As an analyst charged with assessing and anticipating European biopharmaceutical market access trends, I read with interest last week’s Reuters article on the “leaked” EFPIAa working group paper that seemingly signals industry’s openness to the wide use value-based drug pricing. The concept of tying drug prices and/or manufacturer financial incentives to patient outcomes is certainly not new to industry; there are numerous examples of outcomes-based agreements that have been made between individual manufacturers and payers within the major European (EU5) markets, with some, like the UK’s agreement with Johnson & Johnson on its multiple myeloma drug Velcade (bortezomib), going on a decade.

However, the Reuters article implies that industry views these agreements as equal parts market access enabler and salve for financially strapped single-payer EU markets struggling to justify the funding of pricey new anticancer, antiviral, and stem-cell therapies, among others. The crux of industry’s stance is that, viewed holistically, the proper use of drug therapy can convey quantifiable outcomes—e.g., reduced hospitalizations—and thus return cost-savings for EU payers over time.

Details of EFPIA’s “roadmap for change towards outcomes-based reward systems” are limited—the proposal will be discussed by the EFPIA board at its June 16 meeting—but the Reuters article suggests a concessionary industry may be willing to assume much of the risk associated with paying for pricey treatments that don’t work as well as in clinical practice as they did in clinical trials, in exchange for an upheaval of many of the market mechanisms that EU payers have increasingly relied upon for cost-containment, such as international reference pricing, tendering on patented drugs, and the parallel trade that allows wholesalers to purchase lower-cost drugs from European markets and sell them for higher prices elsewhere.

While national (and sometimes subnational) bodies involved in HTA and drug pricing and reimbursement in the EU5 markets may have varied data requirements, Decision Resources Group’s primary research underscores that each of these markets rely on “upstream” mechanisms—increasingly aggressive negotiations in national list price setting, and often regional or local reimbursed price negotiations—as well as various cost-containment mechanisms, such as those EFPIA proposes to eradicate—that further limit the near-term budgetary impact associated with drug acquisition and use. We have seen the direct result of these mechanisms in our recent research for our Access & Reimbursement (formerly Physician & Payer Forum) offerings:

  • The impact of poor G-BA reviews for multiple type 2 diabetes drugs, including Trajenta (linagliptin) and Galvus (vildagliptin), and the subsequent GKV-SV price negotiations that were viewed unfavorably by manufacturers, have resulted in withdrawals from the German market, rather than the manufacturer risking a cascade effect from external reference pricing.b
  • Interviewed payers in Spain tell us that public tendering is likely to set a maximum reimbursement price for emerging branded asthma biologics used in public hospitals.
  • The manufacturer of the branded antipsychotic drug Latuda (lurasidone) withdrew the drug from the German market after failed price negotiations with the GKV-SV; however, physicians can access the drug in Germany thanks to parallel importing.

Payers’ use of “downstream” approaches to funding drug therapies (e.g., price adjustment and/or refund requirements based on variation from projected treatment outcomes) has been clustered predominantly in Italy and the United Kingdom, but Italy has taken the clear lead in developing risk- or performance-based agreements due to its progressive use of drug registries to track patient outcomes.

Our primary research suggests that many payers who were initially bullish on outcomes-based agreements have increasingly favored more straightforward simple discounts, volume rebates, or free stock agreements that are easier to manage administratively. (An examination into UK outcomes-based agreements in both oncology and multiple sclerosis suggested their benefit was hampered by ineffective mechanisms for monitoring of the schemes.) Indeed, DRG-interviewed payers anecdotally note this trend across multiple therapeutic areas. Over the past weeks, UK payers have told us that a positive NICEc recommendation for funding for new asthma therapies will most likely be contingent upon PASs that lower product acquisition price in line with NICE cost-effectiveness, but they emphasize a clear preference for a PAS with minimal administrative burden (e.g., simple discounts). Only 5 of the 78 patient access schemes (PASs) fielded through NICE’s Patient Access Schemes Liaison Unit (PASLU) currently tie drug reimbursement to patient outcomes—Velcade’s manufacturer refunds the cost of treatment for patients who have a partial response to treatment, while schemes for Lynparza (olaparib), Yondelis (trabectedin), and two for Revlimid (lenalidomide) rely on manufacturers to fund the cost of treatment beyond pre-defined timeframes.

Upending the current system demands a major financial outlay from health systems to adapt the infrastructure and logistical processes that would enable a true, longitudinal model of pricing and reimbursement based on outcomes. Thus, in the interim, European payers are unlikely to relinquish long-used price- and usage-control mechanisms.

However, European payers are seeking better sustainability of their healthcare budgets, as exemplified by recent national-level agreements within the EU5 markets—including true outcomes-based deals—due to the arrival of curative therapies for hepatitis C as well as personalized oncology medicines. Thus, incremental steps toward outcomes-based pricing and reimbursement will likely be practical for EU5 payers.

As in life, seemingly most everything is a tradeoff.

  1. EFPIA = European Federation of Pharmaceutical Industries and Associations.
  2. G-BA = Gemeinsamer Bundesausschuß der Ärzte, Zahnärzte, Krankenhäuser und Krankenkassen (Joint Federal Committee of Physicians, Dentists, Hospitals, and Health Insurance Funds); GKV-SV = (GKV-Spitzenverband; Federal Association of Statutory Health Insurance Funds).
  3. NICE = National Institute for Health and Care Excellence.

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