Executive Summary

Centers for Medicare & Medicaid Innovation could enable outcomes-based contracting for novel, ‘curative’ therapies follow something like the FDA’s Accelerated Approval model, former top HHS official suggests.

One option for the US Medicare program to enable outcomes-based pricing agreements would be to create a demonstration project that applies something similar to the US Food & Drug Administration’s Accelerate Approval model to coverage and payment.

Former HHS Senior Advisor John O’Brien offered the idea during a discussion about some of the barriers to innovative contracting arrangements during the Prevision Policy/Friends of Cancer Research Biopharma Congress on 7 October. O’Brien helped oversee the HHS drug pricing “Blueprint” until he left the department in August. (Also see “Beyond The “Blueprint”: The Next Stage For US HHS Drug Price Policy” – Pink Sheet, 14 Aug, 2019.)

The absence of clear protections for value-based pricing agreements is clearly having an impact on the ability of manufacturers and the Centers for Medicare & Medicaid Services to try creative payment models for new treatment modalities like the CAR-T therapies or the first directly-injected gene therapies. (Also see “HHS Safe Harbor For Value-Based Drug Contracts May Be On Horizon” – Pink Sheet, 9 Oct, 2019.)

“There are 19 definitions and three clarifications under the determination of Best Price” in the statute, O’Brien noted. “You can try to backfill some of these things,” but it is very hard to decide exactly whether and how some concepts fit with outcomes-based agreements.

He noted the exemption granted for “a free good not contingent on sale” as an example. Could an outcomes-based agreement fit under the exemption? “It depends on how you want to answer that,” O’Brien said. Is the framing that the “drug didn’t work, therefore we are not going to charge them, therefore, no sale?” Or is it “Will you give me this drug and if it works I will pay you for it?”

“What we think, what you think, and what lawyers think, and what lawyers employed by the government or lawyers employed by industry think are all subject to very different opinions,” O’Brien said. And “as permissive as the government would like to be in guidance, [industry] lawyers don’t want to accept a ‘yeah, yeah, yeah, go ahead and try it’” from CMS without clear protection from anti-kickback prosecution later on.

“It is much easier to do this kind of stuff in Medicaid,” O’Brien observed, since that involves “more the feds approving an agreement that a state enters into, as opposed to trying to change a statute.” The pharmaceutical industry has been working on statutory revisions, but has so far only made modest progress in building consensus on Capitol Hill. (Also see “Value-Based Contracts: Medicaid Best Price Concerns Could Be Eased With CMS Guidance ” – Pink Sheet, 17 Sep, 2019.)

CMMI Might Be Able To Design ‘Broader’ Pilot

The Center for Medicare & Medicaid Innovation (CMMI) authority does arguably give HHS room to be creative even with statutory payment authorities. However, that alone doesn’t make it simple to define an appropriate scope for innovative models. O’Brien explained the problem of specifying which products would qualify.

“Should we do it for this drug, or should we do it for all drugs in this indication, which is a very limited set? Should we do it for a handful of conditions? That’s when the patient advocates’ ears pick up and say, well my indication is certainly as important as” whichever ones are included in the demo.

Still, O’Brien suggested that he would have liked to see CMMI move forward with a “broader” policy modeled on FDA’s Accelerated Approval paradigm, where companies with potentially curative therapies could come forward with pay-over-time proposals tied to “real outcomes.”

“I would favor a broader” proposal, he said, with “CMMI saying there are a lot of ways we can be paying for drugs differently that is tied to real outcomes, not sham outcomes.” The proposal is “not just pay over time, but is pay over time because it has a potential to fix a problem that we haven’t been able to fix before” – a concept he sees as similar to “where the FDA went on the accelerated approval.”

“I am totally in favor of something that’s broad and there’s parameters and the companies say here are our outcomes, here’s our approach, and let’s negotiate over the finer points of that, so that we can get going and learn as opposed to waiting for the perfect scenario,” O’Brien said. “This actually puts the company in a very different position,” he said. “You aren’t thinking about new prescriptions or total prescriptions.” Instead, the sales focus is “let’s make sure the right people are using my drug. I like that.”

O’Brien’s tone suggested a missed opportunity rather than a predicted next step by CMMI. One complicating factor in the current environment for any major move by CMMI is that the Trump Administration has formally joined in a case seeking to declare the entire Affordable Care Act (which includes the CMMI) unconstitutional.

https://pink.pharmaintelligence.informa.com/PS141064/Accelerated-Approv…