Thanks to Guidance from the FDA, FDAMA Spells Opportunity

Enlightened Pharma Companies Are Capitalizing on New Clarity from the FDA
Regarding the Sharing of Information with Payers

In the 1990’s, as healthcare costs spiraled out of control, the healthcare industry was inundated with cost-effectiveness analysis studies. While payers were hungry for this type of healthcare economic information (HCEI), regulations strictly limited what pharmaceutical companies could share. In response to the growing demand for this information, the Food and Drug Administration Modernization Act (FDAMA) of 1997 outlined specifications for promoting HCEI to managed care. These specifications were included in Section 114, so the new rules have been referred to as FDAMA 114.

FDAMA 114 was a good start, but pharma companies, concerned over what they regarded as legally ambiguous language, failed to fully leverage the new legislation. The FDA further complicated matters by failing to deliver on promises of future guidance.

The 21st Century Cures Act of 2016 amended FDAMA 114 and cleared up some of the confusion, but questions remained. It was not until the FDA issued Draft Guidance in January 2017 regarding HCEI communications that the FDA’s position on the matter became clear; they want to avoid another pricing controversy like the one that transpired with Sovaldi. In 2015 Gilead faced severe backlash for the Sovaldi list price that equated to approximately $1,000 per pill. Nonprofit groups, such as the Institute for Clinical and Economic Review (ICER), have since questioned the true cost-benefit of Sovaldi and offered up suggested prices in their analyses. Had similar HCEI been shared pre-launch, the pricing strategy may have been entirely different.

The FDA went so far as to make the following statement in the draft guidance: FDA confirms that, for manufacturers that disseminate HCEI consistent with the Draft Guidance, the agency does not intend to consider such information false or misleading. In what was clearly a concerted effort to promote the usage of FDAMA 114, the Draft Guidance addressed questions regarding who can and cannot receive HCEI and the type of information that can be conveyed to payers regarding unapproved drugs.

Payers prefer to be given HCEI in a timely manner, even before FDA approval, so they can make coverage decisions and prepare for budget impacts.

Some companies have seized the opportunity to promote their HCEI to payers consistent with the Draft Guidance. Those who neglect to do so risk their drugs excluded from formularies.

Author: Steven Serafin