The Inflation Reduction Act (IRA) requires the Secretary of Health and Human Services to consider information on therapeutic alternatives to drugs selected for negotiation. The Secretary must have the necessary information to understand the market position and therapeutic role played by different drugs in the same therapeutic class. To consider the relative importance of a given drug in patient care, the Centers for Medicare and Medicaid Services (CMS) must identify therapeutic alternatives, determine their comparative therapeutic advantages for patients (eg, safety and efficacy), and incorporate that comparative information. in its initial bid price, which will serve as a starting point for negotiations.
This commentary provides a high-level discussion of the issues CMS must consider when implementing each of these three steps, along with the data sources needed to support each step. There are no specific recommendations on which data should be used.
CMS will use net Medicare Part D prices or average selling prices for Therapeutic Alternatives when making an initial price proposal for drugs selected for negotiation.1: CMS is required to consider the clinical benefit of selected drugs relative to their therapeutic alternatives to adjust this starting point up or down.
CMS guidance issued June 30, 2023 states that CMS plans to identify therapeutic alternatives for each drug indication, including FDA-labeled indications and off-label indications that are “included in nationally recognized, evidence-based guidelines and recognized : In the CMS-approved Part D context.”2: Based on this guidance, we developed options that CMS can use to evaluate whether certain drugs are therapeutic alternatives.
CMS has also stated that it intends to include drugs within and outside of the same class of therapeutic alternatives, including generics and biologics where appropriate. When there are multiple therapeutic alternatives, the guidance states, “CMS may focus on the subset of therapeutic alternatives that are clinically most comparable to the drug of choice.”3: To identify therapeutic alternatives, CMS said it will use a variety of sources, clinical guidelines and literature, as well as commonly used drug classification systems. We will offer options for CMS.
Identifying treatment options
The process of identifying therapeutic alternatives to CMS should include drugs that may have a different mechanism of action or chemical composition. They also need to account for therapeutic class heterogeneity.
Identification of drugs with the same chemical or biological properties
Drug classes are usually defined by properties such as chemical composition or mechanism of action. Drugs of the same class are generally used for the same clinical purposes, although there may be variations, especially among classes that have multiple therapeutic uses. For example, there may be certain patient populations who cannot use certain medications in a class.
There are several national and international sources used to identify harmonious therapeutic alternatives.
Two of these sources are public. The World Health Organization’s Anatomical Therapeutic Classification (WHO ATC) divides drugs into groups based on therapeutic use, indications, and mechanism of action. The FDA has a general classification system, although the categories are broad therapeutic areas and cannot group drugs by mechanism of action.
Several compendia have their own therapeutic classification systems, including:
- The US Pharmacopeia has developed therapeutic alternatives for many drugs based on chemical structure and an extensive stakeholder feedback process.
- Multum (Cerner) provides a therapeutic classification for each drug and each drug component using the a3-level nested category system; for example, naproxen is classified under central nervous system agents. [level 1]pain relievers [level 2]and non-steroidal anti-inflammatory drugs [level 3].
- The First Databank Enhanced Therapeutic Classification System™ is a “drug classification system that provides multiple ways to classify drugs for easy formulary storage and drug selection. It allows drugs to reside in multiple therapeutic classes, with drug concepts at different levels of the hierarchy.”
- The American Society of Health-System Pharmacists (ASHP) American Hospital Formulary Service (AHFS) classification, which includes “grouping drugs with similar pharmacologic, therapeutic, and/or chemical characteristics in a 4-level hierarchy” and “ingredients typically outside the scope of the AHFS Drug Information, but should be included as a placeholder for specific customer needs.”
CMS may use one or more of these summaries to identify drugs in the same class. In most cases this will be clear. However, not all drugs in the same class may have the same indications, so not all drugs may be therapeutic alternatives for every drug indication.
Identification of drugs with the same application/indication
In some cases, other drugs outside the immediate therapeutic class have similar therapeutic uses. For example, although all statins have the same mechanism of action, other cholesterol-lowering agents such as ezetimibe or PCSK9 inhibitors.4: don’t do
There are other sources that can be used to identify out-of-class drugs that CMS may wish to consider as therapeutic alternatives;
- The Department of Veterans Affairs and the Department of Defense (VA/DOD) have developed practice guidelines that include therapeutic alternatives.
- Evidence-based clinical guidelines from recognized scientific and medical organizations.
- Peer-reviewed literature directly comparing alternative treatments or systematic reviews of clinical trials comparing therapeutic alternative drug treatments can provide data.
- Foreign health technology assessment (HTA) agencies, such as those in France and Germany, compare drugs with treatment alternatives.
Narrowing the list of therapeutic alternatives
Not all drugs are therapeutic options for all patients. Therefore, CMS must determine the criteria for therapeutic alternatives to include in its evaluation.
There are several options for choosing appropriate therapeutic alternatives.
- Include all drugs listed as therapeutic alternatives in one or more of the data sources reviewed above.
- Limit the list to drugs with the same mechanism of action and drugs on the FDA’s list of approved treatments.
- Use claims data to determine the frequency with which two drugs are used interchangeably and select a threshold (eg, 50%) to define therapeutic alternatives. Special attention can be paid to drugs taken by vulnerable populations.
Adjustment for comparative effectiveness
In some cases, there may be important differences in the efficacy, safety, or mode of delivery of therapeutic alternatives. CMS should consider these differences when developing their initial price proposals.
To rank these clinical differences, CMS may designate a series of clinical benefit ratings that qualitatively summarizes the entirety of its review of the available evidence and any additional comparative effectiveness analyzes performed as part of the CMS review. For example, France uses a five-point scale to measure the added therapeutic benefit for all newly marketed drugs, with five categories (major, important, moderate, minor, or none). CMS can accommodate this approach.
CMS can then use this overall clinical assessment to inform its initial price proposal. For example, if a drug is considered less beneficial than its therapeutic alternatives, CMS must negotiate for a lower price because there is a better alternative. On the other hand, if the drug being negotiated is more profitable than the therapeutic alternatives, the price should be increased to reflect this advantage over competitors.
Each level of added clinical benefit can then be linked to a price benchmark that depends on the price range of therapeutic alternatives at that level. For example, drugs with “major incremental benefit” compared to therapeutic alternatives may have their contract prices set at a statutory ceiling price, while drugs with “minor” or no incremental benefit may have their initial offer price set at the weighted average price of the alternatives. or the lowest cost alternative, respectively.
There are several sources for determining relative efficiency:
- VA and DOD conduct comparative effectiveness reviews for specific conditions, such as post-traumatic stress disorder.
- The Agency for Healthcare Research and Quality (AHRQ) regularly funds systematic reviews of the literature and may be commissioned to conduct systematic reviews for drugs under consideration.
- The Patient-Centered Outcomes Research Institute (PCORI) has funded extensive comparative effectiveness studies. These are investigator initiatives and CMS must contract for specific studies.
- The Institute for Clinical and Economic Review (ICER) conducts comparisons of clinical effectiveness based on the results of clinical trials.
- Several foreign governments, such as France and Germany, conduct comparative effectiveness studies that inform national price negotiations. CMS may adopt a similar methodology.
- There are clinical studies that perform comparisons and literature syntheses that summarize the results of multiple studies. For example, Cochrane reviews, which are systematic reviews that attempt to identify, evaluate, and synthesize all empirical evidence that meets pre-defined eligibility criteria to answer a specific research question, can be used when available.
Congress was appropriately concerned that negotiations take into account the market position of drugs when the Secretary makes a price proposal. By formally accounting for the relative therapeutic effects of market alternatives in price negotiations, it is agreed upon how well markets function.
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