Medicines Reimbursement and funding arrangements in Europe

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

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

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

10. Pharmaceutical Expenditure in %of Health Expenditure (2005, PPRI) • 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

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

12. Medicines expenditures OECD countries (2004)

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

14. Goals for pharmaceutical policies in Europe • Equitable access for patients to effective, safe and good quality medicines • Enhancing appropriate use of medicines for better health outcomes • Ensuring value for money • Balance with industrial policy objectives • 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 • Unnecessary • Avoidable • Unfair • 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 • Public finance cannot keep up with increase in drug expenditures • Options for policy-makers • Increase health budgets : funding from …? • Limit range of drugs to be reimbursed : cave - medical need and quality treatment • Increase efficiency ( regulation of prices, prescribing, use, …) : requires sustainable funding and programmes • Shift expenditures to patients : equity, solidarity …?

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

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

22. Selecting medicines for reimbursement • Prof. Don Birkett ( former chair of PBAC Australia) • “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 • Positive list for reimbursement ( NL, DK, Swe, …) • Reference pricing, with generic or therapeutic groups (D, Ita, NL, Por, Rom, …) • Differential reimbursement % ( Fr, Bul, …) • Economic evaluation of medicines ( Fin, NL, Swe, UK,…) • Promote use of generics ( UK, DK, D, Fr, …) • Co-payment mechanism (DK, N, Esp, …) • Standard treatment guidelines (UK, DK, Esp, …) • …

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

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

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

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

29. Reimbursement decision-making process : after the initial reimbursement decision … • Post-listing reviews (at least annually) • prices • restrictions and listings • Post-listing monitoring (at least annually) • usage (including predicted versus actual) • cost to reimbursement system • 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) • Population that was most likely to use the treatment not adequately identified and described • No head-to-head trials, or inappropriate comparators • Relevance of outcomes worth paying for ? surrogate and final outcomes • Sensitivity analyses not performed

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

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

34. International collaboration on evaluation of medicines • Each health care system different • different levers • different solutions • Problems tend to be the same • similar cost drivers • similar evidence • 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. http://www.who.int / medicines http://euro.who.int/pharmaceuticals Thank you

37. Slides for discussion

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

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

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

41. Price regulation (4) • International price referencing • Which countries • Which drugs (innovators, generics) • How to calculate ( average, lowest ?) • Internal reference pricing / value based pricing • Relate price to expected benefit • 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 • Efficiency savings through price competition • Improve health care affordability and close treatment gap • Headroom for innovation • 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. International differences in antibiotic consumption Outpatient antibiotic sales in 1997 in the European Union Cars et al Lancet 2001

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

48. Use of cost-effectiveness analysis in reimbursement in Europe • CEA needs to relate to goals, values, and priorities of the health care systems • Growing requirements and increasing need for resources • RCTs do not provide all information needed • How to deal with “point-decisions” vis-à-vis re-assessment of the evidence ? • Major difficulties in implementation of CEA decisions in the health care environment ; “silo-budgeting” limits application • 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-policydevelopment

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