Contact Us

Home

About us

Services

AI Excellence

case studies

publications

HEOR Certificationheor Certification

AI for Medical Writing

Contact

  • International Reference Pricing vs. Value-Based Pricing: Drug Pricing Strategies

    International Reference Pricing vs. Value-Based Pricing: Drug Pricing Strategies
    International Reference Pricing vs. Value-Based Pricing: Drug Pricing Strategies

    In the complex landscape of pharmaceutical pricing, two prominent approaches have gained traction: International Reference Pricing (IRP) and Value-Based Pricing (VBP). As nations grapple with the challenge of balancing affordability and incentivizing innovation in healthcare, the debate over which approach to prioritize continues to spark discussion.[1]

    IRP is an approach that sets drug prices based on the average or lowest prices in a basket of reference countries. Proponents argue that IRP promotes affordability by preventing price disparities between countries, thereby reducing the financial burden on patients and healthcare systems. Additionally, IRP is perceived to discourage excessive pricing strategies, preventing pharmaceutical companies from exploiting differences in pricing regulations across countries.[2]

    However, IRP has its share of shortcomings. Critics contend that this strategy may inadvertently hinder innovation by limiting the potential rewards for pharmaceutical research and development. Additionally, IRP’s reliance on external benchmarks may not account for individual nations’ unique economic, regulatory, and healthcare dynamics, potentially resulting in skewed pricing decisions that fail to reflect a country’s specific circumstances. It’s worth noting that IRP could also lead to a country missing out on innovative medicines, as manufacturers might lack the incentive to invest in research and development due to constrained pricing structures.[3]

    VBP, on the other hand, seeks to price drugs based on their demonstrated therapeutic benefits and impact on patient outcomes. This approach aims to align drug prices with the value they deliver to patients and healthcare systems. Advocates of VBP argue that this strategy incentivizes innovation that truly addresses unmet medical needs, driving pharmaceutical companies to develop drugs that provide substantial clinical and societal benefits.[4]

    VBP, however, is not without challenges. Determining the exact value of a drug can be complex and may involve subjective assessments. The methodology for assessing value needs to be transparent, robust, and adaptable to changes in medical knowledge and patient needs. Additionally, implementing VBP requires an extensive data infrastructure and cooperation between pharmaceutical companies, payers, and regulatory bodies, which can pose logistical challenges. It’s worth noting that while VBP can encourage the right price for the right value if the methods to assess this value are not accurate and robust enough, the VBP can make healthcare quite expensive.[5]

    The decision between IRP and VBP should be informed by a nuanced understanding of a country’s healthcare system, economic conditions, and goals for healthcare accessibility and innovation.[4]

    IRP can be beneficial for countries seeking to maintain cost control and reduce price differentials for medications. It provides a mechanism to avoid overpricing and ensures that drug costs remain reasonable for patients and payers. However, countries that prioritize fostering a conducive environment for innovation may find IRP limiting in terms of providing the necessary incentives for pharmaceutical research.[1]

    On the other hand, VBP aligns drug prices with the clinical value they offer, potentially driving the development of breakthrough treatments. It encourages pharmaceutical companies to invest in research that directly addresses patient needs, leading to advancements that improve health outcomes. Yet, VBP requires robust infrastructure for data collection, analysis, and collaboration, which might be challenging for some healthcare systems to establish.[1]

    Rather than an all-or-nothing choice between IRP and VBP, some countries are exploring hybrid models that combine elements of both strategies. These hybrid models aim to strike a balance between affordability and innovation, leveraging external benchmarks while considering the unique value a drug brings to its population. While considering the therapeutic value a drug can provide for pricing negotiations (thus incorporating VBP), the prices in other countries can also be considered to set the maximum price levels for these drugs (thus incorporating IRP). Other hybrid models include outcomes-based IRP approach that links pricing adjustments to real-world drug performance, and differential pricing that tailors prices based on disease factors.[1,5-7]

    Choosing between IRP and VBP necessitates a comprehensive understanding of a nation’s healthcare landscape, financial capacity, and innovation goals. Each strategy comes with its merits and challenges, and the ideal approach may differ from country to country. As policymakers deliberate on drug pricing strategies, a holistic evaluation of societal needs, economic realities, and long-term healthcare objectives will be crucial in determining which path to embrace – one that provides equitable access to medications while fostering an environment that encourages pharmaceutical innovation.

    Become A Certified HEOR Professional – Enrol yourself here!

    References

    1. WHO guideline on country pharmaceutical pricing policies [Internet]. Geneva: World Health Organization; 2020. 3, Evidence and recommendations. Available from: https://www.ncbi.nlm.nih.gov/books/NBK570143/
    2. Seidner M, Pearson SD. Value Assessment and International Reference Pricing: Distinctive Strengths and Weaknesses as a Foundation for Medicare Drug Price Negotiation. 2021
    3. Persson U, Jönsson B. The end of the international reference pricing system?. Applied health economics and health policy. 2016 Feb;14:1-8.
    4. Liozu S, Boland D, Hinterbuber A, Perelli S. Mindful pricing: Transforming organizations through value based pricing. InMarketing Dynamism & Sustainability: Things Change, Things Stay the Same. Proceedings of the 2012 Academy of Marketing Science (AMS) Annual Conference 2015 (pp. 412-421). Springer International Publishing.
    5. Labban M, Patrick A, Lederer NM, Jao R, Patel P, Jaksa A. EE155 The Impact of Value-Based Pricing (VBP) Vs International Reference Pricing (IRP) on Innovative Drugs in the US. Value in Health. 2022 Jul 1;25(7):S364.
    6. Rand LZ, Kesselheim AS. International reference pricing for prescription drugs in the United States: administrative limitations and collateral effects. Value in Health. 2021 Apr 1;24(4):473-6.
    7. Seeley E, Kesselheim AS. Outcomes-based pharmaceutical contracts: an answer to high US drug spending. Issue Brief (Commonw Fund). 2017 Sep 1;2017:1-8.

    MarksMan Healthcare

    , , ,

  • The Role and Importance of SLRs and RWE in Drug Price Negotiations in the USA

    The Role and Importance of SLRs and RWE in Drug Price Negotiations in the USA

    The cost of prescription drugs is a significant burden on patients and the healthcare system, especially in countries such as the USA. High drug prices can strain government programs, such as Medicare and Medicaid, and private insurers, which can lead to higher premiums for consumers. Additionally, high drug prices are responsible for increased out-of-pocket expenses for patients, which further lead to medication non-adherence, and thus result in poorer health outcomes. On the other hand, the research and development activities in pharmaceutical industries depend on their profit from sales, and an extremely harsh reduction in drug prices can have adverse consequences in terms of a lack of incentive for innovation in the pharmaceutical industry. (1)

    All these factors make responsible and reasonable price negotiation an extremely important process in the market access cycle for drugs. By negotiating drug prices appropriately, the government and payers can help ensure that patients have access to affordable medications while also promoting competition and innovation in the industry. (1)

    Price negotiations for drugs in the US are typically done by insurers and government programs, such as Medicare and Medicaid. The negotiation process is complex, involves multiple factors, and largely depends on the payer and the drug; the typical steps and factors considered include formulary placement, rebates and discounts, value-based arrangements, price controls, and competitive bidding. (2) To this effect, evidence on clinical effectiveness becomes extremely important, and it is essential that there is a robust and ethical body of evidence to display that the new innovation is efficacious, safe, and brings about enough value to justify the premium that the patients and payers are asked to pay for accessing the intervention.

    The traditional sources for clinical effectiveness evidence for the purpose of price negotiation of drugs are the same as those for marketing approval, and are largely constituted by Randomized Clinical Trials (RCTs), which are often conducted by pharmaceutical companies to demonstrate the safety and efficacy of their drugs. These trials are designed to meet regulatory requirements and are often submitted to the FDA as part of the drug approval process. (3)

    However, it is being increasingly realized that evidence in addition to traditional RCTs can play a crucial role in determining the true extent of efficacy, safety, and value of an intervention in a particular therapy area or patient population. Specifically, increasing interest is being shown towards using evidence from systematic literature reviews (SLRs) and real-world evidence (RWE) for informing clinical effectiveness data for drug price negotiations. (3, 4)

    SLRs, being comprehensive evaluations of existing research studies, provide a balanced summary of the available evidence on a drug’s safety, efficacy, and cost-effectiveness, and thus can be an invaluable resource for drug price negotiations. However, using SLRs is associated with some challenges pertaining to the varying quality of evidence of studies included in the SLR, publication bias (by which there is an overestimation of a drug’s effectiveness due to non-publication of many studies with negative results), time and resource constraints, conflicts of interest, and lack of generalizability. (4)

    RWE coming from the analysis of different sources such as electronic health records, claims data, and patient registries, can provide insights into how drugs are used in actual clinical practice, including their safety and effectiveness over time. By demonstrating the value of a drug in real-world settings, RWE can provide details about the actual usage pattern of an intervention post its marketing, compared to RCTs which offer a view of clinical effectiveness from a restricted population, prior to marketing. However, using RWE is also associated with certain challenges, such as quality of data, reliability, lack of data standardization, data interoperability, privacy concerns, and concerns about the quality of data analysis leading to generation of RWE. (3)

    Health authorities worldwide have taken several initiatives to include Systematic Literature Review and RWE as key elements in market authorization and in price and reimbursement negotiations. Of more credit, is the fact that in the USA, the 21st Century Cures Act specified that RWD could be used to support the approval of a new indication for a drug that is already approved or to support or satisfy post-approval study requirements. (5-7)

    Interestingly, the Inflation Reduction Act (IRA) is the biggest landmark set by United States federal law to curb inflation by reducing the deficit and lowering prescription drug prices. (5) This Act established a drug price negotiation program within the department of Health and Human Services (HHS), enabling the Secretary to negotiate the prices of certain costly drugs within the Medicare program. The Centres for Medicare & Medicaid Services (CMS), through the U.S. Department of Health and Human Services (HHS), released initial guidance outlining the conditions and limitations of the new Medicare Drug Price Negotiation Program for 2026. The Medicare Drug Pricing Negotiation Program and other provisions in the new drug law will improve Medicare’s capacity to serve those enrolled in the program and future generations of Medicare recipients. (5-8)

    SLRs and RWE have an important role to play in generating clinical evidence for drug price negotiations, and the USFDA is in the process of regulating the steps needed for this by drafting the guidance document.  Together with other provisions in the new drug law, the Medicare Drug Price Negotiation Program will increase Medicare’s ability to serve current Medicare beneficiaries as well as future generations. (8)

    Become A Certified HEOR Professional – Enrol yourself here!

    References

    1. Papanicolas I, Woskie LR, Jha AK. Health care spending in the United States and other high-income countries. Jama. 2018 Mar 13;319(10):1024-39.
    2. Gruber J. Delivering public health insurance through private plan choice in the United States. Journal of Economic Perspectives. 2017 Nov 1;31(4):3-22.
    3. Pulini AA, Caetano GM, Clautiaux H, et al. Impact of Real-World Data on Market Authorization, Reimbursement Decision & Price Negotiation. Ther Innov Regul Sci. 2021 Jan;55(1):228-238.
    4. Tarsilla M. Cochrane handbook for systematic reviews of interventions. Journal of Multidisciplinary Evaluation. 2010;6(14):142-8.
    5. Levitt. The Inflation Reduction Act Is a Foot in the Door for Containing Health Care Costs, JAMA Health Forum. 3 (2022) e223575.
    6. A Turning Point for U.S. Climate Progress: Assessing the Climate and Clean Energy Provisions in the Inflation Reduction Act | Policy Commons. https://policycommons.net/artifacts/2649285/a-turning-point-for-us-climate-progress_inflation-reduction-act/3672158/
    7. Inflation Reduction Act Guidebook | Clean Energy | The White House. https://www.whitehouse.gov/cleanenergy/inflation-reduction-act-guidebook
    8. Sullivan SD. Medicare Drug Price Negotiation in the United States: Implications and Unanswered Questions. Value Health. 2023 Mar;26(3):394-399.

     

    MarksMan Healthcare

    , , ,

  • The Importance of Drug Pricing Transparency and its Impact on Healthcare

    The Importance of Drug Pricing Transparency and its Impact on Healthcare

    The need for transparency in drug pricing is getting severe with increased spending on medications with each passing year. Drug spending in the US, without the discounts, has been reported to be $309.5 billion in the year 2015, which is about 8.5% higher than that reported in the preceding year. (1) As a result, undoubtedly, drug pricing transparency is a topic of debate across the worldwide healthcare industry.

    There are several reasons for increasing drug prices. Firstly, ever increasing advancements in healthcare are leading to the production of more complex medications along with the subsequent clinical trials, both resulting in higher spending. Moreover, higher failure rates for drugs tested on human subjects can also lead to increased drug prices. Furthermore, greater clinical trial complexity along with larger clinical trial sizes results in higher out-of-pocket costs for individual drugs. Research and development targeting chronic and degenerative diseases also drives up the costs. (1)

    Pharmaceutical industry has been working to find new ways to approach the drug pricing crisis. There are some proposals focusing on increasing transparency about- a) fixing drug prices, and b) the decisions that lead to increased prices. In the US, while one proposal compels drug manufacturers to submit reports to the State for drugs with annual costs exceeding $10,000; another proposal necessitates them to report price increases beyond a given percentage, for e.g., >10% annual increase. Having said that, the companies must be able to justify the decision about fixing those prices as well as the subsequent increases. (2)

    Furthermore, the US government has compelled the pharmaceutical companies in US to mandatorily disclose not only the side effects, but also the prices of the prescription medicines in television commercials. It will be in effect within next couple of months and will apply to drugs costing more than $35 for a month’s supply. (3) Although the drug manufacturers are resisting to advertise the prices, the pharma executives are supporting this proposal. This resolution was later proposed in the World Health Assembly urging governments and others buying health products to share information on actual prices paid, thus pushing for greater transparency on patents, clinical trial results and other related factors. (4) However, the UK, Germany and Hungary have dissociated themselves from this global resolution promoting greater drug pricing transparency. (5)

    Having said that, the impact of this resolution on patients must be of primary concern. PhRMA, the lobbying arm of US pharmaceutical manufacturers opines that the rule may confuse patients, thus making them not seek the necessary care. Moreover, patients seeing the price may feel exploited, while being completely unaware of the discounts provided to payers and other channels by the manufacturers. (6)

    In terms of the overall impact on healthcare, encouraging drug pricing transparency, including reimbursements, would eventually allow payers to improve negotiation. This can further facilitate access for hospitals to pricing information, which can be used when communicating with manufacturers to establish rates. Similar to the transparency of hospital prices and costs, implementing drug pricing transparency would compel manufacturers to justify the prices being charged for medications. (1,7) Drug pricing transparency can also help in breaking down the current opaque pricing system, which forces consumers to pay higher prices while lining the pockets of pharmacy benefit managers (PBMs) and some health plans. Irrespective of the regulator demands, drug pricing transparency can be achieved by using technology to lower drug prices for consumers. (8)

    To sum up, price transparency can both improve the workings of pharmaceutical and commodities markets as well as undermine them. Therefore, systems for demanding, evaluating, and acting on the price data are crucial. Since there isn’t enough evidence on improved access and efficiency by referencing publicly available prices from other countries, while some evidence showing exactly the opposite; (9) it would help healthcare systems to become smarter buyers of goods and services. (10) Moreover, the marketers are responsible for advertising a drug’s benefits and efficiency, and thus, they must be able to justify the drug pricing to the patients. The marketers are already equipped with ways to convince patients about drugs through direct-to-consumer (DTC) adverts, in spite of the challenging requirements ranging from side effects of a drug to complicated disease information. Therefore, disclosing drug prices will pose a new opportunity to the marketers to rise up to the challenge, and not run away.(6)

    Prescription pricing transparency tools

    In terms of value-driven healthcare delivery, tools enabling point-of-care drug pricing transparency have been observed to significantly impact the lives of clinicians as well as their patients in the past year. In 2018, more than 100,000 clinicians achieved access to patient-specific information at the point-of-care by avoiding lengthy procedures associated with prior authorization and retrospective prescription changes. With these tools at their fingertips, prescribers are reported to eliminate pharmacy call-backs, thereby improving medication adherence and reducing costs; while their patients get the needed medications at an affordable price, faster and with less hassle. (11,12)For instance, the use of the Real-Time Prescription Benefit tool, a price transparency technology, has grown by almost a 1000-fold between 2017 and 2018. (10) These tools enable prescription price transparency as well as automated prior authorization, which is why they will continue to make a measurable impact on clinicians and their patients. However, to determine the full potential of prescription price transparency, it’s essential to connect EHRs, clinicians and patients.(10)

    Become A Certified HEOR Professional – Enrol yourself here!

    References

    [1] Dana KN, Hertig JB, Weber RJ. Drug Pricing Transparency: The New Retail Revolution. Hosp Pharm 2017; 52(2):155–159.

    [2] America’s Health Insurance Plans. Why Prescription Drug Price Transparency Matters. Issue Brief: June 2018. Available at: https://www.ahip.org/wp-content/uploads/2018/06/AHIP_IssueBrief_RxTransparency_62018FINAL.pdf

    [3] Lovelace B Jr. White House requires Big Pharma to list drug prices on TV ads as soon as this summer. May 2019. Available at: https://www.cnbc.com/2019/05/08/trump-administration-requires-drug-makers-to-list-prices-in-tv-ads.html

    [4] Improving the transparency of markets for medicines, vaccines, and other health products. World Health Assembly. May 2019. Available at: http://apps.who.int/gb/ebwha/pdf_files/WHA72/A72_ACONF2Rev1-en.pdf

    [5] Lamble L. UK refuses to back ‘game-changing’ resolution on drug pricing. May 2019. Available at: https://www.theguardian.com/global-development/2019/may/28/uk-refuses-to-back-game-changing-resolution-on-drug-pricing

    [6] Schafer J. Drug prices in advertising: Threading a needle of transparency and confusion. June 2019. Available at: http://www.medadnews-digital.com/medadnews/june_2019/MobilePagedReplica.action?pm=2&folio=32#pg32

    [7] Coukell A, Shih C. What’s driving increased pharmaceutical spending? The PEW Charitable Trusts. May 2016. Available at: http://www.pewtrusts.org/en/research-and-analysis/analysis/2016/05/26/whats-driving-increased-pharmaceutical-spending.

    [8] Borzilleri T. Drug Pricing Transparency: Can Health IT Lower Drug Pricing for Patients? May, 2018. Available at: https://hitconsultant.net/2018/05/24/drug-pricing-transparency/#.XPowAIgzbIV

    [9] Prada SI, Soto VE, Andia TS, et al. Higher pharmaceutical public expenditure after direct price control: improved access or induced demand? The Colombian case. Cost Eff Resour Alloc 2018; 16:8.

    [10] Chalkidou K, Towse A. Can Transparency Lower Prices and Improve Access to Pharmaceuticals? It Depends. April 2019. Available at: https://www.cgdev.org/publication/can-transparency-lower-prices-and-improve-access-pharmaceuticals-it-depends

    [11] Surescripts. 2018 Impact Report- Prescription Price Transparency. 2019. Available at: https://surescripts.com/docs/default-source/intelligence-in-action/prescription-accuracy/2_2019-price-transparency-impact-report-data-brief.pdf

    [12] Heath S. 76% of Patients Benefit from Drug Price Transparency Technology. Available at: https://patientengagementhit.com/news/76-of-patients-benefit-from-drug-price-transparency-technology

    MarksMan Healthcare

  • Determining the ‘Fair Price’ of a Drug: Differentiating ‘Cost’ From ‘Value’

    Determining the ‘Fair Price’ of a Drug: Differentiating ‘Cost’ From ‘Value’

    Drug prices are generally not static. The price of a drug is high when it is newly introduced in the market and is on-patent. After the expiry of patent, the introduction of generic drugs in the market can significantly reduce the price of the drug, sometimes even up to 90% less. In India, drug prices are regulated by the Drug Prices Control Order (DPCO) under the Section 3 of Essential commodities act.

    While fixing the fair price of a drug, it is essential for the regulators to ensure that the patients have access to affordable medicines for the most common and important disease conditions. Fair drug price is a price range between the price that on the one hand incentivises innovation and research, and compensates the manufacturing and distribution cost, and on the other hand is also affordable by the patient. Fair price of a drug is more often the balance between the ‘return of investment’ by the manufacturer and the ‘benefits delivered’ to the population. There are two popular models in arriving at the ‘fair price’ of a drug.

    Cost based pricing:

    In this model, the drug price is regulated by the ‘cost’ of various components involved in making the drug available in the market, such as the costs of API, excipients, duties applicable, labour and overheads, and packaging material; subsequently the margins/profits are added. Cost-based pricing usually results in competitive prices, inexpensive products and services to the consumers. However, there is a lack of transparency in cost-based pricing: for example, while the production costs are considered, the costs involved in the import of drugs are not considered.

    Value based pricing:

    This model considers the ‘value derived’ by the patient when the drug is administered for fixing the price of the drug. The ‘value’ brought in by the drug is generally expressed in terms of longevity or quality of life of the patient. This ‘value’ is compared with the cost paid to purchase the drug. Value based pricing necessitates establishing ‘Therapeutic Value’ of the drug.

    The concept of value-based drug pricing suits mostly for countries having single health insurer. Value based pricing can be profitably applied only if there are measurable outcomes and when no generic drugs are available for the condition.[1] Value based drug pricing favours developing truly innovative drugs rather than introducing minor changes in the existing drugs just to extend the patency period. This also generates an authentic clinical trial data thereby clearly demarcating the risks and benefits. It is claimed that by reducing the duration and quantity of therapy, the overall cost of the treatment could be cut down, since this pricing is based on outcome values. It also refines the relationship between the pharmaceutical companies and the physicians/ hospitals. For example, it has been established that the Value-based model of drug pricing improves the quality of life in diseases like COPD.[2]. This indicates that the readiness to pay for improving the Quality of life mainly depends on the severity of the illness.

    There are some difficulties in implementing value-based pricing. Measurement of the ‘value’ of a drug is often not accurate, by virtue of individual treatment variation, concomitantly administered drugs, co-morbidities, and drug interactions. Also, the ‘quality of life’ and long-term treatment costs are difficult to measure. These factors have made value-based pricing difficult to rate. Also, Value based drug pricing is mainly affected when the treatment population has heterogenous values. This makes personalised medicine difficult as ‘one-size fits all’ concept cannot be applied.

    Fair drug pricing:

    ‘Fair drug price’ refers to the price which is reasonably funded by the consumers and health care organisation and sustains research and development in health care sector. A ‘fair pricing zone’ comprising of a ‘floor price’ and ‘ceiling price’ is often maintained by pharma companies. The purpose of this zone system is that a high resource buyer could pay a price nearer to the ceiling price whereas a low resource buyer uses the floor price. However, to bridge the gap between the floor price and the affordability of a low resource buyer, government supports in terms of subsidies.  This pricing is regulated by certain set of rules worldwide. For example, in the US, the fair drug pricing is controlled by an Act which ensures that the drug prices cannot rise more that 10% in a year and if it is beyond 10%, proper justification and transparency report has to be submitted to the Health and Human services department before 30 days of decision.

    ‘Cost’ or ‘Value’ in Fair drug pricing:

    From the viewpoint of a pharma company, ‘fair drug price’ should compensate the R&D costs, manufacturing and distribution costs, profits, and regulatory charges. An innovator often has the necessity to recover the costs involved in R&D of the drug before the generics are available at a lower cost. From consumer’s viewpoint, ‘fair drug price’ means affordability, cost-effectiveness of the therapy, and supply security. It is often observed that if ‘R&D costs’ rather than ‘value’ are factored in while determining the fair price, consumers express an unwillingness to purchase the product.

    The cost-based model of fair drug pricing seems to be outdated because it does not give importance to the value gained from the patient’s viewpoint. Measuring therapeutic values may be incredibly difficult currently; however, with the increasing adoption of digital techniques in healthcare delivery, assessment of therapy outcomes, patient satisfaction and values are expected to become easier, thereby making value-based pricing more realistic. Even though value-based pricing fixes drugs at a comparatively higher cost, the overall cost of the therapy is lowered, thereby improving the value of the treatment. For this reason, value-based drug pricing is highly logical compared to the cost-based model.

    Theoretically, the value of a medicine should remain the same till a better drug comes to the market but this doesn’t happen practically from the patient’s point of view as the prices slash so as the values with the emergence of generics. This makes the implementation of value-based pricing challenging. A proper co-ordination among the health care technology agencies and regulatory bodies is needed for unbiased implementation. A push towards digitalising healthcare can make the value-based pricing a reality in the near future.

    Become A Certified HEOR Professional – Enrol yourself here!

    References:

    1. Prieto-Pinto, L., Garzon-Orjuela, N., Lasalvia, P., Castañeda-Cardona, C. and Rosselli, D.. International Experience in Therapeutic Value and Value-Based Pricing: A Rapid Review of the Literature. Value in Health Regional Issues,2020, 23, pp.37-48.
    2. Grouse L. Cost-effective medicine vs. the medical-industrial complex. J Thorac Dis. 2014;6(9):E203-E206. doi:10.3978/j.issn.2072-1439.2014.09.01

    MarksMan Healthcare

  • How Innovative Alternate Payment Models Are Bringing Change In Healthcare?

    How Innovative Alternate Payment Models Are Bringing Change In Healthcare?

    Drug prices in the US are the highest in the world, which necessitate new or alternate payment approaches. For instance, the new treatments for hepatitis C virus (HCV) infection are highly effective and very expensive at the same time, at least from the view of many payers, physicians, and patients. Even 5 years after these drugs were introduced, only 15% of the estimated population of more than 3 million HCV patients in the US have been treated. This can also be due to budgetary constraints of the state Medicaid programs. (1)

    In the example stated above, the ideal way to treat the HCV infection would be at the population level, treating every patient possible, at a possible speed. Since the medicine is shifting towards value-based care day by day, it is essential for patients and physicians to have flexible, innovative, and practical payment models that would facilitate better outcomes. As a result, many industry stakeholders are predicting the introduction of new alternate payment models (APMs) that are in being developed currently and will possibly be rolled out later this year. Moreover, the Centers for Medicare and Medicaid Innovation (CMMI) is responsible for the assessment of alternative payment models (APMs), such as bundled payment models that would reduce program expenditures under Medicare, Medicaid and the Children’s Health Insurance Program (CHIP) in order to increase quality and efficiency. (2) In addition, with the support of increasing evidence and momentum, APMs are the precise solution to today’s cost and quality challenge in healthcare. They promise to bend the healthcare cost curve to achieve a sustainable, long-standing future for Medicare and reasonably priced private coverage. (3)

    Having said that, Medicaid programs in several US states have limited access to treatment. For instance, Louisiana State only treated 384 HCV patients last year (2017-18) out of an estimated 35,000 Medicaid beneficiaries carrying the virus. Consequently, the Centers for Medicare and Medicaid Services (CMS) warned the states about possible violation of statutory Medicaid requirements owing to restricted access to hepatitis C treatments. (4)

    However, as a solution, Louisiana State is soon adopting the ‘Netflix Model’ that involves a licensing deal, to expand access to treatment. As per this model, instead of paying for each prescription individually, the State would pay the drug company a subscription fee for medication for several years in exchange for unlimited access to treatment, just like the consumers paying a monthly fee to stream unlimited television shows and movies. (4,5) This ‘Netflix Model’, when applied to health care, makes a lot of sense. This is because the pharmaceuticals R&D costs can be high, but the manufacturing costs, much like software, are often low. Netflix content is essentially purchased through a monthly license, where the consumers are not charged a fee every time to view a show. The basic idea here is to incentivise the content creator, not limiting the ability to watch since marginal costs are low. (4)

    Similar to the ‘Netflix Model’, researchers have also proposed drug-licensing models for health care that promise increased drug use without altering patients’ out-of-pocket spending, health plans’ costs, or drug companies’ profits. These models are based on an idea of buying annual drug licenses to ensure unrestricted access to a clinically optimal number of prescriptions over the course of a year. (6) Furthermore, new efforts are in progress in Massachusetts to figure out ways to pay for the potential million dollar price tag for an experimental one-time therapy designed to treat the devastating, rare disease of spinal muscular atrophy and its underlying genetic cause. Even in this case, similar to the ‘Netflix Model’, the health insurers are considering to pay for the treatment over several years, which if succeeded, could hopefully prove to be a viable model for the entire US. (7) Here, Novartis’s AveXis unit, the manufacturer of the gene therapy Zolgensma, has suggested a price tag of up to $5 million, and is in talks to participate.

    Evidence from literature has shown such subscription models to improve outcomes and save money at the same time. Subscriptions can better balance the public health interest in gaining rapid, extensive and inexpensive access to these drugs than traditional fee-per-dose reimbursement. This can further ensure that manufacturers’ generate enough revenues to justify the drugs’ development costs. (4-6)

    Become an Certified HEOR Professional – Enrol yourself here!

    References 

    1. Trusheim MR, Cassidy WM, Bach PB. Alternative State-Level Financing for Hepatitis C Treatment—The “Netflix Model”. JAMA 2018; 320(19):1977-1978.
    2. Landi H. Are New APMs from CMMI Coming Soon? Industry Stakeholders Forecast Bold Moves from the CMS Innovation Center in 2019. 
    3. Leavitt MO. Alternative payment models in healthcare are a must. January, 2017. 
    4. Goldman DP. When we find a cure, price it like Netflix to ensure access. September, 2018.
    5. Johnson CY. Louisiana adopts ‘Netflix’ model to pay for hepatitis C drugs. January, 2019. 
    6. Goldman DP, Jena AB, Philipson T, et al. Drug licenses: A new model for pharmaceutical pricing. Health Affairs 2008; 27(1).
    7. Court E. A revolutionary drug that could treat a rare and devastating disease is prohibitively expensive. But one state has a plan to pay for its potential $5 million price tag. January, 2019. 

    Written by – Ms. Tanvi Laghate

    MarksMan Healthcare

    , , , ,

  • Importance of Tapping Payer’s Data to Document the Effect of a New Therapy

    Importance of Tapping Payer’s Data to Document the Effect of a New Therapy

    Traditionally, the pharmaceutical industry has always been dependent upon the ‘push’ strategy for successful market access for products. The drug approval process, involving submission of data on efficacy, safety, and tolerability to the regulatory agencies, used to be simple; which ended with the drug being marketed to the targeted physicians and dispensed by pharmacies post approval. Thus, this whole process involved a limited set of stakeholders, viz. physicians, regulatory agencies, and pharmacies. Conversely, over the years, the market access landscape has evolved primarily due to two factors: (1)

    1. Rising healthcare costs owing to an increasing prevalence of chronic diseases, growing geriatric population, and higher prices of new therapies
    2. Competitive pricing and reimbursement environment

    This has further led to the emergence of a new and diverse set of stakeholders over the years, i.e. the ‘Payer’(s), increasing the complexity of drug access to the market in general, and to patients in particular. Payer exercises the greatest degree of control over pricing and reimbursement for any new drug, and will continue to dominate the market access scenario to ensure successful market access. (2,3)

    Pharmaceutical advancements are increasingly conflicting as countries attempt to accommodate healthcare costs via different tools. New criteria for recognizing unique drugs and differences among those within the same therapeutic area or concerning the same molecule are being introduced, even though ‘price’ remains the main driver. (4) There is a surge of criticism towards the increasing prices of drugs that adds growing pressure on pharma companies and manufactures to limit future price increases, and eventually on payers to be more cost-effective in their approach to setting budgets and managing costs. (5) Global pharma operations need to keep up with the pace of these changes to approach pharma tendering as a strategy that spans pricing and commercialization.

    In order to document the effect of a new therapy in the real world, pharma companies are trying to justify prices by tapping payer’s data. Payers encourage pharma to collect post-launch evidence of product performance in the real world, thus turning it in pharma’s favor. This can help verify a price agreement or even clarify uncertainties about the clinical and/or safety outcomes outlined at registration. (6)

    The successful market access will involve collaborative team work between sales and marketing departments. The strategy itself should be well equipped to respond to market evolution and also, to accommodate all known interactions. There is no ‘one-size-fits-all’ solution. The challenges in the market will constantly vary as per the product, therapy area and the setting in which the treatment will be used.i,vi

    Payers are increasingly focusing on “real-world” outcomes to form their decisions, encouraging new policies to be formed, in order to assimilate evidence from different sources. These policies prioritize the evidence that goes beyond information collected during clinical development in randomized controlled trials (RCTs), required by regulatory authorities for marketing approval. ‘Administrative data’- that normally use retrospective or real-time patient data – are an example of the real world data sources, as they are collected primarily for reimbursement, but contain some clinical diagnosis and procedure use with detailed information on charges. Retrospective analyses (longitudinal and cross-sectional) of clinical and economic outcomes at patient, group, or population levels can be performed with the help of claims databases. Such analyses can be performed in short time and at low costs. (7)

    In conclusion, payer data from real-world such as claims data can most certainly impact the sound coverage, payment, and reimbursement decisions. It is critical that payers recognize – a) the benefits, limitations, and methodological challenges in using these data, and b) the need to carefully consider the costs and benefits of different forms of data collection in different situations.

    Become an Certified HEOR Professional – Enrol yourself here!

    References

    1. Kumar A, et al. Pharmaceutical market access in emerging markets: concepts, components, and future. Journal of Market Access & Health Policy 2014; 2:10.3402/jmahp.v2.25302.
    2. McClearn C, et al. Big pharma’s market access mission. Deloitte University Press; 2013.
    3. Arx RV, et al. Leveraging success factors for market access in the life sciences industry. Capgemini Consulting and Cegedim dendrite; 2009.
    4. Skinner JS. The costly paradox of healthcare technology. September, 2013. 
    5. Pharmaceutical pricing and market access 2017.
    6. Wechsier J. Measuring the value of prescription drugs. Pharmaceutical Executive 2017; 37(5).
    7. Garrison LP Jr. Using real-world data for coverage and payment decisions: The ISPOR Real-World Data Task Force Report. Value Health 2007; 10(5):326-225.

    MarksMan Healthcare

    , , , , , , , ,

  • Facts & Fiction – Branded v/s Generic Controversy – India

    Facts & Fiction – Branded v/s Generic Controversy – India

    All branded drugs are of good quality – Fiction
    Majority of the branded drugs are of good quality – Fact

    All generic drugs are of good quality – Fiction
    Majority of the generic drugs are of good quality – Fact

    All pharma companies take pro-patient initiatives – Fiction
    Few pharma companies take pro-patient initiatives – Fact

    All doctors make their cut out of prescription – Fiction
    Majority of doctors make their cut out of prescription – Fact

    All pharmacists are qualified for their job– Fiction
    Few pharmacists are qualified for their job – Fact

    All MRs are qualified for their job– Fiction
    Few MRs are qualified for their job – Fact

    All patients look for affordability over quality – Fiction
    Majority of the patients look for affordability over quality – Fact

    Government dreams to take pro-patient initiatives – Fact
    Government’s steps to make them happen – no less than any fiction

    We all know where the double standards lie in every “Fact & fiction” mentioned above.

    Fact of irony is that inspite of India being the “Generic capital of the world”, patients are not able to afford healthcare. If it would have been all about patients:

    • Government must had central regulatory check on the quality of marketed generics
    • Pharma must not had followed unethical practices
    • Doctors must not had taken prescription cuts
    • Diagnostics must not had bribed doctors
    • Pharmacists must not had differentiated on various brands of same generic, and most importantly…

    “PATIENTS, WHO SHOULD BE IN THE CENTER OF HEALTHCARE SYSTEM, MUST HAVE KNOWN ABOUT THEIR DISEASE IN TOTALITY”

    Patient’s 3 desires in this order: – Hanno Wolfram on twitter

    1. learn what the diagnosis is
    2. learn what the disease does to them
    3. understand what to do against it

    Any patient engagement initiative has to anchor around these three patient needs!

    The million dollar question is who would like to take the responsibility first?

    Become a Certified HEOR Professional – Enrol yourself here!

    MarksMan Healthcare

    , , ,

  • Cost Effectivity or Affordability: What Should be Prioritized in India?

    Cost Effectivity or Affordability: What Should be Prioritized in India?

    Rapidly rising cost in healthcare is an increasing cause of concern across the world. Indian healthcare is also experiencing a change, with increasing focus on better quality of medical care services.

    As per the available information, the healthcare spending per capita per annum in India has been observed to be about $109, with total healthcare spending in the range of 4.9% of the country’s GDP. Most of the spending occurs from the private sector with public sector contributing to a mere $ 19 per capita per annum. Concurrently, the average spending per capita per annum in the United States during the same time frame has been found to be approximately $4271 whilst for the United Kingdom, the spending is $ 1675. These figures clearly indicate that healthcare in India is fairly cheaper, a strong reason for a growing medical tourism market in the country. However, when compared with paying power parity and affordability, the cost of medical care is escalating. It is worthwhile to note that as per World Bank estimates, more than 44% of Indian population earns less than one dollar a day.

    In India, a silent crisis in access to essential medicines confronts most patients who seek treatment of acute and chronic diseases. Close to 40% of Indians live on less than US $1 per day and most of them pay Out-Of-Pocket (OOP) for using healthcare. OOP spending in India is over four times higher than public spending on healthcare. Unexpected illness can have a catastrophic effect on the family of the ill person: direct out-of pocket payments could push 2.2%% of all healthcare users and one-fourth of all hospitalized patients, into poverty in a year.

    In addition, most Indians pay for medicines – a key factor that can contribute to the impoverishing effect of OOP payments for healthcare. According to the World Health Organization (WHO), an estimated 649 million people in India do not have regular access to essential medicines. Public provision of these medicines is poor; the median availability of 30 essential medicines in six states in India varied between 0% and 30%. Patients are forced to buy medicines from the private market, a compulsion that often spells calamity for those who can ill afford the twin burdens of sickness and healthcare costs.

    Drug regulatory agencies all over the world approve medicines for use in their countries on the basis of an evidence-based process which evaluates the data on their efficacy (obtained through randomized controlled trials) and safety. In India, in light of the public health problems that we face, the widespread poverty and high OOP expenditure incurred by patients, the drug regulatory authorities have an additional responsibility: to ensure that the medicines being approved for manufacture serve the public health needs of the country and are cost-effective. Moreover, patients value quality, safety and cost-effectiveness of a medicine; it matters little to them whether the medicine is branded or unbranded and whether it is promoted through the retailer or the doctor.

    India and its pharmaceutical industry have acquitted themselves very creditably on the global platform. Indian generics account for about 40% of the anti-retroviral medicines provided globally. Worldwide, these low-cost high-quality medicines are a lifeline to millions of people. There are an estimated 10,563 manufacturers in India, and more than 65,000 formulations. These numbers look impressive but the paradox is that, at home, large portions of the population lack access to even the most essential drugs. The limited funds available are frequently spent on ineffective or unnecessary medications. The money spent on overpriced medicines is very often also a waste of precious resources. Since these medicines outnumber those which are cost-effective, they directly impact the availability of and access to essential medicines.

    To address the anarchy of drug prices which is impoverishing people, we need a comprehensive cost-based system, and not the market-based system of price regulation. The drug approval system in India needs to be overhauled on the lines suggested by the recent parliamentary committee which looked into the functioning of the CDSCO. The process of drug approval needs to be rigorous, evidence-based, transparent, and in line with the interests of public health in India. The present predicament, of poverty of access to medicines amidst a plenty of overpriced, non-essential medicines which worsen poverty, should not be allowed to continue to imperil the lives and health of Indians.

    Become a Certified HEOR Professional – Enrol yourself here!

    MarksMan Healthcare

    , , ,
    , , ,