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Innovation in pharma: the highs and lows of the current healthcare economy
While the likely premium price of upcoming genetic and cell-based therapies challenges traditional NHS funding mechanisms, the continuing influx of biosmilars is driving down the cost of biologics. Marian Byrt looks at the challenges at both ends of the spectrum.
The high cost of new medicines is a
well-worn topic of debate. But current innovation in pharma is impacting both the higher and lower ends of the healthcare economy, creating new
challenges for clinicians and payers and causing both new hope and,
potentially, confusion for patients.
Regenerative medicine: challenging our approach to healthcare
At the higher end, regenerative medicine looks set to revolutionize the way we approach healthcare. Gene therapies often require a ‘one-time only’ treatment offering life-changing potential to patients with conditions where currently there may be no available therapy at all, for instance, in rare genetic conditions that can lead to blindness and in enzyme deficiencies causing severe metabolic disorders. Also in cancers: chimeric antigen receptor T cell (CAR-T) therapy, a type of cancer immunology that could dismiss chemotherapy in some cancers, is now licensed in the US.
The approach is to deliver treatments which restore or establish normal cell function, allowing the regeneration of healthy cells and tissues. For patients and their families, these new treatments may pave the way to longer, healthier and more productive lives. However, these treatments target very rare conditions, often with very small patient numbers, and so from the commercial point of view their cost is likely to be high, requiring innovative new funding routes that can take into account these lifetime cost savings. For the NHS and most other healthcare systems, this presents a fundamental challenge to the current ‘upfront payment’ approach to budgeting which is also traditionally based in silos, can only consider immediate drug and hospital costs, and cannot encompass long-term healthcare/community savings made as a result of long-term change. These treatments could eliminate future costs associated with side effects of existing chronically administered therapies and related hospital admissions as well as the ‘hidden’ costs of non-compliance while, at the same time, reducing the burden on care givers. These benefits are hard to quantify in the current healthcare system.
And so the funding challenge presented by regenerative medicine will require the NHS to recognize and address its longer term value by going through key recognized stages of behavioural change: pre-contemplation, contemplation, preparation, action and maintenance in order to achieve sustainable new funding pathways for these ground-breaking treatments.
The cycle of behavioural change
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It’s already certain that more pragmatic reimbursement models will be required to deal with the cost of these new treatments as upfront payment will be prohibitive. Options are already under debate including: annual payments, risk share agreements, pay for performance, payer financing, and payment by installments just as a starting point, not forgetting that each of these treatments will require specialist administration and support services to facilitate their use, ensure consistency and safety, and allow for the necessary ongoing monitoring.
Biosimilars driving down cost
Looking at other influences on global markets, and at the other end of the cost paradigm, biosimilar medicines are beginning to drive down cost as their uptake rises against a backdrop of more expensive originator biologics coming off patent. These new drugs are highly similar to their biologic originators but available at reduced prices, providing the NHS with the opportunity to save money. It is estimated this could mean a drug cost reduction of £200-300 million by the year 2020/21 if uptake keeps pace with the recommendations in the latest Commissioning Framework developed by NHS England.
The Framework stipulates that 90% of new patients should be prescribed a biosimilar medicine during the first three months post-launch, if it represents better value than the originator medicine. Also, at least 80% of existing patients should be switched to the biosimilar medicine within 12 months of its launch, if it represents better value.
These tough markers are not simply about driving use of biosimilars, but rather the NHS is seeking to open up the biologics market and drive competition. After all, six of the top 10 medicines prescribed in UK hospitals (based on spend) fit within the biologics category and so reducing cost and opening up choice in this area should have a huge impact.
In most cases, any savings made will be shared between Trusts and CCGs (Clinical Commissioning Groups) using Gain Share agreements drawn up locally, providing resources to support new innovative treatments and services. But this will be down to physicians and payers being able to negotiate and agree mutually beneficial terms. Where this works well, the cost savings can cover new positions and services; for instance, the Crohn’s and Colitis UK website (https://www.crohnsandcolitis.org.uk) states it would like to see savings created by the use of biosimilars used to fund additional specialist IBD (inflammatory bowel disease) nurses to improve standards of care in areas where service support is thin on the ground.
The longer term challenge for new biosimilar market entrants will be to match the robust manufacturing processes and supply chains of the well-established originators. Backed by a long heritage, they have extensive ‘real world’ experience, delivery know-how, and often also provide homecare packages aligned with NHS services. It remains to be seen whether the new entrants can meet these high expectations.
Although biosimilars are being welcomed overall, it is also recognised that there are important clinical considerations to bear in mind. For new patients the biosimilar therapy may be the best approach, but when switching a patient from an originator to a biosimilar, physicians and payers acknowledge that care should be taken - from the clinical point of view of course - but also in informing the patient of their new treatment and explaining what it means. This may cause concern to the patient and their family, but advocacy groups in relevant areas such as NRAS (National Rheumatoid Arthritis Society) and Crohns and Colitis UK both provide extensive information, while counselling patients to ensure they are well informed and their views heard if they have any concerns regarding changing treatment.
So far, the introduction of biosimilar medicines seems to be progressing at a pace (uptake of the biosimilar infliximab was at a national average of 79.7% earlier this year), but in some therapeutic areas, opening up the market to biosimilars is not as straightforward as it seems. For low molecular weight heparins (LMWH), for instance, the scientific definition of ‘similarity’ is more complex and has become the subject of international debate with differing US and European definitions, resulting in the FDA perceiving LMWH copies as generic, while the EMA treats these drugs as in the more complex biosimilar category, but with additional requirements to address on safety and efficacy concerns.
New entrants at both ends of the pricing spectrum
So while challenges remain, biosimilars seem to be finding their place in the market and creating a new and interesting dynamic, while regenerative therapies are just emerging and seeking their position too. There is still plenty to be done to support new entrants at both ends of the pricing spectrum with continued education and communication for clinicians, pharmacy, payers and patients being core requirements.
We are in the midst of interesting times in the global healthcare arena. While there have always been challenges to delivering high quality, affordable healthcare, current scientific innovation is proving a game-changer, creating significant opportunities and new challenges along the way. It’s all good news for the patient in the longer term, as long as our overstretched NHS can find the flexibility to address the new innovations and slot them into the system with a manageable pricing model to suit.
Reference: https://www.england.nhs.uk/wp-content/uploads/2017/09/biosimilar-medicines-commissioning-framework.pdf. Last accessed 14.12.17
Marian Byrt is International Communications Director at Solaris Health
marian.byrt@solarishealth.com
Regenerative medicine: challenging our approach to healthcare
At the higher end, regenerative medicine looks set to revolutionize the way we approach healthcare. Gene therapies often require a ‘one-time only’ treatment offering life-changing potential to patients with conditions where currently there may be no available therapy at all, for instance, in rare genetic conditions that can lead to blindness and in enzyme deficiencies causing severe metabolic disorders. Also in cancers: chimeric antigen receptor T cell (CAR-T) therapy, a type of cancer immunology that could dismiss chemotherapy in some cancers, is now licensed in the US.
The approach is to deliver treatments which restore or establish normal cell function, allowing the regeneration of healthy cells and tissues. For patients and their families, these new treatments may pave the way to longer, healthier and more productive lives. However, these treatments target very rare conditions, often with very small patient numbers, and so from the commercial point of view their cost is likely to be high, requiring innovative new funding routes that can take into account these lifetime cost savings. For the NHS and most other healthcare systems, this presents a fundamental challenge to the current ‘upfront payment’ approach to budgeting which is also traditionally based in silos, can only consider immediate drug and hospital costs, and cannot encompass long-term healthcare/community savings made as a result of long-term change. These treatments could eliminate future costs associated with side effects of existing chronically administered therapies and related hospital admissions as well as the ‘hidden’ costs of non-compliance while, at the same time, reducing the burden on care givers. These benefits are hard to quantify in the current healthcare system.
And so the funding challenge presented by regenerative medicine will require the NHS to recognize and address its longer term value by going through key recognized stages of behavioural change: pre-contemplation, contemplation, preparation, action and maintenance in order to achieve sustainable new funding pathways for these ground-breaking treatments.
The cycle of behavioural change
It’s already certain that more pragmatic reimbursement models will be required to deal with the cost of these new treatments as upfront payment will be prohibitive. Options are already under debate including: annual payments, risk share agreements, pay for performance, payer financing, and payment by installments just as a starting point, not forgetting that each of these treatments will require specialist administration and support services to facilitate their use, ensure consistency and safety, and allow for the necessary ongoing monitoring.
Biosimilars driving down cost
Looking at other influences on global markets, and at the other end of the cost paradigm, biosimilar medicines are beginning to drive down cost as their uptake rises against a backdrop of more expensive originator biologics coming off patent. These new drugs are highly similar to their biologic originators but available at reduced prices, providing the NHS with the opportunity to save money. It is estimated this could mean a drug cost reduction of £200-300 million by the year 2020/21 if uptake keeps pace with the recommendations in the latest Commissioning Framework developed by NHS England.
The Framework stipulates that 90% of new patients should be prescribed a biosimilar medicine during the first three months post-launch, if it represents better value than the originator medicine. Also, at least 80% of existing patients should be switched to the biosimilar medicine within 12 months of its launch, if it represents better value.
These tough markers are not simply about driving use of biosimilars, but rather the NHS is seeking to open up the biologics market and drive competition. After all, six of the top 10 medicines prescribed in UK hospitals (based on spend) fit within the biologics category and so reducing cost and opening up choice in this area should have a huge impact.
In most cases, any savings made will be shared between Trusts and CCGs (Clinical Commissioning Groups) using Gain Share agreements drawn up locally, providing resources to support new innovative treatments and services. But this will be down to physicians and payers being able to negotiate and agree mutually beneficial terms. Where this works well, the cost savings can cover new positions and services; for instance, the Crohn’s and Colitis UK website (https://www.crohnsandcolitis.org.uk) states it would like to see savings created by the use of biosimilars used to fund additional specialist IBD (inflammatory bowel disease) nurses to improve standards of care in areas where service support is thin on the ground.
The longer term challenge for new biosimilar market entrants will be to match the robust manufacturing processes and supply chains of the well-established originators. Backed by a long heritage, they have extensive ‘real world’ experience, delivery know-how, and often also provide homecare packages aligned with NHS services. It remains to be seen whether the new entrants can meet these high expectations.
Although biosimilars are being welcomed overall, it is also recognised that there are important clinical considerations to bear in mind. For new patients the biosimilar therapy may be the best approach, but when switching a patient from an originator to a biosimilar, physicians and payers acknowledge that care should be taken - from the clinical point of view of course - but also in informing the patient of their new treatment and explaining what it means. This may cause concern to the patient and their family, but advocacy groups in relevant areas such as NRAS (National Rheumatoid Arthritis Society) and Crohns and Colitis UK both provide extensive information, while counselling patients to ensure they are well informed and their views heard if they have any concerns regarding changing treatment.
So far, the introduction of biosimilar medicines seems to be progressing at a pace (uptake of the biosimilar infliximab was at a national average of 79.7% earlier this year), but in some therapeutic areas, opening up the market to biosimilars is not as straightforward as it seems. For low molecular weight heparins (LMWH), for instance, the scientific definition of ‘similarity’ is more complex and has become the subject of international debate with differing US and European definitions, resulting in the FDA perceiving LMWH copies as generic, while the EMA treats these drugs as in the more complex biosimilar category, but with additional requirements to address on safety and efficacy concerns.
New entrants at both ends of the pricing spectrum
So while challenges remain, biosimilars seem to be finding their place in the market and creating a new and interesting dynamic, while regenerative therapies are just emerging and seeking their position too. There is still plenty to be done to support new entrants at both ends of the pricing spectrum with continued education and communication for clinicians, pharmacy, payers and patients being core requirements.
We are in the midst of interesting times in the global healthcare arena. While there have always been challenges to delivering high quality, affordable healthcare, current scientific innovation is proving a game-changer, creating significant opportunities and new challenges along the way. It’s all good news for the patient in the longer term, as long as our overstretched NHS can find the flexibility to address the new innovations and slot them into the system with a manageable pricing model to suit.
Reference: https://www.england.nhs.uk/wp-content/uploads/2017/09/biosimilar-medicines-commissioning-framework.pdf. Last accessed 14.12.17
Marian Byrt is International Communications Director at Solaris Health
marian.byrt@solarishealth.com
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