Orphan Drug Pricing and Costs: A Case Study of Kalydeco and Orkambi

Unraveling elements of value-based pricing from a pharmaceutical industry's perspective: a scoping review

Health authorities use value-based pricing models to determine the value of innovative drugs and to establish a price. Pharmaceutical companies prefer value-based pricing over cost-based pricing. It is ambiguous whether value-based pricing has the same meaning to these stakeholders. We aimed to identify the elements that attribute to value-based pricing of innovative drugs from a pharmaceutical industry's perspective and as possible starting point for (value-based) contracting of drugs. We performed a scoping review of publications available in scientific databases with terms such as 'value-based pricing', 'pharmacoeconomics', 'drug cost', 'innovative drug' and 'drug therapy'. We included 31 publications, covering value elements of innovative drugs from a pharmaceutical industry's perspective. Overall, all found elements of value-based pricing were congruent with the elements of value-based pricing from a health authority's perspective. However, the emphasis placed on the elements differed. The most frequently mentioned elements in our review were economic considerations and cost aspects. Least mentioned were elements regarding cost-effectiveness, disease characteristics and patient characteristics. Although all elements in the drug value framework were present which indicate congruity, there seems controversy on the importance of cost-effectiveness as an element of value. Consequently, establishing a coherent and to all stakeholders' acceptable framework to value and price innovative drugs seems complicated. Mutual understanding can be found in the value elements societal considerations and healthcare process benefits. Our results supported the importance of economic and cost aspects regarding determination of prices of innovative drugs. Further research is required to quantify the weights of all relevant elements in the drug value framework, observe their possible interlinkages, and to weigh them over time.

Delivering a New Future for People With Cystic Fibrosis

Treatment, prognosis, and quality of life for people with cystic fibrosis (CF) have improved steadily since the initial description of the disease, but most dramatically in the past decade. In 2021, the median predicted survival increased to 53 years, compared with 17 years in 1970. The recent improvement in outcomes is attributable to the advent of cystic fibrosis transmembrane regulator (CFTR) modulators, small molecules that enhance the function of defective CFTR protein. The first CFTR modulator, ivacaftor, received Food and Drug Administration approval in 2011 to treat a single CFTR variant, comprising only 4% of those affected by CF. With the demonstration of efficacy, drug approval has been expanded to other variants. Multiple CFTR modulators used in combination with ivacaftor augment efficacy and increase the number of CFTR variants amenable to therapy. Approval of elexecaftor/tezecaftor/ivacaftor in 2019 increased the number of individuals who could benefit from highly effective modulator therapy (HEMT) to ∼90% of the CF population in the United States. HEMT has been dramatically effective, with overall improvements in lung function, quality of life, nutritional status, and, in women, increased fertility. HEMT may delay the onset of other CF-related comorbidities. Although off-target effects, including hepatotoxicity, drug-drug interactions, and putative mental health issues can complicate use, modulator therapy has been generally well tolerated. Ten percent of people with CF have variants that are not amenable to modulator treatment. HEMT, despite its great cost and limited global access, has brought legitimate hope and changed the lives of a significant majority of individuals and families affected by CF in North America.

Introduction of managed entry agreements in Korea: Problem, policy, and politics

Objectives: This study aimed to understand Managed Entry Agreements (MEAs) in Korea through the framework of three streams of the policy window model and its practical management and impact on pricing and reimbursement scheme. Methods: An extensive literature review based on Kingdon's model was conducted. We also performed descriptive analyses of MEA implementation using data on medicines listed in Korea and compared its MEA scheme with four different countries. Results: As per problem streams, patients with rare disease or cancers have considerable difficulties in affording their medicines and this has challenged the drug benefit system and raised an issue of patient's access. Policy streams highlighted that MEAs were introduced as a benefit enhancement plan for four major diseases since January 2014. MEAs have also been strengthened as a bypass mechanism to expand the insurance coverage especially for new premium-priced medicines under Moon Care (Listing all non-listed services). In descriptive analysis of MEAs, a total of 48 medicines were contracted as MEAs from January 2014 to December 2020, accounting for 73.4% of listed medicines for cancer or rare diseases and 97.9% of the cases were finance-based contracts. Meanwhile, outcome-based contracts such as CED accounted for only 2.1%. The application of MEAs differs across countries, resulting in a kappa coefficient of 0.00-0.14 (United Kingdom 0.03, Italy 0.00, Australia 0.14), indicating a lack of consistency compared to South Korea. Conclusion: MEAs, which were introduced as a bypass mechanism, have now superseded the standard process for anticancer agents or orphan drugs. Further studies are needed to evaluate the impact of the confidential agreements and effectiveness of new high-priced medicines with limited clinical data at launch.

The impact of conventional cost-effectiveness analysis on pricing dynamics in the market of new medicines: a proposed countervailing approach

BACKGROUND

Countries using cost effectiveness ratio as a decision tool for price and reimbursement decisions still witness accelerating price increases. The objective of this paper is to propose a change in the application of the incremental cost effectiveness ratio as a criterion for price policy.

RESEARCH DESIGN

We develop a model that sets a price for marginal effectiveness equal to the marginal willingness to pay, but it reimburses average effectiveness according to the size of increased QALY gain.

RESULTS

This new formula also allows to split the economic value of drug between patients and the industry and creates a reward to invest into QALY gains. We show some empirical data of the new prices derived from the application of the new formula, as well as the implications in terms of the consumer and manufacturer´s surplus based on two potential scenarios of the incentives generated by this new formulation.

DISCUSSION

We propose that small increases in life expectancy be priced differently from substantial as a way of containing the price dynamics.

CONCLUSIONS

A change in the application of the ICER threshold will help to reduce the price pressure on public budgets.

Enhancing Choices Regarding the Administration of Insulin Among Patients With Diabetes Requiring Insulin Across Countries and Implications for Future Care

There are a number of ongoing developments to improve the care of patients with diabetes across countries given its growing burden. Recent developments include new oral medicines to reduce cardiovascular events and death. They also include new modes to improve insulin administration to enhance adherence and subsequent patient management thereby reducing hypoglycaemia and improving long-term outcomes. In the case of insulins, this includes long-acting insulin analogues as well as continuous glucose monitoring (CGM) systems and continuous subcutaneous insulin infusion systems, combined with sensor-augmented pump therapy and potentially hybrid closed-loops. The benefits of such systems have been endorsed by endocrine societies and governments in patients with Type 1 diabetes whose HbA1c levels are not currently being optimised. However, there are concerns with the low use of such systems across higher-income countries, exacerbated by their higher costs, despite studies suggesting their cost-effectiveness ratios are within accepted limits. This is inconsistent in higher-income countries when compared with reimbursement and funding decisions for new high-priced medicines for cancer and orphan diseases, with often limited benefits, given the burden of multiple daily insulin injections coupled with the need for constant monitoring. This situation is different among patients and governments in low- and low-middle income countries struggling to fund standard insulins and the routine monitoring of HbA1c levels. The first priority in these countries is to address these priority issues before funding more expensive forms of insulin and associated devices. Greater patient involvement in treatment decisions, transparency in decision making, and evidence-based investment decisions should help to address such concerns in the future.

How Much Does It Cost to Research and Develop a New Drug? A Systematic Review and Assessment

BACKGROUND

Debate over the viability of the current commercial research and development (R&D) model is ongoing. A controversial theme is the cost of bringing a new molecular entity (NME) to market.

OBJECTIVE

Our aim was to evaluate the range and suitability of published R&D cost estimates as to the degree to which they represent the actual costs of industry.

METHODS

We provided a systematic literature review based on articles found in the Pubmed, Embase and EconLit electronic databases, and in a previously published review. Articles published before March 2020 that estimated the total R&D costs were included (22 articles with 45 unique cost estimates). We included only literature in which the methods used to collect the information and to estimate the R&D costs were clearly described; therefore, three reports were excluded. We extracted average pre-launch R&D costs per NME and converted the values to 2019 US dollars (US$) using the gross domestic product (GDP) price deflator. We appraised the suitability of the R&D estimated costs by using a scoring system that captures three domains: (1) how success rates and development time used for cost estimation were obtained; (2) whether the study considered potential sources contributing to the variation in R&D costs; and (3) what the components of the cost estimation were.

RESULTS

Estimates of total average capitalized pre-launch R&D costs varied widely, ranging from $161 million to $4.54 billion (2019 US$). Therapeutic area-specific estimates were highest for anticancer drugs (between $944 million and $4.54 billion). Our analysis identified a trend of increasing R&D costs per NME over time but did not reveal a relation between cost estimates and study ranking when the suitability scores were assessed. We found no evidence of an increase in suitability scores over time.

CONCLUSION

There is no universally correct answer regarding how much it costs, on average, to research and develop an NME. Future studies should explicitly address previously neglected variables, which likely explain some variability in estimates, and consider the trade-off between the transparency and public accessibility of data and their specificity. Use of our proposed suitability scoring system may assist in addressing such issues.

A novel perspective on pharmaceutical R&D costs: opportunities for reductions

INTRODUCTION

R&D costs as an element of medicines' pricing play a prominent role in the discussions regarding the affordability of medicine. This paper investigates the details of R&D costs and the potential for reductions.

AREAS COVERED

The manuscript focuses on the constitution of R&D costs in relation to medicines' pricing and its potential developments. This manuscript builds on a cost-of-opportunity approach to explore the results of potential changes in drug development and its possible economic, political, and societal impacts.

EXPERT OPINION

The cost of capital is the largest cost category that could be affected by authorities. Public institutions can affect these costs by increasing public investments in R&D and reducing the amount of development time that is associated with a high capital need. In order to affect the cost of failure, it is key to understand its drivers. A government taking risks as the funder of early innovation yields an opportunity to introduce an alternative model for medicine development. Next, to control pricing, it is important to adequately reward innovation in order to ensure improved quality of care, access, and affordability of systems. Innovation, high-quality care, access, and affordability require entrepreneurial and changing positions of governments, authorities, public institutions, and the pharmaceutical industry.