Lilly, Anthem Seek Changes to Drug Promotion Policies, Drug Pricing

Eli Lilly has teamed up with health insurer Anthem to draft a pair of position papers asking federal regulators and legislators to fundamentally rethink the way manufacturers and payers interact.

The joint papers ask that federal rules prohibiting promotion of unapproved new drugs to health insurers be eased, along with restrictions on pricing policies to allow pay-for-performance contracts.

The first paper — “Facilitating Open Communication About Emerging Therapies” — asks that regulators and legislators loosen restrictions on the promotion of products awaiting FDA approval to enable manufacturers to “speak openly with health plans about drugs going through the FDA approval process, particularly with regard to product efficacy, safety, and pharmacoeconomic information.”

Under the FD&C Act, drugmakers are prohibited from making promotional claims regarding the safety or efficacy of a product undergoing FDA review, to “preclude commercialization of the drug before it is approved for commercial distribution,” the rule states. The Lilly-Anthem paper argues that this restriction presents problems for health insurers attempting to calculate annual rates for new products, because they often lack the information until the rates are set for the year.

This means that premiums could be set higher than needed to cover the costs of a drug, as those costs were estimated.

While Lilly and Anthem aren’t asking regulators to overturn the existing ban on unapproved product promotion, they are seeking clarification of existing requirements given how “broadly written” the rules are.

“Given the lack of clarity on the boundaries of permissible, pre-approval scientific exchange, manufacturers are hesitant to discuss clinical data or pharmacoeconomic information until FDA approves a product,” the paper states.

FDA could issue new guidance with explicit safeguards to protect patients and ensure that communications are truthful and non-misleading,” the paper suggests.

Pay-for-Performance Contracts

Lilly and Anthem’s second paper — “Promoting Value-Based Contracting Arrangements” — focuses on setting new contracts between manufacturers and health insurers that base payment on a product’s performance. Such value-based contracting could “drive quality, create savings, and slow cost growth in the healthcare system,” the paper asserts.

Most drug pricing contracts are based on outcomes, such as the volume of the product purchased, and operate off a fixed price. But value-based contracting would allow for “greater opportunity to align payment with quality, accountability, and coordination.” Amgen and Harvard Pilgrim Health Care struck just such a deal — one of the first in the U.S. — last November (DID, Nov. 10, 2015).

The chief obstacles, as Lilly and Anthem see it, are federal antikickback rules and Medicaid price reporting requirements that prohibit “innovation” in contracting.

The report asks HHS’ Office of Inspector General to establish clear safe harbors to permit value-based pricing, and also seeks statutory changes to carve out exceptions to CMS’ best price requirements to allow for such contracting flexibility. Such changes could have built-in safeguards to prevent abuse, such as a prohibition on mid-contract changes to value-based arrangements.

In response to questions regarding the proposals, Anthem said a “relatively small group of individuals at both companies” worked together on the proposals in response to what “both companies saw happening with the national debate on high-cost drugs.” The company added that both proposals are “realistic and actionable.”

Eli Lilly did not provide answers to questions by Monday evening.

Read the paper on communications here:

Read the paper on pricing arrangements here: — Cameron Ayers


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