Determining Value for Innovation and Setting Prices
PRIORITY MEDICINES FOR EUROPE AND THE WORLD A report prepared by WHO for the Netherlands Government by Warren Kaplan Richard Laing and 1 Saloni Tanna Eduardo Sabat Joyce Wilson Ann Wilberforce Marjolein Willemen Monique Renevier Lisa Greenough Kathy Hurst Objectives of Priority Medicines Project Provide a methodology for identifying pharmaceutical gaps from a public health perspective, for Europe and the World . Provide a public-health based pharmaceutical R&D agenda for use by the EU in the 7th
Framework Programme, Good public policy should spend public funds on areas of greatest public needs 2 Generating a Preliminary List of Diseases and Gaps Cochrane database of systematic reviews Clinical efficacy Burden of disease ranking EU10, EU25 The world (including EU25) Projections and trends PRELIMINARY LIST OF PRIORITY DISEASES AND GAPS IN DEPTH REVIEWS OF PRELIMINARY LIST OF DISEASES AND GAPS FINAL REPORT 3 Social solidarity
Pharmaceutical "Gap" Treatment of ACUTE Stroke (Outcome: Survival at end of treatment or follow-up, unless noted otherwise) 1.8 Various excitatory nerve amino acid antagonists 1.6 Ion channel ,modulators Antiplatelet therapies Fibrinogen depleting agents Glycerol Relative Risk (<1 favors placebo) 1.4 1.2 1 0.8
0.6 0.4 0.2 0 4 NMDA antagonists Gangliosides Streptokinase urokinase ( 7 days) Example of an absent pharmaceutical gap Secondary prevention of occlusive event (Stroke/MI) with antiplatelet therapy 2.5 Picotamide Relative risk (<1 favours placebo) 2
Suloctidil Ticlopidine 1.5 Prior MI Prior MI Prior stroke Aspirin any dose Dipyridamole All trials 1 Sulfinpyrazole 0.5 0 5 .
. . . . . . . . . . . "Commonality of interest" EUROPE 10% ??
Malaria Alzheimer and other dementias Osteoarthritis COPD Alcohol use disorders 6 Unipolar depression Maternal hemorrhage 8% 10% ?? ?? Special Needs for Women, Children, and the Elderly All groups neglected in drug development Complicated by different physiology & metabolism Recent improvements in situation of women and children Considerable gaps remain for the elderly who use the most medicines 7
Determining Value for Innovation and Setting Prices Octavia Quintana Trias, DG Research "How do you value innovation? Special thanks to David Henry, Sue Hill & Danielle Lang 8 Mr Gnter VERHEUGEN (Enterprise and Industry) September 2004 "As for the economic aspects of medicinal products, the Commission could, following deliberations on pricing and reimbursement methods, play a part in developing alternative approaches aimed at promoting innovation and making it financially rewarding. Similarly, questions concerning national procedures for determining the therapeutic value of new medicinal products must also be tackled." 9 The Problem European government have a dual role as purchasers and in promoting innovation All OECD countries except USA regulate pharmaceutical prices using up to five different
methods (Jacobzone) Price setting process is unpredictable for level and time to a decision (Black box) Pharmaceuticals are among the most highly regulated products Pharmaceuticals are only a small proportion of total health care costs in developed countries 10 www.pmprb-cepmb.gc.ca/symposium2002/ present/Jacobzone-Oct7-OECD/ Delays From Pricing And/ Or Reimbursement Application To Reimbursement (EFPI A Data) 90 days 180 days Belgium Greece Portugal France Austria Finland Italy Norway Spain Netherlands Switzerland Sweden Denmark Ireland Germany
800 (Days) In Belgium - until January 2002, the tr ansparency commission pr ocess had to be conducted before a company could apply for reimbursement of a given product. In France, only ambulatory care products have been included in this analysis. In Italy and Sweden the pricing and/or reimbursement procedure can start as soon as CPMP opinion is available (for centrally appr oved medicines). This analysis does not reflect the impact of recent r eforms in Italy. In Spain anecdotal evidence suggests that delays have incr eased recently. In Switzerland a more comprehensive study concer ning 191 files shows an average delay over 180 days. Finland has a two-tier reimbursement system, with a slower process for treatments of chr onic diseases (reimbursed at 75%) and serious or life-threatening diseases, and a faster one for acute diseases. Delays shown in this study do not reflect this distinction, and actual pricing and reimbursement delays are typically longer for medicines in the 75%/100% reimbursement categories Differential Pricing and Parallel Trade Differential pricing already occurs for many consumer products For pharmaceuticals dramatic differences already exist between countries for vaccines, oral contraceptives, antimalarials and ARVs Economic theory indicates that where the true marginal costs of a product are low, price discrimination will increase the total revenue of a company, so long as parallel trade can be minimized A number of technical solutions have been proposed to limit pharmaceutical parallel trade, such as unique presentation and country-specific labelling and packaging measures 12
Parallel Trade - The Evidence Panos Kanavos (LSE) 2003 Examined 19 top-selling drugs in six Northern European "destination countries" of imports -- account for almost a quarter of all prescription drug sales in Europe. Combined sales of reimported versions of these drugs saved 0.3 percent to 3.6 % of their annual drug budgets, or slightly more than $100 million. Savings were not passed on to consumers Drug prices in Northern and Southern Europe did not become more similar. The biggest gains from selling imported drugs (46% of the sales of all products studied) went straight to the repackagers. 13 http://www.washingtonpost.com/wp-dyn/articles/A60984-2004Sep29.html Spreading the Burden of Drug Development Costs and Valuing new medicines Rewarding innovation is a key aspect of pricing i.e. real innovation should be rewarded! Pricing should reflect ability to pay possibly measured as GNI per capita Pharmaco-economics already provides the
methods for reactive price setting and could be used proactively 14 Proposed Method (Henry 2002) The World Bank has suggested that health care interventions may be considered cost-effective if they buy a year of healthy life for less than the national average per capita GNI The method proposed for further evaluation is based on GNI per capita and efficacy measures 15 Indicative prices of highly active antiretrovirals (HAART) and a new hypothetical regimen in countries of variable wealth 30000 United Kingdom France Italy Spain 20000 15000 Slovenia
Czech Republic 10000 Latvia 5000 Mali Kazakhstan Philippines Georgia India Russia Indicative price existing treatment 26076 23225 15000 20000 25000 Per Capita GNI $US 16 22783
267 Indicative price $US 25000 Indicative price new drug Indicative prices of existing antidepressant treatment and a hypothetical new medicine with greater efficacy $6,000 United Kingdom France $5,000 Indicative Price $US Italy $4,000 Singapore $3,000 $2,000 Spain
$1,000 Mali India Czech Republic Slovenia Greece Latvia $0 0 5 10 15 20 Per Capita GNI $000US 17 Indicative price existing treatm ent
Indicative price new drug 25 30 Conclusions (1) Possible to incorporate measures of clinical performance and national wealth in determining indicative prices for pharmaceuticals. Does not mean that the indicative price is necessarily the right price, the lowest possible price or an affordable price. No guarantee that manufacturers will be interested in manufacturing products on this basis. 18 Conclusions (2) A more predictable system that encourages medicines development and achieves affordability of access in countries of variable wealth requires reconsideration of current policies towards parallel trade. Parallel imports tend to favour high-income countries, which can benefit from the prices paid in lower-income countries. May hurt lower income countries. Reference pricing encourages higher prices for poorer countries
Any inhibition of parallel trade conflicts with European law, which highlights the need for a wide debate & research on these issues. 19 Reviewer Comments The model is theoretically interesting but impractical. There is such a strong commitment to the ideal of a European Common Market that any restrictions on parallel trade would be unacceptable. Technical requirements for such an approach would be impossible to undertake proactively. 20 Final Summary If rewarding innovation is one of the intended effects of reimbursement policies, then setting prices related to the level of clinical efficacy and the national wealth as measured by GNI per capita would be a logical and transparent approach. A researchable topic! 21
Introduction To Proverbs Proverbs 1:1-7 The walk of a Christian is to be the walk of wisdom. Ephesians 5:15-17 Value of time. The word of God equips man unto every good work. 2 Timothy 3:16-17 The book begins by identifying...
Gave 550 million dollars to philanthropic pursuits. Handed out dimes to children (except during the Depression when he gave nickels). Working Wages in 1912 Male mill workers earned $8.76 per 56 hour work weeks. Women & children mill workers earned...
What is an Aorta Alert? Aorta ALERT - An alert activated by or under the direction of an Emergency Medicine Physician for the purpose of rapidly assembling key team members for the prompt diagnosis of a patient with suspected impending...
The Marketing "Mix" Marketing Mix - 4Ps The marketing mix elements that make up an organization's marketing program: Product Promotion Price Place These are management decisions, controllable factors Marketing function relates to many people, groups, and forces Marketing's first task:...
The key changes are: the definitions of disability and gender reassignment have both widened, so that more people are now covered by the Act. Guidance on this will be published on our intranet site when the Act comes into force;...
Kindergarten Cohort Chris Chapman National Center for Education Statistics Institute of Education Sciences IES Research Conference June 2006 Study Design Mean fifth-grade reading, mathematics, and science scores, by poverty status over time: Fall 1998 through spring 2004 Mean mathematics scores...