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TECHNOLOGY ASSESSMENT HEALTH CARE REFORM OPTIONS ALTERNATIVE TO ADVISORY COUNCIL ON BREAKTHROUGH DRUGS The President's proposed Advisory Council on Breakthrough Drugs, which would examine the launch prices of new breakthrough drugs, is an inappropriate and unnecessary cost-containment mechanism: (1) It focuses on the cost of a single therapeutic item, rather than examining the value of the full range of available treatments, and (2) By isolating breakthrough drugs -- which are and will continue to be a tiny fraction of total health care expenditures -- it sends a message about the government's attitude toward breakthrough products that is eroding the funding for risky research and development efforts. The Advisory Council on Breakthrough Drugs should be deleted. A. Alternative: A Commitment to Assessing the Quality and Value of Health Care One alternative to the narrow focus of the Advisory Council on Breakthrough Drugs would be to consolidate, enhance and refocus the technology assessment activities of agencies such as the Agency for Health Care Policy and Research ("AHCPR"), which was created by Congress in 1989. Current Law: AHCPR is located within the Public Health Service and has responsibility for an extensive set of health care assessment activities designed to enhance the quality, appropriateness, and effectiveness of health care services, and access to such services, through the establishment of a broad base of scientific research and through the promotion of improvements in clinical practice (including the prevention of diseases and other health conditions) and in the organization, financing, and delivery of health care services." AHCPR is authorized to study the safety, effectiveness, and costeffectiveness of all medical treatments and technologies, and also may consider a treatment's legal, social, and ethical implications. AHCPR consists of eight separate divisions, some of which assimilate technology assessment functions established by Congress in various agencies over the previous 20 years. Some AHCPR divisions have personnel that engage in some literature research and analyses of data, but AHCPR largely relies on outside researchers funded through grants and agency contracts, to undertake its research projects. For example, in addition to divisions that award intramural and extramural research grants, a division of AHCPR is responsible for organizing the panels of professionals that create practice guidelines; another division is responsible for the PORTS (Patient Outcome Research Teams) that design and conduct comparative studies of treatment methods available for a particular condition; still another division, OHTA (the Office of Health Technology Assessment), assembles data on the safety, effectiveness and cost-effectiveness of specific technologies in response to requests from government payers such as Medicare and CHAMPUS (a health program for military families and retirees). Other divisions are responsible for assembling health care data and for disseminating research findings. 42 U.S.C.A. §299(b) (West Supp. 1993). B. 1. C. Goals of an Alternative Increase availability of information concerning the cost and value of medical treatments, including cost effectiveness and quality of life, to providers, payers, and patients. 3. Promote the development of breakthroughs and other technological changes that benefit patients over their lifetimes. Principles of an Alternative 1. 2. 3. 5. 6. 7. The role of the federal government should be in developing and disseminating information on outcomes and the appropriate uses of technology in improving health status and quality of life. Technology assessment should not be the responsibility of a national body that is charged with cost containment or benefit design, but instead should have enough independence to ensure confidence in scientific assessments. Decisions about whether to use a particular technology should be made by local providers and their patients, in consultation with local plans and informed by scientific research, including information disseminated by the government and other sources. All technologies and procedures should be subject to possible evaluation at any time -- old and new technologies should be the focus of research projects as indicated by the agreed-upon priorities of researchers. Technologies subject to FDA review (drugs, biologics, devices) should be presumed to be safe, effective, and not investigational for uses which have marketing approval or are accepted uses listed in the major compendia. A decision not to use a technology for a particular patient or a whole plan should be based on persuasive evidence that the excluded therapy does not present a clinically meaningful advantage over the available alternative therapies. Procedural safeguards should be spelled out in statute to discourage arbitrary action by payers and to give consumers and other interested parties the right to challenge adverse decisions. Gordon Public Policy Center Regulatory Review Project Volume 1 December 1993 Price Control and Innovation: An International Comparison By Robert Goldberg, Ph.D., Senior Research Fellow Introduction: Progress and Profits The Clinton proposal to regulate the price of new drugs has become one of the most controversial elements of the President's health care plan. First, there is a concern that innovative products tend to be more expensive than current products. For consumers, a drug that costs hundred or thousands of dollars a year could exceed ability to pay or insurance coverage. As a result, many policymakers believe that comprehensive coverage of prescription drugs is more important than research for innovative new drugs. Policies that lower drug prices may yield drug savings at the expense of delaying more cost-effective treatments. As the late Lewis Thomas has noted, the price of the outright capacity to prevent or cure is never as high as the cost of managing disease with less effective technologies. Controls could make cost-effective drugs even more so by cutting their prices. However, price controls also send a signal to bio-pharmaceutical companies and investors alike that lower prices are more important than new, breakthrough drugs and thereby bring about a more enduring decline in the bio-pharmaceutical R&D enterprise. Less R&D will lead to fewer innovative drugs. Ultimately, as Dr. Harold Varmus, director of the National Institutes of Health has noted, neglect of research will slow the pace of biomedical discovery and the search for new cures.' From an economic viewpoint, higher drug prices and pricing freedom have contributed to the US pharmaceutical and biotech enterprise being "...in a class by itself as an exceptionally strong competitor".? Proponents of controls insist that incentives of R&D will not be undermined. They point to the fact that European pharmaceutical firms have managed to produce innovative drugs under price controls. Even President Clinton has weighed in on the subject by stating that the German pharmaceutical industry was healthy despite controls on drug prices and expenditures. Price controls could have profound implication for the quality of medicine and America's economic competitivess. Their impact on innovation in Europe compared to the United States must be examined carefully. Comparing rates of innovation internationally will allow us to more accurately assess the tradeoff between price regulation and rates of innovation and determine which path to follow.' 2 J.M.Bishop, M. Kirshner, H. Varmus, Science. Volume 259, 1993, page 444. Lacy Glenn Thomas, III, "Implicit Industrial Policy. The Triumph of Britain and the Failure of France in Global Pharmaceuticals". School of Business, Emory University, February, 1993. 3 "Implicit Industrial Policy. The Triumph of Britain and the Failure of France in Global Pharmaceuticals". Page 4. |