Global Pricing and Reimbursement Trends in the Pharmaceutical - - PowerPoint PPT Presentation
Global Pricing and Reimbursement Trends in the Pharmaceutical Industry New York, NY September 29, 2008 Bonn Office Haydnstrasse 36, D-53115 Bonn, Germany Tel. +49/228/98 43-105, Fax +49/228/98 43-120 e-mail: Thomas.Buchholz@simon-kucher.com
New York, NY September 29, 2008
Thomas Buchholz, Partner Bonn Office Haydnstrasse 36, D-53115 Bonn, Germany
e-mail: Thomas.Buchholz@simon-kucher.com Internet: www.simon-kucher.com
NY Pharma Forum 2008
NY Pharma Forum 2008
NY Pharma Forum 2008
Ultimate Goal of a Market Access Strategy? Resulting Strategy
Market share Price Profit Pricing leading to maximum market share
M a x i m u m S h a r e M a x i m u m R e v e n u e M a x i m u m P r i c e
New
Profit Market share
Pricing leading to maximum revenue Pricing leading to maximum price
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NY Pharma Forum 2008
NEW
Full revenue potential National Access Achieving national reimbursement without severe restrictions Regional Access Gaining formulary inclusion on regional formularies (Italy/Spain/ UK) or on Managed Care formularies Local decision Physicians, hospitals, patients also need to be convinced, and price may be important
Source: SKP Research
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NEW
Full revenue potential
Source: SKP Research
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NEW
Full revenue potential
Source: SKP Research
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They have a role to fulfill and just happen to be on the other side They have to provide healthcare to patients and they have seen drug budgets growing
At the end of the day they have to balance their budgets. They have seen many pharmaceutical companies overstating the therapeutic value of their
They have seen the pharmaceutical industry becoming one of the most profitable
They want what everybody wants: Value for money. The key questions are
Source: SKP Research
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Low High Level of Innovation
Source: SKP Research
Industry View
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Low High Level of Innovation
Price premium Price discount Price parity
Source: SKP Research
Payer View
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Source: SKP Research
"The efficacy of Exubera is comparable to s.c. human insulin. However, Exubera increases the therapy cost fivefold. Exubera is uneconomical. In addition, due to the missing long term data and the unclear risk in comparison to s.c. insulin, a recommendation for prescribing Exubera cannot be
clinically from Exubera could not be identified in clinical studies." (Therapy Advice of G-BA, Oct. 2006)
Germany
Janssen-Cilag suggested a risk-sharing scheme:
50% for full NHS funding
UK
The AIFA's solution... :
= the first case of a drug on Law 648 list without the manufacturer having asked for it!
Italy
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Accepted by NICE Rejected by NICE or SMC
£0 £10 £20 £30 £40 £50 £60 £70 £80 £90 £100
Herceptin - mono Herceptin combo Glivec -CML MabThera - high grade* Glivec-GIST Herceptin adj Sutent - GIST Nexavar Erbitux** Avastin - IFL Avastin - 5FU/LV Sutent - RCC Alimta - MPM***
Source: SKP Research, NICE, SMC * In combination with CHOP, average of cost per QALY results for over 60 and under 60 population** Broad range of cost/QALY estimates – £77- £370 ***In combination with cisplatin; recommendation only in people who have a WHO performance status of 0 or 1, who are considered to have advanced disease and for whom surgical intervention is considered inappropriate - result shown for most favorable subgroup
Cost per QALY (000)
Sep-07 Jan-07 Jan-07 Jan-07 Jan-07 Nov-06 Sep-06 Aug-06 Oct-04 Sep-03 Oct-02 Mar-02 Mar-02 Date of appraisal
UK
Summary of Cost per QALY for targeted oncology drugs "But isn't that a UK problem?"
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France Italy UK Germany Spain Price
Country-specific
Price corridor based on referencing and parallel trade
Conceptual High price but no access GER FR IT SP Profit
Loss
France Italy UK Germany Spain Price
Country-specific
Conceptual Lower price but access GER FR IT SP UK Price corridor based on referencing and parallel trade
Source: SKP.
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NY Pharma Forum 2008
Source: SKP Research
NY Pharma Forum 2008
Source: SKP Research
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“I don't think they are going to give CMS any teeth."
a nonpartisan health policy consultant in Washington
“I don't think they are going to give CMS any teeth."
a nonpartisan health policy consultant in Washington
Source: SKP Research
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Source: SKP 2006, company websites.
US Covered Lives Based on Company Self Reporting
PBM lives are overlaid on top of these figures. Among PBMs, the majority of lives are covered by Medco, Express Scripts, and Caremark. PBM lives are overlaid on top of these figures. Among PBMs, the majority of lives are covered by Medco, Express Scripts, and Caremark. 19% 14% 8% 6% 5% 5% 3% 11% BCBS TN Kaiser Cigna HCSC (BCBS IL, NM, OK, TX) Aetna United WellPoint Inc. >20 Others
2% each 1% each
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$7 $13 $17 $10 $22 $35 $74
$0 $20 $40 $60 $80 Generic Preferred Nonpreferred 4th tier 2000 2001 2002 2003 2004 2005
$28 $30 $42 $47 $51
$0 $20 $40 $60 Single coverage 2000 2001 2003 2004 2005
From 1990 to 2004, the spending for prescription drugs increased
From 1990 to 2004, the spending for prescription drugs increased
Source: Kaiser Family Foundation, Prescription Drug Trends, http://www.kff.org/rxdrugs/upload/3057-05.pdf; Kaiser Family Foundation, Employee Contributions to Premium, http://www.kff.org/insurance/7315/sections/upload/7315Section6.pdf
USA
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Source: http://www.nytimes.com
The Evidence Gap Costly Cancer Drug Offers Hope, but Also a Dilemma
By GINA KOLATA and ANDREW POLLACK Published: July 6, 2008 […] But some in the pharmaceutical industry worry that such prices will raise concerns about whether the drugs are worth it, leading to a backlash like price controls or restrictions on use. Roy Vagelos, a former chief executive of Merck who is considered an elder statesman of the industry, said in a recent speech that he was troubled by a drug, which he would not name but which was a clear reference to Avastin, that costs $50,000 a year and adds four months of life. “There is a shocking disparity between value and price,” he said, “and it’s not sustainable.” “It’s absolutely critical that we start having a public discussion,” said Barbara Brenner, executive director of Breast Cancer Action, an advocacy group. “I think of Avastin as a model that is showing us where the problem is.”[…]
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Improved evaluation of real impact on public health (ISP) Lacking comparative data with existing treatments / gold standard, lacking transferability
Checking market access consequences of payer decisions Reassessment of drug if differences between expected ASMR/impact and real-life benefit/impact are too great
7 4 12 15 27 27+
5 10 15 20 25 30 35 2000 2001 2002 2003 2004 2005
16 Impact on the healthcare system 65 Tolerance 76 Benefit for the patient 94 Prescription and usage conditions … in %
Parameters required…
Experimental studies Observational studies Modeling of existing data Types of studies Distribution of requests Number of studies Payer’s motivation
Source: TC.
France
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RCT RCT Price Negotiations
Proven:
Expected:
Evaluation Time
Is input for
Price Scenario A Price Scenario B
Initially high price Initially low price
Market authorization Observational Study Observational Study
France
Source: SKP Research
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Source: SKP Research
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Joint activities on scientific healthcare topics of high importance for all 3 countries e.g. Multimorbidities Orphan diseases Development of recommendations regarding suitable methods for “Rapid Reports”: fast value & benefit appraisals Validation of external scientific information Implementation of published, up-to-date recommendations Unification of scientific approaches and procedures Scientific research regarding incentive systems for healthcare professionals in order to speed up implementation of scientific recommendations
“Shared products & projects require compatible scientific methods”
“Shared products & projects require compatible scientific methods”
Source: http://www.iqwig.de/index.385.html
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Germany
Source: SKP Research
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a b a‘ b’ A B C D E E’ E’’ Cost Benefit Under discussion
(e.g. cost metric), “benefit” may be a combined score of several clinical input parameters
as C offers a higher benefit at the same cost as B)
incremental cost/benefit ratios a and b can be
area can be shown that identifies potential reimbursement thresholds for new therapies
indicated in point E, a maximum reimbursement price would range between the points E’ and E’’. The exact level of reimbursement would be up for negotiations between the sickness funds and the manufacturer
Source: www.iqwig.de, “Methods for assessment of the relation of benefits to cost in the German statutory health care system”, January 24, 2008.
Germany
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2 reps. 3 reps. 4 reps. 1 rep.
*Italian Association of Medical Oncology (Associazione Italiana di Oncologia Medica) **Pricing & Reimbursement Committee ***Technical & Scientific Commission (CTS) **** Istituto Superiore di Sanità
Italy
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(Innovative) P&R possibilities Examples
France
Reluctance to implement new P&R schemes Some flexibility in design of price- volume agreements Information not publicly available
Germany
Rebate contracts with sick funds Value-adding contracts with sick funds Expenditure cap contract Risk-sharing contracts Portfolio rebate contracts Short-acting insulin analogs contracts Sanofi Aventis’ Henning portfolio Lucentis Aclasta Sandoz
Italy
Discount schemes based on risk assessment Volume clauses Portfolio contracts Conditional reimbursement + monitoring study Tarceva, Sutent & Nexavar Numerous Class H drugs Portfolio contracts for retail portfolio Byetta, Januvia
Spain
Conditional price based on post- launch observational study Sales volume and EU price monitoring Bonviva Revlimid
Source: SKP Research
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First cycle free then 5% price reduction on further cycles
Metastatic RCC Sunitinib (Sutent)
Receive a discounted price for drug after certain preagreed level of expenditure at full price has been reached. Company aim is to ‘preserve’ full price for mesothelioma patients and allow discount for NSCLC use.
Meso-thelioma and NSCLC Pemetrexed (Alimta)
Rebate direct to PCT on the cost of any vials of Cetuximab used for patients who do not achieve a preagreed clinical outcome (‘non-responders’) at up to 6 weeks (up to an agreed maximum of 3200 mg)
Metastatic CRC Cetuximab (Erbitux)
Free drug (for the full licensed course) for the first 300 patients to sign up to the scheme.
Follicular NHL Rituximab (Mabthera)
Rebate in form of credit note against any future Roche purchase Rebate will provide drug acquisition parity compared to docetaxel for an average patient duration Upper limit for number of packs set in business case and in contract
NSCLC Erlotinib (Tarceva)
Drug bought at full cost In case of non-responders a retrospective claim for replacement drug/credit/cash is possible
Multiple Myeloma Bortezomib (Velcade) Risk-sharing scheme Indication Drug
UK Source: British Oncology Pharmacy Association (BOPA): Cancer Network Pharmacists Forum. March 2008. (bopawebsite.org/tiki-download_file.php?fileId=236)
"We want these rebates in Spain too now!"
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As part of a risk sharing contract Novartis gives a quality guarantee on Aclasta, an innovative osteoporosis drug In case of a fracture in the first 12 months, Novartis reimburses the full treatment cost occurred so far Novartis and the DAK also signed a similar contract on immunosuppressants given after kidney transplants, where costs are reimbursed on the case of an organ rejection
Cost containment due to efficacy guarantee Positioning advantage in competition with other sick funds Aclasta: rapid market penetration as a "late entrant" Immunosuppressants : market share gains
„We want to be measured based on the success of our products.“
Germany
Source: Barmer website; DAK website; FTD 19.10.2007, SKP research
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n.a. Therapeutic improvement over current gold standard
Important to major None to minor Generic substances Me-too substances First-in-class NCEs
Type of pharmacological substance
Moderate Primary Focus Less Pressure Secondary Focus
Source: SKP Research
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Source: SKP Research
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Useful** Very useful/ required** Useful** Useful** Useful
National (IQWiG*)
Useful Useful Useful Useful Very useful/ required
Regional
Rarely useful Rarely useful Rarely useful Rarely useful Very useful/ required
National (SDGCMP)
E I
Rarely useful Rarely useful Rarely useful Useful Very useful/ required
Regional
Rarely useful Useful Rarely useful Rarely useful Rarely useful
Cost benefit
Rarely useful Rarely useful Rarely useful Very useful/ required
Local (PCTs)
Rarely useful Useful Useful Very useful/ required
National (AIFA)
UK D F
Very useful/ required Very useful/ required Useful Useful
National (NICE/SMC)
Rarely useful Rarely useful
Cost utility
Rarely useful Rarely useful
Cost effectiveness
Rarely useful Useful
Cost minimization
Rarely useful
(Sick funds focus
global budget)
Very useful/ required
Budget-impact data/analysis
Sick funds,
National (TC, CEPS)
France Germany Spain UK Italy
Country Type
Health Economics is a tool used by some payers for pricing & reimbursement, not an end in itself. The question is not: "Do health economics matter?" - The question is: "What type of health economics, in which country, at which institutional level, and at what point in time before and after launch?"
Sources: SKP experience *Cost-utility evaluations will introduced during the course of 2008, concept under discussion ** Expected future importance (2009)
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1 2 3 4 5
Less important Very important
Source: SKP Research
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100%
Time
Source: SKP Research
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Thomas has developed national and international pricing and marketing strategies for many pharmaceutical companies in many different countries throughout the world and all major therapeutic areas. His clients include Abbott, AstraZeneca, Biogen Idec, GlaxoSmithKline, Johnson & Johnson, Merck & Co, Merck KGaA, Novartis, Pfizer, Procter & Gamble, Roche, Sanofi-Pasteur, Schering-Plough, and UCB. He specializes in market access, pricing and reimbursement of pharmaceutical products. Market
competitive positioning, generic defense strategies, and forecasting are further areas of special interest. Thomas received his masters degree in business administration from the University of Bielefeld. In 1988 he worked for RJR Nabisco in Trier, Germany and Winston-Salem, North Carolina before joining Simon-Kucher in Germany, as a consultant in 1989. From November 1999 until December of 2005, he worked at the Boston office of the company. In January of 2006, Thomas returned to the Bonn
Thomas.Buchholz@simon-kucher.com