Taking stock: European cross-border cooperation on medicines’ value-assessment, and Pricing & Reimbursement negotiations
Fertile ground for cross-border cooperation
Even with pan-European EMA approval, pricing is still a country-level issue, with national governments, regional or local stakeholders and pharmaceutical companies being responsible for engaging in price formalities such as negotiations on a bilateral basis. But the landscape in Europe is beginning to show signs of change in how pricing is determined at a European level.
The Solvaldi example
Rising medicine prices are now posing a major challenge even to “high-income” countries such as those in the EU. The financial barriers associated with high-cost innovative drugs, treatments in oncology or for rare diseases, for instance, are limiting their access to some European populations and present a significant burden on already tight national healthcare budgets.
In 2014, the launch of Sovaldi[i], an effective treatment against Hepatitis C, has drawn attention to the challenge many governments face in providing life-saving but high-priced treatments to their populations. Recent increases in costs of innovative medicines have been driven by many factors including high development costs, focus on orphan disease and small targeted populations, as well as novel mechanisms of action and promise of cure [ii]. The expenditure on medicines as well as matters concerning access conditions for national markets has been on the agenda of many politicians and local/European agencies[iii][iv][v].
Even with pan-European EMA approval, pricing is a country-level issue, with national governments, regional or local stakeholders and pharmaceutical companies being responsible for engaging in price formalities such as negotiations on a bilateral basis. Pricing approaches across countries vary markedly: In negotiation, the class of drug and medical benefits offered may play a part in the pricing process, but equally, there are pricing policies (e.g. international reference pricing (IRP) or value-based pricing), administrative processes, and the negotiating abilities of each purchaser and supplier that come into play.
The outcome of individual pricing mechanisms may result in substantial differences in terms of official or list prices, discounts, reimbursement and access agreements, including timelines or the overall availability of the medicine [vi]. With reference to the latter, countries traditionally considered low-price markets, in particular, those using IRP or those with prospective low sales volume, seem to be most affected. Manufacturers are reluctant to launch a product in these markets as it may not justify the administrative and marketing costs. Countries with this profile need to create price levels and reimbursement environments that ensure marketing interest, but not all of them can easily afford it[vii][viii].
In terms of pricing, low-income countries have become more affected by the arrival of high-priced innovative drugs. There are increasing cross-country price levels which do not reflect the economic landscape. If we refer back to the Sovaldi example, we see that list prices, when adjusted for purchasing power parity, appeared to be particularly high in Poland, Turkey, and Slovakia, while the lowest list prices were observed in Nordic European countries, Switzerland and the UK[ix](Chart 1)
Chart 1. Sovaldi pricing landscape, selected countries representative of different income levels
Methods and sources: 400mg 28 tablets, ex-factory price – GPI pulse, August 2018; exchange rates – OANDA, August 2018; Purchasing power parities (PPP) rates – OECD, 2017
Whilst many solutions to the mounting cost pressures and drug access are being explored, joint resolutions to these common difficulties have gained some momentum in the past few years. With countries joining forces, it is believed that more informed decision can be made and a faster, more equitable access to promising new medicines can be provided at an affordable and sustainable price. This approach has been frequently encouraged and emphasised in previous health-related European Council recommendations[x][xi][xii].
In April 2015 the Belgian and Dutch Health Ministers signed a declaration of intent to jointly negotiate with the pharmaceutical sector on pricing and reimbursement, starting with orphan drugs. The group believed this would take some of the pressure off individual authorities and ensure that a greater group of patients would be represented in the negotiations, meaning greater leverage in terms of purchasing volume. This initiative was then joined by Luxembourg (late 2015)[xiii]and Austria (2016)[xiv]. Ireland has just become the most recent member by officially joining the initiative in June 2018, after issuing a Letter of Intent earlier this year.
In 2017, the group co-signed new Terms of Reference in an effort to extend the collaboration into other areas and harmonise its positions during the negotiations.
- Horizon scanning – identifying relevant pharmaceutical innovation before it reaches the market, permitting timely monitoring and management of their introduction.
- Health technology assessment (HTA) – collaborating on a supranational level on joint HTA assessments, and exploring mechanisms to further benefit from the coordinated efforts (e.g. external referee, mutual recognition of national assessments)
- Information sharing and policy exchange – enhancing transparency through information and knowledge sharing (e.g. biosimilars, patient registries) and exchange of experience in pharmaceutical policy practice
- Pricing and reimbursement (including joint price negotiations) – improving their strategic position towards the industry
The Valletta Declaration
After BeNeLuxA, this kind of initiative was soon replicated by other groups of countries. In May 2017 the Valletta Declaration was signed and it is now an ambitious collaboration project comprising 10 countries (Croatia, Cyprus, Greece, Ireland, Italy, Malta, Portugal, Romania, Spain, Slovenia), mostly Mediterranean, with different incomes and population sizes.
This set of countries representing 32% of the total EU population has already held four meetings to explore ways of cooperation, particularly regarding information sharing, identification of good practices and mechanisms for negotiating medicine prices and joint procurement.
The group has two pilot projects underway where it will jointly assess the added value and negotiate the prices for two drugs. No details on the drugs concerned were disclosed, except that one is an orphan drug and that the other currently has two indications not classified as “orphan”. The La Valletta Technical Committee, is still identifying other candidate products that should go through the same process.
Furthermore, it was recently agreed between members that negotiations on products already assessed could also be part of the collaboration remit. Additionally, the group is interested in analysing therapeutic areas of growing expenditure such as oral antidiabetics and oral anticoagulants and reinforce the exchange of information in areas of common interest such as biosimilars [xvii].
Other voluntary collaboration initiatives
In the past few years, many EU countries have embarked on cross-national voluntary cooperation (Fig.1) through initiatives that have different scopes and different levels/areas of cooperation. Currently, besides the two groups of abovementioned countries there are seven more that have been created as early as 2012:
- Baltic Partnership Agreement (2012 – Latvia, Lithuania, Estonia) [xviii]
- Romanian and Bulgarian Initiative (2015 – Romania, Bulgaria) [xix]
- Sofia Declaration (2016 – Bulgaria, Croatia, Estonia, Hungary, Latvia, FYR Macedonia, Romania, Serbia, Slovakia, Slovenia) [xx]
- Visegrad+2 Group (2017 – Croatia, Czech Republic, Hungary, Lithuania, Poland, Slovakia)
- Spanish and Portuguese initiative (2017 – Spain, Portugal) [xxi]
- Nordic Council (2017 – Denmark, Finland, Norway, Sweden) [xxii]
- Nordic Pharmaceuticals Forum/ NLF (2015 – Denmark, Iceland, Norway, Sweden)[xxiii]
Fig 1. Schematic representation of current voluntary cooperation initiatives members
Timeline of finalised joint projects
In May 2017, Belgium and the Netherlands announced that the first attempt at joint negotiations has failed for Orkambi due to what was considered an excessive price asked for by Vertex. The HTA agencies from the two countries found that the drug was not cost-effective and that the additional benefits in comparison to the existing standard of care did not justify the asking price [xxiv].
The governments have decided not to reimburse the product then. However, the Netherlands on its own, stroke a deal with Vertex later that year, after internal pressure from a patient group [xxv].
Although a joint agreement was not achieved, this was the first time a pilot has reached the negotiation table, representing a learning experience for all parties involved xiv. Besides this past pilot experience, BeNeLuxA has recently released some of its guidance for future pilot projects which shed further light on the process.
The guidance document mentions that the pilot project can proceed with two or more BeNeluxA members. In addition, a joint HTA assessment is a requirement to proceed with joint negotiations. Furthermore, the candidate pilot drug must comply with specific conditions of national legislations and not be in a reimbursement process with any of the participants. At the moment, no formal joint reimbursement regulation is in place, leaving each participant to take their formal reimbursement decisions separately [xxvi].
On a smaller scale the Baltic Partnership Agreement, after several attempts at pan-Baltic tenders, ending without any results, two of the members (Estonia and Latvia) were able to joint purchase rotavirus vaccine in 2017. For Estonia it represented savings of 25% when compared to a standard purchase without joint tender [xxvii].
In early July 2018, BeNeLuxA reached another milestone after Spinraza, an orphan drug indicated for spinal muscular atrophy, successfully went through joint HTA, followed by a joint price negotiation. The two participant members (the Netherlands and Belgium) did not reveal the details of the confidential negotiation terms, except for the fact that the €83,300 per injection asking price by Biogen was significantly reduced to what was considered an acceptable level (Chart 2). Through separate procedures, both countries decided to reimburse Spinraza under the condition of collecting more clinical and cost-effectiveness evidence for certain patient populations [xxviii].
The involvement of Austria, Ireland and Luxembourg in future projects should strengthen the chances of reaching more suitable deals with manufacturers while creating administrative challenges for the organisation at the same time (Chart 2).
Chart 2. Spinraza price levels, BeNeLuxA + EU5
Methods and sources: 12mg/5ml 1 vial, ex-factory price – GPI pulse, August 2018; exchange rates – OANDA, August 2018; Purchasing power parities (PPP) rates – OECD, 2017; ATU price was considered in France; Product not marketed in Austria and Ireland at time of writing, prices in Belgium TBC in September 2018
European Commission stance
The European Commission has been following the developments related to the voluntary collaboration between countries and has even attended meetings and advised the groups. Besides that, the Commission keeps on working on strengthening EU cooperation for Health Technology Assessment, an on-going process that was initiated in 2005. The latest legislative proposal in that direction has been submitted in January 2018 and it is expected to be adopted by the European Parliament and the Council by 2019 to come into force in the EU member states after a transitional period of around 3 years.
Unlike the existing collaborations among EU countries, the Commission has underlined that the current legislation mainly entails mandatory cooperation for a joint scientific assessment of clinical aspects, leaving economic, social and ethical aspects to national authorities as well as pricing and reimbursement decisions. The scope of the assessments would be new medicinal products undergoing the centralised marketing authorisation through the European Medicines Agency, products for which the marketing authorisation is extended to a new therapeutic indication and certain classes of medical devices with high impact on patients, public health and health systems.
In this proposal for new regulations, the creation of common assessment methods and procedures is clearly outlined as well as sharing of data and expertise, identifying emerging health technologies, and voluntary cooperation in areas such as surgical procedures. The Commission also emphasised that its role in the process will be that of providing scientific, administrative and IT support for local HTA authorities, as well as safeguarding the role of national bodies in performing the joint assessment work through a coordination group at EU level[xxix].
Nevertheless, Member States that do carry out HTAs for products in the Directive’s scope will be required to use the joint clinical assessment final reports and do not undertake further independent clinical assessments.
The binding nature of this proposal has faced a lot of opposition from several member countries. France and Germany have been leading the criticism by suggesting amendments which advocate for the voluntary essence of the cooperation and the dismissal of the Commission as the guarantor of the process[xxx].
In the past, the Commission has sought a cooperative solution for a particular type of procurement for the outbreak of pandemic diseases. In 2014, it has effectively developed a Joint Procurement Agreement to purchase medical countermeasures (Vaccines, Antivirals, Medical countermeasures for serious cross-border threats to health). It was signed by 24 member states to date [xxxi].
The Canadian case
A coordinated approach to pricing may not be the most apparent option for the Canadian territories and provinces when one considers the strongly decentralised political system. Nonetheless, all territories and provinces, except Quebec, have established national review processes (Common Drug Review [CDR] or Pan-Canadian Oncology Drug Review [pCODR]) for assessing health technologies. The Canadian Agency for Drugs and Technologies in Health (CADTH), was created with the purpose of carrying out those health technology assessments and making them available to provinces so they can take decisions regarding funding at a regional level.
The harmonised approach may extend towards price negotiations across all territories and provinces, through the pan-Canadian Pharmaceutical Alliance (pCPA), created in 2010. After a branded drug is assessed by CADTH or the Quebecois equivalent (Institut national d’excellence en santé et en services sociaux [INESSS]), the pCPA decides whether joint negotiations should occur for the product in question. If the decision is to move forward, one province/territory will assume the lead and confirm which other ones are participating.
If a mutually acceptable agreement can be reached between the participants and the manufacturer, it is up to each province to make the final decision on funding the drug product through their own public drug plan and enter into a jurisdiction-specific product listing agreement with the manufacturer. The pCPA also negotiates the framework for the pricing for certain generic medicines [xxxii].
Lately, the pCPA has been involved in a 25% – 40% price reduction of nearly 70 of the most commonly prescribed generic drugs in Canada. In addition, the collaborative efforts within pCPA have resulted in 95 completed joint negotiations on brand name drugs. As of March 2017, it is estimated that the pCPA has led to combined savings of $1.28 billion per year [xxxiii].
Summary and outlook
- As far as we are aware, most of the transnational voluntary collaboration projects are still in their infancy or have had a very limited impact on the European market. In this respect, BeNeluxA seems to be leading the way by already having some processes in place and by having successfully completed joint HTA and price negotiations for one product (Spinraza). The future success of this cooperation group may set the tone for existing or future joint procurement and joint negotiation approaches.
- Despite concerns over the possible slowness of joint procedures, BeNeLuxA’s Orkambi and Sprinraza pilots, with two participating members, have proven to be in line with the average timelines for individual bilateral approaches. For Orkambi it took about one year from the draft of joint HTA to the end of negotiations. As for Spinraza (Chart 3), negotiations that started in February were concluded in 5 months and the product will be reimbursed the same year in Netherland and Belgium, in August and September, respectively.
Chart 3. Spinraza HTA decision/ Reimbursement timelines in Belgium and Netherlands + EU5
Methods and sources: EMA approval date to HTA or Reimbursement dates – GPI pulse, August 2018; NICE (England) guidance not finalised; Effective Reimbursement inclusion date assumptions: Germany: start of post-AMNOG price, Netherlands: End of Lock Period, France: ATU date not considered
- Through different local processes, Spinraza is reimbursed in the Netherlands and Belgium under similar conditions. This may indicate that joint reimbursement could be part of the cooperations’ remit in the future. Admitting that further policy alignment would be required, country alliances are likely to expand their level of cooperation with time and after a series of positive joint outcomes.
- The special situation of drugs, such as orphan drugs, being accompanied by a high unmet need with strong patient advocacy, may be the key driver of successful negotiations rather than the joint purchase process.
- Group memberships are not fully established yet. Countries such as Ireland are currently involved in more than one overlapping project. It will be important to clearly define participants in different initiatives to show solid political commitment and create mutual trust between partners, as well as avoid instances of “cherry picking” or playing out alliances one against another.
- By reviewing past cross-border cooperation’s developments, one can assume that members, individually, can choose to not participate in the negotiations joint effort, as it is evident in the BeNeLuxA, Baltic Partnership, and in the Canadian example, or that when negotiations fail, country-groups may not stay cohesive in rejecting the outcome of the negotiation, as seen with the Netherlands in the Orkambi case. In order to build alliances’ credibility, it is paramount that all members participate and stay aligned during the process. Pharma companies, which have long-term and tailored plans for the launch of their products, may not be ready to compromise on these high levels of uncertainty and may be compelled to pursue or prefer “regular” bilateral procedures if given the option.
- Currently, cooperation remit does not have to be followed to its full extent for every product, from horizon scanning to price negotiations. The question remains as to whether this could create significant divergence in pricing and reimbursement outcomes for each member, especially where the joint effort was pursued until important process parts such as joint HTA. Unreasonable differences in these outcomes may create tensions among members, as well as with pharma.
- The European Commission’s proposal on joint HTA – if successful – will have to be integrated into the already existing country collaborations who jointly assess the clinical value of medicines (or vice versa). That might render initiatives, supported mostly by joint HTA, less relevant or even obsolete.
- The manufacturers must be prepared to flexibly collaborate with the country groups. On the one hand, this approach represents a faster and simpler way to put their products on several markets with just one submission/negotiation process, also assuring stable sales volumes; on the other hand, sales and marketing impact must be carefully considered. For instance, could there be a negative impact on launch sequence, undermining effective pricing? Upcoming developments and the future relevance of cross-border approaches will help us understand what it would mean for pharma companies to give up control of individual price and launch strategies, cascading even to countries which do not belong to a cooperation initiative.
- Although there is not enough clarity on how joint pricing negotiation processes and follow-up negotiations will develop, some consideration for pricing should be taken into consideration by manufacturers:
- Both the group and the individual markets should be evaluated as each country still has some input during joint negotiations.
- It is unknown to date whether the result of price negotiations could be a price ceiling, a fixed price, or a range of prices for different members. New and adjusted pricing mechanisms should be available for cross-country approaches, especially if the group is numerous or with different levels of income.
- There is high uncertainty in the price evolution as it not clear whether after a joint negotiation is successful, the following price update will be going through usual procedures or if it will also go through joint renegotiations.
- The risk of price spill-over will be higher not only because of the interconnection of initiatives which include information share on prices, that may undisclosed certain market entry conditions, but also because of the possible impact on IRP (for instance, more than 20 countries around the world reference at least one of the members of the La Valletta Agreement).
About Global Pricing Innovations
GPI is a market leader company in business intelligence, analytics and innovative solutions for pharmaceutical pricing and access. See how we can support you on price decision-making through a combination of robust data-driven insights and bespoke analytical solutions, as well as our specialist consultant team’s knowledge of P&MA dynamics across Europe.
Authors: João Ataíde, Henrike Granzow, GPI
Contact: firstname.lastname@example.org for further information