1. A Tale of Two Ratios: Assessing Value From the Perspectives of Cost-Effectiveness and Affordability

2. Cornerstone Research Group Inc.
Disclosure
Director of Evidence Synthesis & Health Technology Assessment at Cornerstone Research
Cornerstone Research Group Inc. consults for various pharmaceutical and medical device companies
Previously worked for CDR/pCODR and consulted for ICER in the United States
Cornerstone Research Group Inc.

3. Cost effectiveness vs Budget Impact Analysis
Cost effectiveness helps us assess whether a health technology is worth the cost – provides good value for money
Cost effectiveness does not provide information on affordability, i.e., can we afford it
A health technology might be cost effective but the financial impact to a drug plan may be such that it cannot list the drug
Affordability decisions are made by the participating decision makers based on their budgets and priorities
Cornerstone Research Group Inc.

4. Cost effectiveness vs Budget Impact Analysis
CEA
BIA
Question
Is it good “value for money”?
Is it affordable?
Goal
Economic efficiency
(max. health with resources)
Plan financial impact
(cost containment)
Modelled patients
Entire Population
Individual or groups
Scope of costs
Usually broader
(health system costs)
Narrow perspective
(decision-maker costs)
Health Outcomes
Included
Excluded
Measure
Incr. cost per unit of outcome
Total expenditure ($)
Marketplace dynamics
Usually not modeled
Usually included
Time Horizon
Usually longer (lifetime?)
Usually short (1 – 5 years)

5. Consideration of budget Impact ? Cornerstone Research Group Inc.
Reimbursement Process in Canada and consideration of budget impact analysis
Focus on role of budget impact by HTA groups in today’s presentation such as CDR/pCODR given process is more transparent
Consideration of budget Impact ?
Cornerstone Research Group Inc.

6. Role of Budget Impact Analysis at CDR/pCODR
Budget Impact not considered by CDR
BIMs and BIAs are Category 2 requirements and are not considered as part of the review or recommendation process of CDR (provided to CADTH at least 20 business days before the targeted CDEC meeting)
Budget Impact considered by pCODR
Part of pCODR Deliberative framework (Adoption Feasibility)
Budget Impact not considered as part of CADTH Therapeutic Review Process
Cornerstone Research Group Inc.

7. How is budget impact considered by pCODR?
“The following budget impact analysis (BIA) information is required in the Submission to pCODR:
one non-specific BIA model and report. The BIA should be non-specific in that the model it is based on should be flexible enough to be applied to the context of any of the participating Federal drug plans, P/T Ministries of Health or Provincial Cancer Agencies, which may differ with respect to funding of comparators or the design of the program responsible for drug funding.
The following supporting documentation for the non-specific BIA:
all market research information used in the BIA
documents cited in the BIA
Disease prevalence — the prevalence or incidence of the disease(s) or condition(s) for which the Drug is under review should be provided for the Canadian population.
For Drugs which require reconstitution or dose preparation, the method of dose preparation, dose stability and specifics around potential drug wastage should be addressed.”
Cornerstone Research Group Inc.

8. How is budget impact considered by pCODR?
Cornerstone Research Group Inc.

9. Options for incorporating budget impact within CDR/pCODR deliberations
Do not consider budget impact in submissions to CDR/pCODR
Consider budget impact in submissions to CDR/pCODR without comparing against current (and forecasted) expenditures in Canada
Consider budget impact in submissions to CDR/pCODR and compare against current (and forecasted) expenditures in Canada
Consider budget impact in submissions to CDR/pCODR by comparing against a threshold
Cornerstone Research Group Inc.

10. Option 1: Do no consider budget impact
Cornerstone Research Group Inc.

11. Cornerstone Research Group Inc.
Option 2: Consider budget impact but do not compare current (and forecasted) expenditures in Canada
Cornerstone Research Group Inc.

12. Total Sales ($ millions) Cornerstone Research Group Inc.
6/2/2018
Option 3: Consider budget impact but compare current (and forecasted) expenditures in Canada
2013 Leading Pharmaceutical Products in Canada
Rank
Leading Products
Therapeutic Subclass
Total Sales ($ millions)
2012 Growth (%)
Company 1
Remicade
Anti-arthritic
694.9
23.1
Schering 2
Humira
434.9
18.2
AbbVie 3
Lucentis
Vision loss
402.2
40.4
Novartis 4
Enbrel
332.9
5.4
Amgen 5
Cipralex
Antidepressant
250.0
16.1
Lundbeck 6
Rituxan
Autoimmune
217.6
8.7
Roche 7
Cymbalta
Depression
204.7
19.2
Lilly 8
Advair
Asthma Therapy
204.5
0.2
Abbott 9
Spiriva
Brochodilators
204.3
6.3
Boehringer 10
Ezetrol
Cholesterol reduction
185.0
6.4
Merck
New Drug (Forecasted budget impact $190 million)
Affordable?
Reasonable value compared with other drugs with similar expenditure?
Source: IMS Health Pharmafocus through 2018 &
Cornerstone Research Group Inc.

13. Option 4: Consider budget impact by comparing against a threshold
Parameter
Estimate (Drugs)
Source 1
Growth in Canadian GDP, 2016 (est.) + 1%
2.40%
Bank of Canada, 2016 2
Total health care spending ($)
219.1 billion
CIHI 2015 3
Contribution of drug spending to total healthcare spending (%)
15.70% 4
Contribution of drug spending to total healthcare spending ($) (Row 2 x Row 3)
34.4 billion 5
Annual threshold for net healthcare cost growth for all new drugs (Row 1 x Row 4)
825.6 million
Calculation 6
Average number of new molecular entities or approvals, 26
Canada’s Research-Based Pharmaceutical Report Companies (Rx&D) 2015 7
Annual threshold for average cost growth per individual new molecular entity
(#5 divided by #6)
31.8 million 8
Annual threshold for estimated budget impact for each individual new molecular entity (doubling of row 7)
63.5 million
Cornerstone Research Group Inc.

14. Advantages & Disadvantages of Each Option
(Do not consider budget impact)
Simple
Requires limited resources by CDR/pCODR to appraise
Allows payers to be responsible for consideration of budget impact
Not transparent
No consideration of affordability
Option 2
(Simple budget impact analysis that does not compare with expenditure data)
Considers budget impact, albeit against no expenditure data
Simple budget impact model from manufacturer is sufficient
Require limited resources by CDR/pCODR to appraise
Not transparent consideration of budget impact
Only allows crude budget impact statements to be made, e.g., “Drug A will be associated with high budget impact”
Option 3
(Detailed BIA which compares against current (and forecasted) expenditures in Canada)
Considers budget impact and current expenditures on drugs in Canada
More precise budget impact conclusion can be made, e.g., “Drug A will be associated with a forecasted budget impact of 190 million per annum potentially ranking it among the top 10 expenditures by public drug plans ”
Requires better access to up-to-date expenditure data
Requires high quality budget impact analysis from manufacturer
Requires additional resources by CDR/pCODR to appraise
Does not link budget to price
Option 4
(Detailed BIA which compares against a threshold)
Mechanism to link budget impact to a maximum price
Does not require better access to up-to-date expenditure data
Relies on GDP
Cornerstone Research Group Inc.

15. Breakfast Session Voting
Which option do you think CADTH should use when it comes to considering budget impact of pharmaceuticals in Canada?
Option 1: Do not consider budget impact – leave it to payers
Option 2: Consider simple budget impact analysis but do not compare current (and forecasted) expenditures in Canada
Option 3: Consider detailed budget impact and compare current (and forecasted) expenditures in Canada
Option 4: Consider detailed budget impact analysis and compare against a threshold
Cornerstone Research Group Inc.