Should companies wait to charge full price for agents that receive accelerated approval?
A discounted price is fair to the system.
I fully endorse the accelerated approval pathway because it allows faster access to drugs that patients need. We can all agree that providing drug access to patients is critical. However, strict guidelines state that companies taking their compounds through the accelerated path must complete confirmatory and post-marketing trials before their compounds get full FDA approval. The FDA occasionally has failed to enforce its own rules, specifically that a drug be pulled from the market if a manufacturer does not fulfill the confirmatory component of the trial. That doesn’t usually happen.
If a manufacturer acknowledges that it does not have confirmation that its compound is going to be effective based on an FDA-dictated confirmatory study, this acknowledgement should be mirrored by some form of a price discount. Until it gets the confirmatory data, the company should charge, for example, 50% of what it would normally charge for that drug. Once it is approved, the drug would then revert to 100% of the price on the market. The percent discounts can be negotiated based on agreed-upon criteria.
This discounted price is fair because the accelerated pathway does not assume the compound will gain full approval. It assumes that there are limitations to the original study — perhaps the study used surrogate endpoints or studied the drug in a limited patient population. So, it’s only fair to the patients, payers, health care system and society at large to acknowledge this limitation by virtue of lower cost to the system.
One alternative idea to consider might include no price regulation upfront — the company charges what it wants, the drug goes through the pathway, receives accelerated approval and gets on the market, and the company carries out the confirmatory trial. If the confirmatory trial is negative, a possibility would be that the company pays back about 25% of the revenue (or some previously agreed-upon percentage). If, on the other hand, the confirmatory data show benefit, the company wouldn’t have to pay back anything. However, there is no question that the manufacturer has made money on a drug that did not pass muster in rigorous post-marketing studies; so, it is only fair that it pays some of that money back.
Chadi Nabhan, MD, MBA, FACP, is chairman of Precision Oncology Alliance at Caris Life Sciences and adjunct professor in the department of clinical pharmacy and outcomes sciences at University of South Carolina. He can be reached at Caris Life Sciences, 4610 S. 44th Place, Phoenix, AZ 85050; email: firstname.lastname@example.org.
Mandating limited prices ultimately may lead to less investment in oncology drugs.
It’s important not to think of accelerated approval as one path, but to look at the specifics of each drug. It will work for some drugs and not for others. This pathway requires either a surrogate marker or an intermediate marker that would be likely to predict outcomes. I would argue that we have some surrogate markers that are clearly going to predict long-term outcomes but are not widely accepted yet. These aspects must be looked at individually.
There has been a good deal of criticism of accelerated approval and the documented lack of confirmatory studies. However, it’s important to recognize that the absence of evidence is not evidence of absence. Sometimes a drug does not show an OS improvement in a confirmatory trial, but that’s not the same as saying it doesn’t improve OS. Those are two completely different statements.
It can be complicated to conduct confirmatory trials, because once you have a drug that is perceived to be better, patients will want to receive that treatment rather than a comparator.
A challenge in requiring a discounted price is in determining and calculating the target price. There is no metric or formula for establishing the “right price,” and there never will be a formula.
Thinking of drug approval strictly from a financial perspective, the companies’ assets are the drugs, which have a lifespan of intellectual property protection. The companies may consider in their calculations how many years they have to recoup their investment in the development of the drug. If accelerated approval means the company will have discounted revenue upfront, even if that represents the true value, they likely are going to have to push the revenue on the back end.
Ultimately, these companies have a fiduciary responsibility to their investors to generate revenue. It is controversial, and people like to circle around the topic of how much money is spent on drug development. The idea of this discounted price sounds great in principle but, in practice, making it extremely difficult to generate revenue is going to lead to less investment.
Rafael Fonseca, MD, is interim executive director of Mayo Clinic Comprehensive Cancer Center in Phoenix. He can be reached at Mayo Clinic, 5777 E. Mayo Blvd., Phoenix, AZ 85054; email: email@example.com.