Product value data can defend against cost cutting
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Dr. Scott Gottlieb recently wrote an article in Forbes asserting that governmental healthcare agencies such as CMS are practicing medicine by asserting "their own clinical judgment about when and how seniors get access to new medicines." He argues that CMS extracts concessions from manufacturers by preemptively making their displeasure about new innovations known. Dr. Gottlieb portrays manufacturers as powerless in the face of an overzealous bureaucracy determined to cut spending with no consideration of the impact on innovation and patient care.

The pharmaceutical and medical device industry is not powerless to counteract this downward pressure on price constraints for new products. We know payers (government and private) are seeking to reduce costs any way they can. In the absence of any evidence that the new products deliver a commensurate improvement in outcomes, the agencies are acting rationally in considering cost as the sole determinant of value. Pharmaceutical and medical device manufacturers need to develop and present compelling data as evidence of the value of their product if they want to be reimbursed at all -- let alone at higher levels than existing treatments. This presents two significant challenges manufacturers must address.

First, they need to generate compelling data to support the economic and clinical value of their products. In the case of the Sapien aortic valve replacement that Dr. Gottlieb cites, the increased cost of the product and procedure is offset by the reduced risk of infection, shorter hospital stay and greater patient satisfaction achieved by minimally invasive surgery as opposed to conventional invasive open-heart repair. Edwards Lifesciences -- the manufacturer -- has to demonstrate not a product to product cost comparison, but that the total value of its offering is greater than that of alternative treatment options. In many cases the research methodology necessary to produce this data is different from the randomized clinical trials (RCT) that of been used to gain regulatory approval of the product. New skills and capabilities are needed to develop data based on real world evidence (RWE) and comparative effectiveness research (CER).

Second, companies will need to do a better job communicating the value supported by this new evidence. For a long time manufacturers have allowed others to control the narrative, to portray them as greedy and uncaring. This impression is enhanced when manufacturers behave in a manner that leads to substantial fines and product withdrawals due to avoidable marketing malfeasance (e.g., numerous off-label promotion verdicts), manufacturing lapses (e.g. J&J recently) and poor decisions relating to safety issues (e.g., covering up or not publishing poor data).

Bad news such as fines and consent decrees travels louder, faster and further (and sells more media) than the good news that comes from the development of new medicines and products that improve patient lives. Manufacturers have to share data about their products' value more clearly and work to take the reins of public perception back. Leveraging patient advocacy groups, the media and others can influence decision makers -- but this is only a viable strategy if you have the data supporting your product.

The pressures to reduce reimbursement are real. The best defense is to get data supporting the economic and clinical value of your product and then aggressively get that data out to convince the decision makers.

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