Delivering medicines of value in an age of cost containment
Paul Tunnah interviews Rick Morton
PAREXEL
It’s not just within the pharma industry that the term “value” is being thrown around – given the current economic environment, much focus is on creating and delivering value across many dimensions.
However, pharma is perhaps experiencing the greatest rate of change of any industry in terms of what defines value for its products, leading to a need for urgent reforms to its development and commercialisation processes.
So what do terms like “market access” and “value” actually mean in the pharma context today and what goes into the seemingly elaborate processes behind reimbursement, health technology assessment and appraisal? More importantly, what changes does pharma need to make to ensure effective new drugs can reach the patient without price becoming an issue and whose responsibility does delivering value become?
Rick Morton addresses these questions day in, day out in discussion with pharma clients as part of his role as VP of Commercial Strategy Consulting at PAREXEL. We caught up with him, ahead of his attendance at the Orphan drugs summit 2011 to hear his perspective on these areas. During our discussion we touch on how pharma needs to adapt to deal with cost containment, how different geographies may adapt to measuring the value of medicines over time and what part the patient has to play in gaining access to new treatments.
Please see the edited highlights of this interview shown in print below.
Interview summary
PT: Hello Rick and thanks for joining me. Now, market access is clearly an important aspect of your role, so what are the major issues you see for pharma here?
RM: When the phrase market access was first coined about 12 years ago people had very specific definitions of what it was - they saw it as pricing and reimbursement. It’s now become evident that it is a very broad term, encompassing everything you do from phase II right through to genericisation. So one of the major issues impacting the pharma industry right now is the segmentation we see in terms of roles and responsibilities across R&,D, commercial and regulatory, which needs to be addressed by more cohesive and synchronised working toward common goals. Externally, the increased drive to demonstrate value is certainly a major issue for pharma, predominantly because value is not something that’s inherent in people’s thinking at the early product development stage, where a focus may reside on different regulatory endpoints such as safety, efficacy and quality of medicines. Given the current economic constraints countries are under, governments will push back on pharma companies who are not designed to deliver value to healthcare systems and patients. A delay in launch of Trajenta in Germany, awaiting value assessed pricing outcomes is a clear example of a new horizon of healthcare systems standing their ground on the price paid for a medicine relating to the value obtained.
"Anybody in R&,D should be able to answer three key questions – what is the unmet need, what will this development asset replace and what ultimately is its value proposition?"
PT: So you think pharma companies could reinforce the value of their medicines and overcome pricing issues by better aligning development and commercial processes?
RM: It’s about getting information as early as possible, as being forearmed is to be forewarned. Anybody in R&,D should be able to answer three key questions – what is the unmet need, what will this development asset replace and what, ultimately, is the proposed asset value proposition? The challenge is that currently those questions are asked far too late in the development program, as opposed to being used early on to support internal alignment and direct the development and commercialisation of assets. Of course, we’re generalising here between big pharma and smaller biotechs, but they can learn from each other. Big pharma could create small biotech type units within their own organisation with their own accountability from start to finish, whereas biotech can learn from big pharma about how to gather reimbursement evidence earlier in development to support potential commercialisation or, evidence to support effective out-licensing / partnering. Ultimately, it’s about gathering information as early as possible around these key questions and making informed decisions around how to progress or indeed even whether to progress.
PT: At what point exactly in the development cycle do those key questions need to be addressed?
RM: I would say that as an asset is being selected to move into phase II then at that stage everybody needs to be clear on the unmet need being addressed and what the asset will replace. This necessitates the right type of commercial intelligence across various markets – key markets such as the US, Europe and also evolving markets like Asia, Brazil and Russia. Finally, everyone needs to be aligned at this stage as to why the medicine is being developed, because without that we’re doing a disservice to both the patients and the investors.
PT: Looking globally, we’re seeing increasingly sophisticated reimbursement authorities and processes. Where do you see this developing and will we see health technology appraisal processes such as those employed by the UK’s National Institute for Health and Clinical Excellence (NICE) emerging elsewhere?
RM: It’s a good question. NICE has been seen as a bit of a flagship over the last 10 years and there have been extensive learnings for both it and the industry during that time. So other healthcare systems have taken on board some of its assessment work and some, particularly in emerging markets, are working with NICE as a consultancy to actually help direct their approach. So it’s clear that, whilst the NICE methodologies may sometimes be confrontational with the public and press in the UK, the system is relatively fair, very transparent, collaborative and open to appeal – all key factors. But we need to highlight that health technology assessment and health technology appraisal are two different things. Health technology assessment gives you an answer, whereas health technology appraisal is the decision making process based on this answer. So the NICE appraisal process has evolved as it has become more in tune with new medicines that may have a high price and may not demonstrate classical cost-effectiveness, particularly around end of life products, which have a weighted cost-effectiveness threshold, and areas with high unmet need.
"Health technology assessment gives you an answer, whereas health technology appraisal is the decision making process based on this answer."
PT: What about value-based pricing – where does this fit into the mix?
RM: The role NICE will have in value-based pricing is still being decided by the Department of Health, but it will potentially be an evolved assessment process taking into consideration things such as the level of innovation of a medicine, the burden of illness and unmet need. These have both been fairly well established in other European markets, such as France, Germany or Sweden, so the UK is also learning from other jurisdictions. Another work stream that’s going on is the joint initiative between the EMA [European Medicines Agency] and EUnetHTA [European Network for Health Technology Assessment], where they are looking at the core components of health technology assessment and where data and methodologies around relative effectiveness can be shared. For pharma, what’s key is to ensure that they’re intimate with individual country or jurisdiction developments, because the one thing that will never happen is adoption of a medicine appraisal taken in one country by another, because individual countries have their own GDPs and are legally bound to work by their own decision making around what they’re going to fund.
PT: Looking specifically at the area of rare diseases, what do you see as the key considerations when it comes to ensuring patients can access a new drug?
RM: By definition, the reason that some medicines are classified as orphan drugs is that they are in an area of high unmet need, which lends itself to the evolving concept of value-based assessment and appraisal irrespective of what geography that may sit in, as these medicines are offsetting potentially expensive supportive care. Of course, the prices that are charged can also reflect the level of R&,D that goes into them and the number of eligible patients, so you’re moving from an area of cost-effectiveness into an area of affordability and budget impact. What is really interesting is that you wouldn’t think of diseases like epilepsy or gout as having medicines with orphan drug designation, but this is now happening for specific patient groups who have already gone through several lines of therapy. So by definition the numbers of patients within these groups make them small enough to qualify for orphan designation. For the manufacturer, this creates an opportunity to demonstrate innovation and capture a strong market share in subpopulations of common diseases with high unmet need, from which they can build for other indications. So I think that’s a trend we will see more off – looking for niches of unmet needs in common diseases, which might stop patient groups in disease areas where incremental value is difficult to show (such as neuroscience) being disenfranchised.
"…pharma has a lot to learn from the patient experience around what the true value is of a medicine."
PT: Finally, what role do you see for the patient in supporting the development of medicines that deliver real value, moving forwards?
RM: That’s an interesting question because patient involvement in the development of medicines, other than being trial subjects, is generally limited. However, patients are becoming more involved in the assessment and appraisal process, for example with NICE and the SMC [Scottish Medicines Consortium] where they can contribute through patient groups. But at the development end pharma has a lot to learn from the patient experience around what the true value is of a medicine. Often, the R&,D teams focus almost exclusively on the primary endpoints, but we know that improving things like the routes of administration for a medicine, for example going from infusion to an oral based therapy, can provide real value for the patient. These sorts of things are captured by quality of life assessment, but are not always factored in if they’re not seen as important for regulatory approval. So the patient experience is really important and the more the industry can become intimate with this then the more they have an opportunity to develop medicines that demonstrate real incremental, and potentially step changes in value to patients, payers, healthcare providers and reimbursement agencies.
About the interviewee:
Rick leads PAREXEL’s EU Commercial Strategy Consulting practice, focusing on core commercial, market access and pricing and reimbursement activities, many focusing on orphan therapies. Rick works extensively with PAREXEL’s Clinical Research and Regulatory divisions to provide commercial strategy support and operational workstreams to PAREXEL’s partner client in an informed is forearmed approach to asset development. Prior to PAREXEL, Rick was MD of WG Consulting, a Global Market Access Consultancy. Here, Rick worked with EU and US based clients supporting the market insights (clinical and payer) and commercial objectives to meet regulatory, reimbursement and marketing performance indicators. Rick worked closely with clinical, medical, health outcomes and marketers as part of core strategic teams with European, US and Global pharmaceutical clients. Rick has substantial experience from senior commercial and market access positions in the CRO and pharmaceutical industry (GD Searle, Yamanouchi and Pfizer) to support PAREXEL’s core consulting activities. In addition, Rick has specific experience in Health Technology Assessment (HTA) and Health Economics (Brunel University), having been involved in many dossier development programs for clients in Europe. Prior to roles in industry, Rick held a UK academic position as lecturer in Neurophysiology and Neuropharmacology, following PhD and B.Sc (Hons) degrees from Manchester and Liverpool Universities, respectively.
Rick will be speaking at the upcoming Orphan drugs summit 2011.
What determines the value of a medicine?
