1. Medicines Reimbursement and funding arrangements in Europe Multicountry meeting of the Visegrad group countrieson reimbursement and pricing of drugs Warsaw, October 29-30, 2007 Kees de Joncheere WHO Regional Office for Europe

2. Overview n Health and health care in Europe : some data n Pharmaceutical figures in Europe n Pharmaceutical policies and strategies on improving use and containing costs n Challenges and conclusions

7. Stewardship (oversight) Creating resources (investment and training) Financing(collecting, pooling and purchasing) Delivering services (provision) Responsiveness (to people’s non-medical expectations) Fair (financial contribution) Health Functions the system performsObjectives of the system Functions and objectives of a health system

9. Total Pharmaceutical Expenditure per capita in Euro-PPP 2005 PPRI ( source PPRI) Source: PPRI 2006

10.  European averages  EU-25:18.6%  EU-15:15.6 %  EU-10:23.7%  Member States differences  <= 10%: LU, DK, IE, NL; NO  => 25%: BG, HU, LT, PL, SI, SK Pharmaceutical Expenditure in % of Health Expenditure (2005, PPRI)

11. WHO pays ? n Public health expenditure as % total health expenditure ä EU-25:74 % ä EU-15:78 % ä EU-10:70 % Source : PPRI

12. Medicines expenditures OECD countries (2004)

13. Who pays ? options and issues n Tax based n Compulsory health insurance n Private out of pocket n Private or complementary insurance Considerations n Fiscal sustainability of the system n Equitable access for patients n Protection against catastrophic costs of illness

14. Goals for pharmaceutical policies in Europe n Equitable access for patients to effective, safe and good quality medicines n Enhancing appropriate use of medicines for better health outcomes n Ensuring value for money n Balance with industrial policy objectives n Underpinning values : equity, solidarity, access, quality, participation

15. “Equity” as value in the goals for pharmaceutical policies in Europe In-equality means differences in health and access to health care that are considered n Unnecessary n Avoidable n Unfair n Unjust

16. The rising costs on medicines Higher volumes and higher price component  Ageing  Shift to new medicines in same therapeutic category  New drugs for prevention, and for diseases that could not be treated e.g. AIDS, MS  “Life-style drugs”  Hospital - primary care shifts  especially for Eastern Europe : increase public coverage and close treatment gap

17. A changing pharmaceutical policy panorama  Till 1995  Patent = Innovation = Premium Price  Over the last years  Cost containment focus  More cost – effectiveness evaluations and HTA  International price referencing  Therapeutic price referencing  Additional market access hurdles  Concern over decreasing innovation

18. R&D spending increases but number of NMEs approved not increasing

19. Mind the gap n Public finance cannot keep up with increase in drug expenditures n Options for policy-makers ä Increase health budgets : funding from …? ä Limit range of drugs to be reimbursed : cave - medical need and quality treatment ä Increase efficiency ( regulation of prices, prescribing, use, …) : requires sustainable funding and programmes ä Shift expenditures to patients : equity, solidarity …?

20. Improving the use of medicines and containing costs n Education and information n Managerial and administrative measures n Financial measures

21. Pharmaceutical policies and the EU n One EU regulatory framework and legislation (including EMEA in London) ä Review 2003, in force 2005 n National responsibilities on pricing and reimbursement (“subsidiarity”), but ä Transparency directive ä DG Health - High Level Pharma committee, ä G 10 ä Pharmaceutical Forum

22. Selecting medicines for reimbursement n Prof. Don Birkett ( former chair of PBAC Australia) ä “If you are going to buy a car, it makes sense to take a look at it first”

23. Increasing use of strategies to select medicines for public provision n Positive list for reimbursement ( NL, DK, Swe, …) n Reference pricing, with generic or therapeutic groups (D, Ita, NL, Por, Rom, …) n Differential reimbursement % ( Fr, Bul, …) n Economic evaluation of medicines ( Fin, NL, Swe, UK,…) n Promote use of generics ( UK, DK, D, Fr, …) n Co-payment mechanism (DK, N, Esp, …) n Standard treatment guidelines (UK, DK, Esp, …) n …

24. Evaluation criteria and medical decision making (1) n For market entry : ä quality, efficacy, safety n For reimbursement ä Medical need ä Health gain and added therapeutic value ä Cost-effectiveness ä Budget impact ä Equity considerations ä …

25. Evaluation criteria and medical decision making (2) n For medical practice ä Evaluation by drug bulletins, professional associations on the “place in therapy” of a new medicine ä Consistency between reimbursement indications and therapeutic guidelines ? ä Reviews by national HTA commissions

27. Implications of cost-effectiveness analysis n Health-based reason to justify a price premium for the proposed drug n Relate extent and nature of health gain to justify price increase, including cost off-sets in health sector n Common outcome measure (QALY, life year gained,.. ) n Pristine value judgement

28. Economic evaluations n Two main approaches ä on a “cost-minimisation” basis ä as “acceptably cost-effective” n Two main “levers” ä restrict to particular patients ä price of the proposed drug

29. Reimbursement decision-making process : after the initial reimbursement decision … n Post-listing reviews (at least annually) ä prices ä restrictions and listings n Post-listing monitoring (at least annually) ä usage (including predicted versus actual) ä cost to reimbursement system n Coordinate post-listing activities

30. Compilation of problems countries encountered with pharmaco-economic evaluations (WHO 2000) (1)  No references to source of data  Study design and methodology not clearly described  Differences in time measurement for the new and the standard treatment  Lack of transparency in economic modelling  Not relevant in the context of criteria for reimbursement

31. Compilation of problems countries encountered with pharmaco-economic evaluations (WHO 2000) (2) n Population that was most likely to use the treatment not adequately identified and described n No head-to-head trials, or inappropriate comparators n Relevance of outcomes worth paying for ? surrogate and final outcomes n Sensitivity analyses not performed

32. Making cost-effectiveness evaluations work (1) n Separate licensing and reimbursement decisions n Positive list n Price negotiations n Ability to restrict indications n Adequate guidelines for submissions n Competent evaluations of submissions n Consistent and informed decision-maker

33. Making cost-effectiveness evaluations work : decision-making process (2) n Inclusiveness in decision-making and input from all stakeholders n Reimbursement committees with external experts : managing potential conflict-of-interests n Health Technology Assessment agencies and committees often not directly linked with reimbursement decisions

34. International collaboration on evaluation of medicines n Each health care system different ä different levers ä different solutions n Problems tend to be the same ä similar cost drivers ä similar evidence n Basis for common guidance, and exchange of information, and “lessons learned” ? !

35. Conclusion and challenge : promote efficiency, maintain equity  Reaffirm goals and values of health systems and pharmaceutical policies : quality treatment at affordable cost, as needed  Be selective – need and efficiency – on which medicines get reimbursed  Enhance the use of generics  Strengthen appropriate prescribing  Increase efficiency and negotiation capacity of buyers, while protecting patients  Shift to reference pricing schemes  Networking among authorities

36. Thank you http://www.who.int / medicines http://euro.who.int/pharmaceuticals

37. Slides for discussion

38. Price regulation (1) n Profit control ä F.e. UK PPRS, ä Voluntary arrangement ä Innovative drugs ä Claw back ä Free prices n Price - volume arrangements

39. Price regulation (2) n Regulating distribution margins ä In Europe, pharmacies 10-30% and wholesalers 1-10% ä Use degressive margins ä How to deal with rebates and discounts ?

40. Price regulation (3) n Cost-plus pricing (ask companies for information on production costs) ä How to get real data ? ä How to deal with overheads ? n Price reductions, price freezes

41. Price regulation (4) n International price referencing ä Which countries ä Which drugs (innovators, generics) ä How to calculate ( average, lowest ?) n Internal reference pricing / value based pricing ä Relate price to expected benefit ä Compare with other drugs in same class

42. Patented medicines prices in selected countries (2004)

43. Importance of promoting national strategies for the use of generic medicines n Efficiency savings through price competition n Improve health care affordability and close treatment gap n Headroom for innovation n Appropriate use by avoiding interaction and double medication

44. Making national strategies on the use of generic medicines work  Supportive legislation and regulation, e.g. Bolar, fees, generic substitution, …  Reliable quality assurance : a credible, effective European regulatory system  Professional and public acceptance, e.g. university education, patient information  Economic incentives, e.g. dispensing fees v. margins, % generic prescribing, reference pricing

45. Outpatient antibiotic sales in 1997 in the European Union Cars et al Lancet 2001 International differences in antibiotic consumption

47. Disease impact and reimbursement – beyond DALYs and QALYs and value considerations n Favouring survival over quality of life n Favouring ‘severe’ diseases n ‘Rule of rescue’ n ‘Fair innings’ n Culpability / fault issues n Favouring economically productive n Potential for misuse / “leakage”

48. Use of cost-effectiveness analysis in reimbursement in Europe n CEA needs to relate to goals, values, and priorities of the health care systems n Growing requirements and increasing need for resources n RCTs do not provide all information needed n How to deal with “point-decisions” vis-à-vis re-assessment of the evidence ? n Major difficulties in implementation of CEA decisions in the health care environment ; “silo-budgeting” limits application n Shift to conditional reimbursement with prospective trials : from paying for the medicine to buying an agreed upon therapeutic outcome

49. Aims of the Networking agreement  Better information for better decisions at national level  Efficiency gains  Learning from good experiences on medicines reimbursement policies and pricing regulations  Potential to contribute to better insight in access to medicines, medicines use and population health outcomes  Support policy makers, scientific community, all stakeholders in pharma-policy development

50. Networking agreement  Clinical effectiveness evaluations  Price and pricing information  Country pharmaceutical profiles  Website / Portal for competent authorities  Permanent secretariat, modelled after “Heads of Agencies”  Annual meetings  Working groups

51. Proposal : Information exchange on clinical effectiveness evaluation (“extended MEDEV”)  Medicines evaluation for reimbursement - first assessment - post-listing review  Discuss guidelines for medicines assessment  Discuss criteria for re-assessment  Discuss criteria for therapeutic equivalence and interchangeability ( reference pricing ?)

52. Proposal : make price information available  Exchange information on prices  Linking national sites via website portal  National sites with - Pricing structure - Search function ( per active ingredient, ATC group)  Build on DG SANCO funded PPRI - project

53. PPRI Pharmaceutical country profiles  Making DG SANCO funded PPRI project sustainable  A “living” web-based overview of national pharmaceutical policy, maintained by the competent national authority