The Proliferating Known Unknowns
Akceso’s overview of four pivotal Pricing & Market Access conferences in 2023
– Miami, Athens, Paris, and Budapest –
EXCLUSIVE CONTENT FOR OUR CONTRIBUTORS AND CLIENTS
Written by Chris Shilling – Chief Editor of PRiMA Headlines, Akceso’s monthly newsletter
Our CEO and Founder Dr. András Incze presented at a series of four important Pricing & Market Access conferences in the past months – Miami, Athens, Paris and Budapest – that shed light on the growing uncertainties impacting the pharmaceutical landscape. Geopolitical tensions, energy issues have intensified, causing global inflation and manufacturing disruptions akin to challenges seen during the Covid pandemic. These conferences provided the opportunity to consider the landscape for our discipline, and where we might be heading.
Table of Contents
The underlying theme across all of the conferences appears to be a sudden dramatic increase in the ‘known unknowns’. The rise in geopolitical tensions (wars, US/China tension) energy turmoil, migration prevention schemes has caused a level of uncertainty that has fuelled inflation globally (although less so in the US). This in turn has driven a cost explosion for manufacturing and disruptions in logistics that echo the challenges faced during the Covid pandemic, leaving us with a number of questions with unknown answers:
- How will the availability and accessibility of healthcare and medicines change?
- How will equity of access evolve – within and across countries?
- How will pharmaceutical prices evolve in the changing world?
- What does the market landscape look like in the new world?
- Will Pharma remain an exciting investment opportunity in this new world? An interesting anecdote shared at the conference is that VC firms now calculate with 10 years for NPV as opposed to previously being as much as 30 years
Searching for Answers
The questions above impact different elements of a very complex environment – PR&MA processes, procurement, economics of production, and distribution are all affected by the growing uncertainty. We have seen interventions by government and regulators building up over time but now accelerating – the IRA in the US, European HTA harmonisation through the Joint Clinical Assessment as well as threats of penalties under the emerging new Pharmaceutical Law, and the new NRDL process in China where companies not only have to provide heavy discounts to get on the list but face continuing price cuts once on it.
Looking Into The Abyss
The intended effect of the major interventions is evidenced in budgets that have been successfully constrained, but the key question is at what price; this is the key unknown! For example, there are two schools of thought on how many drugs will be lost as a result of the IRA – as low as 3 or 4, or 130. While the answer is likely to be somewhere in the middle, even the loss of a few medicines could be a major impact for public healthcare.
As life expectancy is declining in the US, reduced public OOP health spending may be an important factor. There is evidence that lack of access to drugs is linked to a reduction in quality of health: Entresto has been proven to be better than competitors; in Akceso’s recent research, patients in some countries where it is not fully available were shown to have lost half a million QALYs, a very high number of actual life years compared to those in Germany where it is reimbursed and accessible to a broad set of eligible patients.
Finding Answers for Today’s and Tomorrow’s Patients
A key challenge for policymakers and companies alike is how to balance the needs of today’s patients ensuring equity in all countries, while funding the development of new treatments for future patients.
Across the conferences there were different proposals for establishing health equity and access equity. Leading figures such as Lou Garrison, David Danko and Jens Grueger covered this, looking at affordability-based differential pricing – value or equity-based tiered pricing – as a way forward to establish better access across countries. Achieving this will require trust to be re-established between the stakeholders, but also better controlling some of the adverse factors such as IRP and parallel trade, which undermine differential pricing.
Access, affordability and availability were also the subject for a panel discussing equitable pricing that Dr. Incze chaired with Zoltan Kalo and former Polish Deputy Health Minister Marcin Czech. The panelists advocated the use of fair pricing principles e.g. in IRP, value-based price review during the product lifecycle, and control of parallel trade to ensure availability for patients.
There is a strong belief within Akceso that the approach chosen to control adverse factors is vital. While the current system is sub-optimal in most countries for access and equity, for a as long as this approach is used by authorities (and it appears unlikely to be dropped any time soon) then a key task, especially in Low-Middle Income Countries (LMICs), is to identify the best way to bridge the gap between global IRP and locally affordable pricing via a confidential pricing agreement.
Transparency for Price or for Pricing?
A key element in making the system work is addressing the controversial subject of transparency, something that Dr. Incze covered in his presentation at the Sorbonne conference and is also covered in the WHO Novel Medicines Platform Initiative. Transparency and Sustainability are two of the three Working Groups under the initiative. The Sustainability Group is pursuing differential pricing from an equity perspective while the Transparency Group is pursuing this from the perspective of publishing a medicine’s net price – the approach called for in the World Health Assembly 2019 resolution.
These are two opposing approaches with different potential impacts. The push for transparency is likely to enable richer countries to benefit from lower prices, but with strong potential for medicines not to be launched in LMICs because of the fear of the “price race to the bottom”, e.g., the strong correlation of level of price erosion and reduced number of launches in LMICs for elotuzumab, and Zolgensma, where legislative attempts to enforce price transparency cause a similar reluctance to launch. The Hungarian government is an example of a LMIC that has fully understood the benefit and risks and is against net price transparency.
Dr. Incze, along with Prof. Czech, advocate pricing transparency as a better alternative to net price transparency – the process of identifying a price should be transparent in all countries, to promote access equity within and across countries.
The keynote speech in Budapest by deputy health secretary Judit Bidló highlighted the health policy priorities when Hungary chairs the EU in 2024:
- Finalise the EU Pharma Law
- Implement the common EU Health Data Space
- Cardiovascular-metabolic prevention improvement
EU Pharma Law
There was general consensus amongst experts at the conferences that the new EU Pharma Law will support improved health equity, but only if it is implemented well. However, this requires all stakeholders to work together towards a shared vision and to be actively aware of the pitfalls. One controversial topic is the planned reduction of the base exclusivity period, that not only Pharma companies but also some of the EU rapporteurs are against. While total reform of the system is unlikely, it will be important to establish workarounds to avoid the pitfalls.
EU Health Data Space
Hungary has been at the forefront of EU initiatives such as EURIPID. Taking that to the next level, building health data space to move from value-based pricing to data-driven healthcare. To collect real world evidence and clinical data to enable payment for real outcomes. Dr. Bidló has been talking about the promises of AI as part of this – how is AI going to help to make this better, quicker? The Hungarian government is working to adopt AI as part of its PR&MA initiatives.
While the decision has been taken to implement the Joint Clinical Assessment (JCA), there is no consensus on what the benefits and burden of this will be. The intent is to simplify the lives of the reviewers and the Pharma companies using the Patient Population Intervention Comparator and Outcome (PICO) structure, but there is a significant risk that HTA will become even more complex as countries will have several PICOs, leading to a highest common denominator that makes assessment more of a challenge.
Eric Baseilhac highlighted that if use of the JCA methodology was already in place for cell and gene therapies, this would probably have caused 90% of them to be rejected. Thus, another key unknown is how we manage these added methodological, stakeholder interactions/expectations and trust complexities? While stakeholders call for transparency of data, there is, as yet, no transparency of the basis for data-based decisions.
Inflation Reduction Act – Ask Two Experts, Get Five Opinions!
While there have been initial decisions, this is still a situation where there are many known unknowns, e.g., how will the price cuts will be implemented, will the PBMs be involved, what are the criteria for the negotiation. In addition, there is the controversy of the choice of the first 10 products, since four are close to going generic (Stelara and Novo Nordisk insulins were not expected to be on the list). This leads to an additional question of how the new structure might be applied to drugs that become generics.
There are also unanswered questions for specific types of drugs, such as how the IRA will be implemented for orphan drugs, and if only the first indication is exempt, should a company wait for a bigger indication before launching in the US? Eventually, will companies choose to launch a first smaller indication in Europe first? Will this cause companies to try to launch at higher prices everywhere? Is there potential for a spill-over effect if drugs switch to newer indications, and what is the evolution pathway to a maximum fair price?
Amongst all of this uncertainty there is some good news, with a positive move towards increasing access. Low-income support will be increased, and co-insurance eliminated – there is more to the IRA than just the P&R.
While there continues to be a lot of hype around AI, there is little practical application yet in PR&MA. The overall view from experience shared at the conferences is that large language tools are not very helpful on their own but may be beneficial when combined with expert systems as a way of achieving better value assessments, integrating and analyzing combinations of large qualitative and quantitative outcomes data, literature and electronic health records.
Participating in these conferences has given Dr. Incze an opportunity to bring Akceso’s experience and research results into the policy debate and provided the Akceso team with a valuable set of insights to help refine and further develop our set of services and tools, to be used with our clients to reduce the unknowns – for the benefit of today’s and tomorrow’s patients worldwide!
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