Impact of Comparative Effectiveness Research on Drug Development Strategy and Innovation

Food and Drug Administration approval of a new drug, or new indication for an existing drug, is a necessary but increasingly insufficient condition for market access in the United States. Payers evaluate a drug’s clinical safety and effectiveness profile in relation to existing standards of care. The collected evidence is referred to here as comparative effectiveness research (CER). Augmented with evidence from cost-effectiveness and budget-impact studies, CER elucidates a drug’s value, which, in turn, helps inform payer pricing and reimbursement decisions. Such decisions can reach back to impact clinical development programs and hence future innovation, as they indicate key value parameters that payers, health-care providers, and patients are seeking in new pharmaceutical products. In this chapter, we address what CER delivers in terms of information regarding the value of pharmaceutical products, to whom that information is directed, and the impact that CER can have on drug development strategy and biomedical innovation.