The 2009 Pharmaceutical Industry Outlook - part III

Is your drug more effective than your competitors’ drugs? Of course, right? Would your company be willing to prove it?

In order for a drug to be used by consumers, it has to have been demonstrated to be safe and effective. Meeting these two requirements seems like reason enough for a product to be on the market. However, with the cost of healthcare skyrocketing it has become more important to cut costs. This means that stakeholders in healthcare now want to see data that goes beyond safety and effectiveness to demonstrate that a drug is either better than other available treatments or comparable but more cost effective.

Industry experts have urged pharmaceutical manufacturers to invest in comparative clinical effectiveness research with increasing urgency over the past several years. Some companies
have invested, but others appear to have been too worried about what the outcomes would be to take the risk without being legally compelled to produce comparative data. The reality is that if a study was to show that a drug either did not improve outcomes over other treatments or was equally effective but more expensive, the reimbursement rate of that drug may be dropped.

Like it or not, pharmaceutical companies will soon be faced with the implications of comparative studies. The $787 billion economic stimulus bill passed by congress has $1.1 billion earmarked for comparative clinical trial effectiveness research. The goal of the bill is to improve care and cut costs by providing physicians and healthcare consumers with better information about the relative effectiveness of their treatment options. The research dollars will be split between studies on drugs, medical devices and procedures. However, the question remains: will the focus be as much on cost as it is on clinical effectiveness? Given that prescription drug spending has been one of the fastest growing components of national healthcare spending in the US market, it is reasonably safe to assume that a significant portion of the $1.1 billion dollars will go towards verifying the clinical effectiveness of some of the more costly drug treatments.

The role of the pharmaceutical industry in the comparative research initiative is complex. There is the potential for both financial gains and losses depending on the studies’ outcomes. In this regard, it is important that organizations, such as PhRMA, take part in shaping the policy framework that will govern the goals of comparative effectiveness studies. The industry will continue to lobby for the focus of drug studies to be on clinical effectiveness only, regardless of cost. However, in the current economic climate it is unlikely that the cost of drugs to payers and patients would not be considered an important factor.