groupH’s Market Access practice, headed by Nicolas Touchot, has recently been part of a collaboration to research the feasibility and attractiveness of indication value-based pricing (IBP) in key EU countries.

Many targeted medicines are developed for different diseases and indications with common underlying biological mechanisms. The product benefit and therefore the ‘value’ is almost certain to vary by indication and by treatment.

At present there is no system in place to allow payers to fully capture this difference in value found across indications. This could lead ultimately to products never being developed in an indication for which they could represent a major therapeutic advance, simply because this would lead to a lower price than that achieved or achievable in other indications.

IBP has been proposed in the United States as a tool to address this issue, and is in the early phases of implementation there. However, in Europe, the picture is more patchy and implementation on a broader basis appears to be lagging behind the US.

Our latest research assessed how the reimbursement and pricing environment could allow for IBP in seven European countries, evaluating both incentives and hurdles.

Our findings suggest that broad implementation – including community-based practices – will be difficult in most countries covered, because of legal, data collection, and billing hurdles.

However, implementation at a smaller scale and scope e.g. for specialty products in hospitals could be feasible because of much lower hurdles.

Other mechanisms, such as use of managed entry agreements and volume-weighted average pricing defined through HTA outcome across indications, are likely to continue to be used to account for the difference in value across indications for most broadly prescribed treatments.

We believe, however, that indication based pricing is here to come because it is attractive in principle to all stakeholders. For community-prescribed pharmaceutical products it currently still encounters logistical and IT challenges, but for hospital-based specialty products there is a good chance. This will be the area where we see the first pilots.

Please click here to view the article, published this month in the Journal of Market Access & Health Policy.

For more information, please contact Nicolas Touchot.

Market Access, and with it Pricing & Reimbursement models, has become an integral part of opportunity assessments for novel drugs and therapies. Nicolas Touchot, head of groupH’s Market Access practice, has looked into the feasibility and desirability of a number of reimbursement frameworks for gene therapies and potential other novel premium priced future therapies.

Below is a summary of his article published in the September issue of Nature Biotechnology.

To obtain the full article please follow the link below;
The payers’ perspective on gene therapies: Nature Biotechnology, September 2015 (Vol 33:9, 11-13)

The Western world’s first gene therapy, Glybera launched in Germany at an initial €1.1 million price tag, a new record for a medicine to treat a rare disease. Several other gene therapies are in late stage development and both large pharmaceutical and biotech companies have been building their internal capabilities and striking multiple partnerships. The financial community has also shown great appetite driven by the promise of high drug prices and recurring payments. The current conventional wisdom for Pricing and Reimbursement of gene therapies builds upon two premises:

1. Gene therapies provide long-term or definitive benefits. Therefore pricing them as multiples of the yearly cost of expensive drugs such as protein replacement therapies is justified. This leads to prices in excess of $1million or $1.5 million per treatment
2. A new reimbursement system is required to absorb such high prices. The most likely approach is a capped annuity with risk-sharing, allowing health systems to spread the cost along several years and to limit risk if efficacy is not maintained

Unfortunately, these premises are strongly questioned by the people who ultimately carry the financial burden of gene therapies, the payers:

1. The concept of a capped annuity is theoretically attractive but impossible to implement in current health care systems
2. Pricing a gene therapy as a multiple of the yearly cost of expensive protein replacement therapies is considered highly artificial and unjustified

In this article Nicolas Touchot from groupH, and Mathias Flume a leading German payer, detail why the payers’ view differs from that of other industry stakeholders, and provide alternative approaches developed through discussions with selected senior payers in the US and large European countries.

You can click here for our White Paper.