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XMFHelical (< 20)

Pharma - Comparative Effectiveness Today



July 08, 2010 – Comments (1) | RELATED TICKERS: ANTM , GSK , SNY

Almost without question, one of the key areas of uncertainty surrounding big pharma investing is how comparative effectiveness of pharmaceutical products will be evaluated and implemented.  The days when obtaining FDA approval was the barrier to the launch of a sucessful drug product seem to be in the past.  Post market studies, REMS (risk evaluation and mitigation strategies) programs, and the transition to widespread use of electronic medical records all seem to point to post approval responsibilities becoming far more than just effective marketing.  Add to those issues comparative effectiveness research (CER) and value based reimbursement considerations (get used to hearing terms like QALY - 'quality adjusted life years').

Two recent news reports indicate that this future is upon us now.  FIrst is some news out of Wellpoint.  A recent review out of osteoporosis drugs led to: "the company now requires that members try Sanofi-Aventis' Actonel or Merck's Fosamax before it will pay for the Roche/GlaxoSmithKline drug Boniva."

But that was just the headline news.  Wellpoint didn't stop its evaluation for just this drug class and indication but used it as a template.  The key was mentioned later in the story "As of last month, the company had developed standardized guidelines for the research."  More on this development can be found in this Pharmaceutical Commerce story which concludes with "WellPoint claims to be the first health benefits company to release CER guidelines. In 2008, WellPoint published health technology assessment guidelines, which are also used in its formulary decisions."  A recent industry commentary I listened in on noted that many in the industry expect other care providers to follow Wellpoints lead, and likely its template / guidelines in making there own reimbursement / formulary decisions.

Second, we have this news out of Italy (though I'd rather be talking world cup and Italy, sadly I'll  have to settle for pharmaceutical news).    Italian Drug Studies Trigger Government Price Cuts.  The price cuts are the result of post market studies on drug effectiveness.  Treatments that haven't proven to be as effective as initially indicated are slated for cuts.  How this post market research was done (vs. how clinical trial data is collected) should give drug developers and idea of how tough the post market hurdles to continued drug use and continued justifications for reimbursement will be.

From an investment standpoint though, these events can be seen as a degree of good news.  Yes, the landscape for effectively launching a high-returning drug is getting more difficult, but this has been known for some time.  Reports like these are clarifying in terms of just how drugs will need to be positioned and evaluated post market approval - removing or at least reducing past uncertainties.  Pharma management should at least now be able to better appreciate the costs and risks (and PR needs) of post market research, much of which will occur outside the control of the company. Loss of the control of the efficacy data around marketed pharmaceutical products isn't an easy thing for these companies to adjust to, but they have little choice.  But at least now they can prepare, and even get in front of the issues by attempting to address potential post market issues as part of the clinical research process.



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Tempted to get broadly bullish on pharma as a sector.

1 Comments – Post Your Own

#1) On July 08, 2010 at 4:17 PM, XMFHelical (< 20) wrote:

Thought I had linked the Pharmaceutical Commerce story.  It is here:

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