|
|
 |
February 17, 2011
Ulf Staginnus, is the creator of HealthEconomics Blog and Head Pricing, Health Economics & Outcome Research, Europe, at Novartis Oncology. He talks about the direct implications of recent European cost-containment measures on the pharmaceutical industry. Watch, and learn why the tough times are here to stay. what industry executives and policy makers alike, must do to reach an innovative and cost-effective agreement.
Jeff: We’re talking today about the impact of financial duress on reimbursement policy in cash-strapped European countries. First of all, do you see any macro-economic relief, or are increasing healthcare cost-containment measures going to be a necessity for increasingly fiscally conservative governments?
Ulf: I think the latter circumstance is what’s going to happen. We were hoping for some recovery, but this doesn’t seem to be the case. We have a lot of new countries coming out with cost-containment measures, like Slovakia, Romania, and Hungary as I mentioned in my blog. Circumstances are not getting better; it’s actually quite the contrary. There is a huge financial problem in a lot of these European markets and a lot decisions are purely finance and not outcomes driven.
Jeff: What are proactive life sciences and pharmaceutical companies doing in order to mitigate the potential damage to their bottom-line, given these cost-containment measures?
Ulf: There are a couple of points to consider, and it varies from market to market.
Some countries are implementing measures like simple price cuts, or reducing reimbursement rates, without much regards for state of the art treatment guidelines.
One thing we are trying to do is define exactly where the problem is from product to product. If it’s a simple and temporary financial problem, you can engage in financial risk-sharing agreements, or other specific conditions that will provide a temporary relieve coupled with improvements when things get better economically.
Some of the policies that are being implemented are not in line with a framework of supporting innovation nor do they provide a stable framework for business conduct. All stakeholders should ensure that a new health policy is patient centric and advances medical outcomes. To this end, we must engage each other with a longer-term objective in mind that addresses the treatment needs while at the same time considering budgetary constraints. We should however not be naive, if we look at the field of oncology with increasing incidence and availability of novel medicines, I think it’s foolish to believe that budgets can be kept constant. Apart from finding a way of linking prices better to value we also need to think of finding, and reallocating, additional resources.
Another problem that does not makes things easier is the issue of international price referencing in Europe. The industry is trying to address this at the various political institutions and associations in order to make health authorities understand that there is a world beyond specific country interests. These policies are short sighted and are not productive in the long run neither for the countries applying excessive rules (thinking here of transaction cost but moreover eventual patient access issues).
Jeff: In a recent blog post, you profiled Hungary as an example of a European country reigning in healthcare spending by cutting drug subsidization. What is the risk of such policy, considering the wider EU impact of implementing cost-containment measures?
Ulf: The measures that they will be implementing are not fully clear yet. We are assessing the implications beyond Hungary. Pure price cuts across the board have implications that neighboring countries are referencing as I mentioned before. The risk is really that we export this price-cut to other countries. This creates a lot of downward pressure on price.
The government has not been very specific on what the exact policy measures will be. We are working with our local teams to find meaningful solutions in going forward.
Jeff: In contrast to sweeping budget-cuts, the German GBA has come up with new guidelines that take a slightly different, and perhaps more innovative approach. Can you comment briefly on the implications of this model?
Ulf: This is indeed a very complex undertaking, in my view following a little the French model with the various ASMR ratings. The submission process is very comprehensive. Some of the underlying principles seem somewhat open to interpretation still. However they are relatively explicit about the way they want to do with a benefit assessment. I think the trick will be in the practical implications. I guess the good news is that Germany is shying away from implementing a cost per QALY threshold when it comes to price setting.
The problem with this benefit assessment at launch is that in some areas, such as oncology, it is difficult to deliver the full set of requested data at launch. In most cases you have complications like cross over’s in trials, the trial design or endpoints per se etc.
There are also some concerns about the modeling and extrapolation that might be required. It remains to be seen how this submission process will play out if you don’t have all the data that is required. There should be some flexibility for conditional pricing and reimbursement. The other thing is the capacity, in Germany there are not yet the same resources as have been build up for NICE in the UK. It really remains to be seen who is going to do all of this.
The implications are definitely very important. The times of free pricing are over now in Germany. Given that many countries reference the German prices its role as the previous price setter might be changing over time.
Jeff Given all of your hands-on experience and ongoing success in health economics, what is the most important thing to remember when it comes to achieving a positive outcome with stakeholders driven by conflicting interests? (e.g. tips to a successful negotiation).
Ulf: I think that it applies to both sides, and that is to make an honest and unbiased effort to understand where the parties’ are coming from.
I understand that we try to do this. But we often miss the common-language or understanding across the board, especially when it comes to HTA and all the various developments we are seeing at the moment.
When it comes to policy, there might be a few things to consider. First a little more flexibility would go a long way. It is important to engage at an early stage and understand the long-term goals. Secondly, we must be able to negotiate satisfactory bilateral commercial solutions, rather than simply relying on what is my neighboring country paying, and lastly, we need to build more trust over time.
In addition to that, I think a lot of people need to become more innovative while at the same time focus more on creating the data that supported the products effectiveness. There needs to be some fresh air in the way that things are being presented and discussed.
My personal philosophy has always been to try to understand the other side and be honest with yourself and others. As an industry, I think we will need to have a closer and more critical look at our pipeline earlier on and in dialogue with the authorities that eventually going to pay for these medicines. But at the same time, governments must understand how difficult it is to advance a drug from an early stage. The innovation doesn’t happen in quantum leaps, but mostly in smaller yet important steps. This latter point is not very well understood. It might that we are not yet communicating effectively how difficult all this is. As much as we all would wish for another Glivec every time we launch a product, science does not always advance that fast.
Jeff: Why are you so passionate about health economics and increasing access to affordable first-class medicines?
Ulf: That’s a good question. I started in that area during university, more or less accidently, to be completely honest with you. In Germany, studying economics, you do your first three terms undergraduate, and then you sort of focus on something. We called it the “trial period,” you go to different lectures and see what you like. I was fortunate to have a very cool professor who was working as a consultant for pharma and biotech companies and I got very interested in the field.
I thought this was a very new area with a lot of potential. People were always shying away from applying economics to healthcare, because everyone was saying it was priceless. But over time, people have realized that resources are not infinite. I always wanted to be involved with medicine without being a physician, so I thought this was a good combination of the two things I was personally interested in.
I also like the pioneer aspect of it. When I first started out, I was the only guy in a company doing this. It was fun to have that entrepreneurial spirit to it. Nobody really knew what this area was going to contribute and now we are rising into the ranks of senior management. The health economics field has grown very much over time. It has been nice to see it evolve and be part of it. We are seeing a lot of great things from our daily work on the way patients are able to access the latest technologies and drugs.
It is generally well accepted that things are increasingly becoming based on health economics considerations. The problem now though is that the expectations are really high. First and foremost we (all of the stakeholders) need to get better on collecting real life data and assess the benefit of the drug, than comes the economic part and eventual the link of price to the value delivered. I see this more as a dynamic process over time rather than the current ex ante assessments.
Of course it would be so much nicer if everyone had the healthcare resources to do whatever one wants, but this isn’t the case, so that’s why we are here.
Bonus! Download Today: Free Special Report - Focus on the Latuda Pricing Decision
Thank You!
Sign up for our newsletter to get consistent updates on content like this. Feedback is welcome and appreciated.
Back to top
|
|
Understand recent policy reforms. Analyze the concerns of all stakeholders. Achieve long-term buy-in. Learn how to stay on the cutting-edge. Examine the interests of an industry expert. Log in anytime, from anywhere, for free. Hear directly from the experts. Get exactly what you need.
|
|
