One week after President Barack Obama signed the Patient Protection and Affordable Care Act (HR 3590), the sweeping healthcare reform legislation into law (Public Law No. 111-148), it is still an important task to evaluate the impact of the new law on the pharmaceutical industry. Last week we reported and commented on some of those implications, and this week we continue our analysis: provisions in the new legislation regarding comparative effectiveness research (CER) and the underlying shift to value-based healthcare.
According to a summary analysis of the legislation by the Kaiser Family Foundation, a nonprofit policy research firm, the new law supports CER by establishing a nonprofit Patient-Centered Outcomes Research Institute to identify research priorities and conduct research that compares the clinical effectiveness of medical treatments. The institute will be overseen by an appointed multistakeholder board of governors and will be assisted by expert advisory panels. The law specifies that findings from CER may not be construed as mandates, guidelines, or recommendations for payment, coverage, or treatment, or used to deny coverage. The funding for the institute will become available starting in fiscal year 2010 and will terminate the Federal Coordinating Council for Comparative Effectiveness Research that was founded under the stimulus bill, the American Recovery and Reinvestment Act (ARRA), which passed in February 2009, and which provided $1.1 billion in funding for CER. Following the passage of ARRA, the Institute of Medicine issued a report recommending priorities for CER.
CER seeks to evaluate and compare the implications and outcomes of healthcare strategies such as medical procedures, medicines, and other approaches to address a particular medical condition, according to a Kaiser Family Foundation analysis on CER. CER proponents say it is a valuable tool to improve the quality of healthcare and cut unnecessary costs. CER critics have raised concerns that CER could be a forebearer to healthcare rationing and would circumscribe treatments to patient-specific populations, including approaches in personalized medicine. So, for the pharmaceutical industry, is CER a good thing or a bad thing?
When CER was incorporated into the stimulus bill, the Pharmaceutical Research and Manufacturers of America (PhRMA), broadly supported the concept of CER, but noted that a long-term framework for implementing CER still had to be worked out as part of healthcare reform. “Throughout the discussion of this issue in the stimulus bill, PhRMA maintained its long-standing support for increased government funding of constructive approaches to comparative effectiveness research,” said PhRMA President and CEO Billy Tauzin in a Feb. 17, 2009 statement in commenting on the passage of the stimulus bill.
Since the healthcare legislation was passed, PhRMA has not issued a public statement on the CER provisions in the new healthcare law, but an industry group, the Partnership to Improve Patient Care (PICP), has come out in support of the CER provisions in the new law. PICP was formed in November 2008 to address CER and is comprised of healthcare, scientific, and trade associations, which includes PhRMA and the Biotechnology Industry Organization. “The Partnership to Improve Patient Care has been working for over a year in support of patient-centered CER, and we’re very happy to see it included in the final healthcare reform bill,” PIPC Chairman Tony Coelho said in a Mar. 23, 2010 statement. “Everybody is different, so it’s critical that CER reflect these differences. This legislation will help ensure that CER is used to help doctors and patients make the best treatment decisions possible and not to set coverage guidelines.” He noted that the final bill is consistent with the principles for patient-centered CER adopted and released by PIPC in 2008. PIPC said it will work with other stakeholders to advance patient-centered CER in the coming months.
It was a victory for the pharmaceutical industry that the CER provisions in the newly passed healthcare reform law do not use CER as a requirement for coverage or reimbursement, but the CER provisions, along with other measures in healthcare reform, point to a shifting focus to value-based healthcare. As outlined in the Kaiser analysis, the new law establishes a national quality-improvement strategy that includes priorities to improve the delivery of healthcare services, patient health outcomes, and the health of the population. It creates processes for the development of quality measures involving input from multiple stakeholders and for selecting quality measures to be used in reporting to and payment under federal health programs. The national strategy is due to Congress by January 1, 2011.
The shifting focus to value-based healthcare, with its emphasis on health outcomes, as a means to improve the quality of care, allocate resources more efficiently, and reduce costs, is likely to influence drug development. Clinical studies obviously will still focus on evaluating a given drug’s efficacy and safety as well as measure the effectiveness of a given drug compared with existing therapies, but the focus on value-based healthcare implies a broadening of the scope of clinical research.
For drug companies, comparative clinical research has traditionally been a tool in their own efforts to advance a particular product against competing therapies. What we see now in the movement to value-based healthcare, including CER, is a broader mindset to more critically evaluate all healthcare approaches in treating a particular condition, which includes both pharmaceuticals and non-pharmaceutical solutions. This philosophy implicitly raises the bar in clinical research and widens the competitive field to include not only drugs but also other tools such as molecular diagnostics and medical devices that can work in conjunction with or separately from drug therapies. An important issue to watch is how the underlying philosophy of value-based healthcare may alter drug-development efforts and strategies and the positioning of pharmaceutical companies in non-drug-based healthcare solutions.