Economic Considerations For REMS

Drug sponsors have options in both how the new FDA risk programs are structured and how to execute them


The Food and Drug Administration Amendments Act of 2007 (FDAAA) establishes broader authority for the agency in a variety of ways, perhaps none more game-changing than the authority to require a Risk Evaluation and Mitigation Strategy (REMS) for new and currently marketed medications. Effective March 25, 2008, the intent of REMS is to ensure that the benefits of a drug or biologic outweigh its risks without creating an undue burden on the healthcare system.

Much has been written about when a REMS might be required and how to determine what a REMS might entail, but less attention has been paid to the costs incurred in going through this complex process. This article takes a look at what the costs might be to plan, implement, operate, and assess a REMS program, a difficult task in light of the fact that very few REMS have been approved by FDA and even fewer have been implemented. Also, FDA is yet to issue a REMS guidance. This article is solely intended to provide the author’s views and opinions concerning the issues addressed herein.


As stakeholders sort out whether a REMS is needed and if so, what type, it might make economic sense to work with a strategic partner familiar with the requirements of the applicable regulations and with execution of REMS plans, an ongoing consideration. The stakes are high as FDAAA provides for enforceable monetary penalties for violations of the REMS provisions. Outsourcing some or all of the REMS functions to a knowledgeable strategic partner can be a cost-effective choice for sponsors with limited resources to make their REMS compliant and operational.

REMS implications
Minimizing risk of a drug or biologic that offers real benefits to patients is a longstanding practice, but the advent of REMS raises some new issues, several with direct cost implications. For starters, REMS replaces its predecessor, the RiskMAP (risk minimization action plans), which sought to implement risk mitigation activities in line with risk, but lacked legal enforcement. That has changed with FDAAA.
Another new feature is that FDA is now empowered to require a REMS with a marketing application if the agency deems that one is needed to ensure that the benefits of the product outweigh its risks. In addition, the legislation has a sharp focus on postmarketing safety whereby FDA can force sponsors to conduct Phase IV studies for new and existing products if it learns of new safety information, which is knowledge gained from a clinical study, an adverse event report, or post-approval work. In these instances, a REMS may be required. Previously, moving ahead with Phase IV studies was at the discretion of the sponsor.

Penalties for violating various REMS requirements are stiff, starting with $250,000 per violation, or $1 million for all violations adjudicated in a single proceeding. Additional monetary penalties are described in Fig. 1.
It is important to note that the FDA may take into consideration whether a sponsor is making efforts to correct a violation when determining the amount of the penalty. The financial implications of not complying are attention grabbers, but there are more costs besides those associated with civil monetary penalties. There are costs tied to all aspects of developing, implementing and assessing REMS plans, whether those plans are submitted along with marketing applications or are in support of currently marketed products. Companies also sustain costs once they move forward with operationalizing the REMS, whether the work is done in-house or is outsourced.
To develop a plan, a sponsor needs to consider what type of REMS might be needed. To date, the handful of REMS plans that have been approved by FDA consists largely of a Medication Guide, which is defined as an information leaflet for patients that emphasizes product risk. It is to be written in non-technical language and distributed by a healthcare provider when drugs are prescribed or dispensed in outpatient settings.
Although the sample size of approved REMS with Medication Guides is small—less than two dozen—insurance providers are starting to formulate some preliminary cost figures. It appears that the cost to develop a Medication Guide and conduct the required follow-up assessment can be as high as $500,000.
Assessments are required by the FDA 18 months, three years, and seven years after the REMS is approved. The assessments must include several elements such as—does the patient understand the risks associated with the drug or biologic (Fig. 2)? At the time of this writing, the 18-month time frame has not yet occurred, so no assessments have been performed, but sponsors are gearing up for that eventuality. It is expected that assessments will be conducted with the help of call centers that contact patients who have been prescribed the drug, asking them questions such as: Have you received a Medication Guide? Do you know the risks associated with the drug?
In addition to a Medication Guide, other elements of REMS may include (1) a communication plan with health providers; (2) elements to assure safe use, such as allowing only specially certified healthcare providers to prescribe the product and periodic monitoring; and (3) an implementation system designed to help ensure that the safe use elements are followed. Each of these elements requires follow-up assessment. It is difficult to project costs associated with these more complex programs because of their limited numbers, but it seems that they will require much effort and expense to implement and maintain.
It is conceivable that more elaborate programs could cost in excess of $1 million to launch, plus monthly operational fees approaching $100,000. Such programs might involve building a user-friendly website that has information for healthcare providers such as specifics about the program, forms, tools and brochures, as well as an online Medication Guide for patients. Other uses for the website could include documenting the training and certification program for prescribers; and enrolling patients in a program meant to test their knowledge of the drug. Call centers are likely to be used to perform the testing, to remind prescribers to complete questionnaires for each patient, and to remind patients that they may need to complete blood work or other tests before their next refill can be dispensed.

Serious business
Staying on top of a changing REMS scenario is essential. Once the FDA has notified the holder of the application that a REMS is needed to ensure that the benefits of a product outweigh the risks, the sponsor has 120 days to submit a REMS plan. Failure to comply with REMS requirements may result in civil penalties, but there could be more far-reaching ramifications such as delayed approval, no approval, or mandates for additional REMS work. The commercial viability of valuable treatments could be threatened with removal from the market.
These are serious considerations that may be beyond the core strengths of many pharmaceutical and biotechnology companies. One approach is to collaborate with an experienced outsourced partner. This would be a provider who has worked with clients as they explore whether a REMS might be required, and if so, how it might be structured to be commensurate with the risk and acceptable to FDA. Making that determination is linked to several factors such as the estimated size of the population likely to use the product, and the seriousness of the disease or condition to be treated with it (Fig. 3).
Once a REMS is approved by FDA, it must become operational. This may involve resources that an experienced provider can offer, such website designers and call centers staffed with personnel trained to talk to patients and healthcare professionals with respect and at the appropriate level of expertise.
Metrics on the cost of a user-friendly REMS are scant as the process is still in the formative stage and is determined on a case-by-case basis. What has already become clear are the hidden costs associated with difficult programs. Physicians who view the REMS program for a specific drug as too burdensome may opt to substitute a different drug that carries fewer responsibilities for certification, registration of patients, and ongoing blood work. Similarly, patients who believe that it is too difficult to comply with the various requirements of taking a certain therapy may discontinue it.
When imposing a REMS, the FDA is charged with ensuring that the requirements are commensurate with the risks involved, which includes a consideration as to whether any requirements will be unduly burdensome on patient access to the drug. If a sponsor is interested in raising a dispute concerning required elements of a REMS, the sponsor may utilize the FDA’s dispute resolution procedures if the REMS is required upon initial approval of the drug. If a REMS is required thereafter, disputes about required elements may be raised with the Drug Safety Oversight Board.
Knowledgeable partners who have been down this path before can help sponsors engage in the dispute resolution or appeals process to push back against REMS requirements they believe to be placing excessive demands on stakeholders. The legislation is clear that the plan should be commensurate with the risk associated with the drug, so to the extent that a sponsor agrees to a plan that is not commensurate with the risk, it may incur additional costs unnecessarily on implementation and eventually, assessment.

Experience—a cost-effective choice
As biopharmaceutical sponsors of all sizes tackle the issue of REMS, they will be deciding whether it is in their best interest to build expertise in-house or to outsource REMS work. Because of the complexity and nuances of FDAAA, many companies may want to outsource some or all their REMS projects to experienced providers. During this process, there is always the temptation to move ahead with the lowest-cost providers, especially in today’s intensely cost-conscious environment, but there is a question as to whether this approach is the most cost-effective solution.
The more seasoned provider has in-depth knowledge of the legislation, and can offer a strategic vision instead of tactical solutions. This might includes a range of services from consulting to operating and managing a comprehensive REMS program. An experienced provider can work with clients to help mitigate costs, possibly through greater use of technology, and by raising questions such as:

Is the program big enough to develop a Web-based solution to facilitate savings?
Can a well-designed website substitute for a call center if the size of the program cannot justify it?
If a call center is needed, has the provider invested in training and evaluating call center personnel?
It is critically important to have properly trained individuals who understand the sensitivity needed to interview patients about their medications. At this level of public interface, there is no substitute for experience. And there is the issue of interacting with FDA during the appeals process. Finding a partner who can handle all of these functions relieves sponsors of having to go through the bidding process repeatedly to outsource each aspect of what a REMS program might entail.
Because REMS programs are new and are likely to continually evolve, good business dictates that companies looking to outsource will want to select a reputable provider with the experience and security to manage costs as the risks and benefits of a product unfold over time. PC

About the Authors

The authors are all employees in the Periapproval Services unit of Covance (Princeton, NJ; tel: 888.268.2623). Dr. Edgar Adams (top left) is Executive Director, Epidemiology, responsible for providing scientific and technical leadership in epidemiology, biometrics, and risk management. He has more than 15 years of experience consulting on risk minimization action plans (RiskMAPs), postmarketing surveillance, and drug scheduling nationally and internationally. He was a commissioned officer in the US Public Health Service, and has served as the Chief Epidemiologist at the National Institute on Drug Abuse. Dr. Adams obtained his BS in Pharmacy from Fordham University, an MS in Pharmacology from Purdue and his doctorate (ScD) in Health Policy and Management from Johns Hopkins School of Public Health.

Robin Carter (top right) is Senior Director of Operations, Risk Management, responsible for planning, resources and implementation strategies for risk management programs. Previously, was vice president of Cystic Fibrosis Services, a national specialty pharmacy, and, in an earlier stint at Covance, was a member of the iPledge patient-registry program. Ms Carter has a BS in business from Columbia Union College.

Heather Raschtschenia, Account Director/Principal, specializes in the development, management and strategic guidance of reimbursement support, patient assistance programs, and risk management programs. Prior to joining Covance, Ms. Raschtschenia served as CEO for Priority Pharmacy. Her background in healthcare spans an 11-year period with extensive experience in reimbursement and compliance initiatives. Ms. Raschtschenia received an MS in Executive Leadership from the University of San Diego and a BA from the University of Phoenix.

Thomas Noto is Vice President for Regulatory Affairs, providing regulatory oversight, and consulting for clients and communicate with regulatory authorities in the US and Europe. Prior to Covance, Mr. Noto held various senior management positions at a number of contract research organizations (CROs) where he submitted more than 20 marketing applications to FDA and coordinated more than 10 investigational new drug (IND) filings to the Agency.