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Financing, pricing & reimbursement of medicines: opportunities & challenges for pharma companies in the Swedish single payor healthcare model
US Healthcare RoundtableTPG-IHA Sweden Executive Trade/Study Mission
Stockholm, Sweden - 15 October 2019
Anders Blanck, Director-General LIF Sweden
Anders BlanckDirector-General of LIF – Swedish Association of the Pharmaceutical Industry
• Director-General for LIF since 2011.
• Deputy Director-General for LIF 2005–2011.
• Director-General for Healthcare at Sw Ministry of Health & Social Affairs 2000–2004
• Different positions at Sw Ministry of Health & Social Affairs 1993–2000
• Member of Sw Government Life Science Advisory Board
• Member of IFPMA Council & Heads of Association Committee
• Member of EFPIA Board & Co-Chair of EFPIA Heads of Association Committee
• Chair of the Sw medicines e-Verification organization (e-VIS)
• Member of Sw Research Council Committee on Clinical Trials
• Member of the Board of semi-governmental Swecare Foundation
• Previously on the Boards of Sw Anti-Corruption Institute, Sw Health Policy Forum, Karolinska Institute, Karolinska Innovation Holding & Sw Institute for Health Economics
Agenda – Financing, Pricing & Reimbursement of medicines
• Brief intro to LIF Sweden
• Some basic facts on Sweden – setting the scene
• Swedish pharmaceutical market
• ‘Value-based’ HTA model
– 2002 Reform
• Pharmaceutical financing
• On-going developments of P&R model
90 members - the research-based pharmaceutical industry in Sweden
BGP Products AB
LIF Board
Malin Parkler (chair)CEO Pfizer
Amy van BuskirkGeneral ManagerRoche
Anna-Kaija GrönbladCEOSanofi
Björn BerglundCEOSwedish Orphan Biovitrum
Iddo LeshemCEOBristol-Myers Squibb
Judith LoveCEONovartis
Linn Mandahl (vice chair)CEOAbbVie
Niclas KarlssonCEOGlaxoSmithKline
Jan G. SmithFounder and CEOAbigo Medical
Adjunct Representative IML
Niels Abel BondeCEONovo Nordisk Scandinavia
Jacob TellgrenCEOMerck Sharp & Dohme
Michelle WernerCountry President, Nordics/Baltics Astra Zeneca
Tashia LentzCEOAstellas Pharma
Tomer FefferCEOBayer
Johan StrömCEOBiogen Sweden
Sweden - some basic facts• Large but sparsely populated country:
– 450 000 km² (10% of EU area) with 10.2 Mn inhabitants (2% of EU population)
• Universal tax-based healthcare & care governed at 3 independent levels:– National Government only influences healthcare & care by laws, Government agencies & complementary
financing– 21 Regions with taxation right have full responsibility for healthcare services & healthcare technologies – 290 Municipalities with taxation right have full responsibility for care & welfare technology (elderly,
disabled etcetera)
• Private providers: – 36 percent of all patient visits take place at private healthcare providers – 24 percent of hour worked in elderly care in the home are provided by private providers– 68 percent of persons with personal assistance (for disabled persons) have chosen a private provider
• Over 650.000 individuals have private healthcare insurance (nearly 14% of all employees)
Sweden = high rankings in global innovation scoreboards
2019-10-16
#1 “EU innovation leader” 2019 , followed by Finland, Denmark and the Netherlands.
#2 “The Global Innovation Index (GII) 2019” Creating Healthy Lives The Future of Medical Innovation
#7 “Bloomberg Innovation Index: 10 most Innovative Economies in the World”
Sweden = High healthcare qualityEFPIA Tweet on World Cancer Day (2019.02.04)
Conflict = balancing (national) interests
Innovation Agenda
Investments in R&D
Pharma production & Exports
Company RoI
Regional payers
Cost control
Minimizing risk
Responsibility ’only’ for HC
2019-10-16
Swedish pharmaceutical market
• Swedish Healthcare Act– The objective of the healthcare system is good health & healthcare on equal
terms for the entire population
– Healthcare should be given with respect for the equal value of all people & for the dignity of the individual. Those with the greatest healthcare needs should be given the highest priority
• Pharmaceutical legislation is a social insurance legislation to give all residents equal access to the treatments they need– Pharmaceutical market = ’mature market’ with strong cost (effectiveness) focus
• There are hardly any private insurances covering pharmaceutical expenses
6.6 million Swedes filled prescriptions in 2017
0
50,000
100,000
150,000
200,000
250,000
300,000
Nu
mb
er
of
pe
op
le
Women Men
Source: Pharmaceutical Register, National Board of Health and Welfare 2017
Pharmaceuticals = a limited share of society’s total healthcare costs
Total healthcare expenditure SEK 402 billion
Curative and rehabilitating health care SEK 252 billion
Pharmaceuticals and other goods SEK 59 billion
GDPSEK 4,405 billion
Source: Statistics Sweden Health Accounts 2016
Pharmaceuticals = a limited portion of total healthcare costs
0 50 100 150 200 250 300
Inpatient
Outpatient
Total
SEK billion
Pharmaceuticals Curative and rehabilitating healthcare
7.9%
Source: Statistics Sweden Health Accounts 2016 and EHM Concise
21.4%
16.8%
Cost trend per capita - past 10 years
12,547
3,287 3,762
16,353
4,478 4,260
0
2,000
4,000
6,000
8,000
10,000
12,000
14,000
16,000
18,000
Specialist care Primary care Pharmaceuticals
SEK
2008 2017Source: SALAR and EHM Concise
+30%
+36% +13%
Sweden has high per capita healthcare costsHealthcare expenditure and pharmaceutical expenditure in outpatient care
0
1,000
2,000
3,000
4,000
5,000
6,000
7,000
8,000
9,000
Latv
ia
Po
lan
d
Lith
uan
ia
Hu
nga
ry
Esto
nia
Slo
vaki
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ece
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Spai
n
Ital
y
Fin
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UK
Net
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lan
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Icel
and
Bel
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Fran
ce
Den
mar
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Au
stri
a
Irel
and
Swe
den
Ger
man
y
No
rway
Luxe
mb
ou
rg
Swit
zerl
and
USD
per
cap
ita
Healthcare expenditure per capita Pharmaceutical spending per capitaSource: OECD 2017
Sweden invests a large percentage of GDP in healthcareHealthcare expenditure (range) and pharmaceutical expenditure in outpatient care
0
5
10
15
20
25
30
35
Luxe
mb
ou
rg
Lith
uan
ia
Latv
ia
Esto
nia
Po
lan
d
Irel
and
Slo
vaki
a
Hu
nga
ry
Slo
ven
ia
Gre
ece
Icel
and
Spai
n
Ital
y
Po
rtu
gal
Fin
lan
d
UK
Bel
giu
m
Net
her
lan
ds
Den
mar
k
Au
stri
a
No
rway
Swe
den
Ger
man
y
Fran
ce
Swit
zerl
and
Shar
e %
Health expenditure as share of GDP Pharmaceuticals as share of health spending
Sweden is one of four countries where healthcare expenditure as a
percentage of GDP exceeds pharmaceutical expenditure as a
percentage of healthcare expenditure.
Source: OECD 2017
Sweden has average per capita pharmaceutical expenditure in outpatient careHealthcare and pharmaceutical expenditure, respectively, in outpatient care (range)
01,0002,0003,0004,0005,0006,0007,0008,0009,000
Den
mar
k
Po
lan
d
Esto
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Net
her
lan
ds
Po
rtu
gal
Latv
ia UK
No
rway
Icel
and
Slo
ven
ia
Fin
lan
d
Swed
en
Lith
uan
ia
Hu
nga
ry
Slo
vaki
a
Gre
ece
Luxe
mb
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Spai
n
Ital
y
Au
stri
a
Fran
ce
Irel
and
Bel
giu
m
Ger
man
y
Swit
zerl
and
USD
per
cap
ita
Healthcare expenditure per capita Pharmaceutical spending per capitaSource: OECD 2017
The percentage of total pharmaceutical expenditure in
outpatient care varies by country
A small percentage of Swedish healthcare expenditure goes to pharmaceuticalsHealthcare and pharmaceutical expenditure, respectively, in outpatient care (range)
0
5
10
15
20
25
30
35
Den
mar
k
Net
her
lan
ds
No
rway
Luxe
mb
ou
rg
Swed
en UK
Icel
and
Au
stri
a
Fin
lan
d
Irel
and
Swit
zerl
and
Fran
ce
Ger
man
y
Bel
giu
m
Po
rtu
gal
Ital
y
Slo
ven
ia
Esto
nia
Spai
n
Po
lan
d
Slo
vaki
a
Gre
ece
Lith
uan
ia
Latv
ia
Hu
nga
ry
Shar
e %
Health expenditure as share of GDP Pharmaceuticals as share of health spending
The percentage of total pharmaceutical
expenditure in outpatient care varies by country
Source: OECD 2017
Three distinct markets for pharmaceuticals
Prescription medicines
administered by patient
Medicines administered by healthcare staff
Over the counter (OTC) medicines
administered by the patient
72% 19% 9%
Payers & price regulation for pharmaceuticals
Prescription medicines
administered by patient
Patient & Regions (via Gov’t subsidy)
Act on pharmaceutical
benefits, etc.
Medicines administered by healthcare staff
Regions
Public Procurement Act
(LOU)
Over the counter (OTC) medicines
administered by the patient
Patient
Free pricing both for pharma
companies & pharmacies
Patients protected from high costs
• First law 1955
• Residents in Sweden should be able to buy the medicines they are prescribed, regardless of financial means
Unsustainable cost increases in the 1990:s-> HTA reform in 2002 for reimbursed medicines
HTA reform 2002 - Pharmaceutical benefits Act
• Prior to 2002 essentially all prescribed medications = reimbursed
• Since 2002, only medicines approved for reimbursement based on the Pharmaceutical Benefits Act & the ‘ethical platform’ are subsidized
– Reimbursement decisions should be based on three ethical principles: • principle of human dignity
• principle of need and solidarity
• cost-effectiveness principle
• Costs under this Act are reimbursed by the patient’s residential Region
Pharmaceutical benefits Act (2002:160)
• Companies apply to have medicines covered by the pharmaceutical benefits scheme and may also request that a medicine no longer be covered by the pharmaceutical benefit scheme
• The company’s documentation must meet the criteria under section 15:
– the costs of using the product, subject to the provisions of the Health and Medical Services Act must be reasonable from medical, humanitarian and socio-economic considerations, and
– that there are no other available medications or treatment methods which after overall consideration of the intended effects and harmful effects can be judged as significantly more suitable for the purpose.
• The company and the Regions are provided with an opportunity to confer before the Swedish Dental and Pharmaceutical Benefits Agency (TLV) reaches a decision
• TLV may at its own discretion decide that a medicine shall be included in the benefits scheme, that a medicine shall be included only for a particular use and/or combine the decision with special conditions.
• Price changes may be made at the initiative of TLV, at the request of the marketing party, or by a Region. The party requesting the change has the right to confer with the agency.
Pricing during the life cycle of a medicine after 2002 HTA Reform - Prescription medicines
Value-Based Pricing
Product-based
Health economic data
Limitations & special conditions
TLV Committee takes decision
Reassessment of reimbursement status
Initiated by TLV
Sometimes based on price change application from Region
Focus on cost savings
Generic substitution
‘Product of the Month’
65% rule
15-year rule
15 year after the HTA Reform - Sweden is not extreme in any aspect..…except for very low prices on generics
Competition after patent expiry gives ‘headroom for innovation’
Generic competition
~ SEK 8 billion
~ 60% of volume
~ 20% of costs
Patented medicines
15 top selling products
~ SEK 6.5 billion
Cost does not reflect useBecause of Value Based Pricing & ‘Product of the Month’
0%
20%
40%
60%
80%
100%
Use (DDD) Cost
Other (usually older medicines of natural origin)
Generics/Biosimilars
Parallel import
Original
Source: IQVIA InformX 2017
Pre & post LoE – Sw prices in international context
Funding of pharmaceuticals• Specific Gov’t subsidy for Pharmaceutical Benefits Scheme (72% of market
value)– Based on forecast from the National Board of Health & Welfare
– Agreement between the Sw Government & SALAR (the Regions’ association)
– Allocation to the Regions based on ‘needs’ model
– Solidarity financing - HIV, hemophilia & Gaucher’s disease
– Regions have different models for how the Gov’t subsidy is allocated to operations• Often based on own forecast
• Mix of centralized & decentralized budget
• Certain Regions have special funds for new medicines in a central budget associated with local adoption, e.g. Region Västra Götaland
• Regional tax for in-patient medicines (19% of market value)– Usually budgeted together with other in-patient care expenses
– Enumeration by ‘a few percent’ yearly
Medicines are paid for by patients, a separate Gov’t subsidy for the Pharmaceutical Benefits & Regional tax
Patient – self medication 9%Patient/Region (Gov’t Subsidy) – no reimbursement9%
Patient –Co-payment in benefits13%
Region (Gov’t subsidy) – Benefits in tiers 14%
Region (Gov’t Subsidy) – Patient ‘free pass’ 36%
Region (Regional tax) In-patient care19%
Source: SoS, Pharmaceutical Register, 2016 and EHM Concise
Sw pharmaceutical market – on-going developments
• HTA for both prescription & hospital medicines – Increasingly complex system
• Increased collaboration between regions to secure equal access to new medicines
• Increased use of ‘confidential’ agreements – mainly rebates
Nationwide managed introduction of medicines
Source: www.janusinfo.se
HORIZON SCANNING
SELECT
ION
DECISION ON
NATIONAL
COOPERATIO
N
HEALTH
ECONOMICS
VALUATIONAPPROVAL NEGOTIATION/P
ROCUREMENT
RECOMMENDATION
ADOPTION
FOLLOW-UP
All county
councils and
regions are
involved
throughout the
entire process
Pre 2015
Dec. 18, 2018
Hospital medicines
Prescription medicines
Horizon scanning
(Four county
group)
Decision on level
of collaboration
(New Therapies
(NT) Council)
Adoption/follow
-up protocol
(Four county
group)
Preliminary
study
(TLV)
Health
economics
evaluation
(TLV
administration)
Negotiation/procu
rement
(Negotiation
delegation/company
)
New Therapies
(NT)
recommendation
(New Therapies
(NT) Council)
Agreement
(Company and negotiation
delegation/county councils)
Adoption/Use
(in each county
council)
Follow-up
(Four county
group/
TLV/companies)
Follow-up
(Four county
group/
TLV/companies)
Adoption/Use
(in each county
council)
New Therapies
(NT)
recommendation
(New Therapies
(NT) Council)
Decision
(TLV committee)
Health
economics
evaluation
(TLV
administration)
Subsidy
application
(Company)
Tripartite discussions, managed
entry agreements
(negotiation delegation/proxy group
representing county councils,
companies and TLV)
Today
Dec. 18, 2018
Hospital medicines
Prescription medicines
Horizon scanning
(Four county
group)
Decision on level
of collaboration
(New Therapies
(NT) Council)
Adoption/follow
-up protocol
(Four county
group)
Preliminary
study
(TLV)
Health
economics
evaluation
(TLV
administration)
Negotiation/procu
rement
(Negotiation
delegation/company
New Therapies
(NT)
recommendation
(New Therapies
(NT) Council)
Agreement
(Company and negotiation
delegation/county councils)
Adoption/Use
(in each county
council)
Follow-up
(Four county
group/
TLV/companies)
Follow-up
(Four county
group/
TLV/companies)
Adoption/Use
(in each county
council)
New Therapies
(NT)
recommendation
(New Therapies
(NT) Council)
Decision
(TLV committee)
Health
economics
evaluation
(TLV
administration)
Subsidy
application
(Company)
Tripartite discussions, managed
entry agreements
(negotiation delegation/proxy group
representing county councils,
companies and TLV)
Pricing during the life cycle of a medicine after2015 - both prescription & hospital products
Value-based pricing
Product based
Health economic assessment
- also for hospital products
Restrictions & special conditions
Three party negotiations
TLV Board makes decisions
Regions’ NT Council make recommendations
Reassessments
Initiated by TLV
More often based on applications for price change from Regions
Focus on saving potential
LoE
‘Product of the month’
65% rule
15-year rule
Biosimilars
‘Three party negotiations’ Motivated by risk sharing - main effect from increased competition
IntroductionCompetition
On PatentLoE
Competition
LoE
2019-10-16
A challenging transformation for industry … resulting in cost control
2019-10-16
+500 Msek
Hospital
THANK YOU!
2019-10-16
Back-up slides
2019-10-16
Increasing demographic pressure on public finances
Källa: SKL http://www.natverken.se/media/8008/roger-molin-effektiviseringsutmaningen-sammanfattning-nhd-170420.pdf
Sw Public healthcare debate & trends
• New public management & value-based healthcare
• Equal care & patient access
• Demographic & structural challenges – Ongoing reform to shift resources: hospital care > primary care
– Reform to centralise highly specialised healthcare
– National collaboration among regions for ‘knowledge management’
• eHealth vision 2025: ‘World leading in using opportunities offered by digitalisation and eHealth’
• Life Science in focus
Copyright © 2017 IQVIA. All rights reserved.
3 April 2019
EFPIA Patient W.A.I.T.
Indicator 2018 survey
44
The rate of availability, measured by the number of medicines available to patients in European countries as
of 2018: for most countries this is the point at which the product gains access to the reimbursement list*.
Rate of Availability
0 3 7 10 7 12 12 11 16 22 17 21 26 23 27 22 25 26 32 31 31 32 32 34 36 38 38 39 38 40 45
1 3 2 5 2 9 8 612 14 15
16 19 16 17 21 2221 19 25 25 24 30 26 29 32 34 32 35
38
01 4 5 5
2 5 6
9 15 12 9 10 12 23 18 20 17 23 19 18 2725 32 29 31 29 34 31
38
0
20
40
60
80
100
120
140
Rat
e o
f A
vaila
bili
ty
2015 2016 2017 Data N/A EMA approved
Data N/A- data is not provided by associations (companies have not sent data or are not members of the association)
*See next slide for country specific definitions
2019-10-16
46
The rate of availability, measured by the number of medicines available to patients in European countries as
of 2018, compared to the rate of availability in the 2017 W.A.I.T. indicator study
Rate of Availability (%)
Data N/A- data is not provided by associations (companies have not sent data or are not members of the association)
Note: there are differences in country scope and methodology for product selection between the 2017 and 2018 studies (26 countries included in 2017 study; 30
countries in 2018 study)
14% 20% 21% 23% 28%31% 37% 39% 40% 41% 47% 49% 51% 53% 53% 55% 59% 68% 69% 71% 73% 77% 79% 82% 85%
33%
86% 80% 79% 77% 72%
3%
60% 61%34%
59% 53% 51% 49% 47%28% 34% 38% 32% 31% 29% 27% 23% 21% 18% 15%
0%
20%
40%
60%
80%
100%
Rat
e o
f A
vaila
bili
ty
20
17
stu
dy
(20
14
-20
16
)
3% 9% 13% 14% 16%19% 20% 23%
36% 38% 40% 42% 43% 45% 51% 53% 56% 58% 60% 62% 62% 69% 74% 78% 79% 83% 84% 86% 88%
24%36% 23%
87%
11%
84% 81% 80% 77%64% 62% 60% 58% 57% 55% 49% 47% 44% 41% 40% 38% 38% 30% 26% 22% 21% 17% 16% 14% 12%
0%
20%
40%
60%
80%
100%
Rat
e o
f A
vaila
bili
ty
Available Not Available
20
18
stu
dy
(20
15
-20
17
)
47
The average time between marketing authorisation and patient access - the number of days elapsing
from the date of EU marketing authorisation (or effective marketing authorisation in non-EEA countries) to the
day of completion of post-marketing authorisation administrative processes
Length of market access delays (average)
925
726
634 618 612 603547 539
498 492 486449 445 428 426 417 402 401 395 385
333292 291 288 269
220 209171 146 119
0
100
200
300
400
500
600
700
800
900
1000
Ave
rage
de
lay
(day
s)
In most countries patient access equates to granting of access to the reimbursement list, except for hospital products in DK, FI, NO, SE where some products are not covered by the general
reimbursement scheme and so this shorter delay is artificially declining the median and average.
• In France, some innovative products without competitors can be made available prior to market authorisation under the system of Temporary Authorisations. As these are not taken into account in the analysis, the average for France is higher than in reality.
• Average of 29 European countries in the analysis (excludes Macedonia)
48
The average time between marketing authorisation and patient access - compared to the average delay
in the 2017 W.A.I.T. indicator study
Length of market access delays (average)
Note: there are differences in methodology for product selection between the 2017 and 2018 studies; chart only shows countries overlapping both studies
979
563
637
356
632
436
535
419
500467
408 391
479 494
383411
374
291250
329281
228
111 123155
106
925
726
634 618 612 603547 539
498 492 486449 445
417 402 395 385333
291 288 269220 209
171146
119
0
200
400
600
800
1000
1200
Ave
rage
de
lay
(day
s)
2017 study: 2014-2016 2018 study: 2015-2017
49
The average time between marketing authorisation and patient access - the number of days elapsing
from the date of EU marketing authorisation (or effective marketing authorisation in non-EEA countries) to the
day of completion of post-marketing authorisation administrative processes
Length of market access delays (median)
969
677
585 577 547 534493 492 457
418 411 407 398 382 369 352 351 344 340 320 303 272 259196 167 138 128
75 67 47
0
200
400
600
800
1000
1200
Me
dia
n d
ela
y (d
ays)
In most countries patient access equates to granting of access to the reimbursement list, except for hospital products in DK, FI, NO, SE where some products are not covered by the general reimbursement scheme and so this shorter delay is artificially declining the median and average.
• In France, some innovative products without competitors can be made available prior to market authorisation under the system of Temporary Authorisations. As these are not taken into account in the analysis, the average for France is higher than in reality.
• Average of 29 European countries in the analysis (excludes Macedonia)
50
The average time between marketing authorisation and patient access - compared to the average delay
in the 2017 W.A.I.T. indicator study
Length of market access delays (median)
1,021
525
638601
316
534
374 383
460429
387
454
282
419378
343 347
235288
216
0
163
44 56 73 51
969
677
585 577547 534
493 492457
418 411 407382
351 344 340 320272 259
196167
138 12875 67 47
0
200
400
600
800
1000
1200
Ave
rage
de
lay
(day
s)
2017 study (2014-2016) 2018 study (2015-2017)
Note: there are differences in methodology for product selection between the 2017 and 2018 studies; chart only shows countries overlapping both studies
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