Market access in Europe: balancing access and affordability

Governments across Europe are struggling to balance the desire to provide timely access to innovative medicines with the need to contain healthcare spending. 2016 ended with important new initiatives in three of Europe's largest pharmaceutical markets and growing interest from many smaller countries in working together to negotiate lower pharmaceutical prices.

Germany: overhaul of AMNOG and extended price freeze
The German Parliament has been working for several months on the Gesetz zur Stärkung der Arzneimittelversorgung in der GKV (AM-VSG; Act to Strengthen Pharmaceutical Supply in the Statutory Health Insurance System), legislation that would reform the AMNOG early benefit assessment system that has underpinned the pricing of new drugs in Germany since January 2011.

Pharmaceutical companies will remain free to set the prices of new drugs for the first year after launch. However, if sales in that period exceed €250m, companies will be liable to pay rebates. The German government reserves the right to introduce price-volume agreements in the future.

If companies fail to submit an early benefit assessment dossier, or they submit incomplete documentation, they will be penalised by a price cap below the annual treatment costs of the comparator therapy.

Prescribing restrictions could be imposed on drugs that are judged to offer no additional benefit, but might be of value to particular patient subpopulations. At the same time, the current rule that the price of a drug given this level of additional benefit assessment is set in relation to the price of the least-expensive appropriate comparator therapy could be relaxed in exceptional circumstances.

The UK could adopt flexible pricing methods that have been implemented in other countries

In response to the pharmaceutical industry's concerns about international reference pricing, details of drug rebates will, in future, be available only to stakeholders in the German healthcare system that require this information to fulfil their legal obligations.

Drugs launched prior to January 2011 could have to undergo early benefit assessment if they are licensed for significantly different new indications.

In addition to changes to the AMNOG system, the AM-VSG will extend the current price freeze on reimbursable medicines, which was scheduled to end in 2017, until the end of 2022. However, increases in line with inflation will be permitted from 2018 onwards.

The AM-VSG is expected to be enacted early in 2017.

UK: faster access for innovative drugs, but challenges for other products
In October 2016, the Accelerated Access Review (AAR) published its recommendations to the UK government. The AAR's central proposal is the creation of an Accelerated Access Pathway to speed up access to the most promising new drugs by up to four years by enrolling products in the Early Access to Medicines Scheme (EAMS), streamlining health technology assessment and facilitating commissioning and adoption. Pipeline health technologies that have the greatest potential to deliver improved outcomes or efficiencies would be granted a coveted new 'transformative innovation' status.

In return for transformative status, manufacturers might have to accept new flexible pricing arrangements. The AAR speaks of 'win-win scenarios' that effectively trade market access against lower prices. Specifically, the UK could adopt flexible pricing methods that have been implemented in other countries, such as price-volume agreements, conditional reimbursement, deferred payments or annuity-based pricing, outcome-based payments, product-service bundling and deferred payments.

Despite all the fanfare around the AAR, it is important to bear in mind that only 5-10 technologies - not just drugs, but also diagnostics, medical devices and digital products - are expected to be granted transformative innovation status each year. Furthermore, not all of these technologies would necessarily complete the Accelerated Access Pathway.

For the vast majority of drugs, the AAR contains little in the way of good news. NICE is likely to introduce substantial charges to manufacturers for its services, with no concessions for smaller companies. Drugs that have a projected budget impact of more than £20m in any of the first three financial years of their use in the NHS could have to undergo negotiations for commercial agreements, such as patient access schemes, to manage their costs.

Many older drugs could feel the adverse effects of the AAR. To create 'head room' for funding transformative technologies, the NHS would need to practise 'value exchange'- a euphemism for disinvestment in products and procedures that are deemed to be outdated or not cost-effective.

The UK government is currently reviewing the AAR's recommendations, but has indicated that 'there is much in it, if not all of it, that will be accepted'.

France: cost-cutting measures and new powers for the CEPS
Each year, the French government passes a wide-ranging Loi de Financement de la Sécurité Sociale (LFSS; Social Security Finance Act). The government has consistently made the life science industry its primary target for savings in the healthcare sector. Indeed, Les Entreprises du Médicament (LEEM; Pharmaceutical Companies), the association that represents French drug manufacturers, reports that the pharmaceutical industry contributed €5b of savings in the last three years - half of the total for the entire healthcare sector. The LFSS 2017 targets savings of approximately €1.7b from the life science industry. The accompanying figure summarises the measures that target spending on prescription drugs.

The LFSS 2017 will also make changes to France's unique system of autorisations temporaires d'utilisation (ATUs; temporary authorisations for use) for treatments for serious or rare diseases for which no appropriate licensed therapy is available. Manufacturers are free to set the prices of ATU medicines and may be able to take advantage of the fact that these drugs are monopoly treatments for serious or rare diseases to set prices at a relatively high level. In future, however, ATU reimbursement will be capped at €10,000 per patient per year for drugs that have pre-tax sales of more than €30m per year in France.

The LFSS 2017 also gives the Comité Economique des Produits de Santé (CEPS; Economic Committee for Healthcare Products) the power to unilaterally set drug prices at the level of the lowest-priced competitor (including generics) in the event that negotiations with a manufacturer prove unsuccessful. The life science industry has condemned this policy as an abrogation of the framework agreement it signed with the government, but the Ministry of Health insists that this provision would only be an 'exceptional procedure'.

On a more positive note for the life science industry, the LFSS 2017 paves the way for the establishment of a new Fonds pour le Financement de l'Innovation Pharmaceutique (FFIP; Pharmaceutical Innovation Finance Fund). The initial funding will be €876m, which will grow by at least 5% per year.

Increased cross-border collaboration on pricing
In addition to national initiatives to contain pharmaceutical expenditure, interest in cross-border collaboration on negotiating lower prices for new drugs is gathering momentum across the EU - and beyond. Alliances generally involve countries with similar levels of gross domestic product. Governments have typically begun by exploring opportunities to negotiate lower prices for orphan drugs. If successful, however, these arrangements could be expanded to encompass a broader range of medicines.

Bulgaria and Romania have been working together since 2014 to explore opportunities to reduce the prices they pay for their prescription medicines. Several other Eastern European countries, including Poland, Serbia, Macedonia and Moldova have attended meetings organised by the Bulgarian and Romanian governments and indicated that they might be interested in joining the cooperation. Significantly, the Bulgarian and Romanian governments have indicated that cooperation can be quite flexible - countries can join them to negotiate prices for a single drug if they wish.

In addition, the Greek government has reportedly hosted a meeting of Mediterranean countries to discuss how they might work together to cut their pharmaceutical bills.

The Dutch and Belgian governments launched a pricing coalition - initially for orphan drugs - in April 2015. The alliance has subsequently expanded to include Luxembourg and Austria, with Ireland expected to be the next country to become a member.

In November 2016, the Irish Minister for Health, Simon Harris, wrote to his counterparts in England, Scotland, Canada and Australia to invite them to work together to negotiate a lower price for Vertex's Orkambi (lumacaftor/ivacaftor), a treatment for cystic fibrosis. In a debate in the UK Parliament, David Mowat, a health minister, replied that: “It would be a great idea were we to use our combined procurement muscle in that regard. He [Simon Harris] is certainly pressing at an open door.”

The pharmaceutical industry may find that many other governments have an open door to collaboration on pricing in 2017.