Global Vision and Future on Health Economics for Regenerative Medicine: Perspective from EuropeBengt JönssonProfessor emeritus Stockholm School of EconomicsVice chair, Expert Panel on Effective Ways of Investing in Health, European Commission

The European Union: 500 million people – 28 countries

Member states of the European Union

Candidate and potential candidate countries

GDP per inhabitant: the spread of wealth

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2012 GDP per inhabitant

Index where the average of the 28 EU-countries is 100Lu

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Finl

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Italy

Spai

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Slov

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Latv

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Bul

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The single market: freedom of choice

Four freedoms of movement:

goods

services

people

capital

© G

etty

Imag

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The single market has led to:

Significant reductions in the price of many products and services, including airfares and phone calls

More choice for consumers

2.8 million new jobs

Managing introduction of new innovative health care technologies Decision making under uncertainty Uncertainty can only be reduced at a cost Two alternativesDoing more studies before introduction

May reduce risks But delay potential benefits

Follow up studies after introduction For risk assessment For effectiveness assessment

Lack of effectiveness – Loss of money and health Loss of moneyBecause money spent on ineffective usage

does not contribute to improved outcome Loss of health Because resources has alternative uses

within the health care budget

Increased risk of loss of money?

Annual costs for treatment with new drugs TNF alfa (RA); approx 15 000 Euro Tysabri (MS); approx 25 000 Euro Avastin (Cancer); approx 50 000 Euro (in colon

cancer) Eculizimab (orphan drug), approx 300 000 Euro

Drugs used in small populations with severe disease carry relatively small health risks But the economic risk from incorrect ineffective use

can be substantial And must be balanced against patient benefits

What are the implications? Without third party payment (reimbursement) very few

patients can afford to use the new opportunties Challenge for health care systems based on the principle of

equity Co-payments have no meaning

Small economic incentives for innovation without reimbursement Inefficient allocation of resources since price < cost

Reimbursement decisions must take both costs and effectiveness into account For an efficient and just allocation of resources To create correct incentives for innovation

Problems assessing cost-effectiveness before market authorization

Reimbursement agencies and payers are interested in how the new drug can improve clinical practice and patient outcomeClinical trial data and other scientific

information is helpful but not conclusive Cost-effectiveness is based estimations,

often with help of modelsNeed for follow up and verification of

assumptions

Requests for follow up studies are commonTLV in Sweden as example

Follow up to secure that the drug is used for the right patients (reimbursed indication) Xenical, Reductil (weight loss) Champis (smoke cessation)

Follow up to verify predicted effectiveness and/or cost-effectiveness Fosteo (osteoporosis) Elidel (excema)

Opportunities for developing of new models for payment Coverage by evidence developmentData is collected which are used for

reassessment of the reimbursement decision Risk sharing If predicted goals are not met, payment will be

adjusted Pay for performancePayment per patient treated adjusted for

outcome or other “quality” indicators

Experiences so far

About 60 schemes so farNumbers increasing over timeMajority in EU

Most are coverage by evidence developmentTLV and CMS (US) most active

Some successesBut problems with data collection

Experiences with patient registersFrom a health economic perspective

Data collection too costly and complicated Lack of variables related to patient

outcome and resource allocation Limited access for “outsiders” Not used to their full potential as an

instrument to improve health care and health outcomes

Data is like children…

You like your own best, and do not like strangers to play with them

Why European collaboration?

Information is a public good The value is not reduced if many share it

But costs of producing it are reduced if shared Time is essentialCollaboration gives information faster

Variations in use between countriesGives opportunities to learn from each other

..in particular from early adopters

Key European initiatives

Adaptive licencing Joint regulatory and HTA advice PAES – Post Authorization Efficacy

Studies (in addition to PASS) Assessment of relative effectiveness at the

European levelHTA and reimbursement

What is special with regenerative medicine?

“Regenerative medicine is an emerging interdisciplinary field of research and clinical applications focused on the repair, replacement, or regeneration of cells, tissues or organs to restore impaired function resulting from any cause, including congenital defects, disease, trauma and aging. It uses a combination of several technological approaches that moves it beyond traditional transplantation and replacement therapies. These approaches may include, but are not limited to, the use of soluble molecules, gene therapy, stem cell transplantation, tissue engineering, and the reprogramming of cell and tissue types” (Greenwood et al., 2006).

What is special with regenerative medicine?

”Making goods measureable and comparable is a driver of new market creation, but in the regenerative medicine field there is considerable uncertainty regarding data and product classifications, both in the UK and internationally. This means there is a very strong need for soft interactions between the regulators and stakeholders, especially with MHRA on the one hand, and NICE and Health Technology Assessment agencies on the other, because their approaches to the central issue of product classification and scientific evaluation are very different.”

conclusions from UK workshop

What is special with regenerative medicine?

”Similarly, a key intermediary agency for the NHS, the NIHR Horizon Scanning Centre, which provides notice of significant new and emerging health technologies up to three years prior to their launch in the NHS, does not have experience of how long it will take for various types of regenerative medicine therapies to diffuse since the product and development models are very different from drugs and devices”

conclusions from UK workshop

Development of a common regulatory framework for all medical technologies

Technological developments in healthcare, such as the use of nanotechnology, regenerative medicine and minimally invasive surgery have drawn the pharmaceuticals and devices closer together in terms of both development and usage.

Payers are looking for treatments, and their outcomes and costs, not products

A tentative conclusion

RM technologies have a lot in common with surgical procedures in terms of assessment of value from a payer perspective

The product is only one part of the cost, but can significantly improve the outcome

Important to include health economics early, before the selection of applications and design of studies

It is about accountability

…… all other show data

It is not all about money, but health economics matter, and should be used to support decisions during the whole development process

Health economics – A summary

Health economics is about improving resource allocation for better health

Follow up data must include variables that allow a broad perspective on value

Data must be available to all stakeholders

Health economics – A conclusion

Follow up data are key to the development of rational and accountable decisions about resource allocation

This may provide not only a more efficient allocation of resources for health in the short run but also incentives for more cost-effective innovations in the long run