Adaption of healthcare systems in their management of innovation /hospital specialty products

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1 Adaption of healthcare systems in their management of innovation /hospital specialty products Lisa Taylor Global Pricing and Market Access Principal, IMS Consulting Group

2 Pressures in healthcare expenditures continue- bailouts, reducing deficits & spending and challenges with budgets 8 Dec 2014 The government has officially announced (as part of its autumn budget statement) that an additional 2.00 billion will be provided to the NHS in England for front-line services in March 2015 Government and regions revise expenditure plans for 2015; planned healthcare spending to be reduced. The new arrangements for healthcare reportedly form part of an agreed package of savings for 2015 totalling some 5.25 billion 06 October 2014 The first details of the 2015 Social Security Finance Bill aims to reduce the combined deficit of the social security system; to achieve the 2.1% overall target, the bill includes cost-containment measures to reduce healthcare (and pharmaceutical) spending by 3.2 billion in January 2015 The Treasury has expressed concern that seven regions may be at risk of being unable to pay their pharmaceutical invoices in 2015 based on the fact that for each of these regions, pharmaceutical budgets for 2015 are lower than official estimates on total spending on drugs in Traditional healthcare management 2 Healthcare system adaptation in their management of innovation

3 How have the EU markets traditionally funded hospital drugs and how will they continue to do so in the future? Hospital /Specialist products Increasing innovation System adaptation Traditional Healthcare Management 3 Healthcare system adaptation in their management of innovation

4 Currently, EU5 Payers utilise varying assessments / systems to make funding and price decisions Healthcare funding and access management behaviours Cost Effectiveness Comparative Clinical Effectiveness Budget Optimisation Essential Need Adaptive Negotiations Traditional healthcare management Patient Led Free-market Competition 4 Healthcare system adaptation in their management of innovation

5 England manage hospital drugs via a cost effectiveness analysis by NICE; and other additional funding schemes Cost Effectiveness UK NICE CE analysis 20,000-30,000 QALY End of Life thresholds 211 CCGs for regional / out -pt funding DRG hospital funding Cancer Drug Fund NSCAG Traditional healthcare management Source: IMS Concise guide: UK 2014 update 5 Healthcare system adaptation in their management of innovation

6 In France, for hospital products, CT ASMR assessments influence if price negotiations are required with CEPS Comparative Clinical Effectiveness France Commission de la Transparence (CT) SMR and ASMR- vs comparator Comité Economique des Produits de Santé (CEPS) Price negotiations T2A in-pt hospital funding T2A exclusion list High cost oncology/ orphan drugs Liste rétrocession Dispensed at out-pt Source: IMS Concise guide: France 2014 update Traditional healthcare management 6 Healthcare system adaptation in their management of innovation

7 Germany introduced the AMNOG benefit assessment in 2011 which then contributes towards rebate negotiations Comparative Clinical Effectiveness Germany GBA additional benefit analysis (IQWiG) vs comparator 1mill excluded Orphan drugs at 50mill automatic benefit GKV-SV rebate negotiations DRG hospital funding Exclusions, INeK (high cost oncologics and biologics) NUB and ZE funding Traditional healthcare management Source: IMS Concise guide: Germany 2014 update 7 Healthcare system adaptation in their management of innovation

8 Italy manage pricing and reimbursement centrally, while funding is done at regional level via DRGs and tariffs Budget Optimisation Italy AIFA reimbursement and price negotiations Innovation algorithm Innovative hospital products must be available 20 regions Regional hospital formularies* - binding? DRG and tariffs for in-pt File- F Some high cost drugs, reimbursed by ASLs Source: IMS Concise guide: Italy 2014 update *except autonomous provinces of Bolzano, Venezia, Lombardy Traditional healthcare management 8 Healthcare system adaptation in their management of innovation

9 Spanish pricing and reimbursement is done nationally, while budgets are allocated by regions to hospitals Budget Optimisation Spain 17 regions Budget allocation Some regional formularies Pais Vasco; Andalucia, cataluna, Vaalencia Individual hospitals draw up formularies GENESIS DRG (GDRs) - Catalunia Traditional healthcare management Source: IMS Concise guide: Spain 2014 update 9 Healthcare system adaptation in their management of innovation

10 In the next few years, more innovative specialty products will gain authorization... Hospital specialist products Increasing innovation System adaptation Traditional Healthcare Management 10 Healthcare system adaptation in their management of innovation

11 Most of the new launch pressure will come from innovative products, with a strong focus on specialty care Pharma pipeline overview # entities in the pipeline 2,364 35% 65% Pre-clinical 1,207 40% 60% Phase I 1,450 44% 56% Phase II % % 56% 44% Phase III Primary care Specialist driven Preregistration/ Registration Increasing innovation Source: IMS Lifecycle 2013/14 11 Healthcare system adaptation in their management of innovation

12 How will these new specialist drugs be funded? Hospital specialist products Increasing innovation System adaptation Traditional Healthcare Management 12 Healthcare system adaptation in their management of innovation

13 How successful are the major EU markets in giving access and funding to drugs? How will they need to adapt? System adaptations Clinical assessments Innovative agreements Impact on price? Impact on access? System adaptation Additional budget pockets 13 Healthcare system adaptation in their management of innovation

14 UK economic pressures are seeing most recent oncology NICE approvals required Patient Access Schemes (PAS) Clinical assessments # completed appraisals NICE STA evaluation outcomes 21 33,3% 38,1% 9,5% 19,0% ,0% 12,0% 28,0% 28,0% 2011 Not Recommended Optimised 21 14,3% 4,8% 28,6% 52,4% ,0% 32,0% 12,0% 20,0% 2013 Source: Summary of NICE statistics ( IMSCG analysis (includes only Single Technology assessments, and excludes assessments where no data was submitted by the manufacturer) 14 Healthcare system adaptation in their management of innovation 22 13,6% 9,1% 36,4% 40,9% 2014 Recommended with PAS Recommended PAS liaison PAS ( 09-14) Discount / rebates 2013 Bosulif CML; and Xalkori NSCLC 2013 NICE Pixuvri (NHL) then 2014 revision Impact on price? NHS discounts No more CCG discounts? Hospitals? System adaptation

15 In France there are 5 non reimbursement onco verdicts, & only 1 onco product achieved ASMR>3 in the last 5 years Clinical assessments # completed evaluations CT oncology drugs evaluation CT awarded 19 ASMR from I IV ASMRI- 1 granted (Nimenrix) ASMR II 0 ASMR III 8 ( incl Xalkoroi, Perjeta) ASMR IV 10 Impact on price? ASMR informal link to price System adaptation ASMR I ASMR II ASMR III ASMR IV ASMR V Not recommended Source: Published payer assessments (CT reports, G-BA assessments, NICE guidance). From Unravelling payer perception in oncology P&8 MA Forum June Healthcare system adaptation in their management of innovation

16 Tougher clinical assessments in Germany has seen considerable product price (rebates) cuts Clinical assessments GBA benefit assessment & price impact For 22 assessed oncology products* with an add. benefit, Avg. MSP reduction for onc. is 24%** Avg MSP non-onc. products 27% System adaptation Impact on price? Inlyta low benefit, high rebate Zelboraf, Zytiga, Bosulif high benefit, high rebate Source: Lauer-Taxe; G-BA & GKV SV homepage (Feb 2015); **excluding 75 rebate *Average rebate across all 22 products; the graph shows only products which had one price negotiation 16 Healthcare system adaptation in their management of innovation

17 Moreover some markets have being more receptive to considering innovative agreements for hospital drugs~ Innovative agreements Distribution of Innovative Agreements by Category 2014* 22% 16% 63% 36% 50% 24% 12% 65% System adaptation 14% (n=33) Performance based (n=25) (n=54) Financial based Coverage with evidence development *Note: Some Innovative Agreements s included in the IMS Database are not categorized into a particular group (due to lack of information available). These IAs are not included in the chart above. Source: IMS Innovative Market Access Agreements and Policies Database (as of Q3 2014) ~typically high cost, high unmet needoncology and/or orphan drugs more common 17 Healthcare system adaptation in their management of innovation

18 Traditionally seen in the UK and Italy; but now also arising in Spain, to ensure access & ease budget concerns Innovative agreements* System adaptation *selection of examples 18 Healthcare system adaptation in their management of innovation

19 Whilst recently, markets have created or dismantled budget pockets in response to funding pressures System adaptation Additional budget pockets 19 Healthcare system adaptation in their management of innovation

20 Therefore, healthcare system adaptation WILL impact the outcomes of hospital speciality price, access or both System adaptations Impact on price Impact on access Clinical assessments Innovative agreements ü ü Indirect impact ü Indirect impact ü System adaptation Additional budget pockets û ü 20 Healthcare system adaptation in their management of innovation

21 Traditional Healthcare Management Increasing innovation Budget pressure will keep increasing System adaptation New mechanisms are implemented to fund innovative drugs Close partnership between payers and manufacturers is key to facilitate patient access to innovative therapies Conclusions Traditional ways of managing are not enough to fund innovation 21 Healthcare system adaptation in their management of innovation