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The Price of Global Health

We recently had a chance to catch up with Ed Schoonveld, author of ‘The Price of Global Health,’ Managing Principal and Market Access & Pricing Leader with ZS, to gain his insights into issues affecting the industry, the latest release of ‘The Price of Global Health (2nd Edition),’ and his involvement with the upcoming World Pharma Pricing & Market Access Congress.  His full interview is below.

What are the top 3 issues influencing access to new medicines?

a. Government and private payers are struggling to fund the increasing health care needs in an economically constrained environment. Take for example, the increasing diagnoses of obesity, diabetes and cardiovascular disease, all of which are largely lifestyle related conditions that will continue to increase healthcare costs. In addition, we have existing and emerging health challenges for Alzheimer’s disease, cancer and infectious disease like Ebola. Biotechnology is bringing new solutions, but also tends to be expensive. Meanwhile, pharmaceutical budgets are generally flat, which is forcing payers to make tough decisions. As a result, market access negotiations will be increasingly challenging.

b. There is a growing expectation that products are supported with real life evidence of effectiveness. However, expecting, or even demanding, this evidence when a drug is launched is not realistic. FDA and EMA evidence requirements mostly include randomized controlled clinical trials, which are not compatible with real-life evidence trial needs. Post launch trials and registries can provide real-world effectiveness data, but this is too late for launch time market access and pricing decision-making.

c. Some of the new innovations might lead to some cures for major diseases, such as Sovaldi for hepatitis C. When we find an effective cancer vaccine, or a very effective targeted treatment for lung cancer, as an example, we will likely have some very difficult discussions about value. The Sovaldi discussions are perhaps only a prelude. We need to start thinking about that now, so that patients are not denied access to long-awaited pharmaceutical solutions.

How can pharma develop a compelling value proposition for its products?

a. Pharma needs to have a sharp focus on 1) benefits that new treatments offer to patients, their treating physicians and payers, 2) evidence that these benefits are really delivered with the drug and 3) ensuring that the proven benefit claims are formulated in a compelling value story to payers, fitting their formal approval requirements.
b. We need to truly understand payers and their concerns. We seem to still be hesitant to have a dialog with payers. There are formal hurdles for this dialog, but there are many effective ways of building a strong understanding of payers, their concerns and their needs

How can you integrate payer expectations in product development?

We need to make sure that a few key conditions are fulfilled:

a. We need to understand the payer and the resulting commercial implications for various drug development options, including indication choice, comparator choice trial design, etc.

b. We need to ensure that we have a company environment where an open and efficient dialog between R&D staff and marketing/market access specialists can take place.

c. We need a formal decision-making process that makes the appropriate trade-offs between pros and cons for development options from a number of functional perspectives, including clinical, regulatory, marketing and market access.

Your book is now in its 2nd edition, what has changed since you first wrote ‘The Price of Global Health’?

It was clearly time for an update and an expansion for several reasons:

a. In the almost four years since the first edition, a lot has changed. Healthcare systems in the U.S., Germany, France, the U.K. and other countries have changed dramatically. This is caused by a combination of technological advances in biotechnology and poor economic conditions. Many payers have been forced to make tough decisions.

b. There has been a lot of interest in some additional pharma topics. Oncology has been in the spotlight, both because of the large number of drugs in development and because of the increasing scrutiny of payers in this therapy area. The same is true for orphan drugs, which is why I designated a new chapter to these specialty drug topics.

c. Creating a strong payer value story and negotiation strategy has emerged as a critical area of focus for pharmaceutical companies. This is a direct result of some of the system changes and payer and physician willingness to evaluate cost as part of the decision-making process for individual patients or patient types. Two new chapters specifically address this in detail.

What changes do you foresee for the 3rd edition?

a. Good question. I don’t know today and I am not planning a third edition yet. I hope that the second edition will be relevant and useful for a long time. The goal of the book is also not to have the latest specific approval rules documented for each country, but rather to provide an understanding of payer behaviors and principles. A bit of a fish versus fishing rod story.

If you could dictate pricing and market access policy in Europe, what would you do?

I would do three things:

a. Payers should not manage price, particularly in Europe, where free trade is dogma. If I don’t like a price of a product, I don’t buy it. So should governments. They should not attempt to control price, but should decide on reimbursement across their patient population. Lack of reimbursement is an issue for drug companies, so they will be motivated to consider a lower price, but it is still their choice. I have a hard time explaining to anyone how governments in various European countries can dictate price and at the same time insist on free trade. Only European bureaucrats can make that up.

b. I have challenged payers to think more about restoring a natural balance, a market, rather than building an increasingly complex book of rules and regulations on price or reimbursement. Every day, consumers make choices for many products, choosing between price and product or service offered. For healthcare, you need a safety net with respect to affordability, but a slight difference in co-pays with appropriate caps can help restore a more natural market mechanism.

c. We need active dialog between government payers and industry to find solutions that address the gap in evidence at launch versus payer information needs, without delays in patient access to needed treatments. Particularly drugs with compelling value propositions, in terms of long-term health improvements, are unlikely to be able to show this at time of drug launch. Risk sharing has been discussed a lot as a means of addressing this, but in reality, it is usually just a discounting mechanism unrelated to this issue. Some countries have some mechanisms in place to confirm evidence post-launch, coupled with “benefit of the doubt” during pricing discussion. But more dialog is needed to come up with better solutions. This will not be easy, but we strongly need it.

You’ll be discussing the topic of drug pricing at the 9th annual Pharma Pricing & Market Access Congress. What will you be covering in your opening presentation “Drug Pricing 2015: perfect storm or business as usual?”

I will be discussing the main changes in the environment and their impact on what pharmaceutical companies need to do to be successful. As I explained earlier in this interview, so much has changed in drug pricing and market access that we need to constantly look at where we need to adapt. The presentation will also be an introduction to a number of panel discussions that we will be having during the conference. It should be very interesting.

You’ve spoken before at this event. What has made you come back? Do you think this is a good opportunity for professionals to network and discuss the updates happening in the industry?

This particular conference has been known for being one where payers and pharma industry decision-makers are attending and exchanging ideas. It is the largest venue of its kind, and I have both enjoyed the conference and have found it to be very useful. As a chair, I also hope to stimulate the debate a little.

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