Since the dawn of the biotechnology era, pricing models for new drugs have evolved to reflect the impact of many important advances in biomedical research, including the introduction of often complex new molecules and cell therapies. In recent years, however, advances in research are positioned to transform the healthcare landscape at unprecedented levels and could make long-term planning for the development of drug pricing models more difficult.

In a recent survey published in collaboration with a leading UK-based pharmaceutical company, more than 60 different healthcare industry stakeholders from the UK (n=16), France (n=16), Germany (n=11), Italy (n=11) and Spain (n=12) shared their views on a range of issues associated with both established and emerging trends in drug pricing. They offered perspectives on the roles of different stakeholders in setting pricing policies, how new models might vary based on the structures of different healthcare systems, and how they might help or hinder future research in diverse indications including oncology, cardiovascular disease and central nervous system diseases. Responses to this survey were published in Health Policy in March 2018, showing that stakeholders strongly agree on the need for potentially multiple new drug pricing models. The responses also reinforce that there is widespread sentiment that time is rapidly running out to develop these models as many new therapies – including some potentially curative therapies – advance to later stage regulatory review and approval. Nonetheless, despite the ticking clock there is still little consensus on the structure of new pricing models and the alignment of different stakeholders in their design and implementation.

A new era introduces new challenges

Fully 85% of participants in the survey note that newer pricing models may have to consider alternatives including caps or annualized rebates on a per-manufacturer basis, list price discounts or price volume agreements.

There are some examples of pricing innovations already in use in European markets that can serve as models outlining the path forward, including performance-based reimbursement criteria. In the UK, Takeda launched bortezomib with a real-world performance-based agreement that includes rebates for patients with multiple myeloma who do not meet specified response criteria. Celgene’s pomalidomide, also a treatment for multiple myeloma, has a similar performance-based agreement in France. Survey responses confirm that uncertainty associated with long-term efficacy of these types of new therapies could remain a major concern, paving the way for broader use of outcomes measures in reimbursement. Respondents from Spain and the UK – mostly national and regional payers – strongly indicate that many new therapies will be much more attractive if pricing models can be structured to help manage this uncertainty.

A community of diverse opinions

Respondents were asked to share their opinion about several statements related to innovation in drug pricing; their responses highlight several areas where opinions differ. Among survey participants, 30 percent indicated that new pricing agreements should be designed to support better management of healthcare budgets by assessing the rate of future expenditure, while 23 percent said that such agreements should be designed to help reduce risk for payers, especially in cases where long-term outcomes data have not yet been demonstrated. Respondents in Germany, Spain and the UK were most in favor of pharmaceutical companies taking a lead role in developing new pricing agreements, while respondents in France and Italy preferred that agreements be developed initially by healthcare providers (i.e. hospitals) or government agencies, with only limited early involvement of industry. As shown in Table 1, of participants in the survey from the UK specifically, 44 percent agreed that pharmaceutical companies and government agencies should work closely together to outline new pricing strategies, while 19 percent each preferred that pharmaceutical companies and healthcare providers jointly lead collaborations on the design of new models, or healthcare providers alone should take responsibility for developing new pricing models, or pharmaceutical companies should work to develop new models independently.

Respondents also disagreed on whether new agreements should be made at the national or regional levels. Most respondents in the UK (72 percent), Italy (67 percent) and France (65 percent) preferred that models be national in scope. For the UK, future challenges to national pricing agreements may be compounded by ongoing Brexit negotiations, as regulatory harmonisation between the newly-independent UK and the EU is just one of many unresolved questions. Brexit may introduce significant additional costs associated with the launch and marketing of a drug in both the UK and EU, potentially making the UK a less attractive market for many new therapies. Despite expectations in the UK for joint pharma company and government agency initiation of innovative agreements, the potential additional burdens of UK launch post-Brexit might reduce pharma willingness to work with agencies, on the one hand, and agencies may have significantly greater regulatory workload, on the other. During the period of uncertainty related to Brexit, government contacts and industry stakeholders will likely need to work closely with UK government departments and NHS organisations across England, Scotland, Wales and Northern Ireland to support appropriate pricing and continued access to new therapies.

Respondents do concur that new pricing models must be developed in ways that do not limit or slow access to innovative therapies for patients in need in any market. They also reinforce that new forms of strategic alignment among stakeholders, potentially including payers, hospital administrators, regulators, manufacturers, academia, and patient advocacy groups, may be necessary. But they anticipate that establishing these new inter-relationships to build consensus among all stakeholders will be a challenge. The key to success will be alignments that successfully reflect individual stakeholder needs while also optimising benefits to healthcare systems and patients.

Guy Edwards is a senior associate in CRA’s Life Sciences Practice.

The views expressed herein are the author’s and not those of Charles River Associates (CRA) or any of the organisations with which the author is affiliated.