Global HTA and pricing mechanisms What can we learn about national medicines pricing and procurement? Led by Janssen UK Day One, Pop-up University 3, 16.00

1. Global HTA and Pricing
Mechanisms
Jennifer Lee
Director of Health Economics, Market Access & Reimbursement
Janssen UK
September 2016
What can we learn from other countries around the world
about national medicines pricing and procurement?
NHS Expo Pop-up University Workshop

2. Disclaimer
The views expressed in this presentation are my own, as a
health economist who has worked in several different countries
across the world, and not necessarily those of Janssen

3. Objective of today’s workshop
A ‘crash course’ of how a selection of other countries
around the world assess and fund new medicines
 What are the benefits and challenges of the various approaches?
 How are other countries dealing with the affordability challenge?
 What can the UK learn from international best practice?
Key question: How can the NHS ensure that patients can
access new, clinically effective medicines in a timely fashion
within a fixed budget?
Answer: You need to increase flexibility in the system

4. How do you assess the value of a new
medicine?

5. Use of HTA in decision making
Assessment Appraisal
Evaluation of
Evidence
(clinical, economic)
Coverage / Price
Decision
(based on evidence)
Academic/
Scientific
Policy making

6. HTA in reimbursement decisions
Two main approaches to
assessing value
Two main approaches to
coverage decision
Clinical value added compared
with best existing treatment
• A two-step process: clinical,
then price
• Germany, France, Spain, Italy
Incremental cost utility (eg £
per QALY)
• A one-step process: clinical and
economics together
• UK, Canada, Australia, Sweden
Manufacturer sets price and HTA is
used to assess value and hence
coverage/reimbursement in relation
to that price
• UK, Germany
HTA is used to determine value
and hence price at which system
will cover/reimburse
• France, Italy, Spain, Sweden, Canada,
Australia

7. Purchaser –
assessing
affordability
Value assessor
of cost
effectiveness
Cost-effectiveness is not the same as
affordability
Case in point: Hep C vs Cancer

8. What models are being used globally?
How are other countries dealing with the
affordability challenge?

9. Germany

10. Joint Federal Committee (GBA):
Decision body with 13 members
(SHI, physicians, hospitals,
(patients))
Institute for Quality and Efficiency
in health care: scientific institute,
supports GBA
Head association of ‘sick funds’:
Negotiation partner for prices
AMNOG: Key Players
AMNOG = Arzneimittelmarktneuordnungsgesetz
“Act for the Restructuring of the Pharmaceutical Market in Statutory Health Insurance ”
Effective since January 1st 2011

11. Assessment
Appraisal
Source: G-BA

12. Outcome of benefit evaluation
SMALLER BENEFIT
NONE
NOT
QUANTIFIABLE
SLIGHT
IMPORTANT
MAJOR
The benefit of the medicinal product to be assessed is
smaller than the benefit of the appropriate comparative
therapy
No additional benefit has been demonstrated
Because the scientific data basis does not allow it (non
quantifiable can mean anything between slight and major)
A moderate and not just small improvement of the
therapy-relevant benefit that was previously unattained
compared to the appropriate comparative therapy
A significant improvement of the therapy-relevant benefit
that was previously unattained compared to the
appropriate comparative therapy
A sustained improvement of the therapy-relevant benefit
that was previously unattained compared to the
appropriate comparative therapy
Extent of the additional benefit (categorization)
Determination of the additional benefit (probability)
PROOF INDICATION CLUE
Source: www.vfa.de

13. France

14. Assessment
Appraisal
Source: HAS

15. Source: HAS

16. Australia

17. 17
Australian HTA process
Assessment
Appraisal

18. Key features in the Australian system
• The Drug Utilisation Sub-Committee (DUSC) of the PBAC monitors the
patterns and trends of drug use and makes such data available publicly –
ability to control and monitor overall drug expenditure
• Each indication (not just drug) is tracked by a unique PBS number
• No explicit cost per QALY threshold – ability for PBAC to flex according to
judgement
• Comparative health gain assessed in terms of magnitude of effect and clinical
importance/need
• Budget impact
• Level of R&D investment
• Equity issues
• Quality use of medicines
• Risk share
• Rule of rescue
• Ability to introduce flexible pricing arrangements
• Alternative funding arrangements for treatments that do not fit the cost per
QALY framework – Life Saving Drugs Programme

19. Risk sharing arrangements (RSA) in
Australia
RSAs have been developed to address at least
three types of risk:
 the overall cost to the PBS — this is affected by
uncertainties in the number of patients, daily dose
and duration of therapy of the proposed drug
 cost-effectiveness — this is affected by the volume
of use beyond the restriction(s) and by the volumes of
use of categories within the restriction(s) where cost-
effectiveness is known to vary across categories
 the extent of overall gain in health outcomes —
these are managed entry agreements
Result: Flexible pricing arrangements for most new treatments listed on the PBS

20. Canada

21. HTA in Canada
• CADTH (Canadian Agency for Drugs and Technologies in Health):
o Non-oncology health technologies for all public
provinces/territories/federal plans (except Quebec)
• pCODR (pan-Canadian Oncology Drug Review):
o Oncology health technologies for all public
provinces/territories/federal plans (except Quebec) – uses a more
clinically driven process than non-oncology CADTH
• INESSS (Institut National d’Excellence en Santé et en Services Sociaux):
o All health technologies for Quebec (replaced AETMIS in 2011)

22. HTA in Canada
1. The drug is submitted to the appropriate
HTA agency to be evaluated. The agency
provides a formulary listing
recommendation based on economic and
clinical criteria (Assessment)
2. Once the recommendation is provided to
the provinces, the drug formulary
committees are free to make their own
listing decisions based on resource
availability and budget constraints
(Appraisal)
Provincial Drug
Plans
pCODR/CADTH(via
CDR)
INESSS

23. Canada - Pricing
• The Patented Medicine Prices Review Board (PMPRB) is a federal body
that regulates the maximum price the manufacturer can charge in Canada
based on the PMPRB Excessive Price Guidelines
• Based on value, the drug is classified into one of 3 categories:
•Category 1 (Extension of existing drug) – existing drug price
•Category 2 (Breakthrough) – price is limited to the higher of:
• Maximum price of comparable drugs in the same therapeutic class in Canada
• Median price of the same drug in 7 comparator countries (UK, USA, France, Germany, Switzerland,
Sweden, Italy)
•Category 3 (Moderate/No Improvement) - price is limited to
the maximum price of comparable drugs in the same
therapeutic class in Canada
• If the price exceeds the guidelines, the manufacturer can provide additional
evidence in support of the suggested price
• Price Listing Agreements (PLAs) have price volume agreements to allow
different prices for different indications of the same drug

24. 24
Cancer-specific patient and clinician review
committee

25. 25
pCODR decision-making criteria

26. 26
Key features of Canadian system
• Different process for cancer treatments (pCODR) with
broader decision-making criteria
• National assessment with regional appraisal and pricing
negotiations
• Positive recommendation from CADTH/pCODR does not mandate
funding – this is up to the provinces to control their individual budgets
• No explicit cost per QALY threshold

27. 27
Sweden

28. Sweden HTA process
Assessment
Appraisal

29. Key features of Swedish system
 Inclusion of multiple criteria in the HTA – TLV (Swedish
Dental and Pharmaceutical Benefits Agency) is based upon
three principles:
– Human value principle (equality of all human beings)
– Need and solidarity principle (higher threshold for the ones in higher
need)
– Cost-effectiveness principle (no fixed QALY threshold and pricing by
indication)
 ‘Collaboration Model’ implemented in 2013 - Three-way
reimbursement negotiations
– County councils
– TLV
– Manufacturer
29

30. Spain

31. Spain - A Decentralised
HTA Process
Ministry of Health
(MSSSI)
17 Autonomous
Communities/Regions
Pricing & reimbursement
decision
(Assessment)
Drug access decision in
each region
(Appraisal)
National Level Regional Level Local Level
Hospitals
Drug formularies

32. National Level
Reimbursement Conditions (SGCMPS)
Main drivers for inclusion on reimbursement list
Disease severity
and burden
Unmet needs Therapeutic value
Level of
innovation
Therapeutic
alternatives and
prices
Budget impact
Pricing Decision (CIPM)
CIPM, Interministerial Commission for Pricing of Medicinal Products
IRP, International Reference Pricing
SGCMPS, General Subdirectorate of Quality of Medicines and Health Products
Main drivers for pricing
Degree of
therapeutic
innovation
Budget impact
Drug price in
other EU
countries
Price of
comparable
existing therapies
in Spain
Company
profit
R&D activity and
manufacturing
investment in
Spain
Total cost of
the drug
•IRP is used as
supportive
criterion
•Country basket
generally includes
Eurozone
countries
•R&D costs
•Production costs
•Promotional costs
•Administrative costs

33. Italy

34. Italian HTA
•Important
•Moderate
•Modest
The HTA agency in Italy, the
Italian Medicines Agency (AIFA),
is responsible for both
regulatory approval and for
pricing and reimbursement
decisions (including conducting
HTA) of all new medicines in the
market at the national level.
 Manufacturers make a
submission to AIFA, which first
assesses clinical effectiveness
and categorises the technology
as an important, moderate or
modest innovation
 AIFA’s evaluations are taken into
account when pricing medicines
at a national level. Hospital
formularies are defined at a
regional level. The method and
process for which regions decide
what to include differ across
regions, with some regions using
a cost-effectiveness analysis to
determine reimbursement.
Level of innovation

35. Source: AIFA

36. Source: AIFA

37. 37
What have we learned from these global
examples?
• Germany, France and Italy base their value assessment
upon added clinical benefit and level of innovation
• Spain considers many different factors when assessing the
price and reimbursement status of new treatments
• Australia, Canada and Sweden all use the cost per QALY but
do not have an explicit threshold, and all consider value
elements beyond simply the cost per QALY (eg level of unmet
need, severity of disease, wider societal benefits) – final price
negotiations are handled separately
• Canada has a separate HTA process for cancer treatments,
due to the methodological issues associated with the cost per
QALY
• Italy has pioneered the use of registries to track drug
expenditure and patient outcomes
• All countries have some form of flexible pricing arrangements
to deal with affordability, beyond just simple discounts

38. Comparing the two main HTA models
QALY
Relative
Effectiveness
Australia, Canada, Sweden, UK France, Germany, Italy, Spain
Cost/QALY vs
ICER Threshold
2 steps: 1) Clinical benefit
2) Price negotiation on “added value”
and Budget Impact
Difficult for non-health economists to
understand?
Technical limitations;
eg. end of life,
data availability, not cost-effective at
zero price
What is the right threshold?
Country
Concept
Applicability
&
Learnings
Clinical benefit focus more
understandable for patients and public?
What is the right local comparator?
Less resource intensive?
More focus on budget impact?

39. The value (and limitations) of HTA
A tool for value – not affordability
Why we may not see cost savings from medical advancements, and why we need to look
across the entire patient pathway, including de-commissioning to create headroom
Drug therapy
Moves patient
from hospital
to home
One hospital bed
Many willing
patients!
LOS reduced
by use of
laparoscopic
surgery rather
than open
Bed re-filled
Minimally invasive
techniques move
treatment to
out-patient setting
Bed re-filled Bed re-filled

40. Where is NICE leading the way globally?
The HTA & decision making processes are transparent
Stakeholders are engaged formally in the HTA process
Independence between evaluators, decision-makers and
payers
The HTA process has the right to appeal

41. How do we create greater flexibility within
the UK model?

42. The complexity of multiple indications

43. Managed Entry Agreements Taxonomy
Managed Entry
Schemes
Financial Schemes
Total cost for all
patients
Discounts
Price/volume
agreements
Total cost per
patient
Patient/dose
dependent
discount
Utilisation/price
capping
Performance-
based Agreements
Utilisation in real
life
Outcomes
guarantees
Patient registries
Evidence regarding
decision
uncertainty
Coverage with
evidence
development
Combination of
financial and
performance
elements

44. Some ideas…
 Flexible pricing arrangements linked to value across the
whole molecule across different indications
– Harness the power of NHS data to track drug usage and patient
outcomes by indication
– Aligns with NHS objectives of outcomes based commissioning
 Broader value assessment beyond simply the cost per QALY
– Science has progressed dramatically in recent years (ie. increasingly
personalised medicine) but methodology has not kept apace
– Broader decision-making framework including other criteria (ie beyond
cost per QALY) that align with NHS objectives and patient priorities
 De-commissioning less cost-effective technologies across
the patient pathway (ie. not just medicines) to make room
for newer innovations
– Aligns with NHS objectives of medicines optimisation and reducing
wastage and inefficiencies in the system

45. 45
Thanks for listening – any questions?