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Off-Label Prescribing: Overcoming the Reimbursement Barrier
Decision Resources, Inc, June 2006
Off-label prescribing accounts for most uses of certain drugs and reportedly is particularly common in oncology, neurology, and psychiatry. Although this practice holds the potential for tremendous financial rewards for pharmaceutical companies, the marketing of off-label prescribing is fraught with legal peril as regulators place increasing restrictions on off-label usage. In this report, Decision Resources Inc examine the reimbursement barriers to off-label prescribing in the world’s six largest pharmaceutical markets: the United States, France, Germany, Italy, the United Kingdom, and Japan. Decision Resources Inc analyze off-label usage in the United States of four key drug classes: antineoplastic drugs, antidepressants, antipsychotics, and anticonvulsants. Decision Resources Inc then review the hazards that manufacturers may face when they engage in off-label marketing and explore the reimbursement environment in the United States, focusing on Medicare, Medicaid, and private insurance. Next, we consider the reimbursement challenges in each of the other countries covered in this report. The report is concluded with a brief assessment of the outlook and implications for the pharmaceutical industry.
Anecdotal evidence suggests that off-label prescribing accounts for the majority of uses of certain drugs. Reportedly, this practice is particularly common in oncology, cardiology, neurology, and psychiatry. Our analysis of U.S. claims data for best-selling medicines in four drug classes found a peak off-label usage rate of 36% for antipsychotics, 52% for antidepressants, 75% for anticonvulsants, and 77% for antineoplastic drugs.
Pharmaceutical companies enter a legal minefield when they engage in off-label marketing of their products. In 2004, Pfizer had to pay penalties totaling $430 million for a subsidiary’s illicit promotional activities. The prospect of enormous rewards could prompt employees of drug manufacturers to initiate whistleblower lawsuits against companies that violate the False Claims Act in the United States, and private payers are also likely to become more litigious in the future.
In Germany, recent lawsuits have helped to define the conditions for off-label therapy: the disease to be treated is life-threatening or causes chronic impairment of the quality of life, no other therapy is available, there is reasonable evidence that the treatment in question could achieve therapeutic success (remedial or palliative), and the manufacturer should confirm the appropriateness of off-label prescribing. Expert groups are evaluating off-label therapy in oncology, infectious disease, and neurology/psychiatry. Physicians in Germany can face substantial fines for improper off-label prescribing.
In many countries, pharmaceutical pricing and reimbursement terms are increasingly influenced by health economic calculations, including detailed projections of the potential drug-treated populations for approved indications. If extensive off-label usage stimulates sales far in excess of original forecasts, manufacturers may be forced to cut their prices. Regulatory authorities would undoubtedly like manufacturers to conduct clinical trials for major new indications for medicines, but the cost of such research will remain a substantial obstacle.
Cost-containment measures will be employed to limit off-label prescribing. Prior authorization is likely to remain the most important method of control, complemented by drug utilization review or prescribing audits. The growth of computerized prescribing will help payers in their efforts to enforce limits on off-label prescribing and to monitor and manage physicians who disregard these restrictions.
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