Role of Pharmacoeconomics in a Developing country context Gavin Steel for Anban Pillay Cluster Manager: Health Economics National Department of Health Republic of South Africa

Range of interventions to improve affordability Generic substitution policy Regulation of prices in the supply chain Reduction/prohibition of rebates and discounts Internal Reference pricing External reference benchmarking Tender based procurement of medicines Use of TRIPS flexibilities Pharmacoeconomics

Generic Substitution Policy Quality – assessed by medicine registration authority. Public confidence in medicine regulatory authority. COMPETITIVE local manufacturing sector CRUCIAL When manufacturers compete on price then generic prices – 20-70% lower than patented drug price. Fast Track registration for essential medicines. Generic substitution – “mechanism important” –SA, Canada – mandatory –Sweden, Germany – prescriber authorisation

South African Experience with medicine pricing

Regulation of markups in the supply chain Transparency in the pricing system allows the public to understand how the final price is derived. This level of transparency in itself applies “pressure” on all players in the supply chain. Maximum fee for wholesalers/distributors. Wholesalers buy and sell medicines while distributors simply prepare and delivers orders on behalf of manufacturer. Distribution model is cheaper since they do not take ownership Maximum fee for pharmacists. Markups at pharmacy level can be very high. Activity based costing of these services is necessary to establish the max fee. Cooperation from pharmacies to provide financial and cost information is a challenge.

Removal of rebates and discounts Rebates and discounts can be up to 80% of the selling price of a drug Manufacturers should sell at a single price irrespective of volumes Remove rebates, discounts or any other perversity Maximum price valid for a year Logistics fees must be transparent

External Reference Pricing (originator) Choose a basket of countries Identify same product in benchmark countries Average exchange rate in basket of countries Lowest/Median/average price in the basket Reduction in price over a defined period

Internal Reference Pricing Limits the price of an individual drug by comparison with the price of other drugs. Basis for comparison: Same active ingredient Drugs in a pharmacological class Drugs with similar therapeutic effect Most effective when there is a strong generics industry. New drugs in the same pharmacological class/therapeutic class will be referenced using pharmacoeconomics.

Key considerations in an economic analysis Details of the new drug and its proposed use Data from comparative randomised trials Economic evaluation for main indication Estimated extent of use and financial implications

Details of the new drug and its proposed use Pharmacological action Proposed mechanism of action Has the regulatory authority approved the new drug for this indication Who will be prescribing the drug? Are there any conditions under which the drug will be prescribed?

Details of the new drug and its proposed use Treatment details Dosage form dose regimen dose titration duration of therapy

Details of the proposed drug and its proposed use (1) Co-administered therapies What other co-administered therapies are required? Are the costs of these co-administered drugs included in the economic analysis Dose regimen, dose titration and duration of therapy

Details of the proposed drug and its proposed use (1) Main Comparator How is the main comparator identified? Is the comparator considered to be “best practice” ? What are the differences between the proposed drug and the comparator?

Data from comparative randomised trials (2) Description of search strategy Databases searched Search terms Time periods In house studies

Data from comparative randomised trials (2) Identification of relevant RCTs List of all potentially relevant trials – characteristics including head to head, indirect comparison Assessment of methodological quality of studies- discussion of impact of quality on results Selection of studies – basis for the selection

Data from comparative randomised trials (2) Methodological Quality Randomisation Blinding Follow up Generation of allocation schedule Concealment

Data from comparative randomised trials (2) Characteristics of the comparative randomised trials Are the trial participants representative of the patients that would be receiving the drug Are subjects comparable across the different trials Dosing regimen in studies versus Package Insert – dose titration numbers of patients randomised and duration of follow- up of the trials

Data from comparative randomised trials (2) Analysis of the comparative randomised trials Outcome measures – definition of outcome, clinical relevance of outcome measure, measurement bias Method of analysis – meta-analysis, statistical considerations – superiority, equivalence, non inferiority studies

Data from comparative randomised trials (2) Results of the comparative randomised trials Comparative effectiveness - extent of difference with 95% CI, preferably with both RR and ARR and NNT Comparative toxicity - key toxicity data from the trial

Data from comparative randomised trials (2) Interpretation of the results of the comparative randomised trials Possible categories of claims: significant advantages in effectiveness over main comparator and having similar or less toxicity similar effectiveness to its main comparator but having less toxicity significant advantages in effectiveness over its main comparator but having more toxicity no worse than main comparator in terms of effectiveness and toxicity less effective than main comparator but having less toxicity.

Data from comparative randomised trials (2) Economic evaluation based on the evidence from the comparative randomised trials Identify costs to be used in economic analysis Identify source of information results of the incremental costs incremental cost effectiveness ratio corresponding to the 95% CIs of the outcome measure

Modelled economic evaluation for main indication Justification Population to be modelled Approach to be used CBA, CEA, CUA Variables to be used in model Structure of the economic evaluation Results of evaluation Sensitivity analysis

Estimated extent of use and financial implications (4) Estimated extent of use of the proposed drug Estimated extent of substitution of other drugs Estimated financial implications

Conclusion and Recommendations Economic analyses is a complex instrument that requires a range of skills and other resources that are not readily available in developing countries. The costs of evaluating/performing economic analyses in a developing country context compared to the relative benefit. There several other interventions that may produce more significant reductions in price than economic analyses. Economic analyses should only be considered when other regulatory interventions have been successfully implemented

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