Placeholder Banner

What Parallel Review Means for Manufacturers

March 12, 2012
By Stephen Rothenberg, J.D. and Matt Levy, J.D., Numerof & Associates, Inc. (NAI)

Currently, the FDA and CMS consider new medical products in series; after FDA approval or clearance, CMS begins consideration of a National Coverage Determination (NCD), if requested by an interested stakeholder. Any party seeking drug approval (e.g., manufacturers, suppliers, providers, medical professional organizations, and Medicare beneficiaries) may initiate a request for an NCD. In addition, CMS may initiate a request for an NCD when there is debate over the benefit of a drug, or other controversy. CMS waits for the FDA to complete its process first, ostensibly because it doesn’t want to spend time on a product that ultimately doesn’t receive approval or clearance.

Serial review also ensures that CMS can meet its statutory requirement to complete the NCD within nine to twelve months of starting the process, even if a manufacturer should stumble upon a roadblock in obtaining FDA approval. As a result, serial review has the potential to delay a sponsor’s ability to receive Medicare coverage, which can, in turn, delay the public’s access to new medical products. Not only does this impact Medicare recipients, but commercial insurers often follow – and wait for – the lead of CMS in their own coverage decisions. The delay could potentially affect anyone who might benefit from the drug.

To address this issue, the FDA and CMS jointly announced on September 17, 2010 their intent to institute a process for cooperation and concurrent review of medical products. The proposed approach would give CMS the go-ahead to begin considering a request for an NCD before the FDA has completed its review of the product’s safety and effectiveness.

The agencies expect that this overlapping review process and sharing of data and resources would reduce the time between FDA approval or clearance and the CMS NCD to ensure coverage and subsequent reimbursement for Medicare beneficiaries (the “approval-to-payment” time).

FDA and CMS believe that a parallel review process will also provide efficiencies in the creation and submission of clinical study data. In the current framework, the FDA and CMS frequently require different clinical data, so it’s not uncommon for sponsors to have to conduct different studies for each agency, adding to the cost of both development and review. CMS and the FDA believe that a cooperative and collaborative parallel review will allow sponsors to develop clinical study designs that could provide data to address both FDA and CMS questions (i.e. economic and clinical value).

While those in the biotech and pharmaceutical industries may want to reduce the time between FDA market approval and CMS approval for national payment, there are potential downsides. Critics are concerned that parallel review would be difficult to implement, especially given the respective mandates of the FDA and CMS. The FDA bases approval on safety and efficacy, relying on randomized placebo-controlled trials; whereas CMS pays for “reasonable and necessary” products, based on the totality of evidence within the Medicare population only. Is it appropriate to comingle these different mandates and considerations? What might manufacturers risk if their proprietary information is shared with CMS, an agency without a statutory requirement to safeguard third party proprietary information (or, arguably, a related cultural imperative to do so)? Would statutory duties be violated if CMS rulings influence FDA decisions?

Additionally, comments submitted to the Department of Health and Human Services (HHS) expressed concern that joint FDA and CMS requirements for clinical trials could be cumbersome and costly, and CMS does not have the resources needed to process NCDs at the rate the FDA approves new products. Others felt that collaborating only for NCDs limited the actual benefits, especially since local coverage determinations (“LCDs”) cover a substantial number of new medical products (possibly even more than NCDs).

Despite these concerns, there is a lot of well-deserved enthusiasm for the prospect of securing reimbursement more quickly. Initial interest in some type of process for seeking reimbursement in parallel with FDA review started after Johnson & Johnson was able to secure Medicare reimbursement for its Cordis Cypher drug-eluting stent immediately upon FDA approval in 2003, based on interactions with CMS during the PMA process. In this case, Johnson & Johnson worked with CMS proactively during the product approval process to secure reimbursement more quickly, but the potential to improve time-to-market resonated with stakeholders within both agencies as well as other manufacturers. In recent years, companies have begun to realize the need to put more emphasis on collecting economic and clinical data prior to FDA approval to support reimbursement.

Given that CMS’ reimbursement concerns will become an element in the FDA’s determination of the product’s safety and market clearance, and that implementation of the shared information activities undoubtedly will have unexpected and unintended consequences, industry leaders should prepare for the potential implications. Economic and clinical value data will be increasingly important for both regulatory approval and coverage.

While the agencies have not specifically responded to the very valid concerns expressed during the review period, the FDA and CMS did announce the start of a parallel review pilot for medical devices this week. In light of indicators like the proposed cooperative and collaborative review process and the fact that agencies in Europe are already dealing with these issues, there does seem to be a growing trend toward the FDA stepping outside of its traditional mandate, and considering factors like necessity of drugs -- not just safety and efficacy -- in their approval decisions. The value bar is being raised for drugs, and biotech companies should proactively prepare to demonstrate robust economic and clinical value propositions for their products, because regardless of what CMS and the FDA decide to do regarding the proposed concurrent review, their increasing collaboration has implications for biotech companies.

Stephen Rothenberg, J.D. is a Consultant, and Matt Levy, J.D., is a Business Analyst at Numerof & Associates, Inc. (NAI). NAI is a strategic management consulting firm focused on organizations in dynamic, rapidly changing industries. We bring a unique cross-disciplinary approach to a broad range of engagements designed to sharpen strategic focus, increase revenues, reduce costs, and enhance customer value. For more information, visit our website at Mr. Rothenberg and Mr. Levy can be reached via email at or by phone 314-997-1587.