lunchtime seminar with paula lorgelly - 14 december 2015

Assoc Prof Paula Lorgelly

14th December 2015

From the Antipodes to the Motherland: reflections on HTA decision makers as budget takers and budget makers

From the Antipodes to the Motherland: reflections on HTA decision makers and budgets

By way of introduction


Presentation Plan

• HTA decision making globally and locally• Review/describe how the United Kingdom,

Australia and New Zealand make funding decisions/recommendations• Listing and funding

• Case studies• include cancer drugs

• Ways forward for NICE?• Economic theory of decision making


Health Technology AppraisalGlobally and Locally


HTA Globally – one size does not fit all• Various committees• NICE in England and Wales• SMC in Scotland• CADTH CDR in Canada• IQWiG in Germany• Pharmaceutical Benefits Advisory Committee (PBAC) in

Australia• Pharmaceutical Management Agency (PHARMAC) in New

Zealand• Alternative criteria


http://www.ispor.org/PEguidelines/index.asp


Factors that influence HTA decisions• A range of factors affect adoption decisions• Recent synthesis found that there is little

consensus across agencies Bossers et al, 2015

• Additionally differences in studies focusing on the same agencies

• However, for NICE cost effectiveness appears to be important Devlin & Parkin, 2003; Dakin et al, 2006; Dakin et al, 2014;

Cerri et al, 2014


HTA Locally – UK issues

• NICE cost effectiveness threshold• End of Life inflation• Cancer Drugs Fund• Austerity and affordability


The Motherland and the Antipodes


United Kingdom

• Population = 64.1m• GDP per capita = $39,800 (PPP)• Real growth rate = 3%• Health expenditure % GDP = 9.1%• Pharmaceutical expenditure =

£16,393m (Oct 2015)• Pharma exp per capita = $367

($US PPP 2008) OECD, 2014


NICE

• Established in 1999 to undertake technology appraisals and produce clinical guidelines• Now has a wider remit

• Appraisal committee considers the evidence• Clinical – Patient benefits• Economic – Value for money


Decision Criteria and Recommendations• Explicit cost effectiveness threshold, £20k-£30k

per QALY• End of life threshold of £50k (weight of 1.6)• Decisions• Recommended• Optimised (restricted)• Only in research (approve with research)• Reject


Implementation into NHS

• Mandatory that approved technologies are made available within 90 days

• Clinical Commissioning Groups are to find this money• NICE does not advise on how to find this money, although

does produce costing templates to understand the budget implications locally

• In some instances NHS England may provide special funding


Criticisms

• A postcode lottery remains with regard to what disinvestment decisions are made locally to fund NICE decisions

• NICE has no funding mandate, threshold bears no relation to the budget impact


Australia

• Population = 22.8m• GDP per capita = $46,600 (PPP)• Real growth rate = 2.7%• Health expenditure % GDP = 9.4%• Pharmaceutical expenditure =

$10,050m (AUD)• Pharma exp per capita = $509

($US PPP 2008) OECD, 2014


PBAC

• PBAC established by act of parliament in 1953• Since 1993 mandatory that submissions include

economic evidence• The PBAC is an independent expert body

appointed by the Australian Government• Economic Subcommittee (ESC)• Drug Utilisation Subcommittee (DUSC)

• No new medicine can be listed unless the committee makes a positive recommendation


Submission requirements

• Clinical evidence• Safety• Economic evidence• cost minimisation analysis• cost effectiveness analysis

• Consider budget impact (5 year forecast)


Decision Criteria

• No explicit cost effectiveness threshold• Often assumed to be $50,000 per QALY• Some consider PBAC to work within a value

based pricing framework


Recommendations

• PBAC makes recommendations to the Minister for Health for Pharmaceutical Benefits Scheme (PBS) listing• Positive, reject, defer

• Sponsor negotiates pricing arrangements with Department of Health

• When that listing is expected to cost more than $20 million in any one of the four years of the forward estimates period the Cabinet must give approval


Funding decisions

• Very few instances where Minister/DoH has not funded as per PBACs recommendation• Sildenafil for erectile dysfunction (2002)• Number of deferrals in 2011• Hep C drugs (discussed later)

• Most notable was trastuzumab for metastatic breast cancer, which in 2001 was not recommended by PBAC• Resulted in the Herceptin Program• Although this year it came into the PBS


Pharmaceutical expenditure


Criticisms

• Timely access to drugs• High cost drugs and expenditure growth• Cost of generics


New Zealand

• Population = 4.4m• GDP per capita = $35,300 (PPP)• Real growth rate = 3.3%• Health expenditure % GDP = 9.7%• Pharma expenditure = $795m (NZD)• Pharma exp per capita = $261

($US PPP 2008) OECD, 2014


PHARMAC

• Established in 1993 • PHARMAC's statutory objective is: ’to secure for

eligible people in need of pharmaceuticals, the best health outcomes that are reasonably achievable from pharmaceutical treatment and from within the funding provided.’ Section 47(a) of the NZPHD Act

• Expanded remit to evaluate hospital pharmaceuticals and medical devices


Decision criteria (current)1. The health needs of all eligible people within New Zealand;2. The particular health needs of Māori & Pacific peoples;3. The availability and suitability of existing medicines, therapeutic medical devices

and related products and related things;4. The clinical benefits and risks of pharmaceuticals;5. The cost-effectiveness of meeting health needs by funding

pharmaceuticals rather than using other publicly funded health & disability support services;

6. The budgetary impact (in terms of the pharmaceutical budget and the Government’s overall health budget) of any changes to the Schedule;

7. The direct cost to health service users;8. The Government’s priorities for health funding, as set out in any objectives notified

by the Crown to PHARMAC, or in PHARMAC’s Funding Agreement, or elsewhere; and9. Such other criteria as PHARMAC thinks fit. PHARMAC will carry out appropriate

consultation when it intends to take any such “other criteria” into account.


Factors for Consideration, 2016


Cost effectiveness

• Incremental utility cost ratio (IUCRs), i.e. the incremental QALY gains per unit net cost, is the metric used

• Expressed as QALYs per $1 million of the total budget invested

• QALYs gained per $1M spend emphasises health gain, by presenting the result as maximising health gains as opposed to minimising cost

• Less inference on cost-effectiveness thresholds, instead focuses decisions on opportunity cost (the gains within a set budget)


Cost effectiveness threshold?

• There is no threshold below which a pharmaceutical is considered cost-effective

• Proposals are only considered in relation to other funding proposals at the time

• Cost-effectiveness is only one decision criterion used by PHARMAC

• Spending on pharmaceuticals is required to be kept within a fixed budget

• What is and is not considered cost-effective will vary with the amount of funding available

Metcalfe and Grocott, 2010


Recommendation to list

• Pharmacology and Therapeutics Advisory Committee (PTAC) advises PHARMAC, offer recommendation • Positive: high, medium and low priority

• If PHARMAC accept then begin commercial negotiations

• Funding within a fixed capped budget, so need to fund new products from savings


PHARMAC’s budget


Praise and Criticisms

• “Pharmac is possibly the most publicly respected body in this country. Protesters took to the streets at the mere suggestion its ability to drive hard bargains with pharmaceutical manufacturers might be compromised in the recently concluded Trans-Pacific Partnership trade negotiations. ‘Big Pharma's’ occasional lobbying attempts to change Pharmac's remit only reinforces our confidence in the professionals who decide how our taxes can be spent for medicines of most value.” NZ Herald, 5th Dec

• Lack of choice• Waiting list of drugs


Summary comparisonNICE PBAC PHARMAC

Serving a population of 64m 23m 4.4m

Pharmaceutical spending per person is

$367 $509 $261

Considers economic evidence

Yes Yes Yes

Has an explicit cost effectiveness threshold

Yes Maybe No

Has an explicit budget threshold

No No Yes

Implementation Mandatory but not funded

Funded If there is money in the fixed

budget


Case studies and comparisons


Case studies - Sofosbuvir

• Sovaldi (Gilead) • Blockbuster drug• Extraordinary high cost• Costs US$84k for a 12 week

course• One of a number of direct-

acting antivirals (DAA)• Notably cost effective at most acceptable

thresholds


What happened in the UK?

• NICE approved Sofosbuvir in Feb 2015• Estimated cost of implementing the guidance would be £106m

• Accepted that NHS England should be allowed longer than the standard 3 months to implement (31st July 2015)

• Recently NICE approved three further treatments• Prior to this NHS England took proactive approach creating

an Emergency Access Programme• There are now Operational Delivery Networks to help NHS

England commission hepatitis treatment• Commercial in confidence pricing arrangements


What happened in Australia?

• Sofosbuvir first reviewed March 2014, then again in March 2015 (with a price discount)• Range of other DAAs reviewed at the July 2015 meeting

• The PBAC advised the Minister:• that there is the high clinical need for all oral interferon-free

treatments of CHC to be made available on the PBS• that these treatments would be cost-effective at $15,000/QALY

range and that there was no basis on which to recommend that any one treatment be more expensive than another

• there is a large opportunity cost to health care system. Given this large opportunity cost, the cost of a course of treatment should be set irrespective of the duration, and that other pricing policies be considered



• Rumour that Sovaldi will cost $AUD65k• Estimated that there are 233,000 patients =

$15b (twice the pharmaceutical budget)• Approved as Section 100 drug• Rationing by stealth


What happened in New Zealand?

• Considered Sofosbuvir in August 2014• PHARMAC ranked it (and Ledipasvir+Sofosbuvir;

Harvoni) high priority for certain groups of patients• Decompensated cirrhosis • Pre/post liver transplant• Essential mixed cryoglobulinaemia

• But not get listed nor funded



• Request for Information in Aug 2015 to help inform a decision• Gauging supply, and understanding new agents in the

pipeline, getting a better understanding of health utilisation and prevalence

• Next communication is due Nov/Dec 2015


Case studies - Pembrolizumab

• Keytruda (MSD)• Immunotherapy for advanced stage melanoma• First in a new class of cancer

immunotherapeutics• Described by oncologists as revolutionary• Follows the success of ipilimumab (Yeroy)

targeted therapy



• Melanoma is the fifth most common cancer in the UK

• Yervoy reviewed in 2012 and 2014, received positive recommendation with Patient Access Scheme (PAS)

• NICE published positive recommendation for Keytruda in October 2015

• First drug to be approved through the Medicines and Healthcare Products Regulatory Agency’s Early Access to Medicine Scheme (EAMS)



• Highest rate of melanoma in the world• PBAC considered Keytruda at the March 2015

meeting• Yervoy was approved in November 2012, after rejecting

at July 2011 and March 2012 meetings • Committee said that Keytruda appeared to offer

a clinical advantage over Yervoy, but the economic modelling did not allow a price advantage to be estimated with confidence

• Proposed a managed entry scheme, may result in revising the price


What happened in New Zealand?• Second highest rate of melanoma (after Australia)• PHARMAC considered the evidence to still be developing• Pricing being sort was excessively high, adversely

affecting the cost effectiveness ($300,000 for a full course)

• In December 2015 PHARMAC recommended, but with low priority• In 2014 PHARMAC declined Yeroy

• Calls for the government to intervene, which is what happened in 2008 with Herceptin• Health minister recently conceded that it was wrong to overrule

PHARMAC


Case studies – Trastuzumab Emtansine• Kadcyla (Roche)• New line of targeted therapy for HER2 positive

breast cancer• Part of Roche’s monopoly on targeted therapies for breast

cancer, includes Trastruzumab (Herceptin) and Pertuzumab (Perjeta)



• NICE first reviewed Kadcyla in April 2014• Not cost effective even given flexibility in

threshold with EoL allowance• Funded on CDF in 2014 • Roche recently agreed a discount with NHS

England to retain it on the CDF• November 2015 NICE rejected it again, still not

cost effective• Notably a lesser discount was offered to NICE• “Questionable long-term future in the NHS”



• Reminder that Herceptin for advanced cancer was not funded via the PBS

• Evaluation of both Kadcyla and Perjeta were problematic as the comparator was not deemed cost effective• Reviewed first in July 2013 and then with pertuzumab in

March 2014• Herceptin for advanced cancer patients needed

to be brought into the PBS• Note it has been periodically reviewed since 2001



• Evaluated all three in November 2014• Herceptin and Perjeta were approved (with risk sharing

arrangements), Kadcyla was deferred• In an out-of-session meeting pricing proposal for Kadcyla

was proposed and accepted by PBAC



• MedSafe approved but no evidence that PHARMAC is reviewing it

• Perjeta reviewed in February 2014, given low priority

• Possibly an instance where the manufacturer doesn’t wish to enter the market


Cancer Drugs Fund

• Established with a fixed budget • Lack of incentive to price cost effectively

resulted in NICE rejecting many cancer drugs and these being funded on the CDF

• Budget was not constrained, now there is a need for a rationing mechanism• New consultation document regarding the CDF

• No equivalent in Australia nor New Zealand• Although many oncologists in Australia have called for a

fund to expedite access while the PBS is overhauled


Economics of Agency Decision Making


Agency Problem

• Principal-agent problem• Principal recruits an agent to act on their behalf• Due to asymmetry of information

• Agent acts imperfectly• Lack of understanding of principal’s preferences and a

lack of (misaligned) incentives• Generally in health economics see it in the

patient-doctor relationship (purchaser-provider split)


Agency problem in HTA

• Principal is the health service (NHS), agent is the HTA agency (NICE)

• What criteria is of importance to the NHS?• Funds allocation beyond technologies, includes hospitals

and other health providers• Is this the same criteria NICE are using?


Double agent problem

• Alternatively the population (general public and/or patients) is the principal and health service is their agent, for whom NICE is their agent

• Again asymmetric information• Given local implementation issues, the principal

could be at the level of the local catchment • Highlights the implementation issues


Misspecification of the objective function• NICE is seeking to maximise QALYs• NHS is seeking to maximise health• The public is seeking to maximise what?• Health/wellbeing/wealth?

• What does the principal wish to maximise?• Depends on who the principal is


Misspecification of the constraint• Need to understand opportunity cost of

decisions• What is the budget the agency is working

within?• Is it possible to set an informed threshold?• Threshold setter

• One that can be adapted/relaxed when faced with adopting technologies which will have non-marginal effects on the budget• Threshold searcher


A way forward for NICE and the NHS?• PHARMAC’s fixed budget appears to offer more

affordable pharmaceutical prices, but with limited drugs• PHARMAC’s request for a greater budget was recently

denied• PBAC appears to function with no budgetary

constraints, but this results in delays and concerns regarding future budget impact

• What could be the NICEst approach?


NICEst approach Sampson, 2015

• It could be a threshold setter• What is the social value of a QALY?

• It could be a threshold searcher• Need to consider the current budget and affordability

issues• This would require it to make disinvestment decisions (at

what threshold?)• It could abandon the threshold (or at least give

less weight to it) and go down the PBMA or MCDA approach


What could NHS England do?

• Alternatively, NHS England could search for the threshold and then set the threshold for its agent• Or perhaps not have an agent at all?

• However need for credible separation of the appraisal and implementation task


Questions? Comments?

Thank you!

lunchtime seminar with paula lorgelly - 14 december 2015

Presentations & Public Speaking