Orphan Drugs in a Budget Constraint Healthcare System · Italy €755 €823 617 €80 457 €31...

Orphan Drugs in a Budget ConstraintHealthcare System

RARE 201721st November 2017

Pr. Mondher ToumiAix Marseille University

The demand is growing fast in an increasingly constraintenvironment

Healthcare Expenditure in Europe

0

2

4

6

8

10

12

14

%GDP

HealthcareExpenditurein2015

Around10%ofGDPisspendonhealthcareinEurope

Source:OECD2017

Trend Growth in Pharmaceutical Expenditure, Health Expenditure and GDP

0

50

100

150

200

250

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

GDP

Healthexpenditure

Pharmaceuticalsexpenditure

Source:OECDdataGDP:GrossDomesticProductNotes:valuesareaveragevaluefortotalOECDcountries Year 2000was considered 100%

PharmaceuticalandtotalhealthexpendituresgrewatahigherratethanthemeanannualgrowthrateofGDPfortheOECDcountriesbetween2000and2015

100%

200%

150%

Sustainability Gap of the Healthcare System by Country

- 5 -

Apositivehealthcare sustainability gapis identified.Each year alarger partoftheGDPofthese countriesis allocated tohealth care

%GDP

Thegraphshowsthedifferencebetween averagerealgrowth ratepercapitatotalhealth carespendingandrealpercapitaGDPgrowth rate2000-2008

Medearis A,Hishow O.NarrowingthesustainabilitygapofEUandUShealthcarespending.workingpapers.SWP2010.

Widening the gap?

Unsustainable gapbetweenhealthcareexpenditure level ononeside

andaffordability anddemand ontheotherside

Current Situation

While governments aretrying tocut thehealthcare expendituregrowth

Thenumber ofverypromising molecules indevelopment is increasing

7

Rapid Pace of Therapeutic Innovation

8

Dramaticadvancesintechnology

Advanced-TherapyMedicinal Products

• Genetherapymedicinalproduct

• Somaticcelltherapymedicinalproduct

• Tissueengineeredproduct

PersonalizedMedicines

• Medicinestailoredtothespecificcharacteristicsofapatient(e.g.targetedtherapiesinoncology)

Digitisedmedicine andbigdata

• Electronic-health-records• Computerbasedmedical

decision• Lostofclinicalpowerin

Rxdecision

Therapiesthatmightsubstantiallyextendsurvivaltimes,evencurechronicand/orseverediseases

Easieranalysisandutilizationofrapidlygrowing,largerepositoriesofhealth

information

High Prices of OrphanDrugs

USA, EU & Japan Orphan DesignationsCumulative Total: Fast Increase

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Source:EvaluatePharma®30September2015

Innovation High PricesSome approved Cell and Gene therapies

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Cell-based gene therapyAcutelymphoblastic leukemiaPriceperpatient:475000$

CAR-Tcell therapiesDiffuselargeB-cell lymphomaPriceperpatient:373000$

Lipoprotein lipasedeficiencyGenetherapy

Priceperpatient:€1,1MWithdrawnrecently

Adenosine deaminasedeficiency

GenetherapyPriceperpatient:594000€

• OnlineConsultation:Sustainableaccesstoinnovativetherapies

Number of Orphan Drugs with AvailablePrices

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Numberoforphandrugswithavailableprice

France 67(exclude hospital products)

Germany 68

Italy 83

Norway 67

Spain 42

Sweden 35

Medic G, Korchagina D,Young KE, etal.Dopayers valuerarity?Ananalysis of therelationship between disease rarityandorphan drugprices inEurope. JournalofMarketAccess& HealthPolicy. 2017;5(1):1299665. doi:10.1080/20016689.2017.1299665.

Orphan Drugs Annual Treatment Costs in Seven EU Countries

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Country Minimumannual cost

Maximumannual cost

Mean annualcost

Median annualcost

France €1500 €912600 €103744 €32100

Germany €3285 €1051956 €142194 €51598

Italy €755 €823617 €80457 €31294

Spain €980 €912600 €75035 €37 986

UK €937 €1012677 €95533 €42085

Sweden €1906 €469513 €72802 €46044

Norway €803 €927706 €113770 €36600


France Annual Treatment Cost Per Prevalence(0–1 Per 10,000)

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Relative Cost Ratios Using GDP Per Capita

Ø WhentheannualcostswereadjustedusingGDPpercapita,EU-5andtheNordicsmaintainedtheminimaldifferencesinmediancostratios.However,thelowerGDPcountriesBulgaria,Romania,Poland,andHungary showedhighermediancoststhanhigh-GDPcountries,and3to6timeshighercoststhantheUK

Relative cost ratios using GDP per capita and UK as reference (UK =1)

1.26[0.31, 1.93]

1.15[0.64, 2.04]

1.55[0.66, 2.28]

1.65[0.85, 2.13]

0.91[0.41, 1.27] 0.51

[0.22, 0.70]

2.47[1.22, 3.89]

3.44[2.71, 4.74]

6.27[3.23,13.51]

4.56[2.45, 7.77]

3.29 [1.47, 4.21]

0,00

2,00

4,00

6,00

8,00

Median relative cost ratios [Min; Max]

YoungKE,Soussi I,ToumiM.Theperverseimpactofexternalreferencepricing(ERP):acomparisonoforphandrugsaffordabilityin12Europeancountries.Acallforpolicychange.JournalofMarketAccess&HealthPolicy.2017;5(1):1369817.doi:10.1080/20016689.2017.1369817.

Launch Prices of New Drugs are Increasing at a High Pace

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Cost & Return on Investment for Orphan vs Non-orphan Drugs

Comparison of the Performance of Specialized Orphan Drug Companies With Other Companies

• Thegraphsshowthemeanresultsovertheperiod2007–2011forfivebasketsofsixtosevencompanies,drawnfrom33publiclytradedcompanies.Thefollowingfinancialindicatorsforeachbasketwereanalysed:grossmargin;spendingonresearchanddevelopment(R&D)asapercentageofsales;EBITDAmargin(ameasurementofacompany’soperatingprofitability),equaltoearningsbeforeinterest,tax,depreciationandamortisation (EBITDA)dividedbytotalrevenue;returnonaccountingequity;andreturnonequity(ROE)onmarketcapitalization.

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Mrel,T,Popa C,Simoens S,Marketwatch:Areorphandrugcompaniesthepickofthepharmaceuticalindustry?NatureReviewsDrugDiscovery 13, 10(2014)

Influence of Orphan Designation Status on Price• Picavet Eetal,demonstrated that awardingorphandesignationstatusinitself

isassociatedwithhigherpricesfordrugsforraredisease indications• Prices for 28designated orphan drugs and16comparablenon-designated

drugs forraredisease indicationswere compared.• Sensitivity analysis confirmed therobustness oftheresults

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MedianpriceperDDDfordesignatedorphandrugs:

138.56€Interquartilerange

406.57€

DDD=defined daily dose

MedianpriceperDDDforNon-designatedorphandrugs:

16.55€Interquartilerange

28.05€

p<0.01

Picavet,E.,Dooms,M.,Cassiman,D.etal.Appl HealthEconHealthPolicy(2011)9:275.

Worldwide Orphan Drug Sales & Share of Prescription Drug Market (2000-2020)

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Average Cost per Patient per Year 2010-2014

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Median Cost per Patient per Year 2010-2014

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R&D Costs (PIII/ Filed) & Expected Investment Returns (NPV)

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Type Number ofpatients

PhaseIIIcosts ($bn)

Asa% Number ofproducts

NPV/PhaseIIICost

Orphan 44,357 6.9 23% 69 12.7

Non-orphan

426,951 23.1 77% 117 11.1

Total 471,308 30.1 100% 186 11.5


Orphan Drugs Budget Impact Will Not Be Sustainable

Case StudySpinal muscular atrophy (SMA)• Spinalmuscularatrophy(SMA)isageneticdiseaseaffectingthepartofthenervoussystemthat

controlsvoluntarymusclemovement.• Themusclesclosertothecenterofthebody(proximalmuscles)areusuallymoreaffectedinspinal

muscularatrophythanarethemusclesfartherfromthecenter(distalmuscles)• Spinalmuscularatrophy(SMA)isaprogressivegeneticdisorderthataffectsthenervoussystem

andmuscles,andisaveryrarediseaseatthat,foundinanestimated 1/6000to1/10000people.

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Type Onset Lifeexpectancy

SMAtype0 Themostsevereformofthedisease,takesplacebeforebirth.

Fewlivelongerthansixmonthsaftertheirbirth

SMAType1(mostcommon)

Withinthefirstsixmonthsoflife

68%ofchildrendiebeforetheirsecondbirthdayand82%diebeforetheirfourth

SMAType2 betweentheageof7monthsand18months

majorityliveintoearlyadulthood

SMAType3 After 18months thesameastherestofthepopulation

Case StudySpinal muscular atrophy (SMA)

• Genetherapy Xis aninnovative therapy forSMAtype1.• Genetherapy Xproved agoodefficacy inclinicak trials.Almost

alltreated patientswere cured after theGenetherapy Xadministration.

• Lifeexpectancy becomes normalinstead of2years.

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Lifeyears gained:78years

QALY=Lifeyears gained xUtility= 78years x0.75=58.5QALYgained

Thecost-effectiveprice=QALYgained x250000€=58.5x250000=14625000€

250g:9100€

Budget Impact of Orphan Drugs

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- €

5 000 000 000€

10 000 000000€

15 000 000000€

20 000 000000€

25 000 000000€

30 000 000000€

35 000 000000€

40 000 000000€

year1 year2 year3 year4 year5 year6 year7 year8 year9 year10 year11 year12

If20orphan gene therapies for20diseases will reach themarket successively (3to4orphan drugs each year),theannual budgetimpactmay reach €35bn.

Theprice ofanorphangene therapy was estimated 350,000€

Orphan Drugs will be Cost-Effective but Not Affordable

BudgetImpactCost-

Effectiveness

From Cost-Effectiveness to Budget Impact

29

Potential Solutions to EnsureFunding for High Price OrphanDrugs

Funding Solutions

Fundingmodels

Health outcomesbased agreements

Financialagreements Healthcoin

Indicationspecific ornot

IndividuallevelPerpatientpercourseoroverallperyear

Populationallevel

CoveragewithEvidence

Development

Annuitypayment

Performancelinkedpayment

Singlepayment

Paybackfornon-performa

nce

Paymentforsideeffects

management

Paybyachievedoutcome

Conditionalto

preventingpredefined

effect

Basedonachievedoutcomes

DiscountsBundleRebateCostplusprice

Healthcareloans

Pricecaps/volumecaps

Fundbased

payment

Intellectualbased

payment

Price-volume

agreement

Nationalcondition

specificfund

Pooledfunding

Tax Debtreduction

Frontloading

Riskadjustment Reinsurance Risk

corridors

Internationalfund

Pertargetpopulation

Perpatient

Hanna E,Toumi M,Dussart C,Borissov B, Dabbous O, Badora K,Auquier P,Funding breakthrough therapies: asystematic review and recommendation, Health policy journal, inpress

Potential Solution

A« Special Fund »may be apotential solutiontoensurefund forinnovationwhilemaintaining thesustainabilityof

thehealth insurance

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InnovationSpecial Fund

Need of Transparent HTA Decision Frameworks

Complementary HTA Methods

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1. Need to support the development of a robust and reliable methodology toimplement MCDA techniques in HTA decision frameworks

• MCDA methods appears to be the most appropriate for integrating multiple attributes, butthey require additional research and shared guidelines for an appropriate use to becomeactionable

2. Need to support research on constraint optimisation modelling (withassociated research on disease burden) to be used in HTA decisionframeworks.• Using mathematical programming techniques to maximise population and society health gain

while adhering to a predefined budget and other recognised constraints• This should be recognised by HTA bodies as a relevant method that could be used when a

product may create a shift in the interventions mix within one specific therapeutic area and fora defined patient population, when it is possible to document the associated budget

Deliberative Process

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HTAdecisionframeworksshould encompass allattributesrecommendedbytheEUnetHTA CoreModel®

• TheseattributesshouldbeintegratedasmodifiersofICERthresholdorasmodifiersoftheaddedclinicalbenefitassessmentscoring

• Need to integrate all domains of attributes of EUnetHTA HTA Core Model® in a standardised andexplicit way through a transparent and reproducible deliberative process

• Explicit metrics• Reported in publicly availableHTA reports

• For attributes which are not already included in HTA decision frameworks or informally included,it is suggested to include these attributes as modifiers of the existing HTA frameworks whilerespecting current HTA decision frameworks, thus preventingmajor revision of these frameworks

Conclusion

• Thehighincrease ofhealth expenditure is athreat forpublichealth asit channel ressourceoffthedeterminant ofhealth

• Newoprhan drugs will be cost effectiveandwewill notbe abletoafford them

• Orphan drugs areavery goodvalueformoneyforinvestors andRoI is high

• NewHTAtransparentdecision analysis is needed• Newfunding routesareneeded based onnewrules andaffordable willingness topay equations

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Orphan Drugs in a Budget Constraint Healthcare System · Italy €755 €823 617 €80 457 €31...

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