The Value Equation: A Journey Through the Innovation Ecosystem in the Time of Covid

By Peter J. Pitts

One of many lessons gleaned from COVID-19 is that our healthcare ecosystem can accomplish extraordinary feats, and quickly, when the individual components work together. Imagine the innovation potential that awaits patients if such large-scale collaboration occurred with more regularity? For over a decade, Peter Pitts has offered incisive commentary on this very question. The articles featured in this book aim to confront conflicting perspectives on subjects ranging from healthcare economics and patient education, to development roadblocks and friction between payers, providers, manufacturers, and regulators. The Value Equation: A Journey Through the Innovation Ecosystem in the Time of Covid is necessary reading for anyone interested in charting a new, urgent path forward for patient-centric healthcare innovation.

• Language: English
• Publisher: Lulu.com
• Release date: Jan 5, 2021
• ISBN: 9781716323850

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The Value Equation

A Journey Through the Innovation Ecosystem In The Time Of Covid

By Peter J. Pitts

Copyright © 2020 by Peter J. Pitts

All rights reserved. This book or any portion thereof may not be reproduced or used in any manner whatsoever without the express written permission of the publisher except for the use of brief quotations in a book review or scholarly journal.

First Printing: 2020

ISBN 978-1-716-32385-0

Cognito Press

757 Third Avenue

New York, NY 10017

www.cmpi.org

Cover photo and book design by Mandi Vollmer.

Author’s Note

John Donne reminds us that, No man is an Island, entire of itself; every man is a piece of the Continent, a part of the main. Nowhere is that truer or more crucial than in partnerships of thought. This collection would be impossible without the many dedicated healthcare policy experts with whom I have collaborated over the years. Their professional comradeship has often led to close, personal friendships — and that is a price beyond rubies. This volume is dedicated to the whole host of my collaborators who have, over the years, made me savvier and more prescient than I am (or could ever be!) alone.

Peter J. Pitts

December 2020

New York City

Contents

Author’s Note 4

Introduction: The Value Equation 8

Chapter One: Innovation Nation 10

The Healthcare Pilgrim’s Progress 13

Can There Be Value-Based Medicine Without…Values? 15

Fewer Drugs, Shorter Lives, Less Prosperity: The Impact of Comparative Effectiveness Research on Health and Wealth 20

Safe Harbor Sunshine and Flat Fees: Vital Steps Toward Smarter Drug Spending 26

Chapter Two: The Urgency of Quality 30

FDA’s Quality Revolution 33

Are All Men Created Equivalent? 38

Chapter Three: The 21st-Century Patient Voice 42

The Patient Voice: At the Intersection of a US Regulatory Revolution 45

Toward Meaningful Engagement for the Patient Voice 53

Chapter Four: The Urgency of Safety 58

21st Century Pharmacovigilance: Efforts, Roles, and Responsibilities 61

Advancing Drug Safety Through Prospective Pharmacovigilance 74

21st-Century Oncology Drug Safety via New-Age Regulatory Standards and Practices 79

Chapter Five: Biosimilars 88

Biosimilars Report Card: Is the FDA on Track to Get an A? 91

The Need for Distinct Nomenclature for Originator and Biosimilar Products 94

Chapter Six: The Urgency of Information Sharing 104

Using Off-Label Communications to Responsibly Advance the Public Health 107

Is Off-Label on the Table? 117

A Social Media Manifesto 126

Of Pens, Pizzas, and Pharmaceuticals 141

Chapter Seven: The Urgency of 21st-Century Regulation 146

Toward a More Intramural Approach to Biomarker Development 149

Can We Talk? Rethinking FDA Communications With Drug Developers 151

Regulatory Centaurs 154

From the Valley of Death to the Crossroads of Opportunity: A Discussion of Evolving Benefit-Risk Evaluation Standards 157

Chapter Eight: The View From Abroad 168

Impact of Real-World Data on Market Authorization, Reimbursement Decision, and Price Negotiation 171

Advancing Pharmaceuticals and Patient Safety in Saudi Arabia: A 2030 Vision Initiative 188

The Globetrotting Regulator 196

Chapter Nine: The Healthcare Ecosystem and COVID-19 202

Our Most Powerful Weapon to Fight COVID-19: Patient Involvement 205

The Case for Methodological Pluralism in Medical Science 207

Patient Contribution to the Development and Safe Use of Medicines During the Covid-19 Pandemic 211

The Question of Mitigating Patient Mortality: Comparing Gilead’s ACTT-1 and the WHO’s Solidarity Trials 215

US Response to Pandemic Is Chaotic. Here Are Five Ways to Prepare for the Next One 220

Concluding Thoughts 222

About the Author 224

Introduction:

The Value Equation

What is value, and how is it determined and measured?

For the sake of this discussion, let’s contextualize value as a fraction: With patient outcomes expressed as the denominator and all remaining factors categorized individually as above the line items. This equation will serve as the guiding principle throughout these essays and articles as we navigate the myriad challenges facing our healthcare ecosystem today.

The word urgency will appear repeatedly over the next few chapter headings. That is by deliberate design, not for want of imagination (or an accessible thesaurus!).

Senator Everett Dirksen famously quipped, When I feel the heat, I see the light. And so, in that spirit, the chapters that follow aim to both turn up the heat and augment the illuminative wattage so that we can focus our immediate attention on the task at hand: Enhancing the lives of patients and their families.

As Rabbi Hillel reminds us, All the rest is commentary.

Chapter One:

Innovation Nation

For good ideas and true innovation, you need human interaction, conflict, argument, debate. Margaret Heffernan

Healthcare innovation saves lives, saves money, promotes economic growth, and provides hope for hundreds of millions of people — both patients and caregivers — in the US and around the world. But innovation isn’t easy. There are many roadblocks beyond those of discovery and development. The complicated and conflicting dynamics of politics, perspectives on healthcare economics, of friction between payers, providers, manufacturers, and regulators, the battle for better patient education, and the need for a more forceful and factual debate over the value of innovation all create the need for a more balanced and robust debate.

The Healthcare Pilgrim’s Progress

By Peter J. Pitts and Hervé Le Louet

Originally published in Journal of Commercial Biotechnology, October 2020

Progress is both a noun (forward or onward movement toward a destination), but can be changed to a verb (to move forward or onward in space or time). Innovation is also a noun (the action or process of innovating). However, they aren’t synonyms. When it comes to the future of healthcare, which is more important, innovation or progress?

Let’s consider innovation first. We spend a lot of time speaking about the urgency of innovation. As such we talk about the importance of patents, intellectual property rights, data protection and the role of investment capital. We also talk a lot about creating a culture for organizations to create innovation. According to Francis Bacon, Surely every medicine is an innovation; and he that will not apply new remedies, must expect new evils. Innovations in healthcare technologies are crucial. Every new medicine you swallow is an innovation to your biochemistry. But not all innovations are alike or of equal importance. Innovation exists within a larger ecosystem needed to support and enable its introduction to and adoption by the market.

Samuel Johnson defines innovation as Change by the introduction of novelty and offers this quotation from Francis Bacon, It were good that men in innovations would follow the example of time itself, which indeed innovateth greatly, but quietly and by degrees. In 21st century plain English, Bacon is reminding us that the greatest and most powerful innovator is ... nature and, unless we opt to drive innovation, we are at its mercy. Time and tide wait for no man and the same is true for innovation.

Here’s an example: We live in a market driven economy. Our current means of production are not eco-friendly and are a major cause of climate change. Manufacturing must innovate so that we can continue to produce the same things — but in a different way (the green economy, etc.). This is innovation. As Giuseppe Tomasi di Lampedusa wrote in La Gattopardo, If we want things to stay as they are, things will have to change.

As to Progress, here is Dr. Johnson’s definition, To move forward and he offers this snippet from John Locke, Others dispond at the first difficulty, and conclude, that making any progress in knowledge, farther than serves their ordinary business, is above their capabilities. Progress presupposes a better future — but isn’t pain free and requires trade-offs.

Descartes wrote that freedom, autonomy and self-realization can only be attained through science, that only the growth of science allows for progress.

On a more real-world level, let’s take the example of the decennial European Union strategy. In 2000 It discussed the Economy of Knowledge. In 2010 the focus was on a Union for innovation. The leadership of the EU clearly understand the need to innovate rather than being driven by the unstoppable organic innovation of time.

There are important lessons for the biopharmaceutical industry and its relationship with healthcare technology assessment (HTA) organizations. As we move from QALY-based assessment protocols (quality-adjusted life year) to HTA based on value — should there be a distinction between health technologies that are innovative versus those that facilitate progress? The Salk vaccine was progress. The Sabin oral dose was innovation. It is a distinction with a difference. As Goethe wrote, When ideas fail, words come in very handy.

Innovation enables change that maintains or sustains an ecosystem. Progress changes the ecosystem. Many new biopharmaceuticals and medical devices are innovative. They can improve both quality of care and quality of life, but do not always represent true progress. Perhaps we need a healthcare technology continuum that considers the value of an innovation (a new molecule, a newly identified receptor, gene therapy, etc.) in the context of progress. Rather than value-based HTA we should be thinking about progress-based HTA. It’s worth repeating that the terms innovation and progress" have separate and distinct meanings. They are, like many generic drugs and biologics, not interchangeable.

Innovation depends on the women and men of science. Progress, according to George Bernard Shaw, depends on the unreasonable man. When it comes to 21st century healthcare, it’s time for us to demand more unreasonableness. That’s progress.

References

1. https://www.goodreads.com/quotes/24499-be-the-change-that-you-wish-to-see-in-the. Last accessed, August 1, 2020

2. https://www.annacastle.com/bacons-essays-innovations/. Last accessed, March 9, 2020

3. https://www.iep.utm.edu/desc-sci/. Last accessed, March 9, 2020

4. https://ec.europa.eu/eurostat/documents/4187653/5746717/KS-42-01-254-EN.PDF/e99c3db5-c94e-405c-9c37-0d1b531cb7a7?version=1.0. Last accessed, March 9, 2020

5. https://ec.europa.eu/research/innovation-union/pdf/innovation-union-communication_en.pdf. Last accessed, March 9, 2020

Can There Be Value-Based Medicine Without…Values?

By Peter J. Pitts

Originally published in Journal of Commercial Biotechnology, February 1, 2018

On September 11, 2017, the Center for Medicine in the Public Interest and the National Community Pharmacists Association sponsored a National Press Club event entitled, Principles for Patient-Centered Prescription Drug Coverage.

The keynote address was given by the Father of Value-Based Insurance Design, Dr. A. Mark Fendrick, director, Center for Value-Based Insurance Design at the University of Michigan. According to Dr. Fendrick, The biggest myth in Washington is that people believe that the improvement of high-quality healthcare actually will lower healthcare costs. They hardly ever do. Living longer, better lives is something we should invest in. We have to change the healthcare conversation from how much we spend to how well we spend it. My view is that people in Washington care more about money than they do about individual and population health. We have to get this conversation back to the patient.

He also quipped that the blessing and the curse of 21st-century healthcare is that we have Star Wars medicine, but Flintstones delivery.

It seems that value-based is the hot new prefix. Value-based medicine, value-based insurance design, value-based contracting. It seems that everyone agrees that everything should be based on value. But do they — really?

Do we really all agree that value is the denominator rather than price? Clearly not considering that the price of medicine is still very much driving the media and political conversation.

But value is what patients care about, because value means clinical outcomes.

When patients say, My drugs are too expensive! what do they mean? As a rule it means that their co-pays and co-insurance fees (their out-of-pocket expenses) are too high. What are we doing about that? Who sets those costs? What do they mean? How do they impact formulary design and…value-based contracting?

Let’s simplify that question: How does value-based contracting impact access and affordability — the only things patients care about and generally the last thing that are taken into consideration? And how does it impact PBMs (prescription benefit managers) and payer profitability?

Now consider these questions through the lens of a public health issue much on the minds of policy wonks, politicians, providers, pharmaceutical companies, payers, patients, and physicians — opioids.

According to a recent front-page story in the New York Times, At a time when the United States is in the grip of an opioid epidemic, many insurers are limiting access to pain medications that carry a lower risk of addiction or dependence, even as they provide comparatively easy access to generic opioid medications. The reason, experts say: Opioid drugs are generally cheap while safer alternatives are often more expensive.¹

And, also in just the past few weeks, a 37-state coalition of attorneys general asked health insurers to encourage pain treatment through means other than prescriptions for opioid pain medications. These attorneys general are sending letters to companies to request they prioritize alternative treatments.²

Insurance companies and PBMs often implement barriers to the use of branded, on-label nonopioid medicines, relegating these treatments to second-line options. The facts speak for themselves: According to IMS data, 52 percent of patients diagnosed with osteoarthritis receive an opioid pain medicine as first-line treatment, as do 43 percent of patients diagnosed with fibromyalgia and 42 percent of patients with diabetic peripheral neuropathy even though there are FDA-approved, nonopioid medicines specifically designed and labeled to treat these conditions.³

Where’s the value in that? There’s certainly short-term value to payers and PBMs — but is that really what we want value-based to mean?

Now let’s consider last month’s announcement by Cigna that they are going to stop covering most prescriptions for Oxycontin in favor of Collegium’s Xtampza ER.

Here’s the CNN headline: In an attempt to reduce opioid use amid a nationwide abuse epidemic, insurance giant Cigna will no longer cover most OxyContin prescriptions in its group plans beginning January 1.⁴

Cigna has signed a value-based contract with Collegium Pharmaceutical for the drug Xtampza ER, an oxycodone equivalent with abuse-deterrent properties. According to Cigna’s chief pharmacy officer Jon Maesner, Our focus is on helping customers get the most value from their medications — this means obtaining effective pain relief while also guarding against opioid misuse.⁵

That’s fine, but there’s one fact that’s strangely absent — both drugs, OxyContin and Xtampza ER, are equally abuse-deterrent.

Here’s another important fact — OxyContin was reformulated and in 2013 became the first opioid with FDA-approved labeling describing abuse-deterrent characteristics. Once the poster child for abuse, OxyContin is now at or near the bottom of the junkie-preferred chart.⁶

It’s important to understand that both products are formulated with properties designed to deter intranasal (snorting) and intravenous (injection) abuse, but that neither is abuse-proof — and one isn’t better than the other. What Cigna isn’t saying is that its customers will no longer have access to a range of FDA-approved products with abuse-deterrent properties — limiting a physician’s options to help patients and address the opioid crisis via more personalized, appropriate therapeutic choices.

So, why the switch from OxyContin to Xtampza ER? Could it be that Cigna negotiated a better deal with Collegium than it had with Purdue Pharma (the manufacturer of OxyContin)? Unfortunately, this decision appears to be more about pharmaceutical rebates than guarding against opioid misuse.

Alas, Cigna’s hyperbole has been met with silence when it comes to pricing transparency.

As John Adams said, Facts are pesky things.

I recently had a very open and honest chat with a senior Cigna executive. He assured me that patient co- pays wouldn’t go up for Xtampza ER and that if a patient stays on OxyContin after prior authorization, that the co-pay would also stay the same. So, good news for patients there.

I asked how this move would guard against opioid abuse. The answer was that, because of the value-based contract, Collegium would be rewarded for appropriate prescribing. But since Collegium doesn’t prescribe — they sell — would their role be in detailing best practices? The executive didn’t know.

I also mentioned to him that Purdue Pharma, as far as I know, is the only company actively detailing the CDC Opioid prescribing guidelines.⁷ He said he’d get back to me.

I’m waiting.

In any case, it’s a simple find x algebra problem. If the co-pay for the medicine isn’t changing, the abuse-deterrent labeling is the same, and the only variable is a new manufacturer, then the only reason for Cigna to make the change is because they got a better price via value-based contracting — that the manufacturer now has skin in the game.

That’s okay. We live in a free-market economy — but it’s not mentioned in the press release. What is mentioned as the lead-in story is that the switch will guard against opioid abuse. How? Nobody seems to know. And what’s more frightening is that nobody is asking. Also, it’s worth mentioning that forcing a doctor to go through the prior authorization rigmarole isn’t something to be just mentioned in passing. And PBMs, on average, charge between $35 and $40 for prior authorization reviews — and that they are not generally done by a healthcare professional.⁸

In 2015, I attended the Utah Employer Healthcare Summit and participated on the panel on emerging therapies for Hepatitis C titled, The $84,000 Pill. One of my main points was that payers regularly receive significant discounts on medicines — and then don’t pass along the savings to consumers. The audience was largely composed of employers and I made sure they understood that the same issue holds true for PBMs and their consumers — employers.

Allow me to share one telling moment. Another panelist, an executive from a large regional PBM, was explaining why they couldn’t afford $84,000 for Sovaldi. I (politely) interrupted him to say, Many large payers are getting upwards of a 50 percent discount on Sovaldi. He shot back, We’re only getting a 38 percent discount. I said, Well, then maybe you should stop talking about an $84,000 pill and start talking about a $52,000 treatment that cures the patient 90+ percent of the time. His snappy comeback, It’s not that simple.

The truth, as Oscar Wilde quipped, is rarely pure and never simple.

Consider the 2010 comment of George Paz, then the chairman and chief executive of Express Scripts,⁹ The cheapest drugs is where we make our profits.

But who is cheaper better for? According to Mr. Paz, Our whole model is switching people to lower-cost drugs. The more money my shareholders make, the more money I make.

It looks like we have to amend Dr. Fendrick’s quote. It’s not just people in Washington who care more about money than they do about patient health. Is this a gross generalization? I hope so, but fear not.

When it comes to value-based contracting the keywords are cui bono. Press releases make it sound as though it’s patients. But it seems as though they are merely an afterthought, a positive unintended consequence. And I know that sounds harsh, but remember — PBMs do not have fiduciary responsibility to either their clients or their clients’ customers — aka, patients. Perhaps if they did have a fiduciary responsibility, that would drive greater transparency.

After all, how can you have a value-based system without transparency?

As Dag Hammarskjold said, You are the lens in the beam. You can only receive, give, and possess the light as the lens does. If you seek yourself, you rob the lens of its transparency. You will know life and be acknowledged by it according to your degree of transparency, your capacity, that is, to vanish as an end, and remain purely as a means.

Whether it’s value-based insurance design, or value-based medicine, or value-based contracting, it must be viewed as a means to an end — and that end must be (at least primarily)