Market Report Source

Overview

Introduction
The oncology market has shown remarkable growth in recent years, driven by the advent of targeted therapy and the high level of unmet needs in the disease, and it is poised for further expansion. While this will provide companies with opportunities, a key hurdle for novel cancer drugs will be the increasing pharmacoeconomic vigilance that prevails within cash-strapped healthcare systems.

Scope
Overview of issues surrounding the sustainability of oncology drug pricing and reimbursement, supported by interviews with 23 key payer stakeholders
Review of processes involved in getting a new oncology drug approved for payment
Evaluation of the level of supporting clinical data, economic data or other value evidence used in the reimbursement decision-making process
Assessment of measures for cost-containment in oncology that have already been taken or are being planned for the future

Highlights
FDA approval of innovative oncology drugs will guarantee patient access in the US and market uptake is dependent on clinician’s perceptions of drug benefit rather than payer constraints. However, this is not the case in the EU where payers have a greater influence on prescribing decisions.

Drug developers need to be more proactive in initiating and integrating pharmacoeconomic studies concurrent with pivotal clinical trials. Manufacturers also need to shift payer focus away from drug acquisition cost, incorporating a more holistic approach to effectively communicate the value of their drugs.

Improvement in overall survival from randomized Phase III trials is deemed to be the most desirable outcome by payers. While other endpoints would be given consideration in reimbursement decision-making, payers were of the opinion that these endpoints would support an application based on improved overall survival, rather than as a substitute.

Reasons to Purchase
Evaluate what payer measures for cost-containment in oncology have already been taken or are being planned for the future
Maximize the chance of your drug gaining positive payer decisions by recognizing the influences on the reimbursement/funding decision-making process
Understand how the oncology pricing and reimbursement environment may evolve over the next five years

Table of Contents

ABOUT DATAMONITOR HEALTHCARE

Nish Saini – Director of Oncology

CHAPTER 1 EXECUTIVE SUMMARY

Datamonitor insight into the oncology drug reimbursement/funding decision-making process

Market penetration of novel cancer therapeutics challenged by increasing pharmacoeconomic vigilance

US market characterized by self-professed poor management of oncology drugs by Managed Care Organizations

More bureaucratic and centralized approach to drug reimbursement/funding decision-making prevails in the Europe

NICE blight hampering novel oncology drug uptake in the UK

Emphasis on pricing- rather than remibursement-control in Japan as regulatory approval virtually guarantees formulary inclusion

Independent health technology assessment bodies a rarity

Improvement in overall survival viewed as the optimal endpoint in supporting drug reimbursement funding/applications

Increased management of oncology drugs by payers viewed as inevitable

CHAPTER 2 OBJECTIVES, SCOPE AND COVERAGE

Target Respondents

List of abbreviations

CHAPTER 3 INTRODUCTION

Market penetration of novel cancer therapeutics challenged by increasing pharmacoeconomic vigilance

Advances in cancer treatment outstripping available financial resources

The rising costs of cancer pharmacotherapy are often disproportionate to improvements in survival rates

Oncology is likely to be one of the first specialist disease areas to be targeted by the payer community

Improved pharmacoeconomic analysis will be required to communicate the ‘value’ of novel cancer treatments

Lack of flexibility in funding of new drugs in EU hospital settings has a major impact on patient access to innovative cancer drugs

CHAPTER 4 DYNAMICS OF THE REIMBURSEMENT/ FUNDING PROCESS

US market characterized by self-professed poor management of oncology drugs by Managed Care Organizations

Individual benefit design dictates which MCO committee makes formulary-inclusion decisions

Early delivery of clinical data to payer organizations is paramount to driving rapid and optimal market uptake

Medicare Modernization Act (MMA) introduces defined time line for formulary-inclusion decisions

Procedural aspects of formulary-inclusion decision-making appear standardized across interviewed MCOs

Procedure unchanged for second- and third-generation therapies

Negative formulary-inclusion decisions have minimal impact on patient access to novel oncology therapeutics

Payers attempt to rationalize oncologists’ prescribing behavior through innovative approaches

Japan: centralized agency controlling relatively efficient healthcare system

Key stakeholders within the MHLW

Pricing rather than reimbursement control in Japan since formulary inclusion is virtually guaranteed by regulatory approval

Transparency increased with the NHI Pricing Organization

Rewarding innovation with price premium

Cost accounting method for drugs without comparators

Biennial price cuts to contain healthcare costs

Increasing importance of pharmacoeconomic data

Novel drugs are subject to reassessment due to changes in circumstances

France: multi-step pricing and reimbursement decision-making process can delay access to innovative oncology drugs

Evaluation of therapeutic benefit by Transparency Commission is crucial to facilitating market access and optimizing manufacturer reimbursement

Different agencies have responsibility for pharmacoeconomic and clinical evaluations

Hospital formulary-inclusion decisions rely heavily on Transparency Commission evaluation

‘ATU’ system provides a mechanism for temporary authorization of innovative cancer drugs that would otherwise be delayed by lengthy decision-making processes

Recently-mandated reference pricing system for multi-source drugs will have little if any impact on innovative oncology treatments

Recent pricing and reimbursement reforms attempt to encourage innovation of drugs

Germany: reference pricing system threatens revenue potential for second- and subsequent-generation oncology drugs

Patient access to approved innovative cancer drugs relatively unhindered

Within Germany’s reference pricing system, decisions regarding innovative products are relatively uncomplicated

Increased cost-containment measures are likely to impact on favorable drug prices for oncology drugs administered in hospitals

Italy: single agency responsible for all aspects of drug approval, pharmacovigilance, pricing and reimbursement

Regulation of centralized decision-making at local level is particularly relevant for oncology drugs

Dynamics of application procedure and structure of AIFA facilitates expeditious decision-making for innovative drugs

Elements beyond clinical and pharmacoeconomic data may influence pricing decisions

Negative decisions regarding oncology therapeutics are rare

Unique reference pricing systems can significantly challenge market penetration for second- and third-generation drugs

Re-evaluation of manufacturer reimbursement levels every two years effectively penalizes success

Spain is one of the most efficient EU nations in facilitating access to new cancer drugs

Ease of access to innovative cancer drugs in Spain is evidenced by Karolinska Institute report

Drug developers and suppliers bear the burden for cost-containment efforts

Despite rigorous appraisal process by Directorate of Pharmacy and Healthcare Products, market access is virtually guaranteed following AEMPS approval

Autonomous communities (ACs) make efforts to rationalize regional drug use

Pricing determinations for reimbursable prescription drugs performed by specialized agency

UK: favorable pricing structures are countered by poor and discrepant access to novel cancer treatments across country

Cancer networks are responsible for implementing and delivering NHS cancer services

NICE serves as a ‘gatekeeper’ in managing universal access to novel treatments

Complex funding system for oncology drugs, with procedural variation among geographic regions

Funding decision-making triggered at request of local specialists rather than automatically following drug approval

Payers will not routinely consider funding unlicensed drugs or off-label use of licensed drugs

Constitution of funding decision-making group somewhat variable

Clinical and pharmacoeconomic (PE) data evaluation is rigorous, sourcing information from multiple sites

Inefficiency of financial arrangements and weak clinical evidence perceived as ‘bottlenecks’ to the decision-making process

Process and decision-making for entry and evaluation of second- and third-generation products variable

Manufacturers at the mercy of payers suffering “NICE blight”

CHAPTER 5 REQUIRED LEVELS OF CLINICAL AND ECONOMIC EVIDENCE

Independent health technology assessment bodies a rarity

Increased emphasis on contextualizing the clinical benefit derived from novel oncology drugs in relation to other therapeutic areas

Greater acceptance among US payers of positive supporting data derived solely from Phase II trials

French approach places onus on marketing company to fully disclose all supporting clinical and pharmacoeconomic data

German and Italian payers less rigorous in their appraisal of the clinical value of novel oncology therapeutics already approved by EMEA

Japanese payers primarily focus is on level of reimbursement rather than formulary inclusion decision-making

Improvement in overall survival viewed as the optimal endpoint in supporting drug reimbursement funding/applications

US payers more pragmatic in their consideration of endpoint designation

European payers reticent in quantifying the relative increase in specific endpoints that would justify drug reimbursement/funding

US payers more forthcoming in quantifying desired improvements in clinical benefit

Automatic listing in Japan but endpoints significantly influence pricing based on prescribed formula

Payers generally feel underserved in terms of the provision of pharmacoeconomic information from manufacturers.

Discipline of pharmacoeconomics is in its relative infancy, with payers feeling unable to interpret complex information

UK payers most familiar with QALY concept, an integral component of the NICE appraisal process

Raising awareness of cost-effectiveness in Germany

Independent pharmacoeconomic evaluations seen as preferential

Pharmaceutical companies needs to shift payer focus away from solely drug acquisition costs

Disparate opinions about influence of budget impact on decision making

Heightened awareness among French payers with regard to off-label use

Discrepant opinions among EU and US payers regarding relative importance of criteria for reimbursement/funding decisions

EU payers interviewed placed a greater emphasis on cost-effectiveness than their US counterparts

Beyond persuasive clinical and pharmacoeconomic data, other influences may impact on the decision process

UK payers misplaced in their denial that payer advocacy or media attention have any influence on funding decisions?

Early engagement of patient advocacy groups a valid and effective strategy

Distribution channels and patient/caregiver education seen as important ‘service elements’ influential to US payers

CHAPTER 6 FUTURE COST-CONTAINMENT MEASURES

US payers believe they have little option other than to increase their management of oncology drugs

US payers believe reduced profiteering among oncologists with regard to drug acquisition is essential

Community oncologists argue that MMA legislation will significantly impact service provision

Concern that financing of MMA may result in future implementation of price controls

Pre-emptive move by pharmaceutical companies

Impact of MMA will inevitably extend beyond Medicare patients

Numerous other cost-containment measures envisaged in US

Greater shift of cost-pressures to insureds not met with universal payer enthusiam

European payers’ favorable attitudes to innovative oncology drugs starting to wane

An increased emphasis on disease prevention and drug reimbursement based on treatment outcomes postulated

Risk-sharing model for pricing

Uniqueness of UK-specific measures reflect complexity of drug funding system

No urgency among Japanese payers

CHAPTER 7 HYPOTHETICAL SCENARIOS

Scenario one: Payer attitudes to a novel high-cost oncology drug with debatable clinical benefit

Scenario two: Value of second-generation oncology drugs with reduced toxicity accompanied by non-inferiority

CHAPTER 8 APPENDIX

Contributing experts

US Payer Transcripts

Japan Payer Transcripts

France Payer Transcripts

Germany Payer Transcripts

Italian Payer Transcript

Spain Payer Transcripts

UK Payer Transcripts

List of abbreviations

Bibliography

Research methodology

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