October 21, 2015
By Melanie Senior
Tools that provide transparent, comparative information about the efficacy, drawbacks and costs of a range of treatment options are helping patients, clinicians and payers choose drugs wisely. They’re also forcing pharma to link price more explicitly to value.
The National Institute of Health and Care Excellence (NICE), the cost-effectiveness watchdog for health systems in England and Wales, is renowned for rejecting drugs it deems as poor value for the money, based on a well-known cost-effectiveness threshold. Many disagree with its approach, and with its threshold. But by and large pharmaceutical manufacturers know what they’re up against.
Most US payers have, for a variety of reasons, until recently resisted the health technology assessment (HTA) approach. Medicare can’t, by law, negotiate drug prices, leaving manufacturers free rein to maximize them. Over the decades, that free pricing created a complex knot of intermediaries whose interests diverged increasingly from those of the end-users: patients. The late-2013 launch of Gilead Sciences Inc.’s Sovaldi (sofosbuvir) for Hepatitis C (HCV) initially priced at $1,000 per pill, marked a tipping point in the US system’s willingness to accept the status quo. It also brought discussions about “value” and “cost-effectiveness” – hitherto largely absent in the US – into the mainstream.
Granted, it was market forces, not some complex HTA formula, that eventually knocked down Sovaldi’s price by almost 40%. Large pharmacy benefit managers like Express Scripts Holding Co.and Prime Therapeutics LLC played the HCV competition off against each other as firms vied for formulary positioning; they did something similar, though less aggressively, for an emerging class of cholesterol-lowering drugs, the proprotein convertase subtilisin/kexin type 9 (PCSK9) blockers.
But this laissez-faire approach isn’t enough. Not all therapies face such tight and direct competition. Meanwhile, drug costs continue to rise, driven by a large increase in specialty products – including oncology drugs opening up expensive new combination therapy options. All this is forcing payers to manage their formularies more aggressively. It’s forcing providers, many, under provisions of the 2010 Affordable Care Act, paid by results, to more carefully determine the most cost-effective treatment pathways. And it’s forcing clinicians to fully engage their patients, many facing rising co-pays, in the most appropriate choice of therapy.
Payer & Channel Insights, Marketing Analytics & Business Insights
NorthEastern Region, Top 20 Pharma
Executive Team Lead
Top 5 Pharma
Sr. Marketing Director
Top 10 Pharma
Top 5 Pharma
National Business Director
Top 5 Pharma
Specialty Access Solutions, Top 5 Pharma
Director of Operations
Reimbursement and Patient Support Services, Top 20 Pharma
Chronis H. Manolis, RPh
Vice President, Pharmacy UPMC Health Plan
Global Value/Market Access Lead Oncology Portfolio & Global Commercial Lead Oncology Biomarkers Halozyme Therapeutics, Inc.
President , GlaxoSmithKline U.S.
Michael S. Sherman, MD, MBA
Senior Vice President and Chief Medical Officer, Harvard Pilgrim Health Care