Pharmaceutical Price Regulation Scheme Research Articles

PCP10 - PATIENT ACCESS TO NEW MEDICINES; THE CHANGING LANDSCAPE

The market access landscape has changed substantially since the introduction of the National Institute for Health and Care Excellence (NICE) in 1999 and the Pharmaceutical Price Regulation Scheme (PPRS) in 2009 (updated in 2014). Increasingly formalised pricing mechanisms were introduced in the 2009 PPRS to allow a range of options to industry, including Patient Access Schemes (PAS). These PAS have since evolved; currently simple discount (confidential upon request), and complex schemes are available. However, the introduction of NHS England also brought Commercial Access Agreements (CAAs) and Market Access Arrangements (MAAs), and the range of options in the future may be even more innovative, albeit with simplicity at their core, relative to complex PAS. A key driver for more innovative approaches comes from ground-breaking new regenerative therapies, such as CAR T-cell therapy in oncology. CAR T-cell therapy is administered once, and patients who remain in remission for over 5 years are considered cured. The University of York and NICE assessed various pricing models and considered a leasing payment model for CAR T-cell therapy worthy of further exploration. This model would spread the cost of providing patient treatment over time; however, there are potential barriers, including the standing operating protocol and standing financial flows within the NHS. While CAR T-cell therapy is likely to be provided by only a small number of specialist centres, this would not be the case for less-specialised treatments that follow a similar model of high upfront costs for long-term benefits. Other solutions may be required for routinely commissioned treatments that are approved through the NICE Technology Appraisal process. This provides the potential for industry and the NHS to collaborate to identify strategies that while innovative are both acceptable and implementable. These concepts will be explored further and summarised.

OP20 When Are Nationally Available Discounts Introduced In NICE Appraisals

Introduction:Offering a nationally available discount has become common to increase the chance of being recommended by the National Institute of Health and Care Excellence (NICE). This study reviewed all NICE technology appraisals (TAs) since October 2007 to determine whether a national available discount was submitted, and explore when these discounts were introduced.Methods:All TAs between October 2007 and August 2017 were reviewed. The timing of the nationally available discount submission was allocated into one of four categories: initially submitted; initially submitted but changed; introduced after submission; or, other discount. An analysis was conducted to examine whether there was a temporal pattern in the introduction of nationally available discounts before or after January 2014, when the current Pharmaceutical Price Regulation Scheme (PPRS) came into effect.Results:Before 1 January 2014, a nationally available discount was only used in the minority of cases across recommended (22 percent of cases) and not recommended (19 percent) technologies. In the period since 1 January 2014, use of a nationally available discount increased overall, but to a greater degree in technologies ultimately receiving a positive recommendation from NICE (not recommended: 19 percent to 39 percent; recommended: 22 percent to 59 percent). In the period since 1 January 2014, the proportion of technologies with a positive recommendation where implicit price flexibility during the appraisal was revealed increased (from 20/186) to 40/182.Conclusions:With the current PPRS, the majority of technologies have offered a nationally available discount, most commonly at the time of submission; however, there is increasing evidence of implicit price flexibility during the appraisal process to achieve a positive recommendation.

UK Value-Based Assessment: Will Scotland's Smc Approach It In The Same Way?

In May 2010 the UK government set out its intentions to reform the current method of pricing branded medicines and introduced a new system of value-based pricing (VBP). This was to replace the Pharmaceutical Price Regulation Scheme (PPRS) which expired at the end of 2013. With discussion still ongoing, and the PPRS renewed up until end of 2018, it has been indicated that VBP will no longer relate to medicines’ pricing, but instead will be a reshaping of the Health Technology Assessment (HTA) model employed by the UK in its appraisal of new medicines, and renamed Value Based Assessment (VBA). As medicine assessment is devolved in the UK, performed by NICE in England and the SMC in Scotland, we seek to understand whether the SMC will adopt the same approach to VBA as NICE The research was conducted through in-depth secondary research and interviews with stakeholders, including payers and KOLs, in UK Both NICE and the SMC have indicated they will continue to use QALY as a measurement of clinical and cost effectiveness while also incorporating issues such as burden of illness and wider societal impact in their assessment. However, their approach to conducting such assessments may differ with the SMC suggesting using a new system of patient and clinician engagement (PACE), currently in use for the appraisal of medicines for end of life or rare conditions (orphans), as a wider process to determine Scotland’s requirement for a value based approach to assess all new medicines Manufacturers would be encouraged to closely follow the outcomes from the new PACE system, incorporated into the SMC assessment for end of life and orphan therapies, to ensure readiness for the introduction of VBA in Scotland.

How the Assessment of Burden of Illness might change NICE Decisions: A Retrospective Analysis under Value-Based Pricing

Background: Value based price (VBP) is the price that reflects the value to patients, carers, society and the economy which delivers health benefits that exceed the health predicted to be displaced both elsewhere in the NHS and in the welfare economy, due to their additional cost. VBP is constituted of the the burden of illness (BoI), the cost of illness due to its severity and unmet need. It will replace the existing PPRS in September 2014. Objective: To address the question of how moving to a VBP system from the current Pharmaceutical Price Regulation Scheme (PPRS) might change selected old non-recommended and optimised NICE appraisal decisions dependent on the BoI, which considered to be a key driver of VBP. Methodology: Two classification measures were identified and used in order to categorise the selected diseases into higher, medium and lower burden. After a categorisation matrix was constructed, information about the BoI assessment along with the cost and clinical effectiveness of each disease were applied to the analysis so as to make recommendations of how NICE decisions might have changed under VBP and the BoI assessment. Results: A categorisation of the diseases into higher, medium, and lower burden was attempted and it was evident that the decisions differed with respect to the different measurement tool that were used. In some cases BoI played a trivial role into the assessment of NICE decisions due to the fact that clinical effectiveness was considered a more important factor. In other cases, where the ICER was bounded into the recommended range of £20,000 and £30,000, the nonrecommended or optimised decisions might change under VBP.

Health-Related Productivity Loss: NICE to Recognize Soon, Good to Discuss Now

The National Institute for Health and Care Excellence (NICE) will soon consider the societal benefit of drugs, including their impact on productivity. Chief Executive Sir Andrew Dillon says NICE was asked by the Department of Health ‘‘to take account of wider societal benefit. For example, if we have a condition that significantly reduces our ability to undertake the daily activities that most of us would regard as normal, such as paid employment or caring for children or relatives’’ [1]. Until now, NICE has upheld that only health sector costs may be incorporated in cost-effectiveness analyses, not the ‘indirect’ costs such as productivity loss [2, 3]. Numerous reasons were given for this position, e.g., productivity costs were outside the budget purview or incorporating them would discriminate against non-working populations, including the elderly [4]. Critics of NICE retorted that ignoring productivity was tantamount to discrimination against the young, to valuing marginal gains in labor output at zero [4]. Time and again, NICE put these arguments aside. Why the sudden change of heart? It calls to mind the UK’s recent attempt to replace its Pharmaceutical Price Regulation Scheme (PPRS), a voluntary agreement between the Association of the British Pharmaceutical Industry and the government and set to expire in December 2013, by a system of ‘value-based pricing’ (VBP). In light of criticism that the costeffectiveness-based threshold set by NICE was too high, VBP was promoted as a new way to link the price of medications to their value to patients and society. Talks around VBP brought together various lobbies, who agreed that VBP should take the ‘societal perspective’ and account for productivity loss. Although the VBP policy initiative died on the table (the PPRS of old is still in effect [5], albeit with caps on overall pharmaceutical spending growth over the next few years), the beneficiary of this round of politicking is the societal perspective. This is indeed good news for the welfarists. There are, however, issues around the measurement and valuation of productivity loss that have been given short shrift. Our aim is to highlight some of these issues, as cost-effectiveness studies incorporating productivity are likely to advance quickly in the wake of NICE’s decision. The inclusion of productivity losses in cost-effectiveness analyses has always provoked concerns over measurement and valuation, including problems around double-counting, equity, and perspective [6, 7]. Despite these concerns, decision making will be best informed if studies of new drugs explicitly include all societal costs related to the disease being treated. By clearly presenting all cost components separately alongside methodological assumptions, decision makers will be permitted to assess the impact of different assumptions on the final study results. This has been supported by the recent reporting guideline, Consolidated Health Economic Evaluation Reporting Standards [8, 9]. So what components of productivity loss should be considered? People may lose their paid employment because of their health problems (job loss or early retirement). For people maintaining paid employment, some will reduce their routine work time, or experience periodic absences because of their poor health. While people are W. Zhang A. H. Anis (&) Centre for Health Evaluation and Outcome Sciences, St Paul’s Hospital, 588-1081 Burrard Street, Vancouver, BC V6Z 1Y6, Canada e-mail: aslam.anis@ubc.ca

PHP145 - A Regression Analysis Of The Impact Of Patient Access Schemes

Patient Access Schemes (PASs) are part of the UK Pharmaceutical Price Regulation Scheme (2009). PASs enable patients to receive drugs, and allow pharmaceutical companies to collect cost-effectiveness and efficacy data, even if the payer classified the drug as outside the cost-effectiveness threshold. This project analysed the effect of PASs on patient access (PA) (defined by total sales in volume/prevalence of the particular disease group). A literature search of Medline and online resources was carried out to capture relevant data on PASs, however no suitable publications on the relationship between PA and PASs were obtained. Multiple regression was used to test if a relationship exists between the dependent variable, (change in PA) and the independent variable (existence of a PAS) and other factors that may affect change in PA. The other factors were: type of PAS, country, number of competitors, list price, how long the drug has been marketed for, and the orphan drug designation. Five drugs with approved PASs in the UK were analysed. These included: lenalidomide, erlotinib, bortezomib, sunitinib, and cetuximab. These were analysed in France, Germany, Italy, Spain and the UK, between 2010 and 2011 using IMS sales data and the Globocan Project 2008 prevalence data. The results of the regression analysis showed the existence of a PAS does not seem to have an effect on the change in PA. Therefore, this model cannot support a relationship between these two variables. The R442 is 0.6119, however the only variable which was statistically different from 0 is the number of competitors, with a p-value of 0.014; which means it is the only variable which had a significant effect on the change in PA. Further research needs to be conducted for a detailed analysis on this relationship.

Straight talk with... Mark Sculpher

By 2014, the UK will be changing the way it regulates the price it pays for medicines. Currently the country's National Health Service (NHS) uses the Pharmaceutical Price Regulation Scheme (PPRS), which controls the maximum profit a drug manufacturer can make on the basis of capital investments the manufacturer has made. A review of this system, carried out by the UK Office of Fair Trading in 2007, recommended that, instead, medicines should be priced according to the therapeutic benefits they offer to patients-an idea known as value-based pricing (VBP) that has similarities to systems already used in smaller countries such as Australia and Canada. This pricing scheme has been embraced by the UK government, and negotiations on how the system will work are due to begin this month. A British switch to VBP could have ripple effects throughout the global pharmaceutical industry. Even though the UK's share of the world drug market is relatively small-just 3%-drug prices in the country are important because a quarter of national governments reference British values to determine their own sticker prices. One of the most influential thinkers on the UK's proposed system is health economist Mark Sculpher, director of the Programme on Economic Evaluation and Health Technology Assessment at the University of York. As a regular advisor to the UK National Institute for Health and Clinical Excellence (NICE) and former chair of a task force on methods guidance for economic evaluation at the agency, Sculpher has had an instrumental role in guiding value-based decision-making in the country's healthcare system. Kate Ravilious met with Sculpher at his office in York to discuss the value of VBP.

Faster access to Cancer Drugs Fund

Access to England’s Cancer Drugs Fund will be sped up to ensure that patients are off ered drugs within days of applying, the Department of Health has announced. Introduced by the coalition government in 2010, the Fund aims to improve patient access to cancer drugs before the expected reform of arrangements for branded drug pricing. The current Pharmaceutical Price Regulation Scheme expires at the end of 2013. However, some doctors and charities have raised concerns that it can take several weeks for patients to access cancer drugs through the Fund. Pharmafocus magazine recently reported an underspend of around £60 million on the Fund last year by the Strategic Health Authorities (SHAs) accountable for the Fund. New guidance to the UK National Health Service (NHS) will speed up applications for cancer drugs, which will no longer need to go through the primary care trust (PCT) funding processes. Each SHA should ensure there is a transparent, published process for allocating the funding, and “more challenging timescales” for decision making should be adopted. The present 31-day treatment standard should be seen as an absolute maximum. The guidance came into force on April 23, 2012, and does not apply retrospectively. It will be kept under review and updated as appropri ate during 2012–13. An audit of the Fund will also be undertaken to provide evidence from drugs funded through the Fund for the benefi t of wider NHS practice. Andrew Wilson, from the Rarer Cancers Foundation (Canterbury, UK), said, “We welcome the measures aimed at speeding up applications for drugs by bypassing PCT funding processes prior to applying to the Fund. This will help patients to get the fastest possible access to the drugs recommended by their doctors”. Heather Walker from Cancer Re search UK (London, UK) agreed. “Cancer Research UK welcomes anything that helps patients get the treatments they need faster. But it’s still unclear what will happen to the Fund when we move to value-based pricing in 2014. We would like to see detailed plans from the government to reassure us that cancer patients won’t be left in limbo”, Walker said.

Creative compliance in pharmaceutical markets: the case of profit controls

This article discusses the issue of creative compliance in pharmaceutical markets. In particular, we explore the case of profit controls in the UK as an indirect way of regulating prices of in-patent originators. We study creative compliance in the presence of profit controls, rather than price controls or the Pharmaceutical Price Regulation Scheme in general. We use lessons from the accounting literature to explain firm behavior and reveal potential weaknesses in profit control regulation and use data to show changes in trends following the introduction of this policy. We demonstrate that in the presence of profit controls there is an incentive for producers to increase costs (leading to inefficiencies) or to inflate reported costs. We find some evidence that the behavior of pharmaceutical firms in the UK may have changed as a result of the introduction of profit controls. Although the evidence is in line with what we would expect to occur as a result of creative compliance, establishing a concrete causal relationship between such a pricing policy and costs is not possible. As institutions or organizations look to achieve legitimacy for their actions, they will use the tools they have, whether accounting or regulatory, to best represent themselves.

Value-Based Pricing

Within a free market economy, the ‘invisible hand of the price mechanism’ operates such that suppliers allocate resources in response to consumer demand. However, where a market is distorted, prices can have adverse effects on welfare and efficiency, and government intervention is required to reduce the potential for exploitation by sellers (or buyers) by regulating how goods, services and labour are used, priced or distributed. This is the case for monopolistic suppliers of patent-protected, branded medicines, operating within monopsonistic health service providers such as the UK NHS. The Pharmaceutical Price Regulation Scheme (PPRS) was established not long after the NHS itself and has the explicit aim of ensuring ‘‘that the interests of patients, the NHS, the industry and the taxpayer

Generic substitution: authors' response

We thank Professor Peterson for clarifying the standards by which regulatory authorities consider the bioequivalence of generic products. We did not intend to perpetuate a myth that downplays the quality assurance for equivalence of generic drugs and, if this was the result, we apologise. Since our publication went to press, the Department of Health (DoH) in England (speaking for the whole of the UK) decided against plans detailed within the 2009 Pharmaceutical Price Regulation Scheme (PPRS) for pharmacist-led generic substitution of medicines in primary care [1]. Following a consultation process, the DoH was swayed in its decision by the ‘strong perception (by consultees) that generic substitution poses a threat to patient safety’. However, looking at the responses it seems that many others were in favour of these plans. The DoH was also unconvinced of the cost-effectiveness of generic substitution, recommending instead that other mechanisms should be utilitized to support the use of generic medicines. As noted in our article [2], only in a minority of cases is generic substitution inappropriate, and the proposals permitted the dispensing of a branded medicine when indicated explicitly by the prescriber. Nevertheless, concerns about the minority have seemingly influenced a decision that would have saved the NHS millions of pounds annually. Moreover, in anticipation of the efficiencies achieved from generic substitution which the drug companies involved had agreed to, the PPRS made provisions for a 0.5% compensatory increase in the price of branded medicines, which account for around 80% of the NHS drugs bill, over the next 3 years. Thus while the proposal for generic substitution has been shelved, the costs of branded medicines to the NHS in the UK are allowed to rise. This decision seems perverse at a time of financial austerity.

Value‐based pricing: a new scheme for setting drug prices

AbstractSteve Chaplin explains value‐based pricing, the Government's proposed new pricing system that will replace the Pharmaceutical Price Regulation Scheme. Copyright © 2011 Wiley Interface Ltd

Count epilepsy out of any plans for generic substitution

The National Society for Epilepsy's campaign to ‘Count Epilepsy Out’ has succeeded in excluding antiepileptic drugs from the proposed changes to the Pharmaceutical Price Regulation Scheme.

Value based pricing, research and development, and patient access schemes. Will the United Kingdom get it right or wrong?

The National Health Service (NHS) should reward innovation it values. This will enable the NHS and the United Kingdom (UK) economy to benefit and impact positively on the Research and Development (R&D) decision making of companies. The National Institute for Health and Clinical Excellence (NICE) currently seeks to do this on behalf of the NHS. Yet the Office of Fair Trading proposals for Value Based Pricing add price setting powers--initially for the Department of Health (DH) and then for NICE. This introduces an additional substantial uncertainty that will impact on R&D and, conditional on R&D proceeding, on launch (or not) in the UK. Instead of adding to uncertainty the institutional arrangements for assessing value should seek to be predictable and science based, building on NICE's current arrangements. The real challenge is to increase understanding of the underlying cost-effectiveness of the technology itself by collecting evidence alongside use. The 2009 Pharmaceutical Price Regulation Scheme sought to help do this with Flexible Pricing (FP) and Patient Access Schemes (PASs). The PASs to date have increased access to medicines, but no schemes proposed to date have yet helped to tackle outcomes uncertainty. The 2010 Innovation Pass can also be seen as a form of 'coverage with evidence development.' The NHS is understandably concerned about the costs of running such evidence collection schemes. Enabling the NHS to deliver on such schemes will impact favourably on R&D decisions. Increasing the uncertainty in the UK NHS market through government price setting will reduce incentives for R&D and for early UK launch.

Generic substitution: Implications for safe medicines management

The government and health authorities have a duty to provide safe, effective and efficient health care. The Office of Health Economics Compendium of Health Statistics shows that 10.5% of the NHS budget is spent on drugs (The Pharmaceutical Journal, 2008: 145). As the NHS is funded through public money with competing priorities there is a responsibility to use this money as efficiently as possible. The Pharmaceutical Price Regulation Scheme (PPRS) is the vehicle through which the Department of Health (DH) controls prices of branded medication. The House of Commons Committee of Public Accounts (2008) proposes that the NHS could reduce costs by over £200 million annually through price cuts and substituting branded medicines with equivalent generic medicines. The government has advised that it is going to introduce generic substitution in primary care in January 2010 following discussion with interested parties (DH, 2009).

The reformed Pharmaceutical Price Regulation Scheme

AbstractThe new Pharmaceutical Price Regulation Scheme addresses previous criticisms by promoting patient access and uptake of new medicines, and introduces flexible drug pricing and generic substitution. Copyright © 2009 Wiley Interface Ltd

Editorial

Editorial

Decision analysis for resource allocation in health care

This paper addresses the use of economic evaluation to inform resource allocation decisions within health care systems about which interventions to reimburse and whether additional research should be funded. A social decision-making view of economic evaluation, that is to maximize health gains subject to an exogenous budget constraint, is adopted. A brief overview of the components of an economic evaluation is presented. Particular attention is paid to how uncertainty is inherent to decisions about resource allocation, the consequences of that uncertainty and how it can be incorporated informatively into economic evaluation. A Bayesian approach to uncertainty is used as it meets the needs of social decision-making, allowing analysts to quantify the probability that an intervention is cost-effective given the available evidence and to quantify the expected value of further research. The discussion covers methods to represent parameter and structural uncertainty and considers the role of formal elicitation of expert judgements. The association between decisions to approve interventions for reimbursement and decisions about future research funding, and how value of information analysis can be used to formalize this link, is explained. Recent developments in the UK highlight the evolving policy environment for economic evaluation, such as the Cooksey report on the funding of UK health research, the review of the Pharmaceutical Price Regulation Scheme by the Office of Fair Trading and the update of the methodological guidelines issued by the National Institute for Health and Clinical Excellence. The paper concludes by describing ongoing methodological work designed to meet the challenges of undertaking decision analysis for resource allocation in health care.

Drug price reform in the UK: debunking the myths

The OFT report into the Pharmaceutical Price Regulation Scheme (PPRS) called for reform of the scheme, replacing existing profit and price controls with a system of value-based pricing (VBP). The report argued that VBP would be much more effective than the current PPRS both at providing value for money for the NHS and giving pharmaceutical companies the right incentives to invest in drugs in the future. The report has sparked a widespread debate about drug pricing in the UK and has been controversial in some quarters. Some of the more negative responses are, however, based on fundamental misconceptions about the OFT recommendations. In particular, contrary to some claims, the recommended system would provide strong incentives for incremental innovation and the right balance of rewards for first in class and follow-on products. Nor, as is sometimes argued, would VBP have an adverse effect on investment in the UK.Certainly, real challenges lie ahead if VBP is to be implemented. These concern the definition of value, particularly where patient benefits differ significantly by subgroup or indication, and the level of resource required to implement VBP. The OFT report contains proposals for addressing each of these areas. Perhaps the most difficult challenge is the political one: securing acceptance for a reform package that would create winners and losers among pharmaceutical companies according to their success in producing valuable drugs. Ultimately, however, only a scheme that does precisely this can hope to meet the needs of patients, the NHS and innovative companies in the long run.

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