Winds of change for pricing and funding in Spain (Part II)
In the concluding part of this two-part article exploring the drug pricing environment in Spain, Beatriz Casado and Kathrine Kartach of Simon-Kucher & Partners highlight the impact of changes in pricing and funding for pharmaceuticals in Spain on the commercialization of pharmaceutical products.
(Continued from "Winds of change for pricing and funding in Spain (Part I)")
In part one of this article the authors examined why have these changes occurred and which changes have materialized. In summary, the main drivers of change identified were the clashing of severe budgetary pressures with the large number of high-cost innovative therapies entering the market. In addition, differences in access to drugs across the regions in Spain was discussed to be leading to greater inequality in drug access. As a result, the MoH (Spanish Ministry of Health) has responded by undertaking several measures in order to guarantee the sustainability of the Spanish NHS (National Health Service). The key measures identified by the authors were the introduction of new factors (such as contribution to the GDP), as well as the involvement of new stakeholders (representatives from the Autonomous Communities), in the pricing and funding decision, the more prominent use of contracting, financial and performance-based, to gain market access and therapeutic positioning for new drugs in order to homogenize drug access across the country.
In this part two, the authors will discuss the impact of these changes on pricing and funding for pharmaceuticals in Spain.
What is the impact of these changes on the commercialization of pharmaceutical products?
A good understanding of the changing environment is key, since this will help to adapt pricing and market access strategies accordingly, in order to support successful product launches. Several recommendations follow:
Translate the clinical benefits of the product into economic arguments (e.g., cost savings): Spanish payers have shown reluctance to increase pharmaceutical expenditure and will consider the economic impact of funding a new product to an even greater extent than in the past. Economic messages should be clearly communicated and reflected in a products' value dossier.
Be prepared to offer contracts: National payers' receptivity to contracting provides a new opportunity to define creative agreements that facilitate access. Although contracts should be used as fallback strategies, companies need to prepare them prior to entering the negotiating room. It will be important to define a number of factors in advance, such as the most appropriate contract type based on the target indication, and the floor net price for negotiating a contract. Complexity and implementation hurdles also need to be evaluated. For example, implementation of risk-sharing schemes requires manufacturer's support to monitor outcomes and gather data at the hospital level. Chosen variables need to be simple and easy to measure.
Anticipate the positioning of the product in the treatment algorithm: As outlined earlier, with the implementation of IPTs (Therapeutic Positioning Reports), product usage is expected to be limited further than the approved label. Therefore, when preparing payer negotiations, the positioning for the product should be anticipated in order to align this outcome with the price request. Product positioning from the payer perspective is also a factor to consider even at an earlier stage in the product's development, given that design decisions made early in clinical programs can have important consequences for funding and access decisions at the time of launch. Although pharma companies are already aware of this, in some cases, alignment between market access strategies and clinical plans could be further improved.
Engage with key stakeholders at the different levels: Despite efforts from the MoH to provide uniform access, the market will remain fragmented with 17 regional health governments. Engaging with regional payers will be necessary, especially considering their increasing role in national pricing decisions. Given that they will also be responsible for defining therapeutic positioning and recommended use of drugs in the IPT process, they can help manufacturers anticipate the outcome of these evaluations. Therefore, market access and public affairs will be key strategic departments within pharmaceutical companies when commercializing new drugs.
Collaborate with new stakeholders for a new product launch: The new IPT process opens the door to interactions with new stakeholders. Medical societies and patient associations will have the opportunity to comment on the IPTs before submission to the Pricing Committee. These two stakeholders can be advocates when communicating the value of innovative treatments.
Maintain internal payer and stakeholder maps up-to-date: As new committees are being created and new stakeholders are becoming involved in drug evaluations, it will be important to monitor who is who.
Continue to monitor the Spanish market: Some initiatives already disclosed by the government, but yet to be developed, have been mentioned in this article (e.g. a cost-effectiveness committee, the selected price system). In addition, a new law regulating pricing and funding of pharmaceuticals in the NHS is expected by early 2015, which could lead to more new challenges for pharma companies.
In summary, pricing, funding and market access for pharmaceutical products in Spain has undergone multiple changes over the last couple of years and has led to a fundamental change in the mindset of the payers. As a consequence of the changes and mindset shift, the environment has become tougher and more complex, especially for high-cost, innovative therapies entering the market. Given it is unexpected that payers return to their old ways, in order for pharma companies to succeed, it is necessary for them to understand and adapt to the new environment. The purpose of this article is to provide insight into the changing pricing and funding environment in Spain, as well as provide potential actionable solutions to pharma companies.
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 pharma adapt to the evolving pricing environment in Spain?
