By: Abraham Asfaw

During a fireside chat moderated by Janet Currie, a professor of economics and public affairs at Princeton University, former FDA commissioners Scott Gottlieb and Mark McClellan reflected on a range of pharmaceutical policy issues. They discussed issues on the development of a single treatment guideline, the task of the FDA in the fight against the opioid epidemic and the current administration’s new drug price reduction policy.

Explaining why the FDA does not provide a single treatment guideline as in the UK, Mr. McClellan mentioned the complexity of the interaction among multiple agents that involve in the treatment decision process. When choosing the type of treatment for a certain diagnosis, he noted that plan providers, PBMs and purchasers might have conflicting interests. Therefore, for these groups, having a single cost-effective treatment guideline is different from having evidence on the cost-effective treatment. In this regard, the task of the FDA has been supporting the development of evidence and making the evidence on treatments that increase value for patients available.

The panelist also reflected on the role of the FDA in combating the opioid crisis. Mr. Gottlieb described the responsibility of the agency in combating illicit opioids and the approval standard for new pain medications. He noted that the nature of the opioid crisis has shifted from addictions initiated by exposure to prescription opioid to the one caused by exposure to illicit opioid drugs. He pointed out that the way seizures of illicit opioid drugs measured have been a challenge. In the past customs and border protection agency reported seizures of illicit opioid drugs only in terms of pounds or kilograms. Because opioid drug potency varies, measuring seizures of illicit drugs influx to the country in pounds or kilograms can be misleading. The FDA is now working with customs and border protection (CBP) agency to report seizures in Morphine gram equivalent. Mr. Gottlieb also mentioned that the FDA is changing approval standard to evaluate new opioid drugs in terms of their ability to relieve pain, to deter abuse and be differentiated from the existing opioid drugs in clinical delivery settings.
Mr. McClellan also added the benefit of expanding access to mental health treatment and other behavioral therapy in reducing the number of new opioid drug addiction. He noted that evidence shows that expanding access to physical therapy and mental health treatment does not only improve patients’ health, but it also leads to lower opioid use and addiction rate. Despite the evidence on the benefits of expanding these treatments, a poor payment model has discouraged payers from covering the cost of these treatments. He argued that the fight against the opioid crisis should involve setting up a good payment model that can incentivize payers to increase access to mental health treatments.

The panelist also weighed on the current administration’s drug price reduction policy proposals. Mr. McClellan described the tradeoff of the price transparency proposal. He pointed out that as much as price transparency reduces the price information friction, in an oligopoly market, it can reduce the amount of discounts plan providers obtain. Lower discount can lead to an increase in out-of-pocket costs and premium for patients and the general population. Mr. Gottlieb, on the other hand, discussed the challenge of using international reference pricing to control drug spending in Medicare Part B. He noted that the current administration might not achieve significant cost-saving from using the international pricing index. He indicated that pharmaceutical companies, for example, can work with foreign countries to set a US-level official price and provide informal discounts for either a segment of their population or other drugs to offset the US-level price. He also mentioned that once we adjust for the wealthiest and the poorest countries’ GDP per capita within OECD and account for purchasing power, the drug price difference between the US and other OECD countries can narrow down significantly. He suggested that, in the long term, the goal should be moving Part B to a competitive base scheme as in Medicare Part D.

The participants closed the discussion with suggestions on future research questions they want to see answered. They mentioned that they want to see evidence on the health tradeoff from nicotine addiction and exposure to combustible tobacco; the effects of non-tax policies on youth e-cigarette use behavior; the comparative effectiveness of different types of medical technologies and the effect of mental health treatment and other behavioral therapy on opioid drug use and abuse.

Abraham Asfaw is a Visiting Assistant Professor in Economics at Bates College.