Assessing the value of medicines in middle-income countries

Dávid Dankó, PhD, MScCorvinus University of Budapest

Institute of Management

david.danko at uni-corvinus.hu

Assessing the value of medicines in middle-income countries

ZF PHARMA SUMMIT 2012, Buchares, 24 September 2012

© Dávid Dankó Assessing the value of medicines in middle-income countries Bucharest, 24 September 2012 (2)

For the sustainability of a reimbursement system, proactive and consistent policies are needed in innovative and generic sub-markets

Ensure easy and quick access to new generic

medicines

Ensure sustainable generic price decrease and foster

generic substitution

Eliminate inefficiencies in expenditure by identifying all sustainable cost saving

potentials

Admit new value-added therapies (active

substances) into the formulary

Apply value-based schemes to guarantee the optimal allocation of resources

Treat high-incidence diseases along a cost-minimisation approach

Enable the treatment of special, ‘complicated’ or

rare conditions

Revise effectiveness based on real-world data and restrict the use of products with no

added therapeutic value

COMPETITIVE (genericised)

MARKETS

INNOVATIVE(patent-protected)

MARKETS

RECYCLE

1

2

34

5

6

THERAPIES FOR MASS DISEASES

NICHE THERAPIES

RE

CY

CL

E

Source: Dankó, D. – Molnár, M.P. (2012, ed.): Handbook of Pharmaceutical Reimbursement. Medicina (in press)


Pharmaceutical innovation: underlying dilemmas in the early 21st century

Th

erap

euti

c va

lue

Provides progress in treatment

Does not provide

progress in treatment

Chemical structure

NewAlready known

143

(10%)

201

(14%)

295

(18%)

821

(56%)

SOURCE: BARRAL, P.E. [2004]: 28 ans de résultats de la recherche pharmaceutique dans le monde 1975-2002. IRDES, Paris

Innovation content of new active substances introduced between

1975 and 2002

• Real therapeutic breakthrough has become extremely rare

• Innovation seems to be biased towards „sellable” therapy areas, while other areas are largely neglected

• BUT policy backlashes against some forms of innovation

• More and more new substances cause disappointment in real-life settings

• The business model of the pharma industry is undergoing a slow but thorough transformation


Health technology assessment: assessing the value of health technologies

Health technology assessment (HTA) covers all methods for

the systematic evaluation of the comparative value of pharmaceutical products and other health technologies

linked to pricing & reimbursement decisions by public and private payers

preceding to admission to the reimbursement formulary and during formulary management.


Three main paradigms for health technology assessment (HTA)

1ECONOMIC

EVALUATION2

QUALITATIVE ASSESSMENT

3BALANCED

ASSESSMENT

Based on pharmacoeconomics Strict quantitative methods

applied by dedicated HTA agency Attempt to arrive at two economic

indicators: ICER, budget impact Cost-effectiveness linked to

explicit or implicit threshold Supported by structured review

Similarity with regulatory approaches Mainly qualitative methodologies

based on collective decision-making No attempt to arrive at ICER: scoring is

often used, classification is a priority Consideration of non-financial aspects

& broader societal impact

Synergies between economic evaluation and qualitative assessment

Mainly collective decision-making, which is retraceable and publicly accessible

Cost-effectiveness is one input to a classification /scoring algorithm

Wide consideration of non-financial aspects & broader societal impact

UK KSPL HU F I J CHCAN AUS STW


Cost-effectiveness as the cornerstone of economic evaluation

Egés

zség

nyer

eség

(u)

Terápiaköltség (c)

A

B

C

K H

I

F

J

E

D

Δu > Δc

Δu

Δc

Δu

Δc G

Δu <Δc

Cost-effectiveness means that

the new drug delivers larger health benefit at a lower cost or at the same cost (‘dominant case’: therapies ‘B’ and ‘C’ compared to therapy‘A’),

the new drug costs more than the comparator but the

incremental health benefit is more than the incremental costs incurred (therapy ‘D’ compared to therapy ‘A’),

the new drug delivers lower health benefit compared to the comparator, but the loss in health benefit is lower than the decrease in costs (not preferred, therapy ‘K’ compared to therapy ‘A’). Cost of therapy (c)

Hea

lth

gai

n (

u)


Economic evaluation – is it really able to capture value?

Methodology overload

Pseudo-objectivity

Lack of pragmatism, mismatch with higher-level decision-makers’ style

Perverted incentives, pricing effect

Costly and requires capabilities which are non-existent in MIC

Consultancy business

PUBLIC BACKLASH & SHIFT AWAY FROM ONE-SIDED ECONOMIC EVALUATION


Overview of qualitative value assessment criteria used in current international practice

Australia France Italy Japan Singapore Spain (implicit) Sweden Taiwan

Better pharmacokinetics X X

Budget impact X X X X

Clinical efficacy X X X X

Clinical trial X

Cost-effectiveness X X (X) X ?

Currently untreated disease X X

Depth of action X X

Industrial policy X

Logistics costs X X

Market size X

New mechanism X

Orphan disease X ?

Patient equality X

Place in therapy landscape X X X X

Public health significance X X X

Relative price X X X X

Second-line therapy X

Severity of disease X X X

Side effect profile X X X X

Technological innovation X X

Therapeutic value X X X

Different systems weigh elements differently, and no system covers all elements. Focus is sometimes missing. Assessment criteria used in different countries may

cover similar concepts under different terminology.

SOURCE: OWN COMPILATION, JASMINE PWU (TAIWAN), JEREMY LIM (SINGAPORE)


Pragmatic framework for a redundancy-free, balanced system

Therapeutic value added

Budget impact

Explicit local policy

priorities

Cost-effectiveness Szöveg

Unmet need (urgency)

Therapeutic value added

Higher effectiveness

(degree of response)

Stronger adherence to

treatment

More favourable

side effect profile

Cost-effectiveness is necessary but not sufficient for drug reimbursement

Therapeutic value added is measured along 4 factors

Health policy priorities help decide between therapy areas

SOURCE: OWN COMPILATION


Institutional background in middle-income countries

• Several payers, complex decision-making processes

• Intuitive, rather than analytical, decision-makers at political levels

• Budget impact focus, emphasis on financial aspects

• Questions around the practical applicability of economic evaluation

• CAPABILITY GAP, „institutional cost-effiency”

Rational free-riding:

Peering on selected international assessment

Simplified local evaluation:

Very focused, pragmatic local assessment

Regional shared service centres for value

assessment?


Overview of other strategic variables in middle-income countries

PARADIGM

RESOURCE LEVEL

SCOPE

PROCESS AND ORGANIZATION

Economic evaluation

Heavy model

Only pharmaceuticals

Independent Drug Committee and HTA Institute

Qualitative assessment

Light model

Pharmaceuticals, diagnostics and medical devices

Separate department within sick fund (Health Insurance House)

Balanced assessment

Ultra-light model

All health technologies, incl.

public health programmes

Separate department within Ministry of Health

PERSPECTIVE Societal perspective

Patient perspective

Payer perspective with societal

considerations

A

B

C

D

E


Blueprint process for reimbursement decision-making in middle-income countries

Technical inspection of dossier

Simplified economic evaluation Qualitative drug assessment

First consultation with the manufacturer, discussion of cost- or risk-sharing proposal

Drug Committee opinion on cost-effectiveness

Drug Committee decision on reimbursability

Second consultation with the manufacturer, renegotiation of cost- or risk-sharing proposal

Publication of decision, notification of the manufacturer and the payer

Signature of cost- or risk-sharing agreement

Listing (adoption to the formulary)

HTA INSTITUTE

DRUG COMMITTEE

PAYER

PAYER

Balanced assessment


Important procedural requirements for a balanced drug assessment system

Standardized retraceable decision-making processes with clear milestones and deadlines

Pre-defined decision criteria, publicly accessible, intelligible (plain language) individual opinions and collective decisions

Balanced composition and properly designed voting mechanisms of the Drug Committee

Full disclosure of eventual conflicting interests

Individual financial independency of participating experts (remuneration based on agency / ‚national bank model’)


Recommended strategic options for Romania

PARADIGM

RESOURCE LEVEL

SCOPE

ORGANIZATION

PERSPECTIVE

A

B

C

D

E

Only pharmaceuticals

Independent Drug Committee and HTA institute

Payer perspective with societal

considerations

Ultra-light model

Balanced assessment

HTA for pharmaceuticals carries considerable advantages over other health technologies as methodologies are widely available, and interests and incentives are easier to identify.

Independent Drug Committee and HTA institute can best support retraceable, publicly accessible and intelligible

decision-making based on collective reason.

As the goal of HTA is to support reimbursement decisions taken by the payer, the payer’s perspective has to be used,

complemented by the analysis of wider societal impact.

As a country with limited financial resources, Romania cannot realistically implement a heavy model, while the light

model may have higher cost than benefits. Therefore an ultra-light model may be a rational first step.

As negative case studies show, HTA implementation based on balanced assessment offers a one-time historic

opportunity to bypass practical problems with economic evaluation and the resulting disappointment.


Some high-level conclusions

There is considerable variation in HTA systems all around the world, with tendencies toward balanced assessment frameworks.

Economic evaluation has challenges in middle-income countries. Following the track which Poland and Hungary has followed in the

past few years is not necessarily helpful.

Both the framework and the process are crucial.

Documents

Assessing the value of medicines in middle-income countries