Drug pricing strategies to balance patient access and the funding of innovation Drug pricing strategies to balance patient access and the funding of innovation
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The document discusses strategies for balancing patient access to drugs with funding pharmaceutical innovation. It notes that developing a new drug takes over 10 years and $2.6 billion on average. Spending on prescription drugs makes up only 10% of total healthcare spending in the US. Cross-country drug price comparisons are misleading because pricing systems differ between countries. Alternative pricing schemes like outcomes-based agreements can help address uncertainties around drug effectiveness and outcomes. Key actions to facilitate value-based pricing in Saudi Arabia include updating regulations, improving data collection, building trust between stakeholders, and establishing standardized outcome measures.
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Drug pricing strategies to balance patient access and the funding of innovation Drug pricing strategies to balance patient access and the funding of innovation
- 1. Drug pricing strategies to balance patient access and the funding of innovation Norah Al Johany PRA Pricing Reimbursement & Access Manager
- 2. Disclosure of Interest • I work for Eli Lilly & company as a pricing reimbursement & access manager Lilly affiliate in Saudi Arabia. • The content of this presentation reflects publicly available literature and personal views related to personal experience in pricing reimbursement & access • The partnership with the congress organizers does not involve financials, reimbursement or compensation. • I’m very grateful for the invitation as a speaker and looking forward for future collaborations. 7/22/2019 2
- 3. 3 How to balance patient access and the funding of innovation
- 4. How much does it cost to develop a new drug $ 2.6B $ 1.3 $11 B $ 4 B 4
- 5. How much does it cost to develop a new medicine • On average, it takes more than10 years and $2.6B to research and develop a new medicine. • Just 12% of drug candidates that enter clinical testing are approved for use by patients http://csdd.tufts.edu/news/complete_story/pr_tufts_csdd_2014_cost_study 5
- 6. Spending on Medication 2015 6 4% 29% 32% 10% 2% 23% Dental Servies Physician & Clinial servies Hospital care Perscirtion medication Nursing Care Facilities other Source: CMS National Health Expenditure Data and Altarum Institute 2015
- 8. Spending on medication is small percent of the total health care spending 7/22/2019 8 Note: Prescription drug data is net of rebates and includes both retail and non-retail drugs. Data used were predominantly derived from CMS 64 reports. Pre-rebate expenditures were tabulated using FY2015 CMS State Drug Utilization data files and CMS brand/generic indicators for each NDC. Source: CMS National Health Expenditure Data and Altarum Institute
- 9. The United States has higher prescription drug prices than other countries ? • Yes • No 9
- 10. WHY CROSS-COUNTRY COMPARISONS ON DRUG PRICES ARE MISLEADING • “It is not accurate to say, then, that the United States has higher prescription drug prices than other countries. It is accurate to say only that the United States has a different pricing system from that of other countries. Americans pay more for drugs when they first come out and less as the drugs get older, while the rest of the world pays less in the beginning and more later.” • –Malcolm Gladwell, New York Times bestselling author Company Confidential ©2015 Eli Lilly and Company 10 • nearly 90 percent of all medicines prescribed to U.S. patients are generics WHY CROSS-COUNTRY COMPARISONS ON DRUG PRICES ARE MISLEADING phrma.org/misleading-comparisons
- 11. Why 11 Organisation for Economic Co-operation and Development (OECD) 2015
- 12. Cross-country price comparisons are misleading • Sitting on an airplane we would be shocked to find out what the prices are that each passenger on the plane has paid for his ticket 12 http://abcnews.go.com/Travel/airline-ticket-prices-shown-vary-wildly-seats-flight/story?id=24928939
- 13. ‘ Why drug pricing is so different from other industries (supply _demand ) 13 Physician Payers Patient I will rely on my physician in determining the best treatment The price of global health Ed Schoonveld $
- 14. Defining how the prices are set for new products Reference based pricing • Therapeutic referencing • International price reference Cost effectiveness Volume based pricing Free pricing Value based pricing Company Confidential © 2014 Eli Lilly and Company 14
- 15. Innovative payment models 7/22/2019 15 Physician Payers (pharma) company New medical products I will rely on my physician in determining the best treatment I need to individualize the treatment • Uncertainty about Outcomes in the real world • Volume ?? By the time we will have real world evidence new treatment will be available
- 16. Assuming no Regulations 16 how you will set the price for a new product ?
- 17. 17 The concept of pay-for-performance isn’t new in the industry Also known as : • Outcomes-based agreements • Access with evidence • Performance based agreements • Alternative pricing schemes • Risk sharing agreements • Value Based Pricing • Coverage with evidence development The price of global health Ed Schoonveld
- 18. Alternative pricing scheme categories Biomarker Outcomes -based Financial -based Biomarker linked reimbursement 1. Short term clinical Address uncertainties about long-term outcomes 1. Per patient cost capitation deal 2.Long term clinical Address uncertainties about long-term outcomes 2. Overall sales volume capitation 18 https://www.ispor.org/ValueInHealth/ShowValueInHealth.aspx?issue=5E4EB78D-D58F-48A3-9FD7-E96C7B626C11 The price of global health Ed Schoonveld
- 19. The biomarker-linked reimbursement deal • Example Herceptin UK • The drug is particularly effective in HER2-positive patients. • Payers have made reimbursement contingent on a positive biomarker test that screens for HER2-positive patients 7/22/2019 19 The price of global health Ed Schoonveld http://pharmaceuticalcommerce.com/business-and-finance/unpacking-risk-sharing-and-alternative-pricing- schemes/ In this type of arrangement, payers make reimbursement conditional on results from biomarker tests.
- 20. What are benefits barriers to implement biomarker-linked deal Benefits Barriers 7/22/2019 20
- 21. Short term performance based reimbursement deal Company Confidential © 2014 Eli Lilly and Company 21 NEHI. “Paying for Value: Exploring Innovative Pricing Arrangements for Biopharmaceuticals.” NEHI Issue Brief. March 2012. Health Alliance Announces First Fracture Protection Program for Actonel(R)(risedronate sodium) Tablets. Health Alliance Medical Plans, Inc., Press Release. PRNewswire. April 14 2009 • These deals link reimbursement to meeting short-term endpoints, such as tumor response rates http://pharmaceuticalcommerce.com/business-and-finance/unpacking-risk-sharing-and-alternative-pricing-schemes/ Sutent and Nexevar in Italy were introduced using this kind of deal and show some of the hazards of engaging in it. The Italian government reimbursement agency now frequently insists upon agreements that link reimbursement to demonstrated efficacy; Sutent and Nexevar have been approved for partial reimbursement for the first three months of use. After three months, the government only pays for patients who respond under agreed-upon patient response definitions.
- 22. Can we implement short term performance based deal in Saudi Yes No Company Confidential © 2014 Eli Lilly and Company 22
- 23. What are benefits barriers to implement Short term performance based reimbursement deal Benefits Barriers 7/22/2019 23
- 24. Long term performance based reimbursement deal 24 The price of global health Ed Schoonveld http://pharmaceuticalcommerce.com/business-and-finance/unpacking-risk-sharing-and-alternative-pricing-schemes/ The multiple sclerosis deal in the UK • MS patient registry that was created for this purpose • Under the plan patients are being followed for ten years to see the effect of the drugs • 9000 patient conceded to be followed • The largest study of MS therapies in the world • After 7 years …………………..
- 25. Can we implement long term performance based reimbursement deal in Saudi Yes No Company Confidential © 2014 Eli Lilly and Company 25
- 26. Long term performance based reimbursement deal 7/22/2019 26 • Benefits • Barriers
- 27. Financial • Per patient cost capitation deal For example when patients require more than 14 injections of the treatment • Overall sales volume capitation • France annual sales volume must be agreed upon for several years if the maximum volume is exceeded the pharmaceutical company will pay penalties 27 The price of global health Ed Schoonveld Ensures payers that cost will not exceed a certain limit
- 28. Can we apply financial based contract in Saudi ? 7/22/2019 28 • Yes Per patient cost capitation deal • Yes volume capitation • Both • No
- 29. Financial deal 7/22/2019 29 • Benefits • Barriers
- 30. This example is under which pricing scheme category • In Lilly’s partnership with Harvard Pilgrim Health Care, the regional non- profit insurance provider gets additional rebates if fewer patients using Lilly’s diabetes treatment Trulicity drug meet blood sugar goals than expected 7/22/2019 30 Biomarker Short term Long term Financial
- 31. Examples of pharmaceuticals that might be candidates for future agreements. 7/22/2019 31
- 32. Barriers to implementing value-based pricing for pharmaceuticals • Everyone likes the idea of outcomes-based contracting, but the contracts themselves are really complicated,” said Mark Fendrick, director of the Center for Value-Based Insurance Design at the University of Michigan 7/22/2019 32
- 33. Key actions that can facilitate successful value-based pricing in KSA ?? Company Confidential ©2015 Eli Lilly and Company 33
- 34. Key actions that can facilitate successful value-based pricing in KSA 34 Pharma companies- win Payers –win Update regulations Trust Data collection organizations Transparency Set of patient-centered and patient-reported outcomes measures. No such set of measures currently exists. Value-based pricing for pharmaceuticals: Implications of the shift from volume to value Deloitte Center for Health Solutions Value-Based Contracting for Oncology Drugs:A NEHI White Paper http://www.phrma.org/report/value-based-contracting-for-oncology-drugs-a-nehi-white-paper
- 35. Company Confidential ©2015 Eli Lilly and Company 38 New drugs New policy
- 36. 39
Editor's Notes
- السلام عليكم و رحمة الله و بركاته بسم الله الرحمن الرجيم
- I'm Norah Aljohany Thank you for joining us today The view and opinions expressed in these slides are my own and do not necessarily represent the views of lilly
- We are going to spend next 1/2hr discussing one of the most debated aspect of the pharmaceutical industry There is a lot of mystery about how are drugs priced You may be hearing a lot of talk lately about spending on medicines Before we start
- Risky investment Today innovative medication will be tomowwr Over the last half-century, new medicines, technologies and biopharmaceutical research have revolutionized health care and helped millions of patients live longer, healthier lives A revolution is occurring in cancer treatment, based on new insights into the biology of cancer, and resulting in dozens of new drugs on the market or in the development pipeline. Many of these new drugs are “targeted” therapies that are tailored to the specific genetics and molecular pathways of different types of cancer. The drugs have demonstrated very successful outcomes for some patients and some cancer types; for example, they can produce added months of survival without any progression of disease, or total remission for some patients with previously untreatable or relapsed cancers. Yet stakeholders have expressed anxiety and concerns about these drugs’ high list prices.1 For all payers, for patients, and for society, the potential benefit and costs heighten the need to understand the drugs’ value, and to know which patients will benefit from specific drugs..
- Medicines have remained a small share of health care spending medicines have consistently accounted for about 10% of USA. health care spending WHAY . MEDICINES HAVE REMAINED A SMALL SHARE OF HEALTH CARE SPENDING BECAUSE 2 A COMPETITIVE BIOPHARMACEUTICAL MARKETPLACE HELPS CONTROL COSTS GENERIC medicines have transformed how we treat and cure some of the most complex diseases facing patients. Unfortunately, patients often have to fight to access these innovative treatments
- Medicines save lives and are part of the solution to reducing medical spending, but only if we have a health care system that supports Innovation and encourages the development of new treatments so best way to act if you face bugt constrain is to We need to focus on delivering the right medicine, to the right patient, at the right time
- every where Spending on medication is small percent of the total health care spending If we combere % Medication spending will not effect the total health care spending significantly cross-country comparisons on drug prices are misleading Organisation for Economic Co-operation and Development (OECD) 2015 The 5-year survival rate for all cancers is 40 percent higher for men and 13 percent higher for women in the U.S. than in Europe. Researchers have attributed the higher cancer survival rates in the U.S. to the greater availability of advanced treatment options. And a study by Tufts University found that between 2000 and 2005, 73 percent of medicines launched in the U.S. before becoming available in Europe – which was attributed to our nation’s market-based system 12 Nearly 90% of all medicines dispensed in the United States are generics. It is not accurate to say, then, that the United States has higher prescription drug prices than other countries. It is accurate to say only that the United States has a different pricing system from that of other countries. Americans pay more for drugs when they first come out and less as the drugs get older, while the rest of the world pays less in the beginning and more later.” –Malcolm Gladwell, New York Times bestselling author U.S., patients enjoy access to innovative medicines far earlier than patients in countries with centralized price controls and leads the world in drug discovery and development brand-name medicines and aggressive tactics by insurers to negotiate prices all help to control how much the U.S. health care system spends on medicines. Currently nearly 90 percent of all medicines prescribed to U.S. patients are generics, which are typically up to 80 percent less than that of the brand medicine. In contrast, between 50-60 percent of all medicines prescribed in countries with strict price controls are generics, and are more expensive. This indicator is measured as a share of total health spending, in USD per capita (using economy-wide PPPs) and as a share of GDP.
- 5 y survival rate of cancer lung 8% 15 %
- Why would we pay more than someone else Lest tak air plan as an example in the air paln You would be shocked if you ask the person setting next to you who much he paid for his tkt
- Imagine Tareq discded to bye car for me Mohamed asine to choice the car Mohmed chose for me lexess Tarq not shore about Mohamed choice he sead my not hylok to he ask for recommendation Hosa recommend that all tyota care shod be @ the same price Ibrahem think that we shod take the price of jpan sowned ridiculues in drug trems Common practice For the cheapest meal would certainly have done the jop In competitive market buyers and seller are balanced supply demand @ market price through elasticity relationship
- AGAIN
- lets talk about Innovative payment models so we have cancer pt Obout pharma company jest lunched new trargeterg gen therapy for cancer t physician understand that there is no one size fit all for ttt of cancer there is unmet need for individualization payer lets hare payer perspective will I'm not sure I will spend for targeted therapy that maite not work in our population i need evidence i have budget constrain how many cycle this pt need I need access BRING real world ON YOUR PUPULATION G Why do we need Innovative payment models made available based on how well they work in specific patient sub-populations RESULTS Patients get access to medicines that deliver the best outcomes for their specific health needs And considerations respond differently to medicines based on factors such as age, genetic variation, and comorbidities. Because patient sub-populations can differ in their response to therapy, a variety of treatment options may be required to optimize treatment and provide the most clinical benefit and the greatest value. Recognizing patient heterogeneity is particularly important to ensure alignment with the emergence of personalized medicine. response to the growing cost of new drugs and other innovative medical products and the desire of payers to obtain greater certainty and greater value for the money spent. There has always been considerable uncertainty at product launch about the ultimate real-world clinical and economic performance of new medical products. The uncertainty and concomitant financial risk to the payer for a new treatment that does not work as anticipated in the real world has increased along with the rising price of the new treatments, whether a biologic, device, or other medical technology. If payers are reluctant to adopt, manufacturers face the risk of reduced revenue for a product they regard as delivering value.
- Where you pay somebody to cut you grass of you just py somebody to keep them green One database study identified 116 cases of these types of arrangements for medicines and other medical products since 1997 [1], There are # of alternative teams Innovative payment models Payers حطي صورة من جرايد toward a system that focuses on value and outcomes for patients has gained even more momentum in recent years. Http://www.phrma.org/media/value-collaborative-videos for example, drug manufacturers may have to pay more if drugs don’t work as well as demonstrated in clinical trials. There are multiple varieties of these contracts, but the overall objective is to hold manufacturers more accountable for value than more common arrangements that tie the net prices paid for drugs to the volume of drugs that are purchased. These emerging strategies are deemed by payers to be one part of a multi-pronged solution to the challenge of paying for high- cost medications Increasingly, biopharmaceutical companies are entering into risk-based payment arrangements with payers for medicines. Under these arrangements, payers often pay a variable rate depending on how well a medicine works for the intended patient. For patients, these arrangements can oer important benefits – medicines that work best for them and, often, reduced patient costs. it is important to ensure value frameworks are not misused in ways that impose centralized, one-size-fits-all policies, impede patients’ and physicians’ ability to tailor care to individual needs and preferences and hinder progress against unmet medical need.
- There is a program of data collection agreed to between the manufacturer) and the payer. address uncertainties about long-term effectiveness (beyond trial duration and including possible unintended or adverse consequences), thereby reducing uncertainty about the expected cost-effectiveness of a medicine (or device or diagnostic) in the health care system. In some cases, the data collection is for patient group/population-based studies; in other cases, individual patients are tracked.
- Biomarkers inherently limit a drug’s eligible patient population, but can significantly enhance the product’s value through a demonstrated higher effectiveness—it can command a higher price and market share, provided that the biomarker is available and reimbursed at the time of launch transparency of the medication’s value contribution to the consumer Basic price threshold --Cost per quality-adjusted life year (QALY) or other outcome metric • Value --BOI --Unmet treatment need or severity of illness --Extent of medication innovation involved --Wider societal benefits
- Sorafonib سورافةنب anti vgf agent Ajvent therapy for Italy Government insistence to not pay for non-responsive patients creates objections with many pharmaceutical pricing executives. It seems unfair to first reference a drug price to other countries and then to insist on paying only for a subset of treated patients There have been several prominent clinical outcome based agreements in the U.S. as well. In 2009, Merck and Cigna entered into an arrangement in which two of Merck’s type-2 diabetes medications would receive preferential placement on the Cigna formulary. In return, Merck provided a discount to Cigna for any patient taking any oral diabetes medications who demonstrated improved blood sugar levels and medication adherence. Further discounts were triggered if Cigna showed that the medications had been taken as prescribed. This scheme is unique in that the manufacturer provided the incentive to the payer regardless of what diabetes medication was taken and that the incentives were tied to improved outcomes. After one year, patients who were enrolled in the program (regardless of prescribed drug) exhibited a 5 percent improvement in blood sugar levels and a 4.5 percent increase in compliance with blood sugar lab testing. These deals link reimbursement to meeting short-term surrogate endpoints, such as tumor response rates. However, clinical risk is not associated with surrogate outcomes, but rather with the predic tability of long-term outcomes that the deal does not address Positive benefits may manifest in non-clinical benefits not often recognized in health care reimbursement such as improved productivity and quality of life. This additional value, in theory, should warrant additional reimbursement
- These deals link reimbursement to meeting short-term surrogate endpoints, such as tumor response rates. However, clinical risk is not associated with surrogate outcomes, but rather with the predic tability of long-term outcomes that the deal does not address Positive benefits may manifest in non-clinical benefits not often recognized in health care reimbursement such as improved productivity and quality of life. This additional value, in theory, should warrant additional reimbursement
- in 2002 after nice reject all MS treatment bc is not cost effective four pharmaceutical companies supplying MS and nice agreed on this dear drugs following NICE’s rejection of any use of these Lets critises this ageermnt The important of trading of scientific validity with real world relevant cost and time 1 after 10 y may be we will have new tretemt come out be the time AND HERE I WANT TO THANK SFDA FOR ABREAGE AND VAREFACAON ACCCELREATED REGERSTERATION AND MAKING INOVATED MEDICATION AVAALABLE QULQTY FOR SAUDI PT NO ALL WORKING WITH MEA REGION I REALIZE HOW LUKY WE ARE OTHER CONTRYS LUKY TO HAVE THIS PROSEES SOME COUNTRY SPEND 2 Y TO REGESTER THE PRODUCT AND BY THE THIME THEY FINSH REGESTRATION NEW MIDACTION ABOROED drugs by the NHS. addresses outcome uncertainty After 7 y still no data available on 2 y pt new drugs for the same indications Ccpmlexty should be lesson for future deals Biogen Idec Schering-Plough EMD Serono/Pfizer Teva Pharmaceuticals Interferon beta 1a (Avonex) Interferon beta 1a (Betaferon) Interferon beta 1a (Rebif) Glatiramer acetate (Copaxone) Multiple Sclerosis United Kingdom (NHS) The concept of this deal type is actively explored on many fronts in the US under the Coverage with Evidence Development (CED) classification. Garrison et al (L.P. Garrison, 2008) attribute a number of device- and drug-reimbursement agreements with CMS to the CED concept. Under this agreement, reimbursement coverage is provided by CMS, under the condition that the patient is enrolled in a registry in which further evidence on the treatment’s efficacy and safety is gathered over time. The recent Sanofi-Aventis/Proctor & Gamble deal with Health Alliance in the US for its Actonel osteoporosis treatment deal is a variation on the Novartis-German sickness funds deal guaranteeing outcomes. However in this deal, for patients taking Actonel and suffering fractures, Sanofi-Aventis will reimburse the medical cost for treating a fracture rather than just the cost of the drug treatment. It is unclear if an uncertainty of clinical outcomes forms the basis for this type of deal, rather than tactical life-cycle marketing objectives reimbursement is based upon longterm outcomes of a patient population, rather than individual or short-term population outcomes
- Increasing Data Collection Burden
- 229 page The per-patient cost capitation deal In general, the per-patient cost capitation deal ensures payers that cost will not exceed a certain limit. This is particularly important for payers concerned that a pharmaceutical product can support sustained use beyond what the payer may find reasonable. For example, in a deal with the Department of Health in the UK, Novartis agreed to pay for macular degeneration drug Lucentis when patients require more than 14 injections of the treatment, beyond which evidence suggests that it is not clinically useful. 7. The overall sales-volume capitation deal The final type of risk-sharing/alternate pricing agreement ties prices to sales. As part of a launch price negotiation in France, annual sales volumes must be agreed upon for several years. If the maximum volume is exceeded, the pharmaceutical company will pay penalties, be it in terms of rebates or price reductions. Sales-volume capitation deals are designed to address government budget concerns, but form a disincentive for innovation, as additional demand following better data can be punished severely
- OK IMAGEN THE CONTRY HAVE WORNG DATA RGESTRY
- GIVE ME EProducts with simple methods for measuring the treatment effects (e.g., decreased blood pressure or cholesterol level), products with clearly defined outcomes (e.g., did the tumor respond to treatment or not products with high budget impact due to high cost and/or high volume appear to be good candidates, as they represent areas of increased scrutiny for payers (e.g., oncology treatments or those for chronic versus acute diseases Products with simple methods for measuring the treatment effects Products with clearly defined outcomes Products with high budget impact due to high cost and/or high volume appear to be good candidates, as they represent areas of increased scrutiny for payers
- While outcomes-based pricing is useful for some drugs, the obstacles to apply the concept across the board “are nearly insurmountable,” said Peter Bach of Memorial Sloan Kettering Cancer Center. It could require calling patients in for additional tests they don’t need merely to determine reimbursement. And because almost all of the details are proprietary, it is hard to know whether the existing programs are actually saving money, he said.
- Frst of all I think payer in Saudi shod update tender regulation certain adherence support arrangements designed to help patients. short-term budget needs and failing to adequately account for individual differences among patients with a one-size-fits-all standard outdated regulations prevent insurers from negotiating deals that lower the price of medicines when they are used in combinations or when they don’t deliver the promised benefits set of patient-centered and patient-reported outcomes measures. No such set of measures currently exists. Payers and work together to develop well-structured frameworks to assess the value of medical treatments, these tools can drive patient-centered, value-based health care in the private sector. Value assessments should reflect the unique health needs different stakeholders and individual patients who often respond differently to medicines based on factors such as age, genetic variation and comorbidities biopharmaceutical manufacturers in particular should commit to helping to develop these measures and incorporating them into future value-based contracts. Importantly, a core measure set should gather information on financial toxicity, or the problems that cancer patients have that are related to their costs of Treatment A WIN FOR PATIENTS هل في فرق لما الشراء لا جلوكوفاج و biological it is important to ensure value frameworks are not misused in ways that impose centralized, one-size-fits-all policies, impede patients’ and physicians’ ability to tailor care to individual needs and preferences and hinder progress against unmet medical need.
- Not only new medication are neded for the pt But also new policy that support innovation