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Affordability and cost control in Europe

The EU's financial crisis has put focus on tighter budgets, so there is no better time to understand how to boost a drug's attractiveness

The EU continues to undergo significant financial turmoil. Just as the Eurozone members are considering greater fiscal union the better to manage its finances, so there is greater convergence of measures to control healthcare expenditure across EU member states.

How these instruments of cost control converge and what approaches can be adopted at a global, regional and market level in order to meet the evolving challenge are discussed here.

The challenge
The European population is living longer due to improved living standards, better education, improvements in public health and significant advances in the management and treatment of disease. However, improved living standards have also led to an explosion in longer-term chronic diseases, such as obesity and diabetes, two of the EU's 21st-century epidemics. This means that more people are consuming more healthcare resources at a time when affordability is under scrutiny like never before. Added to this are the increased complexity and costs of advances in health technology and treatment.

The word increasingly on payers' lips is affordability. In addressing affordability, governments are driving further healthcare reform, payers are aggressively managing costs, limiting therapy choice and shifting more of the cost burden to consumers. At the same time, employers are tightly managing contributions and managed care organisations are demanding improvements in health outcomes and value for money. Plus, physician consolidation is establishing grounds for new delivery system models, and patients are becoming educated healthcare consumers and driving demands for improved quality.

All of this has led to a growing emphasis on a total healthcare package, offering benefits for the healthcare system, the patient and the local health community throughout the care pathway. So payers should be viewed as investors in their community's health, not just guardians of the budget.

None of this is new, but the emphasis and methods deployed continue to evolve, including the adoption of similar cost-control measures by multiple countries. Methods initially adopted by a single country are now common practice across others, with suitable adaptations to meet their specific needs. This is best exemplified by EUnetHTA which is driving the adoption of health technology assessment (HTA) around the world.

John Irwin, head of market access at Actelion, said: "Over the last few years, there has been an acceleration in the transfer of payer best practice and a convergence of proven cost-control measures across Europe. This clearly has an impact on the way companies should be approaching their market access strategic and programme planning, where value and affordability are central."

While value and affordability are two critical considerations, what is affordable in one country may not be so in another. And it is here that the EU and other international or regional influencers can have a significant influence.

Fundamental rights
Article 35 of the EU Charter of Fundamental Rights provides for the 'right of access to preventive healthcare and the right to benefit from medical treatment under the conditions established by national laws and practices'. The aims behind Article 35, and the many directives that have followed, are increasingly being relied upon by the pan-European advocacy sector in their challenges to treatment restrictions within individual countries.

Matt Phillips, ex-UK director of Johnson & Johnson (J&J) and chief executive of Engage Health Alliance, an organisation that brings together the EU advocacy community, policy makers and industry, said there were many similarities across markets when it came to restricting patient access to medicines. He stated: "Building on the underlying principles of 'right of access' and 'right to benefit', there is an important role for European-wide initiatives that can be cascaded into markets to support best practice. This is not all about medicines, though; this also involves access to services, service design and even basic standards of care."

But European influence extends well beyond Article 35 and again EUnetHTA is a good example of this, as it supports scientific co-operation in HTA across Europe. It comprises 34 government-appointed organisations from the EU member states, accession countries and European Economic Area, which work together to help develop reliable, timely, transparent and transferable information to contribute to HTAs in European countries and beyond.

Mike Sobanja, head of the UK's NHS Alliance, said: "EUnetHTA is an interesting project with worthy ambitions. There is much debate over whether it can achieve full alignment of HTA across Europe. However, what EUnetHTA clearly demonstrates is the commitment of those that support payer-informed decision-making to sharing best practice."

Instruments of medicines' cost control can be broadly divided into supply-side and demand-side approaches. The structure of a particular healthcare system, coupled with whether or not the country focuses on price control, volume control or a mixture of both, will influence the approaches adopted. For example, in many markets, patient co-payments can act as a deterrent to branded prescribing when lower cost generics are available. For markets where such approaches are not an option, setting targets for generic prescribing and therapeutic substitution can achieve a similar effect.

Demand-side instruments include:

  • National-level price negotiations/price cuts
  • Reference pricing systems
  • Health technology assessments
  • Promoting generics and parallel imports.

Supply-side instruments include:

  • Patient co-payments
  • Reimbursement restrictions
  • Delisting
  • Devolving responsibilities
  • Prescribing budgets
  • Formularies and guidelines.

Role of strategies

To date, the pharma industry has focused heavily on cost and cost-effectiveness arguments to secure optimal pricing and reimbursement for a brand at a market level, supported by the global value dossier. More recently, industry players have recognised the benefits of global and regional market access strategies and programmes that directly support markets and can be adapted to reflect specific market needs.

These include support for service development initiatives, change management programmes, market research and coalition building. However, with the issue of affordability set to move up the agenda, arguably there is more that global and regional teams can offer.

Mike Sobanja said: "If the true value of a treatment is to be realised for the benefit of patients – and, indeed, the pharmaceutical industry – more needs to be done to demonstrate this value. This will require an increased focus on longitudinal data to clarify the longer-term benefits to healthcare systems, patients and our communities. This is not future thinking; this is happening now and the recent German AMNOG [the country's system of drug reimbursement] reforms are a good example."

Adopting this longer-term approach will require an additional layer of strategic thinking and planning. This is where global and regional access teams can add significant value.

True value of treatments

  • Improve and demonstrate longer-term patient outcomes – support patient concordance and persistence programmes and provide 'real-world data' to reinforce the longer-term outcomes in specific countries and their health economies
  • Demonstrate economic value across all stages of a product lifecycle – communicate the longer-term development plan to reinforce a treatment's current and future value and what the company can offer beyond a treatment alone
  • Targeted medicine – support payers to stratify which patients would benefit most from treatment; identify and develop tools and approaches
  • Changes to healthcare infrastructure – new technologies that help realise efficiencies within an established healthcare system may benefit from support for payer commissioning and service realignment
  • Support the empowered patient – patient involvement in healthcare improves patient outcomes, patient choice and can drive efficiencies in healthcare delivery. Yet, the complexity of healthcare systems disempowers patients and restricts their ability to drive change. Get together with patient advocacy organisations to support patient understanding of their healthcare systems
  • Knowledge exchange and sharing best practice – the convergence of medicines' cost control means that one market's success is another's learning.

There is no doubt that the industry continues to go through a period of radical change and just when things could appear to get no worse, the economic troubles sweeping Europe have moved the issue of affordability higher up the agenda. This has been matched by wider adoption of proven cost-control instruments between and across markets. As the EU zone is considering greater fiscal alignment, maybe now is the time for a greater alignment of global and European market access strategies and programmes? 

The Author
Carsten Edwards
is managing partner of access service at Ogilvy Healthworld Market Access

5th January 2012


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