1. Current Approaches in European Health Care Policy What models can balance the needs of payors and industry?

2. Three Waves of Health Economics 1. The principles The benefits of innovation From price comparisons to cost- effectiveness 2. The ”fourth hurdle” HTA and Cost effectiveness as a requirement for pricing and reimbursement 3. Health economics in the market place Accountable health economics

3. The first wave – establishing the principles Cost-containment a new important goal for health care systems in 1970s Cost-containment a new important goal for health care systems in 1970s –OECD international comparative data base Health economics not primarily about cost containment Health economics not primarily about cost containment –Allocation of resources for better health –Economic evaluation a method for assessing costs and benefits of actions aimed at better health –Innovation a major factor in health care

4. Benefits of innovation Reduced health care expenditures in other sectors, for example hospitalisations Reduced health care expenditures in other sectors, for example hospitalisations Improved productivity Improved productivity –Reduced indirect costs due to illness Improved survival Improved survival –Value of life Improved quality of life Improved quality of life –Quality-adjusted life years

5. HTA and Market Access Cost-effectiveness as a new criteria HTA for medical technologies established in the US in the 1970s HTA for medical technologies established in the US in the 1970s First European agency established in Sweden 1987 (SBU) First European agency established in Sweden 1987 (SBU) –Today agencies in most countries Introduction of the “4th hurdle” for drugs Introduction of the “4th hurdle” for drugs –Australia 1992 –UK, NICE 1999 –Sweden, LFN 2002

6. HTA and reimbursement (1) Reduce price differences between products with similar effectiveness Reduce price differences between products with similar effectiveness –In a dynamic market you expect price differentials which consumers react to –Payers do not trust the health care providers to react to price differentials in a rational way HTA is used to provide evidence for clustering HTA is used to provide evidence for clustering –IQWiG as example Statins and insulin analouges Statins and insulin analouges

7. HTA and reimbursement (2) For drugs the are “true innovations”, HTA will be used to provide information for For drugs the are “true innovations”, HTA will be used to provide information for –Cost-effective indications at different levels of price at introduction –Reimbursement will be linked to cost-effectiveness Follow-up studies for gaining additional information Follow-up studies for gaining additional information –Verification that the right patients are treated –Verification of benefits in clinical practice

8. France: The Transparency Commission ASMR: “Amelioration du Service Medical Rendu” ASMR I ASMR I – Major therapeutic advance ASMR II ASMR II –Important improvement in terms of efficacy and/or safety AMSR III AMSR III –Modest progress in terms of efficacy and/or safety AMSR IV AMSR IV –Minor progress in terms of efficacy and/or safety AMSR V AMSR V –No therapeutic progress

9. France: Criteria for pricing and reimbursement ASMR I-II ASMR I-II –Reimbursement and free pricing Based on comparison with prices in other “big five” Based on comparison with prices in other “big five” Answer within 15 days Answer within 15 days Price fixed for 5 years Price fixed for 5 years ASMR III ASMR III –Same as above if sales below 40MEuro AMSR IV-V AMSR IV-V –Bargaining and reference pricing

10. Germany and the Netherlands To be or not be clustered – that is the question To be or not be clustered – that is the question (Hamlet, Prince of Denmark) –HTA and economic evaluation may influence the decision If clustered If clustered –Reference price If not clustered If not clustered –Opportunities for premium price based on HTA and economic evaluation

11. Evidence based re-imbursement LFN Review of Anti-ulcer drugs in Sweden Reimbursement for generic omeprazole Reimbursement for generic omeprazole –Generic substitution at pharmacy Reimbursement for Nexium (patent) Reimbursement for Nexium (patent) –In erosive GERD –For HP eradication No reimbursement for other products unless they reduce price to that of generic omeprazole No reimbursement for other products unless they reduce price to that of generic omeprazole

12. Impact of HTA and Economic Evaluation on Decision Making: Evidence from EUROMET EUROMET 2000 EUROMET 2000 –Limited knowledge about economic evaluation –No evidence on influence on decision making EUROMET 2004 EUROMET 2004 –Improved knowledge about economic evaluation –Some influence, put the potential greater than actual use –Main barriers relevance and bias

13. European Comparator report regarding funding and access to oncology drugs Karolinska Institute (KI)/ Stockholm School of Economics (SSE), Stockholm Sweden Nils Wilking nils.wilking@karolinska.se nils.wilking@karolinska.se Bengt Jönsson bengt.jonsson@hhs.se bengt.jonsson@hhs.se Christer Svedman MD, PhD, KI. Niklas Zethraeus PhD, SSE. Frank Lichtenberg, Columbia University, New York

14. Trastuzumab uptake in selected European countries

19. The third wave The role of health economics in a possible resolution Decisions about reimbursement are based on therapeutic value and cost-effectiveness Decisions about reimbursement are based on therapeutic value and cost-effectiveness Price controls should be abolished since price is declared in the reimbursement application and included in the cost-effectiveness study Price controls should be abolished since price is declared in the reimbursement application and included in the cost-effectiveness study Resource allocation is directed towards an optimal use of new medicines Resource allocation is directed towards an optimal use of new medicines –Provide correct incentives for investments in R&D

20. The third wave Consequences Reimbursement will be for defined indications Reimbursement will be for defined indications Decisions about reimbursement based on evidence at launch Decisions about reimbursement based on evidence at launch Follow-up studies used to reveal the true cost- effectiveness in different indications Follow-up studies used to reveal the true cost- effectiveness in different indications Industry and other stake holders share information needed to assess cost-effectiveness Industry and other stake holders share information needed to assess cost-effectiveness This evidence will be used as a basis for clinical governance This evidence will be used as a basis for clinical governance

21. The third wave Accountable health economics Benefits for industry Benefits for industry –Market access for new medicines –Pricing related to therapeutic value in actual use –Improved and trustful relation to its customers –Market based incentives for innovation Benefits for the costumers Benefits for the costumers –Patients will get access to the best possible therapy within the general resource constraints that health care systems work within –Drugs will take the share of health care expenditures that is determined by the cost-effectiveness of new medicines –Third party payers – private as well as public – can show their principals that money used are well spent

22. The third wave Accountable health economics Risks Risks –For industry Information will be used against the industry? Information will be used against the industry? Unproven business model Unproven business model –For the costumers Captured by industry? Captured by industry? Alternatives Alternatives –More regulation? –Less reimbursement?

23. The third wave - Summary Information for economic evaluations will come from actual use of technology Information for economic evaluations will come from actual use of technology Shared information between different stakeholders Shared information between different stakeholders –Payers, industry,doctors,patients Innovations will be used to improve the quality and efficiency of the health care system Innovations will be used to improve the quality and efficiency of the health care system

24. Thanks for your attention!