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Panel Detail

The price of innovation: Who defines 'value'?

Tuesday, November 18, 2014
8:00 AM - 8:55 AM
GH - Empire Ballroom I


Peter Bach, Director, Center for Health Policy and Outcomes, Memorial Sloan Kettering Cancer Center
Cartier Esham, Executive Vice President, Emerging Companies, Biotechnology Industry Organization
Louis Jacques, Senior Vice President and Chief Clinical Officer, ADVI
Michael Kolodziej, National Medical Director, Oncology Solutions, Office of the Chief Medical Officer, Aetna
Brian Rosen, Chief Policy, Advocacy & Patient Access Officer, Leukemia & Lymphoma Society


Roger Longman, CEO, Real Endpoints

The biomedical and healthcare systems are currently facing a very public and urgent debate about the need for more life-saving innovations, the price of these innovations, and the value they bring to patients. At "The price of innovation: Who defines 'value'?" panel at Partnering for Cures, moderator Roger Longman of Real Endpoints started the discussion with a question of whether high-priced drugs encourage innovation. Representing the biotechnology industry, Cartier Esham of the Biotechnology Industry Organization said prices are set in the context of a market-based reimbursement system that enables returns on investments. She said profits have to be enough to attract further investments from venture capitalists to sustain the innovation cycle.

Peter Bach of Memorial Sloan Kettering Cancer Center said the current pricing structure does not incentivize true innovation. "I don't believe the prices are real," Bach said. "Prices are set at what the market tolerates, adjusted around an artificial constraint."

Providing the perspective from a nonprofit advocacy organization, Brian Rosen of the Leukemia & Lymphoma Society said, "There has to be some type of give from all sides. Our mission is to provide affordable – not unlimited – access to quality care." To be able to afford services and products in the care setting, many people need coverage and reimbursement. For cancer therapies, insurance payers historically cover all FDA-approved drugs, said Michael Kolodziej of Aetna. However, payers are increasingly using tools to contain costs such as prior authorization and implementing preferred clinical pathways that incorporate comparative effectiveness research.

"An era of some control around cost and price is inevitable given the way things are going," said Kolodziej. "We're uncomfortable with [health technology assessment] but I don't see how we can get away from it." Health technology assessment (HTA) is a systematic evaluation of the social, economic, organizational, and ethical impact of new technologies in order to inform policy decision making. Although uncommon in the United States, HTA is used in countries such as Canada and the United Kingdom to make coverage decisions.

Addressing the comments from panelists about the practice of paying high prices for drugs with incremental benefits compared to existing therapies, Esham pointed out that that drug development is not always linear. "One day you may have a drug that's [incremental] ... for an indication, but later it may be discovered as a game-changing drug for another indication," she said. "We have made significant advances. The question is what we do now to make sure we allow that progression to continue but sustain a system that allows for access."

According to Louis Jacques of ADVI and formerly of the Centers for Medicare and Medicaid Services, the problem is that the system pays too high a price for incrementalism. "If my goal is to get to Seattle in the morning, the challenge I have as a payer is that people are selling me a train ticket to Hoboken and telling me that it is incremental ... and charging me the price of an airline ticket," he said. "If incrementalism was paid as incremental improvement I don't think it would be such a gray issue. The problem is that we pay for incrementalism based on the shared delusion that they are cures."

Rosen warned the group to not focus the discussion on ways to pick the best drug in order to limit patient choices to treatment. "The future of medicine is a very targeted approach where you have one solution for one patient and another completely different solution for another patient," he said. "We have to derive a system that pays for very targeted approaches."

A question from the audience then prompted the panel to discuss patient-reported outcomes (PROs). PROs measure aspects of care such as patients' quality-of-life, symptoms, and preferences. Although there have been issues with poorly adjudicated PROs in the past, Jacques is a proponent of using quality-of-life measures as endpoints in cancer clinical trials. Kolodziej also agreed that payers would benefit from PROs in making coverage decisions. Esham added the biotechnology industry is interested in using PROs both for drug development and monitoring the use of the drug post-FDA approval.

In closing, several of the panelists agreed that there is a need for a systematic and transparent way to evaluate products by a trusted and fair broker. "If we believe that healthcare is a right, it's also a social contract for the greater good," Kolodziej said.