Pharma Competitive Intelligence Conference

UK turns to value based pricing of pharmaceuticals

PINK-SHEET, March 31, 2008, Page 22 copyright 2008, F-D-C Reports, Inc.

The British Department of Health has notified drug companies that it is ending the current Pharmaceutical Pricing Regulation Scheme as of Aug. 31 and will examine other approaches, such as "value-based" drug pricing.
The current pricing scheme, which governs drugs sold through the country's National Health System, had been scheduled to run through Dec. 31, 2009. The department informed the industry of the early termination on Feb. 29.
The pricing scheme, negotiated with manufacturers, now relies on a system of price cuts and profit limits for drug manufacturers. A key factor in the Department of Health's decision to renegotiate the scheme is an Office of Fair Trading report issued earlier this year. The report contends that value-based pricing would provide the NHS with more value for its money, better investment incentives for industry and a more sustainable, stable system. The department opened new negotiations in August based on ideas in the report.
The pricing system should relate "the prices of products to their clinical value relative to existing treatments," OFT concluded. It estimated that about [L]500 million of the National Health System's drug expenditures could be used more effectively if prices were based on value. The pharmaceutical budget accounts for more than [L]10 billion per year of NHS spending.
Unsettling Environment For Industry
Renegotiation of the PPRS mid-way through its term is among factors causing unease among British drug companies, the Association of the British Pharmaceutical Industry says.
A survey of more than 100 U.K.-based drug firms found 97 percent believe there is "an increasing level of uncertainty" with the U.K. drug market environment, ABPI and the Confederation of British Industry reported March 20.
"Stability is essential for business confidence and investment," noted Nigel Brooksby, ABPI President and head of Sanofi-Aventis, U.K. PPRS provided the "very stability on which our success largely depends," he said.
Calling the pharmaceutical industry a bellwether for the U.K.' s ability to thrive in the global economy, CBI Deputy Director General John Cridland said any lack of confidence in the U.K. business climate "should be of deep concern to the government."
Neither the Department of Health nor ABPI are commenting on the negotiations, but the two sides have agreed their talks will focus on achieving value for money, reward for innovation, accelerated uptake of new medicines, and sustainability.
OFT suggested that companies retain freedom to set prices up-front. But instead of profit controls and price cuts established by the PPRS scheme, the report says drugs should be reviewed at certain points to determine a maximum price in accordance with clinical benefits relative to a comparator.
If sufficient cost-effectiveness information is available at product launch, a maximum price could be set quickly, OFT said. Product value would then be re-evaluated periodically.
Value-based Pricing Has Not Been Tried
The OFT report has given prominence to value-based pricing, Jens Grueger, head of global pricing and reimbursement for Novartis, told "The Pink Sheet." It has been a topic of discussion in the drug field, but "to my knowledge," is not yet being used anywhere, he said.
During the Drug Information Association's EuroMeeting in Barcelona March 4, Grueger discussed value-based pricing and reimbursement for therapies that have a broad indication, but provide different levels of benefit to different patient subgroups.
Rather than restrict the product to those who would likely receive the most benefit, value-based pricing or reimbursement allows payers to pay more for patients whose likely benefit is greatest, and less for indications where there is less potential benefit, he explained. The patient pays the same co-payment regardless of indication.
Grueger also discussed the concept of conditional reimbursement for drugs that are conditionally approved for marketing. The reimbursement is warranted because there is a potential for significant benefit even though there is insufficient information to demonstrate efficacy fully, he said.
If scientists or policymakers have enough data for conditional approval, that should be sufficient for reimbursement based on "a first, very initial, very crude, price and reimbursement assessment," he said.
Reimbursement would be adjusted up or down if subsequent data shows the benefit is greater than expected or less than expected, he added.
Conditional reimbursement also could be used in situations where full approval is granted but long-term benefits of a therapy remain uncertain, he said.
The benefit of pricing and reimbursement schemes that permit price adjustments based on later data is that both the drug maker and payer share the risks, according to Grueger.
Risk sharing is useful "in situations where responses to therapy are not predictable," he said, and "may be the next frontier" of reimbursement.
Grueger sees little future for "money-back guarantees," such as the U.K. agreement with Johnson & Johnson under which the company will rebate the cost of using Velcade (bortezomib) in patients who have a minimal response to the drug ("The Pink Sheet," Oct. 15, 2007, p. 5).
These "are just rebate schemes in disguise," he contended.
In the case of Velcade, "it is quite clear what proportions of patients will benefit from therapy and what proportion of the overall drug costs has to be refunded by the manufacturer," he explained to "The Pink Sheet."
"So the price could have been lowered to reflect this."
The U.K. is not the only country seeking better value in the drug market. The German Institute for Quality and Efficiency in Health Care has proposed that evaluations be conducted to set a ceiling reimbursement level for drugs and medical devices under Germany's government-based health insurance system ("The Pink Sheet," March 3, 2008, p. 28). Germany currently does not take drug pricing into account when adopting new therapies.
-Cathy Dombrowski (c.dombrowski@elsevier.com)


Fund Mangers bullish on pharma stocks in the long run

FT.com site : View of the day: Pharmaceuticals.
March 27, 2008Financial Times (FT.Com)

The market's attitude towards the pharmaceutical industry has changed dramatically over the last decade. The rise of generics, perceived pipeline issues and pricing have all led to a major de-rating of these stocks. This presents a huge opportunity," says Jamie Seaton, fund manager at SVG Investment Managers.
The sector is on a 15 year high free cash flow yield and companies within it are changing their attitude towards capital returns to shareholders with increased dividends and more share buybacks, he says.
GlaxoSmithKline, for example, yields more than 5 per cent and is buying back more than 10 per cent of its share capital in 2008 as part of a GBP12bn scheme.
"Underlying factors fully support the industry. The pipeline for drug approval in 2008 is strong - there are $12bn of new drugs awaiting approval in 2008 versus a three year average of $11bn, and the sector is forecast to grow its earnings per share 9.3 per cent per annum until 2012 via top-line and cost cutting initiatives, with the latter as yet largely unexploited."
The industry is also supported by favourable demographics, global growth and wealth creation. The latter is leading to improved healthcare in emerging economies and gives pharma groups an opportunity to expand into relatively untapped markets.
"Pharmaceuticals remain a long-term growth story regardless of the macro environment. Current sentiment merely provides an opportune time to buy."

NICE recommends Sanofi Aventis' Obesity drug

by Michael McKenna

"The UK’s National Institute for Health and Clinical Excellence on Wednesday issued final appraisal determination recommending that sanofi-aventis’ obesity drug, Acomplia (rimonabant), be made available on the NHS for certain patients. Sanofi-aventis noted that a final decision from NICE is expected in "due course."
The agency recommended that the compound be used as an adjunct to diet and exercise in overweight or obese patients who have not responded well, or are contraindicated, to other obesity drugs. NICE also recommended that the treatment should not be used for longer than six months unless the patient loses at least 5 percent of their initial body weight while taking the drug. Furthermore, the agency stated that Acomplia should not be used for longer than two years without a clinical assessment and discussion of the risks and benefits of the product with each patient".


Pharma 2020

PriceWaterhouseCoopers (PwC) published a report: Pharma 2020: The vision: Which path will you take?

PWC indicates that the current pharmaceutical industry business model is both economically unsustainable and operationally incapable of acting quickly enough to produce the types of innovative treatments demanded by global markets. In order to make the most of these future growth opportunities, the industry must fundamentally change the way it operates.

Some of the major changes PwC anticipates for the industry are:

- Health care will shift in focus from treatment to prevention.
- Pharmaceutical companies will provide total health care packages.
- The current linear phase research & development process will give way to in-life testing and live licensing, in collaboration with regulators and health care providers.
- The traditional blockbuster sales model will disappear.
- The supply chain function will become revenue generating as it becomes integral to the health care package and enables access to new channels.
- More sophisticated direct-to-consumer distribution channels will diminish the role of wholesalers.

You can download the pdf of the report at their website.


Health Economics & Outcomes Research Opening at Epi-Q

I am posting below job opportunity on behalf of Andrew Baker, VP Business Development at Epi-Q. Interested candiates please get in touch with Drew.


EPI-Q, Inc., an established consulting firm to the life sciences and healthcare provider and payer industries, seeks an experienced outcomes researcher for their offices in Harrison, New York (just 20 miles north of NYC). The qualified individual will spend about 30% of his/her time supporting marketing and sales and 70% leading and contributing to project work in support of client engagements.

RESPONSIBILITIES 1 Conducts background research on therapeutic areas and products, identify key clinical research, define potential unmet medical need, articulate product profile and associated potential value messages for key stakeholders, propose preliminary ideas for elucidating health economic value, and meet with prospective clients to demonstrate firm’s understanding of commercial challenges; 2 Conducts comprehensive secondary research of key clinical, epidemiological, economic, and HRQoL information for various therapeutic areas; 3 Drafts proposals for project work, including clear articulation of key issues, goals and objectives, approach, means for managing project team and communicating with client, description of deliverables, and accurate time and budget estimates; 4 Develops appropriate methodologies and coordinates study logistics, including selection of data for abstraction, data summaries, evaluation of variables, development of health economic models using spreadsheets and decision-analytic software, design of questionnaires and surveys, preparation of study materials such as investigator meeting agendas, IRB forms, consent forms, protocols, and CRFs; 5 Leads client engagements, including providing regular project status reports internally both to the project team and members of senior management, and externally to members of client organizations; 6 Utilizes strong working knowledge of health services research and life sciences and healthcare industry terminology to effectively conduct assigned projects; 7 Prepares technical reports and manuscripts of results and recommendations stemming from assigned projects targeted toward various audiences and stakeholders; 8 Works with colleagues to balance workload and timelines for assigned projects; 9 Anticipates issues and applies superior problem solving skills to address project hurdles.

EDUCATIONAL AND EXPERIENTIAL REQUIREMENTS 1 Advanced degree from an accredited institution in the fields of medicine, pharmacy, or nursing; 2 Minimum 3 years’ clinical practice; 3 Minimum 3 years’ experience in biopharmaceutical outcomes research

KNOWLEDGE 1 Understanding of drug development process, i.e., stage gates, milestones, regulatory and commercial compliance issues; 2 Strong knowledge of research design for epidemiologic studies, pharmacoeconomic studies, clinical trials, and prospective observational studies; 3 Understanding of US healthcare system and economics, i.e., financial incentives, perspectives, business models, and information needs of managed care, hospitals, long-term care, and public sector (Medicare, Medicaid); knowledge of healthcare systems of major international markets, including “fourth hurdle” issues related to evidence-based medicine, technology assessment, and pricing and reimbursement a plus; 4 Understanding of commercial and regulatory issues relating to dissemination of scientific information; 5 Solid understanding of and experience in at least one of the following therapeutic areas: (i) neurosciences; (ii) cardiovascular, metabolic & endocrine; (iii) oncology; (iv) inflammation, pain, muscular-skeletal; (v) infectious disease & immunology

SKILLS AND OTHER QUALIFICATIONS 1 Outstanding oral and written communication and interpersonal skills; 2 Comfort in consultative selling role and ability to identify key issues; 3 Ability and willingness to travel up to 40%, primarily domestic

Compensation commensurate with experience. Generous benefits available.

German IQWIG publishes presentations from the fall symposium on cost-benefit assessments of pharmaceuticals

The German IQWIG has published the presentations from the fall symposium.
To access the files click here. The talks on costing methods and modeling are unfortunately in German only.

Please find a list of the available speeches on the IQWIG website below:

Prof. Dr. med. Peter T. Sawicki, Welcome (German)
PD Dr. med. Peter Kolominsky-Rabas MBA, Process of the methods development (German)
Prof. J. Jaime Caro (MDCM, FRCPC, FACP), Methodological foundation of the Efficiency Frontier concept
Prof. David Henry (MBChB, MRCP, FRCP), How decision makers will view the proposed methods and how they will use it
Dr. Erik Nord, Why QALYs need replacement
PD Dr. med. Dr. rer. pol. Afschin Gandjour MBA, Cost estimation in IQWiG's cost-benefit assessment (German)
Prof. Dr. Uwe Siebert MPH, MSc, Modelling in IQWiG's cost-benefit assessment (German)
Prof. Alistair McGuire, Budget Impact Analysis (BIA) and how the proposed methods could control health care expenditures
Prof. Dr. med. Peter T. Sawicki, Summary and next steps (German)


IMS analyzes sales growth of US pharma market

Pharma's `slowing' pains - Prescription drug sales growth in U.S. hits lowest point since 1961
March 13, 2008

The Star-LedgerBUSINESS

The nation's pharmaceutical industry experienced its weakest growth last year in more than four decades, a trend fueled by the continued loss of patent protection on blockbuster drugs and a slowdown in approval of innovative medicines, according to the market research firm IMS Health.
IMS said sales growth in the U.S. prescription drug market moderated to a 3.8 percent increase in 2007, compared with more than 8 percent in 2006. It said total U.S. prescription sales last year reached $286.5 billion, compared with $274.9 billion the year before.
"In 2007, the U.S. pharmaceutical market experienced its lowest growth rate since 1961," said Murray Aitken, an IMS senior vice president.
"The pharmaceutical market has entered a new era, one characterized by more modest growth due to the continuing impact of new generic products, fewer and more narrowly indicated novel medications, and closer scrutiny of safety issues."
The sluggish sales growth has led to sweeping cost-cutting moves and massive layoffs by some of the biggest drugmakers, including 10,000 job losses at Pfizer, 7,600 at AstraZeneca, 7,000 at Merck, 4,800 at Johnson & Johnson and 4,300 at Bristol-Myers Squibb.
Aitken said the slowdown began in 2001, but was briefly interrupted by a boost in revenue stemming from the creation of the Medicare Part D prescription drug program for seniors. Aitken said the Part D sales growth has leveled off.
Barbara Ryan, a pharmaceutical analyst with Deutsche Bank, said "industry performance for the past several years has been very difficult."
"Stock prices are at new historic lows relative to the S&P 500," Ryan said. "They have had a challenging period, and this will continue to be the case, although individual companies may fare differently."
Ken Johnson, vice president of the Pharmaceutical Research and Manufacturers of America, said the fact revenue growth has slowed counters the "common misconception that drug costs are skyrocketing and are responsible for an increase in health-care costs."
IMS forecasters said they expect compound annual U.S. pharmaceutical sales growth through 2012 to be in the 3 percent to 6 percent range. That compares with double-digit annual sales growth for much of the 1990s and early part of this decade, peaking at about 19 percent in 1999.
On the plus side, IMS also predicted the introduction of novel biologic medicines and vaccines, as well as the launch of five to eight products this year with the potential for annual sales of $1 billion or more. But IMS said this will be offset in part by an additional $13 billion in branded products that are likely to be exposed to generic competition during 2008.
The IMS report said brand-name drugs representing $17 billion in sales lost patent protection in 2007. Generics increased their share of total dispensed prescriptions to 67.3 percent in 2007, from 62 percent in 2006, but account for only about 20.4 percent of the dollars spent.
Drugs that lost patent protection in the past two years and now face competition from lower-cost generics include Merck's Fosamax osteoporosis medicine; Bristol-Myers Squibb's Pravachol and Merck's Zocor, both cholesterol drugs; Pfizer's Zoloft antidepressant; Sanofi-Aventis' sleeping pill Ambien; and GlaxoSmithKline's Coreg hypertension and heart medicine.
At the same time such big-selling, high-profit drugs were coming off patent, IMS said innovative new medicines represented just $441 million of total sales in 2007, reflecting the slowest period for product launches in the past three decades.
IMS said slowed sales growth also was affected by a significant number of "black box" label warnings - representing the most serious safety concerns - as well as product withdrawals and safety issues raised by the Food and Drug Administration for anemia, diabetes and antidepressant medicines.
"Safety issues contributed to significantly lower-than-expected sales for products accounting for approximately 10 percent of the total prescription market," IMS said.
The report said cholesterol medicines continued to be the largest revenue-producing therapy class in the United States, despite a 15.4 percent year-over-year sales decline. Cholesterol drugs accounted for $18.4 billion in domestic sales, with Pfizer's Lipitor leading the pack with $8.1 billion.
Acid reflux medicines ranked second, with sales of $14.1 billion and growth of 2.8 percent. Antipsychotics replaced antidepressants as the third-largest therapeutic class in 2007, with prescription sales growth of 12.1 percent, to $13.1 billion.
In terms of the number of prescriptions written by doctors, antidepressants ranked as the leading therapy class, followed by cholesterol, codeine and combination pain medications, ace inhibitors and beta blockers.

Robert Cohen may be reached at rcohen@starledger.com.
(c) 2008 The Star-Ledger. All rights reserved.

All that ‘market access’ talk

While I have been on a skiing vacation in Switzerland last week, I had an interesting conversation over a long mount with the t-bar lift. Funnily enough as we started moving out of the base station and talking about the usual - weather and snow conditions, it also turned out that my Saturday morning lift sharing neighbour from Geneva was a consultant at one of the major management consultancies, currently assigned to help a top 10 pharma to reorganize departments involved with maximizing market access opportunities of the companies’ medicines. Given that I am working in that area, we very quickly had a lively conversation on the subject, continued over several Gl├╝hwein on the terrace of one of the restaurants on the slope.
I found it rather impressive how quickly he had come to the bottom of the matter although not very familiar with the details and technical aspects of our day to day work. It’s no news that almost all companies seem to struggle with the changing environment and HTA hurdles and are trying to form new teams and organizational structures to meat the challenges ahead. What he described correctly though was that the problem lays a few steps earlier, in product development. You simple need to bring forward a real good product, as he told me, and than the whole access discussion is less of an issue. Sounds rather simple and straightforward I suppose – not so easy to do as we know. Indeed, one thing however is to try to fix and justify at launch what may not be justifiable to some stakeholders… or, applying outcomes based accessed strategies – as the Bruckner Group puts it in their recent article – earlier on in a more strategic and systematic fashion in order to weed out the portfolio and develop an overall outcomes based business strategy. I also believe that he is definitely right in his observation that health economics appears to be underutilized in business development, licensing and pipeline decision making. This consultant also mentioned that there might be a danger that some of the folks from health outcomes/economics departments he interviewed may turn out to end up as glorified medical writers and will be producing papers rather than their skills being used towards a more strategic approach. I wonder if it is the lack of ‘sales’ skills of the outcomes people or the position within the company org chart that causes that perception in many cases. It’s not the first time that I hear that the health economics guys feel not fully appreciated or involved enough into the general commercial strategy. There is probably also some element of science clashing with marketing views – some of the later guys coming from the ‘old’ school where outcomes based access and evidence was considered, at most, a marketing gimmick without necessarily always having the appreciation that times have changed big time since. In any case it is kind of amazing to see the vast amount of recruiting, reorganizing etc. that is going on in the last couple of month and especially the tremendous increase of consulting groups in that area. I think it would be very interesting to hear from readers of the blog as to how they feel about the developments and what they think best organizational structures and approaches could be and where we see all this going? In the meantime, a happy Easter week to all!


NICE explains guidance in Lancet articles

March 3, 2008 Scrip

The National Institute for health and Clinical Excellence, which assesses healthcare technology for the national health service in England and Wales, is collaborating with The Lancet Oncology to publish background information on its anticancer appraisals. Recent guidance from the institute on the use of Roche's Mabthera (rituximab) in non-Hodgkin's lymphoma is to be outlined in the April print issue of The Lancet Oncology, along with a special report on the appraisal committee's consideration of the evidence (Scrip No 3340, p 5). NICE hopes that Lancet readers will find the report "a useful aid to understanding how we make our assessments and decisions". The Lancet Oncology points out: "Medical journals can play an important part in communicating to a wider audience the workings behind decisions and announcements made by publicly funded organisations, thus giving an insight into how such decisions are made and helping to increase accountability." NICE says it has similar arrangements with other publications, including the British Medical Journal, the Health Service Journal and Pulse, adding that these help to bring information about its work to an appropriate audience. The Mabthera guidance is the first of what is intended as a series of articles on anticancer appraisals to be published in The Lancet Oncology. NICE says its agreement with the publication is non-commercial.