The Tufts Center for the Study of Drug Development (CSDD) just a published a report assessing the probable effects that Comparative Effectiveness Research will have in the future of the US drug industry. Increasingly, new drugs will have to show proven benefits in relation to their costs to gain 3rd party payer and goverment reimbursement approvals. It likely will no longer be enough to get your drug through the licensing process with FDA, EMEA, etc. - you also have to prove its cost effectiveness.
In comparing the access to oncology drugs in the US versus Australia, the CSDD study found that regulatory approval in Australia was not synonymous with reimbursement. Only cost-effective drugs (under their criteria) received reimbursement status. However, the following features of the Australian system were noted:
- Oncology drug prices were about 30% lower than the US
- 100% of drugs in Australia were designated with prior authorization whereas the comparable US figure was only 60%
- Australian patient cost sharing was lower and more evenly spread, where in the US the average co-insurance rate per cover drug was 35%
So in Australia, the use of cost-effectiveness standards led to lower prices and more affordability for approved medications. As compared to the US, drugs not seen as cost effective had their access severely limited.
It will be interesting to see what occurs - as the US system generally has allowed patients to immediate access drugs more or less on demand (comparatively). But, under an increasing cost-conscious and under cost pressure system, will the US also find itself moving much more into a more critical cost-effectiveness based standard that will make drugs put up? Is Provenge an early case where this type of standard my first be applied? The Medicare reimbursement decision on that drug will be interesting to watch.
Posted by Bruce Lehr July 11th 2010.