Should Pharmaceutical Companies Share in the “Accountability”?

Preeti S. Bajaj Pharmaceutical Outcomes and Policy Program University of Washington 05 November 2013

Historical R-S Equilibrium •

Risk to manufacturer: Operate with a blockbuster financing model for R&D. – Patent protection to incentivize investment and risk-taking, but for a limited time. – There is no ex ante clause to share innovation cost or to purchase drugs.

•

Risk to payer: The payer negotiates a price and/or use. – The payer (and patient) bears the risks of making a bad buy. – The payer is free to collect post-launch data. Manufacturers will only do this if it is in their competitive interests.

•

Individual countries strike different types of deals with manufacturers – Range of country environments: negotiated prices free pricing.

Incentive for manufacturers to seek highest justifiable price at launch. Limited incentives for collection of real-world evidence. 2

The Pervasiveness of Uncertainty •

Drugs are approved, launched, and reimbursed under conditions of uncertainty, affecting many key parameters: – – – – –

Efficacy (heterogeneity) Effectiveness in the real world Risks (safety) Utilization Models, including links between surrogate markers and long-term outcomes – Cost-effectiveness – Budget impact

• •

Variability Æ Uncertainty (=Risk) Gathering more evidence to reduce uncertainty is costly.

3

What is a “Risk-Sharing Agreement”? •

•

RSAs between drug manufacturers and payers provide for the collection of additional data after product launch to address uncertainty about a product’s clinical performance, utilization, and/or value. Also referred to as: – – – – – – – – –

managed entry agreements (MEA) outcomes-based schemes risk-sharing agreements coverage with evidence development (CED) access with evidence development patient access schemes (PAS) conditional licensing pay-for-performance programs (P4P) and others? 4

RSAs: Five Characteristics 1. 2.

3.

4.

There is a program of data collection agreed between the manufacturer (or provider, in some instances) and the payer. This data collection is typically initiated during the time period following the regulatory approval (which may be full, conditional, or adaptive), and linked to postlaunch coverage decisions. The price, reimbursement, and/or revenue for the product are linked to the outcome of this program of data collection either explicitly by a pre-agreed rule or implicitly through an option to renegotiate coverage, price, and revenue at a later date The data collection is intended to address uncertainty about …. For example: – –

5.

Efficacy or effectiveness in the tested population as compared to current standard of care; The efficacy or effectiveness in a broader, more heterogeneous population than used in registration trials or in pre-licensing testing;…

These arrangements provide a different distribution of risk between the payer and the manufacturer than the historical manufacturer-payer relationship.

5

Trends in the Use of RSAs •

Pharmaceutical risk-sharing has garnered considerable attention in recent years, but in some jurisdictions more than others. – In the U.S., for health plan processes and physician services. – Internationally, for branded drugs.

•

The dearth of schemes in the U.S. raises questions as to why but also as to what might become feasible in the rapidly evolving health care system.

6

Dimensions of RSAs

7

Taxonomy of Risk-Sharing Agreements Performance‐based schemes between health care payers and manufacturers

Non‐outcomes based schemes 

Population level 

Market  share

Health outcomes‐based schemes

Patient level 

Price  volume

Conditional coverage

Coverage with  evidence  development (CED)

Conditional treatment  continuation (CTC)

Performance‐linked reimbursement  (PLR)

Outcomes  guarantee 

[Ex: Alzheimer’s drugs in Italy]

Utilization  caps

Manufacturer  funded treatment  initiation

Only in research

Only with research 

[Ex: Cochlear implants  in US (CMS)]

[Ex: Risperidone in  France]

[Ex: OncotypeDx in US  (United Healthcare)]

Clinical Endpoint [Ex: Bortezomib in  UK]

Carlson et al., 2010

Pattern or process of  care

Intermediate  Endpoint [Ex: Simvastatin in  US]

8

Taxonomy of Risk-Sharing Agreements

Garrison, Towse, et al., 2013 (ISPOR PBRSA Task Force)

9

Types of Risk-Sharing Agreements and Real-World Examples Definition

Example [FRA] Ministry of health agreed to cover  Risperidone if J&J performed studies to  evaluate whether it helps patients stay on their  medications

[ITA] Alzheimer’s drugs provided free by  manufacturer; if treatment goals are met after  3 months, treatment is continued with drug  costs reimbursed by national health service.  [UK] J&J agreed to reimburse the NHS in cash  or product for patients who do not respond  after  4 cycles of treatment with Velcade.   Responding patients receive additional 4 cycles.

[UK] Novartis agreed to pay for ranibizumab injections above an agreed upon and clinically  appropriate threshold of 14 injections per eye. 10

RSAs by Country and Type

CED: Coverage with evidence development; CTC: Conditional treatment continuation;  PLR: Performance linked reimbursement; FU: Financial or utilization based agreements *Note: Multiple schemes had multiple performance‐based components

11

Global Trends in RSAs by Type

CED: Coverage with evidence development; CTC: Conditional treatment continuation;  PLR: Performance linked reimbursement; FU: Financial or utilization based agreements

12

Globally Employed RSAs by Type

CED: Coverage with evidence development; CTC: Conditional treatment continuation;  PLR: Performance linked reimbursement; FU: Financial or utilization based agreements

13

Incentives & Challenges

Challenges

Incentives

Pharmaceutical Companies

Payers

• Opportunity to demonstrate real‐ world product value • Edge/increased access over  competition • Discounting tied to product  performance

• Minimize risk due to a drug’s  uncertainty (effectiveness, safety,  utilization) • Obtain deeper discounts • Maximize spend on products that  perform

• Data collection efforts • Inability to control product  prescribing, dosing, adherence and  compliance

• Data collection efforts • Complexity over traditional  rebates/discounts • Long‐term outcomes mean  delayed returns

Æ ALIGNED INCENTIVES Æ SHARED RISK AND ACCOUNTABILITY

14

Acknowledgments • National Pharmaceutical Council • Lou Garrison, PhD • Josh Carlson, MPH, PhD

15