Monday, May 1, 1995
Reality, part II
The collision between the launch of Centocor Inc.'s ReoPro and the growing sensitivity of hospitals to the cost of adding new drugs to their formularies provides lessons for every biotech company.
As detailed in BioCentury last week, the anti-platelet antibody has run hard into an environment where the cost of the drug and the benefits of its use face a disconnect, resulting in pressures to control use of the product.
Beyond the specific implications of the angioplasty drug for CNTO and partner Eli Lilly, the ReoPro story illustrates the amount of analysis going into the decision by hospitals to add new drugs to their formularies, the vigilance they plan to exercise in monitoring their use, and hence the scrutiny drugs will continue to receive as a factor in hospital costs. The dilemma for biotech companies will be how to create, price and promote new drugs in this frugal context.
At the Cleveland Clinic, for example, the decision to add ReoPro to its formulary was seen explicitly as a political one with broader implications for other drugs down the road.
"Politically, in our mind, with outcomes not real well defined, and adding potentially $200,000 to the drug budget based on the cost of the drug minus costs avoided, it became a political case," said Bruce McWhinney, director of pharmacy. "If a cardiologist can get this, then an oncologist would want whatever he could get. So this drug was a test for us.
"Basically, the P&T committee felt the improvement in outcomes was not well-defined, and therefore this was a political test case for their ability to control what goes on the formulary and how it is used. They want to maintain control of the pharmacy budget, especially given that this drug was not 'a clear winner.'"
Tom Franko, quality assurance pharmacist at the Cleveland Clinic, noted that he has received calls from other, smaller institutions that lack the analytical capabilities of the clinic, but want to know how much ReoPro is likely to set them back.