Showing posts sorted by relevance for query drug prices. Sort by date Show all posts
Showing posts sorted by relevance for query drug prices. Sort by date Show all posts

November 18, 2014

Drug pricing 101 (2)

The New Drug Reimbursement Game. A Regulator’s Guide to Playing and Winning

In my former post I was backing a complete review of current drug pricing regulation. Any official that has to perform this task needs some fresh ideas and knowledge and this is precisely what a new book provides. In The New Drug Reimbursement Game by Brita A.K. Pekarsky you'll find the economic foundations for a new drug pricing regulation.
The basic argument:
Higher prices today mean increased economic rent for the pharmaceutical industry (Pharma) otherwise firms would not lobby for them. It is in Pharma’s interest to protect and seek these economic rents. Whether higher prices and more R&D today increase future health remains an empirical question. If higher prices also mean a higher net present value of the population’s health, then it is in the institution’s interest to increase prices. Given the institution’s objectives, the most effective strategy Pharma can use to protect these rents is “the Threat”: lowering prices is against the interest of health funders because it will reduce a population’s future health.
 The regulator’s challenge is to answer the following question:
• “How should rational institutions respond to the Threat?” (A rational response is one that is consistent with a given institution’s stated objective function, whatever this may be.)
This introduction places this research question in the context of current evidence and research, by addressing the following three questions.
• Is it plausible that the Threat exists and that it influences the price of new drugs?
• Is there rigorous empirical evidence that suggests that lower drug prices will result in reduced future health?
• Are economists in agreement as to the value of a decision threshold for new  drugs that accommodates characteristics of the health budget such as allocative and technical inefficiency?
And the conclusion:
When the Institution buys this new drug, it buys the health effects from this drug and the health benefits from future innovation. This is not the case with other health programmes. Therefore, unless the Institution pays a premium for the health effects from the new drug, the population will be worse off because innovation will be suboptimal and the future drug will not be produced.
Unfortunately, when you get to the end you'll miss any consideration about what innovation means. If you look at recent patterns of effectiveness of new drugs, you'll see that the value of innovation is under scrutiny, and most drugs would not pass the test. In my opinion, the regulator has to send signals about the value of health improvement in certain diseases and pharmaceutical companies should focus R+D on such fields and avoid others.
Therefore, a new companion to this book should be written. This is only a regulator's guide to play, but not to win. Take it only as a starting point.

PS. Just FYI, you'll not find the term "Budget impact analysis"  in the book, a close term Programme budgeting marginal analysis PBMA is what you'll find. It is suggested a price effectiveness analysis as a previous requirement for any PBMA, otherwise it makes no sense. This approach seems quite different to  yesterday's news.

Thomas Piketty speech at UPF Oct 2014, it starts at min 8:10. My post, last May.

January 20, 2017

Stimulating ideas for drug development and pricing

New Health Technologies. Managing Access, Value and Sustainability

This new OECD report sheds light over several issues in an heterogeneous way, but the pharma chapter has a box that I want to highlight. It is really suggestive:

Future scenarios about drug development and drug pricing

These disruptive scenarios result from an expert consultation led by ShiftN and commissioned by the Belgian Health Care Knowledge Centre of Expertise and the Dutch Health Care Institute. The aim of the consultation was to imagine disruptive ways to finance R&D that could potentially better respond to public health needs.

Scenario 1: Needs-oriented Public-Private Partnerships
Public actors and drug developers are tackling public health priorities in vigorous and pragmatic partnerships. The public actor identifies indications representing high public health needs; specifies criteria for the performance levels of drugs to be developed for those indications; and indicates his willingness to pay. Through procurements with enforceable contractual commitments, the public actor enters into a partnership with drug developers to
find solutions for these needs. Developers are prepared to enter into the partnership and to give price concessions for a pre-negotiated fixed agreement on price and volume, and speedier access to market, which reduces their development risk. This drug development and pricing model is close to existing governmental procurement practices in researchintensive areas such as public transport, defence and space exploration.

Scenario 2: Parallel Drug Development Track
EU member states set up a parallel, not-for-profit drug development track that exists alongside, but independent of, the pharmaceutical and biotechnological industry. The aim of the parallel track is to develop cheaper drugs without compromising safety and effectiveness. After having made up an inventory of the public health gaps and priorities in health care, EU member state authorities ask leading public research institutes which
discoveries, assets, tools and capabilities they possess to develop solutions addressing (some of) the needs that were identified. Starting from the match between demand and available expertise, coalitions are built between these (not-for-profit) research institutes, payers, authorities and patients’ organisations. All these partners make the commitment to participate in an open and transparent way in clinical research projects. Intellectual
property (IP) rights are acquired early on in the development process by the partners of the consortium, and ownership is shared. Alternatively, the parallel research infrastructure can completely deprioritise ownership; i.e. inventions and developments in the parallel track are not protected and are in the public domain.

Scenario 3: Pay for Patents
A consortium of European countries join forces and establish a “Public Fund for Affordable Drugs”. Each of the participating countries deposits a fixed annual percentage of what it currently spends on drugs into the Fund. Private payers (including insurance companies) can also join the Fund. The Fund continuously screens the research market for “interesting” drugs that are being developed in Phase II or in Phase III for indications with clear health priorities. The Fund buys the patent from developers, conducts or commissions the last phases of research in public research institutes or subcontracts to private partners (with strict public oversight), and guides the submission process for market authorisation. Because the drug is then put on the market at a relatively low price, substantial savings are generated for the public payer. Once the system is functioning “at cruising speed”, these
savings can (partly) serve to replenish the Fund. The “Pay for Patents” model delinks R&D from manufacturing and sales. The prices decrease because the partners in the Fund consider medicines as public goods that should not be financed through monopoly prices.
Hence, once the patent is owned by the public sector, after a successful development and authorisation trajectory, the rights to produce, distribute and sell the drug can be licenced to manufacturers and distributors that provide the best deal in terms of quality, safety and accessibility for the lowest cost. As a rule, various private partners compete with each other, with the result that “new drugs enter the market at generic prices”.

Scenario 4: Public Good from A to Z
Drug development is essentially a public enterprise, and is radically re-oriented from serving private profits towards serving the public interest and patients’ needs. In a drug development system that is essentially a public enterprise, private drug companies still have a role, albeit with a completely different business model. They mainly manufacture drugs and deliver services to the public provider on a competitive basis. With drugs and other health technologies essentially public goods, patents and monopolistic prices have no role.
Patients and public health providers, not corporations, choose which unmet needs research should address. Public authorities regularly publish lists of research priorities, based on objectively established and patient-informed unmet medical needs. Governments organise and fund that research through a variety of mechanisms, including requests for proposals based on well-defined targets that any research team, public or private, can compete for, or milestone compensation, and active management of the innovation process. By paying directly for R&D and active management of the drug development pipeline, nations and health care systems pay much less than the patent-protected prices of the past. Ultimately, drug prices are set on the basis of the real costs of manufacturing, quality control and distribution, which are decoupled from R&D.
Source: Vandenbroeck, Ph. et al. (2016), “Future Scenarios About Drug Development and Drug Pricing”, Health Care Knowledge Centre (KCE) Report 271, D/2016/10.273/59, Health Services Research (HSR), Brussels.

December 18, 2016

The farce of confidential drug prices

We are approaching the end of cost-effectiveness as we have known. If you can't use the price of the drug because it is confidential, then there is no possibility of cost-effectiveness analysis. As far as Pfizer has sued a public agency because its officials have leaked the prices, then everybody that uses such information is at risk of being sued. I had already said that some time ago, when in our country we moved to confidential prices. This trend is ridiculous, getting better discounts comes at the price of opacity. And opacity is an extraordinary arm to prevent competition and constrain prioritisation. Qui prodes? It's up to you to get the answer, for me it's clear. If money comes from taxes, the citizens have to know the final price paid. The time to finish such farce has come.

PS. On why external reference pricing is meaningless (p.36):
The practice of lowering list prices through discounts, rebates and similar financial arrangements15 between public payers and the MAH is wide-spread. 22 countries reported that discounts, rebates or similar financial arrangements (e.g. managed-entry agreements such as risk sharing schemes) – either statutory (i.e. based on a law) or confidential (based on agreements) – are in place. As will be discussed later in more detail (cf. Chapter 4.1.2), the widespread use of the discounts and similar provides financial benefits to the country using it, but the other countries referencing to that country do not benefit from the lower prices since they refer to undiscounted higher prices.

Rembrandt. Self portrait
Current exhibition in Caixaforum - Barcelona

January 11, 2019

The bill of new drugs

In the US there is a huge concern over drug prices. The question is what's driving expenditure growth, new product entry or inflation? In new product entry we have two categories, generic drugs and innovations (in specialty drugs). The answer appears in the latest issue of Health Affairs.
In this retrospective study of pharmaceutical pricing data for 2005–16, we found that increases in the costs of specialty and generic drugs were driven by the entry of new drug products, but rising costs of brand-name drugs were largely due to inflation in existing medication prices.
The costs of oral and injectable brand-name drugs increased annually by 9.2 percent and 15.1 percent, respectively, largely driven by existing drugs. For oral and injectable specialty drugs, costs increased 20.6 percent and 12.5 percent, respectively, with 71.1 percent and 52.4 percent of these increases attributable to new drugs. Costs of oral and injectable generics increased by 4.4 percent and 7.3 percent, respectively, driven by new drug entry. The rising costs of generic and specialty drugs were mostly driven by new
product entry.
We would need similar data for our country. Nobody knows anything, prices are confidential.

PS. On drug pricing scams.

Count Basie and the beginning of swing

June 9, 2017

The farce of confidential drug prices (2)

Payers’ experiences with confidential pharmaceutical price discounts: A survey of public and statutory health systems inNorth America, Europe, and Australasia

Some months  ago I posted on confidential drug pricing. I said that this was the end of cost-effectiveness as we have known. Now a new article reflects the evidence of my words:
Confidential price discounts are now common among the ten health systems that participated in our study, though some had only recently begun to use these pricing arrangements on a routine basis. Several health systems had used a wide variety of discounting schemes in the past two years. The most frequent discount received by participating health systems was between 20% and 29% of official list prices; however, six participants reported their health system received one or more discount over the past two years that was valued at 60% or more of the list prices. On average, participants reported that confidential discounts were more common, complex, and significant for specialty pharmaceuticals than for primary care pharmaceuticals.
If confidential discounts are huge (>60%), as they are, any cost-effectiveness analysis is adhoc and its obsolescence undermines any result. This fact is the recognition that the pricing system is not working and we are under a procurement system. As I said some months ago:The time to finish such farce has come.

September 23, 2011

Preus raonables per a rics i pobres

Setting Cost-Effectiveness Thresholds As A Means To Achieve Appropriate Drug Prices In Rich And Poor Countries 

Sempre ens molesta que ens aixequin la camisa. Volem pagar un preu que es relacioni amb el valor que ens aporta i que sigui fruit de la lliure disponibilitat a pagar de cadascú. Però, això sabem que no és del tot així en molts mercats, hi ha problemes de tota mena i el més important el d'informació. Quan estem assegurats desapareix la barrera del preu i aleshores són les asseguradores públiques i privades que compren per nosaltres. A elles tampoc els interessa que els aixequin la camisa, però alhora volen garantir accés. I ja hi som. Com fer-ho?
La Patricia Danzon, Adrian Towse i  l'Andrew Mulcahy analitzen què està passant al món amb els preus dels medicaments i fan una proposta a HA (finançada per Lilly). Transcric un paràgraf clau:
Examining drug pricing, we found that in rich countries, insurance coverage can make consumers insensitive to price, which means that manufacturers' prices are largely unrestrained unless payers intervene. In middle- and low-income countries, where most consumers pay for drugs out of pocket, we found that the poorest countries face the highest prices, relative to their mean per capita income. We recommend that countries and payers set their own cost-effectiveness thresholds to reflect how much they are willing to pay for "health gain"-in other words, for a measured improvement in the health of a person or a population. Adopting this approach broadly should lead to appropriate price differences across and within countries, benefiting consumers and manufacturers alike.
A l'interior de l'article veureu l'èmfasi en un llindar cost-efectivitat per tal de fixar preus. Bé, aquest és un tema complicat. Crec que ens cal tenir-ho present però no sé si la seva aplicació ha de ser totalment prescriptiva o si cal que sigui només indicativa. Les febleses metodològiques d'aquest llindar són conegudes i cal anar en compte. Per tant, ens convé mesurar el valor que aporten els medicaments, i relacionar-ho amb el preu, però també cal tocar de peus a terra i admetre les limitacions.

PS. Salaris raonables per a docents universitaris. La decisió de reduir un 44% el sou als professors associats és molt més que el 5% que s'ha reduit als metges de la sanitat pública. És això una reducció salarial raonable?. Ho deixo dit aquí i qui ho vulgui llegir pot consultar LV. La mesura és per avui, l'impacte serà a llarg temini.

PS. La festa s'ha acabat però hi ha elements que encara volen continuar ballant amb els nostres impostos i els polítics els ajuden. Un altre exemple, la venda de la CAM

April 9, 2019

A lifetime fair drug pricing system

When Is The Price Of A Drug Unjust? The Average Lifetime Earnings Standard

Is there any measure for unfair pricing in drugs?. According to Ezequiel Emanuel prices should not
"exceed 11 percent of the average American’s disposable income. This suggests that current prices for many drugs are excessive and unjust."
Currently, average lifetime costs for health care are estimated at 31 percent of disposable income. Drugs account for 17 percent of health care expenses. A threshold for medical care as a share of disposable income that is set 10 percentage points higher than the current average amount spent on medical care (at 41 percent, or $261,907) is generous, as is a threshold for drug costs as a share of medical costs set 10 percentage points higher (at 27 percent, or $70,715) than the current share. Using these standards, the costs for all of the drugs a person takes in a lifetime should not consume more than 27 percent of medical costs, or $70,715. This constitutes 11 percent of lifetime disposable income.
He achieves this conclusion after applying these principles:
1. Complete life. The unit of analysis should not be a year or other limited time frame, but rather the impact over a whole lifetime
2. Limited resources. The just price of a drug should reserve enough resources for people to pursue valuable life activities
3. Value. There should exist a close relationship between the actual benefits of an intervention and its price
4.  Comprehensiveness. Life activities other than health matter; in considering the benefits of a treatment, we should also consider how it affects education, employment, and other valuable life activities
This article represents a deep change of perspective on drug pricing. Cost-effectiveness of individual drugs are not enough, a lifetime and societal perspective is necessary. I agree in this part, however methodological implications are huge and uncertain.

Bonnard at Tate modern right now

November 14, 2014

Drug pricing 101

In his book "Reinventing the bazaar. A natural history of markets", John McMillan says:
Market design consists of the mechanisms that organize buying and selling; channels for the flow of information; state-set laws and regulations that define property rights and sustain contracting; and the market’s culture, its self-regulating norms, codes, and conventions governing behavior. While the design does not control what happens in the market—as already noted, free decision-making is key— it shapes and supports the process of transacting.
If we look at the pharmaceutical market, there are unique features. The government role is at the same time the "market designer" and mostly the monopsonist. The price setting mechanism relies on multiple regulations that evolve according to circumstances. For example, since 2012 there has been no information about patented drug prices accepted for public funding. It sounds quite weird in a moment that everybody is proud of boosting transparency. The debates over the new pricing decree are still more strange. The current mess was explained some months ago in this op-ed. The uncertainty now also embraces pharma-distribution, pharmacists complain about the system.
Such a pricing system is explained in  this presentation (details about pricing in p.6). As far as it is unsatisfactory for everybody, it needs to be rebuilt. My suggestion is that there is a need to start from scratch. John McMillan would say that we have to look for a clever market designer to reinvent drug pricing as soon as possible.

October 2, 2014

Fasten seat belts

We have entered into an unknown new world: drug prices -for innovative drugs- are on track to disappear. The NHS has agreed a cap on expenditure for a hepatitis C (sofobusvir) new drug in €125m without disclosing the unit price. Some people may consider it an opaque strategy in times that politicians claim transparency.
In my opinion, such a situation allows to understand better that the pharmaceutical market for innovative drugs is mostly a monopsony (one buyer) in a monopoly (one seller), it is not a competitive market - and this is what I have always considered. Therefore, resource allocation is the result of a bargaining between both parties, and the unit price is irrelevant. The buyer wants to maximize health,  the seller is maximizing income, this is exactly the struggle.
The key question is: How much is NHS willing to pay for better health?. As far as  the budget is limited, the number of treatments times the price is not the right way to proceed to maximize health under constrained resources.
Any government has to set priorities for expenditure according to expected health value created. This information should be public. In any case, when a new drug is available the government should clearly define which benefits are cancelled and which are acceptable. A responsible minister can't  agree new expenditures without any budget.
Therefore, innovative pharmaceutical market is not really a market -right now is clear- and governments should set priorities according to resources available -right now is also clear that they haven't done it-.
Fasten seat belts, we are entering into trying times without any political compass-gps. Citizens are expecting something different. I still remember when Victor Fuchs told long time ago: usually health economists discuss incremental cost-effectiveness in limited marginal terms, the real issue appears when such an amount is enormous. The case of hepatitis C is the example of such a situation, and only health policy and deliberative democracy are the tools to confront it. Unfortunately, this was not the strategy applied nearby.

PS. Catalonia in contention, at Harvard Political Review. Must read, if you are interested on what's going on. Otherwise, try Bloomberg op-ed or LAtimes.

PS. Reading Francesc-Marc Alvaro op-ed I always learn something.

PS. Rating catalans' well-being by OECD.

Ricard Molina. Muntaner-Velódromo. Galeria Barnadas

April 24, 2015

A successful implementation of a bad idea

Since 2012 it hasn't been posible to know the price of new drugs funded by NHS. The government considers that they are confidential. This is a clear example of what exactly means transparency and the application of the rule of law. Meanwhile a new strategy has been put into place. Without public prices, the government has decided to set budget ceilings for several innovative drugs: pertuzumab, ivakaftor, telaprevir/simeprevir, abiraterona, pirfenidona y ruxolitinib. And the last one is new drugs for hepatitis C, defined as "therapeutic group" not as a specific molecule. Following this strategy there is a proposal to extend such a model of budget ceilings by ATC, therapeutic classification.
This is really a bad idea that is already being implemented. As you know sometimes there are good ideas badly implemented, and therefore criticized. But in this case, it is a bad idea with a scrupulous implementation. Some officials consider that if they set a budget ceiling, all decisions will be taken  to fit in with it. Clinical decisions follow a different path, not the mechanical and administrative way officials are used to.
The measure represents a tough hit to economic evaluation, because in the next future the government will not be any longer interested in it. Why? Their only concern is about the budget ceiling, the value doesn't matter. A missed opportunity for the development of priority setting under a rational scheme. Health economists should react to such a big mistake.
The saddest  issue is that nobody knows what will happen when the budget ceiling is surpassed. This will be the job for the next government, nobody cares about it right now. Democracy and rule of law are only words subject to interpretation.

PS. All the details about hepatitis C controversy at Boletín AES.

PS. Understanding the foundations of confidential drug pricing, in Forbes.

PS. Explained at Health Affairs:

International Best Practices For Negotiating 'Reimbursement Contracts' With Price Rebates From Pharmaceutical Companies
By: Morgan, Steven; Daw, Jamie; Thomson, Paige
HEALTH AFFAIRS  Volume: 32   Issue: 4   Pages: 771-777   Published: APR 2013

Reimbursement contracts, in which health insurers receive rebates from drug manufacturers instead of paying the transparent list price, are becoming increasingly common worldwide. Through interviews with policy makers in nine high-income countries, we describe the use of these contracts around the globe and identify related policy challenges and best practices. Of the nine countries surveyed, the majority routinely use confidential reimbursement contracts. This alternative to drug coverage at list prices offers benefits but is not without challenges. Payers face increased administrative costs, difficulties enforcing contracts, and reduced information about prices paid by others. Among the best practices identified, policy makers recommend establishing clear and consistent processes for negotiating contracts with relatively simple rebate structures and transparency to the public about the existence, purpose, and type of reimbursement contracts in place. Policy makers should also work to address undesirable price disparities within their countries and internationally, which may occur as a result of this new pricing paradigm.

July 17, 2015

Efficiency in drug patents buyout

Panning for gold: sourcing pharmaceutical innovation

Once upon a time there were pharmaceutical firms that invested mostly in internal R+D departments. Long time ago, the door was opened to contracting out, buying patents and licensing. The most recent step is to the acquisition of firms with promising molecules.
A short article in Nature sheds some light about the efficiency of recent mergers and acquisitions. And the summary is:
Our analysis suggests that most companies have a considerable opportunity to get better at deploying capital and resources efficiently when sourcing innovation externally. In our experience, we have found that the best performers develop robust forecasts for the key assets, are fiscally disciplined, and set up their innovation-sourcing teams and transaction capabilities to ensure that the right internal expertise is brought to bear and to ensure smooth hand‑offs through the life cycle of a deal.
The success lies within, the internal expertise is crucial. Have a look at the figure and you'll notice that the most efficient (defined as the commercial impact of the products acquired relative to capital deployed in M&As) is Roche. This is not by chance.

PS. Unfortunately, the study doesn't reflects any consideration to value in health or lobbying efforts in drug prices.
PS. FT's summer books 2015 

October 22, 2014

Fasten seat belts (3)

In former posts I have argued that pharmaceutical pricing is forging a new trend. The summary is in this figure (US prices):

The latest FDA approved drug is Harvoni, for hepatitis C. This new drug will compete with Sovaldi, the best drug launch ever made by the same manufacturer, 9.000 million $ in sales in 9 months.
The soaring costs of drugs is also affecting the generics market in US. Have a look at this blog.
As far as the economy is not growing at the same pace, new resources are needed and this may come from reductions on current drug benefits (price or quantity) or less expenditures in non-pharmaceutical goods. Otherwise the option is to delay access. Is this an option for cost-effective therapies?

October 11, 2017

Understanding Generic Drug Markets

Comparing Generic Drug Markets in Europe and the United States: Prices, Volumes, and Spending

The development of generic drug markets depends widely on an active regulator. This is the main reason of differences in consumption among countries. A new article highlights these differences and allows to understand better such market.
Substituting generic medicines for more expensive brand-name versions is likely among the most cost-effective interventions in health care systems.
There remain large differences in the usage and prices of generics in Europe and the United States. The barriers to market entry for generic companies vary between countries, as do pricing and reimbursement policies. Beyond such features of the market,
there are differences in whether, and to what extent, patients and health care professionals perceive generic and branded medicines to be bioequivalent.

March 4, 2019

Pharma landscape

The Global Use of Medicine in 2019 and Outlook to 2023

The summary of IQVIA report:

  • Global spending on medicines reached $1.2 trillion in 2018 and is set to exceed $1.5 trillion by 2023.
  • Invoice spending in the United States is expected to grow at 4– 7% to $625–655 billion across all channels, but net manufacturer revenue is expected to be 35% below invoice and have growth of 3-6% as price growth slows on both an invoice and net basis.
  • Net drug prices in the United States increased at an estimated 1.5% in 2018 and are expected to rise at 0–3% over the next five years.
  • China reached $137 billion in medicine spending in 2018, but will see growth slow to 3-6% in the next five years as central government reforms to expand insurance access to both rural and urban residents, as well as expansions and modernizations of the hospital system and primary care services have been largely achieved and efforts shift to cost optimization and addressing corruption.
  • Medicine spending in Japan totaled $86 billion in 2018, however spending on medicines is expected to decline from -3 to 0% through 2023, due to the effect of exchange rates and continued uptake of generics and offset by the uptake of new products.
  • The number of new products launched is expected to increase from an average of 46 in the past five years to 54 through 2023, and the average spending in developed markets on new brands is expected to rise slightly to $45.8 billion in the next five years, but represent a smaller share of brand spending

June 16, 2018

Value creators and extractors

The Value of Everything: Making and Taking in the Global Economy

The rethorics of value is usually plagued with deliberate misunderstandings. Specially, those that quote themselves as value creators may appear on a close look as a value extractors. This is precisely what the book of Marianna Mazucatto does. It identifies the patterns to assess value creation and extraction and the private of public and private roles.Chapter 7 on Extracting Value through the Innovation Economy is specially helpful. You'll find there the patents as a value extraction process or the pharmaceutical pricing discussed in detail. Therefore, a must read.
In modern capitalism, value-extraction is rewarded more highly than value-creation: the productive process that drives a healthy economy and society. From companies driven solely to maximize shareholder value to astronomically high prices of medicines justified through big pharma's 'value pricing', we misidentify taking with making, and have lost sight of what value really means. Once a central plank of economic thought, this concept of value - what it is, why it matters to us - is simply no longer discussed.
 The logical outcome of a combination of monopoly and rigid demand is sky-high prices, and this is precisely what is happening with specialty drugs. It explains why pharmaceutical companies enjoy absurdly high profit margins: in addition to the normal profit rate, they earn huge monopoly rents.59 A value-based assessment of the kind NICE carries out can be helpful because it reduces demand for the monopolists’ drugs and prevents them from charging whatever price they choose. The downside, however, is that increased elasticity of demand for drugs comes at the cost of leaving some patients without the medicines they need, because pharmaceutical companies may not cut their prices enough to treat everyone who needs the drug if doing so would reduce profit margins by more than the companies want.

May 6, 2016

A prescription for pharmaceutical expenditure, is there any one?

Pharmaceutical Expenditure And Policies

If you want to know what's going on in OECD countries on pharmaceuticals, just read this paper. The challenges are huge, and policy answers are delayed. My impression is that beyond the standard approach (the one in the paper), somebody should start talking about priorities for research and innovation according to health needs and potential benefit from recent advances in basic science. There is a need for a dialogue between firms and governments about it. Just a signaling game, saying how much are willing to pay for new innovations if they fit with health needs and potential benefit.

PS.Drug prices: Tweaking the formula excellent article in FT

March 3, 2015

An illusionary free lunch

Some months ago I started a series of posts under the title "Fasten seat belts". The topic is well known, how new skyrocketing drug prices are distorting budgets and access. Yesterday we got the final resolution. Fasten you seat belt, this is the moment of truth: The government has decided that hepatitis C patients under specific conditions will get treatment. And once he has decided coverage, he concludes that he will not pay the bill. Somebody else will have to do it, autonomous communities governments. Free lunchs exists in Sepharad!
This is a complete mess and it is only the begining, new drugs are knocking at the door. For catalans, this foreign decision represents 470 m €, an additional deficit for the 2015 budget of 5.7%!!! (if all expenditure were charged in one year). Does this make any sense?. Of course Basque country is not included in such arrangements...
There is an objective need to disconnect, the time is getting closer. Things couldn't have been done worse.

February 5, 2013

Overvaluing expensive drugs

A research from University of York has concluded that NICE is overvaluing expensive treatments because its cost threshold - the price at which a treatment is deemed good value for the NHS - is set too high. The threshold value per quality-adjusted life year (QALY) - a measure of the health benefits of a treatment - should be lowered from £30,000 to just £18,317, their analysis found. It suggests the NHS may be wasting money on treatments that are not as good value as first thought. Professor Sculped said:
It is crucial that the cost effectiveness threshold is seen as representing health forgone as the additional costs of new technologies are imposed on the fixed budgets of local commissioners. For decisions made by NICE and many policy options considered by the NHS and DH, this is the key to establishing the value for money of new services.
This is a strong criticism against QALYs, let's see if it has some impact in the near future. Fortunately, the British have the opportunity to debate on it. Nearer here, the press is saying now that 30% of drugs requested for approval were rejected (7 out of 24). No details available, no website, no transparent process. That's alleged democracy, southern style. NTA=Nothing to add.

PS. If you don't want to read the article, have a look at this presentation. I suggest you save it, it may be useful for the future.

PS. As you can see from my blog, in one week, two officials have said different numbers of rejected drugs for public funding (2 vs 7). Does this make any sense? Is there anybody asking for an explanation in Parliament?

PS. Follow the controversy on DSM-5 at BBC News.

PS. Check here how our drug prices have converged to the european average.

PS. Must read: Uwe Reinhardt blog.

PS. Interesting article on 20 years of economic evaluations of cancer.

May 22, 2012

El valor de les proves diagnòstiques

Can and Should Value Based Pricing Be Applied to Molecular Diagnostics?

Cal dir que la distància entre preu i valor en cada mercat és ben diferent. Penseu per un moment en una prova diagnòstica. La informació que ofereix pot capgirar el curs de la malaltia, i fins i tot assegurar la supervivència. El preu que en paguem s'acosta previsiblement més al cost que al valor que representa.
Fa poc que els de l'Office of Health Economics han publicat un article que ens ofereix una perspectiva en aquest sentit.
El resum:
Current pricing and reimbursement systems for diagnostics are not efficient. Prices for diagnostics often are driven by administrative practice and expected production cost. The purpose of this paper is to discuss how a value based pricing (VBP) framework that is being used to ensure efficient use and price of medicines also could be applied to diagnostics. Diagnostics not only facilitate health gain and cost savings, but also provide information to inform patients’ decisions on interventions and their future “behaviours”. For value assessment processes, we recommend a two-part approach. Companion diagnostics introduced at the launch of the drug should be assessed through new drug assessment processes considering a broad range of value elements and a balanced analysis of diagnostic impacts. A separate diagnostic-dedicated committee using VBP principles should review other diagnostics lying outside the companion diagnostics-and-drug “at-launch” situation.
A data d'avui em costa assenyalar quin és el mecanisme de preus òptim per a les proves de laboratori, ni sé si existeix com a tal un mercat que permeti aquesta formació de preus. En absència de mercat competitiu, aleshores cal pensar més aviat en mecanismes d'assignació adhoc, subhastes i preus de transferència interns. Per tant el que diuen a l'article cal considerar-ho com una primera aportació. Ells mateixos assenyalen que no resoldran teòricament l'aportació de valor en la combinació diagnòstic-teràpia. I per aquest motiu que cal seguir refinant l'anàlisi.

PS. Llegeixo a les comunicacions AES, frases com aquesta:  "La introducción de tests genéticos en el tratamiento de pacientes con cáncer de mama es una opción eficiente". O aquesta altra: "El extra coste del test genético se ve compensado con ahorros potenciales de la reducción de eventos coronarios en pacientes
de alto riesgo no identificados con el método estándar". I només em pregunto sobre el que significa realment,  si té sentit i res més, i aquí ho deixo.

PS. Un gran record per un dels grans emprenedors del país: Josep Maria Rubiralta. va saber situar la seva empresa entre les 10 més grans del món en diagnòstic. El seu llegat ens ensenya que la capacitat d'innovació i adaptació esdevenen la clau de l'èxit.

PS. Quan en un país hi ha un jutge que per 60.000 euros deixa anar a tres presos i no passa res, i quan en un país el president del tribunal suprem utilitza fons públics per al seu ús de cap de setmana i es considera que no hi ha intenció d'ús inapropiat, és una confirmació de la inseguretat jurídica de la que n'he parlat en diverses ocasions.

PS. A la King's Fund trobareu informació sobre com va anar l'International Integrated Care Summit.

PS. Avui és el dia que ens informen que l'any que ve també hi haurà recessió, i fins quan?

September 5, 2018

Khan el-Khalili based drug pricing

When is it too expensive? Cost-effectiveness thresholds and health care decision-making

In one week of difference, the same technology: CAR T-cells has had two different options for drug pricing. Last week, under NICE review the answer was no to Gilead, and yesterday was yes to Novartis. The first paradigm applied to Yescarta is well known: marginal effectiveness should be acceptable at an affordable cost (NICE). The second one applied to Kymriah is based on preferences and willingness to pay under confidential prices. It is also a well known system specially at bazaars like Khan el-Khalili in Cairo.
This is an example of how two systems are applied in practice and nobody cares about it. I'm concerned about transparency, and that's why I can't understand why with public money the expenditure is confidential. I would agree if somebody explain the budget impact that have been agreed, otherwise with public money Kahn el-Khalili system is not acceptable. After more than four decades, Torrance would ask himself if all this effort on cost-effectiveness analysis has had any sense to arrive at this point.
Anyway, the remaining question is: when is too expensive? This is precisely what this editorial asks. And the and the answer (?) is:
For deciding whether something is too expensive, thresholds are crucial. Depending on which perspective is taken, the word ‘threshold’ may either refer to the consumption value of health or the marginal cost-effectiveness of current spending. 
This is a standard health economics perspective that no health politician nowadays will buy. Right now they are not buying the idea, and I think that they prefer confidential prices. It allows to reflect power,  discretionality, or even worse arbitrariness. Khan el-Khalili system has won.