1. European Commission Dialogue-Innovation-Future An experience of the Pharmaceutical Forum Dr Stefaan Van der Spiegel, MD Competitiveness in the Pharmaceuticals Industry and Biotechnology DG Enterprise and Industry European Commission Dialogue-Innovation-Future The role of the Health sector Warsaw, 5 December 2007

2. European Commission EXPERIENCES OF THE FORUM Different expectations… … though much can be realised

3. European Commission DIFFERENT EXPECTATIONS… Investment in innovative medicines Patient: a necessary step to get access to a new treatment Funding authority: a choice to invest in future health of the population Manufacturers: a reward for risky investement in R&D 1 2 3

4. European Commission 1. PHARMACEUTICAL EXPENDITURE TAKES SIGNIFICANT PART OF WEALTH (Total* expenditure / GDP) Different driving factors possible e.g., level of GDP, local health situation/ needs, public coverage, … * Publicly and privately funded Source: 2002 data OECD except CY,ES,LT,LV,MT,SL 2004 data by Alcimed and Member States

5. European Commission 1. HIGH GROWTH RATES OF EXPENDITURE IN MS % annual growth* 00-03 * Total expenditure, publicly and privately funded Source: OECD except CY,ES,LT,LV,MT,SL data by Alcimed and Member States 7-8% /year, up to 10-15% /year in CEE Demand grows faster than budgets can (ageing population, demanding and informed citizens, high cost of new technologies, …) Each Euro can only be spend once, hence need for cost- containment Impact of orphan medicines, individualized therapies, … ?

6. European Commission 2. CREATING A NEW MEDICINE REQUIRES SIGNIFICANT UPFRONT INVESTMENT RESEARCH M.A. € + Time (years) CLINICAL DEVELOPMENT 2-3 5-7 1-2 + 8-12 = Up to 800 million Euro >10,000 molecules ~10 candidate medicines 1 new medicine Investment (Millions €) Success rate

7. European Commission 2. RETURN ON THIS INVESTMENT DEPENDS ENTIRELY ON P&R DECISIONS Time (years) Return on investment Expected revenue Real revenue impacted by changing P&R decisions individual countries, e.g., timing of decisions/approvals, prescription conditions, … THEORETICAL EXAMPLE Exclusivity Period SME’s (Biotech) are vulnerable to P&R policy changes as they … - … depend on a single product - … limit nr of markets/countries

8. European Commission 3. P&R DECISION DEFINES ECONOMIC ACCESS FOR PATIENT Positive list: XYZ ABC DEF … Total price Reim- bursed Co-paid

9. European Commission 3. TIMING OF P&R DECISION DEFINES AVAILABILITY Time between Market Authorisation and P&R decision * Defined by when medicine gets a pricing and reimbursement decision in a MS Source: IMS, Marketing Autorisation 30/6/2000 to 30/6/2004 0100200300400500600700 V U T S R Q P O N M L K J I H G F E D C B Country A Number of days Significant (>1 year) differences in timing of P&R decisions between Member States Driving factors with industry as well as with authorities Max 180 days for national procedures (EU-law)

10. European Commission EXPERIENCES OF THE FORUM Different expectations… … though much can be realised

11. European Commission INCREASING MUTUAL KNOWLEDGE ON PRICING PRACTICES: TOOLBOX Pricing practices Reference pricing Payback Price control Prescription guidelines Cost sharing Generic policies … Questions and answers from and to participants in the Working Group: Expected benefits? Practical set-up? Risks, interactions, success factors? … Study « Differences and Commonalities in Pricing and Reimbur- sementin the EU » by the Andalusian School of Public Health

12. European Commission GUIDING PRINCIPLES OF THE WG PRICING Control of expenditure Reward for R&D investment Access to health solutions 1.Potential of free pricing 2.Align demand side 3.Leverage generics 4.Set expectations 5.Recognise innovation 6.Be consistent 7.Ensure timely access 8.Ensure availability in all markets 9.Ensure affordability for all EU citizens 1 2 3

13. European Commission INCREASING TRANSPARENCY OF PRICES 15 products of interest (most-selling, recent innovations, …) A B C D … Made comparable: - Per active substance - Per daily dosis - Levels of price -(ex-factory, -wholesale, -pharmacist) Info collected from 22 MS + Feedback Scope can be expanded Will be repeated on regular basis

14. European Commission AN OVERVIEW OF THE VALUE OF INNOVATION Different and Common Expectations Therapeutic / Clinical Quality of Life Socio-Economic Morbidity, mortality Side effects, drug-interactions Probability and speed of recovery … Pain-management Self-management at home Social possibilities … Pandemias, drug-resistance Cost of medication Overall treatment costs Non-healthcare spending Cost of sick-leave, productivity …

15. European Commission HARMONIZING ASSESSMENTS OF INNOVATIVE MEDICINES Assessment- methodology 2 13 Inputs - Data A - Study B - … Results +/- €/$ Completion of data-sets at moment of decision Extra sources, better data-generation (Standardisation?) … Choice of treatment comparator Clarifications –Type of benefits to consider –Costs to include –Time horizon Harmonisation, mutual understanding … Variation in outcome assessment One of the bases for national P&R decisions THOUGH, differences in national P&R decisions, as many factors are locally driven

16. European Commission DIALOGUE HAS A LOT TO OFFER Investing in innovation Patients: access to the most valuable innovative treatments Funding authority: most effective allocation of scarce resources Manufacturers: guidance on what innovation is most needed and rewarded 1 2 3