11th February, 2020
The key healthcare issue for 2020
How can we make the newest and most promising drugs affordable?
It’s a topic that’s featured in almost every recent article about the evolution of healthcare markets, and we increasingly find ourselves working with our clients to develop novel pricing and market access models to improve their brand’s value proposition with payers and patients.
So what shared experiences can we bring together to support the discussions commercial Pharma teams will inevitably have in 2020?
As is often the case, the year started with some of the biggest Pharma players announcing price increases to some of the biggest Pharma brands in the US. However, the price hikes weren’t as big as usual amidst growing political and public scrutiny of drug treatment costs.
Our global clients are increasingly looking to lessons learnt from markets across the European and Asia Pacific regions, so let’s take a look at some of the recent approaches to tackling the elephant in the room.
Increasing emphasis on pay for performance
Pay by value and pay by performance models have been tried and tried again; but robust ROI is elusive as healthcare systems are simply not set up to assess and track value in this way. That said, as data collection increases, tracked and analysed in real time, these models are gaining traction.
Pharma Mar was one of the first to try early Pay by Use Models for its brand, Yondelis™, in Italy and the UK. Yondelis™ is indicated for the management of two types of cancer; soft tissue sarcoma and ovarian cancer, each with unique dosing and administration regimens.
Pharma Mar markets the brand in Europe (it is licensed to Janssen in the US and Taiho in Japan) and worked to establish innovative P&MA models to support access, given both the rarity of the conditions it treats, and the expense of the brand. Developing a pay by use approach that served each country’s unique healthcare system proved challenging, but two models have proven successful in improving access:
- In Italy, patients receiving Yondelis™ are evaluated after two treatment cycles (six weeks), at which point the treatment cost for non-responders is refunded
- In the UK, the cost of Yondelis™ is covered by the manufacturer if used for more than five cycles, limiting the cost to the NHS to £17,500 to £25,000 per patient
The learnings are very apparent: financial flows and incentives within healthcare systems are complex, and current payment models are simply not built to cope with a ‘pay by use’ type of price management scheme yet.
This has led to wide variations of approaches, with comparative value hard to determine, and calls for collaboration to create a ‘pay by use’ pricing infrastructure across Europe.
However, if done correctly, this approach could enable a pricing mechanism and data collection capability that allows payers to demonstrate they have made the best use of scarce financial resources, whilst ensuring innovation is rewarded and the best patient outcomes achieved.
Learning from others, i.e. Netflix
Payer licensing models are being trialled in a number of areas and many analysts predict these will become increasingly common over time.
AbbVie is one of the latest companies to use a “Netflix” style subscription contract for their hepatitis C medication, Mavyret™, in Washington state in the US. The approach seeks to expand patient access while containing drug costs and has widespread political support, reflecting the state of Washington’s healthcare vision.
Subscription-based contracts for pharmaceuticals are still a new concept, but several US states are now picking up on these programs, particularly for treatments which are used for a fixed term. Washington's selection of AbbVie mimics a move by Louisiana, which recently chose a Gilead subsidiary to provide hepatitis C drugs through a similar program.
The US pilots are being closely watched, and there are more being set up around the world. In July 2019 the UK Government announced its plan to trial a subscription style payment system for new antibiotics able to treat multi drug resistant infections.
Under this model, the UK intends to pay upfront to pharmaceutical companies for access to medicines depending on their worth to the NHS. This is expected to encourage companies to invest in R&D as they will be paid even though the product may be held in reserve – an interesting twist on how companies might assess commercial viability.
And we’ve seen the first steps companies are taking to make the very expensive gene therapies more affordable
The first wave of gene therapies are largely targeting rare diseases that are associated with unparalleled levels of unmet need.
They are one shot wonders that aim to offer a cure, and no physician or payer wants to deny that hope to patients in their care. However, when a single treatment costs over US$1 million, affordability becomes a very real issue, and we’ve seen a couple of annuity models emerge in the last year or two.
The most obvious example here is, of course, Novartis’ Zolgensma™, indicated for the treatment of patients less than 2 years of age with spinal muscular atrophy with bi-allelic mutations in the survival motor neuron 1 gene.
With a price tag of US$2.1million, its launch has been followed closely by the media, and AveXis, the drug’s originator, and Novartis worked closely with payers prior to launch to create 5 year outcomes-based agreements and novel pay-over-time options.
The price negotiations have been supported by several cost effectiveness assessments completed by independent experts.
There are also education programs for commercial payers, state Medicaid programs to support rapid treatment, and a well-funded patient program to support affordability and access.
So what do we expect to see in our projects this year?
Drug affordability, facilitated by novel pricing and market access models, will continue to be a driver for growth reflected in the majority of commercial brand plans. How that affordability will be delivered is less certain, and we look forward to the innovative approaches different teams will undoubtedly develop.
If you would like to talk more about making affordability a key pillar in your brand growth strategy, please do get in touch. We’d love to hear from you.
Achieving commercial excellence in the new normal
It’s clear that ways of working and travel aren’t going to go back to where they were anytime soon, and more likely never. So there’s a growing realisation that the ‘plasters’ we all put in place to make things work since March need to become more permanent solutions if we’re going to have the impact and results we need.
Where will consumers buy their (over-the-counter) drugs in future?
An unprecedented change is currently taking place in the sale of pharmaceutical products, pointing to the influence of new competition with the existing pharmacy structure.