French Industry Head Lauds New Drug Pricing Deal

Agreement includes reference price floor for products of higher therapeutic value; trade group says deal reflects "new pragmatism by regulators, with more predictability of pricing and more use of real-world data.

After years of a rather frosty relationship between industry and French drug pricing authorities, things seem to be improving, at least if the agreement just inked by the industry association Leem is anything to go by.

The latest three-year framework agreement ("accord cadre") signed by Leem and the government's pricing committee CEPS (Comité Economique des Produits de Santé) seems to be based on a more consensual approach to the question of balancing access to new medicines with the need to keep health care spending within reasonable limits.

According to Leem's Director General Philippe Lamoureux, the deal is evidence of a new pragmatism on the part of the authorities, and is the result of "dialogue and concertation." The agreement, he says, is "both balanced and modern, because each side has listened to the other's concerns as well as trying to anticipate the therapeutic revolutions of tomorrow."

Select Key Elements Of Pricing Deal

• Horizon scanning: companies will provide data on innovations expected to have significant impact on payers or the organization of the health care system;
• "European guarantee": prices for products of higher therapeutic value will be at least equal to the lowest price in four reference countries;
• Medico-economic evaluation: Products with sales great than $50m in their second marketed year will undergo a budget impact review, including savings generated and impact on the health care system;
• Performance contracts: A conditional price will be set when pricing can't be reached under the standard mechanisms, with a plan for review after real-world experience.

In an interview, Lamoureux said the agreement contains fewer ambiguities than its predecessors, offers more predictability in terms of the prices of costly new drugs, and gives more weight to "performance contracts" based on real-life results.

And while providing for better recognition of innovation, it allows more scope for taking account of efforts to promote the use of generics and biosimilars and the way that medicines are prescribed and used in practice.

The framework agreement, which is renegotiated every three years, lays down principles for setting new drug prices, mainly on the basis of medico-economic evaluations carried out by the HTA body, the HAS (Haute Autorité de Santé). These principles then form the basis of individual companies' negotiations over their own pricing agreements with the CEPS.

These individual agreements include a list of the prices of the company's reimbursed products and any clauses attached to them (such as triggers for any price revision), as well as any commitments in terms of promotion and proper use of medicines.

In its discussions with the government over the framework agreement, Leem emphasized three key principles, Lamoureux said: predictability, clarity, and the bilateral nature of the agreement.

That there was a real need for predictability – for example, in terms of keeping an eye on the kinds of new products that might be heading the health insurers' way – was clearly demonstrated by the arrival of the new drugs for hepatitis C, which "took the government by surprise," he said. "These major innovations were not well anticipated, and we think that having more predictability means a more coherent economic policy."

Under the new agreement, companies have committed, as far as possible, to provide data needed to anticipate the arrival of "therapeutic innovations likely to have a significant budget impact for payers or a significant impact on the organization of healthcare in the coming five years."

As for clarity, Lamoureux said that the negotiators wanted to remove all the ambiguities that plagued the previous agreement. For example, for a number of years Leem had had disagreements with the authorities over the amount of savings that needed to be made in the pharma sector. "But now we are working together on trends in spending, savings from cost-containment measures, and so on."

But possibly the most important aspect of the deal is its consensual, two-way nature. "In our dialogue with the government," Lamoureux said, "we said the agreement needed to prioritize the bilateral aspect, so that when we have difficulties we will try to find a solution within the contractual framework, not through authoritarian measures."

The fact that the government is more willing to listen was demonstrated by the fact that the 2016 social security financing law passed at the end of last year "has not added any new constraining measures, as was the case in the three earlier laws. For France, this is a real revolution."

The 30-page framework agreement is a complex document, with a great deal of emphasis on the practical arrangements for negotiating drug prices. Lamoureux singled out a few of aspects as deserving particular attention.

One is the so-called "European guarantee" which says that medicines of higher therapeutic value will have a price that is not lower than the lowest price in four reference countries – Germany, Italy, Spain and the UK. This guarantee is valid for five years, and can be extended to six years for products for which studies have been carried out in accordance with a pediatric investigation plan (PIP). Lamoureux said that Leem managed to fend off government efforts to exempt from this guarantee those products with the highest budgetary impact.

Playing a bigger part now is medico-economic evaluation. "We decided with the government to develop studies on the budget impact for all products with sales of more than €50m in their second year on the market," Lamoureux said. "This is interesting because as well as assessing the budgetary impact we will be able to gauge the savings generated and we hope to better get an idea of the role of medicines in the efficiency of the healthcare system."

"Performance contracts," which are used where a price cannot be agreed under the usual mechanisms, are another key aspect of the new deal. While these figured in previous framework agreements, not much use was made of them, according to Lamoureux. "But now the new agreement gives more detail on how these agreements should work. They will also be applied when setting the prices of orphan drugs, which was not the case before."

Under performance contracts a conditional price is established and a set of parameters laid out to evaluate the drug's performance in the real-life setting. The assessment can be done in various ways, such as using observational studies, market data, or information from registries. The result can be a re-evaluation of the price or the payment of rebates.

As before, the agreement also has an accelerated pricing procedure for some innovative drugs, and a "pre-evaluation" system whereby products that have gained a marketing authorization recommendation from the European Medicines Agency's CHMP can be submitted to the CEPS and the transparency committee (which assesses the medical value of drugs) before they have gained a full MA, thereby reducing the time to a pricing and reimbursement decision.

There are also clearer rules for decisions on products such as drug-device combinations. Where such a product is likely to generate savings for the health insurers, the CEPS can take account of these projected savings in its pricing deliberations, provided they are supported by an appropriate study.

Steering Committee

In order to oversee the proper implementation of the framework agreement, a steering committee (Comité de Pilotage de la Politique Conventionelle, or CPPC) is being put in place. The CPPC, composed of representatives of the pharma industry and the CEPS, will aim to ensure that the principles of the agreement are properly applied, and that it works as it should. It will also act as a forum for discussions on monitoring drug spending, both current and predicted, and any changes in price setting and regulation, and will propose measures that could have a favourable impact on the financial regulation of healthcare systems.

The CPPC will set up a working group to look at proposals for new ways of financing new innovative drugs, and in addition will have three "technical groups". One will monitor the operation of the generics market in France, while another will look at biosimilars – both will look at economic aspects, pricing and reimbursement issues, opportunities for savings, etc. The third will focus on monitoring spending on medicines and any savings brought by price regulation measures.

"I think that after several difficult years we are again finding the pathway of dialogue," Lamoureux declared, citing the new framework agreement, the lack of any new punitive measures in the 2016 social security financing law, and the continuing talks within the Strategic Council for the Healthcare Industries (CSIS), which was set up in 2004 as a forum for discussions between industry and government on key regulatory, political and technical issues facing them.

"The media landscape around medicines remains difficult," he observed, "but we can say that with regard to the situation two or three years ago we have some signs that things are improving.

[Editor's note: This story is also published in Scrip Intelligence. "The Pink Sheet" DAILY brings selected complementary coverage from sister publications to our subscribers.]