Pharma pricing & market access outlook Europe 2013
In this article, Rebecca Aris provides an overview of some of the topics discussed at day one of the ‘Pharma pricing &, market access outlook Europe 2013’ event.
What’s happening in the global environment?
‘May you live in interesting times’, a phrase widely used in Asia, was used to open the day’s session by Ed Schoonveld, highlighting that the pharma industry lives in very interesting times indeed. The age of austerity, imminent patent cliffs, emerging biosimilars and pipeline challenges contribute to this this, in addition to changes on the payer side – VBP in the UK, AMNOG in Germany and ITR changes in France and changes in the US, to name a few.
Although most countries are looking to the US and the Euro big five for guidance, things haven’t been smooth in these regions, explained Ed. The US market offers the most stability and even there a lot of changes are on the horizon. There are questions marks over AMNOG and the situation in Italy, whilst the situation in the UK seems increasingly unclear.
Ed predicted that drug prices would continue to rise in the US. Coverage will be tougher under Obamacare, and pipeline challenges, in addition to patent cliffs, will result in drug companies needing to make up the deficit by increasing drug prices. As a result insurance costs will also rise.
“There are questions marks over AMNOG and the situation in Italy, whilst the situation in the UK seems increasingly unclear.”
Whilst Europe’s economic situation continues to be tough, payers are increasingly tougher, flagged Ed.
On VBP, Ed highlighted that ‘If you speak to people about value based pricing you get a lot of enthusiasm, but it’s just because they don’t know what you mean by it’. If you look up the definition, he continued, it usually says it’s not cost-plus pricing. The essence is it seems to be a price control.
The situation in Scotland
Prof. Angela Timoney of the Scottish Medicines Consortium spoke of the differences between England and Scotland in terms of how they determined value.
Policy differences in access to new medicines:-
• NICE have end of life modifiers
• SMC have modifiers related to quality of life
• England has cancer drugs fund
• Scotland has rare conditions fund
Angela Timoney was not the only person on the day to highlight the recent article in the Financial Times, titled ‘UK value-based pricing will struggle to materialise as year-end deadline approaches’.
Angela closed with a slide of the Loch Ness monster, which she claimed she might find before she found value based pricing.
“Whilst Europe’s economic situation continues to be tough, payers are increasingly tougher…”
Italy – update on reform agenda
Paolo Siviero introduced his presentation by sharing an overview of the health system in Italy:-
• Provides healthcare to all citizens in equal way
• Primary care and hospital care are free of charge to all patients
• Pharmaceutical care is free of charge for all the most important medicines
Past cost-containment measures used in Italy were price cutting (in 2005, 2006 and 2007), an expenditure ceiling, a volume &, expenditure agreement and reference price &, substitution with generic products.
Measures being currently implemented in Italy are an expenditure ceiling mechanism, conditional reimbursement agreements and a two-year re-evaluation of negotiated price.
As of 2008, public pharmaceutical expenditure monitoring and control was based on the following criteria:
• An expenditure ceiling is decided annually at national level
• The ceiling corresponds to a fixed amount of the total health financial resources
• Based on National financial resources AIFA defines expenditure ceiling:
o for each active ingredient
o for each manufacturer
• If the expenditure ceiling is exceeded, manufactures should refund the NHS through a payback mechanism
Previous measures were for outpatient drugs only and not for inpatient drugs, however, this year the budget for inpatients starts.
Paolo suggested that it was clear that the inpatient budget is insufficient and there will be future problems with inpatients expenditure that will need addressing.
“Angela Timoney was not the only person on the day to highlight the recent article in the Financial Times, titled ‘UK value-based pricing will struggle to materialise as year-end deadline approaches’.”
Anna Brzezinska clarified the rules of the Polish reimbursement system in her presentation.
Poland has a centralized public health insurance system (9% of salary is taken as taxes to cover this). The whole population contributes to this, and it covers outpatients and hospital care. There is no supplementary health insurance.
In 2011 the Polish Health Care System utilized approximately €24 billion, consisting of approximately €16 billion of public money and roughly € 8 billion of private money. The expenditure on health care is 7% of GDP (4,7% public), compared with the average in the EU of 8%. Some figures for comparison are shown below:-
• 5% Romania
• 10-11% Denmark, Holland
• 12% Belgium, France
On clarifying the roles in the Polish health care system, Anna explained that the Ministry of Health (MoH) is responsible for decision making and is advised by the Agency for Health Technology Assessment in Poland (AHTAPol), which was established in 2005 as an advisory body to the MoH. The National Health Fund (NHF) is the entity responsible for financing health care services from public funds and consists of:-
• Central Office (planning and dividing money) and 16 regional branches
• Regional branches contract with hospitals and other healthcare centres (purchasing publicly financed health care services)
Anna broke down the NHF expenditure structure in 2012 as:
• 49% hospitals
• 15% drugs
• 12% outpatients care
• 12% outpatients specialist care
• 2% other
The main task of AHTAPol is preparation of recommendations for the MoH on financing ALL health care services from public funds, including:
• Drug (reimbursement list, drugs programs, chemotherapy drugs list)
• Non – drug technologies (medical devices, surgical procedures , food for special dietary purpose etc. )
• National and Local Government Health Care Programs
The final decision, however, is taken by the MoH. In practice, decisions are not always consistent (e.g. reimbursement can be granted by the MoH in spite of a negative recommendation from AHTAPol).
“‘Value is the currency of the new healthcare’, he explained, ‘but what is value?’”
The main problems that Anna identified for HTA in Poland were:-
• Established short time frame for the assessment process
• Excessive requirements for analyses in case of food for special nutritional purposes and orphan drugs
• 3 x GDP per capita – strictly defined cost-effectiveness threshold, regardless of the burden of disease or its rarity
• Limited access to relevant cost and epidemiologic data
Turning apples into oranges
Mika Newton introduced his presentation with the following statement:- ‘In the pursuit of value definition, measurement and communication, we often find ourselves comparing apples to oranges’.
“Mika demonstrated with details of a case study, how value analytics can support a novel value proposition.”
‘Value is the currency of the new healthcare’, he explained, ‘but what is value?’ Mike broke value down into the three major components that he believes contribute to value of a pharmaceutical product:-
o Mechanism of action (novel vs. me-too)
o Safety / adverse events
o Clinical outcomes: survival, recurrence risk, other clinical benefits
o Quality of life and patient experience (satisfaction, utility, convenience)
o Out-of-pocket cost
• System / Society
o Burden of illness (BOI)
o Relative total value compared with other options
o Cost per QALY saved
o Cost savings elsewhere in the treatment pathway
o Wider societal benefits
o Impact on caregivers, family members
Mika demonstrated with details of a case study, how value analytics can support a novel value proposition.
A genetic test for lynch syndrome (a genetically inherited predisposition to multiple types of cancer, including colorectal, endometrial, liver, urinary tract, and others) is currently offered to family members once a relative has been diagnosed with cancer. The uptake of the test is low.
The Lynch Syndrome Study investigated what would happen if patients were given a test for Lynch syndrome before colorectal cancer had a chance to develop, if it was offered to individuals whose risk exceeded a certain threshold.
“Many highlighted that we need to look at the overall costs to society of any measures we implement rather than solely look to healthcare costs.”
Value analytics were used to identify people at risk at a time when prophylaxis, surveillance, and early detection might be most effective.
By doing so, the objective of the study was to assess whether primary screening created value for payers, whether the strategy was cost effective, when the appropriate age to initiate screening by risk assessment was and to gauge an optimal risk threshold at which to implement genetic testing,
The results suggested there would be substantial life savings and that the cost effectiveness of the screening is comparable to that of other screening measures.
“Genetic testing was always assumed to be cost effective for those at high risk based on their family history, but this shows it would be cost effective in a wider population, similar to the cost effectiveness of mammography,”
Stephen Gruber, director for cancer prevention and control at the University of Michigan Comprehensive Cancer Center, and a lead researcher on the study.¹
A question that echoed throughout the day was ‘what is value?’ and ‘what does society value?’. Many highlighted that we need to look at the overall costs to society of any measures we implement rather than solely look to healthcare costs.
Value is becoming increasingly important in this age of austerity, as we need to make sure that healthcare systems are making the right decision on their spending and we need to be aware of the impact on access.
Whilst a more universal approach is needed, the message that we seem to be hearing from each region is that ‘we want a harmonised system as long as it works for our country’.
We will see changes to market access globally. The Comprehensive Spending Review in 2015 and the Francis review will impact on the future of the health environment in England. And as highlighted throughout the day, it will be a struggle to implement VBP by January of next year, meaning an interim system may be needed.
In Italy, concerns remain around inpatient cost restrictions, whilst Poland faces the challenge of limited access to relevant cost and epidemiologic data when determining value.
In emerging markets, we may see biosimilars having a huge impact on those markets.
Maybe the answer to determining value in all of these regions lies in technology and utilising value analytics.
Many factors shape the market access environment in Europe and globally, leaving the future unclear. What is clear, however, is that we do live in very interesting times indeed…
About the author:
Rebecca Aris is Managing Editor of pharmaphorum, the primary facilitator of thought leadership and innovation for the pharmaceutical industry featuring news, articles, events / company listings and online discussion.
Rebecca was the first full time employee to join pharmaphorum, starting in her current role in mid-2010, and is responsible for coordinating all editorial content on the site. Prior to working at pharmaphorum she was a medical writer at a healthcare PR agency. In addition, she spent three years working as a commissioning editor on three journal titles at a biomedical publishing company. Rebecca holds a BSc (Hons) in pharmaceutical science.
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