final version : 21/09/2015 sustainable healthcare systems sustainability
TRANSCRIPT
Final version : 21/09/2015
Sustainable healthcare systems
www.efpia.eu
Sustainability
2
Sustainable Healthcare systems – Rationale
The purpose of this document is to address some of the key questions related to the sustainability of healthcare systems.
The document has been divided in three sections which gather a rich and robust collection of evidence aiming at tackling these questions. The objective is to facilitate an evidence-based discussion amongst the different stakeholders including payers, policymakers and regulators.
How to improve health outcomes while maintaining the financial sustainability of healthcare systems ?
What are the recent trends in pharmaceutical and healthcare expenditure?
How can a more differentiated approach to pricing across European Member States contribute to more sustainable healthcare systems ?
3
Index
Sustainable Healthcare systems – Rationale…………………………………………………………………………………………………………………………….………………Index……………………………………………………………………………………………………………………………………………………………………………………..…………………
Part 1: How to improve health outcomes while maintaining the financial sustainability of healthcare systems ?....................................Workforce reduction and increasing dependency ratio put increased pressure on society’s healthcare financing and reinforce the need to keep working age healthy……………………………………………………………………………………………………………………………………………………….The EU needs new approaches to maintain the sustainability of its public finance to mitigate the effects of an aging population…………….Significant disparities in terms of life expectancy persist in Europe……………………………………………………………………………………………………..For many conditions, outcomes vary widely among developed countries……………………………………………………………………………………………Proactively initiated care for patients at risk result in better outcomes and lower costs for the health system…………………………………...Early use of medicines in mental health can delay the need for nursing home placements………………………………………………………………….Improvement in disease progression could lead to significant returns to society…………………………………………………………………………………Innovative new medicines enable to reduce per capita expenditure on hospitalisation……………………………….............…………………………Preventive approaches with early and appropriate use of medicines is key to improve outcomes and avoid costs……………………………..A tool to achieve better outcomes & less resource usage are accountability-based payments…………………………………………………………….Geisinger bundle scheme for coronary bypasses led to reduced mortality and complications at lower costs compared to feefor service……………………………………………………………………………………………………………………………………………………………………..…………………….Data allows identification of high risk patients and targeted intervention, leading to better outcomes at lower costs…....………………….Heart failure program in Sweden shows that more follow-up can lead to 30% reduced costs………………………………………….………………….Helping patients adhere to medicines regimes can yield substantial returns to the health system……………………………..….……………………
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7 89
10111213141516
17181920
4
Index
Part 2: What are the recent trends in pharmaceutical and healthcare expenditure?.........................................................................Pharmaceuticals and other medical non durables represent 17% of total expenditure in Europe although variances exist between therapy areas……………………………………………………………………………………………………………………………………………………………….The growth of retail pharmaceutical spending decreased from 2009 to 2012……………………………………………………………………………..Retail pharmaceutical spending per capita decreased by 2% on average between 2009 and 2012………………….............................Throughout Europe medicines are only reimbursed if value can be comprehensively proven across multiple dimensions…………Across Europe growth of retail pharmaceutical expenditure is lagging behind growth in total healthcare expenditure………………Retail pharmaceutical spending per capita is more contained than growth in health care expenditure per capita (2000-2012).......................................................................................................................................................................................Within cardiovascular, industry’s innovation model ensures clinical effectiveness in the short and major social surplusin the longer term……………………………………………………………………………………………………………………………………………………....................Combination of generic price erosion & price regulation resulted in a 19% decline in nominal medicines prices vs. a 24% rise in consumer prices…………………………………………………..........................................................................................................On average the volume of share of generics has increased by 11% in the last four years, showing improved efficiency in European pharmaceutical markets…………………………………………………...............................................................................................Generic volume share in selected countries vary widely across European countries……………………………………………........................ In the mid-term, biosimilars will contribute to the continued sustainability of medicines spending………………..………………………….
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2223242526
27
28
29
30
3132
5
Index
Part 3: How can a more differentiated approach to pricing across European member states contribute to more sustainable healthcare systems?...................................................................................................................................................
Health expenditure is a function of wealth and varies by a factor of 6 across Europe………………………………………...................External reference pricing is widely used to establish and regulate medicines prices in Europe………………………………………….Countries mostly construct their pricing baskets referencing slightly poorer economies, however this leads over time to an ‘averaging down’……………………………………………………………………………………………………………………...……………………………………In a single trading zone, price disparities across borders can create significant supply chains disruptions and product shortages………………………………………………………………………………………………………………………………...............................................Out of pocket expenditure on healthcare is higher in markets with comparatively low GDP………..………….…………………………The current and future wave of multi-indication products will require a more flexible approach to value definition and price evaluation………………………………………………………………………………………………………………………………….………………………………
Bibliography…………………………………………………………………………………………………………………………………............................................
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Part 1: key messages
Part 1: How to improve health outcomes while maintaining the financial sustainability of healthcare systems ?
Workforce reduction and increasing dependency ratio put increased pressure on society healthcare financing and reinforce the need to keep the population healthyThe EU needs new approaches to maintain the sustainability of its finance to mitigate the effect of an aging populationSimply cutting back on healthcare at a time when Europe needs it most is likely to be counter productive. If outcomes in chronic disease do not improve the smaller proportion of working age people in future will struggle to pay for those who need care. A different approach is neededSignificant disparities in terms of life expectancy and health outcomes exist across OECD countriesOutcome-focused healthcare systems can be a solution to those challenges by focusing management effort on the overall quality of care and rationalize spendingProactively initiated care for patients at risk can result in better outcomes and lower costs for the health systemEarly use of medicines in mental health can delay the need for nursing home placementsImprovements in disease progression could lead to significant returns to societyInnovative new medicines enable to reduce per capita expenditure on hospitalisationPreventive approaches with early and appropriate use of medicines is key to improve outcomes and avoid costsA tool to achieve better outcomes & less resource usage are accountability-based paymentsGeisinger bundle scheme for coronary bypasses led to reduced mortality and complications at lower costs compared to fee for serviceData allows identification of high risks patients and targeted intervention, leading to better outcomes at lower costs.Heart failure programme in Sweden shows that more follow-up can lead to 30% reduced costsHelping patients adhere to medicines regimes can yield substantial returns to the health system
7
Part 1: outcomes-focused HCS
Workforce reduction and increasing dependency ratio put increased pressure on society’s healthcare financing and reinforce the need to keep working age people healthy
Source: The European Commission (2015). The aging report.
Social Impact: Decline in workforce due to demographic changes (mn people)*
Ratio of workers to pensioners will decrease
335
328
323
317
311
306302
299297 296
270
280
290
300
310
320
330
340
2013 2020 2025 2030 2035 2040 2045 2050 2055 2060
-12%
4 workers / 1 pensioner
2 workers / 1 pensioner
2013 2060
-50%
8
Part 1: outcomes-focused HCS
The EU needs new approaches to maintain the sustainability of its public finance to mitigate the effects of an aging population
Note: For the EU, NMS (new member states) and the EA (euro area) the average are weighted according to GDP. European Commission (2015). The Aging report.
Projected increase in public expenditure in healthcare due to demographic change (2013-2060) (% of GDP)
34.2 3.8 4 3.8 4.4 4.6 4.2 4.7 4.6
6 6.1 5.9 5.7 5.7 66.9
5.7 5.77 6.6 6.9
5.77.1 7.2 7.6
6.9 7.56
7.7 7.8 8.1 7.80.3
0.1 0.6 0.4 1.10.8 0.7 1.3
1 1.2
0.5 0.8 1 1.2 1.4 1.30.6
2 2.20.9 1.4 1.1
2.51.1 1.2 0.7 1.6
1.22.8
1.1 1.1 1 1.5
0
1
2
3
4
5
6
7
8
9
10
CY LT LV BG RO EE LU PL HU
NM
S BE IT ES CZ SI IE SE HR SK EA EL EU MT
EU15 N
L
DE AT NO PT FR FI DK
UK
2013 Change between 2013 and 2060
9
Part 1: outcomes-focused HCS
Significant disparities in terms of life expectancy persist in Europe
Source: Eurostat database (accessed in May 2015)
Life expectancy at birth in EU28 (2013)
10
Part 1: outcomes-focused HCS
For many conditions, outcomes vary widely among developed countries
1. Deep Vein Thrombosis 2. Acute Myocardial InfarctionNote: Latest available data for 2012, 2011 or 2010. Mexico not includedSource: BCG analysis based on OECD Stat Extracts
2010-2012 OECD Health outcomes indicators
4.617 4.24.2 2.7 1.31.4 1.1Variation factor between best
and worst
3x OECD mean
AMI2
30 day mortality(in hosp.)
2x OECD mean
Post-operative pulmonary
embolism or DVT1
Post-operative sepsis
2010-2012OECD mean
0.5x OECD mean
Breast cancer5y survival
Cervical cancer5 years survival
Colorectal cancer5y survival
Hemorrhagic stroke 30 days mort.
(in hosp.)Ischemic stroke 30 day mortality
(in hosp.)
Better performance than OECD mean
Worse performance than OECD mean
11
Part 1: outcomes-focused HCS
Proactively initiated care for patients at risk can result in better outcomes and lower costs for the health system
Note: 1. Dual-energy X-ray Absorptiometry 2. Men 70 and olderSource: ACHP, Building Healthier Communities: Kaiser Permanente Southern California , 2012
Kaiser Permanente's Osteoporosis Disease Management Programme
200
150
100
50
0
# DXA Scans (thousands)
+473%
2009
124
2002
22
200
150
100
50
0
# Enrollees treated (thousands)
+214%
2009
104
2002
33
KP proactively identifies, screens and treats risk group patients...
...leading to a reduction in hip fractures for risk group of 47%
• Saving 250 lives per year
• Saving ~$40M per year– $39k per hip fracture– Compared to ~$5M programme costs
0.000
2.500
2010
Hip fracturesin risk group >1000 fractures
-47%
2011
Targeting enrollees based on set criteria:• Fragility fracture but no recent DXA1 scan• Fractured a hip or diagnosed with osteo-porosis but not on
medication or not refilled• 65 or older2 but never had DXA scan
12
Part 1: outcomes-focused HCS
Early use of medicines in mental health can delay the need for nursing home placements
Source: Lopez, O et al: Clinically meaningful outcome in Alzheimer’s disease (2005); † Getsios D et al.: Economic evaluation of early assessment for Alzheimer’s disease in the UK (2012)
% of patients placed in nursing homes* Cost-effectiveness of early treatment (£ per patient) †
Patients taking cholinesterase inhibitors were 5 times less likely to be admitted to a nursing home after 3 years of treatment after controlling for multiple factors that can alter the course of the disease
Treatment initiated for early-stage (mild-to-moderate) Alzheimer’s disease followed by 7-year treatment proves more cost-effective than current standards of care
In addition to cost savings, the QALY per patient were 9% higher with early treatment of Alzheimer’s Disease
13
Part 1: outcomes-focused HCS
Improvements in disease progression could lead to significant returns to society
Source: Johnson, SJ et al. Economic value of slowing Parkinson’s Disease in Germany, (2012)
Economic Value to Society of slowing Parkinson’s Disease Progression
Example: Parkinson
Study objective: Model PD progression over the complete course of disease and to assess economic consequences of slowing down PD progression Methodology:
Model length spanned 25 years Cost and benefits were discounted at 3% Patient progression based on Hoehn and Yahr (H&Y) stages of
disease development Direct and Indirect medical costs were taken from published
German studies Conclusion: Net savings of €54,000 achievable by slowing PD progression per patient by 20% rising to €327,000 per patient by fully arresting disease progression
If this potential is to be realized more innovation within the area of Parkinson’s disease should be encouraged.
14
Part 1: outcomes-focused HCS
Innovative new medicines enable to reduce per capita expenditure on hospitalisation
Source: Lichtenberg, F: Have Newer Cardiovascular Drugs Reduced Hospitalization? Evidence from Longitudinal Country-level Data on 20 OECD Countries, 1995–2003 (2008)
Cost of new cardiovascular medicines compared to savings in hospitalizations in 20 OECD countries 1995 - 2003
Example: Cardiovascular
Study objective: Assess the effects of introductions of innovative cardiovascular medicines on total healthcare spending Methodology:
Data used for 1100 cardiovascular medicines in 20 OECD countries during the period 1995 – 2003 and based on drug vintage (i.e. the first year the medicines was available in any market)
Controlling for demographic variables, quality of cardiovascular medicines consumption, consumptions of other medical innovations (e.g. CT scanners and MRI units), cardiovascular risk factors and prevalence
Conclusion: Per capita expenditure on hospitalization would have been $89 higher in 2003 had new cardiovascular medicines not been introduced in the period 1995 – 2003. This increase was almost four times as high as the per capita increase on expenditure on cardiovascular medicines ($24)
15
Part 1: outcomes-focused HCS
Preventive approaches with early and appropriate use of medicines is key to improve outcomes and avoid costs.
Note: 1. Extrapolated from the likelihood of patients on insulin with delayed insulinazation from IMS Disease Analyzer; 2. Average cost for treating stroke and myocardial infarctionSource: IMS Institute for Healthcare Informatics: Advancing the responsible use of medicines (2012)
Estimated avoidable macrovascular events, absolute numbers, 20101
Estimated avoidable healthcare cost, € 000s, 20102
Example: Diabetes
0 100 000 200 000 300 000 400 000 500 0000 2 000 4 000 6 000
% of total diabetes spending
13%
8%
4%
16
Part 1: outcomes-focused HCS
A tool to achieve better outcomes & less resource usage are accountability based payments
Note: 1. CAD coronary artery disease, CKD chronic kidney disease, COPD chronic obstructive pulmonary disease. Based on an analysis of claims data and demographic information from 2011 for ~3M Medicare patientsSource: Alternative Payer Models Show Improved Health-Care Value, BCG, 2013
Based on Medicare data from patients in different programs
11.5 0.30
15
30
40.5 19.70
100
Amputations in diabetes patients (average per 1,000 patients)
16.5
2.1
14.9
3.110.3
2.66.3
1.96.4
1.70
20Lower mortality
rate
Fewer emergency visits
Fewer complications
Patients who visited the emergency room (%)
Single-year mortality (%)
-51%
-97%
Capitated health networksFee for service
Higher accountabilityHigher accountability
OverallCADDiabetesCOPD
CKD
17
Part 1: outcomes-focused HCS
Geisinger bundle scheme for coronary bypasses led to reduced mortality and complications at lower costs compared to fee for service
Note: 1. Coronary Artery Bypass Graft Source: BCG based on “ProvenCareSM”: a provider-driven pay-for-performance program for acute episodic cardiac surgical care, Ann Surg 2007; Geisinger Health System, Successful Case Studies in Accountable Care, ACO Oct 2010; press articles
Impact on outcome: proven positive effect on mortality and complications
BackgroundBackground
ProvenCare launched as a bundle scheme
• Incl. CABG1 surgery since 2006
• A package price for elective CABG, including pre-operative evaluation to follow-up care within 90 days
• Actionable to-do's based on clinical guidelines and outcome measurement
Impact on resources: 45% less re-admission and 28-36% lower costs than other providers
Reduced readmissions Reduced mortality
1.5% 038% 30%
In-hospital mortality (%)Any complication (%)
Before After Before After
-100%-21%
Reduced readmissions Reduced costs
6.9%3.8%
Before
30 days readmission (%)
After
-45%Cost/patient
Total claims vs other providers
– 4.8%
– 28-36%
1. Coronary Artery Bypass Graft
18
Part 1: outcomes-focused HCS
Data allows identification of high risks patients and targeted intervention, leading to better outcomes at lower costs
Source: BCG based on Schmier, J. K. et al (2007) Evaluation of Medicare Costs of Endophthalmitis among Patients after Cataract Surgery, Vol. 114, No. 6, pp.1094-1099; Friling et al, Six-year incidence of endophthalmitis after cataract surgery: Swedish national study, J Cataract Refract Surg., 2013; County of Uppsala (Landstinget i Uppsala Län).
Impact on outcomes: registry findings saved over 500 people from the risk of blindness
BackgroundBackground
• A national Cataract Registry was established in 1992 in Sweden
• The aim was to identify and implement best practices to avoid PE
• PE: postoperative endophthalmitis (PE) is a severe inflammation leading to blindness
Impact on resources: Savings from reduction of PE rate estimated at ~$6M during 2000-2009
Incidence of PE (%)
1998 2009
0.025
0.050
0.075
0.125
0.100
0.000
0.106
0.021
-80%
218
With PE
Claims / patient US ($k)
Without PE
-61%
Estimated savings inmedical costs ($m) , '99-'091
500 cases prevented
Savings0
2
4
6Actual societal
cost by patient is much higher and varies by patient6
19Source: BCG based on Agvall B, et al. (2014) Resource use and cost implications of implementing a heart failure program for patients with systolic heart failure in Swedish primary health care, International Journal of Cardiology, vol 176, n°3.
Heart failure program initiated Ratio of workers to pensioners will decrease
Part 1: outcomes-focused HCS
Heart failure program in Sweden shows that more follow-up can lead to ~30% reduced costs
• Study in Sweden randomizing patients to be enrolled in a heart failure program or continue with conventional treatment (control group)
• Patients received information by nurse and multimedia program
• Medication reviewed and titrated thoroughly
• Regular follow-up by phone or in person with HF nurse to optimize treatment according to current guidelines
Total cost of health care / patient (Euro)
481.0
453.0
1764
1257
2761
4471
4393
6638
8000
6000
4000
2000
0Control group Group enrolled
in the programme
MedicationPrimary health care
Hospital care
-33%
Main effect through feweradmissions and fewer GP visits
20
Part 1: outcomes-focused HCS
Helping patients adhere to medicines regimes can yield substantial returns to the health system
Note: Calculations are marginal effects from linear fixed-effects models of services cost. Main drivers for cost savings were inpatient hospital days and emergency department visitsSource: Roebuck et al: Increased Drug Spending Medication Adherence Leads To Lower Health Care Use And Costs Despite increased drug spending (2011)
Total Healthcare Spending: Adherent vs. non-adherent patients, 2005 - 2008
2x
6x
7x
9x
21
Part 2: key messages
How have pharmaceutical expenditures in the healthcare system evolve ?
Pharmaceuticals and other medical non durables represent 17% of total expenditure in Europe although variances exist between therapy areasThe growth of retail pharmaceutical spending decreased from 2009 to 2012Throughout Europe medicines are only reimbursed if value can be comprehensively proven across multiple dimensionsAcross Europe growth of retail medicines expenditure is lagging behind growth in total healthcare expenditureWithin cardiovascular, industry’s innovation model ensures clinical cost effectiveness in the short- and major social surplus in the longer termCombination of generic price erosion & price regulation resulted in a 24% decline in nominal medicines prices vs. a 30% rise in consumer prices in EuropeOn average, the volume share of generic has increased by 11% in the last four years, showing improved efficiency in European pharmaceutical marketsIn the mid-term, biosimilars will contribute to the continued sustainability of medicines spending
Throughout Europe, medicines are only reimbursed if value can be comprehensively proven across multiple dimensionsRetail pharmaceutical spending per capita has decreased by 2% between 2009 and 2012Throughout Europe medicines are only reimbursed if value can be comprehensively proven across multiple dimensionsAcross Europe growth in medicines expenditure is lagging behind growth in total healthcare expenditureCombination of generic price erosion & price regulation resulted in a 19% decline in nominal medicines prices vs. a 25% rise in consumer pricesPatent expiries and biosimilars will continue to contribute to the continued sustainability of medicines spending
22
Part 2: pharmaceutical expenditure
Pharmaceuticals and other medical non-durables represent 17% of total expenditure in Europe although variances exist between therapy areas
Source: *EFPIA, the industry in figures, edition 2015 (OECD health data 2014, extracted in 2015, EFPIA calculations, non weighted average for 21 EU & EFTA countries). † A.T. Kearney analysis (2012); Δ Schwarzkop et al. (2010); Damm el al. (2012). ♯
Breakdown of total healthcare expenditure in Europe – 2012*
Medicines contribution to disease cost (2011, various diseases)
36.6%
46.5%
16.9%
Inpatient careOutpatient care & otherspharmaceuticals & other medical non durables
Cost factor COPD† Diabetes† CHF† Alzhei-mers∆
Prostate Cancer
Care 21% 8% 6% 9% 34%
Hospitalisation 30% 22% 64% 11% 31%
Indirect Cost 22% 35% 18% 76% N/A
Other Cost 14% 20% 6% 1% 2%
Medication 14% 15% 5% 3% 34%
23
Part 2: pharmaceutical expenditure
The growth of retail pharmaceutical spending decreased from 2009 to 2012
Note: *According to the OECD definition, pharmaceutical spending include expenditures on prescriptions medicines and over-the-counter products. Pharmaceuticals consumed in hospitals are excluded.Source: OECD (2014), Current health expenditure by function, 2012 (or nearest year), in Health at a Glance: Europe 2014, OECD Publishing, Paris. DOI: http://dx.doi.org/10.1787/health_glance_eur-2014-graph129-en (accessed via the OECD e-library in April 2015)
Annual growth rates of spending for selected components (real term, 2012, EU average)
6.4%
8.6% 8.7%
1.9%
5.7%
2.5%2.2%3.2%
5.4%
1.8%
8.2%
-3.5%
-1.3%
0.7%
6.5%
-1.7%
-3.8%
0%-0.4%
1.0%
-0.3%
-1.3%
0.5% 0.2%
1.5%
-0.3%
1.9%
-2.7%
1.8%
2.9%
-6%
-4%
-2%
0%
2%
4%
6%
8%
10%
Inpatient care Outpatient care Long-term care Pharmaceuticals Prevention Administration
2007/08
2008/09
2009/10
2010/11
2011/12
24
Part 2: pharmaceutical expenditure
Retail pharmaceutical spending per capita decreased by 2% on average between 2009 and 2012
Source: OECD (2014), Expenditure on pharmaceuticals per capita and as a share of GDP, 2012 (or nearest year), in Health at a Glance: Europe 2014, OECD Publishing, Paris. DOI: http://dx.doi.org/10.1787/health_glance_eur-2014-graph131-en
Average annual growth rates in pharmaceutical expenditure per capita or nearest year (2000-2012, in real terms)
10
0.9 1.3 1.6 2.2
-0.6 -0.3
3.3
8.5 8.0 8.0
3.4 3.71.9 2.4 3.1
1.7
4.83.1
2.04.6
1.8 2.2
4.9
10.2
2.5
-0.2
1.2
-12
-7.2-6.1 -6.1 -5.2
-3.9 -3.5 -3.3 -2.9 -2.9 -2.4 -2.2 -2.2 -1.7 -1.6 -1.3 -1.3 -1.0 -0.4
0.1 0.9 0.9 1.83.2
6.1
-4.9
-1.2 -1.0
-15
-10
-5
0
5
10
15
2000-2009
2009-2012
25
Part 2: pharmaceutical expenditure
Throughout Europe medicines are only reimbursed if value can be comprehensively proven across multiple dimensions
Source: * EFPIA: Role and impact of Health Technology Assessment (2011); † Sorensen et al.: Ensuring value for money in health care (2009)
Countries with formal HTA systems in place*
Reimbursement criteria across countries†
Countries with formal HTA process for reimbursement in placeCountries with no formal HTA process for reimbursement
AT BE GE FI FR NL SE UKTherapeutic
benefits
Innovative Characteristics
Availability of therapeutic alternatives
Patient benefits
Cost-effectiveness
Budget Impact
Equity considerations
Public health impact
R&D
Included in HTA process
26Note: Countries included: Austria, Belgium, Czech Re Austria Belgium Czech Republic Denmark Estonia Finland France Germany Hungary Ireland Italy Luxembourg Poland Slovak Republic Slovenia Spain Sweden United KingdomSource: OECD Health Statistics Database (accessed in April 2015).
Total healthcare expenditure per capita and pharmaceutical expenditure per capita (2006 – 2012, 21 EU OECD Countries, population-weighted, current prices, PPP, $)
Part 2: pharmaceutical expenditure
Across Europe growth of retail medicines expenditure is lagging behind growth in total healthcare expenditure
116
127
27
Part 2: pharmaceutical expenditure
Retail pharmaceutical spending per capita is more contained than growth in total health care expenditure per capita (2000-2012)
Countries included are Greece, France, Romania, Austria, Poland, Cyprus, Lithuania, Czech Republic, Slovenia, Netherlands, Estonia, Finland, Germany, Latvia, Croatia, Denmark, Sweden, Luxembourg, Belgium, Hungary, Portugal, Spain, Slovak Republic, Norway, Iceland, Switzerland. OECD health statistics database and Europe at glance 2014 (accessed via elibrary in April 2015)
Annual average growth rate in per capita healthcare and pharmaceuticals expenditures (in real terms between 2000-2009 and 2009-2012)
4.3%3.7%
-0.8%
-2.2%-3
-2
-1
0
1
2
3
4
5
Gro
wth
in e
xpen
ditu
re in
%
Growth in total health expenditure per capita
Growth in retail pharmaceutical expenditure per capita.
2000-2009
2009-2012
28
Part 2: pharmaceutical expenditure
Within cardiovascular, industry’s innovation model ensures clinical cost effectiveness in the short- and major social surplus in the longer term
Source: Lindgren et al.: Cost–effectiveness of statins revisited: lessons learned about the value of innovation, (2011)
Simvastatin patients treated and total associated cost of treatment
Patient- and manufacturer surplus in on- and off-patent period
0
10
20
30
40
50
60
70
80
90
0
100
200
300
400
500
600
700
1985 1990 1995 2000 2005 2010
Treated Patients Simvastatin Cost
Zocor® patent expiry
Patients (‘000) €mn.Off-patent
period
54
237
454
40 4 5
-
50
100
150
200
250
300
350
400
450
500
1987 - 2002 2003 - 2008 2009 - 2018
Patient Surplus Manufacturer Surplus
On-patent period
29
Part 2: pharmaceutical expenditure
Combination of generic price erosion & price regulation resulted in a 24% decline in nominal medicines prices vs. a 30% rise in consumer prices in Europe
Note: Countries included: Belgium, Finland, France, Germany, Italy, Spain, Sweden, Netherlands. For Spain, only data available until 2012 (include only big countries)Source: various OECD databases (accessed in April 2015), Austria: pharmig based IFP; Belgium: Pharma.be; Finland: Pharma Industry Finland based on Statistic Finland; France: Leem based on INSEE; Germany: vfla based on GKV; Greece: SFEE based on Eurostat; Italy: farmindustria based on ISTAT; Spain: Farindustria based on INE; Sweden: LIF Sweden based on Apotekens Service, Netherlands: Farmingform based on the Central bureau of Statistics
Consumer Price Index (CPI) vs. Medicines Price Index, population weighted, year 2000 = Index 100
70
80
90
100
110
120
130
140
2000 2013
CPI Medicines Price Index
76
Population-weighted - Europe
130
30
Part 2: pharmaceutical expenditure
On average, the volume share of generic has increased by 11% in the last four years, showing improved efficiency in European pharmaceutical markets
Note: countries included: Romania, Poland, Slovakia, Germany, Czech Republic, Netherlands, UK, Hungary, Sweden,Italy, Finland, Portugal, Norway, France, Spain, Switzerland, Greece, Ireland, Austria, Belgium. Average non weighted.Source: IMS MIDAS data (accessed in April 2015)
Generic volume share of the Prescription bound, un-protected retail market, 2009-2012 (SU,%)
54% 55% 56% 57% 58% 60%
0%
10%
20%
30%
40%
50%
60%
70%
2009
2010
2011
2012
2013
2014Europe, non weighted average
+11%
Ireland
• Reference price reimbursement and generic substitution implemented in 2013
• Increase of 10% of the generic volume share in the unprotected retail market between 2009 and 2011.
42% 43% 45% 48%52%
57%
0%
10%
20%
30%
40%
50%
60%
2009 2010 2011 2012 2013 2014
+36%
Portugal
• The government and the National Association of Pharmacies (ANF) concluded an agreement in April 2014 which contains measures to promote generic dispensing
47% 50% 53% 56% 59% 60%
0%10%20%30%40%50%60%70%
2009 2010 2011 2012 2013 2014
+28%
31
Part 2: pharmaceutical expenditure
Generic volume share in selected countries vary widely across European countries
Source: IMS MIDAS data (accessed in April 2015)
Generic volume share of the Prescription bound, un-protected retail market, 2014 (SU, %)
0%
10%
20%
30%
40%
50%
60%
70%
80%
90% X 2.3
32
Part 2: pharmaceutical expenditure
In the mid-term, biosimilars will contribute to the continued sustainability of medicines spending
Source: * IMS Health: Global Outlook for Medicines through 2018, November (2014) † Parexel Statistical Yearbook 12/13
Sales in 2018 ($bn.) by Therapeutic Area* Disease Indications for biosimilar mAbs currently in clinical trials†
$7-9Bn$10-12Bn$12-14Bn$13-15Bn$14-16Bn$15-17Bn$16-19Bn
$19-22Bn$20-23Bn$21-24Bn$21-24Bn$22-25Bn$22-24Bn
$21-24Bn$33-38Bn$33-38Bn
$38-43Bn$47-52Bn
$61-71Bn$71-81Bn
ADHDImmunosuppressantsOther cardiovascular
VaccinesAltiulcerants
AntibioticsImmunosuppressants
other CNSAnticoagulants
CholesterolHIV antiviralsDermatology
Viral HepatitisHypertension
RespiratoryMental Health
PainAutoimmune
DiabetesOncologics
Top 20 Global Therapeutic Areas (42% of total)
51%
24%
10%
10%
5%
Oncology Rheumatoid Arthritis Acute Coronary Systems
Thrombotic Disorders Other
33
Part 3: need for differential pricing in Europe
How can a more differentiated approach to pricing across European member states contribute to more sustainable healthcare systems ?
Health expenditure is a function of wealth and varies by a factor of 6 across EuropeExternal reference pricing is widely used to establish and regulate medicines prices in EuropeCountries mostly construct their pricing baskets referencing similar or slightly poorer economies, however this leads over time to an ‘averaging down’In a single trading zone, price disparities across borders can create significant supply chain disruptions and product shortagesOut-of-pocket expenditure is higher in markets with comparatively low GDPThe current and future wave of multi-indication products will require a more flexible approach to value definition and price evaluation
34
Part 3: need for differential pricing in Europe
Health expenditure is a function of wealth and varies by a factor of 6 across Europe
Note: Cyprus, Latvia 2009 data. Denmark 2010 data. Netherlands, Portugal Slovenia Slovakia Lithuania Bulgaria in 2011 data. Source: Eurostat database (accessed in March 2015)
GDP per capita and Healthcare Spend per capita (€ 2012)
Positive and very strong correlation between expenditures on healthcare and overall wealth across Europe
6-fold difference in healthcare expenditure per capita between the highest and lowest
R² = 0.9439
0
1,000
2,000
3,000
4,000
5,000
6,000
7,000
8,000
Hea
lthca
re S
pend
per
Cap
ita (€
2012
)
GDP per Capita (€ 2012)
Luxembourg
Greece
Denmark
Spain
RomaniaLatvia
France
FinlandBelgium Germany
Sweden
Netherlands
Austria
Cyprus
Portugal
Lithuania
35
Part 3: need for differential pricing in Europe
External reference pricing is widely used to establish and regulate Medicines prices in Europe
Source: Leopold, C et al.: Differences in external price referencing in Europe (2012).
Usage of External Reference Pricing (23 out of 27 EU Member States)
Variations in constructions of pricing baskets
Countries using external price referencing
Countries not using external price referencing
Average Basket Pricing
Lowest basket PricingAverage Basket pricing minus 5%
91% of the average of the basketAverage of 3 lowest
36
Part 3: need for differential pricing in Europe
Countries mostly construct their pricing baskets referencing lower GDP per capita economies leading over time to an ‘averaging down’
Source: WorldBank database (accessed 2013); Leopold, C et al.: Differences in external price referencing in Europe (2012).
GDP per Capita and Average GDP per capita of “pricing basket countries”
Out of 23 EU-27 countries using external price referencing, 15 (65%) have constructed their pricing basket to reference countries with lower affordability (measured as GPD / Capita)
Ongoing re-referencing drives prices down on an ongoing basis (‘a gift that keeps on giving’).
0
10,000
20,000
30,000
40,000
50,000
60,000
0 10,000 20,000 30,000 40,000 50,000 60,000
Avg.
GD
P pe
r cap
ita o
f bas
ket c
ount
ries
GDP per Capita
Average Pricing Lowest Pricing Average of 3 Lowest Average Pricing minus 5% 91% of the average of the basket
Italy
Spain
Slovenia
Slovak RepublicRomania
Portugal
Poland
Netherlands
Malta
Lithuania
Latvia
Ireland
Greece
France
Finland
Estonia
Hungary
Cyprus
Bulgaria
Belgium
AustriaCzech Republic
37
Part 3: need for differential pricing in Europe
In a single trading zone, price disparities across borders can create significant supply chain disruptions and product shortages
Source: IMS Health (2013)
Current overview of supply chain imbalances - 2013
Primarily imports
Net importer
Net exporter
Primarily exports
Norway with PE/PI, but mainly exports and top destinations are SWE and DNK
UK is a mixed market. High level of retail trading compared to other import markets
Ireland has relatively high prices and mainly an importer typically from UK, exports on some brands may grow
Portugal and Spain are mainly exporters of primary care products classically but not exclusively to UK.
Sweden the main importer in Nordic, significant growth in latest year, driven by currency and likely to grow further up to 2014, and then some price cuts are expected
Baltic, new and growing export source
Poland with significant exports, also some imports, pharmacy export is illegal
Czech, Romania and Hungary are major exports due to their low prices,
Italy trade mainly on primary care typically into UK and Germany
38
Part 3: need for differential pricing in Europe
Out-of-pocket expenditure is higher in markets with comparatively low GDP
Source: World Bank latest figures (accessed in March 2015). Available at/http://databank.worldbank.org/data/views/reports/tableview.aspx#
Out of pocket expenditure as a % of total health expenditure (2012)
In general, a correlation between the level of wealth and the state’s willingness to fund medicines can be observed
0% 10% 20% 30% 40% 50% 60%
NetherlandsFrance
United KingdomLuxembourg
SloveniaDenmark
European UnionCroatia
Czech RepublicAustriaIreland
SwedenEstoniaFinland
BelgiumItaly
SpainRomania
PolandSlovak Republic
HungaryLithuania
GreecePortugal
MaltaLatvia
Cyprus
Out of Pocket Expenditure as % of total health expenditure
39
Part 3: need for differential pricing in Europe
The current and future wave of multi-indication products will require a more flexible approach to value definition and price evaluation
Note: Representation of the change in clinical value over time as additional data and evidence became available such as new clinical benefits, new possible use or combination useSource: Goss et al.: Recognizing value in oncology innovation (2012)
Clinical Value over Time
Example: Oncology
Examples of added clinical value over Time 2001: Initial Indication: Patients with chronic myeloid leukemia 2002: Patients with KIT positive inoperable or GISTs 2003: Pediatric patients with Ph+ CML-CP after stem cell transplant 2006: Adults with relapsed Ph+ ALL and with myelodysplastic diseases 2008: Treatment of adult patients following resected Kit positive GIST 2012: 36 months post-surgery in patient with resected KIT positive GIST
Examples of added clinical value over Time 2004: Initial Indication: Combination treatment of EGRF metastatic
cancer 2006: Combination with radiation therapy for treatment of squamous
cell carcinoma 2007: Single treatment of EGRF metastatic colorectal carcinoma 2011: 1st line treatment of recurrent locoregional disease or metastatic
squamous cell carcinoma
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
Imatinib (Glivec®)
Clinical valueover time
Ealier treatment pathway or disease stage usageNew disease indication
2004 2005 2006 2007 2008 2009 2010 2011 2012
Cetuximab (Erbitux®)
New combination Initial FDA indication
Clinical valueover time
40
SourcesSustainable Financing
ACHP, Alliance of Community Health Plans (2012). Building Healthier Communities: Kaiser Permanente Southern California.
Agvall, B et al. (2014). Resource use and cost implication for implementing a heart failure program for patients with systolic heart failure in Sweden primary healthcare, international journal of cardiology, vol. 176, n°3.
Alzheimer’s Association (2010)Changing the trajectory of Alzheimer’s Disease
BCG (2013)Alternative Payer Models show Improved Healthcare Value
BCG expertise based on various sources.
Boccalini, S. et al. (2013)Economic analysis of the first 20 y of universal hepatitis B vaccination program in Italy Human Vaccines & Immunotherapeutics 9:5, 1–10; May 2013; Landes Bioscience
1/10
41
SourcesSustainable Financing
Bredin, C. et al. (2010)Drug cost avoidance from cancer clinical trials (2010)
Busse, R & Stahl, J. (2014)Integrated cares and outcomes in Germany, the Netherlands and England, Healthcare affairs.
Damm, O. el al. (2012)Cost-of-Illness of Common Cancer Types: Results of a Health Insurance Claims Data AnalysisPresented at the ISPOR 15th Annual European Congress, 3-7 November 2012, Berlin, Germany
Cleveland Clinic (2011)Transplantation report (accessed in April 2015)https://my.clevelandclinic.org/ccf/media/files/Transplant/transplantation-2011-ar.pdf
Department of Health Ireland (2011)Health in Ireland: Key Trends 2011
Dönitz, Amelung et al (2009)Intention to treat analysis (ITT) of the impact of a telemedical care programme on overall treatment costs and mortality rate among patients with chronic heart failure.
2/10
42
SourcesSustainable Financing
EFPIA (2011)Role and impact of Health Technology Assessment
EFPIA (2015)The industry in figures, edition 2015.
European Commission (2015)The 2015 Aging Report: Underlying Assumptions and Projected MethodologiesEuropean Economy 8/2014
European Commission (2015)The 2015 Ageing Report: European Economy 3|2015. Economic and Financial Affairs. Economic and budgetary projections for the 28 EU Member States (2013-2060).
EurostatDatabase on GDP per capita in Europe (Accessed in 2015)Database on healthcare spending per capita in Europe (Accessed in 2015)Database on life expectancy (Accessed in 2015)
3/10
43
SourcesSustainable Financing
EvaluatePharmaDatabase of sales and patent expiries (accessed 2013)
Friling et al (2013)Six-year incidence of endophthalmitis after cataract surgery: Swedish national study, J Cataract Refract Surg; 39(1): 15-21
Getsios, D. et al. (2012)Economic evaluation of early assessment for Alzheimer’s disease in the UK Alzheimer’s & Dementia 8 (2012)
Goss et al. (2012)Recognizing value in oncology innovation White Paper June 2012
Agvali, B et al. (2014)Resource use and cost implications of implementing a heart failure program for patients with systolic heart failure in Swedish primary health care, International Journal of Cardiology.
IMSMarket Prognosis, April 2011
4/10
44
SourcesSustainable Financing
IMS Health (2012)The Global Use of Medicines, July 2012 (2012)
IMS Institute for healthcare informatics (2012)Advancing the responsible use of medicines
IMSMidas database (accessed in April 2015)
IMS (2014)Global Outlook of Medicines through 2018
IOM Institute of Medicines (2012)Best care at lower cost: the path to continuously learning Health Care in America
Leopold, C. et al. (2012)Differences in external price referencing in Europe (2012)
5/10
45
SourcesSustainable Financing
Lichtenberg, F. (2008)Have Newer Cardiovascular Drugs Reduced Hospitalization? Evidence from Longitudinal Country-level Data on 20 OECD Countries, 1995–2003 NBER Working Papers 14008, National Bureau of Economic Research, Inc. (2008)
Lindgren, P., Jonsson, B. (2011)Cost–effectiveness of statins revisited: lessons learned about the value of innovationSpringer-Verlag 2011
Lopez, O. et al. (2005)Clinically meaningful outcome in Alzheimer’s disease
Luengo-Fernandez, R. et al. (2013)Economic burden of cancer across the European Union: a population-based cost analysisThe Lancet: http://dx.doi.org/10.1016/; S1470-2045(13)70442-X
McClellan and Kent et al. (2013)WISH accountable care report http://www.brookings.edu/research/papers/2013/12/accountable-care-outcomes-doha-wish-mcclellan
6/10
46
SourcesSustainable Financing
Johnson, SJ et al. (2012)Economic value of slowing Parkinson’s Disease in Germany
NCRAnnual reports 2000-2009
NHSHospital Episode Statistics: Admitted Patient Care 2011-12
NHS confederation (2011)The search for Low-cost Integrated Healthcare, the Alzira model – from the region of Valencia
OECDHealth Statistics Database
Parexel (2013)Statistical Yearbook 12/13
7/10
47
SourcesSustainable Financing
PWC (2010)Clinical Trials in Poland
Rapp, T. et al. (2012)Exploring the relationship between Alzheimer’s disease severity and longitudinal cost Value in Health 15 (2012) 412 - 419
Roebuck, C. et al. (2011)Medication Adherence Leads To Lower Health Care Use And Costs Despite Increased Drug SpendingHealth Affairs, 30, no.1 (2011):91-99 doi: 10.1377/hlthaff.2009.1087
Surg, A (2007)A provider-driven pay-for-performance program for acute episodic cardiac surgical care, ProvenCare.
Schwarzkopf, L. et al. (2010)Results of the German IDA Study – Assessing the financial impact of informal care amongst community-living dementia patientsPresented at ISPOR 13th Annual European Congress Prague, Czech Republic November, 2010
8/10
48
SourcesSustainable Financing
Schmier, J. K. et al (2007) Evaluation of Medicare Costs of Endophthalmitis among Patients after Cataract Surgery, Vol. 114, No. 6, pp.1094-1099;
Sorensen et al (2009)Ensuring value for money in health care Observatory Studies Series No 11
The Access to Medicine Index 2012http://www.accesstomedicineindex.org/
The Pharmaceutical Industry and Global Health (2011)Facts and Figures 2011
The World BankDatabase on GDP per capitahttp://data.worldbank.org/indicator/NY.GDP.PCAP.CD (accessed April 2013)
Thomson Reuters (2013)Bibliometric analysis of ongoing projects
9/10
49
SourcesSustainable Financing
Tsichristas, A. et al (2009)Medical innovations and labor savings in health careAarts De Jong Wilms Goudriaan Public Economics by (APE) and Maastricht University
Vernon, J et al (2010)Alzheimer’s Disease and Cost-effectiveness Analyses World Bank database (accessed in May 2015)
WHO (2009)Vaccine-preventable diseases: monitoring system 2009 global summary
10/10
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