jorge mestre

Risk Sharing Schemes

Jorge Mestre-FerrandizOffice of Health Economics

Kakushin Risk Sharing World 201019th May 2010

Agenda• Setting the scene

• Risk sharing schemes

– Price/volume and Expenditure Schemes

– Expected Value/Outcomes Related Schemes• UK examples• Other examples

• Some practical challenges and Conclusions

Europe – Some Basic Facts• European pharmaceutical market = US$183 bn (28% of

world)Source: IMS World Review 2007

• Large number of individual national markets which display differing characteristics

• Pricing and reimbursement (P&R) policies are likely to remain matters of national competence within EU for foreseeable future

• Range of possible policies is large and varied. The vigour with which they may be applied in different EU markets also varies

• Need a logical structure in order to analyse developments over time

• Some common trends in the development of European P&R policies can be detected

Main P&R Policies in Europe

Price Controls

Product Controls

Expenditure Controls

Price

Reimbursement

Firm’s Volume

Products allowed

onto market and/or

reimbursed

Prescribers

/ dispensers

Firms

Prescribers

Patients

Price controls

Reference prices

Reference prices

Marketing spend limits

+ ve / - ve lists

Generic substitution

Revenue controls

Physician drug budgets

Patient budgets

Price cuts / freezes

International reference pricing

International reference pricing

Product volume caps

Formularies

Price-volume agreements

Physician health care budgets

Copayments

Copayments

Copayments

Economic evaluations

Rate of return regulation

Reference prices

RoR regulation

Single EU price + rebates

Risk-sharing

Economic evaluations (HTAs)

Risk-sharing / VBP

Direct Indirect

Europe has primarily focused on prices e.g. price cuts and price freezes combined with product-

focused policies

Plus use of HTA expanding – albeit

with significant differences across

countries

Future?

Trends – National Level

1. Devolution

2. Capping pharmaceutical expenditure growth

3. Relative value assessments – health technology assessments (HTA)

4. Reference prices

5. Encouraging generic penetration

6. International reference pricing

7. ‘Risk sharing’ agreements

Risk-Sharing Agreements: Sub-types

1. Price/volume / Expenditure arrangements – ‘risk’ concerns size of medicines bill

2. ‘Expected value’/‘Outcomes related’ deals – ‘risk’ concerns different expected values of benefit and/or uncertainty around benefit

1a. Price/Volume Arrangements

• Range of options where price can vary in relation to volume, or if shown to be inappropriate use

• Used in France – in combination with other policies

1b. Expenditure Arrangements (1)• Range of options where companies have

to pay-back if agreed expenditure or expenditure growth is exceeded

• Examples include Spain, Italy and UK (although later dropped)

• Spain:– Stability Pact 2002-2004: Public medicines’

expenditure growth linked to GDP growth

1b. Expenditure Arrangements (2)• Italy: Overall pharmaceutical expenditure,

including both community and hospital expenses, is limited to a maximum of 16% of regional healthcare expenditure. If exceeded:– Update/delist positive list– Reduce prices– Companies to pay-back 60% of overspend; Regions

40%• UK: June 2008: “Further price reduction of 2%

will be available if growth in the drugs bill exceeds an agreed threshold”– But dropped in the final 2009 PPRS

UK Experience• Pre-2009 PPRS: Ad-hoc

– Multiple Sclerosis– Bortezomib (Velcade)– Ranibizumab (Lucentis)

• Post-2009 PPRS– ‘Patient Access Schemes’

Examples of ‘Expected Value Deals’: UK MS RS Schemes1. Multiple Sclerosis• NICE published its guidance (Jan 2002)on beta interferon (Avonex, Rebif and

Betaferon) and glatiramer acetate (Copaxone) for multiple sclerosis (MS), stating that neither drug was recommended for the treatment of MS in the NHS in England and Wales. However, the NICE Appraisal Committee commented that: – “the Department of Health, the National Assembly for Wales and manufacturers,

might usefully consider what actions could be taken, jointly, to enable any of the four medicines appraised for this guidance to be secured for patients in the NHS in England and Wales, in a manner which could be considered to be cost effective” (NICE, 2002).

• Guidance document:Table 1: Cost-effectiveness results based on commercial-in-confidence data Drug and dose Cost/QALY vs. no treatment Beta interferon 1-a (Avonex) £103,712 Beta interferon 1-a 22mcg (Rebif) £61,007 Beat interferon 1-a 44mcg (Rebif) £71,732 Beta interferon 1-b 8MIU: treating RR (Betaferon) £35,282 Glatiramer acetate (Copaxone) £97,636 Beta interferon 1-b 8MIU: treating RR & SP (Betaferon) £39,872 RR = relapsing remitting, SP = secondary progressive Source: Addendum to ScHARR Report on economic modelling

UK’s MS Risk Sharing Scheme (2)• Objective of RS scheme: MS drugs should

achieve an acceptable level of cost per QALY for the NHS when in use in clinical practice. This level has been set at £36,000 per QALY

• Made allowance for other (unquantified) factors noted by the Appraisal Committee vs. ‘usual’ £30,000 per QALY level:– the impact of treatment on the severity (independent

of the frequency) of relapses; and– possible cost offsets from the avoidance of severe

levels of disability requiring intervention by the Personal Social Services

UK’s MS Risk Sharing Scheme (3)• Pre-Scheme price adjustments: Drug Scheme costs Costs at time of appraisal

Avonex £8,502 £9,061 Betaferon £7,259 £7,259 Copaxone £5,823 £6,650 Rebif – lower dose £7,513 £9,088 Rebif – higher dose £8,942 £12,068 • Prices under the scheme are those which, it is

expected, will deliver a cost-effectiveness of £36,000 per QALY (Betaferon’s price unchanged – as within the £36,000 per QALY

UK’s MS Risk Sharing Scheme (4)• Detailed monitoring over 10 years of a cohort of patients to confirm

the cost-effectiveness of the MS treatments, various beta interferons and glatiramer

• Central features are target outcome measures; agreed NHS price; threshold cost per QALY of £36,000

• A formal review of reimbursement arrangements takes place every two years following formal commencement of the scheme’s monitoring provisions

• It is possible in theory for companies to get a price increase • Recruitment into the risk sharing scheme was completed at the end

of April 2005 • The total cohort enrolled into the scheme was just over 5,200

patients • Recruitment was closed at this point, but MS patients outside the

scheme can still be treated under the NHS

Reactions – Caution....• To generate evidence on the longer

term cost effectiveness of disease modifying treatments in patients with relapsing-remitting multiple sclerosis (2-year interim analysis)

• It is too early to reach any conclusion about the cost effectiveness of disease modifying treatments from this first interim analysis

• Important methodological issues will need to be addressed and long term follow-up of all patients is essential to secure meaningful results

• Could be better termed as ‘coverage with evidence development’

...others more positive• Experience of undertaking monitoring

study for initial phases – data exported up to 31st January 2006

• Successful recruitment, follow up and early data analysis suggest that risk sharing schemes should be able to deliver their objectives. However, important issues of analysis, and political and commercial conflicts of interest still need to be addressed

• Some issues with ownership of data:• In 2006, a contract research

organisation took over data collection and statistical analysis, overseen by independent scientific advisory group

• These data might be different to future published data

Examples of ‘Expected Value Deals’: UK Bortezomib

2. Bortezomib• NICE’s first final appraisal for Velcade (not recommended) was

rejected earlier in 2007 by NICE’s appeal panel. Panel said appraisal should consider a risk-sharing agreement. Risk sharing scheme proposed by manufacturer and modified by NICE

• Estimates suggest that QALY gained ranges from £33,000 to £38,000 for the first relapse, to £77,000 to £107,000 for the second relapse (Barham, 2007)

• Final Guidance (Oct 07): “The guidance confirms the response-rebate scheme which will allow patients at first relapse who show a full or partial response to bortezomib to carry on with the treatment, fully funded by the NHS, and patients who show no or minimal response to be taken off the drug and the drug costs refunded by the drug’s manufacturer” (NICE, Oct 07)

• Will remain in place until the next review of bortezomib by NICE (2010)

UK’s Bortezomib Scheme (2)

Source: Barham, PPR September 2007

UK’s Bortezomib Scheme (3)• Additional administration costs for both NHS Trusts and

company • Claims from Trusts will need to be made to the company

and the company will need to process these claims and provide either stock or a credit to individual Trusts

• For their part, Trusts are likely to need to ensure that their claims are processed and appropriate stock or credit issued

• Company has, however, said that it will not routinely audit these claims other than where it sees an “unusual” rebate pattern (Barham, 2007)

UK’s Lucentis Scheme• August 2008 - Not recommended for

treatment of wet age-related macular degeneration

• Restricted recommendation: NHS funds only 14 injections per eye (two years treatment)

• Company pays for additional injections

Some background....• “Value-Based

Pricing” (VBP)• Risk sharing

schemes: exception rather than the rule

UK – New PPRS 2009• Flexible Pricing Schemes: where a company

can increase or decrease its original list price in light of new evidence or a different indication being developed

• Patient Access Schemes: which will facilitate earlier patient access for medicines that are not in the first instance found to be cost and clinically effective by NICE within a framework that preserves the independence of NICE

Patient Access Schemes (1)• Patient Access Schemes are schemes

proposed by a pharmaceutical company and agreed between the Department (with input from NICE) and a pharmaceutical company in order to improve the cost-effectiveness of a drug and enable patients to receive access to cost-effective innovative medicines

• Note: only relates to England and Wales, as different HTA arrangements are in place in Scotland and Northern Ireland

Patient Access Schemes (2)(Some) Key principles:• Arrangements must respect the role of NICE • Schemes are to be discussed first and agreed in principle

by the Department and the company• Schemes should be clinically robust, clinically plausible,

appropriate and monitorable • Any scheme should be operationally manageable for the

NHS without unduly complex monitoring, disproportionate additional costs and bureaucracy

• Schemes should be consistent with existing financial flows in the NHS and with local commissioning

• The more systematic use of such Schemes will need to be reviewed in light of experience. The timing of such a review will be jointly agreed but will be initiated not later than two years after the commencement of this Agreement

Patient Access Schemes (3)

Financially Based Schemes • The company does not alter the list price of the drug, but offers effective

discounts or rebates, linked to various parametersOutcome-Based Schemes • Proven value: price increase: The company seeks agreement to a later

increase in price subject to a re-review of the drug in the light of additional evidence collection as agreed with NICE. The company will normally be responsible for the collection of the additional evidence

• Expected value: rebate: The company seeks agreement to a price subject to the collection of additional evidence as agreed with NICE. Such an arrangement will be subject to a rebate and subsequent reduction in list price in the event of the additional evidence not supporting the current price in a re-review in the light of the additional evidence. The company will normally be responsible for the collection of the additional evidence.

• Risk Sharing: Outcomes are measured, be these Patient Reported Outcomes or clinical outcome measures and price adjustments and/or cash transfers are made in one or both directions (between the company and the NHS) in the light of the outcomes identified relative to those anticipated in line with the terms of the Scheme– Outcome based schemes particularly risk sharing schemes are likely to be

more burdensome - only to be appropriate in exceptional circumstances

Patient Access Schemes (4)Timing:• In the context of an STA, either at the outset

(discussions with the Department of Health should precede the company’s submission) or at the end of the appraisal process, once any appeals have been heard and NICE’s final guidance has been issued to the NHS

• In the context of an MTA: If the company wishes to propose a patient access scheme, they should submit proposals to NICE (post discussions with the Department) at the start of the MTA process

PAS – Some ExamplesFinancially-based schemes:

1. Rebate:–Cetuximab (mCRC): 16% rebate [TA

176]–Bevacizumab: Rebate of cost of drug

after 10g given to patient in 12 month period [TA 178] – but not recommended

PAS – Some Examples2. Free stock:

– Lenalidomide (multiple myeloma in people who have received at least one prior therapy ): Approved on condition that company agreed to pay drug cost for patients who remain on treatment for more than 26 cycles (each of 28 days; normally a period of 2 years) [TA 171]

– Sunitinib (gastrointestinal stromal tumours): company covers costs for first treatment cycle [TA 179]

– Ustekinumab (moderate to severe psoriasis ): provides the 90 mg dose (two 45 mg vials) for people who weigh more than 100 kg at the same total cost as for a single 45 mg vial - essentially provide two vials for the price of one [TA180]

– Sorafenib: Company to supply first pack of sorafenib free to NHS per patient [TA 178] – but not recommended

Italy – Alzheimer’s• CRONOS project started by Italian MoH • Aim: find strategies to supply cholinesterase inhibitors (ChE-I) within

the SSN (National Health Service) in order to achieve simultaneously objectives of social solidarity (i.e. making treatments available) and the efficient use of public resources (i.e. making them affordable.)

• 503 Alzheimer Evaluation Units (AEUs) were instituted for this purpose all over Italy. Periodic multi-dimensional assessments have been undertaken (e.g. results from 14 AEUs in Eastern Lombardy are available in Bellelli et al. (2005)).

• The project finished in 2003• The medicines included in the scheme are fully reimbursed by the

SSN• The full details of this scheme are unclear, but it appears to involve

the free provision of drugs for an evaluation period, the results of which have been used to inform the subsequent decision as to whether or not to reimburse.

Italy – Oncology (‘nibs’)• Hospital discount of 50% applies to the

first two/three months of treatment with Nexavar (sorafenib) and Sutent (sunitinib)

• For responding patients, the treatment is then reimbursed and the discount dropped

• Contrast to Velcade – which is based on refunds

Bosentan in Australia• Wlodarczyk et al. (2006): “unique 3-year risk-sharing agreement”

between the Australian government and Actelion• Price of bosentan is dependent on observed survival of patients with

idiopathic pulmonary hypertension (iPAH) treated under the Pharmaceutical Benefits Scheme.

• The price will be altered if observed survival differs from that predicted by the economic model submitted to the Pharmaceutical Benefits Advisory Committee (PBAC). The intention is to maintain a level of cost-effectiveness at least equal to that predicted in the model.

• Monitoring of bosentan patients is to be carried out by means of an independently managed register.

• Wlodarczyk et al. (2006) do not give the specifics of the process for deciding upon price adjustments

• 33 risk-sharing agreements are estimated to exist in Australia – but public information on them is limited (Barham, PPR, Oct 08)

(Some) Practical Challenges• There must be a clearly defined, objective measure of

results and must closely correspond to the desired treatment effect – that is, to a valid health outcome measure

• Outcome measure must not be heavily confounded by patient characteristics or by other treatments– Survival is perhaps the most important outcome – but not usually a

practical measure– Use of surrogate measures will be most successful if it is a god

biomarker or predictor of clinically meaningful outcomes and if it is not influenced by other treatment

• Any criterion used for payment should also be predictable, reliable and difficult to manipulate

• Difficulties of implementation will limit their adoption• Source: Garber and McClellan, Satisfaction Guaranteed – Payment by

results for biologic agents, NEJM, Oct 2007

Practical Challenges (2)• All risk sharing schemes need to pass the standard

benefit/cost requirement => will the expected benefits of risk sharing schemes outweigh the operating costs?

• Need to overcome a number of hurdles => accelerate diffusion of health benefits to patients

• Hurdles include: – Physician/pharmacist ‘push back’/resistance =>

concerns about increased administrative workload– Problems of free-riding

• Clinical evidence generated may be used freely (at negligible or zero costs) by competitors in a therapeutic category

– Lack of trust between healthcare payers and manufacturers of health technologies.

Practical Challenges (3)• Transaction/administrative costs of risk-sharing

schemes. – These include the development of processes, health

personnel time to administer the schemes, and the (time) costs of negotiating the schemes plus limitations of current medical information systems to measure and track performance.

– Electronic medical records still very much remain something of the distant future in many countries.

• Transactions costs will affect payers’ willingness to enter into risk sharing agreements

– UK NICE has developed a patient access template => requires manufacturers to list the expected costs of operating a risk sharing scheme

Practical Challenges (4)Criteria for “success”: issues for companies• Does the risk share reinforce the underlying

product positioning?• Will it be difficult to implement?• Are competitors likely to respond in a way that

eliminates the advantages?– Will they be able to “free ride”?

• Is there an exit strategy?

Conclusions ‘Risk-sharing’ agreements might grow in importance – and more flexible

than direct price controls/cuts• Pros:

– May provide access where otherwise there would be none– Incentives for manufacturer/payer to run compliance schemes– Provides information on use in practice so adds to evidence

base• Cons:

– Additional costs of collecting the information and setting up the scheme

– Delays in patient access to new medicines as scheme is agreed – especially relevant for the otherwise ‘free-pricing at launch’ (i.e. no price negotiations) countries

– Access delays as scheme is implemented on the ground– Long term impact on innovative environment

• Threats:– Purchaser may renege on deal– Likely to be asymmetric– Patient non-compliance may cause failure

Jorge Mestre-Ferrandiz

[email protected]

Office of Health Economics

www.ohe.org

jorge mestre

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