By Elizabeth Hampson, Director, Monitor Deloitte and Amen Sanghera, Centre for Health Solutions

This week, we launched our report Patient access to innovative medicine in Europe: A collaborative and value-based approach, which examines the challenges European payers and the pharma industry are facing in funding and bringing the latest innovations to market. Moreover, the report also looks at how key industry stakeholders can work in innovative ways to ensure patients have access to the latest medical innovations.

European payers are responding to significant financial and societal challenges

Europe represents a unique challenge for pharma market access and pricing activities. Unlike single regulator countries such as the US and Japan, each European country has its own market access and health care system, with different backgrounds, population sizes and epidemiological factors, as well as different payer systems. These differences affect whether a product will be approved and at what price it will be reimbursed. At the same time, constrained health care budgets, increases in chronic diseases and growing demand from patients and pharma to fund products for rare diseases is placing enormous pressure on European health care systems.

As a high percentage of health care costs are fixed and difficult to tackle in the short term, governments have adopted a number of aggressive pricing strategies and policies to exert downward pressure on consumables, including the price they are willing to pay for new and existing drugs. Indeed, over the past seven years, there have been numerous policy developments across Europe aimed at influencing pharma pricing while improving access to new medicines. However, the balance of these changes is more heavily weighted towards tightening the control and toughening the rhetoric of pricing and reimbursement at a country-specific and European level (Figure 1).

Figure 1: Ongoing changes to the pharma market access and pricing environment across the EU5

Cumulatively, these shifts place pressure on how pharma products are priced and how pharma budgets are managed within each country.

Pharma innovation is facing a more challenging market access environment

Scientific advances have enabled a more personalised approach to prescribing, moving away from traditional volume-based business models. These advances, particularly in genomics and other ‘omics’, are allowing patient populations to be stratified, through the use of bio-marker diagnostic tests, to those who will or will not respond to a treatment.

Pharma has also shifted to developing biologic products that are able to treat cancers, autoimmune disorders and other diseases better than traditional therapies, but are more costly to produce. These products (such as immunotherapies) are often priced at a premium. To increase patient access to pharma innovation, the European Medicines Agency (EMA) has implemented an accelerated assessment process for breakthrough medicinal products. This programme allows pharma to enter the European market early if the product is of major interest for public health and therapeutic innovation. However, the shorter length of trials have created challenges for payers and health technology assessment (HTA) authorities who prefer longer-term data to reduce uncertainty around a pharma product’s efficacy and cost impact. Moreover, innovative pharma products are also facing increasing delays to reach patients. With the average length of time from market authorisation to reimbursement in Europe increasing from 233 days (2007 to 2009), to 318 days (2014 to 2016).

With pricing at the forefront of recent political and societal debate, the payer challenges and other factors discussed above make the market access and pricing environment in Europe increasingly challenging for pharma. Given the significant financial constraints on European payers, there has been increasing emphasis to move away from the traditional volume-based pricing of pharmaceuticals to ones based on health outcomes, risk sharing and cost containment.

Value-based approaches to market access and pricing

Innovative contracting is an evolving paradigm in pharma pricing with a variety of value-based contracting models emerging. These agreements, which can be based on cost, evidence and risks, require a more collaborative relationship between pharma, payers, providers, physicians and patients, in which all members work together to improve patient outcomes and the performance of health care. In some of these approaches, pharma are offering health care providers services that decrease the administrative burden, improve operational and financial performance, and improve patient outcomes. However, it can be difficult to get some payers to think more holistically than discount-based agreements (See Figure 2).

Figure 2: Type of innovative value-based contracts

Success in the European environment requires pharma to communicate their intentions for a product more effectively, be more collaborative with stakeholders, and innovative in the models they deploy for market access and pricing. More specifically this means:

• improving understanding of the scientific and economic considerations of both regulators and payers
• utilising early access schemes to gather evidence on a product’s safety and efficacy, and partner on services and technologies in order to develop solutions that clearly demonstrate value ‘beyond the pill’
• developing regulatory and technical standards and skills to ensure data privacy and interoperability, including registries that allow tracking of outcomes and multi-indication pricing.

Next generation market access requires pharma to evolve

Continued market access success depends on the pharma industry’s ability to adapt and tailor their approaches to pricing and market access. Pharma companies need to be more agile and enhance their core organisational capabilities to support market access and pricing in a proactive way throughout the life cycle of their products. Moreover, pharma need to understand the new skills and talent organisations will need to succeed in market access endeavours in the future. These core organisational capabilities are:

• Earlier launch planning focussed on dialogue: to understand the needs of and collaborate with payers to understand their disease and cost burden; earlier in the R&D process, including early dialogue with payers and collaboration with patients to identify unmet needs and real life experiences.
• Innovative contracting: to design contracting and service solutions that meet the genuine needs of the system, payers and patients, deploying multi-disciplinary teams with first-class collaboration and interpersonal skills backed by strong evidence of health system understanding to support the future health system sustainability.
• Real-world value dossier creation: using real-world evidence to develop an in-depth understanding of system challenges, physician and patient experiences and the benefits of products and services including the ability to demonstrate value in a more holistic way.
• Build trust and understanding: demonstrate that you are a collaborative partner in your therapy area by providing patients and providers with the tools to understand and comply with treatments, and assurance on data use, security and privacy. Develop stronger relationships with payers based on increased transparency.
• Build the skills and expertise needed for the future: adopt new ways of working and deploy multidisciplinary teams that engage early in the R&D process and have deep technical skills such as data analytics, health economics and actuarial modelling skills; combined with creative problem solving, advocacy and communication / engagement expertise.

Conclusion

To solve the challenges facing the health care system, a more collaborative approach is required where all stakeholders adapt their skills and move away from historic methods of engagement. Pharma should build a tailored approach to contracting and market access discussions using new technical and communicative skills. At the same time, health payers need to utilise pharma’s significant skills and commercial capabilities to solve their challenges. It is to both sides’ advantage to engage in more dialogue, communicate, share evidence, and take a value-based approach to the use of medicines across Europe. Without taking these steps, patient access to innovations may be undermined, and health care systems across Europe risk becoming unsustainable.

Elizabeth Hampson, Director, Monitor Deloitte

Liz is a Director in Monitor Deloitte. She leads health policy advisory and health innovation strategy projects with central government, industry, charities and payers in a range of countries.

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Amen Sanghera - Research Analyst, Centre for Health Solutions

Amen is a Research Analyst at the Centre for Health Solutions, the independent research arm of Deloitte LLP’s healthcare and life sciences practices. His remit is to use primary and secondary research and rigorous analysis to develop insights that inform stakeholders across healthcare and life sciences about emerging trends, challenges, opportunities and examples of good practice. Amen has a background in healthcare market research where he has authored several reports on the current and future state of medical devices and pharmaceuticals markets, such as coronary stents and contrast media. Amen also holds an MSc in Nanotechnology and Regenerative Medicine from University College London.

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