C omparative Effectiveness: A Manufacturer’s Perspective AHRQ 2007 Annual Conference September 27, 2007 Peter Juhn, MD, MPH Vice President Evidence and Regulatory Policy Johnson & Johnson Corporate Office New Brunswick, NJ

2 Evolving Environment Cost Quality/ Safety Value DriversChallenges Coverage and Reimbursement Evidence Review Quality Measurement Insurance Benefit Design HIT – EMR, PHR, Data Mining Activities Comparative Effectiveness Pay-for- Performance Benefit-Risk Determination Coverage with Evidence Development Access to and Payment for Innovative and effective products Policies Practice Variation Aging Population Rising Demand Cost of Technology Budget Pressures

Patients Providers EmployerEmployer PayerPayer Pharmaceutical Manufacturers Medical Devices Integrate d Networks Hospitals LTC Facilities Outpatient Other Biotech Distributor/ Wholesaler Regulatory Agency Physicians Payers/ Regulators Healthcare Stakeholders

Patients Providers EmployerEmployer PayerPayer Pharmaceutical Manufacturers Medical Devices Integrate d Networks Hospitals LTC Facilities Outpatient Other Biotech Distributor/ Wholesaler Regulatory Agency Physicians Payers/ Regulators Healthcare Stakeholders Patient – “am I getting the best care?” Convenient Respectful/compassionate Trusted information about choices Lower out-of-pocket cost

Patients Providers EmployerEmployer PayerPayer Pharmaceutical Manufacturers Medical Devices Integrate d Networks Hospitals LTC Facilities Outpatient Other Biotech Distributor/ Wholesaler Regulatory Agency Physicians Payers/ Regulators Healthcare Stakeholders Provider – “am I being rewarded for good work?” Better outcomes Higher reimbursement Increased volume More efficiency Chance to innovate Enhanced reputation

Patients Providers EmployerEmployer PayerPayer Pharmaceutical Manufacturers Medical Devices Integrate d Networks Hospitals LTC Facilities Outpatient Other Biotech Distributor/ Wholesaler Regulatory Agency Physicians Payers/ Regulators Healthcare Stakeholders Employer – “am I getting value for money?” Lower cost “Best care” Not unhappy beneficiaries/workforce Healthy productive employees

Patients Providers EmployerEmployer PayerPayer Pharmaceutical Manufacturers Medical Devices Integrate d Networks Hospitals LTC Facilities Outpatient Other Biotech Distributor/ Wholesaler Regulatory Agency Physicians Payers/ Regulators Healthcare Stakeholders Payer – “am I only paying for effective care?” Lower cost Predictability Better outcomes (influence on later costs)

Patients Providers EmployerEmployer PayerPayer Pharmaceutical Manufacturers Medical Devices Integrate d Networks Hospitals LTC Facilities Outpatient Other Biotech Distributor/ Wholesaler Regulatory Agency Physicians Payers/ Regulators Healthcare Stakeholders Regulator – “am I protecting the public health?” Safe and effective products Two types of challenges: Approving a drug later found to be dangerous Not approving a useful drug in a timely fashion

Patients Providers EmployerEmployer PayerPayer Pharmaceutical Manufacturers Medical Devices Integrate d Networks Hospitals LTC Facilities Outpatient Other Biotech Distributor/ Wholesaler Regulatory Agency Physicians Payers/ Regulators Healthcare Stakeholders Manufacturer – “am I being rewarded for safe and effective products?” Improved patient outcomes Recoup R&D investments Fair and transparent coverage process Clear evidence requirements

10 Does it work? Is it safe? Regulatory Approval Relevant for covered population (i.e. Medicare over 65y) When should it be used? Who will most benefit? Appropriateness guidelines Patient selection criteria How does it compare? Is it definitively better? Earlier generation of technology Within same class of technology Rigor of comparative reviews Key Questions about Products What is the value? Can the value be captured? Is it cost-effective? Is it cost-saving? Is there an ROI? When? To Whom?

11 Evidence Challenges Availability of evidence Needs for evidence are increasing Large gaps in the existing literature Limited generalizability of trials data to real-world practice Unique challenges of devices Distinguishing operator vs. product effects Short product life-cycles Feasibility of RCTs Conclusions from the evidence Reconciling “average” population effects with individual effects “Shelf-life” of evidence Practical use of evidence Application of evidence to real-world medical decisions Provider “accountability” for using evidence

12 The Promise of EBM Properly developed and applied, evidence-based medicine can: Stimulate the development of high quality information about treatments and devices Enhance consistent and informed healthcare decision-making by physicians, patients, caregivers and payers Support patient access to appropriate technologies Help establish the value of medicines, medical devices, diagnostics and other health services Provide the basis for optimal use of health care resources Promote a more quality-focused and cost-effective healthcare system that delivers superior patient outcomes

13 The Perils of EBM Potential for unintended consequences Justifies coverage decisions based purely on cost without regard for overall effectiveness or value Freezes the pace of innovation to the current generation of products Discriminates against new technologies Leads to prescriptive clinical protocols that do not allow for physician judgment and consideration of patient preferences Focuses too narrowly on clinical morbidity or mortality, ignoring a range of other important patient-reported outcomes (ease of use, compliance, functional status) Changes to coverage policies occur haphazardly without clear rationale, transparency or accountability

14 Comparative Effectiveness What is J&J’s position on comparative effectiveness? Help establish the value of treatments Promote a more quality-focused cost-effective health system Help physicians and patients make better decisions Be a way for manufacturers to differentiate products However, it is not the “silver bullet” as it will not automatically solve our cost and quality challenges How should information from CE research be used? Should inform medical decisions, not replace medical judgment with treatment formulas Will need to reconcile “average” population effects and with impacts on individuals that reflect differences in side effects, intolerance, noncompliance, and quality of life

15 How should it be linked to coverage decisions by payers? Should not serve the cost containment concerns of payers Might be most useful in informing treatment options and assigning appropriate reimbursement premiums How should this information be communicated? Share widely with all stakeholders, particularly providers and patients Consider the dangers of incomplete understanding of results, particularly when communicated in an overly simplistic manner Acknowledge that CE information can be incomplete, misleading, or misinterpreted How should stakeholders be involved? Participate in framing the methods that will be used and prioritizing the key therapeutic areas Promote transparency about the processes, findings, limitations, and appropriate uses of the information Comparative Effectiveness

16 Definitions Comparison of “what to what” Drug to drug; drug to procedure; disease management to not What will success look like – information output vs. impact on care delivery Scope Clinical decision dilemmas vs. population economics Synthesis of current evidence vs. initiating new comparative research Funding Commitment to conduct adequately powered studies Distance from payment authorities Stakeholders Genuine involvement with priority setting, methods review and communication approaches A Few Suggestions