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BioFinance Lunch Keynote: U.S. Health Reform

Just finished listening to Scott Gottlieb at the BioFinance lunch keynote. Scott was Deputy Commissioner at the FDA in the Bush administration, and is now a Fellow at the American Enterpirse Institute.

Here’s what he had to say. Stay tuned for questions from the audience, including Dani and I, at the end…

Healthcare in the U.S.

First, good flu vaccine news: current surge capacity for vaccine production is up to half a billion (500,000,000) doses, much better than even a few years ago.

Update: the MaRS Blog has a video of this part of Scott’s talk.

Health care reform:

FOB: Waxman can’t get his bill out of committee. Likely booted to next year.

Comparative Effectiveness: will be a committee in the fall that sponsors research and promulgates guidelines.

1) Medicare has tried to implement some CE: functional equivalence (legislated away), least costly alternative (e.g., wheelchairs) tried to apply to Sepracor, got sued, lost on appeal; tried to take accelerated approval drugs out of reimbursement, didn’t fly. Legislation likely to pass giving CMS back authority to do least costly alternative reimbursement.

Large private plans have hundreds of physicians and thousands of clinicans, CMS has at best 25 physicians. E.g., have made 160 decisions on cancer product reimbursement without a single oncologist on staff.

2) Price controls: private market will be increasingly able to pay off medicade pricing schedules. Drug benefit for dual-eligible patients will be moved to medicade best price schedule.

Similar changes: medicare advantage plans will want to be able to price off medicare if their reimbursement rates are cut.


“Regulatory creep” at the FDA: balance shifts on approval metrics debates because of increased public desire for and tolerance of regulatory caution.

Medical devices: changing regulatory paradigm for diagnostics. Laboratory-developed tests will likely be regulated as devices. Kennedy has a bill pending.

I asked about the regulatory environment for personalized medicine, and Scott pointed interestingly to different regulatory approaches taken in the U.S. vs EU to screening HER-2 as a precursor to Erbitux treatment for colon cancer. EU uses it based on retrospective data, U.S. has wanted to do dedicated prospective controlled trials.

Dani asked about drug reimportation: Scott thinks it will happen, but regulatory structure and currency changes will increase cost, and increased drug reimbursement in the U.S. will decrease demand.

Brian Bloom, a banker at Bloom Burton, asked about how the Obama administration’s vocal support for innovation meshes with the health care reforms and comparative effectiveness initiatives. Scott diplomatically focussed on the administration’s support for basic reseach, then segued less diplomatically to predict the end of cancer drug development that he says could follow if the NICE model in the UK is globalized.

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