When I listened to the podcast interview by David Williams with Donato Tramuto of President of Physicians Interactive I was struck by the potential for a new and different relationship with both physicians and consumers that might emerge from “evidence-based medicine” (EBM) if it were fully applied to pharmaceuticals.  The purpose and result of “Evidence-Based-Pharmacy” (EBP) would be to first identify the “best” medicine for particular patients with particular conditions, a process becoming far more complicated as more discoveries are made regarding differences in people’s responses to medications and medical treatments in general.

When the best solution is identified, the aim of EBP would then be to promote the widespread, even universal adoption of that best solution for all patients whose condition and personalized predicted response to medical treatments make it the best option. Widespread variability among physicians in what they choose should be virtually eliminated, in contrast to the current situation where the best treatment is being used only a bit over half the time on average.

When personalized best choices for pharmaceuticals have been identified, there is a far greater likelihood that it will be a single, patented solution, whose manufacturer will enjoy a monopolistic advantage until generic alternatives are approved.  This will mean the manufacturer can charge whatever the market will bear, and with consumers so insulated from the full costs of drugs thanks to insurance, the limit on what can be borne may be quite high.  Since the manufacturer will have incurred huge research and development costs, not only on the drug for which it holds the patent, but for many other drugs that perhaps did not turn out well in clinical trials and never make it to market, but whose costs have to be covered as well to keep the manufacturer in business.

With EBM, where there is a single drug that is truly identified as the best treatment, the need to cover costs of drugs that may have been approved, but which are not selected as “best practice” will add to the costs that must be borne by those drugs that have been so selected.  This can add significantly to the “overhead” costs of the best drugs, and thereby the need and desire of manufacturers to charge as much as the market will bear.

Countering this, of course, will be the natural desire of third party payers to keep their drug, along with other healthcare costs, under control.  The “best drug” is likely to be selected on the basis of its cost-effectiveness, not merely its relative efficacy.  And certainly, payors are sure to urge the development and approval of generics as soon as possible when an expensive best drug runs out of patent protection.

What might be the most interesting scenario for the future will be learning whether pharmaceutical manufacturers will accept the verdict of whichever agencies select the best solutions.  If the FDA or some other “official” agency, for example, begins to analyze the relative cost-effectiveness of competing drugs, rather than simply their efficacy and safety, will manufacturers of those that rank only second-best or lower drop their promotion and sales of their drug?  In other words, will they put patients’ and payers’ interests ahead of their own?

The current “system” of direct-to-consumer advertising rarely even mentions relative effectiveness, much less cost-effectiveness of competing drugs.  If a respected agency began publishing relative cost-effectiveness to consumers who increasingly bear some share of the costs, there is far more potential for one drug to win most or all of consumers’ and physicians’ prescription business than is the case for hospitals and physicians doing so when similar “best provider” data are reported.  There is simply no way that every patient in the US could, or even would go to the Mayo Clinic, if it were selected as the best provider.  But that might happen with the best prescription.

As it is, pharmaceutical firms have enormous opportunities if their drug is chosen as either the most cost-effective treatment medication, and far greater if one of theirs is chosen as the most cost-effective disease or risk management medication.  As Mr. Tramuto mentioned during the interview, if corticosteroids can save asthma patients from ER and hospital costs, and save payers as much as $180 per month per patient, they should be used by far more than the 5% of asthma patients who take their drugs.  And if one pharmaceutical firm either owned the exclusive patent for it, or had its brand judged the most cost-effective choice, it could enjoy the equivalent of, if not a real monopoly for tens of millions of asthma patients, for as long as either patent protection of EBP superiority remained.

From a purely economic perspective, the pharmaceutical firm could charge close to $180 per patient per month for its drug, regardless of its costs, since payers would be saving that much.  More likely, something more like a $90 charge would be accepted, where the pharmaceutical firm and payers would share equally in the savings.  Since cost-effectiveness would determine which drug is best, the charge would have to compete with other drugs that might not be quite as effective, but cost less, of course.

Such a scenario depends, of course, on not only pharmaceutical firms, but physicians and patients abiding by EBP.  Physicians would have to prescribe the best drug in all cases where is has been found to be best, and patients would have to increase their adherence to the prescribed best drug, in order for the best results to be achieved.   But clearly, EBP could make major differences in the pharmaceutical landscape, and perhaps throughout the healthcare “system”.  It should be interesting to watch.