In recent years European healthcare payers have harassed and challenged the pharma business model like never before, demanding lower prices and higher thresholds of evidence.
For example, last year the three Benelux countries signed a statement of intent to jointly procure orphan medicines in an effort to lower prices. In 2014 Italy signed almost 100 outcomes-based deals with pharma requiring companies to pay refunds if treatment goals were not met. And in recent weeks, the head of the NHS in England suggested that NICE should look at affordability alongside cost effectiveness, and said NICE decisions are hampering his ability to negotiate prices as they effectively lock in a price through the cost effectiveness assessment.
Because of these and other examples, industry has for some time seen Europe as the problem child of the international markets. Global HQs question and challenge performance, demand action from European offices to improve the situation, and sometimes sit in disbelief at the next payer cost containment exercise. Despite this, European problems have not affected the overall pharma business model. As one European CEO told me, companies make enough returns elsewhere (notably in the US of course) that European cost containment has been only an irritant rather than a systemic threat.
But this is changing. President Obama, plus candidates Donald Trump and Hillary Clinton, have all proposed that Medicare should negotiate drug prices. More locally, US HMOs and insurance funds are using levels of HTA and deploying cost containment measures to reduce prices and delay or control access to new medicines. On a global level, President Hollande of France has called for international regulation of medicines prices and wants the issue to be debated at the G7 summit in Japan.
In some companies, European teams are now undergoing a transformation in the eyes of their global peers – from comparative underperformer to vanguard and teacher. US teams are asking for advice on how to handle their new domestic challenges.
Many companies in Europe are engaging in early dialogue with regulators, payers and HTA to plan evidence requirements, begin collaborative thinking on what value means for a particular medicine, and consider what pricing mechanisms or deals may be required. For these conversations and others with wider audiences pre and post launch, companies require compelling value stories. The thinking on how to develop and tell value stories is evolving and growing fast, and companies are at different stages of the learning curve.
Sandwiching the evidence and health economics in a value story are powerful customer and environmental insights, and excellent writing and communications to connect with audiences. Articulating value is not a cleverly constructed but ultimately self-serving ‘sell’. It is about making a real connection with the needs of customers.
Over time, a change in the US market will bring a global change in the approach of pharma, and this in turn will make it easier for European teams to deal with cost containment issues. Global HQs will be more alert to the evidence requirements to demonstrate value, and the flexibility needed to find agreements. They may also be a little more sympathetic when access is tough!