Commentary: Peter J. Pitts: Medicare’s drug policy may discourage improved therapies

A cancer patient has better things to do than sit for hours in an infusion chair. A medicine that safely cuts that burden is progress, even if its ingredients are already familiar.

Washington should be encouraging the kind of research that makes those improvements possible. Yet a proposed Medicare rule could make the next round of investment harder to justify.

Federal officials want to finalize a change in how Medicare groups drugs for price negotiation. The Centers for Medicare & Medicaid Services is seeking to require certain combination drugs that change the route of administration to follow the negotiation schedule of the older treatments they build on.

CMS argues that this would prevent manufacturers from steering patients and spending toward products that fall outside negotiation. That goal is understandable. But any policy meant to preserve Medicare’s negotiating leverage also has to consider what patients gain from a new product, and what it took to create it.

Under the Inflation Reduction Act, drugs become eligible for negotiation after they have been on the market for a legally defined period, subject to spending rankings, competition, exclusions, and other requirements. CMS already groups different dosage forms and strengths of medicines that share an active ingredient and a manufacturer, with similar rules applying to biological products. Grouped products generally share the earliest applicable eligibility date. Eligibility does not mean a drug will automatically be selected, and negotiated prices take effect later.

CMS is now proposing to group combination products with their predecessors as well. The concern is that using an older negotiation clock can fundamentally alter the economics of developing those products, including ones that may deliver major patient benefits.

The proposal would affect certain fixed-dose combinations in which an added ingredient makes a different route of administration possible. Hyaluronidase, for example, can help make the switch from intravenous infusion to subcutaneous injection feasible. Calling the resulting product another formulation of the same medicine does not answer the scientific question: What had to be developed and tested before a patient could receive it safely?

Consider Phesgo, which combines the breast cancer drugs pertuzumab and trastuzumab with hyaluronidase. It delivers the antibody treatments by subcutaneous injection, taking eight minutes for the initial dose and five minutes for later maintenance doses. Observation still follows, and patients may also need chemotherapy or other treatment.

A five-minute injection is not the same as a five-minute clinic visit. Even so, cutting administration time compared with IV treatment can matter a great deal to someone repeatedly returning for cancer care.

Creating that combination took more than repackaging familiar ingredients. The development program included a randomized study of 500 patients comparing it with intravenous pertuzumab and trastuzumab, while examining drug exposure, efficacy, and safety. The results showed the combination could deliver the medicines differently while preserving their established therapeutic effects.

Phesgo highlights the investment issue. Its Medicare negotiation treatment requires scrutiny of ownership, licensing history, and other eligibility facts. If a new combination inherits a clock that has already been running for years, will the expected return still justify the research? Recovering an earlier investment does not make the next clinical trial worthwhile. Developers must put in additional money before knowing whether the new formulation will succeed.

That is why CMS should rethink its proposal and take a more targeted approach. For combination products, the Food and Drug Administration can help assess which earlier findings were reused, what substantial new work was required, and whether the final product provides a meaningful patient benefit. CMS should then explain how that evidence shapes its decision.

A separate eligibility clock should be available for qualifying products where the law allows, with Congress supplying any additional authority that may be needed. Merely having a new application number or making a modest change should not automatically qualify a product for an exception, and the original product’s clock should continue to run.

The same concern applies when established medicines are studied for new diseases. A familiar molecule may require an entirely new clinical program to prove another use. Supplemental indications also require investment, but protecting that research calls for a policy tool different from restarting the clock for an entire product. Policy should reward useful development without shielding established sales.

Drug innovation rarely arrives in a Hollywood-style breakthrough moment. Researchers build on accumulated knowledge, test another use, solve a delivery problem, and sometimes fail. Treating shared ingredients as enough to discount that work risks discouraging advances patients would welcome.

Medicare should negotiate firmly with manufacturers. It should also demand evidence for its own assumption that earlier price negotiations will still leave combination-product innovation worth pursuing.

Peter J. Pitts is president of the Center for Medicine in the Public Interest. He wrote this for InsideSources.com.