Assessment, pricing, and reimbursement of new health technologies: Innovative reimbursement models: Examples from health insurance systems in Asia

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Assessment, pricing, and reimbursement of new
health technologies Innovative reimbursement
models Examples from health insurance systems in
Asia
Abdulkadir Keskinaslan, MD, MBA,
MPH International Conference for Improving Use of
Medicines ICIUM 2011 Antalya,Turkey, November
17, 2011
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Striking a Challenging Balance
Continued innovation
Appropriate use
Household system affordability
Access to new medicines
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The underlying concept of innovative pricing and
patient access schemes is value-based pricing

• In an increasingly cost-sensitive environment, it
  is becoming more difficult for highly-priced
  innovative drugs to gain reimbursement
• Pharma is now moving towards a value-based
  pricing system, opting for risk-sharing in an
  effort to improve equitable access to effective
  care
• Innovative pricing and patient access schemes are
  arrangements which may be used on an exceptional
  basis for the acquisition of medicines
• The schemes are intended to improve the
  cost-effectiveness of a medicine and therefore
  allow HTA bodies to recommend treatments which
  they would otherwise have deemed not
  cost-effective

Risk-Sharing Agreement A contract between two
parties who agree to engage in a transaction in
which there are uncertainties regardless
concerning its final value. Nevertheless, one
party, the company, has sufficient confidence in
its claims of either effectiveness or efficiency
that it is ready to accept a reward or a penalty
depending on the observed performance.
Source Akehurst,Taiwan HTA Workshop 2010 de
Pouvourville, EJHE, 2006
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From Price Volume and Money Back to Value
Based Reimbursement Non-linear pricing

• Price-Volume Agreement assumes that
  reimbursement buckets are filled from left to
  right
• Money-back Guarantee assumes binary outcome full
  response or failure
• Is it possible to devise a scheme, where all
  buckets! Are filled simultaneously, depending
  on patient characteristics (e.g. unmet need,
  risk, benefit)?

high
P3
Weighted Average Price
Average Price
P2
P1
low
S1
S2
S3
Size of Patient segment or indication
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Pricing models to improve access and affordability
Financial Utilization Models
Outcomes Based Pricing Models
Risk Based Pricing Models
Initial 10 of patients
Full response
High Risk
Next 20 of patients
Partial response
Moderate risk
All others
No response
Low risk
Patient segments
Patient segments
Patient segments

• Price volume agreement e.g. full reimbursement
  for first 10 of patients, reduced reimbursement
  for next 20 of patients, no reimburse-ment for
  all others

• Money back guarantee, e.g. full reimbursement for
  responders, reduced reimbursement for partial
  responders, no reimburse-ment for non-responders

• Reimbursement linked to value and level of risk
  factors (e.g. based on diagnostic test)

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Lucentis (ranibizumab) for AMD UKPer patient,
response-assumed, if longer treatment required,
drug free of charge
Financial Utilization Models

• In 2008 NICE found Lucentis to be cost-effective
  for wet Age-Related Macular Degeneration (AMD) if
  a course of treatment did not exceed 14
  injections
• To ensure full patient access, Novartis agreed to
  pay for any injections of Lucentis that exceeded
  the 14 recommended by NICE
• Company covers the costs of additional injections
• Results
• Patients received effective innovative treatment
• Improved cost effectiveness for the NHS
• Lucentis became established as effective
  treatment in the market

Source National Institute for Health and
Clinical Excellence. Final Guidance Ranibizumab
and pegaptanib for age-related macular
degeneration. http//guidance.nice.org.uk/TA155
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Velcade (bortezomib) for multiple myeloma -
UKPer patient, response dependent, cash refund
Outcomes Based Pricing Models

• In 2006, Velcade treatment was considered not
  cost-effective
• costs approx. 3,000 per treatment cycle
  (38,000 per QALY).
• Johnson Johnson scheme proposed that treatment
  would be reimbursed only when effective
• Full or partial response - remain on therapy and
  funded by NHS
• minimal or no response - cease treatment and
  costs refunded to NHS by the company
• ICER with rebate, stopping rule after 4 cycles
  with partial and full responders continuing
  therapy 20,700/QALY
• Response assessed after max of 4 treatment cycles
  and response was measured by tumor shrinkage
• - reduction in serum M-protein levels of 50 or
  more
• 60 day claim period

Source A Keskinaslan, ISPOR Asia, Thailand
September 5-7th, 2010
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Actonel (risedronate) for osteoporosis USPer
patient, response dependent, pay for consequence
Outcomes Based Pricing Models

• In 2009 Procter Gamble and Sanofi-Aventis
  agreed the scheme with Health Alliance Medical
  Plans
• A risk-sharing agreement where preventative
  treatment is assessed against unwanted disease
  outcomes
• To pay for bone fractures occurring while the
  patient is taking Actonel.
• For these patients, any health costs associated
  with a non-spinal fracture to be covered by the
  manufacturing companies (estimated to cost
  between 6,000 and 30,000 per fracture,
  depending on the fracture location).
• Patients qualify if they have no-comorbidity, no
  prior fractures etc and have taken Actonel for
  six out of the nine most recent months
• Intention of the scheme
• To reduce potential treatment costs for fracture
  treatment for patients on Actonel
• To provide an incentive to keep qualified
  patients on Actonel instead of switching to
  less-expensive generic alternatives
• To keep Actonel on a lower formulary tier than
  competition

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Source A Keskinaslan, ISPOR Asia, Thailand
September 5-7th, 2010
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Telbuvidine for chronic hepatitis B treatment -
Australiaacceptable ICER across patient segments
Risk Based Pricing Models

• Telbuvidine is indicated for the treatment of
  HBeAg-positive and HBeAg-negative chronic
  hepatitis B patients who have compensated liver
  disease, evidence of viral replication and active
  liver inflammation and who are nucleoside
  analogue naïve.
• Telbuvidine priced at weighted average price
  across patient subgroups
• priced at a high but acceptable incremental cost
  effectiveness ratio compared to lamivudine for
  HBeAg-positive (e-pos) patients
• priced higher than lamivudine for HBeAg-negative
  patients based on cost-offsets due to reduced
  resistance rates and thus lower use of more
  expensive 2nd-line adefovir

Source http//www.health.gov.au/internet/main/pub
lishing.nsf/Content/pbac-psd-telbivudine-mar08
www.novartis.com.au/DownloadFile.aspx?tpfseb.pd
fdateid
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The underlying concept of patient access schemes
is no different from innovative pricing schemes
value-based pricing
Willingness to Pay BasedPricing Models
Affordability BasedPricing Models
Discount for members
Full price
Price or free goods reward for compliance
Partial price
Value added services for compliant patients
No price
Patient segments
Patient segments

• Loyalty Card e.g. progressive discounted price
  for members, additional reward for compliant
  patients (41), value added services (free
  routine tests) for long term compliant patients

• Patient Assistance Program, e.g.
• Patients pay what they can afford, governments
  or private insurance companies may contribute

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NOA providing Glivec (imatinib) for CML -
Indonesia Affordability based model, shared
contribution

• Novartis Oncology Access (NOA) designed to bridge
  the affordability gap in Indonesia
• NOA offers patients to pay what they can afford,
  based on a financial evaluation to bridge the
  affordability gap.
• Co Pay Model Based on the Cost of Living Wages
  (CoL)
• Patients financial resources do not fall under 2
  X CoL after purchasing Glivec
• 7 tier scheme determined through assessment made
  by financial agency in December, 2010 305
  patients
• Multiple Stakeholders involved in setting up the
  program
• Ministry of Health Indonesia
• Indonesian Society of Hematology and Blood
  Transfusion
• Indonesian Hematology and Internal Medicine
  Medical Oncology National Working Group
• Indonesian Cancer Foundation, Jakarta Branch
• Financial assessment by PT Survindo Putra Pratama
• Novartis Indonesia

Affordability BasedPricing Models
Full price
Partial price
No price
Patient segments
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Lucentis (ranibizumab) for AMD UAE
Affordability based model with shared contribution

• Novartis introducing MUSANDA Program, a patient
  access affordability program which enables
  ophthalmologist to treat a segment of patients
  that was left with no treatment
• Program helps patients with funding gap and
  creates a financing option for self-pay patients
• It helps restoring sight and prevent blinds
  visual impairment for AMD/DME patients
• Program also offers discounted fees for patients
  at affiliated clinics and hospitals
• 3rd party conducts financial assessment to
  identify eligibility for different level of
  support

Affordability BasedPricing Models
Partial price for all segments
Patient Purchase
Patient segments
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Musanada program designed to help patients with
no access
Affordability barrier No Access
Patients wAMD DME for MUSANADA program
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QA abdulkadir.keskinaslan_at_novartis.com
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Examples of Estimated ICER Thresholds
Unit Lower boundary Upper boundary
USA QALY US50,000 US100,000
Canada QALY US17,600 US87,800
Australia LYG US28,200 US51,000
UK QALY US32,000 US48,000
Thailand QALY US2,000 US8,000

Unit Lower boundary Upper boundary
WHO GDP/capita/DALY averted lt3
Australia PBAC GDP/capita/life-year gained 1.26 2.29
UK NICE GDP/capita/QALY 1.4 2.1
If the ICER is within a defined acceptable range
(threshold) by the payer/ provider of healthcare,
then there is a high likelihood that the
treatment could be accepted
ICER incremental cost-effectiveness ratio QALY
quality-adjusted life-year LYG life-years
gained GDP gross domestic product WHO World
Health Organization DALY disability adjusted
life-years NICE National Institute for
Clinical Excellence (UK) PBAC Pharmaceutical
Benefits Advisory Committee Value in Health
20047518
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