Emerging Markets USA

Oct 16, 2012 - Oct 17, 2012, Woodbridge, NJ

Emerging Markets USA

Pharma and market access: How to overcome the challenges

Steven Flostrand, principal at IMS Consulting Group, on how to thrive in pharma’s difficult market environment



According to Steven Flostrand, principal at IMS Consulting Group, the biggest challenge facing the pharma industry is the financial crisis and how it is limiting government spending on healthcare. “The issue our clients face is not market access per se, but the real threat of a deepening of the economic crisis and further constraints on governments’ ability to pay for healthcare,” he says.

That will translate into yet more cost containment measures, which may become increasingly broad and arbitrary as the crisis deepens. Flostrand believes these measures could include moratoriums on new drug reimbursement, dramatic across-the-board price cuts, de-reimbursement of drugs and even whole categories, forced generic prescribing beyond just first-line use, and the use of broad indication tendering for the provision of treatments.

Against that backdrop, Flostrand points out that “the biggest market access challenge facing in-market and new drugs is definitely patent expiry. The growing availability of off-patent drugs in virtually every therapy area is changing payer expectations of disease costs.” (For more on patent expiry, see Patent expiration: Innovate or die, Understanding pharma’s drug development costs, New models for drug discovery and marketing, and Will big pharma become a collection of marketing and distribution firms?)

This is a challenge for the country affiliates of the big pharma companies: How to support the value of new products when the price is so low on the comparators? Theoretically, generics generate savings that can be invested in innovation. But in today’s environment, Flostrand says, “payers do not want to reinvest in new drugs that bring uncertainty and perhaps modest benefits.” Savings are instead used to protect jobs in the healthcare sector. (For exclusive business insights into market access, download eyeforpharma's Pharma Emerging Markets Report 2011-12.)

Uncertain impact of reforms

Of course, the financial crisis is leading to reform across the board in healthcare systems. But the difficulty is predicting how these reforms will really impact how pharma does business. Beyond price cuts, these reforms include the demand for real-world evidence, which can be used to either alter price over timeor to re-position the use of a product in the treatment pathway. (For more on real-world evidence, see Why Comparative Effectiveness Research is a market opportunity and Market access and patient access schemes.)

Companies must now support an ongoing plan of evidence generation, with the consequences of this effort sometimes being loss of market share or reimbursement, if evidence is unfavorable. The expense and risk is not always appreciated or incorporated into planning and decision-making.

Flostrand is also keen to point out that while countries in Europe face the same challenges, their proposed solutions to spend less money vary. Greek companies, for example, are facing more stringent price setting conditions; “Companies have already had to absorb large price cuts, given changes to international referencing rules, which now use the lowest EU price not the average,” he says. This comes alongside the creation of a positive list, for which they must pay a large ‘entrance fee’ as a means for the government to raise a few extra million and limits on reimbursement through the use of a therapeutic reference pricing system. (For more on pricing, see Market access in Russia: Localization versus isolation and Market access: China and international reference pricing.)

In Spain, many of the same changes are underway but there is more uncertainty as some of the reforms have not yet been detailed. Whatever the details, the reforms will be on top of a 7.5% price cut for most drugs that has been added to the previous cut announced in 2010. INN prescribing will become the rule, with pharmacists obliged to dispense the cheapest drug. “The long-discussed national cost-effectiveness committee, announced in 2010, may actually come into being early in 2012,” Flostrand says, “adding another potential market access hurdle to companies.”

Country contrasts

Flostrand contrasts Spain and Greece with Italy, where there is even more uncertainty. Italian reforms have yet to be comprehensively defined and implemented. “The recent change in government has set the scene for reforms to take place, and with the government focus being on austerity measures, industry will not escape demands to make a contribution,” he notes. In France, for example, the PLFSS (social security financing law) foresees savings of 670 million euros in 2012, derived from price cuts to registered medicines.

That may meanless of a focus on previous efforts to improve HTA appraisal coordination among European, national and regional bodies, or to improve the standards of evidence and the use of health economic data, or even to reduce some of the glaring disparities in access to care. When the focus is on cuts, coordination often suffers. (For more on HTAs, see Market access: How to meet both marketing authorization and HTA needs and Market access: The impact of HTAs on strategy; for more on health economic data, see Health economics data and market access.)

Flostrand also predicts that in Italy, when the government asks for savings, we can expect that the AIFA (the Italianagency that provides marketing authorization and reimbursement of medicines) will look closely at high-cost drugs. AIFA has in the past rewarded innovation with high prices, while controlling expenditure through risk-sharing agreements. However, it appears that the true savings from risk-sharing agreements are far less than anticipated, because refunds are estimated to be less than one-third of the potential, mostly due to doctors and hospitals not making claims even when warranted. Options vary, but governments may even “look at jumbo-group referencing and procurement,” possibly at a regional level, according to Flostrand. (For more on risk-sharing agreements, see Managing market uncertainty: Is risk sharing the answer? and Market access: Risk sharing and alternative pricing schemes.)

Local and global knowledge

Companies should not be daunted. There are ways to navigate the European marketplace, drawing on local and global knowledge. Companies must have a keen understanding of local payer and decision-maker needs as these relate to pricing, reimbursement and market access. “In-market resources are vital and the formation of cross-market working groups to address launches and similar challenges is something that companies do not do enough,” says Flostrand.

“A true working group approach would use local resources as virtual teams to manage market access in a multi-national wa yinstead of a global way,” he continues. “The central function would have a coordinating and arbitrating role, acting as a service provider to deliver against the prioritized needs of the markets as opposed to being the ‘corporate leader’ that cascades material down to countries.”

Flostrand hopes companies can be more proactive in partnering with payers and providers to improve care, suggesting that “some leading companies have explored healthcare provisions models such as capitation and co-development. These long-term, strategic considerations need to be further developed by industry, which should not hesitate to put such ideas forward for consideration.”

For more on market access, join the sector’s other key players Sales & Marketing Excellence Turkey on Feb. 21-22 in Istanbul, Market Access Mexico on March 28-29 in Mexico City, Emerging Markets USA in June, and Market Access Europe in October.

For eyeforpharma’s coverage of emerging markets, check out our Emerging Markets special report.

For exclusive business insights, download eyeforpharma's Pharma Emerging Markets Report 2011-12.

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Emerging Markets USA

Oct 16, 2012 - Oct 17, 2012, Woodbridge, NJ

Emerging Markets USA

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