Cross-Country Collaborations, Business As Usual?
Executive Summary
Pharmaceutical companies cannot afford to ignore the growing number of cross-country collaborations springing up in Europe aimed at securing more affordable medicines through actions such as jointly negotiated pricing deals. In Vivo looks at the factors that may influence the rise or fall of these collaborations and at how they may eventually make companies rethink the way they do business.
The increase in the number of cross-country initiatives on pricing and reimbursement comes in response to increasingly big price tags and the growing number of medicines that command them, such as rare disease treatments, gene or cell therapies, and transformative medicines, such as the new wave of hepatitis C treatments. Joining forces is attractive for payers because it means they can swap information, save on resources, cut duplication of work – for example in the area of health technology assessment (HTA) – and wield their collective bargaining power to negotiate lower prices.
Agreements on collaboration are a signal that payers “will fight [industry] with every weapon that we have” to achieve lower prices, Flemming Sonne, CEO of Danish medicines procurement agency Amgros, said shortly after Denmark and Norway announced an agreement to combine efforts to bring down the cost of medicines.
Though these collaborations are in their infancy, the trend is “something that cannot be ignored,” according to Barry Farrimond, head of European value and access at consultancy firm ZS. They mean a shift for companies towards “a situation of higher risk, higher reward in dealing with a number of these smaller countries and economies,” Farrimond said.
Developments So Far
Several collaborations have been established so far. The most advanced is BeNeLuxA, which was created when Belgium and the Netherlands and then Luxembourg teamed up in 2015. The initiative now also includes Austria and Ireland and represents a patient pool of 43 million. It has four main objectives: information sharing, joint HTA, joint price negotiations and horizon scanning.
Meanwhile, the Valletta group wants to ensure that health systems are sustainable through voluntary collaborations on sharing information, identifying best practice, evaluating new innovations and exploring mechanisms for joint pricing negotiations and purchasing. Created in 2017, it now encompasses Spain, Italy, Portugal, Greece, Malta, Cyprus, Ireland, Romania, and most recently Croatia and Slovenia. France is currently acting as an observer country.
Other collaborations include the Visegrad group, comprising Poland, Hungary, Czech Republic and Slovakia. Nordic countries are uniting too. There is the FINOSE cooperation, made up of Sweden, Norway and Finland, while Norway and Denmark have announced their own collaboration to secure lower medicine prices.
It is early days for these collaborations. So far, only the BeNeLuxA initiative has made notable headway. The major development to date has been the BeNeLuxA joint HTA and price negotiations that secured patient access in the Netherlands and Belgium to Biogen Inc.'s Spinraza (nusinersen), an orphan drug for spinal muscular atrophy (SMA). This came after failed negotiations between the same two countries and Vertex Pharmaceuticals Inc. to try and reach an agreement on the cystic fibrosis drug Orkambi (lumacaftor/ivacaftor).
The Spinraza reimbursement conditions are for the time being different in both countries. In Belgium, it is reimbursed for all patients eligible for treatment, regardless of their age or disease type. Meanwhile, in the Netherlands, reimbursement will be limited to: SMA patients with first disease symptoms at 0-6 months and a disease duration of less than 26 weeks at start of treatment; SMA patients with first disease symptoms at 6-20 months and a disease duration of less than 94 months at the start of treatment; and pre-symptomatic babies with a genetic diagnosis of 5q SMA with 2 or 3 SMN2-copies.
According to Francis Arickx, who coordinates the BeNeLuxA initiative on behalf of Belgium, the aim of this pilot was always to achieve the same level of reimbursement in both countries. However, differences in local rules and regulations mean this was not immediately possible, so the remaining patients in the Netherlands will likely receive access to the drug through conditional reimbursement arrangements, he said. A final decision on this is expected in 2019, according to Biogen.
The agreement has been hailed as a win. “Biogen is happy to be the first company who was part of a successful agreement. We aim to be innovative in developing medicines, but also in our approach to allow fast and sustainable access to these medicines,” the company said. Meanwhile, the collaboration described the deal as a “great achievement that benefits patients in both countries.”
Such deals are “highly doable,” according to Arickx. “Surprisingly what was quite easy to do was… come to a common view on what the value of this drug might be for the problem that was there, for the unmet medical need and to translate that scientific medical value into a financial arrangement, taking into account willingness to pay and the overall cost.”
Another pilot is under way that includes more countries, either actively or as an observer.
Beyond Spinraza, there have been developments in other areas too. The BenLuxA initiative has also produced several joint HTA reports that have informed decision making in member countries. Arickx describes these as pilots because the collaboration is still learning the best way to produce these.
In addition, the initiative is embarking on a major project to create an international horizon scanning platform that will “highlight important pharmaceutical and medical technology innovations before they reach the market by continuously gathering data and analyzing research and literature.” The project is open to any country that wishes to join.
Complications
The Spinraza deal was a much-needed success story to show that the collaboration could work, especially after the Orkambi talks failed, according to Catherine Longeval from the law firm Van Bael & Bellis. Meanwhile, Farrimond believes that success in the BeNeLuxA group will drive other coalitions forward too by creating a “positive halo effect and more motivation, so for example, the Valletta scheme can continue along its path and look for a similar outcome.”
It is unclear how far joint pricing talks across multiple countries will proceed in the long run. The bigger and more diverse a group, the slower negotiations will likely be, according to Alexander Natz, director general of EUCOPE, the European Confederation of Pharmaceutical Entrepreneurs. The slow speed of policy discussions among the Valletta group on topics such as driving biosimilar uptake could be indicative of slow pace of the negotiations, Natz said.
Economic diversity across member countries will likely cause problems. The Valletta group is very diverse and spans countries with much bigger GDPs, such as Spain and Italy, and those such with much smaller economies, like Malta and Slovenia. Such diverse countries may have different priorities in joint pricing negotiations, warns Longeval. “In the Valletta group it might quickly turn into a discussion between countries that want value-based pricing and others that say we have to get the rock bottom price that might be obtained,” she said.
According to EFPIA, the European Federation of Pharmaceutical Industries and Associations, the result of pricing negotiations among countries with different levels of economic development will likely be “an average price that would likely disadvantage the least economically developed countries.” The federation believes that collaboration among member states should be confined to groups of countries that have similar economies, geographic criteria and health needs.
Bigger groups also may find it difficult to conduct joint HTA and pricing negotiations because of the differences in local rules and regulations. This impacted the BeNeLuxA Spinraza deal and was the reason the reimbursement populations were not immediately the same in Belgium and the Netherlands.
Both countries received the same advice from the Dutch HTA body that was limited to certain patient populations. However, the two countries have different procedures for providing reimbursement beyond the patients specified in the HTA report, while regular reimbursement for the broader population was possible in Belgium, in the Netherlands a different solution – conditional reimbursement – had to be found.
“To make sure cross-border arrangements are going to work in the long run, it will be important for the collaborating parties to harmonies policy and laws and regulations governing the reimbursement process,” Biogen said.
Company Buy-In
It is important to companies that the net price of their pharmaceuticals remains confidential to prevent lower prices in other markets, for example through reference pricing. Crucially, the Spinraza deal remains confidential and pricing has not been disclosed. This matters as companies will not voluntarily enter into price talks without it, according to Natz.
The issue of confidentiality has made some companies think twice about entering into pilots, said Longeval. They worry that if talks fail among a wider group of countries, shared knowledge of their group “bottom line” price will make it harder for them to agree better prices in the individual countries. “Companies are not keen to give up confidentiality in this cross-country setting,” she said.
Similarly, companies may not engage if collaborations come down too hard on prices. According to Natz, price discussions become about getting the lowest possible price may fail to get buy-in from companies. “Any pricing decision should be based on a thorough value assessment. Any negotiations based on trying to secure the lowest price will fail,” he said.
Indeed, collaboration must not be an exercise in “short-term, financial cost containment goals achieved through the negotiation of the lowest price which is detrimental to medical innovation in the long-term,” said EFPIA. Instead they should have the long-term objective of broadening access for patients, as well as recognizing and stimulating innovation.
Joint HTA
Meanwhile, how far countries work together on joint HTA could also be impacted by possible new regulations proposed by the European Commission on cooperation in this area. The big – and controversial – element would be mandatory joint clinical assessments that member states would have to use in their pricing and reimbursement decisions.
The proposals have yet to emerge as legislation and the Council of Ministers is yet to take its formal position as some member states remain strongly opposed to the proposals. However, if the legislation does pass, joint HTA work may become less relevant.
Strategies
Nevertheless, if these collaborations do take off, companies will have to think about how they will do business.
Longeval warns that companies will likely have to rethink their pricing strategies. She said the collaborative approach to pricing talks comes as “a reaction to the received divide and rule strategy of the pharmaceutical industry.” Companies have traditionally negotiated prices on a national level, keeping those net pricing agreements confidential to try and get the best price on a country by country basis. “That system will be undermined if more and more member states pool their resources to try and negotiate jointly. It would mean a pharma company would no longer obtain one price at a time, but all of a sudden, it would obtain a price for maybe two or three or more jurisdictions at the same time.” This, she says, will impact current pricing strategies.
For example, in response to reference pricing a company will launch first where it can command a higher price and delay launching in lower-priced markets widely referenced by others. “That no longer works with the joint negotiations as you have a simultaneous decision in several member states. You can’t play one country against another and decide to first start negotiating in a country where the price will be higher than it would be in country B,” said Longeval.
As Longeval points out, such a scenario is a long way off, but if groups become more active, companies will have to find ways to get the best possible price through group negotiations. For example, BeNeLuxA has stated that it is looking for a value-based price rather than a rock-bottom price. This means that companies will have to come up with a very good value proposition that convinces several countries at a time why a higher price is warranted.
Meanwhile, Farrimond advises companies to engage with country groupings and to view them as an opportunity rather than a threat. “When it comes to any new organization or cooperative in the external environment, we always encourage is communication and collaboration,” he said. He points to the arrival of NICE, the HTA body for England and Wales, founded back in 1999. “The companies that got involved and had the dialogue, those which tried to understand where NICE was coming from and how they could work within the system, they succeed. The ones who resisted really struggled, particularly in the early years,” he warned.
This article is part of the Outlook 2019 series – an annual collection provided exclusively to subscribers of Informa Pharma Intelligence publications.