GETTING TO ACCESS Innovative approaches to innovative medicines March 29, 2017

1. M ani & O’Qui nn Rei mbursement S trategy Experts
( M O R S E )
Pricing & Reimbursement Exercise:
Se4ng the Payer Context
Sherry O’Quinn
Managing Principal
March 29, 2017

2. Objec&ve
Proprietary and Confiden?al 2
To provide all par?es with a beFer
understanding of the factors that payers must
consider when making funding decisions.

3. Healthspendingasashareof
totalspendinghasstabilizedat
38%.
Proprietary and Confiden?al 3
Provincial/territorial
government health
expenditure as a
propor?on of total
provincial/territorial
government
programs, Canada,
1993 to 2015.

4. Drugsarethe2ndlargest
shareofhealth
expenditure
The drug expenditure share has been increasing since the mid-1980s, and it had accounted for
the second-largest share (16.0% in 2014), aWer hospital spending, since 1997.
Proprietary and Confiden?al 4
Total health expenditure,
share of selected use of
funds, Canada, 1975 to
2014

5. 42.6%ofprescrip&on
drugspendingisfunded
bypublicpayers
• In 2014, $12.5 billion (42.6%) of prescribed drug
spending was financed by the public sector.
• In 2014, the public share of prescribed drug spending
varied among provinces, ranging from:
o 29.8% in New Brunswick;
o 33.0% in Prince Edward Island;
o 45.5% in Quebec; and
o 49.9% in Saskatchewan.
Proprietary and Confiden?al 5
Source: Canada’s health expenditure: Spending on prescribed drugs
increases, total growth remains slow (CIHI Media
rELEASE-2016.12.15)

6. Publicdrugspending
reachedahighfrom
2014-2015
• Compared with overall slow growth in health
spending, public drug program spending
increased 9.2% from 2014 to 2015.
o In 2014, public-sector spending on prescribed
drugs increased by 4.0%.
• The introduc?on of new and expensive
chemicals to treat hepa??s C à two-thirds of
the growth in spending in 2015.
• Patent expira?ons and generic pricing policies
are no longer leading to significant reduc?ons
in year-over-year growth; however, the
savings they achieved persist.
Proprietary and Confiden?al 6
Source: Prescribed Drug Spending in Canada, 2016
(CIHI-2016.12.16)

7. Payersstruggletomanage
currentbudgetswithintheir
constrainedsystem.
Proprietary and Confiden?al 7
Stakeholder Pressure
Significant stakeholder pressure to
fund most drugs (e.g.
manufacturers, pa?ent groups,
media, poli?cal, etc).
Budgets
Forecasts far exceed the budgets set
by governments.
Resources
Time and people are required to
offset the increasing volume of
workload: new launches, nego?a?ons,
re-evalua?on

8. Payershavedeveloped
strategiestomanagedrug
planexpenditures
Proprietary and Confiden?al 8
Drug Specific approaches:
• pCPA standard nego?a?on
approach
• Therapeu?c class re-
nego?a?ons
• Revision of criteria,
disinvestment/de-lis?ngs
• More restric?ve and/or
administra?vely
burdensome access
Program/Policy approaches:
• Program changes related to
eligibility, co-pays & deduc?bles
• Generic pricing and uptake policies
• Biosimilar pricing and uptake
policies
• Broad decisions not to list or to
delay lis?ng drugs that will have
cost impact
• Convince government/finance to
increase their budgets
Most of the drug-specific and program/policy tools are in use or have been
used…many are not ideal and likely no longer enough.

9. Payer“toolkits”are
likelytoevolve
• Drug plan managers have been discussing how to
manage their challenges in public forums and their
need to make “tough choices”.
• Some of these are already underway in certain
dis?nct circumstances:
o Saying “no” to more drugs
o Therapeu?c re-nego?a?ons
• Some are not formally in place but are being
discussed in various sehngs:
o Disinvestment (Oncology)
o Priori?za?on (pCPA and jurisdic?ons)
Proprietary and Confiden?al 9

10. Drugplan“solu&ons”willbe
imposedunlessother
alterna&vesarepresented
Proprietary and Confiden?al 10
• Many of the approaches being taken or considered are not
ideal for any party, including public payers (government).
• Drug Plan Managers do not feel they have other tools that
can be used to manage their budgets in a sustainable way.
• Without some assistance from other stakeholders,
governments will likely make decisions to manage their
budgets through these types of policy and decision
mechanisms.