1 Innovative Agreements for Financing Medicines: a new way of involving stakeholders in paying for real health outcomes Jaime Espín, PhD Professor Copenhagen, 30th May 2012 WS 5: Establishing multi-stakeholder pain platforms in Europe

2 Disclosure Statement of Financial Interest I, Jaime Espin DO NOT have a financial interest/arrangement or affiliation with one or more organizations that could be perceived as a real or apparent conflict of interest in the context of the subject of this presentation.

3 Agenda Pharmaceutical Policies – Some general aspects to remember New way of financing medicines The role of different stakeholders in this new way of financing medicines Some Conclusions (and proposals)

4 DIFFERENT STAKEHOLDERS - INTERESTS Pharmaceutical Sector In Europe EUROPEAN UNIONFree movement of goods Competitiveness PHARMA INDUSTRYPatents Profits GOVERMENTSControl expenditure Accessibility

5 Difficult balance for Goverments Public Health Control Expenditure Access to affordable medicines Industry policy goals Innovation Competitiveness

6 Difficult balance for Goverments Public Health Control Expenditure Access to affordable medicines Industry policy goals Innovation Competitiveness

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8 New way of financing medicines

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10 Why these new Agreements?

11 Low Level of Innovation

12 Source: Priority Medicines for Europe and the World. WHO. November 2004

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14 NO CURE, NO PAY

15 New Trend Pharmaceutical Policies based on price regulation New Pharmaceutical Policies based on rational use of resources and cost effectiveness MacroMicro

16 Individual NHS Trusts Janssen-Cilag Provision of stock for first 4 cycles for each patient at cost to NH Patient initiated on Velcade Respond withim 4 cycles Fail to respond within 4 cycles Discontinue Velcade Trust claims for replacement stock or credit Continue on Velcade at cost to NHS Replacement stock or credit at cost to Janssen-Cilag Audit if “unusual” rebate pattern Velcade Risk-Sharing Scheme Fuente: PPR Sept 07

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18 Source: “Risk-Sharing pricing models in the distribution of pharmaceutical”. Staff Working Paper Andrew Lilico. Febrery 2003 Incentives under traditional and risk sharing contracts (I) Under traditional contracts, the firm’s revenue does not depend on the realisation of the success rate. Once the medicine is accepted on the positive list, the company is guarantue revenue of π* per-unit sold, independently of the actual performance/outcome of the drug

19 Source: “Risk-Sharing pricing models in the distribution of pharmaceutical”. Staff Working Paper Andrew Lilico. Febrery 2003 Under risk sharing scheme, if the succes rate is zero, the firm does not receive any money. But if the actual succes rate is far above expections, the per-unit profit π exceeds the π* level Incentives under traditional and risk sharing contracts (II)

20 Source: “Risk-Sharing pricing models in the distribution of pharmaceutical”. Staff Working Paper Andrew Lilico. Febrery 2003 An intermediate solution (dotte line) is the the risk sharing scheme where the firm is guarantee some small fee per unit sold and a “bonus” per every successful treatment. Incentives under traditional and risk sharing contracts (III)

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23 Why about implementing these new agreements for pain medicines?

24 Thank you for your attention Jaime Espin