OECD calls for ‘rebalancing of power’ in drug price negotiations

The European pharma industry is urging health ministers from the world’s leading economies to stop focusing on high drug costs – just as the OECD has urged countries to club together to exert more bargaining power on medicines price.

Health ministers from the Organisation for Economic Co-operation and Development (OECD) countries meet in Paris today to discuss how to tackle growing health costs, and challenges in diseases such as cancer, Alzheimer’s, diabetes and cardiovascular disease.

Yesterday the OECD released a new report entitled New Health Technologies: Managing Access, Value and Sustainability, which warns that spending on medicines is increasingly ‘skewed’ towards high-cost drugs, and calls for action to control these rising costs.

Among its recommendations it said a “rebalancing of the negotiating powers of payers and manufacturers” was needed, and suggested this could be achieved through greater transparency and co-operation between payers and joint procurement initiatives.

The report also called for greater use of real word data to prove the safety, efficacy and cost-effectiveness of drugs, as well as a faster uptake of health data to aid healthcare system decision making.

This a direct challenge to the pharma industry, and in the wake of a surprisingly vociferous attack on US pharma prices by Donald Trump, will leave the sector wary of new threats to its business model.

Donald Trump last week promised to introduce a ‘bidding’ system to help reduce US pharma prices, which he said could save the US billions of dollars.

Industry leaders know pharma’s pricing model must change, but wants to ensure governments don’t go down the route of simply slashing prices.

In a statement Joe Jimenez (pictured) ahead of the Paris meeting, Novartis CEO, and president of European pharma organisation EFPIA, said the OECD forum would provide a “stepping stone” towards more effective collaboration between industry and governments.

Jimenez said healthcare systems needed to advance on three fronts: improve horizon-scanning to anticipate impact of new technologies, develop a systematic scrutiny of overall costs of healthcare, and a better measurement of actual health outcomes delivered by healthcare systems.

Without these changes, he warned that there would continue to be too much focus on upfront costs and price.  Meanwhile, low cost, but low value healthcare in terms of benefits to patients, must be stopped to reduce waste, Jimenez said.

The price of medicines could also be set according to well-recorded patient outcomes, said Jimenez, something which his own company, Novartis, is trying to pioneer in developed markets.

He added: “Our industry is ready to move to a model where we are rewarded not for the number of pills that we sell, but for the actual results achieved by patients.”

EFPIA representatives will also attend the meeting to highlight the challenges posed by “disruptive” health technologies, which are likely to be very expensive, but can bring huge benefits across patients’ lives.

Some of these technologies may require large investments upfront, meaning they are more likely to be rejected by health technology assessment bodies or by health systems unable to make such large budgetary commitments.

Jimenez mentioned in particular a coming wave of new cell and gene therapies as the next innovative treatments to present a major conundrum for healthcare systems.  These drugs could provide a cure for treatments with a single treatment, but could cost in excess of $1 million for a single patient. UniQure’s ultra-rare disease treatment Glybera is already on the European market at this cost, but has been a commercial failure because of its huge cost.

However other similar drugs are expected to reach the market soon and be more successful. These include Spark’s blindness treatment SPK-RPE65, which could cost $500,000 per eye.

Such drugs may accelerate greater international co-operation to “re-balance the negotiating powers” between healthcare systems and pharma.

Countries have been slow to adopt this approach so far, but Europe has one trailblazing collaboration:  the Netherlands, Belgium and Luxembourg announced in 2015 they would be collaborating on the assessment and pricing and reimbursement of high price orphan drugs.

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