505(b)(2)s in 2023: Three Key Issues to Watch, 2022 Year in Review

Establishing the value of a drug product approved through the 505(b)(2) new drug application (NDA) pathway—from conception through maturity—was critical in 2022 and remains the single most important aspect of developing a successful value-added medicine.  Establishing value applies to all categories of drug products, whether new dosage forms, new dosing regimens, or new combinations (e.g., drug-drug, drug-device, or drug-technology).  The continued need to establish and demonstrate a product’s “value add,” as well as several other key developments, will shape the value-added medicines market in 2023.

​First, the need for a strategic commercialization plan that crosses the historic divide between the first half (conception through FDA approval) and the second half (post-approval through maturity) of a product’s lifecycle has never been more pronounced and will remain so in 2023. Savvy investors understand that citing simple historical examples to support a 505(b)(2) NDA is naïve and that companies must be prepared to bridge this chasm from day one of development with a solid regulatory plan and data.  For example, the belief that once-a-day dosing is always superior to multiple times per day dosing is an unsophisticated view of 505(b)(2) drug development—unless there is adequate support and data to demonstrate that it is actually true for that drug product.  It also dismisses the power of payers and formulary developers who must be convinced that there is an economic or health outcomes benefit for them to cover a drug product with such a simple quality of life change.

​Thus, preparing for market access must be built into a value-added medicine commercialization (business) plan.  That effort is time consuming and controlled by FDA and non-FDA forces alike.  The Platform addressed this issue extensively at its March 2022 annual meeting. Events and activities that occurred during the pandemic magnified the importance of this planning issue, and it continues to gain importance as we move towards a new normal. The 505(b)(2) Platform leadership continues to actively work assisting companies with comprehensive commercialization planning and execution as well as working to develop programs and pathways to assist 505(b)(2) product marketers in addressing existing market access challenges.

Second, the pandemic has magnified an interest in and need for patient-focused therapies, including combination drug-device products. While interest in combination products has exploded, the landscape has revealed the important differences between drug and device regulation as they impact approval of a value-added medicine.  The review process for medical device applications by the Center for Devices and Radiological Health (CDRH), particularly for 510(k) notifications, is unique and functions differently not only between divisions, but within divisions.  The multitude of device categories and the flexibility in device development through the 510(k) process have created a patchwork of unique drug-device combination products that do not fit neatly within historical regulatory categories.  Furthermore, the review of drug applications by the Center for Drug Evaluation and Research (CDER) can vary in practice, with some divisions interpreting the applicability of a prior “finding” of safety or effectiveness to a 505(b)(2) NDA very differently.  Some divisions ignore CDER leadership’s policies on a “totality of the evidence” approach and apply the “finding” standard artificially narrow, while others do not.

These differences across FDA Centers reveal that drug-device combination approvals can prove difficult. Moreover, as new advances in drugs (e.g., topical delivery systems and aerosols) and devices (e.g., artificial intelligence and digital health) are made, the coordinated approval of such combination products becomes even more important.  In 2023, we expect more scrutiny of device patent listings in the Orange Book, drug labeling carve-outs, and reimbursement approaches.
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Finally, changes to CMS reimbursement codes offer opportunity. The Inflation Reduction Act of 2022 and the Consolidated Appropriations Act of 2023 will have long-term impacts on the pharmaceutical industry.  However, the Centers for Medicare & Medicaid Services (CMS) took its own positive steps in Fall 2022 to recognize the importance to the healthcare landscape of 505(b)(2) value-added medicines that are not AB-rated to their reference products.  In an effort to reduce the use of the “Not Otherwise Classified” (NOC) reimbursement codes, CMS recognized that certain value-added products are single-source drugs in need of unique billing and payment codes.  Effective January 1, 2023, CMS created approximately 36 new HCPCS Level II codes to recognize such 505(b)(2) drug products.  CMS also noted that it will review existing codes as needed to identify multiple source and single source drug products.  CMS issues new codes periodically, and this process may offer new opportunities for 505(b)(2) drug product reimbursement.

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​As The 505(b)(2) Platform looks forward to 2023, we plan to address these and other issues that the sector faces in a variety of forums, with further information about each of these activities forthcoming.
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• We will launch a series of webinars on important value-added medicine topics, beginning with the importance of a commercialization plan in February 2023.

 

• We will undertake the development and implementation of an advocacy effort to assist value-added medicine marketers with informing and educating payers on their product value.

 

• We will host our annual meeting in New York City on Tuesday, March 21 during DCAT Week.

 

• We will continue our ongoing dialogue with FDA senior officials who are on the front lines of 505(b)(2) NDA policy making.

 

• Finally, after a hiatus in 2022, we will co-host our Value-Added Medicines Week with anticipated programming across a wide variety of topics pertinent to 505(b)(2) products and other value-added medicines.

We wish you and your teams much success in 2023, and we look forward to being a contributor to that success.