Winds of change for pricing and funding in Spain (Part I)
In part one of this two-part article exploring the drug pricing environment in Spain, Beatriz Casado and Kathrine Kartach of Simon-Kucher & Partners question why the changes in pricing and funding for pharmaceuticals in Spain have occurred and which changes have materialized.
Over the last year, extensive changes have occurred in the way pricing and funding decisions are made for pharmaceuticals in Spain. The decision process is becoming more sophisticated: more variables are being considered when evaluating a product and new negotiating tools are being employed in price negotiations. There is a clear overall goal behind these changes: grant access and public funding to innovative therapies whilst guaranteeing the sustainability of the NHS (Spanish National Health Service). As a result, pharma companies need to adapt and be prepared for this new environment when approaching payers.
Why have these changes occurred?
The financial crisis: Shrinking budgets and concern about the sustainability of the public healthcare system have forced payers at all levels (national, regional and local) to more carefully evaluate funding and access decisions. To this end, several laws have been passed in the last two years.
An increasing number of high-cost, innovative therapies entering the market: Such therapies create high economic burden and their clinical efficacy is not always fully supported by the clinical evidence available at launch. As a result, payers feel reluctant to invest in such treatments, which in some cases, leads to delays in pricing and funding decisions.
Heterogeneity in drug access across regions: Since decentralizing healthcare delivery services in 2002, the seventeen Autonomous Communities have been responsible for healthcare management and budget allocation. Differing political and spending priorities have led to unequal access to certain drugs across regions, as is the case for several innovative oncology therapies. Healthcare professionals frequently criticize this situation as it opposes one of the cornerstones of the Spanish healthcare system: equality for all citizens.
Which changes have materialized?
New factors considered in pricing and funding decisions: Budget constraints have forced payers to raise the bar. In addition to conventional factors, such as unmet need, efficacy, safety and direct budget impact, payers now consider new aspects, some aligned with trends also seen in the EU: positioning in the treatment algorithm, as in France; cost-effectiveness, as in the UK and contribution to GDP. Decisions have become more complex and informed.
Contracting at a national level: Previously, the use of contracting as a negotiating tool was difficult, mainly due to lack of interest, familiarity or most importantly, infrastructure to monitor outcomes. There was even limited interest in less sophisticated types of financial-based schemes, such as paybacks, as they can complicate billing. However, given the current economic environment, the more conventional contracts, such as price-volume agreements, are back on the table, as well as newer types of contracts which entail, most prominently, the introduction of confidential price discounts using a dual pricing system, and granting pricing and funding approval based on performance-based risk sharing schemes. The dual pricing system consists of the MoH (Spanish Ministry of Health) approving a "notified" price, the visible list price, and a "funded" price, a negotiated confidential discount which is applied to the drug when dispensed in the NHS. On the one hand, this system allows manufacturers to maintain their international price corridors, and on the other allows the MoH to sustain the NHS. Currently, the system is mainly administered for high-cost drugs dispensed in the hospital setting due to greater cost-saving needs, as well as more straightforward implementation in this setting.
"Differing political and spending priorities have led to unequal access to certain drugs across regions"
In the second instance, performance-based risk sharing schemes, the details of two such schemes have been publically disclosed. The first scheme concerns fampridine, a multiple sclerosis therapy. The second scheme is for the first cell therapy approved by the EMA (European Medicines Agency), indicated for repairing knee cartilage. On the one hand, these risk-sharing schemes help alleviate payers' concerns around a drug's effectiveness, given the generally limited clinical experience outside of a controlled clinical trial setting, whilst, at the same time, they serve to ease access and decrease time to market.
Evolving role of the Autonomous Communities: Following the philosophy of protecting equal access to drugs and in an attempt to reduce duplication in the system, the MoH has begun to involve the regional health authorities in national initiatives. Since April 2012, the Autonomous Communities are voting members in the national Pricing Committee, and play a central role in the new Therapeutic Positioning Coordinating Group (discussed below), set up last June. The MoH also announced the organization of a centralized national tender platform to purchase certain pharmaceuticals. This initiative is just getting off the ground with tenders in place for hemophilia drugs, erythropoietins and selected immunosuppressant therapies, including anti-TNFs.
Positioning in the treatment algorithm: The purpose of the aforementioned new Therapeutic Positioning Coordinating Group is to develop product evaluations (Therapeutic Positioning Reports, called Informes de Posicionamiento Terapéutico, IPTs) that clearly define the positioning and target population for new drugs, as well as drugs with new indications seeking funding by the NHS. These reports will inform pricing decisions made by the Pricing Committee. The Group is formed of representatives from the Spanish Medicine's Agency, the MoH and the Autonomous Communities (11 out of 17 currently participate in the initiative). In addition, medical societies, patient associations and manufacturers will be able to comment on the reports before they are sent to the Pricing Committee1. Currently, over 30 reports are in development for products which recently received EMA's CHMP positive opinion. Given that all levels are involved, the IPTs are expected to be a single reference, therefore avoiding additional evaluations at the regional or hospital level. However, as the process is still very new, regional health authorities believe there will be nuances.
"Even off-patent products have experienced changes in the pricing game rules."
Reports define the appropriate patient profile candidate for treatment within the NHS. Positioning is based on patient inclusion criteria from the pivotal clinical trials and usually defines usage criteria with greater detail than the approved label (such as defining the minimum required life expectancy for oncology patients, or risk factors for SPAF with new oral anticoagulants).
Greater price pressure for generics: Even off-patent products have experienced changes in the pricing game rules. This market is regulated by a fixed reference price system, analogous to other EU countries, such as Italy or Germany. However, the system has become more complex and rigorous, with the introduction of new concepts such as "precio menor" (lower price) which introduces monthly price revisions and creates increased price competition and further lowers prices. The MoH intends to introduce more changes to the price reference system in the coming months, for instance with the potential inclusion of drugs which have been on the market for more than 10 years without generic competition. To reel in drug spending further, the MoH passed legislation opening the way for a new "selected price" system. This system is yet to be developed, however its aim is to select one generic product from each group (products with the same active substance and mode of administration) for purchasing within the NHS for a stipulated time period.
Besides the measures already described, various laws have been passed which can open the door to additional initiatives in the future. One example is a Cost-Effectiveness Committee announced in 20112. This committee is intended to develop cost-effectiveness evaluations that will inform pricing and funding decisions taken by the Pricing Committee.
In part two of this article the impact of these changes on the commercialization of pharmaceutical products will be discussed.
References
1. Ministry of Health. "Propuesta de colaboración para la elaboración de los informes de posicionamiento terapéutico de los medicamentos". Comisión Permanente de Farmacia del SNS. May 21, 2013
2. Royal Decree 9/2011. Boletín Oficial del Estado (www.boe.es). August 20, 2011
About the authors:
Beatriz Casado is a Director in the Madrid Office of Simon-Kucher & Partner's Life Science's division. She is specialized in the development of international pricing and marketing strategies for pharmaceutical products.
Beatriz.Casado@simon-kucher.com
Kathrine Kartach is a Director in the Madrid Office of Simon-Kucher & Partner's Life Science's division. Kathrine is specialized in P&R and market access strategies for pharmaceutical companies in Spain and the international arena.
Kathrine.Kartach@simon-kucher.com
Closing thought: How can we achieve equality for all citizens in Spain?
