April 4, 2006

1. April 4, 2006 Reimbursement and Phase IV: CRO Role In Clearing The Fourth Hurdle

2. Objective • Understand trends in payer use of Phase IV studies and registries • Identify considerations for adapting Phase III and IV activities to accommodate those trends

3. U.S. reimbursement planning and problem solving since 1998 • Former owner S&FA; Exec VP, PAREXEL • Payer research; competitive analysis • Strategic planning; reimbursement forecasting • Advocacy with major payers

4. Tag Client Mix

5. Sepsis PDT HIV/AIDS Personalized cancer immunotherapy Immune globulins Osteoporosis Genetic testing Bleeding disorders Current Assignment Include

6. The Fourth Hurdle • Proof of efficacy • Acceptable safety • GMP • Reimbursement

7. 4x4: 4th Hurdle’s Link to Phase IV • U.S. payers routinely require outcomes research to support coverage of high cost technologies • High cost = “On my radar per case or in total”

8. Link – cont’d • Tech developers are often reluctant to include in Phase III more than what is needed for FDA. That’s OK because … • Payers want to know how new tech affects real populations, not protocol-driven clinical trial subjects • But Phase III design should anticipate Phase IV data collection

9. Payers Want Practical Clinical Trials (PCTs) • Evidence-based coverage policy will require PCTs • E.g. ICD • Study design is formulated to enable treatment decision making • Distinguish from explanatory clinical trials designed to maximize the chance that a biological effect of a new tx will be revealed

10. PCT Characteristics • Compare clinically relevant interventions • E.g. Enroll based on presenting symptoms rather than confirmed diagnosis • Enroll a diverse population of study participants • E.g. Elderly not excluded

11. Characteristics – cont’d • Recruit from a variety of practice settings • Collect data on a broad range of health outcomes beyond mortality and morbidity • E.g. QoL, symptom severity, cost, patient satisfaction

12. MCO Views on Outcomes Data • Economic data Most persuasive • Clinical data Sometimes useful • Quality of life Interesting but seldom compelling

13. Risks in Post Approval Trials • Failure • Pfizer funded trial comparing its calcium channel blocker Norvasc to other antihypertensives • Generic diuretic (chlorthalidone) was shown to be superior in preventing certain cardiovascular outcomes

14. Risks – cont’d • Credibility • Payers assume study lacks scientific rigor

15. Active Controlled Trials • Payers want to know how the new tech compares to standard of care, not to absence of care • Some manufacturers willing to risk active trials in Phase III because of payer, not FDA, pressure

16. Amgen Oncology and Osteoporosis • Head-to-head trials of AMG-706 and Avastin • Comparative trials of denosumab against Fosamax and Zometa • “If not superior, we’d rather know now than later.”

17. AHRQ Payer Registry Guide • Agency for Healthcare Research and Quality is developing “how to” guide for payers who create patient registries as part of coverage with evidence development • On contract to Outcome Sciences, Inc.

18. Registry Guide – cont’d • National workshop to be scheduled – date TBD • Monitor at ahrq.gov

19. Medicare Evolving to Be National Treatment Policy Manager • CMS process for evaluating new technology is rigorous and evidence based • Adverse Medicare coverage policy decision is routinely followed by private payers • Part D benefit and Coverage With Evidence Development (CED) are accelerating the evolution

20. Part D • More difficult for manufacturers to differentiate products via detailing • Part D benefit design drives utilization toward generics, forcing undifferentiated products to lower net selling price

21. Part D – cont’d • Part D Plan P&T committees rely heavily on comparative effectiveness data • Coverage decisions will likely migrate to Plans’ non-Medicare businesses

22. Medicare CED • Coverage with evidence development for FDA approved drugs, biologicals, devices • CMS can require evidence collection, including Phase IV trials and patient registries, as a condition for Medicare coverage

23. Features • Will be used only where Medicare coverage would otherwise be denied as not reasonable or necessary • Systematic, protocol-driven data collection • No reimbursement for data collection

24. Most Likely To Be Used For … • Drugs in new classes with novel mechanisms • Treatments that may be ineffective or unsafe in some patient subgroups • Off label uses

25. Awaiting New Guidance Document • CMS intends to issue revised guidance by summer 2006 • Clarify Common Rule and IRB application to CED

26. One Current Use of CED • Expand coverage of Eloxitin, Camptosar, Erbitux and Avastin off label for colorectal cancer • Patient must be enrolled in NCI sponsored trial • “Sufficient inference of benefit” + safeguards inherent in NCI sponsored trials

27. ICDs: Another Example of Evidence-Based Coverage Policy Situation: • Trials of implantable cardioverter defibrillator (ICD) showed it to be effective in some patients but not in others • High cost, large population, unsettled medical evidence resulted in adverse coverage policies

28. ICD Coverage Response: • Manufacturer sponsored Phase IV trial: Sudden Cardiac Death in Heart Failure Trial (SCD-HeFT) • Medicare expanded coverage to include study population

29. Outcome • Trial provided evidence on survival benefit with simple, single lead ICD • Medicare issued new national coverage determination

30. How CRO Can Prepare Client for The Fourth Hurdle • Design Phase III for beyond Phase III • Conduct primary research to understand what important payer(s) want to see in that therapeutic class • E.g. What metrics are relevant? • PMPM • Cost/savings • Drug budget impact; Overall budget impact

31. How To Prepare – cont’d • Press to have Phase IV studies be at least as rigorous and credible as Phase III • Identify new tools to address payer needs • E.g. – validated biomarkers

32. Hypothetical Case • New ADD/ADHD tx in development • Will universally be 3rd tier • Inherent safety concerns – pediatric – complicated by conflicting, government sponsored class findings • Not life saving • Many alternatives whose PMPM costs are well understood • Competitor performance contracts in place

33. Manufacturer Objective: Begin Moving To Tier 2 In Year 2 • How will drug move from 3rd to 2nd tier? • Significant price concessions • Outcomes research (OR) • Which is the better choice for client? If OR, then need to identify • Endpoints that are relevant to payers • Tools to accelerate conclusions

34. Example of Tool: Validated Cognitive Biomarkers • How can validated cognitive biomarkers: • Identify patients who are likely responders to this drug? • Use response data to suggest cost effectiveness? • Produce data that is credible to the payer?

35. Summary • U.S. payers, led by Medicare, now require post-marketing outcomes data to grant or continue coverage of new, high cost technologies • Many pharma companies do not yet • Recognize the extent of the trend • Prepare adequately pre-launch • Find out from payers what they really need to see

36. Summary – cont’d • Significant opportunity exists for CROs to fill the knowledge gap by • Determining payer data needs • Perfecting clinical trial tools to address those needs (e.g. validated biomarkers) • Helping clients understand that • Market access does not end with FDA approval • Phase III planning is essential to streamline the Phase IV work

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