Govin Permanand

Hanne Bak Pedersen

Journal of Pharmaceutical Policy and Practice

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Managing new premium-priced medicines in Europe

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KEYNOTE SPEAKER PRESENTATION Open Access
Managing new premium-priced medicines
in Europe
Govin Permanand*, Hanne Bak Pedersen
From 3rd International PPRI Conference 2015: Pharmaceutical Pricing and Reimbursement Policies: Chal-
lenges Beyond the Financial Crisis
Vienna, Austria. 12-13 October 2015
An issue of growing concern for health policy-makers in
Europe is the continuing rise in spending on pharma-
ceuticals. In OECD countries pharmaceutical expendi-
ture rose by 3.5% per year between 2000 and 2009, and
averages 18-19% of total health expenditure [1]. Similar
averages are seen across Europe, with pharmaceutical
spending representing the largest component of ambula-
tory care [2]. Spending in some countries has dropped
since 2009 on account of specific policy decisions taken
due to the financial crisis, but in others this growth has
remained constant [1,3]. Contributing to this is the con-
tinual introduction of new premium-priced medicines,
particularly for biologicals given the appreciable number
in development and their envisaged high prices [3-6].
And while the introduction of new therapies and cur-
rent rapid pace of therapeutic innovation, particularly
for noncommunicable diseases, is extremely positive
from a patient perspective, managing their entry and
longer term affordability especially under health insur-
ance schemes and vis-à-vis existing lower-cost therapies
poses a series of challenges to policy-makers regarding
therapeutic complexity and higher costs [7].
To mitigate such pressures and to balance the demand
for new medicines and the financial impact of their
introduction, further development of systems and pro-
cesses to optimize the entry of new medicines is neces-
sary across Europe; this applies to countries with well-
developed medicine policies and regulation traditions
and those with less mature systems. And while many
European countries have not traditionally required
active priority-setting for access to medicines, appraising
new medicines using pharmacoeconomics is increasingly
seen as critical to improve efficient spending while
maintaining an appropriate balance between access and
cost-effectiveness. Indeed, policy-makers are in need of
wider guidance on how to optimise the entry of new medi-
cines to ensure the financial sustainability of their health
care systems while encouraging the development of new
treatments to address areas of unmet clinical need.
Although not an exhaustive list, areas in which the
challenges around the sustainable management of new
medicines are especially acute include:
• new medicines for patients with cancer where the
price of new drugs has doubled over the past 10
years, up to US$10,000 per month, and often with
little relationship between reimbursed costs and
associated health benefits [5,8]
• new therapeutics for hepatitis C where patients are
potentially being denied new effective direct-acting
antivirals due to extremely high prices [9,10]
• orphan drugs where there is considerable unmet
need for small patient populations, and where
annual acquisition costs can be as high as US
$500,000 per patient per year [11,12].
These represent examples of new premium-priced
medicines which carry considerable implications for
countries’ health budgets due to being either high volume
(for treating many patients) or high cost (because of the
cost of a single course of treatment).
The importance of this issue, and the need for gui-
dance across European countries, is underscored by the
results of a 2014 query undertaken by the Pharmaceuti-
cal Pricing and Reimbursement Information (PPRI) Net-
work (i.e. a network of competent authorities hosted by
Gesundheit Österreich GmbH (GÖG), a WHO Colla-
borating Centre for Pharmaceutical Pricing and Reim-
bursement Policies based in Vienna, Austria, see E4).
* Correspondence: gop@euro.who.int
World Health Organization (WHO) Regional Office for Europe Copenhagen,
2100, Denmark
Permanand and Bak Pedersen Journal of Pharmaceutical Policy and Practice 2015, 8(Suppl 1):K2
http://www.joppp.org/content/8/S1/K2
© 2015 Permanand and Pedersen This is an Open Access article distributed under the terms of the Creative Commons Attribution
License (http://creativecommons.org/licenses/by/4.0), which permits unrestricted use, distribution, and reproduction in any medium,
provided the original work is properly cited. The Creative Commons Public Domain Dedication waiver (http://creativecommons.org/
publicdomain/zero/1.0/) applies to the data made available in this article, unless otherwise stated.
The survey of 42 countries, most of which are in Europe,
revealed that countries are struggling with the overall
issue of defining what constitutes a high-cost or premium-
priced medicine [[7], annex 1]. Additionally, countries’
understandings of a threshold for what constitutes an
innovative advance over existing (lower-cost) therapies
were shown to differ, with respondents noting that their
countries did not have specific policies for the pricing and
reimbursement of premium-priced medicines versus other
medicines (although several are working on inpatient poli-
cies in particular).
Building on the PPRI query, and with the aim to help
facilitate debate on policies around the introduction of
new high-cost or premium-priced medicines in Europe,
the World Health Organization Regional Office for Europe
(WHO Europe), working with a number of partners,
undertook a review of the specific policies and principles
for managing their entry (including financing) across the
different phases of the medicine product cycle (note that
for the purposes of the WHO report, a broad definition of
a new premium-priced medicine as one whose acquisition
cost is greater than EUR 10,000 per patient per year for
the public payer, and is replacing an existing medicine
(also covered by the public payer), was adopted). Figure 1
locates potential policy actions throughout the medicines
continuum; that is, from pre- to peri- to post-launch activ-
ities. This serves to indicate where the value of individual
patient health outcomes from medicines treatment may be
considered.
Pre-launch activities provide policy-makers with a for-
ward-looking perspective on new medicines in develop-
ment. They can systematically anticipate and prioritise
therapeutic innovation with the highest potential for
impact on potential clinical and treatment outcomes, and
health system impact (cost and benefit to patients and
budget implications). Peri-launch activities address, among
other things, issues of access and affordability and are gen-
erally around pricing and reimbursement policies, with the
aim of ensuring that prices reflect clinical and therapeutic
value for the patient. The use of health technology assess-
ment (HTA) is also crucial here. Post-launch activities are
those undertaken to address the appropriate and sustain-
able use of medicines, and oriented around an evidence-
based assessment of their risk-benefit profile over time.
Figure 1 Activities to manage the entry of new medicines Source: [7] (adapted from [10,13,14]
Permanand and Bak Pedersen Journal of Pharmaceutical Policy and Practice 2015, 8(Suppl 1):K2
http://www.joppp.org/content/8/S1/K2
Page 2 of 3
The WHO Europe report makes a series of suggestions
on potential policy choices/directions, for policy-makers in
Europe to consider, and these are oriented around the
three phases indicated in Figure 1. Key steps in these pro-
cesses should include methods to distinguish and reward
meaningful clinical innovation, as well as evaluation
mechanisms to assess the benefits in practice of the intro-
duction of the medicines and impacts on health system
budgets. Overall, amongst its recommendations for certain
policy directions, the report concludes that:
• Prioritization processes should incorporate princi-
ples of collaboration and transparency, as a lack of
collaborative and transparent policy-making and
prioritization runs the risk of unfair and arbitrary
treatment decisions and inefficient systems.
• Cooperation between stakeholders needs to involve
better balancing of the value of innovation with
equitable, affordable patient access. For while indus-
try needs to be rewarded for its research and devel-
opment efforts and the risk companies assume in
pursuing innovation, it is also important to ensure
that countries do not have to limit access because
they cannot afford new medicines that represent a
true therapeutic advance.
• In view of the considerable costs involved in these
areas, collaboration among regional or subregional
health systems could benefit from including a parti-
cular focus on chronic care, specialty medicines and
rare diseases, such that networks of information
exchange for new priority medicines in Europe
including pricing trends, treatment protocols and
guidelines, common principles for the registries for
patient characterization and effectiveness and similar
can offer a way forward [7].
It is clear that decision-makers across Europe will
increasingly be faced with difficult choices in respect of
new pharmaceuticals, and that achieving a sustainable
balance between ensuring access and affordability
around genuine therapeutic advances and treatment out-
comes will be paramount.
Acknowledgements
This article is based on a 2015 WHO Europe report entitled ‘Access to new
medicines in Europe: technical review of policy initiatives and opportunities
for research’, available at: http://www.euro.who.int/en/health-topics/Health-
systems/medicines/publications2/2015/access-to-new-medicines-in-europe-
technical-review-of-policy-initiatives-and-opportunities-for-collaboration-and-
research. The authors of this abstract acknowledge the co-authors of the
mentioned report: Annalisa Belloni, Allison Colbert, Irene Eriksson, Alessandra
Ferrario, Giulio Formoso, Brian Godman, Mari Lundeby Grepstad, Lars
Gustafsson, Panos Kanavos, Eva Andersén Karlsson, Nicola Magrini, Rickard
Malmström, Øyvind Melien, Valérie Paris, Jane Robertson, Bengt Skotheim,
Sabine Vogler and Nina Zimmermann.
Published: 5 October 2015
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doi:10.1186/2052-3211-8-S1-K2
Cite this article as: Permanand and Bak Pedersen: Managing new
premium-priced medicines in Europe. Journal of Pharmaceutical Policy
and Practice 2015 8(Suppl 1):K2.
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