Global market access outlook—10 key developments to monitor in the second half of 2019 and beyond

Keeping up with changes in market access environments around the world is no easy task. What reforms will have the greatest potential impact on the pharmaceutical industry in the second half of 2019 and beyond? Some of the prospective developments included in this list may ultimately come to nothing, but all are worth monitoring in the months ahead.

United States: a welter of legislation to bring down drug prices

The focus on US pharmaceutical prices will continue unabated. The Trump administration’s blueprint to lower drug prices and reduce out-of-pocket costs for patients, published in May 2018, identified four strategies for curbing costs: boosting competition, enhancing negotiation, creating incentives for lower list prices and bringing down out-of-pocket costs. To date, the administration has proposed the following measures:

• A five-year pilot project, beginning in spring 2020, of international reference pricing in Medicare Part B.
• A proposal for drug manufacturer rebates in Medicare and Medicaid to be banned and replaced by discounts offered directly to patients or fixed-fee service arrangements with pharmacy benefit management companies (PBMs).
• A requirement for direct-to-consumer television advertisements for drugs covered by Medicare or Medicaid to include the list price—the Wholesale Acquisition Cost—if that price is $35 or more for a month’s supply or the usual course of therapy.
• Plans for a "favoured nations" policy to cap prescription drug prices at the lowest prices paid by either a manufacturer or a developed nation.

The last of these measures is potentially the most damaging to pharmaceutical companies, though President Trump did not reveal any details when he announced the plans on 5th July 2019. It is unclear how it will differ from the Medicare Part B international reference pricing pilot.

Congress has also introduced several bills intended to make prescription medicines more affordable. Interestingly, the signs are that legislation could be less hostile to the pharmaceutical industry than originally expected. For example, proposals to limit the ability of branded drug manufacturers to hinder the onset of generic competition have been largely abandoned. The legislative focus now seems to be on PBMs: requiring them to be more transparent about pricing and to pass on rebates in full to health plans or patients. Moreover, the pharmaceutical industry stands to benefit from proposed reforms to Medicare Part D that would improve catastrophic coverage and reduce beneficiaries’ out-of-pocket payments.

In addition, House Speaker Nancy Pelosi is reportedly working on a proposal that would empower the Department of Health and Human Services to negotiate lower drug costs for Medicare for the 250 most-expensive medicines. Significantly, these discounts would be extended to private insurers.

Canada: international reference pricing changes and new controls on “excessive” prices

The Canadian government first proposed reform of the country’s Patented Medicine Prices Review Board (PMPRB) in December 2017, but the policies have yet to be implemented. Key changes include the following measures:

• Adjust the basket of comparator countries used for international reference pricing: the high-priced markets of the United States and Switzerland would be dropped, and Australia, Belgium, Japan, the Netherlands, Norway, South Korea and Spain would join France, Germany, Italy, Sweden and the United Kingdom in the basket.
• Introduce controls on “excessive” prices: new factors, such as a cost-effectiveness threshold, price ceilings based on projected market size and proportion of GDP spent on patented medicines, could be imposed.
• Manufacturers would be required to report all indirect price cuts offered as a promotion or in the form of rebates, discounts, refunds, free goods, free services, gift or any other type of benefit in Canada.
• “Tiered” pricing for similar patent-protected drugs could be used to set prices of new medicines lower than those of products already on the market.

One analysis of the proposed reforms concluded that ceiling prices could decline by as much as 40-90%, depending on drug class.

In addition to the PMPRB reforms, the possibility of introducing a universal Pharmacare system—a nationwide single-payer system for prescription drugs—is expected to feature prominently in the general election campaign scheduled for autumn 2019. Some observers believe that PMPRB reform would be easier and more effective within a national Pharmacare system.

China: prospect of faster access to the National Reimbursement Drug List

The new State Medical Insurance Administration (SMIA), established in June 2018, has a mission to improve the efficiency of pricing and reimbursement and update the National Reimbursement Drug List (NRDL) more frequently. A new work plan for the agency is expected in early summer 2019, with a list of drugs for price negotiation to follow in August. The list is reportedly likely to include national essential drugs, cancer therapies, paediatric drugs, emergency medicines, orphan drugs and treatments for chronic diseases. Some analysts predict that drugs with low clinical value could be removed from the NRDL.

Multinationals are optimistic of improvements to the market access environment in China for their products. One route to faster inclusion in the NRDL may be for companies to offer substantial discounts. In a recent pilot programme, 36 out of 44 foreign companies reached an agreement on price. Discounts averaged 57%, but the rewards that NRDL inclusion offers in terms of access to the enormous and growing Chinese market made such concessions worthwhile in the eyes of manufacturers.

The SMIA is also reportedly considering the introduction of a national tender and procurement platform for medicines. If established, it would likely increase price transparency and lead to price convergence.

Japan: new health economic evaluation system troubles foreign companies

The Japanese government is in the process of implementing a new system of health economic evaluation—to the evident displeasure of the foreign pharmaceutical industry. Both Pharmaceutical Research and Manufacturers of America (PhRMA) and the European Federation of Pharmaceutical Industries and Associations (EFPIA) have criticised aspects of the government’s proposals.

PhRMA has criticised the proposed ICER threshold of ￥5 million per QALY, arguing that the figure is arbitrary and ignores other aspects of product value. The association has also protested that the proposed reforms do not adhere to international norms and best practices and are potentially discriminatory against foreign manufacturers. PhRMA “remains very concerned about the current direction of the new HTA system in Japan and its potential to significantly undervalue U.S. innovation and ultimately harm patient access to new medicines.”

EFPIA shares its US counterpart’s misgivings about the proposed methodology of the Japanese health economic system, especially the ICER threshold. The European association also suggests that the new system would overlap with Japan’s existing similar efficacy comparison method of drug pricing. EFPIA additionally warns that incorporating cost-effectiveness analysis into pricing and reimbursement procedures would risk reversing the impressive progress that Japan has made in recent years in tackling the problem of “drug lag”—the excessive launch delays that once characterised the Japanese market.

Russia: manufacturers required to monitor and re-register drug prices to remain on the market

On 7th June 2019, a new law took effect in Russia that will require manufacturers of drugs included in the Essential Drug List (EDL) to re-register prices that were originally listed before that date. Drugs that are not re-registered by the end of 2020 will be excluded from the Russian market. Re-registration will be carried out automatically for generics and biosimilars, but manufacturers of branded medicines will have to submit an application to the Ministry of Health. The objective of the exercise is to reduce prices.

Manufacturers will be required to monitor prices in all relevant markets and notify the Ministry of Health of any of the following changes:

• The drug’s price is reduced in a comparator country.
• The registered price of the first foreign-manufactured generic version of a drug exceeds the price of the second generic version of the molecule.
• The registered price of the first generic version of a drug manufactured in a country within the Eurasian Economic Union exceeds the price of the second generic version of the molecule in that country or any other Eurasian Economic Union member state.

Price increases will be permitted only once per year, whereas there will be no limit on the number of price reductions in a year.

Germany: closer scrutiny of orphan drugs, biosimilar substitution, stability of supply for voluntary rebate contracts and new savings requirements for parallel imports

The German Parliament is expected to enact the Gesetz für mehr Sicherheit in der Arzneimittelversorgung (GSAV; Act for Greater Safety in the Pharmaceutical Supply System) in July. This legislation proposes a wide range of reforms, including measures intended to guarantee the quality and safety of medicines distributed in Germany, as well as policies that could have a potentially significant impact on the market access environment in Germany.

At present, orphan drugs that have annual sales of less than €50 million are automatically deemed to have additional benefit and undergo a streamlined AMNOG benefit assessment process. The GSAV would change the methodology for calculating this sales threshold: instead of being based exclusively on prescriptions written by outpatient physicians, it would also include inpatient prescriptions. Manufacturers would have an obligation to provide the Gemeinsamer Bundesausschuss (GBA; Federal Joint Committee) with sales data for their orphan drugs. In addition, the GBA would be authorised to mandate the collection of indication-specific data to enhance the assessment of orphan drugs, with the possibility of requiring prescribing physicians and hospitals to participate in the data collection process. Prices could be reduced if manufacturers did not comply with the data collection requirement, or if a drug was found to have a non-quantifiable level of additional benefit.

Biosimilar substitution by pharmacists will be phased in over three years. In the meantime, substitution will be permitted only with the authorisation of the prescribing physician. The GBA will compile a list of interchangeable biosimilars to guide the practice of substitution. The legislation will also require associations that represent statutory health insurance funds and physicians to set regional quotas for biosimilar penetration.

Voluntary rebate contracts have become commonplace for generics, but also for some patent-protected drugs. Not surprisingly, price is typically the main criterion in these deals, especially in the case of off-patent compounds. However, the GSAV will require manufacturers and health insurance funds to guarantee an uninterrupted and adequate supply of drugs to avoid product shortages.

The German government has long encouraged pharmacists to dispense parallel imports as a means of reducing pharmaceutical expenditures. Parallel imports must account for a minimum of 5% of a pharmacy’s sales. At present, parallel imports must be at least €15 or 15% less expensive than list prices. The GSAV would introduce stratified minimum savings for parallel imports. This policy is one of the most contentious aspects of the legislation: critics argue that, to live up to the act’s self-declared objective of improving the safety of the pharmaceutical supply system, incentives for dispensing parallel exports should really be abolished.

United Kingdom: Brexit means uncertainty

“Brexit,” the United Kingdom’s departure from the EU, has been postponed twice and is now due to take place by 31st October 2019. Following the resignation of Prime Minister Theresa May, the two remaining candidates to replace her have both indicated that they are fully prepared to leave by that deadline without a deal if they cannot renegotiate the withdrawal agreement. In the event of such a “hard” Brexit, the short-term stability of the pharmaceutical supply system could be compromised by disruption to imports of medicines. To minimise that risk, pharmaceutical companies have been urged to stockpile essential medicines.

Even if the departure from the EU is orderly, with a transition period, Brexit is expected to have a significant impact on the pharmaceutical supply system in both the United Kingdom and the EU. The future regulatory environment in the United Kingdom is still unclear. The marketing authorisations of drugs already on the market should not be affected by Brexit. However, the EU has stated that, “subject to exceptions, the United Kingdom will no longer participate in meetings of Member State groups,” including the European Medicines Agency (EMA). Even during any transition period, the United Kingdom will not be able to act as a rapporteur for the assessment of medicines. In the longer term, the United Kingdom and the EU will “explore the possibility of cooperation” in pharmaceutical regulation.

Historically, the United Kingdom has been a priority market for the launch of new medicines—in part, a result of much shorter launch delays than in most other countries in Europe. However, there are concerns that the UK market will become less attractive after Brexit, especially if companies have to navigate a separate regulatory process.

Brexit is also likely to have an impact on parallel trade, which is limited to the European patent exhaustion zone. In September 2018, the UK government stated that, if the country ultimately left the EU without a deal, it would “unilaterally align to the EU/EEA exhaustion regime from Exit day to provide continuity in the immediate term for businesses and consumers and ensure that parallel imports of goods, such as pharmaceuticals, can continue from the EU/EEA.” In the longer term, the UK government would seek to convert all currently approved parallel distribution authorisations of centrally authorised medicines into UK parallel import licences. However, the EU has not indicated that it would reciprocate such a policy. Parallel trade could also be disrupted by the prospect that the United Kingdom will be excluded from the system that will support the EU’s Falsified Medicines Directive.

EU: cooperation on health technology assessment

In January 2018, the European Commission published a proposal for a new Regulation on Health Technology Assessment, which would cover four main areas:

• Joint clinical assessments, focusing on health technologies that are judged to be the most innovative and to have the greatest potential to add value to the healthcare systems of EU member states. This process would be limited to medicines that undergo the EU’s centralised marketing authorisation procedure.
• Joint scientific consultations that enable pharmaceutical companies to seek early guidance from HTA agencies regarding their evidence requirements.
• Horizon scanning to identify the most promising health technologies for patients and health systems at an early stage with a view to ensuring that these products are included in HTA collaboration.
• Voluntary cooperation in other areas, such as economic evaluation.

A key objective of strengthening cross-border HTA collaboration is to avoid inconsistencies and duplication of effort, as well as to make HTA more predictable across the EU. Accordingly, member states would generally not be allowed to conduct their own clinical assessments of products that have undergone a joint assessment, though they would be permitted to conduct their own non-clinical assessments. For all medicines, member states would remain free to make their own determinations with regard to the value, pricing and reimbursement of health technologies. Nevertheless, the Czech, French and German Parliaments submitted complaints on the grounds that the proposed regulation exceeded the EU’s authority and encroached on an area of national sovereignty—healthcare.

In October 2018, the European Parliament made a number of significant changes to the text of the Commission’s proposal. One amendment explicitly affirmed “the exclusive national competence of Member States for national pricing or reimbursement decisions.” The Parliament also added a provision for Member States to conduct their own complementary assessments—for example, using a comparator therapy or care setting that was not included in an EU joint assessment.

Given the opposition from some countries and the recent lack of news on the legislation, it remains to be seen if it will ultimately be approved by the European Parliament and the Council of Ministers. If the regulation is passed, the new rules would take effect three years after adoption. Member states would then have an additional three-year transitional period to adapt to the new system.

The Centrum für Europ?ische Politik has suggested that joint HTA may require a treaty amendment to grant the EU greater powers in relation to healthcare. With Euroscepticism on the increase in many countries, such a move might prove a step too far for some governments.

Global: growing pressure for transparency around pricing, R&D costs, clinical trial data and patent information

On 28th May 2019, the 72nd World Health Assembly (WHA) in Geneva adopted a landmark resolution on transparency in the market for health-related products. The resolution is unusual in that it seeks greater transparency not just in relation to pharmaceutical pricing, but also R&D costs, clinical trial data, and patent information. Indeed, the disclosure of R&D costs proved far more contentious than pricing transparency. Italy was the driving force behind the resolution, which was co-sponsored by Algeria, Andorra, Botswana, Brazil, Egypt, Eswatini, Greece, India, Indonesia, Kenya, Luxembourg, Malaysia, Malta, Portugal, Russia, Serbia, Slovenia, South Africa, Spain, Sri Lanka, Uganda and Uruguay.

The pharmaceutical industry may choose to take comfort in the fact that the final resolution consists largely of recommendations for voluntary action rather than the requirements for comprehensive disclosure proposed in the original draft. However, such a response could prove to be dangerous complacency. The WHA in Geneva may not have given the World Health Organisation the authority to demand information from manufacturers, but the agenda will be pursued further at future meetings—starting with a UN High-Level Meeting on Universal Health Coverage in New York in September.

Global: cross-border market access collaborations on the rise

In recent years, no fewer than nine cross-border market access collaborations involving 29 countries have been established in Europe. They work together on activities including horizon scanning, sharing pricing information, HTA and joint pricing negotiation and procurement. The two best-known of these alliances are probably the Beneluxa Initiative and the Valletta Declaration Group (VDG).

The Beneluxa Initiative achieved the first breakthrough, when Belgium and the Netherlands announced a joint pricing deal for Biogen’s Spinraza (nusinersen) in July 2018. In the year since then, however, the alliance has had no further successes to report, though the group’s steering committee did meet in May 2019 to select new candidates for joint HTA and potential joint pricing negotiations.

The VDG has a particular focus on oncology drugs, treatments for autoimmune diseases, orphan drugs, biosimilars and products with a potentially substantial budget impact. As of the end of 2018, the group had identified six priority treatments, one of which is reported to be a CAR-T-cell therapy. However, the VDG’s greatest impact may come from its broader political agenda for transparency and international collaboration on pricing. Six of the members of the VDG were among the leading sponsors of the aforementioned transparency resolution at the recent WHA.

Countries in other regions of the world are beginning to explore the potential of regional cross-border collaboration. In June, for example, Mercosur—a trade bloc consisting of Argentina, Brazil, Paraguay and Uruguay—announced an agreement for joint negotiation of the prices of certain high-priced medicines.

Overall message: adapt to a shrinking world

Reflecting on these ten developments, one overarching trend emerges: the world of market access is shrinking, and borders are becoming more porous. At the most basic level, governments (e.g., United States, Canada, Russia) are considering adopting or adapting some form of international reference pricing to reduce prices. Japanese plans to introduce health economic evaluation are influenced by the experience of other countries, although the industry would argue that the government has given insufficient thought to how to integrate this process into the existing pricing system. The prospect of Brexit has highlighted how interconnected European pharmaceutical markets (in common with many other industrial sectors) have become. The EU has proposed joint HTA as a means to improve the efficiency of this process and accelerate market access but has yet to adequately address sensitivities about how the imposition of such a policy may encroach on national sovereignty over healthcare. Yet, the cross-border market access collaborations that have been formed in Europe and other regions, as well as the international alliance on transparency that coalesced at the WHA, arguably demonstrate that many governments are becoming more willing to work together to tackle pricing and other aspects of market access. The challenge for the pharmaceutical industry will be to avoid a potentially adversarial engagement with these governments and to forge a genuinely constructive partnership that can sustainably achieve the common goal of affordable access to innovative medicine.