Emerging role of pharmacoeconomics in the research and development decision-making process

OBJECTIVES: This study examines the organisational structure of pharmacoeconomics departments in major pharmaceutical and biotechnology companies, the impediments to optimal use of pharmacoeconomic evaluations by companies and the integration of pharmacoeconomic analysis with research and development decision making. DATA AND METHODS: The heads of the pharmacoeconomics departments of 40 companies were surveyed on the structure of pharmacoeconomics departments in their companies, the roles that pharmacoeconomic analyses are playing in the new drug development decision-making process, and the initiation of pharmacoeconomic studies during the development process for a random sample of their companies' investigational new drugs. RESULTS: 45 department heads from 31 parent companies responded to the survey. The pharmacoeconomics function in pharmaceutical and biotechnology companies is relatively new and growing rapidly. Most pharmacoeconomics department heads preferred a different reporting structure than what they currently have and indicated that the strategic role that pharmacoeconomics can play is not well understood within the organisation. Pharmacoeconomic analyses have been increasingly initiated early in clinical development and have been a factor in clinical trial design and in key decisions made during the development process. CONCLUSIONS: Given the continued emphasis on containing healthcare costs worldwide, demand will increase for evidence that drugs provide good value for the money spent on them. Companies will likely respond not only with more economic evaluations for purchasers, but also with greater use of pharmacoeconomics early in the development process to aid in rationalising key research and development decisions, and in guiding final pricing decisions and reimbursement planning, thereby improving resource allocations.     

Pricing and reimbursement of pharmaceuticals in Belgium

The Belgian healthcare system has a tradition of access and equity at affordable prices. As in other countries, the system becomes pressured by increasing healthcare costs. This paper describes the actual situation in Belgium with special focus on pharmaceutical products and the potential role of pharmacoeconomics in decision making on price and reimbursement. Nearly all people in Belgium are covered by compulsory health insurance. The system is paid for by social security, the patients and the federal and regional authorities. The part of the consumption of pharmaceuticals that is charged to insurance was about 62.1 billion Belgian francs (BeF), i.e. about 50% of the pharmaceutical market in 1994. Price setting in Belgium has been rather low due to the positive reimbursement list, where the price of a new drug is compared to existing drugs in a comparable therapeutic class (so-called reimbursement criteria). The expenditure on pharmaceuticals is increasing faster than global funding for public health. In order to control drug budgets, different cost-containment measures have been or are being taken, i.e. a mix of price, reimbursement and volume controls. These cost-containment measures are not necessarily in accordance with a health economic approach. This paper suggests the scope for better implementation of pharmacoeconomic evaluation, which can lead to more flexible reimbursement systems in specific indications. Therefore, a formal recognition of the role of objective economic evaluations is needed for both hospital and ambulatory care. This process should be proceeded by improving the understanding and robustness of pharmacoeconomic evaluations.     

Why has the use of health economic evaluation in Japan lagged behind that in other developed countries?

The aging population and the increasing availability of new medical technologies, particularly pharmaceuticals, have led to growing pressure on governments worldwide to contain healthcare costs. Increasingly, economic evaluation is used to aid decisions on the reimbursement and formulary access of drugs, and pharmaceutical companies are often required to demonstrate the cost effectiveness of their products. Canada and the UK are examples of countries that have successfully incorporated mandatory requirements for economic evaluations into the decision-making process in healthcare. Japan faces cost-containment issues for its health and welfare system similar to those seen elsewhere in the world. Despite this, economic assessments are not currently used in the allocation of drug budgets. Reasons why economic evaluations for healthcare have not yet been used routinely in Japan include governmental approaches to healthcare cost containment, the pricing of pharmaceuticals, the organisation of the healthcare system, attitudes of the medical profession, and limited knowledge and expertise. However, small but encouraging steps are now being taken towards the introduction of economic evaluations in Japanese medicine.     

优化参照药物选择机制,提高药物经济学决策利用度

2017年以来,我国医疗保障部门完成了4次医保目录的调整工作。由于调整药品上市证据质量较低,药物经济学评估结论在我国医保准入决策中的可参考性较弱。随着愈来愈多的全球同步上市新药将在我国上市,如何提高药物经济学在医保准入决策中的利用度成为社会关注的重要问题。本文根据药物经济学评价中参照药物的选择机制,从选择标准、选择方式和成本测量3个方面进行分析,提出优化建议,以推进医保目录动态调整机制科学化。     

The societal value of pharmaceuticals. Balancing industrial and healthcare policy

Pharmaceutical policy arises through an ongoing process of negotiation and interaction among the key players in the pharmaceutical market: consumers, industry, healthcare providers and government. There is constant discussion about the just distribution of reward between cost-containment goals and the goals of research and development in the pharmaceutical arena. All industrial countries are under pressure to control healthcare costs, but it is unclear how cost-containment policies will influence industrial policies for pharmaceuticals. The pharmaceutical industry is an easy target for governmental cost-containment policies. The industry is driven by 3 issues: access to consumers, access to new technology and new competitive realities. The launch of a new, innovative product that represents a significant therapeutic breakthrough is becoming increasingly difficult, and a major challenge for politicians and governments will be to balance the need for cost-effective use of drugs and the need to create a favourable climate for innovation. Previously, there was generally little competition between pharmaceutical companies, but those companies will now have to undergo fundamental and comprehensive changes. Particularly, it will be important to have extremely well developed and integrated management systems focusing on both consumers and costs.     

Practical aspects of designing and conducting pharmacoeconomic studies in Japan

The advent of simultaneous global clinical trials and drug registration strategies has increased the demand for global pharmacoeconomic strategies. Outcomes researchers in pharmaceutical companies are faced with the challenge of assessing at a strategic level what pharmacoeconomic data are most useful in Japan and when, and then deciding at a tactical level what type of study designs are feasible. This paper is written mainly for the benefit of researchers working outside of Japan in the pharmaceutical/medical device industry or academia who are interested in conducting research in Japan.We reviewed the existing pharmacoeconomic literature in Japan, and found that the number of studies per year has been steadily increasing. The majority of studies have been cost-effectiveness and cost-consequence analyses. Typical data sources available in Japan are somewhat limited compared with other Western countries. However, charge data can be easily accessed through the national uniform reimbursement fee system and these data are particularly relevant for pharmaceutical pricing negotiations with the Ministry of Health, Labor and Welfare (MHLW). The present use of pharmacoeconomic data by pharmaceutical companies is mainly for pricing negotiations but recent reforms make certain types of data useful for marketing strategies too. The demand for pharmacoeconomic data may increase because of upcoming MHLW pharmaceutical pricing and/or recent health insurance system reforms.Economic evaluation of medical technologies in Japan, though lagging behind North America, Australia and Europe, has the potential to rapidly gather momentum as increasing cost-escalation worries contribute to a growing interest in pharmacoeconomic data.     

Pharmacoeconomics in the new millennium. A pharmaceutical industry perspective

The primary purpose of pharmacoeconomic research is to assist in making healthcare decisions. Rapid growth in the supply of pharmacoeconomic data over the past few years suggests that pharmacoeconomics can be of help in delivering good, cost-effective healthcare. Greater challenges in decision-making coupled with improvements in the techniques of pharmacoeconomic research point to a greater role for pharmacoeconomics into the new millennium. This in turn will have consequences for companies in the pharmaceutical industry. More successful access to markets and better commercialisation of products will be the rewards for those companies committing to pharmacoeconomics and to the broader goal of delivering value for money in healthcare.     

The increasingly complex fourth hurdle for pharmaceuticals

There are three known criteria that underlie drug reimbursement decisions: therapeutic value, cost effectiveness and burden of disease. However, evidence from recent reimbursement decisions in several jurisdictions points to residual unexplained variables, one of which may be budget impact. An economic rationale for carrying out budget impact analyses is opportunity cost, measured by the economic benefits foregone by using resources in one way rather than another. Under certain assumptions, cost-effectiveness analysis accounts for opportunity cost while conveying to the decision maker the price of maximising health gains, subject to a budget constraint. However, the underlying assumptions are implausible, particularly in the context of pharmaceutical care. Although drugs that are cost effective may lead to unambiguous health gains among patient groups for whom the drugs are indicated, the opportunity costs could conceivably lead to a reduction in aggregate health gains, or failure to meet different kinds of equity considerations. The pertinent policy question is where to find the resources to fund new innovations, such as cost-effective pharmaceuticals, or drugs targeting severe diseases. It may be a matter of redeployment of resources across healthcare sectors, cancelling the funding of (older) pharmaceuticals that are less cost effective, or delisting drugs that are cost effective but target less burdensome conditions.     

The 1996 pricing and reimbursement policy in The Netherlands

In The Netherlands, the government operates a reference price system in which medicines are categorised into groups of interchangeable drugs. The reimbursement within groups is limited. In addition, since drug prices in The Netherlands are currently among the highest in Western Europe, a law was implemented in March 1996 to lower the prices of drugs in The Netherlands to the mean of pharmacy buying prices in 4 surrounding countries (UK, France, Belgium and Germany). Maximum prices for oral formulations will be in force from 1 June 1996, and maximum prices for other formulations will be operational soon thereafter. Reducing the price level will lead to a substantial decrease in discounts for pharmacists. Lower discounts will also mean weaker 'golden chains' between wholesalers, the industry, and pharmacists, and will therefore create business opportunities for companies wishing to compete on the basis of price. Liberalising the distribution of pharmaceuticals and creating a cost-conscious demand side will stimulate price competition in the pharmaceutical market and make it easier for new participants to enter the Dutch market. Price competition will lead to lower prices and, consequently, to lower costs. Further exemptions from the reimbursement list will be recognised. Considerable efforts are also being made to rationalise the prescribing behaviour of physicians and the dispensing behaviour of pharmacists. Through this programme, which has many components, The Netherlands hopes to restrain and effectively control its expenditures on pharmaceuticals.     

Economic evaluation of pharmaceuticals: a European perspective

In recent years there has been a large increase in the number of economic evaluations of pharmaceuticals. Many of these studies have been commissioned by individual pharmaceutical companies, in support of new or existing products. In 2 countries, Australia and Canada (in the province of Ontario), draft guidelines issued by the government have outlined the requirements for economic evaluations to be submitted in support of requests for reimbursement (government subsidy) of particular products. One consequence of the guidelines is that they clarify what is required, and in specifying the procedure for submission of dossiers, identify a clear audience for the economic evaluation. In contrast, the situation in Europe is diverse. A wide range of healthcare systems exist, including national health services and more liberal systems, involving a wide range of insurers and providers. European countries also differ widely in their approach to the pricing and reimbursement of pharmaceuticals. Because of this diversity, the nature, conduct and impact of economic evaluation in Europe is not clear. It is therefore difficult for pharmaceutical companies to develop appropriate strategies for economic evaluation and for analysts to decide on appropriate study methodology. This article reviews the nature of any official guidance or requirements for economic evaluation, the potential for use of economic evaluation, the range of studies carried out and the identifiable impacts. There is currently no official guidance in any country, although some countries are considering issuing guidelines. In some countries there is official encouragement to pharmaceutical companies to undertake studies, and where economic data have been presented they have been considered by the relevant committees. The potential uses of economic evaluation vary widely from country to country. These can be classified in terms of a potential role in undertaking national price negotiations, deciding on reimbursement status or copayment level, deciding on inclusion in local formularies or in treatment guidelines, or in improving prescribing decisions. Approximately 80 economic evaluations of pharmaceutical products have been conducted to date in Europe, covering a wide range of clinical areas. There are relatively few examples of identifiable effects of such studies. In part this is because it is often difficult to assess the part played by various items of data. Nevertheless, the overriding conclusion is that economic evaluation of medicines is likely to be more relevant in Europe in the future. The problem for the pharmaceutical industry is in determining when and how.     

Pharmaceutical cost containment and quality care. Conflict or compromise?

Existing methods of pharmaceutical cost containment are relatively primitive weapons of expenditure restraint. Their effectiveness is generally limited to short term savings. The conflict between cost containment and quality is epitomised by the 'Drug Budget', which conditions payers to regard pharmaceuticals solely as a cost input without considering the results of their use in terms of integrated health outcomes, crossing the budgetary boundaries between drugs, hospitals, ambulatory and other forms of healthcare. A further problem, also related to the separation of inputs from outcomes, is the contention by healthcare payers that, even if 'expensive' innovative drugs offer Value for Money, budget holders cannot afford the required Money for Value. The limits of affordability are real in poor countries. In rich industrialised nations, the affordability of quality is in essence a political rather than an economic issue. In making choices and determining priorities, elected governments are usually responsive to public opinion, which is coming to regard the issue of quality in healthcare as one of the highest social priorities. Pharmaceutical innovation has much to contribute to quality in healthcare. A compromise between pharmaceutical cost containment and quality is feasible, based on input/outcome considerations, rational drug pricing, and re-engineering decision-making by payers away from the simplistic notion that the cheapest drug budget is necessarily the best.     

Costs, innovation and efficiency in anti-infective therapy

This paper provides an overview of issues related to the emerging discipline of pharmacoeconomics and its relationship to the outcomes movement. The focus is upon the evolving Management Care Organisation (MCO) and the demands placed upon the pharmaceutical industry as it attempts to provide new innovative anti-infective treatments. Similarly, the challenge is to meet the ever increasing requirements for approval and reimbursement of new anti-infective pharmaceutical products. Outcomes research is playing an increasingly important role in such decisions throughout the world, including the United States. Unfortunately, most decisions and analysis at the national level and within MCOs regarding the adoption and utilisation of pharmaceuticals are rather unsophisticated in terms of the proper utilisation of pharmacoeconomic data. There is a prevalent need to better utilise this information to develop cost-effective disease and therapy intervention models and guidelines. Also, information on the application of pharmacoeconomics for the evaluation of pharmaceutical care services that enhance the cost effectiveness of drug therapy needs to be seriously considered. Specifically, this should include a consideration of the economic consequences of drug-related problems and the potential impact of pharmaceutical care on drug-related morbidity/mortality associated with the treatment of infectious disease.     

Introducing economic evaluation as a policy tool in Korea: will decision makers get quality information? : a critical review of published Korean economic evaluations

Interest in the use of economic evaluations in Korea as an aid for healthcare decision makers has been growing rapidly since the financial crisis of the Korean National Health Insurance fund and the separation in 2000 of the roles of prescribing and dispensing drugs. The Korean Health Insurance Review Agency (HIRA) is considering making it mandatory for pharmaceutical companies to submit the results of an economic evaluation when demanding reimbursement of new pharmaceuticals. The usefulness of the results of economic evaluations depends highly on the quality of the studies. The purpose of this paper, therefore, is to provide a critical review of economic evaluations of healthcare technologies published in the Korean context.Our results show that many studies did not meet international standards. Study designs were suboptimal, study perspectives and types were often stated incompletely, time periods were often too short, and outcome measures were often less than ideal. In addition, some articles did not distinguish between measurement and valuation of resource use. Capital, overhead and productivity costs were often omitted. Only half of the studies performed sensitivity analyses.In order to further rationalise resource allocation in the Korean healthcare sector, the quality of the information provided through economic evaluations needs to improve. Developing clear guidelines and educating and training researchers in performing economic evaluations is necessary.     

Healthcare rationing in Spain: framework, descriptive analysis and consequences

This paper describes the main healthcare rationing policies implemented in Spain over the last 2 decades, and analyses the consequences of these policies on the healthcare system, patients, healthcare practitioners, the pharmaceutical industry and policymakers. The primary explicit healthcare rationing policies utilised in Spain include a catalogue that defines the healthcare rights of citizens. However, the existing system may lead to inequity between regions, and is not structured to direct resources towards the most cost-effective options. Health technology assessment requires further work before it can be utilised widely for the development of rationing strategies. Selective reimbursement of drugs and drug co-payments provide only short-term results and appear to have little long-term impact on expenditure. Implicit rationing instruments, especially waiting lists, have had a significant effect on healthcare quality and the welfare of citizens, and have contributed to keeping the Spanish healthcare budget under control. Newer regulations should integrate some form of economic evaluation within the policy-making processes associated with healthcare. Further research is needed to identify those efficient and equitable rationing instruments that are most likely to improve health interventions for an aging society that is increasingly demanding of health services.     

Design, analysis and presentation of multinational economic studies: the need for guidance

Over the last decade, there has been a proliferation in the number of economic evaluations of pharmaceuticals to meet the growing demand for information about the economic benefits of healthcare technologies. The majority of these studies have been commissioned by pharmaceutical companies for the purposes of drawing attention to the resource and quality-of-life aspects of new or existing products. Such information has become important in overcoming a new obstacle, namely the demonstration of cost effectiveness (the so-called 'fourth hurdle'), in addition to the three well-established criteria of quality, tolerability and efficacy. To ensure the maintenance of standards, guidance for economic evaluations has emerged lately in the form of guidelines, regulations, principles, policies and positions. Drummond outlined three purposes of these guidelines, as follows: as a requirement prior to reimbursement, as statements of methodological standards, and as a statement of ethical standards. Such guidelines are designed to assist both the economic analyst and the decision-maker. In laying out the state of the art regarding the methodology of economic evaluation, guidelines assist the analyst in performing high-quality, scientifically valid studies, and assist the decision-maker in properly interpreting and assessing their quality. In response to these growing requirements for cost-effectiveness data globally, it has become increasingly common for economic evaluations to be conducted on an international scale. However, the recommendations in pharmacoeconomics guidelines regarding the manner in which these multinational economic evaluations should be designed, analysed and presented are too limited to be of any real value. This article examines the various issues that must be taken into consideration when conducting multinational studies, and provides a review of the techniques and approaches that have been suggested to date. It concludes with recommendations for potential inclusion in future sets of pharmacoeconomic guidelines.     

探析中国药品价格管制存在的问题及治理对策

目的 分析中国医院药品价格虚高的成因,探究改进政府药品价格管制的政策途径.方法 结合管制经济学、卫生经济学相关理论,以及我国药品价格管制政策的实践,进行归纳总结.结果与结论 医院和医生倾向于使用高价药的行为是药品价格虚高的主要原因.降低药品虚高价格的有效政策,是采用固定参考定价补偿措施激励医院与医生使用低价药.     

The last decade of Italian pharmaceutical policy: instability or consolidation?

Pharmaceutical policy in Italy has been reshaped as a result of the 1993-4 crisis in which it was revealed that pharmaceutical companies, policy makers and top Department of Health officers had constructed an illegal system to set prices. Following this crisis, the rise of technical competency and leadership in the Italian Department of Health and, since 2000, in the Drug Regulatory Agency (Agenzia Italiana del Farmaco; AIFA) has achieved major improvements in many aspects of Italian pharmaceutical policy. These improvements have included increased transparency of decision making, the use of evidence-based medicine principles for reimbursement and pricing, and the use of generic drugs to lower prices.As a result of these changes, pharmaceutical expenditure has been controlled and equity has improved, mainly because co-payments have been reduced, thus reducing private expenditure on reimbursable drugs. However, a short-term approach to cost containment has prevailed, and Italian pharmaceutical policy has neglected industrial parameters. Hence, the trend in pharmaceutical expenditure has been erratic, and Italy has not favoured localization of research and development and production in its territory.The dominant issue of Italian health policy in recent years has been devolution of powers to regions, the intermediate tier of the Italian State. Overall, devolution has increased regional accountability on healthcare spending. However, regions react to enhanced freedom in different ways, reflecting their institutional capacity and competencies. This process has also affected pharmaceutical policy, more than in other decentralized healthcare systems (such as Germany and Spain). Such a situation is causing increasing regional variations and geographical equity concerns. In addition, the regional level appears rather inadequate to promote an industrial perspective unless it is supported by national initiatives.