Pricing and Market Access Challenges for Payers in Europe

Presented by:

Mondher Toumi, MD, PhD, MSc

ISPOR Lebanon Chapter – 22 February 2019

What are the payers doing? Examples from Europe

Table of contents

1. Pharmaceutical landscape overview

2. Context and Pressure of High Prices

3. Unprecedented Rapid Pace of Innovation

4. Cost Containment and Complexity

5. New Development program, regulatory processes,

and payer uncertainty

6. From Decision Point to Decision Window

7. From Selling Drugs to Selling Outcomes

8. HTAs & Payers are focused on the Real World

9. Integrated Health Care System

10. Hospital Restricted Distribution

11. Price as a Powerful Optimisation Tool

12. Payers, Politicians, and Society

Pharmaceutical landscape overview

4

Healthcare Expenditure in Europe

5

% of GDP Allocated to Healthcare

9

11

13

15

17

19

21

2006 2009 2012 2015 2018 2020

% G

DP

US OECD ex-US

6

Innovation Pillars for Pharmaceuticals

1

Prevent copy cat

• Patent

• Data protection

2

Value based pricing

• Often unknown and source of multiple confusion

7

Pharma Payer Landscape is Evolving in a Multidimensional Context

Healthcare budget pressure

Rapid pace of

therapeutic innovation

Increased aversion to uncertainty

Change in healthcare services organisation

Unfavorable Context for high prices While increase pressure for high prices

9

Current situation

While the healthcare

budget is decreasing

the number of very

promising molecules in

development is

increasing

10

Widening the gap?

Unsustainable gap between healthcare

expenditure level on one side and ,

affordability and demand on the other

side

11

For the first time a company went bankruptcy because of an excessive price

Dendreon is planning to charge $93,000 per patient for Provenge.

Dendreon stock: 25 percent to over $50 after price disclosed.

Provenge is too expensive to be used on the NHS in England,

Dendreon, filed for bankruptcy protection

Provenge sales were hampered by the drug’s high cost of $93,000

We are facing an unprecedented rapid pace of innovation

13

Genomics is a moving target

Adenocarc

inoma

Squamous

Large-cell

Traditional view

Unknown

KRAS

1987

Unknown

KRAS

EGFR

2004

Unknown

KRAS

EGFR

EML4-ALK

HER2

BRAF

MET

AKT1

MAP2K1

PI3KCA

2009

Pao, Lancet 2011 Kris et al, JAMA 2014

14

Treatment in lung cancer

KRAS Mutation: associated with response or resistance to

particular therapies

EGFR Mutation: predicts for sensitivity to EGFR tyrosine kinase

inhibitors (TKIs)

ALK translocation: presence of an ALK translocation strongly

predicts for sensitivity to ALK tyrosine kinase inhibitors

MET amplification: one of the potential molecular mechanisms

of acquired resistance to EGFR-TKIs

ROS-1 fusions: can be used to offer targeted treatment with

criozitinib.

Source: 1Korpanty, G. J., Graham, D. M., Vincent, M. D., & Leighl, N. B. (2014)

15

939 clinical trials for ATMPs

54%

22%

23%

1%

Somatic cell medicinal product SCMP

Gene therapy medicinal product GTMP

Tissue engineered product TEP

Combined product

Government 5%

Hospital 31%

Institute 20%

Medical center 7%

University 37%

Categories Sponsors Commercial 26%

Non-commercial

74%

16

Bending the cost curve in oncology

58

13

30

38

39

34

176

30

25

26

28

58

338

43

71

Other

Transplantation

Skin diseases

Respiratory disorders

Neurologic disorders

Musculoskeletal disorders

Infectious diseases

Genetic disorders

Eye conditions

Digestive disorders

Diabetes/ related conditions

Cardiovascular disease

Cancer/Related conditions

Blood Disorders

Autoimmune disorders

Biologic Medicines in Development - by Therapeutic Category Some medicines are listed in more than one category

PhRMA, report Biologics, 2013

Almost 40% of cancer therapies are biologics accounting for $100 billion in

sales (Kozlowski S et al, The New England journal of medicine 2011; 365(5): 385-8.)

17

Pharmaceutical companies need to engage with payers and regulators at an early clinical development stage to ensure clinical trials are designed to maximize the chance of successful reimbursement, to

optimize non-clinical elements of the appraisal process, and to begin early negotiations for a mutually agreeable reimbursement strategy.

Early Dialogue

To allow pharmaceutical companies to gain critical insights from HTA bodies and regulators early in the development of a medicine, generally before

initiation of phase III clinical trial

To help pharmaceutical companies ensure that their technology development plan is appropriate and to optimize evidence generation and address HTA

bodies’ needs

To increase the probability of a positive outcome during drug assessments and to speed up market access. Frequent engagement with regulators during

all phases of development and commercialization help the agencies to understand challenges.

Parallel advice may help to harmonize HTA and regulators’ perspectives and provide manufacturers with recommendations to achieve market access for

ATMPs

Early

Dialogue

Objectives

• Publishing best practices and consensus papers in collaboration across industry and regulatory bodies will enable the

development of a knowledge base and harmonized standards.

Cost containment is expected to remain the preferred payer’s tool While Complexity for access will increase

19

All is About Affordability

US society accept to pay increase in life expectancy of 1.2 months $80,000

Extrapolation survival of 1 year is valued at $800,000

550,000 Americans die of cancer annually

To extend their life by one year 440 billion would be needed

Even US will not afford it

19

20

Cost Containment Tools

Restricted

distribution Restricted

prescription

Budget cap

for

therapeutic

class

Price cut

Budget cap

per product

Reduce

reimburse

ment

External

reference

pricing

Bundled

payment

Price

volume

agreement

Index

brand

prices on

generic

Restricted

to hospital

use

21

Budget Impact Cost-

Effectiveness

Lesson from sofosbuvir from cost-effectiveness to budget impact

New Development program and regulatory processes

to increase payer uncertainty

23

From a Trend to Reality

Source: Eichler H.-G., Bloechl-Daum B., Abadie E., Barnett D., König F. and PearsonS. Outlook: Relative efficacy of drugs: an emerging issue between regulatory agencies and third-party payers Nature Reviews Drug Discovery 9, 277-291 (April 2010)

Dedicated relative efficacy/

effectiveness assessment ?

•Quality, safety, efficacy

•Benefit-risk profile

•Cost vs health benefit

•Budget impact

•Relative efficacy/effectiveness

•Emphasis on RCT, most often

active- and placebo-controlled

•Cost-effectiveness/utility analysis

•Budget impact analysis

•Active-controlled RCT

•Adaptive Phase III-IV trials

•Observational studies

•Meta-analysis

Assessors

Assessment focus

Studies/data

MA Current paradigm Regulators

Payers

Tomorrow

Future paradigm

24

New Regulatory Processes is widening the gap with payers

• Regulators impact: earlier availability for patients

• Payers impact: level of evidence is lower

*access before marketing authorisation is granted

Introduction

of adaptive

licensing

Approval

under

exceptional

circumstanc

es

Early entry*

Conditional

approval

25

New Development

• Highly sliced population

• Benefits in small populations

• Request for crossover for ethical reasons

New developments involved highly

targeted therapies

• Considerable potential social value

• Low level of payers evidence

• Difficulty to quantify the benefit Payers impact

From Decision Point to Decision Window It is Already There, we Just have not Realised it yet

27

The Window is Already Here

Country MA CP Final Window

Risperdalconsta France 07/01/2003 10/02/2005 End 2010 7 years

Sitagliptin

France 21/03/2007 03/2008 2010 (End of CED ) 5years

Scotland 03/2007 09/2007 06/2010 3.25 years

Duodopa Sweden 2002 2003 2008 6 years

Some examples are well known and widely communicated in literature

28

Time Limit G-BA Resolutions

Vemurafenib (1 y) Sitagliptin (2 y) Vandetanib (3 y)

Crizotinib (2 y) Sitagliptin/metf (2 y) Axitinib (4 y)

Eribulin (2 y) Belatacept (3 y) Ipilimumab (5 y)

Saxagliptin (2 y) Cannabis sativa (3 y) Pertuzumab (5 y)

Saxagliptin/metf. (2 y) Fingolimod (3 y) Bosutinib (5 y)

Window from 1 to 5 years

Example of GBA decision window

From Selling Drugs to Selling Outcomes A Major Model Shift for the Industry

30

There is

no uncertainty

about the cost

of medicine

Payers Buy a Proxy of Health

We need health but we buy a proxy: healthcare

Medicines are intended to produce health

When funding medicines, payers intend to buy health production

31

Shift in Payer Model

The promised benefit must be evidenced in real life clinical practice

Outcomes must be shown in well designed real world studies with limited or no intervention on the field or within databases

The internal validity will be the door entry outcome

The external validity will be the value acquired by payers

HTAs & Payers are focussed on real life.

But what is real life?

33

Randomized double blind two arms clinical study

Behaviour is articificial and may not exist in real life

34

Pragmatic/observational study

Try to mirror natural behaviour but still some control

35

Real life evidence Requested by HTA and Payers

Often impossible to capture.

Need database analysis /

observational studies

coupled with modelling to simulate

real life condition

36

Prescription population

Disease

Target

Treatment

Efficacy

Failure

37

Dispensation

Disease

Specialists

GPs

Hospital

Pharmacists

38

Disease complexity

Disease

Moderate

Mild

Severe

Disease 2

± treatments

Disease 3

± treatments

Disease 4

± treatments

Disease 5

± treatments

39

Real life is complex and often confusing

Disease 2

± treatments Disease 3

± treatments

Target

Efficacy

Failure

Treatment

GPs

Pharmacists

Disease

Moderate

Mild

Severe

Specialists

Hospital

Disease 4

± treatments

Disease 5

± treatments

Need to design a specific study for a specific question.

When behaviour is critical databases allow to ensure unbiased behaviour.

When a question is Complex, a model become unavoidable

40

Place of digitized medecine and big data in real life information

Electronic-health-records

Computer based medical decision

Lost of clinical power in Rx decision

Police role: Early access to practice and fast reaction

Policy role: analysis of best practice and understanding of drivers of cost and outcomes

Access to who?

• Information remain fragmented and heterogeneous

• Next step challenges to integrate the data in a single warehouse

Integrated Health Care System The new way for the future?

42

Changes in Health Care Services Organisation

New funding model: from fee to services to outpatient service and all

other related ancillary services included into a lump-sum payment

Shift of decision-making from payers to healthcare providers

- 42 -

Integrated healthcare systems Hospitals, multispecialty care delivery, other

services, and coverage integrated into a

comprehensive system for delivering care

43

Five popular ACO payment models

ACO model of payments

• providers can share in a portion of the savings they achieve in a modified fee-for-service model

"One-sided" shared savings

• providers take on downside and upside risk in this fee-for-service based payment model

"Two-sided" shared savings

• providers get a single payment for all of one patient's services for one episode of care

Bundled/episode payments

• providers receive preset payments per patient in return for providing whatever services are needed, combined with payments based on actual services performed

Partial capitation/global

payments

• provider organization assumes a great amount of risk with global payments. With this arrangement, providers receive monthly or annual payments, regardless of the care services they performed in that time period.

Global payments

ACO may use a range of payment models (capitation, fee-for-service with

asymmetric or symmetric shared savings, etc.)

44

DRGs for outpatient services

Ambulatory Patient Group (APG) is a classification system for outpatient services reimbursement developed for the American Medicare service by the Health Care Financing Administration (since 2010)

APG reimbursement system does not recognize units of service.

• Nutrition counselling

• Crisis management

• Patient education including diabetes

• Asthma self management services

• Health/behavioral assessments

45

Bundled Payment

• Bundling payment of drugs to procedures, (mirror Hospital DRG)

• Example of ESA bundled to dialysis

• Tenders become systematic

• Competition driven by prices

• Price discount up to 80%

• Shift of power negotiation from payers to healthcare providers

Hospital restricted distribution

47

Impact of Distribution of Biosimilars through Hospital (million €)*

0

1000

2000

3000

4000

5000

FR DE EL HU PL PT UK

Base case Exclusive hospital distribution

Biosimilar savings

Assuming 80% price discount

versus brand

*Health care public payer perspective

Price as a powerful optimisation tool But may be dangerous too

49

The Pricing Lock

49

25 years after GSK tritherapy we are back with Gilead.

50

Financial toxicity: An elephant in the room

• Discussion with patients about

financial concerns represents

a clear unmet need

• Many patients who are

insured do not have adequate

drug plan coverage and end

up in bankruptcy.

• This has become socially

unacceptable

51

The Power of 1%

Source: Compustat, McKinsey analysis

19.2

68.3

12.5

100.00

Revenues Fixed Costs Variables Costs Operating profit

Price increase Profit increase

1.0% 8.0%

Payers have not shown to be creative nor ambitious They are just reactive Politician will unlikely act Society will react

53

Need to change business model

From selling drugs to selling outcomes

From controlling drug distribution to patient management

Multi-companies alliance to access information and impact outcomes

Anticipate the future pricing landscape or loose the battle

Pharma is likely to dominate the game but for how long

54

Uncertainty will remain the critical issue

Albert Einstein

“As far as the laws of mathematics refer to reality, they are not certain;

and as far as they are certain, they do not refer to reality.”

Albert Einstein

56

Pricing of Generics vs. Pricing of Innovative Drugs

While most countries regulate prices of generics to secure savings (price linkage) …

• France: 60% of originator price

• Latvia : 30% of originator price for the first generic, then 10% less for the followings, then 5%

… Prices of innovative drugs (ATMPs particularly) have reached unprecedented prices

and continue to increase

Example of ATMPs’ Prices authorized in Europe

Brand name Manufacturer Authorization date Market Withdrawal Price at market entry

US$

Gene therapy

Glybera® UniQure 10/25/2012 10/28/2017 $1,206,751

Strimvelis® GlaxoSmithKline 5/26/2016 Marketed $738,223

Imlygic® Amgen 12/16/2015 Marketed $357,309

Kymriah® Novartis 8/22/2018 Marketed $441,538

Luxturna® Spark Therapeutics 11/23/2018 Marketed $425,000

Tissue-engineered products

ChondroCelect® TiGenix 11/16/2009 7/29/2016 $21,926

MACI® Vericel 6/27/2013 09/05/2014 $21,926

Holoclar® Chiesi Farmaceutici 2/17/2015 Marketed $93,432

Spherox® Don AG 07/10/2017 Marketed $18,950

Cell therapy

Zalmoxis® MolMed Spa 8/18/2016 Marketed $814,780

Provenge® Dendreon 09/06/2013 05/06/2015 $110,920

57

Patient Access Scheme in UK

• The terms of individual agreements are confidential.

• Discounting levels vary considerably, often reflecting the price must be reduced in order to meet

the cost-effectiveness thresholds applied by NICE:

• Generally applies an ICER threshold of £20,000–30,000 per QALY gained (raised to $50,000

for end-of-life treatments, higher for ultra-orphan drugs

• As of January 2018, 140 schemes are listed on NICE’s website

Few new drugs are recommended by NICE for routine NHS commissioning without the provision of

a discount.

Patient Access Schemes (PAS) are a formal part of the pricing and reimbursement environment in

the UK, commonly represented by simple discount

Source: Barham L, 2015

58

The French ATU, granted and controlled by the ANSM, allows a compassionate use of drugs provided the following characteristics are met

• Treatment of rare or serious diseases

• No Marketing authorization yet

• No suitable therapeutic alternative in France

• Efficacy and safety are presumed

• Benefit is expected for the patient

Early Access to innovative Drugs in France Authorization for Temporary Use (ATU)

The purpose of the “ATU” is to provide an early access to some promising medicinal

products that do not have a marketing authorization where there is a public health need.

• Concerns a single patient (by name)

• Granted for the duration of the treatment

• Issued at the request and under the responsibility of

the prescribing physician

• Safety and efficacy data are collected according to a

protocol for therapeutic use

“Nominative ATU” “Cohort ATU”

Pre - Marketing

Authorization

• Granted for a one-year duration (renewable)

• Group or sub-group of patients treated and monitored

following the criteria defined in a protocol for

therapeutic use

59

The French RTU, elaborated and controlled by the ANSM, allows to monitor off-label prescribed medicines provided the following characteristics are met

• Therapeutic need is unmet (no appropriate alternative medicine with a marketing authorization or a cohort ATU in the designated indication)

• Benefit / risk ratio is assumed to be favorable based on the available scientific efficacy and safety data

Off-Label Use in France Recommendation for Temporary Use (RTU)

The objectives of the RTU are to render the use of off-label prescribed medicines safer

• Applies to drugs with a marketing

authorization in France

• On a temporary basis (3 years)

• Upon request and under the responsibility of

the ANSM

• Efficacy and safety data are collected and

annual reports are sent to the ANSM

RTU Conditions 25 RTU granted as per Feb 2019

2014 2 Lioresal®/Baclofene Zentiva®, Roactemra®

2015 6 Avastin®, Cirdacin®, Stelara®, Thalidomide

Celgene®, Velcade®, Verapamil®

2016 4 Hemangiol®, Methotrexate®, Truvada®,

Xalkori®

2017 3 Uvesterol ADEC®, Novoseven®, Remicade®,

2018 10 Gymisio®/Misodone®, Keytruda®, Inspra®, M-

M- Rvaxpro®, Opdivo®, Tafinlar®, Vindaqel®,

Avastin®, Cirdacin®, Remicade®

Post - Marketing

Authorization