drug purchasing & pricing : industry perspective
TRANSCRIPT
David Lin
Head of Market Access
Novartis Oncology
National Cancer Institute, Putrajaya
24 Nov 2014
Drug Purchasing & Pricing
The Pharmaceutical Industry Perspective
Disclaimer
Full-time employee of Novartis Corporation.
Information shared in this presentation does not
necessarily represents the sole position of
Novartis Corporation.
Previous employment includes Pfizer,
AstraZeneca, Bayer Healthcare, Genzyme and
Sanofi.
Contents
Introduction
Pricing Context in Malaysia
National Medicine Policy (DuNAS)
Pharmaceutical Pricing
External Reference Pricing
Drugs availability – patients access
Access of the Future & Conclusion
Introduction
Introduction
Demand for more and better healthcare grows faster
than resources available to meet the demand
Facing growing ageing population
More chronic diseases developed and diagnosed
More new innovative treatments
Healthcare is a great political topic
More countries recognize good health is an economic
asset and are finding ways to improve the healthcare
system (e.g., designing and implementing Universal
Coverage)
Introduction
Payers face increasingly complex decision-making
challenges in the oncology treatment due to the pace
of groundbreaking scientific advances e.g. targeted
therapy, cell therapy.
Such challenges requires:
Systematic understanding of value of clinical endpoints
Incorporating valuable endpoints in reimbursement
Evidence to demonstrate valuable endpoints
The pace of new treatment discoveries and increasing number of
therapeutic options requires new frameworks for payers to evaluate
for reimbursement
Pricing Context in Malaysia
Medicine Pricing
Malaysia has a free pricing system: manufacturers,
distributors and retailers are allowed to set their
own prices.
Public’s perception of high medicine prices and
subsequent perceptions of inequitable access and reduced affordability of
medicines
In the public sector, medicine prices are indirectly controlled through tenders and price negotiations.
Private sector free market competition governs prices of
medicines, although the Pharmaceutical Services
Division has been monitoring private sector prices through
the Medicines Price Monitoring System (MedPrice).
Private sector prices have come under scrutiny more
recently due to growing concern regarding affordability of
medicines for middle to low income patients.
How much are we spending on
pharmaceuticals? Pharmaceutical expenditure as a share of total health expenditure, 2009
• In Asian countries, pharmaceutical expenditure share of total health expenditure range between 8% -50%.
• For Malaysia, pharmaceutical expenditure is 8.8% of total health expenditure.
Are we effective in
spending our $$$
or we are not
spending enough?
National Medicine Policy (DuNAS)
Industry collaborating with MOH to achieve goals of National Medicine Policy
Policy 2: Access to medicines
Policy 2: Access to medicinesStrategy 2 – Affordability of medicines
Pharmaceutical Pricing
From the lab to the patients
The balancing act
Understanding payer’s perspectives in order for the industry
to position the acceptable price to encourage access
Public health benefits
Economic benefits
Clinical and humanistic benefits
Functional consequences
Product attributes
Payer benefits
• Unmet need for the targeted population• Existing treatment options: not optimal results and risky • Rare disease that has no other approved drug therapy
• Significant cost offsets: lower monitoring and AE costs, savings in medical visits, co morbidity management and productivity
• Limited budget impact: 2nd-line / last-line option, very small patient population
• QoL, DFS, PFS, OS
• Tumor size shrinkage, slow down disease progression, improve survival
• Key product attribute that differentiate its value
Payer goals
Margin
Distribution cost
Functional Costs /
OverheadsImport Tax
Freight & Insurance
Functional Costs /
Overheads
Production Cost
Country costs
HQ costs
Selling Price• Discounts
• Rebates
• Bonus
• Free goods
• Access models
• MEA
Net Selling Price
International Selling Price
Lowest net selling price
PRICE APPROACH AT TIME OF LAUNCH –INDUSTRY’S APPROACH
Includes the cost of the drug development (lab, clinical trials etc.)
THE «MAGIC PRICING TRIANGLE»: OBJECTIVES IN PRICING IS NOT ABOUT PRICE ONLY!
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Find the right balance that maximizes patient access and a sustainable business
INDUSTRY
WHO Guideline on Country
Pharmaceutical Pricing Policies
1. Use health technology assessment (HTA) as a tool
to support reimbursement decision-making as well
as price setting/negotiation.
2. Combine HTA with other policies.
3. Using HTA: review of reports from other countries;
review of reports submitted by industry; conduct
assessments based on local information and local
data.
Source: WHO, 2014
WHO Guideline on Country
Pharmaceutical Pricing Policies
4. Take a stepwise approach to develop legislativeand technical capacity to take full advantage of thepotential utility of HTA in pharmaceutical pricesetting.
5. Clearly define the roles and responsibilities of thedecision-makers and other stakeholders, and theprocess of decision-making.
6. Ensure that HTA processes are transparent andthat the assessment reports and decisions shouldbe made publicly available and effectivelydisseminated to stakeholders.
7. Collaborate to promote exchange of informationand develop common requirements for HTA.
Source: WHO, 2014
External Reference Pricing
External reference pricing According to the Organisation for Economic Co-operation and
Development (OECD), External Price Referencing, also referred to
as External Price Benchmarking or International Reference Pricing,
is defined as “the practice of comparing pharmaceutical prices
across countries” and it is further indicated that, “There are various
methods applied and different country baskets used”1.
4 main components to consider:
Country basket
Product basket
Reference price calculation
Infrastructure and implementation processes
1. Pharmaceutical Pricing Policies in a Global Market. OECD Health Policy Studies, OECD, 2008.
Friend or foe? Is Malaysia paying more than
others? Will this hamper access?
Example of Countries Referencing Germany
Formally, Informally and Indirectly
Comparative Pricing analysis of top 5 therapy
areas across Asia Pacific countries
Drug availability – patients access
Drug Availability There is evidence that availability of medicines may be
a challenge, with patients not receiving treatments
despite reimbursement on the MoH formulary 1.
The public sector uptake showed limited growth, despite
listing on the MoH Formulary in 2009.
In the case of the oncology product, the growth in public
sector uptake over the 4 years since 2009 had been
about 7.5%.
This analysis tends to suggest that despite MoH
Formulary listing status, access to certain medicines
through public channels remains unchanged or low.
1. Babar ZU, Ibrahim MI, Singh H, Bukahri NI, Creese A. Evaluating drug prices, availability, affordability, and price components: implications for access to drugs in Malaysia. PLoS medicine. 2007;4(3):e82.
Volume uptake of branded original drugs
after inclusion in the MoH formulary in 2009
Source: IMS PADDS data, Full year 2008-2014,
Volume uptake of branded original drugs
after inclusion in the MoH formulary in 2009
Source: IMS PADDS data, Full year 2008-2014,
Volume uptake of branded original drugs
after inclusion in the MoH formulary in 2009
Source: IMS PADDS data, Full year 2008-2014,
Drugs availability – patients
access
Access of innovative drugs to critically ill patients
should not be delayed though no perfect solutions
Access Models
Broadly speaking there are three types of drug
reimbursement listing models depending on how
clinical and cost factors are used in decision
making.
Clinical effectiveness evaluation alone
Clinical effectiveness evaluation and budget impact
analysis
Cost effectiveness and budget impact analyses
Solving access through innovative
access program
Industry introduced Patients Assistant Program (PAP) and other form of access program to help patients gain early access to innovative medicines, ultimately increase affordability.
Example: Imatinib for CML was introduced in Malaysia in 2002
through GIPAP (Glivec International Patients Assistant Program) and later transition to MYPAP (Malaysia Patients Assistant Program) since 2008.
MYPAP is an example of Budget Impact Access Model where it is based on cost capitation model.
Since then, many other pharmaceutical companies had introduce access program, some successful, some not.
Access strategies
Various pricing policies and strategies exist, however,
it’s challenging to determine which to implement.
All have strengths and weaknesses, just as all
countries have unique medicine needs and
challenges.
Each country must assess its own medicines situation
and implement different combinations of policies and
interventions.
Industry is open to collaborate.
Access of the Future
The Paradigm of Cancer Treatment is Changing
General Cytotoxic Targeted TherapyPersonalized
Cellular Therapy
37
Dramatic and exciting advances keep coming!
The future of cancer treatment – how are
we preparing for it?
What
would be
the right
price?
Proprietary and Confidential
Sunitinib(RCC)
Bevacizumab(RCC)
Lapatinib(BC)
Trastuzumab(BC)
Ixabepilone(BC)
Bevacizumab(BC)
Everolimus(RCC)
Panitumumab(CRC)
Sorafenib(RCC)
Bortezomib(MCL)
Gemcitabine(ovarian)
Pemetrexed(NSCLC)
Bevacizumab(NSCLC)
Docetaxel(NSCLC)
Bevacizumab(CRC)
Bortezomib(MM)
Erlotinib(pancreatic)
Sorafenib(HCC)
Irinotecan(CRC)
Gemcitabine(pancreatic)
Erlotinib(NSCLC)
Oxaliplatin(CRC)
PFS INCREASINGLY ACCEPTED AS A BASIS FORREGULATORY APPROVAL
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Approval based on OS
Approval based on PFS/TTP
1995 2000 2005 2010
Source: www.cancer.gov/cancertopics/druginfo
What are the views of the regulatory agencies on clinical trial endpoints?
“Acceptable primary endpoints
include OS and PFS/disease free
survival […] While it is generally
acknowledged that the aim of
treatment is to improve quality of life
and survival, restraints on the
conduct of clinical trials may make
these goals unattainable.”
EMA Guideline on the Evaluation of
Anticancer Medicinal Products in Man
“The analysis of OS may be
confounded by crossover and/or
subsequent therapies.
PFS, measured prior to the
introduction of other therapies,
may more accurately depict a
treatment’s therapeutic effect.”
FDA Oncology Head
Richard Pazdur
“PFS can reflect tumour growth and be assessed before the
determination of a survival benefit. Its determination is not
confounded by subsequent therapy.”
FDA Guidance for Industry: Clinical Trial Endpoints for the
Approval of Cancer Drugs and Biologics
EMA Guideline 2009; FDA Guidance For Industry 2009
Conclusion
Conclusion
There are future challenges to address as public financing and quality of care needs to be in pace with population growth, disease and lifestyle trends.
Hence, availability or access to medicines in the public sector has become increasingly difficult leading to an affordability challenge for low and middle income patients who do not have access to medicines through the public sector and cannot afford private sector prices.
This undermines the fundamental principle upon which Malaysia’s health care system has been based – that access to quality health care should not depend upon ability to pay.
Low prices can reduce the attractiveness of certain countries to manufacturers and importers which might result in important products not being produced and marketed in a particular country or at least, being marketed with substantial delays.