Author: Steve Edgar, Senior Manager, Global Market Access
This article covers one of five global market access trends we’re exploring related to how government response to the COVID-19 pandemic is reshaping treatment development, approvals and delivery.
Read the full report here: How COVID is reshaping global policy and what it means for market access.
Large-scale investments in research and access to care point toward growing importance of innovative treatment and pricing models as governments turn toward cost containment
- Heightened public investment in COVID-19 treatment and vaccine research and development
- Expanding access to care through new funding and reducing existing barriers to access
- Questions surrounding pricing for critical medical supplies
- More efficient allocation of health resources in the spotlight, particularly digital health
- Looking ahead to the impact of COVID-19 on healthcare budgets
Governments of all persuasions have sought to surge resources to their health systems to stave off the worst of the pandemic, steadily expanding their efforts to contain, treat, and ultimately end the COVID-19 pandemic. Early indications show countries with an existing network of healthcare coverage will better weather the storm of increased COVID-19 health system demands, while those with high levels of out-of-pocket (OOP) spending or a lack of robust government coverage may struggle to provide adequate care and coverage.
Expanding access to care has aligned well with efforts in recent years to develop universal healthcare coverage, particularly in Southeast Asia, while also illustrating the continued need where these efforts have fallen short. For instance, with decentralization often leading to variance in the level of healthcare across regions, it is reasonable to anticipate inequalities in the COVID-19 response and drug access across regions in overly regionalized markets. Elongated timelines will only raise the difficulties here, increasing the urgency of the search for a vaccine and attendant boost in research funding witnessed worldwide.
Heightened public investment in COVID-19 treatment and vaccine research and development
Vaccine development and investigation of other COVID-19 treatments have unsurprisingly been an early and consistent target of new health funding since the pandemic began.
Through Decision Resource Group’s Global Market Access Solution, we have tracked a number of ongoing initiatives in this area:
- In the U.K., the MHRA has stated that it will prioritize work to support and authorize the development of vaccines, clinical trials of new medicines, clinical investigations of new medical devices, and helping to manage the supply of medicines and other healthcare products related to the COVID-19 outbreak. The U.K. Government further pledged £210 million ($255 million) to the Coalition for Epidemic Preparedness Innovations (CEPI) in order to fund the development of new vaccines.
- In March 2020, France’s Ministry of Health approved emergency funding of approximately $9.8 million for 11 applied health research projects to fight the COVID-19 pandemic, as well as an accelerated process for evaluating COVID-19-related research.
- Canada likewise committed over CAD 1 billion ($700 million) to the novel coronavirus fight in April 2020 as part of a larger national medical research strategy. This followed CAD $275 million ($204 million) the previous month in support of related medical research efforts. Indicative of a larger global trend, the government has taken steps to partner in these efforts with both manufacturers and universities and other research environments.
- In May 2020, the Korea Pharmaceutical and Bio-Pharma Manufacturers Association announced the establishment of the joint public-private Korea Innovative Medicine Consortium (KIMC) to facilitate and accelerate development and market access for vaccines and other medical technologies. KIMC would aim to accelerate market access by synthesizing R&D activities and conducting active commercialization activities using government R&D support and joint procurement systems.
Expanding access to care through new funding and reducing existing barriers to access
Efforts to expand access to care amid surging demand for healthcare services have been central to global health system responses to COVID-19. These policies may give us some indication of future spending once further drug and other therapeutic regimes are more widespread. Responses have tended to feature two key elements:
- extension of health benefit insurance packages to cover COVID-19 associated treatments
- waiving copayments for essential services such as medical aids and diagnostic costs.
Examples of both approaches as well as support for more general population-wide health interventions and locally tailored solutions can be seen across a range of key markets:
- The U.K. announced a £5 billion ($6.2 billion) COVID-19 fund in the 2020 budget to fight COVID-19. A sum of £1.6 billion ($2 billion) was allocated to local authorities to aid their response to the COVID-19 pandemic across all service settings.
- Austria announced a health insurance funding package for COVID-19, with medical aids up to € 1,500 ($1,661) as well as diagnostic examinations free of co-payments.
- In Italy, therapeutic plans governing drug prescribing and reimbursement were extended early in the pandemic rather than risk delayed access through new usage restrictions. Evidence of the need for advocacy across patient, provider and industry groups can be seen in subsequent strong appeals by physicians’ societies to continue these measures to remove barriers to access.
- With India’s health system facing the prospect of being overwhelmed by COVID-19, one key element of the country’s response has seen the Insurance Regulatory and Development Authority of India (IRDAI) requiring all 29 private insurance companies in the country to cover COVID-19 hospitalization costs under the needs-based standard health plan, Arogya Sanjeevani.
Questions surrounding pricing for critical medical supplies
Given the worsening global economic context and escalating demands on healthcare systems, cost containment will increasingly come to the forefront for health decision-makers. Accordingly, there has been some early movement from governments regarding price controls for medical products were deemed necessary to ensure widespread COVID-19 treatment.
As of yet, pricing focus has largely centered around available lower-cost supplies such as testing kits, personal protective equipment, antiseptics, and other related products. Spain’s Inter-ministerial Commission on Prices of Medicines (CIPM), for instance, has set maximum retail prices for surgical masks, hydroalcoholic gels and solutions, and skin antiseptics and has indicated that prices will be further reviewed based on market price surveillance.
However, governments have indicated the potential for further price controls on medicines as they are more widely employed in the fight against the novel coronavirus. Poland’s government has also announced its authorization under COVID-19 Special Legislation to cap maximum sale prices for drugs and devices used in COVID-19 treatment if needed to ensure essential access at affordable prices. Of course, questions remain about the ultimate applicability or meaningful expansion of these regulations.
As higher-cost treatments with greater efficacy become available or find increasing support in the clinical data, governments and industry will necessarily grapple with providing early and widespread access. Early attempts to balance drug development with widespread access are already underway via HTA, most notably through ICER’s aforementioned attempt to develop alternative pricing models such as a “cost recovery approach” proposed to address pressing need for widespread, affordable treatment. However, many questions surrounding appropriate pharmacoeconomic thresholds and cost inputs to consider remain to be ironed out.
One possible guidepost to financing COVID-19 treatments in cases of most pressing need may be Gilead’s May 2020 announcement of voluntary licensing agreements for its remdesivir treatment. Under this arrangement, five generic manufacturers in India and Pakistan were granted access to manufacture the drug for distribution in 127 lower- or middle-income markets as well as higher-income countries facing notable obstacles to access to care. Licensees are free to set their own prices for these generic versions of remdesivir and licenses will be free of royalties until the WHO calls the end of the COVID-19 pandemic or another product or vaccine gains approval for COVID-19 prevention or treatment. In late June 2020, Gilead announced its intention to charge developed markets with government-sponsored national healthcare systems $390 per vial for the treatment or $2,340 for a typical treatment course. In the US, private insurers will see a higher price of $520 per vial or $3,120 per course of treatment. Despite mixed initial reactions, ICER commented that it considered the price reasonably cost-effective, assuming certain assumptions including mortality benefit continue to be met. However, in August 2020, 34 U.S. State attorneys general issued a letter calling on federal authorities to exercise rarely used march-in rights, which allow for exercise of patent rights over products developed with federal funding, claiming this pricing may risk patient access. While authorities rejected this proposal on the grounds that the march-in policy does not properly apply in this case, it raises questions as to the potential for other encounters with authorities over pricing in the future.
More efficient allocation of health resources in the spotlight, particularly digital health
While digital health has taken center stage as a result of the need for safer healthcare interactions during the pandemic, it will likely have a larger role in the eventual wake of the crisis. As health systems globally meet expanding demand with increased funding in an increasingly economically constrained environment, we can expect to see sustained attention to more efficient healthcare delivery as a means of reducing costs.
This will most likely include reducing the burden on overtaxed health facilities and potentially ameliorating physician shortages and issues accessing care in rural areas. This includes telemedicine as well as smartphone apps for contact tracing, symptom diagnosis, tracking and reporting, as well as the use of Artificial Intelligence (AI) to track and predict disease spread. This will be another area where health reorganization for expediency during the pandemic will be unlikely to roll back, paving the way for further future reliance on digital means of health service delivery.
Already we have seen a widespread increase in the use of telemedicine as a necessary tool to prioritize care delivery, triage cases, and better gather, store, and use patient data to aid efficient medical decision-making. Barriers to telehealth have been lowered in several jurisdictions and insurers and public payers alike are lowering barriers to access as a means of reducing unnecessary health system visits and interactions. This trend has been consistent across developed health systems with existing technical and physical capacity, particularly across Europe and North America.
In the U.S., insurers have relaxed long-enforced restrictions on telemedicine, previously in place due to payers’ concerns about over-utilization and potential for fraud. However, concerns over the COVID-19 epidemic drove insurers to commonly relax restrictions. For instance, Humana allowed for temporary expansion of telehealth service scope and reimbursement rules for its members.
In addition, insurers like Humana have broadened the provider types that could qualify for reimbursement under telemedicine and waived copays. Moreover, the U.S. Centers for Medicare & Medicaid Services (CMS) have extended coverage to more than 80 services to be delivered digitally.
Both Germany and Austria have continued to move to further entrench digital health by easing digital prescriptions. In Austria, this has been pursued through a new e-prescription app, EKO2Go, released in September 2020 in support of increasing reliance on prescribing via telemedicine. The app details drugs’ prescription requirements, prices and other valid information for policyholders, while providing physicians with easier access to relevant prescribing and usage data.
Also passed in September 2020, the German Patient Data Protection Act similarly expands the digitization of the health sector. Germany’s approach also looks ahead to the importance of addressing patient data protections while also expanding access to digital prescribing, mandating usage from 2022. The Act also eases integration of providers into the existing telehealth infrastructure.
Governments in Mainland China and India have also looked toward digital solutions to increase the efficiency of their coronavirus response. In India, authorities are drawing on the Aarogya Setu Bridge to Health app, which is driven by artificial intelligence and big data.
They are also building off Aadhaar, the country’s pre-existing biometrically linked database of Indian citizens, which is the foundation for the government-backed Ayushman Bharat 2018 health insurance scheme, used for confirming the identity of enrolled patients and facilitating access to a centralized medical record system.
India’s program has already faced challenges with regard to privacy questions, with the government issuing a host of measures intended to assuage concerns about potential misuse of data in August 2020. This issue is not likely to be unique to India, with questions over the proper, effective use of personal data mounting as we see further development of health data use spurred by the pandemic.
In Mainland China, meanwhile, more consumers are embracing innovative and digital B2C (business to consumer) healthcare delivery models which are expected to gain prominence in the future. Chinese telemedicine services like Ali Health, WeDoctor, and JD Health, have launched online coronavirus clinics for the purpose of triaging and treating patients across the nation.
One issue for telemedicine will be ensuring the technical capacity to effectively implement new systems. Countries like Italy, for instance, have struggled to keep up with the growing desire for digital health solutions amid the pandemic. This is largely owing to a lack of information technology support and hardware (including bandwidth concerns), which will be felt more acutely in more disadvantaged regions. Of course, authorities may look to Mainland China and India’s example of partnering with existing external vendors or apps.
Looking ahead to the impact of COVID-19 on healthcare budgets
With governments worldwide facing growing healthcare costs as a result of the COVID-19 pandemic alongside standard cost drivers that continue unabated such as aging populations, it will be increasingly critical for the life sciences industry to follow health spending patterns for indication of things to come. While budget priorities continue to be set, we can see some early indications of future directions from the Asia Pacific region.
Facing record budget spending requests, the Japanese government has so far committed to continuing its practice of allotting separate funding for COVID-related costs in its upcoming 2021 budget. In a bit of a mixed bag for industry, the government has asked departments to maintain standard spending levels on par with the previous year, which while likely limiting needed budget increases is nonetheless preferable to potential budget reductions to offset COVID-19 costs. In its September 2020 budget submission, the Japanese Ministry of Health, Labor and Welfare’s Pharmaceutical Safety and Environmental Health Bureau requested an undisclosed amount of additional COVID-19 related funding targeting vaccine assessment and production as well as clinical guideline development and assessment of COVID-19 treatments. This provides some indication of where we can expect to see government health funding directed in developed markets.
In South Korea, the Ministry of Health and Welfare has proposed a budget of KRW 90 trillion (roughly $79 billion) for 2021. In a further positive sign for life sciences manufacturers, the government has also not yet moved to rein in health spending. Instead, this figure represents a 9.2% increase from 2020. With regard to COVID-19, this funding will continue trends seen in the earlier phases of the pandemic, with resources directed toward building the country’s public health capacity, including supporting infectious disease and respiratory treatment infrastructure. Further R&D support for COVID-19 vaccines and other known therapies as well investment in regenerative medicine will also continue to be provided into 2021.
With no definite end of the pandemic in sight, policy makers are yet to roll back earlier investments. Rather, they largely continue to surge resources toward treatment exploration and patient care. Clinical research and vaccine development funding is likely to continue unabated. Moreover, decision makers have begun to allocate funding to sizable vaccine supply procurement agreements with prospective vaccine manufacturers, often working jointly across jurisdictions to secure future access.
