Eli Lilly & Co. is positioning itself as a contender to participate in a pilot program for value-based pricing with the Centers for Medicare & Medicaid Services and preparing for the pricing/payment challenge for its potential Alzheimer’s product.

A January 29 position paper prepared in conjunction with the health insurer Anthem Inc. urges CMS to consider pilot programs or demonstration projects “with commercial health plans that adapt the government pricing rules to test how value-based contracts impact reported government price figures, and in turn, Medicaid rebate amounts and 340B ceiling prices.”

Suggested as the joint work product of organizations that approach payment for pharmaceuticals “from different perspectives,” the Lilly/Anthem exhortation to CMS to establish pilot projects reads like an offer by the drug manufacturer and insurer to volunteer.

It is a way for Lilly and Anthem prior to a pilot program to try to get recognized by CMS as wanting to test work-arounds for the best-price restraints on performance/outcomes-based payments and for addressing anti-kickback concerns.

The public statement is novel primarily for the source: the combined policy product of a drug company and insurer. That has been a potent policy combination in the past – behind the success of MMA (Part D, Medicare Modernization in 2003) and ACA (ObamaCare in 2010). Also see "Preparing for Health Care Reform: Why Big Pharma Thinks it Can Avoid Another "Hillarycare"" - Pink Sheet, 1 January, 2008.

It comes at a time when the Obama Administration has noted a coalescence of support for value-based projects and even Democratic senators are urging the Administration to put money for value-based pilot programs in the 2017 budget proposal. ([A#2015500126])

The reference to value-based projects in a recent Feb. 2 letter to President Obama from eight Democratic senators shows the expanding political universe for the idea.

“Common Ground” – Literally

Lilly and Anthem explain the joint project in a summary Health Affairs Blog as the product of “common ground” – a shared interest in innovation in new products and delivery.

The common ground description is appropriate, however, on several levels, perhaps most fundamentally on the shared Indianapolis home of the two companies. The position paper even carries a “ProjectIndy” tag on Anthem’s web posting. The project comes out under the name of Anthem’s former Exec VP and Chief medical officer, Samuel Nussbaum, and Lilly’s President of Bio-Medicines, David Ricks.

The establishment of value-based systems permitting delayed and scaled rebate payments based on success of treatment of individual patients is a logical model for conditions like diabetes, where Lilly is a large participant.

However, the real impact of those models would be much greater in shaping the acceptance of a product for Alzheimer’s, where purchasers are likely to be cautious about any of the next therapies (if and when) they arrive.

Lilly prominently maintains one of the longest active Alzheimer’s development programs for solanezumab (Phase III internal data readouts this year for mild Alzheimer’s and a planned Phase III start for prodromal Alzheimer’s also this year)

Support for New Pharmacoeconomic Communication Policy

Lilly also got Anthem to endorse expanded premarket communications by drug manufacturers in a separate but related position paper, “Facilitating Open Communications About Emerging Therapies.” That is an important broadening of support outside the biopharma industry for the continuing effort to get FDA to permit broader discussion of products prior to approval.

The “Open Communications” paper emphasizes the need for health plans and pharmacy benefit managers to get clear estimates on the size, pharmacoeconomic data and likely patient demand for products in advance of FDA approval to avoid using too high a price or usage estimation in premarket assessments (leading to overcharging beneficiaries in premiums) or too low a price or use estimation which leads to losses for the plans and access restrictions.

From that perspective, the “Open Communications” paper is another iteration of the attempt to extract a positive benefit for pharma form the Sovaldi price headlines of 2014. That message of the impact of broader premarket conversations between drug companies and buyers has already been reflected in such unlikely places as the Senate Finance Committee investigation of Gilead Sciences Inc.’s pricing of Sovaldi.

The Lilly/Anthem messages on creating safe harbors for CMS best price rules and anti-kickback provisions and FDA communications repeat other statements, such as industry testimony (by Merck & Co. Inc. and Novartis AG) at the HHS Drug Price Forum in November. ([A#2016500005])

The position papers are notable, however, in some of the further details suggested for revised regulations (or legislative override of current regulations).

For example, on “Open Communications,” Lilly suggests that drug companies and health plans could “enter into appropriate non-disclosure agreements” to assure that the communications on preapproval products stayed between the companies and plans.

Lilly repeats the idea promoted by PhRMA for the last two year of a disclaimer statement “making it clear” that the data being shared is not FDA-approved.

Other limitations on the data to be shared could include:

Only data on indications under review by FDA
Limit safety and efficacy data to results from Phase III pivotal trials
Economic data would come from pharmacoeconomic studies -- supported by the lesser standard of competent and reliable evidence
Within a specified time of expected FDA action (i.e., within an agreed period prior to the PDUFA date)
Commitments by manufacturers to follow-up with health plans with corrective information if the pre-approval discussions “materially differ from the final product labeling” as specified by FDA.

Lilly and Anthem contend that the discussions are neither inherently promotional nor demonstrative of commercial distribution. “In the absence of definitive negotiations or a signed agreement [between a manufacturer and a plan], such conversations would also not amount to commercialization,” the position paper says, noting again that there would not be use of the product prior to approval.

“As is the case today,” the position paper says, “a therapy would not be used prior to FDA approval under the proposed solution, and health plans would still have ample opportunity to review the label post-approval. In addition, manufacturers might commit to follow up with health plans when necessary to correct any assumptions made in pre-approval discussions that materially differ from the final product labeling agreed with FDA.”

In tune with the recent court decisions on labeling (Amarin and Pacira), Lilly says that FDA could hold preapproval discussions to the standard of “truthful and non-misleading,” which Lilly and Anthem call the key to “one potential path forward” to open up communications. Lilly argues that one standard for judging pre and post approval communications would “inject greater consistency” into FDA regulatory framework.

Lilly, Anthem Singing Same Tune On Value-Based Pricing, Communication Policy

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