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Second-Guessing the FDA: CMS’s Expanding Regulatory Role

Second-Guessing the FDA: CMS’s Expanding Regulatory Role

Nothing gets biopharma policy watchers more worked up than the possibility that the Centers for Medicare & Medicaid Services (CMS) will second-guess FDA approval decisions. In reality, though, CMS often has no choice but to apply its own interpretation to issues that also fall under the FDA’s jurisdiction—and implementation of the health care reform is bringing more of those cases to the fore.


Michael McCaughan

The idea of FDA/CMS collaboration makes plenty of folks in the biopharmaceutical industry nervous. Their fear is understandable: the specter of a direct link between government reimbursement authorities and regulatory authorities prompts visions of impossibly difficult clinical trial requirements and/or unsustainably restrictive coverage and reimbursement policy.

Sponsors much prefer a bright line between the role of regulatory authorities and that of the payer agency. Better to make separate cases for approval and coverage, the thinking goes, than face the potential for coordinated action to limit your commercial opportunity.

Unfortunately for sponsors, reality doesn’t match up with either the projected collaboration they fear or the neat compartmentalization they long for.

There is no unseen hand operating behind the two regulatory agencies when it comes to decisions about new products. But there is also no use in pretending that the two agencies operate in isolation, with complete independence from each other when it comes to those decisions. Instead, there is a haphazard and at times unpredictable feedback loop between the two—a state of affairs made abundantly clear during the long back-and-forth over the safety issues associated with the erythropoietin stimulating agents.

The Food & Drug Administration and the Centers for Medicare & Medicaid Services have overlapping missions, and their standards and priorities can and sometimes do come into conflict. They are also part of the same cabinet department, so the notion of greater coordination is a perennial subject of attention.

Initiatives to improve inter-agency collaboration have been a priority of every recent Secretary of Health & Human Services (Donna Shalala under Clinton, Tommy Thompson and Michael Leavitt under Bush, Kathleen Sebelius under Obama). Those initiatives can produce operational efficiencies, such as those resulting from centralized purchasing or a unified email system. But the very fact that better coordination is a recurring theme demonstrates how far from true coordination the two agencies remain.

That really is nothing new. But, if it feels like a more pressing issue, that’s because it is. Thanks to the Medicare Modernization Act, CMS is well on its way to becoming the majority payer for prescription drugs in the US.

The explosion in “specialty” pharmaceutical markets—disproportionately paid for by Medicare Part B—is only accelerating that trend.

And all that, before the newly enacted health care reform law.

The landmark legislation of this past spring will not only further expand CMS’s role as market organizer for pharmaceuticals in the US, it also increases the number of areas where CMS will have a separate regulatory role layered on top of the FDA’s existing authority. Examples include:

• Identifying “pediatric only” drugs for purposes of Medicaid rebate calculation.

• Defining “new formulations” that trigger a separate Medicaid rebate provision.

• Defining “brands” and “generics” in the context of the Part D Donut Hole discount.

And, if the current state of affairs is any indication, sponsors may end up deciding that they would rather see more careful coordination between the two agencies, rather than find themselves caught in the cross-currents of conflicting authorities.

Provenge Provides Context
There is no doubt that an unexpected step by CMS can have sweeping implications for the biopharma sector.

Exhibit A: CMS’s decision to open a national coverage analysis for Dendreon Corporation’s prostate cancer immunotherapy Provenge.

In this case, CMS appears to be second-guessing the FDA’s decision to approve the product in the first place, asking whether there is sufficient evidence to justify coverage of the agent. The request for a national coverage analysis (NCA) seems quite explicitly to question whether there is sufficient evidence to support coverage for the labeled patient population.

That, at least, is how the Biotechnology Industry Organization (BIO) is reading the NCA request. BIO, citing statutory terms governing the coverage of off-label use of cancer therapies, urged CMS to drop the process altogether.

Instead, CMS is moving forward quickly, convening its Medicare Evidence Development & Coverage Advisory Committee (MEDCAC) on November 17. And, as if to reinforce the view that it is not obligated to cover FDA-approved indications for cancer therapies, the meeting agenda is headlined “On-Label and Off-Label Use of Autologous Cellular Immunotherapy Treatment of Metastatic Prostate Cancer.”

CMS “has called this meeting to consider the currently available evidence regarding the impact of labeled and unlabeled use of autologous cellular immunotherapy treatment on health outcomes of patients with metastatic prostate cancer,” the meeting announcement states. And, if past committees are any guide, MEDCAC will be asked to judge the quality of evidence supporting the labeled use of the therapy.

That is still several steps away from an action by the agency to deny coverage for the on-label use, but it does suggest that the assumption that CMS must cover FDA-approved indications for a cancer therapy could be open to discussion.

CMS’s decision to open the coverage decision has nothing to do with the health care reform implementation process; yet the timing—so soon after the enactment of the new law, and immediately after the appointment of Administrator Don Berwick to oversee the implementation—gives the issue a symbolic weight as a possible sign of a new era.

The fact that the coverage review was announced soon after the completion of a long-debated agreement to allow data sharing between the FDA and CMS only highlighted the sense that the Provenge issue is a harbinger of things to come. (The FDA/CMS memorandum of understanding is itself an example of the challenges of building a more collaborative process for the two agencies; it began as an initiative under the Bush Administration but took eight full years to reach formal agreement.)

The Provenge issue is all the more remarkable in that the Medicare statute is unusually explicit in what it has to say about cancer therapies, including standards for non–FDA-approved indications under Part B. The fact that there is no explicit and unequivocal statement in the statute requiring coverage of an FDA-approved cancer therapy may therefore seem surprising.

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