iStock_000009110795Small

The annual European ISPOR (International Society for Pharmacoeconomics and Outcomes Research) conference was held in Amsterdam in early November. One of the dominant topics in recent health economics circles has been the value-based pricing concept that NICE (National Institute for Health and Care Excellence), England’s NHS (National Health Service) and the Department of Health have been contemplating about introducing over the past three years. However, NICE Chief Executive Sir Andrew Dillon announced in September, “Following an extensive consultation, it’s clear that just changing NICE’s methods will not overcome concerns about how the NHS assesses new treatments.”

The NICE conclusion left many health economists puzzled. A natural question is, what is next?

Interestingly, I have seen very little formal discussion (actually none) of the above question at the conference, and we can therefore only contemplate on what is to follow. I don’t have access to a detailed analysis of the 900 comments from 121 responses from patients, academia and industry to the value-based pricing philosophy, but the introduction of “societal benefit” as a modifier to acceptable cost-effectiveness has surely led to some emotional and methodological questions. Besides the complexity of identifying an appropriate and transparent metric that can be practically applied, there are many (unsurprising) societal issues.

Few would argue the emotion around saving an infant’s life, and many would probably not object to using abundant medical resources for any proposed treatment. However, when the same logic leads to a lower cost-effectiveness cutoff point for the elderly, the discussion becomes much more complex, political and emotional. In the United States, similar discussions were rapidly magnified to “death panel” discussions, a term that illustrates the complexity of the dialog.

The launch of Sovaldi, an effective yet expensive hepatitis drug, has caused a lot of discussion about the role of budget impact analyses and affordability of breakthrough drugs in Europe. The fact that NICE has found Sovaldi to be cost-effective, while other payer systems were scrambling to deal with its broad budget impact, has motivated some payers to further criticize the cost-per-QALY (quality-adjusted life year) methodology.

Most payers are very well aware of the social and political complexity of making health-care and prescription drug resource decisions. The benefit analysis for a new treatment option for patients is often difficult enough without consideration of financial and willingness-to-pay aspects. Cost-effectiveness is not accepted by every payer, as it represents only a limited and relatively intangible perspective. For this reason, the multi-criteria decision analysis (MCDA) methodology is increasingly considered a helpful tool in drug reimbursement decision making. In pharmaceutical decision-making applications, it has been proposed to include broader aspects in population health (including quality of life), patient experience and cost.

Broader consideration of population health and patient experience in a structured format may help make complex trade-offs with cost, particularly in the context of incomplete information at time of a new drug’s launch. Patient experience is certainly at the forefront of the industry’s current focus, but does not really tie to most payer decision-making criteria today. Another likely challenge is the tendency to transform complex consideration into simple numbers to justify tough prescription drug coverage decisions. We will see how discussions and applications further evolve over the next few years.

Two other, perhaps related topics that are of strong interest for future decisions regarding market access and pricing for prescription drugs are real-world data and adaptive licensing. Both topics were extensively discussed at the ISPOR conference. Real-world data is certainly taking the forefront in discussions about unmet medical needs and evidence of drug benefits. Limitations in the utility of the strictly controlled settings of randomized controlled trials are of great concern in treatment and coverage decision making.

However, a great fear for the pharmaceutical industry is that formal real-world data requirements may form payer barriers for new drug treatments, as it is often practically impossible to have real-world effectiveness data for a new drug at time of launch. This is where adaptive licensing, risk-sharing deals, managed entry agreements and other means of allowing for post-launch data gathering in coverage decision making can play an important role in maintaining balance between patient needs and evidence-based decision making. As Dr. Hans-Georg Eichler of the European Medicines Agency (EMA) stated in his address at ISPOR, “The safest drug that no one can afford or that arrives too late is of no benefit to a patient.”

Connect with author Ed Schoonveld on LinkedIn and Twitter.

Topics: pharmaceutical industry, Market Access & Pricing, Drug pricing, Ed Schoonveld