Congratulations-but what’s in store for the next decade?

1. Congratulations-but what’s in store for the next decade? Emeritus Professor Lloyd Sansom AO Special Advisor,Department of Health and Ageing,Australia

2. Declarations The views expressed are my own and are not necessarily those of the Australian Government or those of the Pharmaceutical Benefits Advisory Committee

3. Australia’s Health Care System - main platforms • Universal access to free medical treatment in a public hospitals • public hospitals are the responsibility of the States funded through State and Commonwealth revenue (Australian Health Care Agreements) • Subsidized access for all approved medical services including consultation, management, investigations through Medicare • mainly FFS; fee charged may be greater than rebate • funded through general taxation + Medicare levy

4. Australia’s Health Care System - main platforms Universal access to the approved pharmaceuticals listed on single national formulary Medicare for the subsidy of all medical and public hospital service National Immunization Program (NIP) National Prosthesis Program A key principle underlying Australia’s health system is universal access to quality health care regardless of ability to pay.

5. Australia’s Health System - main platforms Approx 40% of Australians also have private health insurance which covers private hospital expenses and ancillary benefits eg dental, chiropractic, podiatric etc. Very little prescription medicine covered by private health insurance High income earners without PHI pay an increased Medicare levy. At present the Government subsidizes up to 40% of PHI premiums but the extent of rebate is means tested

6. The Pharmaceutical Benefits Scheme (PBS) • A demand-driven, uncapped program • subsidizes the cost of most outpatient prescription medicines • subsidies for all Australian residents • and visitors from countries with Reciprocal Health Care Agreements

7. The Pharmaceutical Benefits Scheme (PBS) • Essentially a community based program • plus certain specialised medicines in public hospitals (Section 100), • in the majority of states also PBS listed drugs for outpatients and patients on discharge. • Some special arrangements exist for certain groups eg indigenous people ,palliative care, IVF • Total cost approx A$390/person/year • Co-Payments contribute 16% of total cost • Total cost increased by 3.2% from 2011 to 2012

8. PBS Patient Contributions • Fixed co-payments irrespective of drug cost (ie no coinsurance) • General beneficiaries • max co-payment AUD36.10 for any item • safety net (stop loss) for families is AUD1390.60/calender year • once threshold reached co-payment reduces to A$5.90

9. PBS Patient Contributions • Concessional beneficiaries • low income, disabled, veterans - max co-payment A$5.90/ item • safety net (stop loss) AUD354 after which zero co-payments applies • concessional beneficiaries ~ 80% of total PBS expenditure and 85% by script volume • Only 7.5% of prescriptions in the community are private prescriptions not covered under the PBS • unless a prescription-only medicine is PBS listed, its market will be limited

10. Australia’s National Medicines Policy: 2000 To meet medication and related service needs, so that both optimal health outcomes and economic objectives are achieved

11. QUM and National Medicines Policy

12. National Medicines Policy In attempting to balance health needs and responsible fiscal discipline, the partners need to address the following issues: • financing and supply arrangements for medicines optimise health outcomes and represent value for money • all partners take adequate responsibility for achieving value for money • access to necessary medicines occurs at a cost both the individual and the community can afford

13. Process for listing 1: 17 week cycle Submission by sponsor (Pharmaceutical Company) Independent Expert Evaluation (PES Commentary) 4 External Groups and 1 internal Drug Utilization sub-committee (DUSC) Economics Sub-Committee (ESC) Pharmaceutical Benefits Advisory Committee

14. Process for listing 2: Post PBAC PBAC DECISION DEFER REJECT RECOMMEND FOR LISTING Pharmaceutical Benefits Pricing Authority (PBPA) Use a cost plus method • Advice to Minister* • Advice to sponsor • Decision & reasons on web • Public Summary Documents • *Minister cannot list a drug that is rejected Resubmit Minister’s/Government approval Independent Review Pharmaceutical Benefits Schedule

15. The Pharmaceutical Benefits Advisory Committee • An independent expert committee with a legislated mandate • required to make recommendations to Minister about which medicines (including vaccines) should be considered as pharmaceutical benefits (or added to National Immunisation Program) .Since 1988 has been required to undertake a cost-effectiveness analysis • Has to examine all medicines applying for subsidy • Minister cannot list without a positive recommendation from PBAC but is not bound by a positive recommendation • 18 members consumers, health economists, practising community pharmacists, PCPs, clinical pharmacologists and specialist physicians and nominees of the Minister with relevant qualifications and experience.

16. Access to medicines When considering a medicine for listing on the PBS, the PBAC takes into account the • medical conditions for which the medicine has been approved for use in Australia • clinical effectiveness, safety and cost-effectiveness compared with other treatments ie comparative effectiveness is the focus together with comparative cost • Whether restrictions on use should be recommended eg second line therapy • consideration of social values

17. What does the future hold?

18. Future challenges –BUT THEY ARE CERTAIN • Demand for health services will continue to increase • The cost of health care will continue to increase • The pressure on budgets (governments/payers, institutions and individuals) will continue to increase. • The need to assess “value for money “will become more acute as the issue of restrained expenditure and greater consideration of opportunity costs becomes critical issue

19. Intergenerational Changes2006-07 to 2046-47Projected Pharmaceutical Benefit Expenditure In Relation to Other Health Services [As a Proportion of Gross Domestic Product] % GDP Source : Intergenerational Report 2, Australian Government – The Treasury April 2007.

20. LIFE EXPECTANCY In 2042,life expectancy at birth for men is projected to be 82.5 years,which is 5.3 years longer than their life expectancy at birth in 2002 In 2042,life expectancy at birth for women is projected to be 87.5 years,which is 4.9 years longer than their life expectancy at birth in 2002 A female born in the UK in 2008 has a predicted 50% chance of living to 100 years of age

21. Current Pipeline-biologicals in clinical trial or FDA review-include • 338 cancer therapeutics-170 are monoclonal antibodies-(cancer as a chronic disease!!) • 176 candidates for infectious diseases (mostly vaccines • 71 vaccines for autoimmune diseases including MS and RA

22. 907 biologics targetting more than 100 diseases are in various stages of development • 30 antisense • 69 cell therapy • 46 gene therapy • 338 monoclonal antibodies • 93 recombinant proteins • 250 vaccines • 81 others www.phrma/sites/default/files/2488/biologics2013.pdf

23. Are we ready for the pipeline? • Are we technically/intellectually ready? • Are we ready for the complexity of HTA judgement in an increasingly ageing population with co-morbidities? • Are we ready to manage the change in epidemiology of disease in an ageing population ?-eg 50% will die from a malignancy by 2030.Malignacy will become a chronic disease with large cost and small incremental benefits but with high consumer expectation • Do we have the appropriate methodologies -technical and administrative? • Could an international network/framework assist ?egEUnetHTA • Will drug targetting be a help or hindrance?

24. Nature of payer bodies Payers around the world include governments (regional, state/province and/or federal), private health insurance companies, health maintenance organisations including private health providers and individuals. Thus the nature of their operation may differ due to legislated differences and political context. This contrasts with regulators where the mandate is similar across the world and where standards of evidence is more overt

25. Value in Health What is value? What components/elements contribute positively or negatively to value? How is it measured/acknowledged ?. How is it interpreted in the decision context ? How is it optimised in practice? Can HTA agencies make decisions about value-industry is questioning this particularly in regard to patient preferences and innovation

26. What is HTA? “HTA involves the medical, social, ethical and economic implications of the development, diffusion and use of a health technology. HTA has been positioned as a ‘bridge between scientific evidence and the needs of policymakers”

27. What is Value?-is it the same as “Value for money”? Many payer organisations are required to make a final decision regarding funding access on the basis of “value for money” Are they the same and are we all on the same page?

28. Are decision makers ignoring elements of value It appears that reason why this debate is becoming more active is that “people” are not aware (or convinced) whether decision makers consider elements of value and if so to what extent the various elements are used,whether they are considered in a consistent manner and how any weightings of these elements are developed and used.

29. Perception-evidence-transparency “If it is not documented ,then in the absence of evidence to the contrary, it is assumed that it has not been done” “If it is documented, then it is assumed to be have been done”- but without full transparency even that is uncertain

30. Porter M: NEJM 362;26,2477(2010) “Value-neither an abstract ideal nor a code word for cost reduction- should define the framework for performance improvement in health care. Rigorous, disciplined measurement and improvement of value is the best way to drive system progress. Yet value in health care remains largely unmeasured and misunderstood”

31. Porter M: NEJM 362;26,2477(2010) “In any field, improving performance and accountability depends on having a shared goal that unites the interests and activities of all stakeholders” “In health care, however, stakeholders have myriad, often conflicting goals, including access to services, profitabilty, high quality, cost -containment, safety, convenience, patient-centeredness, and satisfaction.”

32. Tunis and Eddy; Health Affairs 2007 “Clinical and health policy decisions consist of two critical components: evidence and then judgements”.………..The first step in choosing between treatments is to evaluate the information at hand eg benefits, harms and costs. That information is required for making a decision that could in any sense be considered informed. BUT THAT STEP BY ITSELF DOES NOT MAKE A DECISION”

33. Tunis and Eddy; Health Affairs 2007 “the second box (value judgements) addresses personal preferences. The judgements in the first box are more technical and scientific in nature……..But EBM does not try to make the preference judgements, because that is outside the domain of evidence”

34. Value and data quality-the context If the quality of evidence is poor then any decision based on preferences or values will also be poor and likely to be mis-informed. Rather than being discrete entities ,evidence judgements and value judgements are part of the continuum on the decision

35. DATA AND ITS USE-questions which will become more acute with time • What data do we need? • Are the data requirements different between regulators and payers/HTA • How do we expect the data to be collected? • What do we need to do to clinical trial data in order for it to be relevant to payers/HTA • Is the hierarchy of evidence applicable • How do we predict comparative effectiveness from trial data • How do we manage the uncertainty?

36. Trial versus Clinical SettingAPPLICABILITY • The participants and circumstances of use in a trial may not be the same as the proposed population for subsidised treatment (and might therefore have different expected risk).The results have to be APPLIED to the proposed population and expected risk eg the severity of the disease in the patients in the trial, prior exposure to other therapies etc may determine the evaluation by the payer

37. Applicability of Trial Data • Are there applicability issues relating to patient selection and the population in whom subsidy is proposed?. An increasing number of pivotal trials are being conducted in Asian countries particularly China and India. What are their relevance to other populations? • Can we predict outcome and toxicity modifiers?. • Is genetic polymorphism relevant?. • Is the molecular basis of the disease consistent across populations.

38. Applicability of Trial Data Is the standard of care similar in multi-centre trials? Example with the clinical outcome of Gefitinib in NSCLC in Japanese/non-Japanese patients and the comparative efficacy between warfarin and dabigatran in AF in various countries depending on the standard of care-Does this have implications for large multicentre trials?

39. Trial versus Clinical SettingEXTRAPOLATION • The length of follow-up of participants in the trial may be less than the expected duration of treatment .Results may need to be EXTRAPOLATED to the proposed duration of treatment (eg 6 week trial of an antidepressant, extrapolation of survival beyond the duration of the trial) in order to determine cost effectiveness • This issue will become more acute as demand for earlier access becomes more common

40. Trial versus Clinical SettingTRANSFORMATION • The outcomes measured in the trial might not be the patient-relevant outcomes of treatment. Results generated in this way need to be TRANSFORMED to take account of patient-relevant final outcomes (eg QALY) eg use of surrogate outcomes, progression free survival ,”objective “measures required by regulators eg 6MWTetc

41. TRANSLATION • Therefore the results of trials need to be applied, extrapolated and transformed (collectively referred to as ‘translated”) into a decision analysis appropriate for the proposed clinical use. • The principles and science upon which this translation is performed is universal and should be able to provide the basis for an international framework.

42. Examples of Specific Data issues for HTA requiring urgent attention by researchers internationally Indirect Comparisons –should these be considered or..? Early cross over in oncology trials Post Marketing data-observational data-how to manage the confounding. What makes a new technology innovative? Surrogate endpoints-how do we procede other than through risk-sharing arrangements Measurement of quality of life Continuation beyond disease progression although trial ceased and no data is available

43. Early Crossover This is a particular issue in oncology Ethics committees requiring the option for early crossover even though the specific purpose is to test an hypothesis.The allowance of cross over may in fact compromise the ability to answer the question.There is likely to be significant confounding in crossover design

44. Early Crossover The use of Inverse Probabilty Weighting or Structure Failure time methodologies have been examined –are they appropriate,what is their reliability and stability? The use of these methods is still uncertain and the limitations of the methods appear not to have been fully investigated. NICE has recently added some statements to its Guidance

45. Is the drug discovery and evaluation process efficient?

46. The State of drug development • In 2007-2011 period it took 30.4 NMEs in preclinical development to attain one approval ,compared to just 12.4 in 2003-2007 • Only one out of 19.4 Phase 1 candidates made it to approval in 2007-11 compared to one in 8.6 in 2003-07 • One in 8.6 Phase 11 candidates was approved in 2007-11 compared to one in 4.6 in 2003-07 • Only 22% of drugs in Phase II progressed in Phase III in 2007-11 • From the target identification through discovery and development to first approval in the years 2009-11 was 13.7 years

47. The efficiency of the drug discovery process- Morgan et al 2011 • In an effort to uncover systematic learnings that can be applied to improve compound survival,an analysis was performed on data from Phase II decisions for 44 programs at Pfizer. • It was found that not only were the majority of failures caused by lack of efficacy but also that, in a large number of cases (43%), it was not possible to conclude whether the mechanism had been tested adequately.

48. The efficiency of the drug discovery process • Is this the failure of a reductionist approach due to the belief that once a target has been identified and a agonist/antagonist has been developed, it will automatically translate into a predicted outcome-learnings from molecular targetting in oncology demonstrates that not to be the case

49. What data-what is the impact? • Larger trials in order to detect small differences between actives –are active comparator trials the the best way forward? • Impact on the patient pool particularly for orphan diseases • More expensive trials and therefore more expensive medicines • Longer trials and therefore delayed access • Is it possible to design trials that will satisfy the needs of regulators and HTA agencies/payers?

50. What data • Because of the major issues in translation of trial data to the decision context, there is an urgent need for the relevant factors to be considered as part of a trial design and proposals for post marketing activities not just focusing solely on safety