Health Economics and Reimbursement Implications for

Emerging Pharmaceutical/ Biotechnology Companies

Quality Work • Valuable Results

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Strategies and Perspectives

MaRS • Future of Medicine Series

Agenda

  Quick Intro

  Pharmaceutical/biopharma policy in Canada

  Health Economics and Reimbursement   Delivering ROI

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Introduction

  Focus on Health Economics, Reimbursement and Pricing   Which innovations deliver ROI and how?

  Past decade working with or for industry

  Evolution of Patented Medicine Prices Review Board (PMPRB)

  Creation of Common Drug Review (CDR)   Bill 102+, payer negotiations

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1984 - Canada Health Act   Federal legislation

  Physician services   Hospital care

  Universality, accessibility, comprehensiveness, portability, public administration

  Not pharmaceuticals / Biotech / medical devices

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Federal Government

  Federal Focus – Regulatory   Safety & efficacy

  Line of questioning = “can the drug be used” compared to (usually) placebo

  Product assessment (NOC) / Post-marketing   Ensure Patented Medicine Prices are not

excessive (PMPRB)   Drug coverage for

  Military, Prisoners, First Nations & Inuit Canadians

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Provincial Government

  Provincial Focus – Providing Coverage   Will we pay for this drug?

  Line of questioning = “Is it worthwhile compared to what’s available”   Formulary Assessment

  Drug Coverage Programs   Hospital-Based Care

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Total Drug/Biopharma Expenditures, Canada

1985 to 2005

Source: Canadian Institute for Health Information. Available at http://secure.cihi.ca/cihiweb/products/drug_expenditure_1985_2008_e.pdf

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Factors Driving Pharmaceutical Expenditure

  Increased drug consumption   More patients are taking medications   Patients are taking more medications

  More expensive new drugs   New drugs have higher acquisition costs

  Increased price of existing drugs   Prices increase just as they do with other

products

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Product Assessment

  Until early – mid 20th century – None

  1950s-1960s – Safety

  1970s-1990s – Efficacy

  1997- Access (i.e., reimbursement)

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Product Assessment   2009 and beyond

  Remember this –

  And don’t forget this…..

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Product Assessment

  2009 and beyond   US Health Care Reform John Andrews, President and Head of R&D for NeurAxon,

“Currently the US offers the quickest access to market for companies like mine, and if there is going to be a change to reimbursement rates, and if there is going to be reimbursement at different rates, then it is certain to extend timelines for getting to the market and increase costs.”

  Further Globalization

  Comparative Effectiveness

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Making Sense Of It

CDR - National

Reimbursement Pricing

PMPRB - Federal

Negotiate Prices/Rebates

Provinces More Product Assessment

Health Canada

Product Assessment

Provinces

Further Product Assessment

Price Ceiling

ROI for Payers The 3 Pillars Leading to Reimbursement

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Clinical Evidence

Health Economic Evidence

Payer Priorities

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Importance to Pharma/Biotech?

Development Launch Post-Launch

$

Successfully Demonstrating Product Value:

–  Faster Time to Market –  Quicker Uptake

–  Maximizing Product Potential

Time

Doing it right

Doing it wrong

Clinical Pillar

Clinical Trial Design 1.  RCT Evidence 2.  Active Comparator 3.  Appropriate duration 4.  Meaningful endpoints 5.  Representative patient population (??)

Remember the payer’s line of questioning…..

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Health Economic Pillar Translating and communicating “value for money”

Health Economics & Pricing

Reimbursement

Health Outcomes

Industry – R&D Phase I

  Phase I – Clinical trials - Safety data, no efficacy data

  Role of Health Economics   Modeling target product profile (TPP)   Understanding disease burden   Price justification   Is a drug worth developing?

  Phase II Randomized Controlled Trials (RCTs)   Applications of studies planned from

pharmacoeconomic perspective

  Role of Health Economics   Answers questions posed in Phase I

  Is the TPP being met?   To what extent?   Proceed to Phase III?

Industry – R&D, Phase II

  Phase III RCT - Efficacy & Safety   Comparative Evidence

  Role of Health Economics   ‘Piggy-back’ pharmacoeconomic analysis   Best evidence for

  Federal approval   Payer Reimbursement

  Quality of Life/resource utilization

Industry – R&D, Phase III

  Phase IV - Post-marketing

  Role of Health Economics   Assessment of actual use

  Effectiveness rather than efficacy

  Comparison to other drugs and services   Modelling

Industry – R&D, Phase IV

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Importance to Pharma/Biotech?

Development Launch Post-Launch

$

Successfully Demonstrating Product Value:

–  Faster Time to Market –  Quicker Uptake

–  Maximizing Product Potential

Time

Doing it right

Doing it wrong

Health Economic Pillar

  Demonstrating “Value for Money”

  Early development and validation of cost-effectiveness models

  Incorporating appropriate outcomes in your clinical trials

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Other Factors to Consider

  Affordability   Budget Impact

  Public Outcry   High profile or underserved diseases   Many provinces have defined priorities   Physician/patient advocacy

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Some Examples

1.  Stelara - Psoriasis

2.  Herceptin – Breast Cancer

3.  Xarelto – THR/TKR

Future Examples…..

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In Summary

  Health care expenditures will continue to rise putting greater pressure on all stakeholders

  Successful companies will be those that see a need to deliver ROI to payers and adopt early life-cycle strategies   Clinical   Economic   Payer Priorities

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Colin Vicente (T) 647-669-1483 cvicente@pivina.com

www.pivina.com Its all about ROI

THANK YOU!