Accelerated Approval

            The FDA’s accelerated approval of eteplirsen, a new antisense drug for Duchenne Muscular Dystrophy (DMD), is a clear example of both problems——“astronomical prices” and accelerated access. DMD is a devastating illness that affects children and causes muscle weakness and eventual death. There are no effective treatments. Understandably there was enormous pressure from patient groups to approve the drug despite the lack of evidence that the drug actually works, beyond a change in a surrogate marker.

The drug is now available at a price of $300,000 per patient per year, but it may be years before the data from additional clinical trials can provide substantial evidence of whether or not the drug is effective. If the drug turns out not to provide meaningful clinical benefit, then the $300,000 per year cost of providing patients the drug is a terrible waste of our health care dollars. However, if insurers do not pay for the drug and it actually would provide significant therapeutic benefit to Duchenne’s patients, then there would be even more terrible unnecessary suffering and death among DMD patients.

            Eteplirsen is not by any means the only drug approved before the real risks were known or, in some cases, a lack of real efficacy was demonstrated. One useful model for accelerated access and controlled pricing was developed in response to an earlier era of crisis in pharmaceutical policy when the HIV epidemic first caused a public outcry for accelerated access. Prior to the AIDS crisis of the 1980s, major patient advocacy groups, such as the American Cancer Society and the American Heart Association, focused their efforts on raising money for research and paid virtually no attention to the FDA. With AIDS, and particularly with ACT UP (AIDS Coalition to Unleash Power), the world changed. For the first time there was enormous pressure on the FDA to do something—anything—to get drugs out to patients before all of the safety and efficacy data was in.

            The FDA responded to the AIDS crisis with a number of efforts to expand early access. One that has the most relevance for today was the 1992 parallel track initiative. The parallel track initiative, was used only once for stavudine, a still-experimental drug that was made widely available to physicians treating AIDS patients.  The drug sponsor could seek to charge for the drug but only in an amount sufficient to recover its costs for the trial, which required financial disclosures to the FDA. Treating physicians providing the parallel track drug were required to provide the sponsor with basic data on their patients and patients’ responses to treatment.

How Conditional Approval Could Work

            A more balanced approach to the current cry for accelerated access and lower prices could adapt and build on the 1992 HIV-only parallel track approach. The two key components that could be revised for today’s use are: first, an accelerated approval that permits wide distribution before final approval; and, second, a mechanism that limits the price of the conditionally-approved drugs while more data is collected. Conditional approval based on surrogate endpoints would allow a drug’s sponsor to distribute the drug to all of the desperately ill patients who have no alternative, while maintaining the price restrictions until additional data on actual clinical benefit and risk is provided. This would provide a 21^st Century update of the 1992 HIV-only Parallel Track.

            Under the conditional approval proposed here any physician treating a patient with the targeted indication could prescribe the drug and would agree to collect and report basic data on the duration of treatment, responses to the drug, and any other changes in their patients’ conditions. Such longer-term single arm trials are likely to provide evidence of real effectiveness and safety when the target is an untreatable serious disease. While the drug is being widely used and the data collected, the sponsor could charge for the drug based on a set price formula until the sponsor provides further data and the FDA completes its review. There would be no need for case-by-case negotiations over costs and pricing as was required by the 1992 Parallel Track policy. This differs from other accelerated access programs that use the term “conditional approval” (such as that used by the European Medicines Evaluation Agency, which does not limit prices and must be reviewed annually).

Determining Prices for Conditionally Approved Drugs

            How might the predetermined discounted price provision work? One possible mechanism would require a pharmaceutical company seeking conditional approval to specify its intended initial market price for the new drug. The conditional approval distribution price could be limited to 25 percent of the specified initial market price. Alternatively, the conditional approval price formula might be a predetermined percentage of the average introductory price of breakthrough drugs approved during the prior two years. Unlike the prior Parallel Track provisions, either price formula would avoid the need for the sponsor to disclose its costs and negotiate with the FDA to justify charging during the conditional approval period. Given the strong demand by patients for a potentially life-saving drug when there is no effective alternative, marketing expenses should be low.

With the very low cost of small molecule manufacture or even the higher costs of manufacturing biologic drugs, the 25 percent pricing formula should cover the costs of manufacture, distribution, a limited marketing outreach, and the process of data collection and still provide a modest profit. This conditional approval update of Parallel Track would provide the needed balance between access to potential breakthrough drugs and substantial evidence to support their unrestricted entry into the marketplace. Limiting profits would motivate drug companies to distribute the drug widely enough to provide the needed evidence as expeditiously as possible. And in an era of skyrocketing prices for new drugs it would avoid imposing even greater costs to consumers and insurers for what are actually experimental drugs such as eteplirsen.

A Way Forward with Conditional Approval

            New proposals are being discussed that would even further accelerate access to new drugs and members of both parties in the House and Senate are moving forward with a variety of approaches to the high cost of new drugs. Now is the time to take a new approach to accelerating access and limiting drug prices. Of course, it would also be necessary to require insurers and government payers to cover the drugs during the conditional approval period in the same way that they currently cover drugs approved under the accelerated access and breakthrough drug procedures. If the data confirms the benefit of the treatment, full approval would be granted and the drug sponsor could charge whatever price it can justify in the marketplace, but with much better evidence as to what the drug’s real worth actually is. Patients desperate for treatment would get access to drugs, insurers would be paying less than under the current system, and patients, providers and insurers would get the data they need on the drug’s efficacy. It is time for a new approach to accelerated access that is good for patients and good for us all.