Health Affairs, 23, no. 3 (2004): 177-185 doi: 10.1377/hlthaff.23.3.177 © 2004 by Project HOPE	New Online   Obama's Success & Next Steps   3 Health Policy Options for President Obama   A Hybrid Proposal   Bipartisan Compromise

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Interview

INTERVIEW

Think Globally, Protect Locally: A Conversation With Mark McClellan

Abstract

 
Departing Food and Drug Administration (FDA) Commissioner Mark McClellan outlines the major initiatives of his sixteen-month tenure at the agency, including an expanded role for economic analysis in FDA policy, steps to promote "e-prescribing" and other information technologies, broadened use of external advisory panels to reduce political conflict between the agency and its various stakeholders, and an uncompromising stance against allowing U.S. citizens to reimport drugs from foreign sources. McClellan’s policy interests and positions at the FDA may offer some insight into his approach to future policy positions at the Centers for Medicare and Medicaid Services.

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Mark McClellan: Actually, there is more tradition of paying attention to economic issues at the FDA than people would think. We have a staff of economists—I’ve beefed it up since I came here—who work hard thinking about the cost and benefits of new regulatory actions. Everything from banning ephedra, to whether we should take new steps to protect the food supply, to what the appropriate response to the risk of BSE [bovine spongiform encephalopathy, a.k.a. "mad cow disease"] through animal feed should be. All of that requires economic analysis, and this is something the FDA actually has a long tradition of doing effectively.

The other thing that has made everyone at the FDA at least an implicit economist is the fact that we have an extremely broad regulatory mission and extremely limited resources, and yet our decisions can have a fundamental impact on our nation’s economy, on the food supply, on medical product availability. And so people at the FDA have informally gone through economic analysis in their work for a long time, doing what they call risk assessment and risk management. Basically the science of risk assessment and risk management is all about understanding the risks that are facing the public and identifying the most effective ways to manage those risks. You can do more with limited resources to manage risk effectively if you think hard about what approach gets you the most bang for the buck. Then you’re right back into economics. All I really did at the FDA when it comes to economics was to create the position of Chief Economist—to recognize explicitly the implicit importance of thinking about costs and benefits of our choices in approaching regulations. I have tried to think through with the staff the consequences of our regulatory actions for the cost of medicines and the like. I think there really is a connection between how long it takes and how costly it is to develop a new medicine and what the typical price of the medicine is coming out the other end, and therefore access to the treatments in the end. The FDA has, as a central part of its mission, promoting greater access to medicines, and that again is at least indirectly helped by paying attention to the economics.

Kleinke: So you’ve increased the visibility?

McClellan: I guess you could think of it as increasing the visibility. Or just talking more explicitly about things the FDA has been thinking about implicitly already.

Cost-Effectiveness

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Kleinke: Along those lines, there has been a tremendous amount of talk about introducing a cost-effectiveness "hurdle" into the regulatory process.

McClellan: Yes, but not in our process. I think cost-effectiveness for medicines is something that’s on everyone’s mind today. Certainly patients, physicians, and health care payers all need to think about that. Nonetheless, that is not part of the FDA’s approval process [for new drugs or medical devices]. Our regulations—our underlying statute—requires us to consider safety and effectiveness. When we feel a product has been shown be safe and effective, then we approve it for marketing. The cost issues are outside the scope of FDA regulation.

Where I hope we can help in these larger societal questions of how we should be spending our money in health care is in providing information on risks and benefits of products in a way that is up to date and facilitates comparisons across products that others may do, such as AHRQ [the Agency for Healthcare Research and Quality], health care payers, health care professionals, and patients, in figuring out what the best treatment is for them. We can provide useful information on risks and benefits for that process. We do think about how can we provide information more effectively (for example, through electronic product labels)—information that can be integrated into e-prescribing more effectively than our traditional product labels can be.

The Role Of Innovation

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Kleinke: You have spoken frequently about e-prescribing as one way we can reduce the cost of drug care without compromising innovation or access. You seem to be describing some sort of Holy Grail—of ever-better medicine and manageable cost—but there are many who have given up on society’s being able to achieve both goals at the same time, such as your former colleague Victor Fuchs. What is your belief on this?

McClellan: I think that people are worried about affordability, and there are some medicines that we just may not be able afford. But I think that’s not incompatible with trying to promote innovation as much as we can—innovation in higher-value products. There is more in the pipeline today than ever, and more potential for having truly individualized, highly effective medicines. We don’t have that now. We have medicines that we’re happy if there’s a 10 or 20 percent response rate. The reason that we’re happy with that is because we care about health outcomes so much.

On the one hand, medical innovation has brought us a lot already. It’s coming at a significant price, though, and there’s a lot of room for improvement. And I am confident that with the right policies, we can do a better job of getting there. That’s not to say that the problems of affordability will go away, or that we won’t have to make even more difficult decisions in the future about whether a treatment is worth it or not. But I do think there are more reasons to encourage innovation today than at any time in the past, and that’s why we need policies that focus on both affordability and innovation.

Kleinke: Innovation that specifically drives efficiency, like e-prescribing. So what are the obstacles to it? There are a lot of great information technologies out there, but most seem to be floundering.

McClellan: That’s right. And there are a lot of calls for spending more money to get over the hump. But my sense is there are still a lot of obstacles to adoption and a lot of ways we can improve the incentives to adoption. One of the main areas of focus in all of HHS [the Department of Health and Human Services], including the FDA recently, has been on developing and getting the adoption of standards for all types of health information. You’re not going to see widespread adoption of bar-code readers, for example, for medicines if there’s not a standardized system of bar codes for all prescriptions. Why? Because a hospital is going to worry that if they buy a particular brand [of software for ordering and tracking drugs], they’re not going be able to recognize certain types of medicines. Or maybe another brand—or another kind of standards system—will come along later that their bar coder won’t be able to identify. One of the things that we learned in our economic analysis of our bar-code rule—getting back to economics—is that we could speed up significantly the adoption of electronic records systems in hospitals without providing any direct subsidies at all, simply by getting a universal system of bar-code standards that every hospital in the country would know, that could read every prescription, so that the hospital would get over that hurdle of not having confidence that their reader will work with all drugs.

Similar to the role that standards can play, I think there is a lot more that we in government can do to increase the benefits of adopting electronic records technology as well. If we can get our patient labeling information and provider labeling information included in electronic formats that are easy to navigate and easy to update, that’s another reason hospitals, health care organizations, and even patients will want to move to electronic systems for getting their prescriptions. Today, too many patients and too many physicians think it’s just as easy to scribble a prescription on a paper pad—if not easier than doing it electronically—because they don’t see the potential benefits. Electronic prescribing tools are not put right in front of them in a way that can be used easily, at the time of prescribing, to help improve the quality of their decisions. And that is something that’s incumbent on us. I think you will see more adoption of electronic prescribing when we’ve taken the steps necessary to make it worthwhile for organizations to adopt it.

Kleinke: "We" being the FDA—meaning that we do not have to wait for HHS’s proposed electronic medical record to find its way off the drawing board and into the real world?

McClellan: That’s right. There are steps that we can take right now to speed up the adoption of electronic information systems. Bar-coding standards is one of them. That, according to the American Hospital Association, would move forward by several years the time at which all hospitals are likely to move to electronic records. We also need better information systems and payment incentives that are tied to the adoption of good-quality decision-support systems.

Kleinke: What about payments for physicians or hospitals?

McClellan: Medicare is moving toward that now for hospitals. There are some elements of the Medicare legislation that make the payment updates bigger for hospitals that have agreed to provide certain kinds of electronic information. It’s a small step, but I think it’s the kind of thing that more health care payers are looking at now as a way of encouraging adoption. Again, there should be incentives for removing barriers for adoption. It’s worked in other industries, and it ought to work here, too.

Kleinke: How about on the clinical evaluation and review side? As with e-prescribing, the process of submitting a drug application to the FDA entails an enormous amount of paperwork, much of which could and should be migrated to electronic form. During the dot-com era, numerous clinical trials information technology companies attempted to help with this migration. And as with the e-prescribing companies, most of these companies have been spectacular failures so far, especially the ones that tried to digitize the entire process of submitting regulatory filings to your agency.

McClellan: I think looking at a gigantic uniform solution for everything is never going to work. One of the approaches we’re taking in our collaboration with the NCI [National Cancer Institute of the National Institutes of Health] to get useful electronic systems adopted by research organizations, product developers, health care organizations, and the FDA—everyone involved in the process of product development—has been focusing on connecting different systems, rather than finding a universal, overall solution.

When the NCI is doing some of their grants to their cancer research networks now, they work with those networks to see what kind of coding standards and the like they’ve put in place, to make sure that the data that they collect in their systems can be read by NCI systems and by the FDA. So it’s finding the connections between the systems, creating interchanges more than finding an overall solution that would be imposed uniformly everywhere. The different cancer research networks are working off different hardware platforms. In some cases they’re using different software. But we’re trying to think hard about how to make sure that information can be exchanged efficiently, and I think it’s going to work.

Kleinke: And it can be done incrementally? So that while a drug company continues to file the paperwork for a new cancer drug application, it can augment the filing with the electronic submission of data consistent with those standards?

McClellan: Right. And I do think that over time we’ll be moving from making these approaches optional toward more requirements for electronic submission. We’re already doing that for some aspects of FDA filing now, and there’s more to come. But you can move that process along only so fast. And we want to make sure that we do it in way that isn’t too costly or doesn’t uses a system that will be outdated in a couple years, but one that can incrementally move us toward more of an electronic system.

Politics And Public Accountability

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Kleinke: Incrementalism seems to be one of the hard lessons of health policy we’ve all learned over the past decade. By contrast with some of those who inadvertently taught us the value of this approach to health policy and politics, you seem to be enjoying some sort of honeymoon in Washington.

McClellan: Is that what they call it?

Kleinke: OK, let’s call it some rare bipartisan support, in a role known for provoking bipartisan criticism, if only because of the enormous things at stake under the FDA’s purview. One of your predecessors, David Kessler, who held the post of commissioner for most of the 1990s, accomplished a great deal, including a major streamlining of the drug review process. Still, the one thing he seems to be remembered for is his attempt to expand the FDA’s mandate to include the regulation of tobacco as a drug. Many in this town accused him of regulatory overreach, and he became a lightning rod for neoconservatives like Newt Gingrich, then Speaker of the House, who used it in his attempt to burn down the entire FDA—an agency he referred to at the time, I believe, as a "jobs-killer." Most of these types of critics, on both the right and the left, have not gone away and are poised to take shots at you and the agency with little provocation. How conscious of this are you when thinking about the next big thing the agency will be embarking on?

McClellan: It’s something you have to think about in this job. But I’m always trying to find the positive angles on this. The good news here is that we’re working every day on many issues that people care deeply about, appropriately so, because these are issues that can have a profound impact on their health and their lives. One of the things we’ve been trying to encourage at the agency is a lot of interaction with the public around these potentially controversial issues. We’ve been trying very hard to use our advisory committee processes [wherein the FDA convenes panels of clinical researchers, practicing clinicians, patient advocates (on occasion), and other stakeholders to debate potential actions by the agency], and other forms of interaction with the public, to have a dialogue to make sure that the latest science on a particular issue gets out there.

We did this recently in the case of silicone breast implants. [The FDA decided, against some public outcry mostly from corporate interests and the Wall Street Journal editorial page, to continue the commercial ban on the implants.] We had advisory committee meetings, where there were a lot of different views presented. That whole process was very helpful for us in terms of making sure that we had access to the latest scientific information that resulted in new, clearer guidance for just what it takes to demonstrate the safety of silicone breast implants. I think it was helpful for the public as well, having that kind of forum where people pay attention, to get a chance to hear science-based presentations on these important issues. It helps further our public health goals as well. It produces a better-educated public, and it gives people a clearer sense of the issues that we’re grappling with when we make our regulatory decisions.

These advisory committees are not binding on the FDA. They are advisory to us, as are the comments and other information we get from the public, members of Congress, and others. But I want to try to make that process as open and transparent and complete as possible, because we really do have opportunities to bring the public along. In the end, people may not end up agreeing with our decisions on any particular issue, but I sure hope that as part of our process for getting to that decision, not only have we considered the science and come to what we think is the right conclusion, but we’ve brought the public along a bit as well. And hopefully we’ve furthered scientific dialogue in this country.

Kleinke: So you aim for transparency and inclusiveness, if not actual consensus.

McClellan: That’s right. You’re never going to get to consensus on the issues we have to deal with. And I do also feel very strongly about making decisions and moving on in an efficient way. That’s probably part of my economics background again. We have so many things to do, we can’t get bogged down on any one issue.

International Drug Dynamics

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Kleinke: That would include the drug reimportation issue, one of the most bitter debates you’re currently involved in. You have expressed very clearly the public health dangers associated with Americans’ purchasing drugs from Canadian Internet sites—drugs that could have originated from God-knows-where—and shipping them back into the country. And yet state officials across the country are encouraging this anyway, despite the fact that it is against federal law. Isn’t that the clearest indicator of just how angry Americans are on the subject?

McClellan: Americans should be angry. It’s not fair that we’re paying so much more for drugs [compared to other developed nations] that should be available across the world and that all developed nations of the world need to share in making available around the world. People should be angry. Unfortunately, we have a system in this country that does not allow us to assure the safety of drugs that would be imported from outside our regulatory system. And that means that importation is not a safe solution. But I can tell you that I don’t think the current situation is sustainable. Something’s going to give. The question is whether prices in the United States are going to come down, and whether our focus is going to increasingly be on just paying the cost of a few additional pills—as it is in much of the rest of the world—in which case we’re not going to get the same kind of innovation as I’d like to hope for.

Kleinke: With the research-based drug industry morphing into a generics-type industry.

McClellan: Yes. And the big losers there are patients with diseases that are currently not treatable around the world—diseases where the potential exists, where more R&D [research and development] is going on than ever before, but we aren’t yet seeing the products ready for patients. And that’s why I think that we have to find a better global solution to this problem, one with fairer pricing around the world. And I think it is absolutely feasible to move in that direction without other countries paying more. We just all need to spend our money better, to take steps like encouraging more widespread use of generic drugs, where they’re available and where they are effective therapeutic alternatives.

Kleinke: The more aggressive use of generic drugs, both here and abroad, would be something you would encourage, or at least encourage via FDA policy?

McClellan: That’s right. Everything that we’re working on to get more value to patients is certainly not in lockstep with the brand-name pharmaceutical industry. We’ve taken more steps in the last few years at the

FDA to promote the availability of generic drugs through new regulations, through getting new provisions in the Medicare bill—so that when legitimate patents expire, there will be a lot of competition. That means if you’re a brand-name drug manufacturer and you want to keep making money, you’ve got to keep innovating, keep developing valuable new medicines. And the same thing goes internationally. If we can adopt these same kinds of steps internationally, we can provide better incentives for innovation without spending more money. That’s really the goal here: getting more out of what we’re spending on drugs, just as we should be paying a lot of attention to getting more out of what we’re spending on health care.

Encouraging International System Change

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Kleinke: That all makes sense in theory, but how do we effect health system change internationally? It’s nice to educate and inform people overseas, but how do we actually get them to implement these ideas? Sheer force of example?

McClellan: Hopefully, that will help. But there is already a recognition worldwide that these are global products and that we have a shared public health interest in promoting the development of better medicines. I think other countries should be aware that the current situation of this country paying much more is not going to be sustainable. That there may come a day when—if some version of drug importation becomes legal in this country—they will have trouble sustaining their own pricing mechanisms. That could really disrupt things in Canada and elsewhere. I’m hopeful that we can find a more constructive worldwide solution, and there are certainly reasons in every country’s interest for doing so.

Kleinke: An end game playing out of a scenario like that would be rather bleak.

McClellan: Yes, it would.

What Motivates The FDA

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Kleinke: On the other hand, and I say this facetiously of course, bad news for the public health has tended to be good news for the FDA’s mission and budget. I’m sure you saw Philip Hilts’ book last year, his excellent history of the FDA?

McClellan: I did. Great history.

Kleinke: What struck me most while reading it were what Hollywood calls the "plot points." Each of these plot points—which we could define as each time the FDA’s mandate was expanded significantly—was triggered by some horrible public health travesty, such as the deaths associated with contaminated sulfanimide or the birth defects associated with thalidomide. It is a gruesome way for a regulatory agency to grow in importance, but it seems to be the real story behind the FDA’s history. Was this in the back of your mind when making policy decisions at the FDA?

McClellan: It’s certainly part of it. Some of our recent budget expansions have involved concerns about new food security threats or about the need for developing better incentives for medical countermeasures for [biological] agents of terrorism. But that’s certainly not exclusive. Some of our other budget increases recently have related to improving the innovation process—about reducing the time required to get new drugs to market. For example, this year, one of the largest single components of our budget increase was new funding for our medical devices program, to speed up and improve the process of getting safe and effective medical devices to market. I really think it’s both. Certainly, early in the history of the FDA, its core mission of protecting the public health was foremost in people’s minds. That is absolutely an essential part of our mission today, and we’ve got new challenges coming along—everything from more sophisticated counterfeit drugs to new concerns about food security, not just food safety, but deliberate harm to Americans that we need to think about—fundamentally changing the way we think about our mission of protecting the American public. That mission is every bit as critical as ever, even though the kinds of public health challenges that we’re facing are evolving.

What I think is also increasingly important for the agency is the other part of our mission. Our mandate is to protect and advance the health of Americans. When it comes to advancing public health, we’ve got more opportunities than ever before. This includes getting better information to the public about all of what the latest science has to say about how they can take steps to improve their own health. Drugs are becoming more individualized. We have more sophisticated knowledge of what works and what doesn’t in particular patients. That’s something people need to be aware of. Just approving the drug isn’t enough anymore.

One of the most important areas in public health is in advancing medical innovation. We’re in an absolutely critical time when it comes to medical product development. On one hand, there is far more spending on R&D than ever before. I think it’s about $28 billion this year in NIH spending, about another $75 billion in private spending of one kind or another—mostly in the United States, but also worldwide—by pharmaceutical, device, and biotech companies; foundations; and the like. That’s far more spending than ever before, and far more products in development than ever before. Literally thousands of investigational new drugs and investigational new devices are registered with the agency and are in testing right now. Yet if you look at what’s actually coming out of the pipeline and reaching patients, we’ve had some of the worst years ever at the FDA. In 2002 we had the lowest number ever of applications for truly new drugs—so-called new molecular entities [a formal regulatory distinction made by the agency as part of the drug approval process]—in more than two decades. I’m pleased to say that in the last year that’s recovered a bit.

Kleinke: So 2002 wasn’t a statistical blip?

McClellan: No, it wasn’t a blip. There was a gradual downward trend for a few years, and we’ve seen an uptick in the past year. But we’re still way below the peak years for new molecular entities—the early to mid-1990s—and there are probably a lot of reasons for this.

The Pace Of New Drug Approvals

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Kleinke: There was the recall backlash. Right after those peak years, the agency took a lot of criticism for the extraordinarily high number of new drug approvals and subsequent recalls, even though the ratio of recalled-to-approved drugs was constant throughout that period.

McClellan: That’s right. The number of new approvals being down is directly related to the number of applications being down. And the number of applications being down was a steady trend over a number of years. Many people have ascribed many different reasons for this: everything from the ten-year development cycle—there was a big downturn in the early 1990s, in 1993 and 1994, in investment in biomedical R&D—to the fact that there’s been consolidation in the pharmaceutical industry. What I think is most important is the fact that the nature of drug development is changing. We had a period of development in the 1980s and 1990s where a lot of blockbuster drugs were coming to the market that were targeted at particular receptor sites [biological "attachment" points on the surfaces of cells] that were known to have a major impact on diseases. There are probably about six hundred or so individual receptor sites out there, and most of those that are involved in major and obvious disease pathways have been taken by any number of molecules that are already on the market. In contrast, a lot of the R&D that’s going on today is more based on some of the new sciences—genomics, proteomics, and complex biologics—where the mechanism of action of a treatment may depend on a much more solid foundation of understanding the mechanism of the development of a disease, not just knowing what a particular molecular receptor may be related to.

Kleinke: The entire cellular cascade leading to the progression of a disease.

McClellan: Yes. And right now, there’s just an awful lot of investment going into figuring out all these new sciences. Putting on the economist hat again, if you think back to the information technology revolution, all the investment really started in the early 1980s, and it wasn’t until the mid-1990s that you started to see a big impact on productivity, on what people were getting for what they were spending on these new technologies. And there may well be a long period before we get the payoff from some of the new sciences like genomics. There’s an awful lot of information that may one day be very predictive for whether a particular compound is safe and effective in a particular individual. But we do not have that knowledge today, and so all we’re seeing so far is a lot of investment and not much to show for it. Now, if this were a typical industry you might say, "So what? It always takes time to turn new scientific insights into safe and effective products." What’s unusual about health care is how expensive it is to demonstrate that these new approaches really do lead to safe and effective treatments that people can be confident in. We need people to be confident in treatments that are on the market. And then there is this unprecedented concern about affordability. If we just sit back and hope that these investments are going to turn into treatments—if we don’t make the right choices in the policies that we are implementing now—we may not get there.

Personal Milestones

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Kleinke: Would you describe that as your core mission on a personal level? How would you like us to remember your time at the helm of the FDA?

McClellan: I don’t think there’s any one issue that I could single out, because there are so many new challenges in the area of protecting the health of Americans. Take the new approaches that we’re implementing right now in food security, for example. We’re implementing some of the biggest changes in food safety regulation in thirty years as a result of legislation passed by Congress in 2003, along with increases in our budget and some major new regulations on food security. We’re making these fundamental changes, such as requiring advance notice of all imported foods coming into this country, an authority we don’t have for drugs, unfortunately. We have new record-keeping requirements for people who are involved in the distribution of food in the United States, which is going to help us trace foodborne disease outbreaks much more effectively.

We’re also taking new steps to protect Americans from unsafe dietary supplements; improving medical innovation, as we were just saying; and getting better information to the public about how they can use the latest science to improve their diets and live longer and healthier lives. But there’s no one thing that stands out. That’s the real pleasure of working at the FDA. We get a chance to keep up with the latest science in a huge range of areas, and we make decisions every day that have a fundamental impact on the health and well-being of the public. So if there’s an overall goal that I want to achieve, it’s making that whole process work as effectively as possible. We’ve got a staff of about 10,700 people now who are very dedicated, very committed to this mission of protecting and advancing the health of the public. And that mission is more complicated and important today than it has ever been.

EDITOR’S NOTE: Mark McClellan’s new mission as administrator of the Centers for Medicare and Medicaid Services (CMS) promises to be just as "complicated and important" as his previous post at the FDA. Because implementation of the Medicare Prescription Drug, Improvement, and Modernization Act (MMA) of 2003 is expected to be the biggest challenge on the CMS agenda in the near future, some of the issues that concerned McClellan in his old job—including drug reimportation—will follow him to the new one. So will some of the tensions between the executive and legislative branches that surfaced occasionally during his tenure at the FDA.

McClellan’s qualifications as a physician, economist, and policymaker clearly impressed members of the Senate Finance Committee during his confirmation hearing in March 2004, as did his confident and knowledgeable responses to questions across a broad range of issues. But the dialogue also showed how contentious the CMS position can be. Members of his own party quizzed him closely on how to lower reimportation barriers and obtain more relief for consumers from high drug prices. Ranking minority member Max Baucus (D-MT) bored in repeatedly on the administration’s policy on Medicaid waivers and McClellan’s commitment to preserving the Medicaid entitlement. Several difficult issues related to the increased role for private plans in Medicare under MMA were raised, including controversial differences between administration and congressional estimates of the bill’s cost and contradictory assumptions about whether private plans would save money for the program.

After a short, sharp skirmish over reimportation, the Senate confirmed McClellan’s appointment on March 12. Congress is excited about being able to offer seniors a new drug benefit. McClellan struck a strong bipartisan chord when he outlined ambitious plans for quality improvement in Medicare. The consensus is that he is an excellent choice for the job.

Editor's Notes

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Mark McClellan, a physician and economist, was confirmed by the Senate in March 2004 as administrator of the Centers for Medicare and Medicaid Services (CMS). J.D. Kleinke (jdk{at}jdkonline.com) is chairman of Health Strategies Network, a company in Portland, Oregon, that provides health care business strategy consulting and education services to a variety of health-related organizations.

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