AffordabilityIssuesintheUSandGlobally

Cinderella&Inspire2LiveProjectAffordableDrugs

April15,2016

LouGarrison,PhDProfessorandInterimDirector,

Pharmaceu6calOutcomesResearch&PolicyProgramDepartmentofPharmacy

AdjunctProfessor,DepartmentsofGlobalHealthandHealthServices

1

ObjecBves

•  Providesomebackgroundonstandardeconomicsofpharmaceu6caldevelopment

•  Providesomebackgroundonthedisciplineof“pharmacoeconomics”anditsroleinvalueassessmentofmedicines

•  Discusssomeissuesraisedby“affordability”

2

Whatisa“medicine”fromaneconomicperspecBve?•  Oneinputina“healthproduc6onfunc6on”:

–  H=H(physicianvisits,hospitalcare,medicines,own6me,OTHER)–  “OTHER”—thesocialdeterminantsofpopula6onhealth

•  Whataboutan“innova6ve”drug?–  Representsnewinforma6onorknowledge.

•  Whatisuniqueaboutnewinforma6onorknowledgefromaneconomicperspec6ve?–  It’saNOTaprivategood:it’sa“publicgood.”–  It’sNOTONLYapublicgood,it’saGLOBALpublicgood.

•  Freemarketswilltendtoundersupplypublicgoods(belowwhatis

sociallyop6mal).–  Therefore,intervene,buthow?–  Patents(intellectualproperty)andsubsidies.

Patents(IntellectualProperty)forMedicines

•  Statutorypatentlifeis20years.

•  Formedicines:–  Takes8-12yearstolaunchproduct.–  Implies8-12yearsremaininga]erapprovalformarke6ng

•  Providesstrong(butlimited)protec6onagainstcompe66on–  Genericcopiesareblockedduringpatentlife–  Butfollow-oncompe66oniscommon

7

DrugDevelopment:Complex,Risky,andCostly

•  Onlyabout20-25percentofdrugstestedinhumansmakeittothemarket

•  Mostrecentes6mateofcostper

newapprovedmedicineises6matedat$1.5billion(OHE,2012)

5,000–10,000 Screened

250 Enter Preclinical

Testing

5 Enter

Clinical Testing

1

Compound Success Rates by Stage

16

14

12

10

8

6

4

2

0

Phase II 100–300 Patient Volunteers Used to Look for Efficacy and Side Effects Phase III

1,000–5,000 Patient Volunteers Used to Monitor Adverse

Reactions to Long-Term Use

FDA Review Approval Additional Post-

Marketing Testing

Phase I 20–80 Healthy Volunteers Used to

Determine Safety and Dosage

Preclinical Testing Laboratory and Animal Testing

Discovery (2–10 Years)

Years

NewProductDiscoveryandDevelopment–ARiskyandExpensiveProposiBon

8 Source: Tufts Center for the Study of Drug Development

Approved by the FDA

Source: H. Grabowski, J. Vernon, and J. DiMasi (2002)

NewTu\sEsBmate--$2.6Billion

10

“...thecosttodevelopandwinmarke<ngapprovalforanewdrughasincreasedby145%betweenthetwostudyperiods,oratacompoundannualgrowthrateof8.5%.”

Source: Berndt et al., 2015

Pharmacoeconomics:Whatisit?

AbranchofhealtheconomicsprimarilyconcernedwithidenBfying,measuringandcomparingthecostsandoutcomesofdrugtherapiestothoseofastandardinterven6on

–  Goesbeyondtheefficacyandsafetyinforma6onthatiscollectedin

pivotalPhaseIIItrials.–  Assessesthe“valueformoney”(cost-effec6veness)ofprojected

outcomesoftherapy.–  Assessesoverallbudgetimpactonhealthsystem.–  Focuseson(real-world)effecBvenessratherthanefficacy.

12

Cost-EffecBvenessAnalysis(CEA)andtheIncrementalCERaBo(ICER)

•  CEAinhealthcareisaboutcomparingtwoalterna6ves(1&2):

TheICER=Cost2-Cost1Outcome2-Outcome1

•  Costsaremeasuredinmonetaryunits•  Outcomescanbemeasuredinavarietyofwaysbutmustbeinthe

sameunitsforeachalterna6ve.

13

Cost per QALY (quality-adjusted life year) is the preferred metric.

StandardOutcomesMeasures

•  Cost-effec6venessRa6o(ICER)—CostperQALYgained•  BudgetImpactAnalysis(BIA)—Changeinspendingper

member•  Pa6ent-ReportedOutcomes(PROs)•  Affordability—Tobedefined

14

www.ispor.org

15

Our Mission: To promote health economics and outcomes research excellence to improve decision making for health globally.

ISPOR’s Global Constituencies

•  Patient Roundtables

• HTA Roundtables

• Health Science Policy Council - Good Practices for Outcomes Research Reports

• Student Faculty Advisory Council

• HTA Council - HTA Roundtables - P&T Roundtables

•  Institutional Council - Manufacturers - CRO/Life Science

Researchers &

Academicians

Industry

Regulators &

Assessors

Decision Makers

Patients

ISPOR TFs and SIGs include all stakeholders

1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

Individual Members Regional Chapter Members

ISPOR Global Membership

~20,000

Nearly 20,000 ISPOR Members from 114 countries

ISPOR Chapters Worldwide

84 Regional Chapters and 88 Student Chapters

Tu\sCEARegistry(hgps://research.tu]s-nemc.org/cear4/)

20

League Table:

21

SelectedTop-Selling

PharmaceuBcalandBiologic

Productsin2004and2013

Source: Garrison, 2014; Do not cite or quote.

23Scott Morton-Kyle 2012

OECDSpendingonPharmaceuBcalsPerCapita:

28

Thanks!

lgarrisn@uw.edu