There are a lot of biotech entrepreneurs out there who are living by yesterday’s rules. The idea was you really had to design and execute a bang-up clinical trial for your new drug or device, win FDA approval, market the heck out of it, and count the money.
If that sounds like your idea of how the life sciences industry works, or ought to work, then Sean Tunis is about to burst your bubble. Proving that a new medical technology is safe and effective is no longer good enough in the coming era of healthcare cost constraints. Tunis knows something about how payers think: He’s the former chief medical officer at the Centers for Medicare and Medicaid Services, which provides health coverage to 100 million senior citizens and poor people. Tunis, who left that post in 2005, now runs the Center for Medical Technology Policy in Baltimore, MD, where he advises companies on how to generate really valuable medical evidence that payers want to see.
Tunis, along with Mitchell Higashi, the chief economist of GE Healthcare, will be one of the featured speakers at an event tomorrow morning in Seattle that’s being organized by the Washington Biotechnology & Biomedical Association. I spoke briefly with Tunis a few days ago about how the landscape for healthcare reimbursement is changing, and how this is going to affect biotech entrepreneurs for years to come.
Here are the highlights of the conversation, edited as always for length and clarity.
Xconomy: What kind of clients do you work with, and what kind of work do you do now?
Sean Tunis: We are funded by government and foundations, as well as health plans, and drug and device companies to really do collaborative work to improve quality and relevant clinical research. It’s mainly by bringing in perspective of patients, practicing clinicians, and payers. There’s been a historic dilemma that a lot of clinical research that’s done is not optimally designed or aligned with what people who make important clinical decisions actually want to know. So we try to take care of that.
For example, if you have early stage prostate cancer, there’s almost no research comparing the different treatment alternatives—surgery, radiation, leaving it alone. None of those studies get done. So our center tries to identify where there are gaps in knowledge and try to get those studies done.
X: Is that largely because most trials are conducted by sponsors that are running trials because they want regulatory approval for a new product, or an extension of an existing product, and aren’t really that interested in the key medical questions a doctor faces?
ST: Exactly. They are aiming for regulatory approval, and most regulatory approvals don’t require comparative studies. In many cases for devices and procedures, they don’t actually have to show the device works. Or that it improves clinical outcome.
X: There’s been a lot of talk lately about cost-effectiveness—biotech, device companies, Big Pharma, they are all hearing it. In the wake of healthcare reform, we keep hearing that they have to show that their products do something to take cost out of the system, or delivers some kind of greater value, rather than just showing safety and effectiveness. Is that really the environment we are in now?
ST: I think it’s the environment we are almost certainly entering. I don’t think we are quite there yet. Over the next three to five years, we really will be there. It’s exactly as you describe. It’s not about being cost-effective. That’s not the target. The target is to achieve better outcomes at lower cost. If you can’t find a way to do that, you’re not
