Dialogue-Innovation-Future An experience of the Pharmaceutical Forum

1. Dialogue-Innovation-Future An experience of the Pharmaceutical Forum Dr Stefaan Van der Spiegel, MD Competitiveness in the Pharmaceuticals Industry and Biotechnology DG Enterprise and Industry European Commission Dialogue-Innovation-Future The role of the Health sector Warsaw, 5 December 2007

2. EXPERIENCES OF THE FORUM • Different expectations… • … though much can be realised

3. DIFFERENT EXPECTATIONS… Funding authority: a choice to invest in future health of the population 1 Investment in innovative medicines 2 3 Manufacturers: a reward for risky investement in R&D Patient: a necessary step to get access to a new treatment

4. 1. PHARMACEUTICAL EXPENDITURE TAKES SIGNIFICANT PART OF WEALTH (Total* expenditure / GDP) Different driving factors possible e.g., level of GDP, local health situation/ needs, public coverage, … * Publicly and privately funded Source: 2002 data OECD except CY,ES,LT,LV,MT,SL 2004 data by Alcimed and Member States

5. 1. HIGH GROWTH RATES OF EXPENDITURE IN MS % annual growth* 00-03 • 7-8% /year, up to 10-15% /year in CEE • Demand grows faster than budgets can (ageing population, demanding and informed citizens, high cost of new technologies, …) • Each Euro can only be spend once, hence need for cost-containment • Impact of orphan medicines, individualized therapies, … ? * Total expenditure, publicly and privately funded Source: OECD except CY,ES,LT,LV,MT,SL data by Alcimed and Member States

6. € RESEARCH CLINICAL DEVELOPMENT M.A. + + = 2-3 1-2 Time (years) 5-7 8-12 >10,000 molecules Up to 800 million Euro Success rate ~10 candidate medicines 1 new medicine Investment (Millions €) 2. CREATING A NEW MEDICINE REQUIRES SIGNIFICANT UPFRONT INVESTMENT

7. 2. RETURN ON THIS INVESTMENT DEPENDS ENTIRELY ON P&R DECISIONS THEORETICAL EXAMPLE Real revenue impacted by changing P&R decisions individual countries, e.g., timing of decisions/approvals, prescription conditions, … Return on investment Expected revenue Time (years) • SME’s (Biotech) are vulnerable • to P&R policy changes as they … • … depend on a single product • … limit nr of markets/countries Exclusivity Period

8. Reim- bursed Total price Co-paid 3. P&R DECISION DEFINES ECONOMIC ACCESS FOR PATIENT • Positive list: • XYZ • ABC • DEF • …

9. 3. TIMING OF P&R DECISION DEFINES AVAILABILITY Time between Market Authorisation and P&R decision • Significant (>1 year) differences in timing of P&R decisions between Member States • Driving factors with industry as well as with authorities • Max 180 days for national procedures (EU-law) V U T S R Q P O N M L K J I H G F E D C B Country A 0 100 200 300 400 500 600 700 Number of days * Defined by when medicine gets a pricing and reimbursement decision in a MS Source: IMS, Marketing Autorisation 30/6/2000 to 30/6/2004

10. EXPERIENCES OF THE FORUM • Different expectations… • … though much can be realised

11. INCREASING MUTUAL KNOWLEDGE ON PRICING PRACTICES: TOOLBOX • Pricing practices • Reference pricing • Payback • Price control • Prescription guidelines • Cost sharing • Generic policies • … • Questions and answers from and to participants in the Working Group: • Expected benefits? • Practical set-up? • Risks, interactions, success factors? • … Study « Differences and Commonalities in Pricing and Reimbur- sementin the EU » by the Andalusian School of Public Health

12. GUIDING PRINCIPLES OF THE WG PRICING • Control of expenditure • Reward for R&D investment • Access to health solutions • Potential of free pricing • Align demand side • Leverage generics • Set expectations • Recognise innovation • Be consistent • Ensure timely access • Ensure availability in all markets • Ensure affordability for all EU citizens 1 2 3

13. INCREASING TRANSPARENCY OF PRICES • 15 products of interest • (most-selling, recent • innovations, …) • A • B • C • D • … • Made comparable: • Per active substance • Per daily dosis • Levels of price • (ex-factory, • wholesale, • pharmacist) • Info collected • from 22 MS + Feedback Scope can be expanded Will be repeated on regular basis

14. AN OVERVIEW OF THE VALUE OF INNOVATIONDifferent and Common Expectations • Morbidity, mortality • Side effects, drug-interactions • Probability and speed of recovery • … • Pain-management • Self-management at home • Social possibilities • … Therapeutic / Clinical • Pandemias, drug-resistance • Cost of medication • Overall treatment costs • Non-healthcare spending • Cost of sick-leave, productivity • … Quality of Life Socio-Economic

15. HARMONIZING ASSESSMENTS OF INNOVATIVE MEDICINES Assessment- methodology 1 • Inputs • Data A • Study B • … 3 Results +/- €/$ 2 • Completion of data-sets at moment of decision • Extra sources, better data-generation • (Standardisation?) • … • Choice of treatment comparator • Clarifications • Type of benefits to consider • Costs to include • Time horizon • Harmonisation, mutual understanding • … • Variation in outcome assessment • One of the bases for national P&R decisions • THOUGH, differences in national P&R decisions, as many factors are locally driven

16. DIALOGUE HAS A LOT TO OFFER 1 Funding authority: most effective allocation of scarce resources Investing in innovation 2 3 Manufacturers: guidance on what innovation is most needed and rewarded Patients: access to the most valuable innovative treatments