pricing and reimbursement policies looking forward in europe · governments in the five major eu...

Pricing and Reimbursement Policies Looking Forward in Europe

Prof. Mondher Toumi, MD, PhD, MSc

Creativ-Ceutical, Chair of Market Access, Aix-Marseille University

Table of contents

1. Current P&R Frameworks in EU

2. Market Access Trends

3. Innovative Payment Models for Innovation

Current P&R Frameworks in EU

4

Decision Making Bodies Market Access: Where does it come from?

Marketing

authorization

European Medicines

Agency (EMA)/European

Commission

National Agency for the

Safety of Medicine and

Health Products (ANSM)

European

Level

National

Level

Health Technology

Assessment French National Authority

for Health (HAS)

Transparency Committee

(CT)

Economic and Public

Health Assessment

Committee (CEESP)

Op

inio

n

Final Decision

Decis

ion

Pricing

Reimbursement Rate National Union of Health

Insurance Funds

(UNCAM)

Economic Committee for

Healthcare Products

(CEPS)

Ministry of Health (MoH)

ANSM, Agence Nationale de Sécurité du Médicament et des Produits de Santé; HAS, Haute Autorité de Santé ; CEESP, Commission Evaluation

Economique et de Santé Publique ; CT, Commission de la Transparence; CEPS, Comité Economique des Produits de Santé ; UNCAM, Union Nationale des

Caisses d’Assurance Maladie

5

Reimbursement Rate Drivers

Actual benefit (AB)

Service Médical Rendu (SMR)

Driver of reimbursement rate

• Disease severity

• Efficacy /safety

• Position in the therapeutic strategy

• Impact on public health

• Type of treatment (preventive, curative or symptomatic)

6

Price Negotiation Drivers

Improvement in actual benefit (IAB)

Amélioration du Service Médical Rendu (ASMR)

Driver of price negotiation

• Assessment by indication vs. comparators or therapeutic strategy

• Benefit mainly driven by the effect size of the incremental clinical efficacy benefit

• Safety and QoL considered if substantial burden

7

Price-Volume Agreement Drivers

Target population

Driver of price-volume agreements

• Quantitative estimation of prevalence/incidence in France of the population who might benefit from the product in claimed indications

8

Medical Assessment by CT AB and IAB

Improvement in actual benefit

(IAB)

Amélioration du Service Médical Rendu (ASMR)

5 levels of AB 5 levels of reimbursement

Major 100%* or 65%

Important 65%

Moderate 30%

Weak 15%

Insufficient 0%

IAB I Therapeutic breakthrough

IAB II Important improvement in terms of efficacy or

safety

IAB III Modest improvement in terms of efficacy or

safety

IAB IV Minor improvement in terms of efficacy or

safety

IAB V No improvement

* Can be 100% for specific drugs, such as drugs in oncology or transplantation

Actual benefit (AB)

Service Médical Rendu (SMR)

9

Decision Making Bodies Market Access: Where does it come from?

Marketing authorization

Federal Institute for Drugs and

Medical Devices (BfArM)/ Paul-

Ehrlich-Institut (PEI)

European Level

National Level

Health Technology

Assessment Institute for Quality and

Efficiency in Healthcare (IQWiG)

Pricing

Early Benefit Assessment Federal Joint Committee (G-BA)

Federal Association of Health

Insurance Funds (GKV-SV)

European Medicines Agency

(EMA)/European Commission

Op

inio

n

Dec

isio

n

BfArM, Bundesinstitut für Arzneimittel und Medizinprodukte; G-BA, Gemeinsamer Bundesausschuss; IQWiG, Institut für Qualität und

Wirtschaftlichkeit im Gesundheitswesen; GKV-SV, Gesetzliche Krankenversicherung-Spitzenverband

10

EBA Methodology and Decision Drivers

Appropriate comparative therapy

• Set out by the G-BA

• Can be a non-/pharmaceutical treatment or best supportive care

• If pharmaceutical: must have a market authorisation in the therapeutic indication

• Preferably already assessed by G-BA

• Should be appropriate therapy based on current medical knowledge

Drug benefit

• The patient-relevant therapeutic effect in regards to:

• Improved state of health

• Shorter duration of the disease

• Increased survival

• Fewer side effects

• Improved quality of life

Drug additional benefit

• The quantitative or qualitative added benefit for patients compared to the appropriate comparative therapy in different subpopulations

Importance of robust

comparison vs. appropriate

comparative therapy to gain

positive additional benefit

assessment

Drug benefit and drug additional

benefit

11

Additional Benefit Market Access: Where does it come from?

1 Major Sustained and large improvement in outcome not previously achieved with the appropriate comparator

2 Considerable Significant improvement in outcome not previously achieved with the appropriate comparator

3 Minor Moderate and not just small benefit not previously achieved with the appropriate comparator

4 Not quantifiable

There is evidence that additional benefit exists, however the scientific information is not sufficient to estimate the size of the additional benefit

5 None No additional benefit demonstrated

6 Inferior Less benefit than the appropriate comparator

6 levels of additional benefit

No additional

benefit

12

Decision Making Bodies

European Level

National Level

Op

inio

n

Decisio

n

Marketing authorization Medicines and Healthcare

Products Regulatory Agency (MHRA)

Health Technology Assessment

Funding

Pricing UK Department of Health (DH)

Regional authorities

European Medicines Agency (EMA)/European Commission

National Institute for Health and Care Excellence (NICE)

Scottish Medicines Consortium (SMC)

All Wales Medicines Strategy Group (AWMSG)

13

HTA Process Cost-Effectiveness Evaluation

ICER < £20,000

Recommendation likely

to be positive

£20,000 < ICER <

£30,000

Recommendation not

predictable

ICER > £30,000

Recommendation likely

to be negative

Funding Decisions by Regional Authorities based on Cost-Effectiveness

Assessment from HTA Agencies

• Incremental Cost-Effectiveness Ratio (ICER) : used to compare healthcare

interventions , it quantifies the cost per unit of benefit gained from using one treatment

versus another

• Quality-Adjusted Life Years (QALYs) : preferred outcome of benefit gained

ICER (Cost/QALY) is a key driver of the decision, but no formal threshold

• NICE adopts a more flexible approach for life-extending treatment Short life expectancy<24 months

Life extension with drugs>3 months vs current NHS treatment

Small patient populations

• These Drugs can be recommended at higher ICER threshold (usually £30,000 - £50,000)

Market Access Trends

15

Health technology assessment harmonization European Commission Proposal for a New Regulation on Health Technology Assessment

Context of the proposal1

Drivers Problems Operational objectives

Different HTA processes and

methodologies in the

Member States

Multiple parallel

assessments

Low uptake of joint HTA

Project based cooperation

1. Impeded and distorted

market access

2. Duplication of work for

Member States HTA bodies

3. Unsustainability of HTA

cooperation

Convergence in HTA tools

Reduce duplication of work for

MS HTA bodies and industry

And Ensure the uptake of joint

output by MS HTA bodies

Ensure long-term sustainability

of EU cooperation on HTA

References:

1. EC, Proposal for a regulation of the European parliament and of the council on health technology assessment

and amending Directive 2011/24/EU, 2018

16

What’s new?

• Common European assessment methods

• Shared data and expertise

• Common procedures across the EU

• All centraly approved products are eligible

What are the benefits?

• Higher level of human health protection

• Faster market access for innovative products

• More transparency for patients and producers

• No more duplication of work for health authorities and industry

Areas of HTA cooperation

• Joint clinical assessments

• Scientific consultations on the development of new products

• Mapping of emerging health technologies

• Voluntary cooperation on other areas (e.g. surgical procedures)

It is important to notice that it is restricted to the clinical assessment scope of G-BA and HAS-TC.

Health economics may not be ultimately part of the scope.

References:

1. EC, Proposal for a regulation of the European parliament and of the council on health technology assessment and

amending Directive 2011/24/EU, 2018

Health technology assessment harmonization European Commission Proposal for a New Regulation on Health Technology Assessment

17

Key national developments in health technology assessment

Governments in the five major EU markets (France, Germany, Italy,

Spain, and the UK) have introduced some modifications to their

approaches to the evaluation of medicines.

Changes in France

Measure Description Impact

Increased use of economic evaluation: Compulsory economic evaluation of certain innovative medicines

Since October 2013, if a manufacturer is hoping to receive an ASMR rating of I, II, or III, and if the product is projected to have annual expenditure of €20.0m ($26.6m) or more after two years on the market, the drug will undergo an economic evaluation by the CEESP.

- So far, only a minority of drugs qualify for economic evaluation, therefore it has limited impact. - No cost-effectiveness threshold and the CEESP remains in an advisory rather than decision-making role. - However, results of economic evaluations do impact pricing negotiations so drugs with lower ICERs may be at an advantage

18


Changes in Germany

Measure Description Impact

Potential AMNOG reforms

The mixed price negotiation may be replaced by consideration of patient subpopulations where added benefit is proven with concomitant G-BA guidelines restricting prescribing to those patients only.

Manufacturers will be able to negotiate higher prices but with stronger regulations preventing wider prescribing. The need to provide evidence in relevant patient subpopulations against relevant comparators will only intensify.

Orphan drugs (ODs) specificity

ODs are not excluded from AMNOG assessment; However, a special legal framework is in place ODs authorised by EMA with revenue of <€50 million/year are exempted from the benefit assessment as benefit is considered as proven with market authorization.

The G-BA only determines the extent of additional benefit (minor, considerable, major, or non-quantifiable), the categories ‘no additional benefit’ or ‘less benefit’ are not applicable. G-BA assessment criteria tend to be more flexible for ODs

19


Special multidimensional approach for innovative therapies (March 2017)

New AIFA Innovation Algorithm & Its Implications

Dimensions Status Implications

RA

TIN

GS

Unmet therapeutic need

Added therapeutic value

Quality of evidence

Designation Commercial implications

Maximum Absence of alternatives

Maximum Greater efficacy/curative vs

alternatives

High Innovative

• Funded via « innovative drugs fund* » • No payback • Immediate regional formulary inclusion • Benefit duration period of 36 months

Important Alternatives lack

relevant clinical impact

Important Greater efficacy/ better

benefit risk/ratio

Moderate Alternatives have uncertain safety/

clinical impact

Moderate Moderately greater efficacy

in subpopulations or surrogate endpoints used

Moderate Conditionally

innovative • Immediate regional formulary inclusion • Benefit duration period of 18 months

Poor Available Alternatives with high impact on

outcomes

Poor Minimally greater efficacy

than alternatives, irrelevant medical outcomes used

Poor

Not innovative No benefits

Absent Available Alternatives that modify history of

disease

Absent No greater efficacy relative

to alternatives Very low

*With the law 11 December 2016 n 232 special funds, in the period 2017-2019 has been instituted:

• Special fund for innovative drugs: 500 million euro per year

• Special fund for innovative oncologic drugs: 500 million euro per year

20

External reference pricing (ERP) in Europe

• In the majority of European countries, ERP is based on legislated pricing rules and is sometimes part of specific agreements with the pharmaceutical industry, such as in France or in Ireland.

• ERP is mainly used for in-patent publicly reimbursed medicines, but can be applied for off-patent drugs or limited to prescription-only medicines or innovative medicines, or hospital medicines in some countries as well.

There are substantial variations in ERP rules among countries

• External reference pricing (ERP) (also called “External price referencing”, “International Reference

Pricing”) is defined as the “The practice of using the price(s) of a medicine in one or several

countries in order to derive a benchmark or reference price for the purposes of setting or negotiating

the price of the product in a given country”.

• ERP has become one of the most common cost-containment tools to control prices for in-patent

pharmaceuticals in the EU

• ERP is an option to manage and regulate medicine prices

21

Role of ERP in the price setting process

Source: GÖ FP, based on bi-annual surveys with competent authorities represented in the PPRI network and a survey as of spring 2015

20 countries use EPR as the sole or main pricing policy. However, in some countries, ERP is

limited to specific sectors and/or medicines.

22

ERP as a Supportive Criterion

• In some countries pricing authorities often take a broad range of factors

into account in addition to ERP when determining the prices for medicines

that should be ‘reasonable’:

• The cost of the therapy cycle,

• Benefits to be gained from the medicine use from the patients’ perspective,

• Relative benefits compared to treatment alternatives,

• Budget impact i.e. Analysis of the effects on the health care system,

• Funds available for reimbursement,

• Reward for innovation (provided that sufficiently detailed information about

the research and development cost structure of the manufacturer has been

submitted).

• The measurement of absolute benefits is done in QALYs gained and the

level of the threshold values differ from country to country, often reflecting

economic differences and the ability-to-pay.

23

Differential Pricing Definition

Differential pricing (DPR) (also called tiered pricing as it divides consumers into different groups or tiers) can be defined as “the adaptation of product prices to the purchasing power of consumers in different geographical or socio-economic segments”.

The principle of DPR is based on the economic concept of price discrimination where different consumers are charged different prices for the same product. The alternative to DPR is uniform pricing, wherein the willingness and ability of each group of consumer to pay for a product are not considered

24

Ramsey (1927) developed a well-known DPR theory stating that prices should differ across markets according to inverse relation of the demand elasticity. This approach would generate enough revenues to covered R&D costs while ensuring that more

price-sensitive users, (i.e. lower income countries) are charged at a lower price than less-price sensitive users

Another approach to DPR proposed by Danzon et al. (2013), called “value-based differential pricing”, would be to have prices reflecting marginal value acknowledged in each country through the use of individual incremental cost-effectiveness ratio (ICER)

threshold based on willingness to pay within each country

Other approaches involve separating price setting and the recovery of fixed R&D costs following different options .

Different DPR approaches were described for pharmaceuticals:

Key DPR principles

25

Patent Expirations of Major Biologics in Oncology

2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 Global sales (2015)

Avastin

$6.74bn

Campath $0.245bn

Herceptin $6.59bn

Vectibix $0.584bn

Yervoy $0,264bn

Adcetris $0.226bn

Erbitux $1.05bn

Gleevec $4.65bn

$20bn

26

Biosimilars and Cost-Effectiveness

As a biosimilar is likely to be less expensive than the comparator, the

assessment of the cost-effectiveness of a biosimilar depends on the

relative effectiveness.

If appropriately designed and powered clinical studies demonstrate

equivalent effectiveness between a biosimilar and the comparator, then a

cost-minimization analysis needs to be carried out and the least expensive

medicine is chosen.

If there are differences in the effectiveness of a biosimilar and the

comparator, other techniques of economic evaluation need to be employed,

such as cost-effectiveness analysis or cost-utility analysis.

Given that there may be uncertainty surrounding the long-term safety and

effectiveness of a biosimilar, the cost-effectiveness of a biosimilar needs to

be calculated at multiple time points throughout the life cycle of the product.

27

Factors Impacting Pharmacoeconomic Analyses of Biosimilars

28

Impact of Distribution of Biosimilars through Hospital (million €)*

0

1000

2000

3000

4000

5000

FR DE EL HU PL PT UK

Base case Exclusive hospital distribution

Biosimilar savings (2012-2016)

Assuming 80% price discount versus

*Health care public payer perspective

29

Biosimilars & Clinical Practice Switching & Automatic Substitution Highly Debated

Source: 1. Mendoza C, Ionescu D, Radière G, Rémuzat C, Young KE, Toumi M. Biosimilar substitution policies: an overview. Poster PHP62.ISPOR EU, 2015

30

Sales Evolution After Patent Expiry

31

Biosimilars Challenges

RISQUE?

No return on investment

No biosimilars industries

No savings No novel therapies

Innovative Payment Models for Innovation

33

Managed entry agreements

Current use of managed entry agreements

Country MEA Prevalence Preferred Approaches

France Widespread

Price/Volume agreements used

increasingly to manage the financial

impact of costly new drugs

Germany Rare Existing P&R framework deemed a

barrier to widespread use of MEAs

Italy Widespread

Outcomes-based deals dominate,

but finance-based agreements and

a handful of mixed deals have also

been struck

Spain Growing

Some regions pursuing expanded

MEA initiatives, and a new national

scheme announced in 2017

UK Widespread

Simple discounts dominate, but

deals involving the provision of free

stock, rebates, utilization caps, and

response-based schemes have all

been struck

Datamonitor

34

Pricing & Funding Solutions

Funding models

Health outcomes based agreements

Financial agreements Healthcoin

Indication specific or not

Individual level Per patient per course

or overall per year Populational level

Coverage with Evidence

Development

Annuity payment

Performance linked payment

Single payment

Payback for non-

performance

Payment for side effects

management

Pay by achieved outcome

Conditional to

preventing predefined

effect

Based on achieved outcomes

Discounts Bundle Rebate Cost plus

price Healthcare

loans

Price caps/ volume

caps

Fund based

payment

Intellectual based

payment

Price-volume

agreement

National condition

specific fund

Pooled funding

Tax Debt

reduction Front

loading Risk

adjustment Reinsurance

Risk corridors

International fund

Per target population

Per patient

Hanna E, Toumi M, Dussart C, Borissov B, Dabbous O, Badora K, Auquier P, Funding breakthrough therapies: a systematic review and recommendation, Health Policy, 122, 3, Pages 217-229, ISSN 0168-8510,

35

Potential Innovative Payment Models Identified in the Literature

Payment Models

Annuity Payment

Pay for Performance

Price control,

Discounts

Definitions & Main Advantages

• Periodic payments over time rather than a one-time, upfront

payment.

Price-volume

agreement

• Performance in a defined patient population is tracked over a

specified period of time in a defined population or at the individual

patient level, and the amount or level of reimbursement is

determined on the basis of the outcomes achieved It allows sharing

the risk of non performance between payers and manufacturers

and limit total budget impact.

• Discounts: Price reductions granted to payers, usually

confidentially, under specific conditions without affecting the drug

list price.

• Price control/caps: methods used to control and limit

pharmaceutical prices and manufacturer revenues.

• Agreements where drug prices are reduced based on sales

volume.

13,19,20,24,25,26,39,4

3,56,61,63

3,6,19,20,24,25

,

39,42,55,56,61

19,43,55

16,19

Payment models were proposed at international or European level, not country specific. Some models are already in use like

the different managed entry agreements and other models are novel models that may be adapted for high-price therapies.

36

Payment Models

Pooled funding19,39,50,61

Fund based payment:

Silo funds6,19

Bundling* 16,19


• Governments facilitate better credit instruments for public

payers or contracting arrangements between payers and

pharmaceutical companies. Or it can be credits for patients.

• It increase the affordability.

Healthcare loans 19,33,39

• National funds for specific conditions or diseases: for

example, the Cancer Drugs Fund in the United Kingdom that

pays for new cancer drugs rejected by NICE.

• The high aggregate costs of drug treatment for an individual

patient are borne by a risk pool of multiple payers.

• This pool reimburses payers for the portion of claims incurred

by high-cost patients, the same way reinsurance does now for

very high-cost healthcare claimants in general.

• An all-inclusive payment per enrollee for a defined scope of

services, regardless of the quantity of care provided.

• It allows better predictability of budget spending and can yield

savings for payers.

*Currently used in US


37

Payment Models

Healthcoin* 19,39,43,49

Specific fund19,29


• It converts the incremental outcomes produced by curative

treatments to a common currency, such as life-year equivalents.

Healthcoin can be exchanged for US dollars in the marketplace.

Medicare would pay the private payer for a beneficiary who is

transitioning to Medicare at the age of 65 years, if the private

payer had previously paid a cure for diabetes for this beneficiary

for example.

• Healthcoin incentivizes private payers to invest in breakthrough

treatments.

• ATMP-specific fund” separate from the traditional existing

reimbursement path and independently funded that ensures the

sustainability of health systems.

*Healthcoin was proposed for US setting


38

Innovative Payment Models: Comparison of Proposed Models

Rebates/ Discounts

Price caps/volume caps Price – volume agreements

Credits for patients

Healthcare loans for payers

Cost-plus price

National silo fund

Bundle payment/ Episode of care

Intellectual based payment

Pooled funding

3Rs

Healthcoin

International funds

CED

Pay for performance

Annuity payment based on performance

0

1

2

3

4

5

6

0 1 2 3 4 5 6

Feas

ibili

ty

Financial attractiveness

CED: coverage with evidence development, 3Rs: Reinsurance, readjustment, and risk corridors

Annuity payment, discounts and pay for performance are the most feasible and financially attractive

models

Reference: Hanna, et al, Health Policy, 2018

39

Innovative Payment Models: Comparison of Proposed Models

Rebates/ Discounts

Price caps/volume caps

Price – volume agreements

Credits for patients

Healthcare loans for payers

Cost-plus price

National silo fund

Bundle payment/ Episode of care

Intellectual based payment

Pooled funding

3Rs

Healthcoin

International funds CED

Pay for performance

Annuity payment based on performance

0

0.5

1

1.5

2

2.5

3

3.5

4

4.5

5

0 1 2 3 4 5 6

Ap

peal (M

an

ufa

ctu

rers

)

Appeal (Payers)

National silo fund may be the most attractive model for both payers and manufacturers

Reference: Hanna, et al, Health Policy, 2018

pricing and reimbursement policies looking forward in europe · governments in the five major eu...

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