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PhD Defence Nora Franzen | Affordable Anticancer Medicines - Exploring the evidence for sustainable pricing in oncology

Affordable Anticancer Medicines - Exploring the evidence for sustainable pricing in oncology

The PhD defence of Nora Franzen will take place (partly) online and can be followed by a live stream.

Nora Franzen is a PhD student in the research group Health Technology & Services Research (HTSR). Supervisor is prof.dr. W.H. van Harten from the Faculty of Behavioural, Management and Social Sciences (BMS) and co-supervisor is dr. V.P.R. Retèl from NKI Netherlands Cancer Institute.

Affordable prices of innovative anticancer medicines are indispensable in enabling patients to receive the most suitable treatment. The prices of many pharmaceutical treatments are, presumably, leading to healthcare budgets approaching capacity limits globally, including in high-income countries. Anticancer treatments account for the largest cost category in specialized medical care. Strategies are needed to assure the affordability of medicines and sustainability of healthcare systems without compromising pharmaceutical innovation. This dissertation explores evidenced-based interventions that lead to affordable medicine prices in oncology at market launch in high-income European countries.

In chapter 2, we systematically review the literature on interventions to reduce medicine prices and secure the affordability of treatments. We screened 4775 articles and selected 80 articles that we used to create an inventory of 23 interventions that may be suitable to reduce treatment prices at market launch in oncology. Interventions were debated across the R&D, intellectual property, and pricing and reimbursement phases. Mapping their available evidence showed that the majority of proposed interventions are lacking empirical or strong theoretical evidence. Based on an initial scoring of potential impact and available evidence, we selected promising proposals for further research across the pricing environment (Transparency, Two-part pricing, Combined purchasing), the intellectual property environment (De-linkage), and the R&D environment (Orphan Drug Reform, Public Drug Development, Public Clinical Trials).

In chapter 3, we focus on the cost of R&D, which is, presumably, a driver of medicine prices. Frequently cited estimates of R&D investments per newly developed medicine vary considerably. Stakeholders have strong hopes technological innovation can lead to better predictive models that help to select targeted patient groups and improve the likelihood of success in clinical trials. In this chapter we present a framework to assess efficiency in the pharmaceutical sector. We show the results of an early budget impact analysis, in which expert elicitation was used to estimate the impact of a promising technology – Organ-on-a-Chip – on pharmaceutical efficiency and R&D cost. We found that stakeholders expect significant cost savings but that outcomes are surrounded by large technological and regulatory uncertainties. Potential savings were mostly driven by improved lead optimizations and pre-clinical phases that help to better select targeted patient groups and improve the likelihood of success in clinical trials. This chapter concludes by discussing the role of publicly financed technological innovation and the lack of a linkage between improvement in R&D efficiency and medicine prices.

In chapter 4, we present the results of a survey among the networks of European Cancer Leagues and the Organisation of European Cancer Institutes to evaluate seven promising interventions to reduce medicine prices: Transparency, Combined European Purchasing, Public Drug Development, Public Clinical Trials, Two-part-pricing, Orphan Drug Reform, and De-linkage. We found that respondents (n=41) ranked Transparency and Combined Purchasing as the most promising interventions, while Two-part pricing and De-linkage were considered the most controversial. Moreover, we assessed risks and success factors of the interventions. A negative impact of lower prices on R&D productivity, and thus the availability of innovative medicines, was considered to be a major risk factor, which is likely to hinder the political change process. Other factors are the technical feasibility of disruptive interventions and reduced access to medicines. In terms of success factors, international collaboration and agreement of pricing mechanisms was most frequently listed. Finally, we were able to confirm the selection of promising interventions. Additionally, the respondents reported that strict value-based pricing and strengthening of the competitive market should be considered as key interventions to achieve affordable prices.

In chapter 5, we report on a scenario analysis to evaluate the expected performance of selected affordability interventions in an EU setting, considering uncertainty in collaboration between Member States and cooperativeness of the industry. A qualitative analyses was conducted to assess the effectiveness, feasibility, and acceptability (to the industry) of four policies: Transparency, Combined purchasing, Public Drug Development, and De-linkage. Data was collected through online questionnaires and semi-structured interviews (n=21) with purposively sampled senior research- and policy representatives. We found that interviewees consistently rated Combined Purchasing the highest. The consolidation of European payers in price negotiations and purchasing of medicines may increase their contractual power and ultimately lead to lower prices. Moreover, Combined Purchasing does not require a full European approach, as consolidation in smaller groups of countries is likely to also be effective. Country collaboration and cooperativeness of the industry seemed crucial for all other three selected interventions, which were not robust in sub-optimal future scenarios. These interventions especially lack a proof-of-concept and strong initiators to test structural changes.

In chapter 6, we present an agent-based computer simulation model with the objective to test affordability interventions in silico. The focus of this project was to create a baseline model that captures key dynamics of the pharmaceutical market correctly. We simulated the interactions of one profit-maximizing pharmaceutical company and four European countries. The model structure followed the lifecycle of multiple medicines, including phases of R&D, price negotiation, commercialization, and reinvestment in R&D. As part of this initial step, we were able to create a baseline model that behaves expectedly and produces correct results. Price increases over 75 years were larger for a high-health-budget country (628%) than for a low-health-budget country (322%). Failure rates of negotiations were higher in lower-health-budget countries (18.8% vs 5.7%), with an average of six price agreements versus seven in the high-health-budget country. We verified model structure, assumptions, and input parameters in a focus groups setting and reported on feedback for future iterations. First policy testing was conducted in scenarios of Transparency and Public-Private drug development regulation. We saw that testing design choices within one intervention group was more meaningful than comparing structurally different interventions. This can, in close collaboration with the relevant stakeholders, be of added value for policy design. However, we also emphasized the challenge of model validation due to a lack of available data and shed light on missing data points.

In chapter 7, we focus on Transparency. We report on an economic experiment in which we have replicated the EU pharmaceutical market in a laboratory setting using a randomized-controlled study design. We empirically investigated the effect of various degrees of transparency on medicine prices, access to medicines, and R&D investments. Participants negotiated for medicine prices in groups of five: one pharmaceutical company and four countries. We analyzed how participants, 400 students located in four European countries, negotiated in the current system of Price secrecy in comparison to innovative bargaining settings where either prices only (Price Transparency) or prices and R&D costs (Full Transparency) were made transparent to buyers. We found that Price Transparency had no statistically significant effect on average prices or number of patients treated, and made R&D investments significantly smaller (-16.86%; p-value: 0.0024). On the other hand, Full Transparency reduced prices (-26%; p-value: 0.0004) and produced convergence between countries with low and high-health budgets. Despite lower prices, it neither reduced access to medicines nor R&D investments. These results provide evidence that the combination of price and R&D cost transparency can be an effective policy lever to contribute to sustainable medicine prices.  A

In chapter 8, we present a commentary, in which we discuss that improving the affordability of anticancer medicines demands evidence-based policy interventions. We use the economic experiment on Transparency as a showcase of how experimentation can deliver empirical insights for decision makers. We give specific examples of laboratory, field, and natural experiments for selected promising affordability interventions.

In chapter 9, the considerations in chapter 8 are expanded and all chapters are accumulatively discussed. The following recommendations for policy and further research are derived:

  1. Implement increased transparency of R&D cost and net prices on national and European level. Develop technical options to enforce truthful, credible, complete, and accessible reporting of R&D cost and net prices.
  2. Investigate factors influencing the R&D investment decisions, considering the availability of information, risk-sharing/predictability, and opportunities of efficiency improvements through effective regulation.
  3. Increase collaboration between European Member States on affordability interventions.
  4. Shift towards a data-driven approach that is grounded in transparent data for ex-post evaluation, experimental evidence, and piloting with promising interventions. Conduct more research on the following interventions:
  • Use empirical research to investigate the consolidation of purchasing and price negotiations to increase the contractual power of payers (Combined purchasing).
  • Update willingness-to-pay thresholds to match what is actually affordable and investigate mechanisms to include risk sharing and uncertainty of clinical evidence in cost-effectiveness models.
  • Test the applicability of separating the remuneration for R&D efforts and prices with affordability objectives (De-linkage and Two-part pricing).
  • Develop more ideas for a sustainable and competitive late phase R&D and marketing of medicines with reasonable profit margins. Bridge silos of financing between expenditure on medicines and investments in R&D.