Epp gabbia filippo 2019

Using the Value Based Procurement Framework to
capture the value of our products in Tenders
A Value Based Strategic Tender Approach
Filippo Gabbia
EMEA Strategic Tender Former Johnson & Johnson
EPP Life Sciences Pricing Forum® 2019
1EPP B2Me Pricing Forum - Monetized 2019

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Public Procurers work under pressure!
The key question is why we need a tender strategy. According public procurement
laws. Public Procures should give to any interest bidder parity of opportunities, they
should not make any kind of favoritism therefore they are cautious talking to us. In
several EU countries is even difficult to talk to them. To approach tenders effectively
we need to learn to reach/talk to them using effectively the market consultation
process.
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Innovations are hard to sell with public tenders….
Driving innovation is in general a challenge. Hospitals have shrinking budgets and
rising costs. Innovation is perceived also as a threat to their equilibrium. They
tenders as usual and this does not leave space to innovation.
Open tenders require to define clearly the product’s specification in the invitation to
tender. If we wait when tender documents are published it will be to late to drive
innovation. Open tenders are 98% of the total tenders published on TEDs.
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There is a clear focus on price….
We are all here for this reason! Maybe the Price only tenders are decreasing or used
only for commodities. The biggest challenge I think today are tenders that are not
capable to differentiate.
In Most EU countries we moved fast from Hospital Based Procurement to centralized
procurement. The assessment commission are today formed by a multiplicity of
stake holders often detached from products utilization.
There is an increasing utilization of highly structured and objective tender criteria.
The Result is that those criteria often are not able to give a premium price to the
quality. For example often Drug’s tenders are based on the Active Pharmaceutical
Principle and the only quality award criteria is the delivery time/service.
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But how do we ensure that the quality is there?
Quality is a key element in the EU Single Public Procurement Strategy. There is a
clear policy drive to foster the use of MEAT (Most Economically Advantageous)
tenders. But the definition of quality within the rigidity of the public procurement
system is not easy.
It is not easy for us when we want to procure something. Just an example: how do
you define the quality of a bottle of wine?
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We need Value Based Pre-Tender Strategies in order to
approach the Complex Public Procurement Ecosystem!
Procurers
Users
Political
Patients
Are we sure that the procurers will make the decision?
Are we sure that our Marketing Messages are consistent with a pre tender strategy?
Are we sure that we can win tenders increasing our intimacy with the Hospital’s C-
Suites?
We need to have a clear strategy to approach all stake holders involved in the
process with consistent, congruent messages that are fair, non discriminatory and
can support the institutions to reach their Health policy political goals.
EPP B2Me Pricing Forum - Monetized 2019 6

Value Based Procurement is an Industry Driven Model to
support Public Procures to approach MedTech tenders
Outcomes
Costs
incl. care delivery
Patient
HCP
Health
system
Socio-economic
impact
Provider
Other benefits for key
stakeholders
Core value: outcomes
vs costs
Broader impact on society
Importance
Source:
Value Based Procurement is an Industry suggestion to public procurers. Basically, as
Industry, we suggest how health care procurement should be done.
The Theory has been built by a working group (the community of practice) that
engaged Industry representative and public buyers coming from different countries
with the support of BCG.
The MedTech Value based Strategy is grounded into the Value Based Health Care
Principles. The core of the Model is Porter’s Value equation Core value in terms of
outcomes, that matter for patients vs. the related product and provider costs
You have a second layers that includes the benefits for all the stake holders involved
in the process.
The third layer includes the policy objectives and guideline.

The MedTech Value Based Procurement Model is an
Extensive list of relevant awarding criteria
Broader impact
on society
Outcomes
Costs
Product
Care
delivery
Other benefits for
key stakeholders
Sustainability
Innovation
Socio-economic
impact
Outcomes & evidence
Outcomes focus
Disposal
Operating / healthcare
delivery
Purchasing
Maintenance
Provider
benefits
Secondary
patient benefits
Health system
benefits
HCP
benefits
Environmental impact
Socially responsible product value chain
Development of new and improved technologies
Contribution to development of health care
Impact of people not in the workforce
Burden carried by non professional carers
Impact on competition in MedTech sector
Evidence of relevant outcomes improvement
Existence of high quality outcomes data
Support in measuring and reporting on outcomes
Willingness to offer outcomes-dep. risk-sharing
Disposal / decommissioning
Cost of consumables
Price of purchasing / renting product
Conversion: staff training for new product ...
Spare parts
Patient and/or relative comfort and convenience
Patient flexibility & mobility
Impact on treatment adherence
Reduced long term costs of treatment
Reduction of rehospitaliz. / number of treatments
Ease-of-use / handling & functionality
Service contract
Infrastructure usage ...
Maintainability & technical service support
Support improving efficiency along patient pathw.
Alignment and support with reimburse. structure
Support on admin., storage and logistics
Strategic fit for provider and support of strategy
Compatibility: required upgrades to infrastructure
Technical staff time
Medical staff time using device
Secure usage for care providers
Ease-of-use / handling & functionality
Training and access to education
Layer Category Criteria
Source:
Value Equation. VBHC
implementation
Public Tenders ARE
multicriteria. Different stake
holders should be considered
Public Policy Goals
You have to remember that public tenders are by definition multicriteria (with the
exception of price only tenders). Tenders are multi criteria because a key goal of
Public Procurement is to make sure there is competition in the market. Example: if
you have all tenders based on a single criteria that only one company can meet the
tender results are predictable. It will discriminate bidders and those will be likely not
even motivated to bid.
The VBP model is an extensive list of criteria. In my experience I think that the
criteria should be tailored on the specific contracting authority need in relation to
the technology they want to procure.
Basically the Contracting/ Purchasing authority should identify a list of relevant
criteria on which they can objectively compare all bidders in order to identify the
one that best meet their needs.
Value Based Procurement is a Procurement Side approach.

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Value Based Procurement from a Supplier Perspective
Value Based Strategic Tendering
Approach
• What are our customer’s needs in
relation to our specific offer?
• How our offer best meet those needs?
• Tender Oriented Messages
• Stake Holders Strategy (Internal /external)
• Market Consultation input
Tender Submission
• Readiness
• Effectiveness
Pre Tender Phase: 12-18 Months In-Tender Phase 20 days
The key question is what we should do as supplier to implement Value Based
Procurement?
My answer is to develop Product/solution specific Value Based Pre-Tender
Strategies. Public Procurement purchase products or solutions to meet their needs
they do not purchase Companies or brands.
Public Servant must base their choices on the capacity of those to meet specific
needs. Those needs must be transparently defined in the call for tender.
Our Product Specific strategic tender approach aims to support the procurement
team to develop transparent, fair, non discriminatory tender requests that will focus
on quality.
The competition among companies will focus on the adoption of specific quality
criteria and then on the capacity to prove that its product best meet those criteria.
Pharma Public Tenders in EU can be clustered into two different tender approaches.
ONE based on the Active Principle, the competition is therefore within drugs with
the same active principle (from which the characteristic therapeutic action of the
substance largely depends). The Second Approach is on the Therapy and Indications
similarly for reimbursement.
Option One allow potentially the competition on additional outcome that may be
proved by specific drugs, the posology, all the value added services that help with

the drug management, appropriateness and therapy adherence. The second could
also address the breath of indication or specific outcome on segment of population
etc… My overall impression is that the VBP approach can be applied also in the
Pharma business.

1. What are the key outcomes that matter to patient’s physicians and hospitals while
using this product or drug?
2. Can those outcome differentiate bidders?
3. Are there Specific indication/counter indication Warning and precautions Vs subject
matter competitors?
4. Are there product class related complications? How do we score on those
complication, what is the evidence?
5. What is the most important application (procedure/patients category?)
• What is the evidence on this application
• Are there particularly delicate application where this product could make the
difference?
How do we score against the subject matter competitors on the above questions?
Big Qs
Outcomes
Outcomes & evidence
Outcomes focus
Evidence of relevant outcomes improvement
Existence of high quality outcomes data
We need to work product by product to anticipate tender requests. I developed with
a cross cultural team of people with various background and tender experience
representing all EU countries a set of questions for each criteria in order to assess if
the criteria is relevant for the users and the patient in relation to the specific
product.
Outcome are key to define the value of a product/solution. First key question is:
What are the key outcomes from a customer perspective? How does the product
could impact the care process? Are there specific complications related to the
product’s utilization. It may be that the specific product does not have a direct
relation with the procedure/patient outcome. For example: cancer patients' key
outcome will be the disease removal and increase life expectancy. For example it is
difficult to link those key outcome to the utilization of different brands of sutures in
surgery or to different Drugs with the same active pharmaceutical principle. If
adverse events have been reported it may be that those led to specific warning or
precautions or even counterindication those could be a great source of
differentiation.
If a relevant outcome is not differentiating brands this could be used as a minimal
entry criteria and any proved improvement from that baseline could lead to
incremental scoring.
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Example:
Outcomes & evidence
Survivorship (Subject Matter: Orthopedic Prosthesis)
What:
• Provide the evidence of product survivorship from multiple National Registers.
Why: Value to the Patient and the HC System:
• Survivorship is defined as the average time before a revision is required for any cause. Long term
survivorship is a direct measure of implant performance and is monitored rigorously in many
health care systems (the higher the number of registers the more the results are reproduced in
different HC environments, the higher the number of patients the more robust the observed
survivorship findings as the confidence interval will be narrower).
How can it be assessed:
• Survivorship can be assessed as an absolute value assessing the average probability of first
revision within the proposed registers.
• The value could be weighed on the number of registers proposed giving the highest score to the
highest number of registers and/or cumulative number of patients
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Example how we have developed a product specific tender awarding criteria to
suggest during market consultations. Note Awarding criteria must be fair, non
discriminatory, specific and linked to the subject matter.
The What represents on of the potential awarding criteria we have envisioned
defining our product specific tender strategy. You notice that the criteria is product
agnostic.
The Why is the Value that this criteria could bring to the system. If you have HTA
models your value proposition will be stronger.
The How is the process the Contracting authority could follow to objectively
compare bidders. In this case we have also identified a potential exclusion criteria
that is supported by a relevant authority.
This is an Ideal formulation of the criteria and the assessment methodology. The
contracting authority will go through internal and external consultation (which for us
are a kind of black box) and will phrase the criteria in its own way. My assumption is
that the better structured our proposal is the higher is the probability that they take
it as it is.
Note the criteria is able to differentiate different knee implants, it does not
differentiate hips implants therefore a different strategy could be used such as:
10/17/2019
05_ASM09_ColleenGoggins_v32.ppt 11

Minimum entry criteria: rates of revision of 5% or less at 10 years in at least one
national register. E.g NICE recommendation (In-Out or No Score if not reached)

RW Example: Outcome Based Criteria in Tender
Croatia National Tender Orthopedic Implants
Open Procedure. MEAT with 3 criteria:
Relative Clinical Efficacy and Safety 35 points out of 60
The PA required Suppliers to provide survivorship evidence from at least 3 National
Registers and provided a detailed scoring system for each product category.
Following the example for Knee and our internal score assessment
Implant Level Points
Comp. 1 Highest level 31
Comp. 2 Highest level 31
Comp. 3 Intermediate level 20
Criteria based on Survivorship has been used in several EU tenders, I’m aware of
examples from Spain, Sweden, UK and Croatia.
This example is in my opinion the best. The table represent our analysis of the score
according the given criteria. This criteria is relevant for the product category.
If you are competitor 1 or 2 probably it is a good idea to define a key stake holder
advocacy strategy involving users maybe also patient’s associations and politicians in
order to maximize the use of the criteria and its weight. This will maximize your
pricing strategy.
Note if you are competitor 1 you should also put in place a key Criteria strategy to
make sure you will get an advantage over competitor 2.
If you are competitor 3, 4, 5 you should assess the risk that this criteria is used and
monitor its potential application for example during the market consultation. If the
contracting authority decides to use it you should put in place an advocacy strategy
to minimize its weighting otherwise the effect on price will be detrimental.
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Price or Costs?
• The most economically advantageous tender can be identified on
the basis of the price or cost, using a cost-effectiveness
approach.
• Contracting authorities are required to provide in the
procurement documents the method they will use to determine
the costs….
• The cost effectiveness method should be based on objectively
verifiable and non-discriminatory data….
Ref. Art. 67 and 67 EU 24/2014 (enacted in all EU countries)
The ne EU public Procurement directive opens clearly the opportunityto assess
products on costs vs price. This potentially allow to consider the full cost of care.
It is important for you to understand the legal requirement in relation to the cost
effectiveness approach. Value Based Procurement is often confused or mixed with
Health Economics. There has been tentative to use HTA methodologies into
procurement process od medical devices.
My view is that Health Economics focus on the Payer’s and Provider relation and it is
the base of the decision to reimburse a Technology or a Therapy. Health Economics
can also impact the decision to allocate specific Budget at Hospital level. Most of the
time the studies requires specific hypothesis or are applied to limited settings.
VBP Procurement defines the relation between Provider and Supplier. The Provider
through VBP must choose the Product (within the chosen technology or Therapy)
that best meet its needs. First of all the competition in Open Tenders (98% of
tenders) is within the same technology. PPI could be used also to compare different
technologies but this still embryonal.
The public provider must choose the product treating fairly all bidders and avoiding
any risk or discrimination or favouritism.

Cost Effectiveness Approaches in tenders
Ref.
https://ec.europa.eu/health/expert_panel/sites/expertpanel/files/docsdir/opinion_innovative_medicines_en.pdf
• Price-Risk Share
• Product performance
• Specific clinical, operational of
financial outcomes
• Outcome based
Managed Entry
Agreements
• No multifactorial and easy to
measure in the short term
indicators
• Real World Evidence
• Pay for Performance/ Result
• Outcome grantee schemes
• Success fee (Risk Sharing)
• Registers
• Combination of treatments
• Digital/ patient’s compliance
What: How: Key elements:
Frankly I saw only one tender where a cost effectiveness approach was used in
Denmark for Orthopeadic prosthesis. The methodology was based on a risk/benefit
sharing approach. I’m aware also of a case in the Cardiovascular field Sau Pau
Barcelona where there was a benefit sharing.
I know also that there are pretty a lot of companies that have put in place Risk
sharing schemes, but I did not see those schemes applied through tenders.
One way to apply cost effectiveness methods in tenders is through risk sharing.
Basically the cost = Price – Risk Share.
A tangible example could come from Pharma with the Managed Entry Agreement. It
is not strictly public procurement, it is more in relation to reimbursement but those
programmes meet the public procurement requirements of Transparency,
verifiability and objectivity.
Market entry agreements can be the first step towards more elaborated strategies.
New payment models based on outcomes (value-based health care), with bundled
payments that may include bonus and penalties related to positive and negative
outcomes defined in a contract, mark a change to simply paying for a product. This
makes acquisition of medicines to treat patients closer to the commissioning of
health care services, particularly if pharmaceutical products are used in combination
with diagnostics or/and treatment involves combining several pharmaceutical

products. (Jonsson et al., 2016)

How Value Added Services and new digital options
could be valued in tenders?
→ Subject Matter: Solution Vs Product
(eg 36,5° temperature Stable along the pathway to procure thermal blanket)
→ Awarding Criteria that assess the specific service
We are all developing and offering services in conjunction with our products. For
Stock Management programs, Digital solutions to improve patient’s engagement and
cure adherence. Are we able to monetize those services?
The example is self explanatory in this tender issued by UnHa In France they
procured the solution to the problem: stable temperature vs a thermal blanket.
Awarding criteria could be a mean to introduce those services. The weights of the
awarding criteria is the value that the contracting authority perceives for the service
in relation to the overall tender economy.

What:
• Enhanced patient pathway program with supporting reductions in length of stay whilst
ensuring no impact on linked parameters such as adverse events, re-operation rate
and readmission rates
How can it be assessed:
• Program description with hospital examples, benchmarks and level of evidence to
prove impact on length of stay and linked parameters (adverse events, re-operation
rate and readmission rates). Alignment with international recognized protocols such as
ERAS.
Provider
benefits
Support improving efficiency along patient
pathway
Other benefits for
key stakeholders
The outer circle of Value Based Procurement focus on different stakeholders. Here
we can position criteria that could help us to drive value added services. This criteria
has been developed from a tender in Wales UK.

What:
• User’s (patient’s, GP…) instruction, training tools to facilitate patient’s utilization, adherence,
engagement and to prevent user’s errors
How it can be assessed:
• User’ instruction clarity and completeness (could be also a selection criteria) .
• Build in guides
• Specific training tools/programs for optimal solution utilization.
• On line training availability and tools.
• User’s instruction embedded within App.
Patient’s/HCP…
benefits
Impact on Patient’s adherence, engagement
Digital app.
Other benefits for
key stakeholders

Key
Learnings
• EU is moving toward a Single Public
Procurement Market. Similarities are more
than the differences
• Strategic Tendering is not a short term
strategy (you need top management
commitment)
• You need to move from Theory to Practice.
Examples are key
• Tenders are based on details and
commitment. Approximation and assumption
don’t work
It is a key goal of the EU commission to build a single Public Procurement Market.
This does not mean that we will see European wide tenders covering all EU markets.
This means that the obstacles that bidders have to tender in different market should
be removed. A key way to remove this obstacle is to make sure that the process to
bid is the same in all markets. The definition of Subject Matter and awarding criteria
is already the same. We can therefore build a EU strategy at least on the What they
want to procure and the How they are going to assess different bids.

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The tender process seems like a black box….
Garbage in garbage out. Often procurers combine previous tender documents with
feedback from Internal consultation. Today the EU commission is “politically”
pushing to use Public Procurement, the public purse, as a strategic mean to drive
innovation. They ask to engage more with internal stake holders to make open
Market Consultations
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Tender Procedure Subject Matter Awarding Criteria
A new solution
A solution
How do
they want
to
procure?
Just a product
What do
they want
to
procure?
Risk/Benefit sharing opportunities as performance clause within the contract
To acquire value
From Price to Value through tenders
To acquire services
How do they assess
different bids?
HOW in Practice:Strategically approach the Pre-Tender Phase
focusing on the opportunity to procure Value
PCP
PPI
Open Tender
The choice of the tender Procedure will define the level of interaction between
authority and potential suppliers. It will define the scope on which they are willing to
innovate introducing new services, or value.
The majority of Tenders (98%) are Open Tender. There is a clear EU drive to use PPI
and PCP to drive innovation in the system (which are specific negotiated procedures
to drive innovation in the system). If we want to hit our sales target we must win
open tenders.
All current Notices CPV 33000000 (all med and pharma) on 18.09.19 (11028 Open,
141 Negotiated with Competition; 7 Competitive dialogue; 3 Innovation parthnersip)
Choice of subject-matter is particularly important because it determines the
permissible scope of specifications and other criteria Prcurers may apply. This is due
to the ‘link to the subject-matter’ requirement. Public procurers cannot buy a car
assessing for example the Car’s Navigation system customer support. But if they buy
a transportation mean, or a solution to mobilize a specific category of patients they
could use solution specific criteria.
The Tender Criteria are of paramount importance since they must be able to
differentiate among different bids. If the awarding criteria are not able to
differentiate the quality the tender will be won on price.
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Solution Tender
Example UniHA Thermal Blanket Case (Comp. Dialogue)
• https://www.medtecheurope.org/access-to-medical-technology/value-based-procurement/
• https://ec.europa.eu/environment/gpp/pdf/news_alert/Issue11_Case_Study27_Consip_Energy.pdf
What:
• Global solution for patient’s warming
Value:
• 60% of patients are hypodermic
• Monitoring along the pathway is
imprecise
How:
• Whole patient’s pathway
• Clear outcome 36.5°
• Cooperative dialogue and discussion
with potential bidders
• Contract performance clauses
Further Proof:
• Consip Italy Integrated Energy
Service framework agreement (open
tender for energy provision and
renovation works)
Implications:
• Outcome Based Tenders are possible
• Risk sharing Agreement can be
implemented also in open tenders
• Measurability and timing of KPI is
key
Can Public Procurers buy solutions instead of products? The answer is yes as it is
proved the VBP Pilots Thermal Blanket procured by UniHa. This tender was a
competitive dialogue awarded to 3M.
There is also a great example of an open Tender in the Energy Business in a
challenging procurement environment
Both cases have a communality: the temperature is an objective outcome that can
be measured easily and directly. This opens up a key element, if Real World Evidence
is used to define outcome or even performance clause, it should be verifiable in the
short term. Verifiability is a key element in public procurement.

Example: Welsh Betsi Cadwaladr 2019
• Below threshold: 100K Lst
• Subject Matter: Development of a Formal Hip Fracture ‘Enhanced Recovery Programme.
• Design and implement a formal Betsi Cadwaladr Hip Fracture Programme, which delivers a new care pathway based
on the Welsh National Hip Fracture Pathway (as a minimum), but with additional best practice interventions
recommended by NICE guidance and English Best Practice Tariff. This will deliver a consistent, standardised and high
quality patient pathway, with minimal variation in delivery across North Wales.
• Performance Based Specification with length of stay reduction goal.
• CPV codes: 72221000 Business analysis consultancy services
• 72224000 Project management consultancy services
• 79410000 Business and management consultancy services
• 79411100 Business development consultancy services
• 79421000 Project-management services other than for construction work
• Open Tender: MEAT 60% Quality 40% Price.
• Quality Criteria:
• Project Plan & Timelines; Method Statement; Evidence of Pathway Redesign; Key Personal
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