Projecting Pharmaceutical Expenditure in EU5 to 2021: Adjusting for the Impact of Discounts and Rebates

Values, challenges, and responses associated with high-priced potential cures: perspectives of diverse stakeholders in South Korea

BACKGROUND

The emergence of high-priced potential cures has sparked significant health policy discussions in South Korea, where the healthcare system is funded through a single-payer National Health Insurance model. We conducted focus group interviews (FGIs) and accompanying surveys with diverse stakeholders to comprehensively understand related issues and find better solutions to the challenges brought by these technologies.

METHODS

From October to November 2022, 11 FGIs were conducted with stakeholders from various sectors, including government payers, policy and clinical experts, civic and patient organisations, and the pharmaceutical industry, involving a total of 25 participants. These qualitative discussions were supplemented by online surveys to effectively capture and synthesise stakeholder perspectives.

RESULTS

Affordability was identified as a critical concern by 84% of stakeholders, followed by clinical uncertainty (76%) and limited value for money (72%). Stakeholders expressed a preference for both financial-based controls and outcome-based pricing strategies to mitigate these challenges. Despite the support for outcome-based refunds, payers raised concerns about the feasibility of instalment payment models, whether linked to outcomes or not, due to the specific challenges of the Korean reimbursement system and the potential risk of 'cumulative liabilities' from ongoing payments for previously administered treatments. In addition, the FGIs highlighted the need for clear budgetary limits for drugs with high uncertainties, with mixed opinions on the creation of special silo funds (64.0% agreement). Less than half (48%) endorsed the use of external reference pricing, currently applied to such essential drugs in South Korea. A significant majority (84%), predominantly non-pharma stakeholders, advocated for addressing cost-effectiveness uncertainty through re-assessment once long-term clinical data become available.

CONCLUSIONS

This study uncovers a broad agreement among stakeholders on the need for more effective value assessment methodologies for high-priced potential cures, stressing the importance of more robust and comprehensive re-assessment supported by long-term data collection, rather than primarily relying on external reference pricing. Each type of stakeholders exhibited a cautious approach to their specific uncertainties, suggesting that new funding strategies should accommodate these uncertainties with predefined guidelines and agreements prior to the initiation of managed entry agreements.

Prices of Orphan Drugs in Four Western European Countries Before and After Market Exclusivity Expiry: A Cross-Country Comparison of List Prices and Purchase Prices

BACKGROUND

Increasing pharmaceutical expenditure challenges the sustainability and accessibility of healthcare systems across Europe. Confidentiality restraints hinder assessment of actual prices of Orphan Medicinal Products (OMPs). Hence, we assessed the real prices of brand-name OMPs around market exclusivity expiry (MEE).

OBJECTIVE

We aimed to explore developments in published list prices (LPs) and confidential hospital purchase prices (PPs) of brand-name OMPs relative to their market exclusivity status in Western European countries with similar GDPs.

METHODS

We analyzed LPs and PPs of 13 selected OMPs purchased by university hospitals in Western European countries between 2000 and 2020. For confidentially reasons, proportions were used, with the Dutch LPs of the selected OMPs at the year of MEE serving as reference values. PPs included pre-purchase discounts. Rebates were not considered.

RESULTS

Data were analyzed from hospitals in Denmark (DK) (n = 1), France (FR) (n = 1), Germany (DE) (n = 2), and the Netherlands (NL) (n = 1). Average LPs and PPs of included OMPs dropped gradually but limited over time, with no explicit price drop after MEE. LP levels differed more per country than PP levels: LP range before MEE was 164% (DE)-101% (FR) and after MEE was 135% (DE)-82% (FR); PP range before MEE was 150% (DE)-102% (FR) and after MEE was 107% (DE)-80% (FR). Overall differences between LPs and PPs were < 3% in all countries, except for Denmark.

CONCLUSION

No evident price drops of included brand-name OMPs were observed around MEE and differences in purchase prices are modest in the selected Western European countries. Results were not subject to significance testing. More robust data are needed to strengthen negotiations with suppliers.

Exploring the effectiveness of demand-side retail pharmaceutical expenditure reforms : Cross-country evidence from weighted-average least squares estimation

Increasing expenditures on retail pharmaceuticals bring a critical challenge to the financial stability of healthcare systems worldwide. Policy makers have reacted by introducing a range of measures to control the growth of public pharmaceutical expenditure (PPE). Using panel data on European and non-European OECD member countries from 1990 to 2015, we evaluate the effectiveness of six types of demand-side expenditure control measures including physician-level behaviour measures, system-level price-control measures and substitution measures, alongside a proxy for cost-sharing and add a new dimension to the existing empirical evidence hitherto based on national-level and meta-studies. We use the weighted-average least squares regression framework adapted for estimation with panel-corrected standard errors. Our empirical analysis suggests that direct patient cost-sharing and some-but not all-demand-side measures successfully dampened PPE growth in the past. Cost-sharing schemes stand out as a powerful mechanism to curb PPE growth, but bear a high risk of adverse effects. Other demand-side measures are more limited in effect, though may be more equitable. Due to limitations inherent in the study approach and the data, the results are only explorative.

High-Expenditure Disease in the EU-28: Does Drug Spend Correspond to Clinical and Economic Burden in Oncology, Autoimmune Disease and Diabetes?

BACKGROUND

Drug costs are increasing in Europe, and there is a heightened need to reduce pressure on healthcare systems. In 2017, oncology, autoimmune disease, and diabetes featured as the three highest therapy areas for drug spend in the EU-28. However, the absolute 1-year drug spend growth for diabetes did not feature within the ten fastest growing therapy areas.

OBJECTIVE

This study explores the association between drug spend and disease burden in oncology, autoimmune disease, and diabetes in the EU-28.

METHODS

Oncology, autoimmune disease and diabetes therapeutic areas were investigated using four methodologies. Historical and forecasted drug spend was analysed using the IQVIA MIDAS® drug sales database. Clinical and economic burden was estimated from targeted literature reviews. Trend analyses compared changes in drug spend with clinical burden using the Global Burden of Disease tool as the epidemiological reference. Cost per quality-adjusted life-years (QALYs) from UK health technology assessments were compared to interpret the health economic value.

RESULTS

Oncology had the highest historical drug spend and growth compared with autoimmune disease and diabetes. Total drug spend and growth in oncology is forecasted to exceed diabetes by twofold. Increasing oncology drug spend historically did not correspond with reductions in mortality and morbidity. Diabetes had the lowest drug spend and greatest QALY/€1000 spent benefit.

CONCLUSION

This study indicates that drug spend may not correlate to clinical burden across diseases. Future research could stimulate debate on whether more equitable drug funding may improve disease management.

A systematic review of pharmaceutical price mark-up practice and its implementation

Pharmaceutical products, apart from being essential for medical treatment, are of high value and heavily regulated to ensure the prices are controlled. This systematic review was conducted to identify pharmaceutical pricing mark-up control measures, specifically in the wholesale and retail sectors. The search method comprised the following databases: PubMed, Science Direct, Springer Link, ProQuest, and EBSCOhost and Google Scholar. The results were filtered systematically from the inception of the aforementioned databases until 23 April 2021. Eligible studies were those focusing on the implementation of pharmaceutical pricing strategies that involve a) mark-ups of medicine, and b) pharmaceutical cost control measures. A total of 13 studies were included in this review: seven covered European countries, four covered Asian countries, one covered the USA and one covered Canada. The main points of discussion in the qualitative synthesis were the implementation of medicine mark-ups, price mark-up regulatory strategies and the outcomes of these regulatory strategies. Our findings suggest that Western countries have a lower mark-up margin, around 4% to 25% of the original purchased price, compared to Asian countries, up to 50%.

Budget Impact Analysis of Biosimilar Products in Spain in the Period 2009-2019

Since the first biosimilar medicine, Omnitrope^® (active substance somatropin) was approved in 2006, 53 biosimilars have been authorized in Spain. We estimate the budget impact of biosimilars in Spain from the perspective of the National Health System (NHS) over the period between 2009 and 2019. Drug acquisition costs considering commercial discounts at public procurement procedures (hospital tenders) and uptake data for both originator and biosimilar as actual units consumed by the NHS were the two variables considered. Two scenarios were compared: a scenario where no biosimilars are available and the biosimilar scenario where biosimilars are effectively marketed. All molecules exposed to biosimilar competition during this period were included in the analysis. The robustness of the model was tested by conducting multiple sensitivity analyses. From the payer perspective, it is estimated that the savings produced by the adoption of biosimilars would reach EUR 2306 million over 11 years corresponding to the cumulative savings from all biosimilars. Three molecules (infliximab, somatropin and epoetin) account for 60% of the savings. This study provides the first estimation of the financial impact of biosimilars in Spain, considering both the effect of discounts that manufacturers give to hospitals and the growing market share of biosimilars. We estimate that in our last year of data, 2019, the savings derived from the use of biosimilars relative total pharmaceutical spending in Spain is 3.92%. Although more research is needed, our evidence supports the case that biosimilars represent a great opportunity to the sustainability of the NHS through rationalizing pharmaceutical spending and that the full potential of biosimilar-savings has not been achieved yet, as there is a high variability in biosimilar uptake across autonomous regions.

The political economics of cancer drug discovery and pricing

Drug discoveries can, when used appropriately, save lives. Since 1970, cancer death rates among people aged under 65 have halved in countries such as the USA and the UK. Despite pharmaceutical market imperfections and fears about the prices of new treatments, further progress should be possible during the 2020s. Anticancer medicine outlays account for 0.1-0.2% of the gross domestic product (GDP) of developed countries. Total cancer service spending typically stands at ∼0.8% of GDP. The affordability of these sums is a political calculation. Improvements in the efficiency of drug development and global access to effective therapies are desirable. However, from a public interest perspective, these goals should not be pursued in ways that understate the value of better treatment outcomes and threaten the funding available for ongoing innovation.

Forecasting drug utilization and expenditure: ten years of experience in Stockholm

Background

Operating under constrained budgets, payers and providers globally face challenges in enabling appropriate and sustainable access to new medicines. Among payer initiatives aiming to improve preparedness of healthcare systems for the introduction of new medicines, drug utilization and expenditure forecasting has played an increasingly important role. This study aims to describe the forecasting model used in Region Stockholm and to evaluate the accuracy of the forecasts produced over the past decade.

Methods

In this repeated cross-sectional study, we compared the predicted pharmaceutical expenditure with actual expenditure during the entire available follow-up period (2007–2018) both for overall drug utilization and for individual therapeutic groups. All analyses were based on pharmaceutical expenditure data that include medicines used in hospitals and dispensed prescription medicines for all residents of the region.

Results

According to the forecasts, the total pharmaceutical expenditure was estimated to increase between 2 and 8% annually. Our analyses showed that the accuracy of these forecasts varied over the years with a mean absolute error of 1.9 percentage points. Forecasts for the same year were more accurate than forecasts for the next year. The accuracy of forecasts also differed across the therapeutic areas. Factors influencing the accuracy of forecasting included the timing of the introduction of both new medicines and generics, the rate of uptake of new medicines, and sudden changes in reimbursement policies.

Conclusions

Based on the analyses of all forecasting reports produced since the model was established in Stockholm in the late 2000s, we demonstrated that it is feasible to forecast pharmaceutical expenditure with a reasonable accuracy. A number of factors influencing the accuracy of forecasting were also identified. If forecasting is used to provide data for decisions on budget allocation and agreements between payers and providers, we advise to update the forecast as close as possible prior to the decision date.

Talkin' About a Resolution: Issues in the Push for Greater Transparency of Medicine Prices

At the 2019 World Health Assembly, a significant new resolution was agreed by most countries to start publicly sharing information on the real net prices they pay for medicines in their health systems. The resolution also includes provisions for countries to support other transparency activities. However, an additional proposal to require pharmaceutical companies to submit information on their internal sales figures, internal research and development costs, clinical trial costs and marketing costs for each individual medicine as a condition of registration, and for governments to publish this, was not agreed. Pressure for coordinated international action to increase the transparency of medicine prices and costs has been building for some time, as confidential discounts and rebates on prices of medicines are common. We argue that while it is possible that stakeholders may benefit to some extent from greater transparency on prices, several important policy and economic issues need to be carefully considered. Such transparency, combined with widespread use of international reference pricing, might undermine companies' differential pricing strategies, which are important in fostering wider access to medicines in low- and middle-income countries in particular, noting that access to medicines issues can occur in high-income countries as well. Moreover, there is a further risk that these types of proposals will lead to price fixing, less competition and higher prices than might otherwise be the case. The lack of any commitments in the resolution to greater transparency in payer decision-making processes also risks undermining the credibility of the resolution. The resolution and further transparency measures could have the potential to undermine patient access to medicines in the developing world, lead to higher prices in some markets and compromise long-term development of new medicines for future generations.

Accessibility of cancer drugs in Switzerland: Time from approval to pricing decision between 2009 and 2018

BACKGROUND

Approved drugs must be included on the so-called "special list" (SL) by the Federal Office for Public Health (FOPH) to be reimbursed by the social health insurance in Switzerland. The FOPH decides whether a drug may be included on SL and if so, negotiates the maximum price with the manufacturer. Time period between approval and inclusion on SL is important to evaluate accessibility of patients to drugs.

METHODS

We identified all approved cancer drugs for first indication between 2009-2018 in Switzerland and determined whether they have been included on SL, and if so, how many days passed between approval and reimbursement, i.e., inclusion on SL. Descriptive statistical analysis was performed by using R.

RESULTS

70 cancer drugs have been approved between 2009 and 2018. Among this sample, 56 (80 %) are on SL. Average time from drug approval to inclusion date on SL increased from 234 days in 2009 to 463 days in 2018, with an average time of 352 days over the full analysis period.

CONCLUSION

Time period between approval and inclusion on SL has prolonged over the past years. This impedes patients' access to cancer drugs. Prioritizing HTA and price negotiation of cancer drugs with high clinical benefit or implement a regulation that sets a maximum time period for HTA and price negotiation are possible policy implications.

An analysis of orphan medicine expenditure in Europe: is it sustainable?

Background

Orphan medicinal product (OMP) prices are considered by some to be a challenge to the sustainability of healthcare expenditure. These concerns are compounded by the increasing number of OMPs receiving marketing authorisation (MA) annually. The aim of this study was to explore the sustainability of OMP expenditure within the context of total European pharmaceutical expenditure.

Methods

Using historical IQVIA data, an analysis was conducted on total pharmaceutical and OMP expenditure in eight countries (using values / volumes) in the branded, non-branded and overall pharmaceutical market. Country level and aggregated data was considered for EU5 countries, Austria, Belgium and Ireland.

Three key analyses were conducted:

The OMP share of total pharmaceutical expenditure was calculated from 2000 to 2017, to assess its evolution over time.

The results of this analysis were compared with a 2011 forecast of OMP budget impact.

The evolution of the total pharmaceutical market and its different segments (branded OMPs, non-OMP branded and unbranded) were assessed by estimating the compound annual growth rate (CAGR) and percentage of pharmaceutical expenditure for each market segment from 2010 to 2017.

Results

Across countries, OMP share of total pharmaceutical expenditure has increased each year since 2000, rising to 7.2% of total pharmaceutical expenditure in 2017. OMP expenditure has increased at a CAGR of 16% since 2010. The number of OMPs receiving MA each year showed a CAGR of 11% since 2001, four percentage points greater than the CAGR for all medicines receiving MA over the same period. OMP share of total pharmaceutical expenditure is higher than forecasted in 2011 due to slower than expected growth in the non-OMP market. OMP growth has been offset by reduced expenditure in the general market and increased use of generics and biosimilars.

Conclusions

Relative spending on OMPs has increased over the last 20 years, but this has been largely compensated for within the current allocation of total pharmaceutical spending by flat expenditure for non-OMPs and increased volumes of (lower-priced) generics/biosimilars, reflecting a shift towards expenditure in higher cost, lower volume patient populations and a shift in drug development towards more specialised targeting of diseases.

Barriers for Access to New Medicines: Searching for the Balance Between Rising Costs and Limited Budgets

Introduction: There is continued unmet medical need for new medicines across countries especially for cancer, immunological diseases, and orphan diseases. However, there are growing challenges with funding new medicines at ever increasing prices along with funding increased medicine volumes with the growth in both infectious diseases and non-communicable diseases across countries. This has resulted in the development of new models to better manage the entry of new medicines, new financial models being postulated to finance new medicines as well as strategies to improve prescribing efficiency. However, more needs to be done. Consequently, the primary aim of this paper is to consider potential ways to optimize the use of new medicines balancing rising costs with increasing budgetary pressures to stimulate debate especially from a payer perspective.

Methods: A narrative review of pharmaceutical policies and implications, as well as possible developments, based on key publications and initiatives known to the co-authors principally from a health authority perspective.

Results: A number of initiatives and approaches have been identified including new models to better manage the entry of new medicines based on three pillars (pre-, peri-, and post-launch activities). Within this, we see the growing role of horizon scanning activities starting up to 36 months before launch, managed entry agreements and post launch follow-up. It is also likely there will be greater scrutiny over the effectiveness and value of new cancer medicines given ever increasing prices. This could include establishing minimum effectiveness targets for premium pricing along with re-evaluating prices as more medicines for cancer lose their patent. There will also be a greater involvement of patients especially with orphan diseases. New initiatives could include a greater role of multicriteria decision analysis, as well as looking at the potential for de-linking research and development from commercial activities to enhance affordability.

Conclusion: There are a number of ongoing activities across countries to try and fund new valued medicines whilst attaining or maintaining universal healthcare. Such activities will grow with increasing resource pressures and continued unmet need.