What is the outlook for pharmaceutical market access?

February 7th 2018

Given the substantial cost of some new medicines, and the unprecedented scrutiny of manufacturers’ pricing strategies, payers are increasingly interested in exploring novel methods of pricing.

New approaches to pharmaceutical pricing

Given the substantial cost of some new medicines, and the unprecedented scrutiny of manufacturers’ pricing strategies, payers are increasingly interested in exploring novel methods of pricing. Among the approaches mentioned during the congress were annuity pricing, payment for a license for treatment, indication-specific pricing, payment for events prevented and mandatory rebates on combination therapies (especially in oncology). Some of these approaches would impose significant new demands on life sciences companies, but the consensus seemed to be that manufacturers must be willing to engage in—and even initiate—a dialogue with payers about such reforms. However, delegates were generally much less receptive to the suggestion made by a representative of one national health insurance agency that, once a drug has achieved global sales of $3 billion (enough to recoup R&D costs and make a profit), its price in all markets should be reduced to a level that merely covers production and distribution costs.

Growing demands for pricing transparency—or maybe not

In the United States, President Obama, presidential candidates and state legislatures have proposed measures to require greater transparency regarding the costs of bringing new drugs to market. In Europe, several governments are exploring the potential of sharing information about net drug prices, and even collaborating on price negotiation. Pharmaceutical companies must prepare for the possibility that they will need to be more transparent with regard to their pricing strategies. On the other hand, the German government is reportedly considering abandoning its current policy of publishing rebates in the hope that negotiating confidential agreements with manufacturers will increase the savings it can achieve.

Budget impact trumps cost-effectiveness

With increasing use of health economic evaluation as a key element in pricing and reimbursement decision making, manufacturers need to demonstrate that their drugs are cost-effective. However, evidence of cost-effectiveness does not guarantee that a drug will receive unrestricted coverage. Budget impact calculations may prompt payers to limit or deny reimbursement even if a medicine is shown to be cost-effective. In this context, one drug was mentioned repeatedly during the congress—Gilead’s Sovaldi (sofosbuvir), the trailblazer for a new class of direct-acting antivirals. Notwithstanding the promise of eradicating hepatitis C, and avoiding the substantial costs of managing the complications of this disease, healthcare systems have struggled to fund treatment for all eligible patients. Increasingly, manufacturers will need to consider affordability when devising pricing strategies for new medicines.

Europeanization versus localization of evaluation and decision making

The EU is promoting greater international collaboration in health technology assessment through initiatives such as the HTA Network, EUnetHTA and SEED. In particular, the HTA Network (composed of the ministries of health for each of the 28 EU member states, with Iceland and Norway as observer members) wants to see more routine cross-border collaboration in HTA. However, comments from delegates at the congress confirm the findings of industry surveys that national HTA agencies continue to insist on their own specific requirements for submissions. Given everything else that is happening in the EU, pursuing greater integration of HTA is unlikely to be a high political priority in the near future. Furthermore, the pressure to move towards more pan-European evaluation is counterpoised by the steady growth of regional, and even local, HTA and reimbursement decision making in many countries. Manufacturers will have to find ways to reconcile these opposing demands in the future. The pharmaceutical industry is understandably concerned about the potential time, labour and cost entailed in conducting pan-European, national, regional and local appraisals of new medicines.

Need to disseminate awareness of market access throughout pharmaceutical companies and across the drug life cycle

Historically, many companies have tended to address market access at a relatively late stage in the drug development process: many biotech companies and mid-sized pharma companies begin this activity in the commercialization phase, and even big pharma companies often wait until Phase IIb or III to address these needs. However, to maximize a drug’s prospects of favorable coverage and uptake, manufacturers need to begin thinking about market access much earlier, and maintain this process well beyond launch. In addition, awareness of market access must permeate organizations, a change that will require effective education of senior management, R&D and brand teams.

Long-term planning—the key to future success

Because of the relatively short duration of political cycles (4-5 years in most countries), healthcare policies—including market access regulations—are subject to frequent change. However, drug manufacturers must try to anticipate the likely market access environment in 10-15 years’ time when planning not just the launch strategy for individual pipeline drugs, but also their overall R&D priorities and corporate strategy. Enduring success will go to those companies that plan ahead for the market access environment of the future, which will almost certainly look very different from what we see today.

Originally Published on 1 March 2016 by Neil Grubert

About the author

Neil Grubert

Neil Grubert

A multilingual pharmaceutical market access specialist with 27 years of experience tracking the global prescription drug and self-medication markets. Neil spearheaded the establishment and growth of Decision Resources’ international market access business. As the author of more than 150 reports covering 20 mature and emerging markets, multiple therapeutic areas and numerous industry issues, Neil has earnt a reputation for extensive knowledge of market access environments around the world. He is an effective communicator with both the written and spoken word, and an accomplished chair of international events, having delivered numerous presentations at conferences, seminars and training workshops.