PharmExec Blog

For What it’s Worth: Study Probes Evolving Value Schemes

Sophia Tickell, Director of Pharma Futures

Sophia Tickell, Director of PharmaFutures

PharmaFutures’ Pathways to Value: Pharma in a Changing World explains how the industry may move forward to combine business imperatives and social mandates through new strategies for determining value and reimbursement for medicines. The study determines that collaboration across three fronts is needed to ensure that value is recognized and adapted over time, taking into account real-world evidence. These three are: establishing the evidence base for drugs in the real world as well as in a clinical trial setting, creating an adaptive-licensing model for increased regulatory flexibility over the full product life cycle, and the adjustment of prices to reflect changing perceptions of value over time.

The study looks at the US, Europe, and emerging markets to define their specific health care weak points and ultimately how redefining value will help to address them. The infrastructure and institutions for assessing quality of drugs is lacking in emerging markets, which represents an opportunity to set up new business models to serve as a template for other markets going forward. Europe is highlighted as a region where negotiations are strained between industry and governments; the tension amid economic constraints could scare away investments from pharma in favor of more robust markets. In  the US, expansion of Medicaid, a focus on new incentives and institutions, and health reform is politicizing the issue and makes for an uncertain atmosphere for the industry.

The study looks at pricing in more dynamic ways. First, measuring health outcomes is becoming an increasingly prevalent practice, particularly in US and Europe as these markets look for ways to become more cost effective in implementing health care. This work not only argues for a move away from fee-for-service models towards basing compensation of providers on quality of care standards, but in doing so supports research approaches that look at real-world effectiveness of drugs beyond pre-approval trials. Comparative effectiveness research (CER) and health technology assessment (HTA) look to weigh the clinical benefit of new drugs versus established comparators, and different countries are now sharing their methodologies to ensure that different approaches are evaluated when determining the value of drugs in the future.

Effective leadership is imperative for this new way of proposing and defining value to replace the current model. Collaboration is key; determining how data will be managed requires agreement across the board and requires the weaving together of disparate insight from research spread across various organizations. Supplementing randomized control trials with more observational data taken from settings outside the formal research space is dependent on consensus from relevant stakeholders to outline the standards of evidence used to assess the real-world impact of medicines on health outcomes. Adaptive licensing models stress that this data is effectively leveraged, that it makes the case for a medicine over time so as to increase access to medicines with unmet medical need. And lastly, flexible pricing arrangements such as risk-sharing deals based on outcomes or on other conditions and value-based systems are needed to reflect shifts in perception of the absolute and relative value of a medicine based on evidence accrued as it is used in a clinical practice.

If enough of an understanding can be brought to the negotiating table, stakeholders will be able to make more realistic, sustainable demands and foster a sense of respect. Mistrust of the industry will melt away as executives focus on solutions that make everyone happy. It will also be important to keep investors up to speed as to how these new initiatives can spur on earlier cash flows, less regulatory risk and less reimbursement risk, as their support is critical in the advance of industry in the allocation of capital funds. The conclusion from PharmaFutures is that while today’s model of drug development is in ways outdated, foundational initiatives are already in place and with the right shepherding, the resulting value proposition will be a win-win for all parties concerned.

PharmaFutures is part of the movement toward socially responsible behavior in the pharmaceutical industry, and counts on support from GSK, among others, in bolstering its arguments for more dialogue between companies, activists and the investment community. Look for this report to serve as the theme for the next round of dialogue the group wants to forge, particularly with shareholders and boards of directors of big pharma.

This entry was posted in Emerging Markets, Europe, Market Access, pricing, R&D, Regulatory, Strategy and tagged , , , , , , , . Bookmark the permalink. Trackbacks are closed, but you can post a comment.

Post a Comment

Your email is never published nor shared. Required fields are marked *

*
*

You may use these HTML tags and attributes: <a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <strike> <strong>

  • Categories

  • Meta