Reimbursement Strategies of Follow-on

Medicinal Products

Prof. Dr. Thomas D. Szucs

Director, European Center of Pharmaceutical Medicine,

University Basel

Three perspectives: Academia – Insurer - Provider

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Disclaimer

The explanations, opinions and facts expressed relate to the personal point of view of the lecturer. The perspective hereby represented does not particularly correspond to the official point of view of Helsana, Hirslanden or the University of Basel and is accordingly not binding in any way for Helsana, Hirslanden or the University of Basel.

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Overview §  Background Where

are we coming from?

§  Basics: What are the key concepts?

§  Boundaries: What is happening in major markets?

§  Beyondness: Where are we heading to?

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§  Background Where are we coming from?

§  Basics: What are the key concepts?

§  Boundaries: What is happening in major markets?

§  Beyondness: Where are we heading to?

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Overview

Society has three approaches to harmonise ...

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Acces

Cost management

Innovation incentives

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High value medical services, equitiy

Contribution to GDP, economic strength and employment

Stabilising and/or reducing costs

... and three conflicting goals to resolve

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§  Background Where are we coming from?

§  Basics: What are the key concepts?

§  Boundaries: What is happening in major markets?

§  Beyondness: Where are we heading to?

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Overview

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Elements to define the optimal target price of a pharmaceutical

Price

Socially responsible

Politically acceptable

Financially sound

Medical-scientifically sustainable

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Dicit Oscar Wilde

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„A cynic is a man who knows the

price of everything but

the value of nothing.“

What is value?

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Defining innovation and benefits

„Customers don‘t buy a drill, but rather a hole in the wall.“

„Payors don‘t buy a technology, but rather a patient benefit.“

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Value is never a constant parameter

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Establishing true value is difficult

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Healthcare value criteria

Medical System

Patient Societal

Σ

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Value elements

Medical value

•  Meaningful outcomes

System value

•  Benefit to the healthcare system

Patient value

•  Patient experience

Societal value

•  Improvement of patients and their caregivers productivity

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Value criteria

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Medical value System value Patient value Societal value

•  Efficacy / effectiveness (final endpoints, surrogate markers, intermediate outcomes, overall survival, progression free survival, response rate)

•  Safety •  Reduction adverse

events •  Relief in symptoms •  Tolerability èInnovation

•  Reduction in: •  Hospitalizatio

n •  Physician

visits •  Diagnostic

tests •  Emergency

visits •  Costs of treating

adverse events

•  Medical value •  Quality of life gain •  Easy use / ap-

plicability •  Compliance

•  Productivity gain •  Reduction caregiver

burden (e.g. social ac- tivities, work, education, etc.)

•  Indirect costs

Tools to measure medical value: •  Instruments / scales •  Biomarkers •  Clinical tests •  PRO •  Registries

Tools to measure system value: •  CEA •  CUA, CMA, PROs •  MCDA •  Budget impact

(direct costs)

Tools to measure patient value: •  PRO

Tools to measure societal value: •  Surveys •  QALY •  LYG •  Surveys (EQ-5D) •  Willingness to pay

OPTIONS FOR REIMBURSEMENT

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Elements to define the optimal target price of a pharmaceutical

Price

Socially responsible

Politically acceptable

Financially sound

Medical-scientifically sustainable

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Value and the “No Differentiation Zone”

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Cost-sharing

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High cost sharing reduces adherence

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Risk-sharing

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Schemes

Financially-based

Outcomes-based

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Financial-based schemes can be broadly classified into four types

Price Volume Agreement

Budget cap

Dose cap Disease-specific

management schemes

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Financial-based pricing schemes and examples from global experience

Scheme Examples from global experience

Price volume agreement

In France, Gilead and the Economic Committee for Health Products (CEPS) negotiated a 27% discount from the original price and then further discounts were applied when different volumes were reached (structure is undisclosed). A year later, Germany also achieved the same price (e41,000 for a 12-week course).

Budget cap Total spend growth cap: In the UK, annual growth in the spending of branded pharmaceuticals has been capped from 2014–2018 with clawbacks in place to recover yearly overspending. Total spend cap: In Italy, pharmaceutical companies are allocated a national level budget by AIFA and clawbacks are in place to recover annual overspending.

Dose cap In the UK, Celgene has agreed to a Patient Access Scheme for lenalidomide (Revlimid) in multiple myeloma in which it has agreed to fund the cost of patients who need more than 26 cycles; typically longer than 2 years of treatment.

Disease-specific management

Both Canada and the UK have additional pricing and reimbursement schemes targeted at oncology. The UK’s reformed CDF will allow use of oncology medicines with a conditional reimbursement where a full reimbursement recommendation cannot be made by NICE. The fixed budget for 2016–2017 is £340 million.

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Outcome-based schemes can be broadly classified into four types

Conditional reimbursement

Success-based payments (pay-for-

performance)

Outcome-based rebates

Indication-based pricing

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Outcome-based pricing schemes and examples from global experience

Scheme Examples from global experience

Conditional reimburse-ment

The Netherlands is the most well-known example of a country having implemented conditional reimbursement for drugs lacking sufficient evidence at the point the HTA process is conducted. Data are collected over the next 4 years and the product is reevaluated again for cost-effectiveness.

Success-based payments

Janssen’s pay-per-clear scheme for simeprevir (Olysio) agreed in England involves Janssen paying for pretreatment blood tests to predict whether sime- previr is likely to be effective in genotype 1 hepatitis C patients and offering to fund alternative treatments if after 4 weeks sufficient response is not seen with triple therapy. NHS England only pays for patients who show successful clearance of the virus posttreatment.

Outcome-based rebates

Procter & Gamble agreed to fund the medical costs of nonspinal fractures in women taking risedronate (Actonel) with the US-based private health insurer, Health Alliance Medical Plans. Results from that time indicate a 79% reim- bursement rate.

Indication-based pricing

In 2015, Express Scripts (US) announced plans to rollout an indication-based pricing program for cancer medicines, such as Roche’s erlotinib (Tarceva), to differentiate price based on likely clinical benefits

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Interesting but very challenging: pay-per-use/indication-based pricing

Indication x = price X Indication y = price Y

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Novel schemes

Scheme Description Deferred payments

Payment for a medical technology is spread over a pre-agreed period of time to manage the upfront cost.

Guaranteed revenue model

Revenue is guaranteed to innovators in indications where it is necessary to stagger or restrict access (eg. antibiotics).

Product-service bundling

Products and services are bundled along a particular disease pathway or for a patient at a particular point in time, at a price discount.

Indication-based pricing

Prices for the same medical technology is different when used for different indications, particularly for cancer products.

BIOSIMILARS STRATEGIC MARKET ACCESS / P&R CONSIDERATIONS

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P& R strategic considerations

1.  Clear definition of Biosimilar strategy and stick to it 2.  P&R / market access strategy should be a coherent

element of the global Marketing Strategy 3.  The product has to be clearly defined:

1. Differentiated Biosimilar, e.g. Biobetter 2. Low cost Biosimilar, e.g. improved manufacturing process

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Biosimilar strategic alternatives

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Biosimilar differentiation -  Expanded product applciations, biobetters -  Safer mor patient friendly delivery systems -  Simplified dosing -  Innovative services (e.g.mobile tracking)

Biosimilar cost-leadership -  Innovative manufacturing, clinical, regulatory processes -  market access maximizing efficiency -  Discounting when necessary

vs

2.Target Price Fin vs Pol

Biosimilar P&R Strategy Factors

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1.Biosimilar Policies (P&R, Substitution)

3. QESUNC (Value, HTA)

4. Ref. Pricing (Therap, IRP)

5. MEA Hosps

7. Country Launch Sequence

6. Formularies

8. Payers Education Program

Differentiation vs Cost-Leadership

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EU HTA requirements

§  For biosimilars HTAs are required in 13/29 countries §  Mainly where therapeutic reference pricing is

applied and in indications where there is no reimbursment for the original

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Ger, Ita, UK show high potential for biosimilars in RA

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§  Background Where are we coming from?

§  Basics: What are the key concepts?

§  Boundaries: What is happening in major markets?

§  Beyondness: Where are we heading to?

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Overview

COUNTRY SPECIFICS

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Comparing prices among countries is difficult and complex

§ Most price agreements of medicines are bound to confidentiality, therefore, what is generally public is the reference price

§  Contractual conditions are frequently rather complex and not in public domain

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Country comparison – Clinical value

AUS CDN SWE UK FRA GER SWI Target patient population and indications

x x x x x x x

Efficacy x x x x x x x Effectiveness x x x x x x x Safety x x x x x x x Availability of treatment alternatives

x x x x x x x

Severity of disease x x x x x x x

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Country comparison – System value

AUS CDN SWE UK FRA GER SWI Cost-effectiveness x x x x x x x Budget impact x x x x x x Direct costs x x x x x x x Indirect costs x x x

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Country comparison – Patient value

AUS CDN SWE UK FRA GER SWI Quality of life x x x x x x x

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Country comparison – Societal value

AUS CDN SWE UK FRA GER SWI Productivity loss x x x Caregiver burden

Country comparison – Price determination methods

AUS CDN SWE UK FRA GER SWI •  REA •  Cost-

Effective-ness

•  Negotia- tion

•  REA •  Cost-

Effective-ness

•  APV •  Negotia-

tion

•  REA •  Cost-

Effective- ness

•  Negotia- tion

•  REA •  Cost-

Effective- ness

•  Negotia- tion

•  REA •  Cost-

Effectiv-ness

•  Negotia- tion

•  REA •  (Cost-

Effective-ness)

•  Fixprice system

•  Negotia-tion

•  REA •  Comparative

Effectiveness

•  APV •  Negotiation

CASE FOLLOW-ON MEDICINAL PRODUCTS

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Saving Potential Biosimilars

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IGE S Ins t i t u t G mbH · www. i ges .deFriedrichstraße 180 · 10117 Berlin · Germany +49 30 230 80 90 · � +49 30 230 80 911

Results

Berlin, July 22nd 2011

Bertram Häussler, Ariane Höer, Christoph de Millas

Savings for European Health Care Systems through Biosimilars

Study

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§  Expected savings from substituting biosimilars for biologicals

§  8 EU countries (Germany, France, United Kingdom, Italy, Poland, Romania, Sweden and Spain)

§  Between 2007 and 2020. §  Limited to:

§  Erythropoetin §  GCSF, for which biosimilars already exist §  monoclonal antibodies

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EU8: yearly savings through biosimilars (mabs)

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EU8: Cumulative savings by launch of mabs (from launch of first mab biosimilar until 2020)

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EU8: Expenditures for GCSF until 2020

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EU8: Cumulative savings through GCSF biosimilars (until 2020)

EU8: Cumulative savings through EPO biosimilars (until 2020)

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EU8: Cumulative savings through biosimilars (all compounds, until 2020)

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EU27: Expenditures for biologicals until 2020

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EU27: Cumulative savings by launch of biosimilars until 2020

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Conclusions of IGES study

§  Considerable savings potential based on use of biosimilars.

§  EPO und filgrastim: compared to the base scenario, savings between 20% and 25% of the expenditures are possible.

§  High savings potential in MAB class thanks to biosimilars.

§  By 2020, savings of a maximum of € 11.3 billion (14.9%) can be realized via introduction of biosimilars for etanercept, rituximab and trastuzumab alone.

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§  Background Where are we coming from?

§  Basics: What are the key concepts?

§  Boundaries: What is happening in major markets?

§  Beyondness: Where are we heading to?

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Overview

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What makes a product valuable ? Payers perspective

1. Unmet clinical need of high priority 2. Meaningful clinical differentiation 3. Clinical and other evidence that cannot

easily be “ignored” or “discredited” §  regulatory label claims §  head to head RCTs §  hard endpoint outcomes §  certainty of promised results

4. Manageable budget impact 5. Acceptable benefit-to-cost ratio

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Perceived value: speed

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Traditional versus adaptive licensing

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Parallel worlds

93 Federal Register 17.9.2010

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Find the balance in a system which is…

available affordable

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Finally...

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Questions?

Contacts

Thomas D. Szucs, MD MBA MPH LLM Professor of Medicine Institute of Pharmaceutical Medicine European Center of Pharmaceutical Medicine Klingelbergstrasse 61 CH-4056 Basel

T +41 61 207 19 50 F +41 61 207 19 48 E thomas.szucs@unibas.ch W www.ecpm.ch

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