Update on pharmacoeconomics

1. Update on Pharmacoeconomics
July 2016
Michael Barry

3. Background

4. 2014 figures show € 1,844 million in Community + € 336 million in Hospitals = € 2,180 m
Total expenditure on medicines approximately € 2,180,000,000 in 2014

5. Drug expenditure in Ireland
HTDS
Cost
€502 million in
2014
(27% of total
expenditure)
GMS
Volume

6. HSE 2016 Service Plan
“overall net expenditure on High Tech Drugs in 2016 is
maintained at 2015 outturn levels”
“this is dependent on the HSE’s capacity to contain approvals
for new medicines to overall funded levels”
“savings targets in relation to drugs/medicines will be achieved
in full – this is a key assumption”

7. So what is the approach ?
INN Generic
(5%)
Branded
Generic (7%)
Brand - off
patent (10%)
Patent Brand
(78%)
Reduce
expenditure in the
off patent side of
the market
Apply HTA to
the patented
side of the
market
1 2
Biosimilars ??3

8. The NCPE conducts the health technology assessment
(HTA) of pharmaceutical products for the Health Service
Executive (established April 1998)
Over 296 recommendations on products since 2006
22/7/2016

9. Cost-effectiveness a condition for
reimbursement
The Health Act 2013 confirms
that cost-effectiveness may be a
condition for the supply and
reimbursement of drugs.

10. IPHA Agreement 2016

11. The process begins
with the price
application by the
manufacturerRapid review to
determine whether a
full HTA is required
Full HTA with a 90
day time frame
NCPE submission
to the HSE – CPU.
The HTA process
The maximum price that a
company can apply for is the
average of the approved prices
in the 14 EU Member States
incl: Austria, Belgium, Denmark,
Finland, France, Germany,
Greece, Italy, Luxembourg, the
Netherlands, Portugal, Spain,
Sweden & the UK.
HSE Drugs
Group
The pharmaceutical company is
invited to submit an economic
dossier to demonstrate that the
product is value for money.

12. HSE Drugs Group
The Drugs Group includes representatives from HSE-
PCRS, NCPE, NCCP, Acute Hospitals, HSE Quality
& Improvement, HSE Clinical Programmes, HSE Chief
Financial Officer.
The HSE Drugs Group will publish the list of planned
dates for its meetings at the outset of each year. There
are approximately 6 meetings a year to consider the
NCPE recommendations.
For cancer drugs the input from the NCCP Technology
Review Group is also considered.
Companies will be advised that their drug is for consideration at the Drugs Group meeting and the
date of that meeting. Companies will also be advised in writing of the recommendation of the Drugs
Group within 14 days.
Recommendations from the HSE Drugs Group will be considered at the next HSE Leadership Team
meeting and a decision will be made within 45 days of the Drugs Group recommendation.

13. Assessment process following 2016 IPHA/HSE/DoH discussions
When the HSE receives a rapid review report or a HTA report it will
consider that report within 14 days, decisions are subject to the following:
(a) Criteria under Schedule 3 Part 3 of the 2013 Health Act
(b) Overall HSE resources as allocated by the Dail

14. ≤ € 20,000
/QALY
> € 20,000
≤ € 45,000/Q
> € 45,000
/QALY
Budget neutral
or ≤ €5 million
HSE – CPU HSE – CPU HSE
Leadership
> € 5 million
≤ € 20 million
HSE – CPU HSE
Leadership
HSE
Leadership
> € 20 million HSE
Leadership
HSE
Leadership
HSE
Leadership
QALY Threshold as per NCPE assessment
Net budget
impact (over
5 years ) as
per NCPE
assessment
for each
drug *
Decision Authority Level Table
* If the 5 year gross budget impact exceeds € 30 million HSE Leadership

15. The final decision on reimbursement is made by the HSE
in line with the Health Act 2013
In reaching its decision the HSE shall have regard to the criteria set out
in Schedule 3 Part 3 of the Act including:
1. The health needs of the public
2. The clinical need for the item
3. The resources available to the HSE
4. Potential budget impact of the item
5. Cost-effectiveness of meeting health needs by supplying the item
6. The proposed costs, benefits and risks of the item relative to
therapeutically similar items or listed items provided in other
health service settings and the level of certainty in relation to the
evidence of those costs, benefits and risks

16. Assessment process following 2016 IPHA/HSE/DoH discussions
The HSE has statutory responsibility for decisions on pricing and
reimbursement of drugs, in accordance with the Health (Pricing and
Supply of Medical Goods) Act 2013.
Where the HSE approves reimbursement of a drug, reimbursement will
be implemented within 45 days.
In a situation where the HSE cannot fund the drug from within existing
resources it may inform the Department of Health. The Department of
Health may bring a memorandum to Government in relation to the
funding implications.

17. “They are not political or ministerial decisions”
Nivolumab (Opdivio)
“game – changer”
“Decisions on which medicines are reimbursed by the
taxpayer are made on objective, scientific and economic
grounds by the HSE on the advice of the National Centre
for Pharmacoeconomics. They are not political or
ministerial decisions”
Kathleen Lynch
Oireachtas debate 2/2/2016

18. Number of products reviewed by the NCPE 2006 - 2016
0
10
20
30
40
50
60
70
Medicines assessed
21/7/2016

19. A review of the HTA process 2010 - 2015
HTA not required = 108 (47%)
230 rapid
reviews A full HTA required = 122 (53%)
Payer led price Full HTA’s Undergoing HTA submission not
negotiation leading reported the HTA made n=24 (20%)
to reimbursement n=71 (58%) process n=15 (12%)
n = 12 (10%)
McCulloch L. & Barry M 2016 (in press)
Positive
reimbursement = 100
Negative
reimbursement = 8
Recommended Not at the submitted price Not recommended
n=19 (27%) n=44 (62%) n=8 (11%)

20. Estimating revealed weights for a multi criteria decision analysis
approach to Health Technology Assessments: A case study in Ireland
The analysis confirms that recommendations for or against
reimbursement of technologies are driven by the following:
Cost – effectiveness (ICER)
Quality of available evidence
Safety & Tolerability
Innovation
Schmitz S. et al 2013

21. Challenge of communicating the HTA decision

22. Ipilimumab
‘Ippi’
Ipilimumab is a monoclonal antibody that blocks cytotoxic T-lymphocyte associated antigen 4
(CTLA-4), a negative regulator of T cells, thereby augmenting T-cell activation and proliferation.
It is indicated for the treatment of advanced melanoma in adults who received prior therapy.
Health Technology Assessment & the public
September 2011
Price: € 85,000/patient
Budget impact: € 4,800,000 - € 7,400,000 per annum
Δ median overall survival = 3.6 months
Basecase ICER: € 147,899/QALY or € 92,443/LYG

23. Ipilimumab
‘Ippi’
“We believe the Company has failed to demonstrate the cost-effectiveness of
ipilimumab for the treatment of advanced melanoma in adult patients who received
prior therapy. We cannot recommend reimbursement at the submitted price”.
Health Technology Assessment & the public
September 2011
Price: € 85,000/patient
Budget impact: € 4,800,000 - € 7,400,000 per annum
Δ median overall survival = 3.6 months
Basecase ICER: € 147,899/QALY or € 92,443/LYG
Final ICER approx € 116,000/QALY

24. Rewarding innovation

25. Innovation – definition ?
“a new or existing medicine applied in a way which significantly
improves healthcare at a price the HSE can afford”
• does not have to be a new product
• does have to significantly improve health outcomes
• does have to be affordable
there must be added value

26. ‘Personalised medicine’
The concept of individualising drug therapy in light of genomic
information is a rapidly developing area of clinical pharmacology
A personalised medication = cost-effective medication (surely !!)

27. Cost effectiveness of crizotinib (Xalkori) for the treatment of adult
patients with previously treated anaplastic lymphoma kinase (ALK)
– positive advanced non-small cell lung cancer (NSCLC)
Price: € 49,719/patient
Budget impact: € 1,610,893 per annum
Δ median progression free survival (PFS) = 4.7 months
No evidence of an overall survival benefit ( 20.3 vs 22.8 months)
Basecase ICER: € 165,616/QALY
Probability that crizotinib is cost effective = 5%
€ 6,242.00
Crizotinib is a
tyrosine kinase
inhibitor

28. Opportunity cost !

29. Reimbursement of Ipilimumab (Yervoy®) – opportunity cost !
Original price – revised price: implications for the treatment of other
patients with serious medical conditions such as hepatitis C & MS e.g.
We could treat an additional 65 patients with Fingolimod (Gilenya) or
We could treat an additional 60 patients with Telaprevir (Incivo)

30. Reimbursing at very high ICER values

31. Cost (€)
Effect
(QALY)
Recent ICERs
€ 23,000/QALY Rivaroxaban – AF
€ 16,023/QALY Telaprevir – Hep C
€ 11,411/QALY Boceprevir – Hep C
€ 116,000/QALY Ipilimumab MM
€ 112,905/QALY Vemurafenib MM
€ 105,420/QALY Abiraterone PC
Cabazitaxel PC € 110,032/QALY
Crizotinib NSCLC € 165,616/QALY ?
€ 203,028/QALY Pertuzumab BC ?

32. Cost (€)
Effect
(QALY)
Opportunity Cost !
€ 23,000/QALY Rivaroxaban – AF
€ 16,023/QALY Telaprevir – Hep C
€ 11,411/QALY Boceprevir – Hep C
€ 116,000/QALY Ipilimumab MM
€ 112,905/QALY Vemurafenib MM
€ 105,420/QALY Abiraterone PC
Cabazitaxel PC € 110,032/QALY
Crizotinib NSCLC € 165,616/QALY ?
€ 203,028/QALY Pertuzumab BC ?

33. After the HTA – what happens next ?
Health Technology Assessment
Positive HTA Negative HTA
Accept new
technology Reject new
technology
Price
negotiation
Performance
based schemes
&/or
Not at the
submitted
price
2
2c
1
2a
2b

34. ICER
The cost-effectiveness analysis usually includes a price/ICER assessment i.e.
pricing threshold analysis
This indicates the price of the product where the decision maker considers it
cost-effective or value for money
Price ICER relationship
Price (€) per patient/year
€100,000/QALY
€45,000/QALY
€35,000€10,000
Q1 For this particular
product the asking
price is € 35,000 per
patient per year. This
gives an ICER of
€100,000/QALY
which is not cost-
effective.
The product becomes
cost-effective at a
price ≤ €10,000 per
patient per year.

35. The challenge of risk sharing schemes
The payer funds the drug for a defined
period of time, with manufacturers
refunding the cost of the drug in
patients who did not achieve the
targeted health outcome (e.g.
bortezomib for Multiple Myeloma)
Barry & Tilson IMJ 2010;103(5):133

36. What about affordability ?

37. Ivacaftor for cystic fibrosis
Price of CF drug may be health cuts elsewhere
‘About one-third of the entire budget for new drugs this year will go
towards making new CF drug available’
Irish Times 2nd February 2013

38. High Cost Drugs – recent examples
€ 76,000/patient/year (CML)
€ 411,000/patient/year
(Duchenne Muscular Dystrophy)
€ 117,000/patient/year (CLL)

39. Affordability – the real issue !!

40. Affordability – the real issue !!
€200 - €500
million
€ 50 - € 100
million/yr
€ 80 - € 90
million/yr

41. HSE 2016 Service Plan
‘new initiatives for 2016’
Funding set aside for new initiatives for 2016 is € 96.5 million
HSE € 38.5 million
- € 13 million acute hospitals
- € 10 million cancer services
- € 7.2 million disability services
Department of Health € 58 million
- € 35 million mental health
- € 13.5 million primary care

42. HSE 2016 Service Plan
‘new initiatives for 2016’
Funding set aside for new initiatives for 2016 is € 96.5 million
HSE € 38.5 million
- € 13 million acute hospitals
- € 10 million cancer services
- € 7.2 million disability services
Department of Health € 58 million
- € 35 million mental health
- € 13.5 million primary care
Opportunity Cost zone

43. Creating space

44. How much space ?
€ 785 million € 600 million

45. Conclusions
• Cost containment in the area of pharmaceuticals will continue to be
a priority for the HSE as outlined in the 2016 HSE Service Plan –
biosimilars, reference pricing...
• The HTA process will likely continue as is with a greater emphasis
on the ‘rapid review’ component
• The IPHA/HSE negotiations may have implications for HTA e.g.
HSE willingness to pay
• Ongoing collaboration with stakeholders including patient
representatives and the Pharmaceutical Industry in relation to the
HTA process
• Continuation of NCPE involvement at the European level

46. Thank you
NCPE www.ncpe.ie