April 4, 2006

Reimbursement and Phase IV:

CRO Role In Clearing

The Fourth Hurdle

ObjectiveObjective

• Understand trends in payer use of Phase IV studies and registries

• Identify considerations for adapting Phase III and IV activities to accommodate those trends

• U.S. reimbursement planning and problem solving since 1998

• Former owner S&FA; Exec VP, PAREXEL

• Payer research; competitive analysis

• Strategic planning; reimbursement forecasting

• Advocacy with major payers

Tag Client MixTag Client Mix

Devices/ Diagnostics

15%

Ad/ PR/ PA Agencies

10%

Investors/ Advisors

15% Biotech/ Biologicals

40%

Pharmaceuti-cals20%

Current Assignment Current Assignment IncludeInclude

• Sepsis

• PDT

• HIV/AIDS

• Personalized cancer immunotherapy

• Immune globulins

• Osteoporosis

• Genetic testing

• Bleeding disorders

The Fourth HurdleThe Fourth Hurdle

1. Proof of efficacy

2. Acceptable safety

3. GMP

4. Reimbursement

4x4: 44x4: 4thth Hurdle’s Link to Hurdle’s Link to Phase IVPhase IV

• U.S. payers routinely require outcomes research to support coverage of high cost technologies

• High cost = “On my radar per case or in total”

Link Link – cont’d– cont’d

• Tech developers are often reluctant to include in Phase III more than what is needed for FDA. That’s OK because …

• Payers want to know how new tech affects real populations, not protocol-driven clinical trial subjects

• But Phase III design should anticipate Phase IV data collection

Payers Want Practical Payers Want Practical Clinical Trials (PCTs)Clinical Trials (PCTs)

• Evidence-based coverage policy will require PCTs– E.g. ICD

• Study design is formulated to enable treatment decision making– Distinguish from explanatory clinical

trials designed to maximize the chance that a biological effect of a new tx will be revealed

PCT CharacteristicsPCT Characteristics

• Compare clinically relevant interventions– E.g. Enroll based on presenting

symptoms rather than confirmed diagnosis

• Enroll a diverse population of study participants– E.g. Elderly not excluded

Characteristics – cont’dCharacteristics – cont’d

• Recruit from a variety of practice settings

• Collect data on a broad range of health outcomes beyond mortality and morbidity– E.g. QoL, symptom severity, cost,

patient satisfaction

MCO Views on Outcomes MCO Views on Outcomes Data Data

• Economic data Most persuasive

• Clinical data Sometimes useful

• Quality of life Interesting but seldom

compelling

Risks in Post Approval Risks in Post Approval TrialsTrials

• Failure

– Pfizer funded trial comparing its calcium channel blocker Norvasc to other antihypertensives

– Generic diuretic (chlorthalidone) was shown to be superior in preventing certain cardiovascular outcomes

Risks Risks – cont’d– cont’d

• Credibility

– Payers assume study lacks scientific rigor

Active Controlled TrialsActive Controlled Trials

• Payers want to know how the new tech compares to standard of care, not to absence of care

• Some manufacturers willing to risk active trials in Phase III because of payer, not FDA, pressure

Amgen Oncology and Amgen Oncology and OsteoporosisOsteoporosis

• Head-to-head trials of AMG-706 and Avastin

• Comparative trials of denosumab against Fosamax and Zometa

• “If not superior, we’d rather know now than later.”

AHRQ Payer Registry AHRQ Payer Registry GuideGuide

• Agency for Healthcare Research and Quality is developing “how to” guide for payers who create patient registries as part of coverage with evidence development

• On contract to Outcome Sciences, Inc.

Registry Guide Registry Guide – cont’d– cont’d

• National workshop to be scheduled – date TBD

• Monitor at ahrq.gov

Medicare Evolving to Be Medicare Evolving to Be National Treatment Policy National Treatment Policy ManagerManager

• CMS process for evaluating new technology is rigorous and evidence based

• Adverse Medicare coverage policy decision is routinely followed by private payers

• Part D benefit and Coverage With Evidence Development (CED) are accelerating the evolution

Part D Part D

• More difficult for manufacturers to differentiate products via detailing

• Part D benefit design drives utilization toward generics, forcing undifferentiated products to lower net selling price

Part D Part D – cont’d– cont’d

• Part D Plan P&T committees rely heavily on comparative effectiveness data

– Coverage decisions will likely migrate to Plans’ non-Medicare businesses

Medicare CED Medicare CED

• Coverage with evidence development for FDA approved drugs, biologicals, devices

• CMS can require evidence collection, including Phase IV trials and patient registries, as a condition for Medicare coverage

FeaturesFeatures

• Will be used only where Medicare coverage would otherwise be denied as not reasonable or necessary

• Systematic, protocol-driven data collection

• No reimbursement for data collection

Most Likely To Be Used For Most Likely To Be Used For ……

• Drugs in new classes with novel mechanisms

• Treatments that may be ineffective or unsafe in some patient subgroups

• Off label uses

Awaiting New Guidance Awaiting New Guidance DocumentDocument

• CMS intends to issue revised guidance by summer 2006

– Clarify Common Rule and IRB application to CED

One Current Use of CEDOne Current Use of CED

• Expand coverage of Eloxitin, Camptosar, Erbitux and Avastin off label for colorectal cancer

• Patient must be enrolled in NCI sponsored trial

• “Sufficient inference of benefit” + safeguards inherent in NCI sponsored trials

ICDs: Another Example of ICDs: Another Example of Evidence-Based Coverage Evidence-Based Coverage PolicyPolicy

Situation:

• Trials of implantable cardioverter defibrillator (ICD) showed it to be effective in some patients but not in others

• High cost, large population, unsettled medical evidence resulted in adverse coverage policies

ICD CoverageICD Coverage

Response:

• Manufacturer sponsored Phase IV trial: Sudden Cardiac Death in Heart Failure Trial (SCD-HeFT)

• Medicare expanded coverage to include study population

Outcome Outcome

• Trial provided evidence on survival benefit with simple, single lead ICD

• Medicare issued new national coverage determination

How CRO Can Prepare How CRO Can Prepare Client for The Fourth Client for The Fourth HurdleHurdle• Design Phase III for beyond Phase III

• Conduct primary research to understand what important payer(s) want to see in that therapeutic class – E.g. What metrics are relevant?

• PMPM• Cost/savings • Drug budget impact; Overall budget

impact

How To Prepare – How To Prepare – cont’dcont’d

• Press to have Phase IV studies be at least as rigorous and credible as Phase III

• Identify new tools to address payer needs

– E.g. – validated biomarkers

Hypothetical CaseHypothetical Case

• New ADD/ADHD tx in development• Will universally be 3rd tier

– Inherent safety concerns – pediatric – complicated by conflicting, government sponsored class findings

– Not life saving– Many alternatives whose PMPM costs

are well understood– Competitor performance contracts in

place

Manufacturer Objective: Manufacturer Objective: Begin Moving To Tier 2 In Begin Moving To Tier 2 In Year 2Year 2

• How will drug move from 3rd to 2nd tier?

– Significant price concessions

– Outcomes research (OR)

• Which is the better choice for client? If OR, then need to identify– Endpoints that are relevant to payers

– Tools to accelerate conclusions

Example of Tool: Example of Tool: Validated Cognitive Validated Cognitive Biomarkers Biomarkers

• How can validated cognitive biomarkers:– Identify patients who are likely

responders to this drug?– Use response data to suggest cost

effectiveness?– Produce data that is credible to the

payer?

SummarySummary

• U.S. payers, led by Medicare, now require post-marketing outcomes data to grant or continue coverage of new, high cost technologies

• Many pharma companies do not yet– Recognize the extent of the trend– Prepare adequately pre-launch– Find out from payers what they

really need to see

Summary – Summary – cont’dcont’d

• Significant opportunity exists for CROs to fill the knowledge gap by– Determining payer data needs– Perfecting clinical trial tools to

address those needs (e.g. validated biomarkers)

– Helping clients understand that• Market access does not end with FDA

approval• Phase III planning is essential to

streamline the Phase IV work

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