Sustainable healthcare systems
Final version : 21/09/2015
Sustainability
www.efpia.eu
Sustainable Healthcare systems – Rationale
The purpose of this document is to address some of the key questions related to the sustainability of healthcare
systems.
How to improve health outcomes while maintaining the financial
sustainability of healthcare systems ?
What are the recent trends in pharmaceutical and healthcare expenditure?
How can a more differentiated approach to pricing across European
Member States contribute to more sustainable healthcare systems ?
The document has been divided in three sections which gather a rich and robust collection of evidence aiming at
tackling these questions. The objective is to facilitate an evidence-based discussion amongst the different
stakeholders including payers, policymakers and regulators.
2
Index
Sustainable Healthcare systems – Rationale…………………………………………………………………………………………………………………………….………………
Index……………………………………………………………………………………………………………………………………………………………………………………..…………………
2
3
Part 1: How to improve health outcomes while maintaining the financial sustainability of healthcare systems ?....................................
Workforce reduction and increasing dependency ratio put increased pressure on society’s healthcare financing and reinforce the
need to keep working age healthy……………………………………………………………………………………………………………………………………………………….
The EU needs new approaches to maintain the sustainabilityof its public finance tomitigate the effects of an agingpopulation…………….
Significant disparities in terms of life expectancy persist in Europe……………………………………………………………………………………………………..
For many conditions, outcomes vary widely among developed countries……………………………………………………………………………………………
Proactively initiated care for patients at risk result in better outcomes and lower costs for the health system…………………………………...
Early use of medicines in mental health can delay the need for nursing home placements………………………………………………………………….
Improvement in disease progression could lead to significant returns to society…………………………………………………………………………………
Innovative new medicines enable to reduce per capita expenditure on hospitalisation……………………………….............…………………………
Preventive approaches with early and appropriate use of medicines is key to improve outcomes and avoid costs……………………………..
A tool to achieve better outcomes & less resource usage are accountability-based payments…………………………………………………………….
Geisinger bundle scheme for coronary bypasses led to reduced mortality and complications at lower costs compared to fee
for service……………………………………………………………………………………………………………………………………………………………………..…………………….
Data allows identification of high risk patients and targeted intervention, leading to better outcomes at lower costs…....………………….
Heart failure program in Sweden shows that more follow-up can lead to 30% reduced costs………………………………………….………………….
Helping patients adhere to medicines regimes can yield substantial returns to the health system……………………………..….……………………
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
3
Index
Part 2: What are the recent trends in pharmaceutical and healthcare expenditure?.........................................................................
Pharmaceuticals and other medical non durables represent 17% of total expenditure in Europe although variances exist
between therapy areas……………………………………………………………………………………………………………………………………………………………….
The growth of retail pharmaceutical spending decreased from 2009 to 2012……………………………………………………………………………..
Retail pharmaceutical spending per capita decreased by 2% on average between 2009 and 2012………………….............................
Throughout Europe medicines are only reimbursed if value can be comprehensively proven across multiple dimensions…………
Across Europe growth of retail pharmaceutical expenditure is lagging behind growth in total healthcare expenditure………………
Retail pharmaceutical spending per capita is more contained than growth in health care expenditure per capita (20002012).......................................................................................................................................................................................
Within cardiovascular, industry’s innovation model ensures clinical effectiveness in the short and major social surplus
in the longer term……………………………………………………………………………………………………………………………………………………....................
Combination of generic price erosion & price regulation resulted in a 19% decline in nominal medicines prices vs. a
24% rise in consumer prices…………………………………………………..........................................................................................................
On average the volume of share of generics has increased by 11% in the last four years, showing improved efficiency in
European pharmaceutical markets…………………………………………………...............................................................................................
Generic volume share in selected countries vary widely across European countries……………………………………………........................
In the mid-term, biosimilars will contribute to the continued sustainability of medicines spending………………..………………………….
21
22
23
24
25
26
27
28
29
30
31
32
4
Index
Part 3: How can a more differentiated approach to pricing across European member states contribute to more sustainable
healthcare systems?...................................................................................................................................................
Health expenditure is a function of wealth and varies by a factor of 6 across Europe………………………………………...................
External reference pricing is widely used to establish and regulate medicines prices in Europe………………………………………….
Countries mostly construct their pricing baskets referencing slightly poorer economies, however this leads over time to
an ‘averaging down’……………………………………………………………………………………………………………………...……………………………………
In a single trading zone, price disparities across borders can create significant supply chains disruptions and product
shortages………………………………………………………………………………………………………………………………...............................................
Out of pocket expenditure on healthcare is higher in markets with comparatively low GDP………..………….…………………………
The current and future wave of multi-indication products will require a more flexible approach to value definition and
price evaluation………………………………………………………………………………………………………………………………….………………………………
33
34
35
36
37
38
39
Bibliography…………………………………………………………………………………………………………………………………............................................ 40
5
Part 1: key messages
Part 1: How to improve health outcomes while maintaining the financial
sustainability
of
healthcare
systems
?
Workforce reduction and increasing dependency ratio put increased pressure on society healthcare financing and reinforce the
need to keep the population healthy
The EU needs new approaches to maintain the sustainability of its finance to mitigate the effect of an aging population
Simply cutting back on healthcare at a time when Europe needs it most is likely to be counter productive. If outcomes in chronic
disease do not improve the smaller proportion of working age people in future will struggle to pay for those who need care. A
different approach is needed
Significant disparities in terms of life expectancy and health outcomes exist across OECD countries
Outcome-focused healthcare systems can be a solution to those challenges by focusing management effort on the overall quality
of care and rationalize spending
Proactively initiated care for patients at risk can result in better outcomes and lower costs for the health system
Early use of medicines in mental health can delay the need for nursing home placements
Improvements in disease progression could lead to significant returns to society
Innovative new medicines enable to reduce per capita expenditure on hospitalisation
Preventive approaches with early and appropriate use of medicines is key to improve outcomes and avoid costs
A tool to achieve better outcomes & less resource usage are accountability-based payments
Geisinger bundle scheme for coronary bypasses led to reduced mortality and complications at lower costs compared to fee for
service
Data allows identification of high risks patients and targeted intervention, leading to better outcomes at lower costs.
Heart failure programme in Sweden shows that more follow-up can lead to 30% reduced costs
Helping patients adhere to medicines regimes can yield substantial returns to the health system
6
Part 1: outcomes-focused HCS
Workforce reduction and increasing dependency ratio put increased
pressure on society’s healthcare financing and reinforce the need to
keep working age people healthy
Social Impact: Decline in workforce due
to demographic changes (mn people)*
340
330
Ratio of workers to pensioners will decrease
335
-12%
328
323
320
317
-50%
311
310
306
302
300
299
297 296
290
280
4 workers /
1 pensioner
2 workers /
1 pensioner
2013
2060
270
2013 2020 2025 2030 2035 2040 2045 2050 2055 2060
Source: The European Commission (2015). The aging report.
7
Part 1: outcomes-focused HCS
The EU needs new approaches to maintain the sustainability of its public
finance to mitigate the effects of an aging population
Projected increase in public expenditure in healthcare due to demographic change (20132060) (% of GDP)
10
9
8
0.6
7
1.3
0.8
1
1.4
1.2
0.5
6
5
0.1 0.6 0.4 1.1
4
3
1
3
2.5
1 1.2
0.7
1.3
0.8
0.3
2
2 2.2
0.9 1.4 1.1
0.7 1.6 1.2
1.2
1.1
2.8
1 1.5
1.1
1.1
4.2 3.8 4 3.8 4.4 4.6 4.2 4.7 4.6
6 6.1 5.9 5.7 5.7 6
6.9
5.7 5.7
7 6.6 6.9
7.1 7.2 7.6 6.9 7.5
5.7
7.7 7.8 8.1 7.8
6
2013
Note: For the EU, NMS (new member states) and the EA (euro area) the average are weighted according to GDP.
European Commission (2015). The Aging report.
UK
DK
FI
FR
PT
NO
AT
DE
NL
EU15
MT
EU
EL
EA
SK
HR
SE
IE
SI
CZ
ES
IT
BE
NMS
HU
PL
LU
EE
RO
BG
LV
LT
CY
0
Change between 2013 and 2060
8
Part 1: outcomes-focused HCS
Significant disparities in terms of life expectancy persist in Europe
Life expectancy at birth in EU28 (2013)
Source: Eurostat database (accessed in May 2015)
9
Part 1: outcomes-focused HCS
For many conditions, outcomes vary widely among developed countries
3x OECD mean
2010-2012 OECD Health outcomes indicators
17
4.6
4.2
2x OECD mean
4.2
2.7
1.4
1.3
1.1
Variation factor
between best
and worst
2010-2012
OECD mean
Better
performance than
OECD mean
0.5x OECD mean
Post-operative
sepsis
AMI2
Hemorrhagic
Cervical cancer
30 day mortality
stroke 30 days mort.
5 years survival
(in hosp.)
(in hosp.)
Post-operative
Ischemic stroke
Colorectal cancer
Breast cancer
pulmonary
30 day mortality
5y survival
5y survival
embolism or DVT1
(in hosp.)
1. Deep Vein Thrombosis 2. Acute Myocardial Infarction
Note: Latest available data for 2012, 2011 or 2010. Mexico not included
Source: BCG analysis based on OECD Stat Extracts
Worse
performance than
OECD mean
10
Part 1: outcomes-focused HCS
Proactively initiated care for patients at risk can result in better
outcomes and lower costs for the health system
Kaiser Permanente's Osteoporosis Disease Management Programme
KP proactively identifies, screens
and treats risk group patients...
...leading to a reduction in hip fractures
for risk group of 47%
Targeting enrollees based on set criteria:
•
•
•
Fragility fracture but no recent DXA1 scan
Fractured a hip or diagnosed with osteo-porosis but not on
medication or not refilled
65 or older2 but never had DXA scan
# DXA Scans
(thousands)
# Enrollees treated
(thousands)
200
200
+473%
150
150
100
100
50
0
124
22
2002
2009
>1000 fractures
-47%
2.500
0.000
2010
2011
• Saving 250 lives per year
+214%
• Saving ~$40M per year
104
50
0
Hip fractures
in risk group
33
2002
Note: 1. Dual-energy X-ray Absorptiometry 2. Men 70 and older
Source: ACHP, Building Healthier Communities: Kaiser Permanente Southern California , 2012
– $39k per hip fracture
– Compared to ~$5M programme costs
2009
11
Part 1: outcomes-focused HCS
Early use of medicines in mental health can delay the need for nursing
home placements
% of patients placed in nursing homes*
Cost-effectiveness of early treatment
(£ per patient) †


Patients taking cholinesterase inhibitors were 5 times less likely to
be admitted to a nursing home after 3 years of treatment after
controlling for multiple factors that can alter the course of the
disease

Treatment initiated for early-stage (mild-to-moderate) Alzheimer’s
disease followed by 7-year treatment proves more cost-effective
than current standards of care
In addition to cost savings, the QALY per patient were 9% higher
with early treatment of Alzheimer’s Disease
Source: Lopez, O et al: Clinically meaningful outcome in Alzheimer’s disease (2005); † Getsios D et al.: Economic evaluation of early assessment for Alzheimer’s disease in the UK (2012)
12
Part 1: outcomes-focused HCS
Improvements in disease progression could lead to significant returns to
society
Example: Parkinson
Economic Value to Society of slowing Parkinson’s Disease Progression
 Study objective:
Model PD progression over the complete course of disease and to
assess economic consequences of slowing down PD progression
 Methodology:
 Model length spanned 25 years
 Cost and benefits were discounted at 3%
 Patient progression based on Hoehn and Yahr (H&Y) stages of
disease development
 Direct and Indirect medical costs were taken from published
German studies
 Conclusion:
Net savings of €54,000 achievable by slowing PD progression per
patient by 20% rising to €327,000 per patient by fully arresting
disease progression
If this potential is to be realized more innovation within the area of
Parkinson’s disease should be encouraged.
Source: Johnson, SJ et al. Economic value of slowing Parkinson’s Disease in Germany, (2012)
13
Part 1: outcomes-focused HCS
Innovative new medicines enable to reduce per capita expenditure on
hospitalisation
Example: Cardiovascular
Cost of new cardiovascular medicines compared to savings in hospitalizations in 20 OECD
countries 1995 - 2003
 Study objective:
Assess the effects of introductions of innovative cardiovascular
medicines on total healthcare spending
 Methodology:
 Data used for 1100 cardiovascular medicines in 20 OECD
countries during the period 1995 – 2003 and based on drug
vintage (i.e. the first year the medicines was available in any
market)
 Controlling for demographic variables, quality of
cardiovascular medicines consumption, consumptions of other
medical innovations (e.g. CT scanners and MRI units),
cardiovascular risk factors and prevalence
 Conclusion:
Per capita expenditure on hospitalization would have been $89
higher in 2003 had new cardiovascular medicines not been
introduced in the period 1995 – 2003. This increase was almost four
times as high as the per capita increase on expenditure on
cardiovascular medicines ($24)
Source: Lichtenberg, F: Have Newer Cardiovascular Drugs Reduced Hospitalization? Evidence from Longitudinal Country-level Data on 20 OECD Countries, 1995–2003 (2008)
14
Part 1: outcomes-focused HCS
Preventive approaches with early and appropriate use of medicines is
key to improve outcomes and avoid costs.
Example: Diabetes
Estimated avoidable macrovascular
events, absolute numbers, 20101
0
100 000 200 000 300 000 400 000 500 000
Estimated avoidable healthcare cost, € 000s,
20102
0
2 000
4 000
6 000
13%
8%
4%
% of total
diabetes spending
Note: 1. Extrapolated from the likelihood of patients on insulin with delayed insulinazation from IMS Disease Analyzer; 2. Average cost for treating stroke and myocardial infarction
Source: IMS Institute for Healthcare Informatics: Advancing the responsible use of medicines (2012)
15
Part 1: outcomes-focused HCS
A tool to achieve better outcomes & less resource usage are
accountability based payments
Based on Medicare data from patients in different programs
Single-year mortality (%)
Lower mortality
rate
20
16.5
14.9
10.3
6.3
6.4
2.1
3.1
2.6
1.9
1.7
0
Patients who visited the emergency room (%)
100
Fewer
emergency visits
-51%
0
40.5
19.7
Amputations in diabetes patients
(average per 1,000 patients)
Fewer
complications
30
15
0
CKD
COPD
CAD
Overall
Diabetes
-97%
11.5
Fee for service
0.3
Capitated health networks
Higher accountability
Higher accountability
Note: 1. CAD coronary artery disease, CKD chronic kidney disease, COPD chronic obstructive pulmonary disease. Based on an analysis of claims data and demographic information from 2011 for ~3M Medicare patients
Source: Alternative Payer Models Show Improved Health-Care Value, BCG, 2013
16
Part 1: outcomes-focused HCS
Geisinger bundle scheme for coronary bypasses led to reduced mortality
and complications at lower costs compared to fee for service
Impact on outcome: proven positive effect on
mortality and complications
Background
ProvenCare launched as a bundle scheme
Reduced readmissions
Reduced mortality
Any complication (%)
In-hospital mortality (%)
• Incl. CABG1 surgery since 2006
• A package price for elective CABG, including
pre-operative evaluation to follow-up care
within 90 days
• Actionable to-do's based on clinical
guidelines and outcome measurement
-21%
-100%
38%
30%
1.5%
0
Before
After
Before
After
Impact on resources: 45% less re-admission
and 28-36% lower costs than other providers
Reduced readmissions
Reduced costs
30 days readmission (%)
-45%
6.9%
3.8%
Before
After
Note: 1. Coronary Artery Bypass Graft
Source: BCG based on “ProvenCareSM”: a provider-driven pay-for-performance program for acute episodic cardiac surgical care, Ann Surg 2007; Geisinger Health System, Successful
Case Studies in Accountable Care, ACO Oct 2010; press articles
Cost/patient
– 4.8%
Total claims vs other
providers
– 28-36%
1. Coronary Artery Bypass Graft
17
Part 1: outcomes-focused HCS
Data allows identification of high risks patients and targeted
intervention, leading to better outcomes at lower costs
Impact on outcomes: registry findings saved
over 500 people from the risk of blindness
Background
• A national Cataract Registry was established
in 1992 in Sweden
• The aim was to identify and implement best
practices to avoid PE
• PE: postoperative endophthalmitis (PE) is a
severe inflammation leading to blindness
Incidence of PE (%)
0.125
-80%
0.100
0.075
0.106
0.050
0.025
0.000
0.021
2009
1998
Impact on resources: Savings from reduction
of PE rate estimated at ~$6M during 2000-2009
Claims / patient US ($k)
Estimated savings in
medical costs ($m) , '99-'091
6
-61%
21
With PE
8
Without PE
Source: BCG based on Schmier, J. K. et al (2007) Evaluation of Medicare Costs of Endophthalmitis among Patients after Cataract Surgery, Vol. 114, No. 6, pp.1094-1099; Friling
et al, Six-year incidence of endophthalmitis after cataract surgery: Swedish national study, J Cataract Refract Surg., 2013; County of Uppsala (Landstinget i Uppsala Län).
500 cases
prevented
4
2
0
6
Actual societal
cost by patient is
much higher and
varies by patient
Savings
18
Part 1: outcomes-focused HCS
Heart failure program in Sweden shows that more follow-up can lead to
~30% reduced costs
Heart failure program initiated
Ratio of workers to pensioners will decrease
Total cost of health care / patient (Euro)
• Study in Sweden randomizing patients to be
enrolled in a heart failure program or continue
with conventional treatment (control group)
• Patients received information by nurse and
multimedia program
-33%
8000
6638
6000
1764
• Medication reviewed and titrated thoroughly
• Regular follow-up by phone or in person with HF
nurse to optimize treatment according to current
guidelines
481.0
4000
4393
2000
0
Control group
4471
453.0
1257
Medication
Primary
health care
2761
Hospital care
Group enrolled
in the programme
Main effect through fewer
admissions and fewer GP visits
Source: BCG based on Agvall B, et al. (2014) Resource use and cost implications of implementing a heart failure program for patients with systolic heart failure in Swedish primary health care, International Journal of Cardiology, vol
176, n°3.
19
Part 1: outcomes-focused HCS
Helping patients adhere to medicines regimes can yield substantial
returns to the health system
Total Healthcare Spending: Adherent vs. non-adherent patients, 2005 - 2008
7x
6x
9x
2x
Note: Calculations are marginal effects from linear fixed-effects models of services cost. Main drivers for cost savings were inpatient hospital days and emergency department visits
Source: Roebuck et al: Increased Drug Spending Medication Adherence Leads To Lower Health Care Use And Costs Despite increased drug spending (2011)
20
Part 2: key messages
How have pharmaceutical expenditures in the healthcare system evolve
?
Pharmaceuticals and other medical non durables represent 17% of total expenditure in Europe
although variances exist between therapy areas
The growth of retail pharmaceutical spending decreased from 2009 to 2012
Throughout Europe medicines are only reimbursed if value can be comprehensively proven
across multiple dimensions
Across Europe growth of retail medicines expenditure is lagging behind growth in total healthcare
expenditure
Within cardiovascular, industry’s innovation model ensures clinical cost effectiveness in the shortand major social surplus in the longer term
Combination of generic price erosion & price regulation resulted in a 24% decline in nominal
medicines prices vs. a 30% rise in consumer prices in Europe
On average, the volume share of generic has increased by 11% in the last four years, showing
improved efficiency in European pharmaceutical markets
In the mid-term, biosimilars will contribute to the continued sustainability of medicines spending
21
Part 2: pharmaceutical expenditure
Pharmaceuticals and other medical non-durables represent 17% of total
expenditure in Europe although variances exist between therapy areas
Breakdown of total healthcare
expenditure in Europe – 2012*
Medicines contribution to disease cost
(2011, various diseases)
COPD†
Diabetes†
CHF†
Alzheimers∆
Prostate
Cancer
Care
21%
8%
6%
9%
34%
Hospitalisation
30%
22%
64%
11%
31%
Indirect Cost
22%
35%
18%
76%
N/A
Other Cost
14%
20%
6%
1%
2%
Medication
14%
15%
5%
3%
34%
Cost factor
16.9%
36.6%
46.5%
Inpatient care
Outpatient care & others
pharmaceuticals & other medical non durables
Source: *EFPIA, the industry in figures, edition 2015 (OECD health data 2014, extracted in 2015, EFPIA calculations, non weighted average for 21 EU & EFTA countries).
† A.T. Kearney analysis (2012); Δ Schwarzkop et al. (2010); ♯ Damm el al. (2012).
22
Part 2: pharmaceutical expenditure
The growth of retail pharmaceutical spending decreased from 2009 to
2012
Annual growth rates of spending for selected components (real term, 2012, EU average)
10%
8.7%
8.6%
8.2%
8%
6.4%
6.5%
6%
4%
2%
5.7%
5.4%
3.2%
2.2%
1.9%
1.5%
0.7%
2.5%
1.9% 1.8%
2009/10
1.0%
-2%
-0.3%
2007/08
2008/09
1.8%
0.5%
0%
-0.4%
2.9%
0.2%
0%
-0.3%
2010/11
2011/12
-1.3%
-1.3%
-1.7%
-4%
-2.7%
-3.8%
-3.5%
-6%
Inpatient care
Outpatient care
Long-term care
Pharmaceuticals
Prevention
Administration
Note: *According to the OECD definition, pharmaceutical spending include expenditures on prescriptions medicines and over-the-counter products. Pharmaceuticals consumed in hospitals are excluded.
Source: OECD (2014), Current health expenditure by function, 2012 (or nearest year), in Health at a Glance: Europe 2014, OECD Publishing, Paris. DOI: http://dx.doi.org/10.1787/health_glance_eur-2014-graph129-en (accessed via
the OECD e-library in April 2015)
23
Part 2: pharmaceutical expenditure
Retail pharmaceutical spending per capita decreased by 2% on average
between 2009 and 2012
Average annual growth rates in pharmaceutical expenditure per capita or nearest year (20002012, in real terms)
15
10
10
5
10.2
8.5 8.0 8.0
3.3
2.2
0.9 1.3 1.6
3.4 3.7
3.1
1.9 2.4
1.7
4.8
3.1
0
-0.6 -0.3
-5
-7.2
-10
-15
-6.1 -6.1
-5.2
-2.9 -2.9
-3.9 -3.5 -3.3
-2.4 -2.2
-1.3 -1.0
-1.3
-1.6
-1.7
-2.2
4.6
2.2
2.0
1.8
1.8
0.9
0.9
0.1
-0.4
4.9
3.2
6.1
2.5
1.2
-0.2 -1.0
-1.2
-4.9
-12
2000-2009
2009-2012
Source: OECD (2014), Expenditure on pharmaceuticals per capita and as a share of GDP, 2012 (or nearest year), in Health at a Glance: Europe 2014, OECD Publishing, Paris. DOI: http://dx.doi.org/10.1787/health_glance_eur-2014graph131-en
24
Part 2: pharmaceutical expenditure
Throughout Europe medicines are only reimbursed if value can be
comprehensively proven across multiple dimensions
Countries with formal HTA systems
in place*
Reimbursement criteria across countries†
AT BE GE FI
FR NL SE UK
Therapeutic
benefits
Patient
benefits
Cost-effectiveness
Budget Impact
Innovative
Characteristics
Availability of therapeutic
alternatives
Equity
considerations
R&D
Countries with formal HTA process for reimbursement in place
Countries with no formal HTA process for reimbursement
Source: * EFPIA: Role and impact of Health Technology Assessment (2011); † Sorensen et al.: Ensuring value for money in health care (2009)
Public health
impact
Included in HTA process
25
Part 2: pharmaceutical expenditure
Across Europe growth of retail medicines expenditure is lagging behind
growth in total healthcare expenditure
Total healthcare expenditure per capita and pharmaceutical expenditure per capita
(2006 – 2012, 21 EU OECD Countries, population-weighted, current prices, PPP, $)
127
116
Note: Countries included: Austria, Belgium, Czech Re Austria Belgium Czech Republic Denmark Estonia Finland France Germany Hungary Ireland Italy Luxembourg Poland Slovak Republic Slovenia Spain Sweden United Kingdom
Source: OECD Health Statistics Database (accessed in April 2015).
26
Part 2: pharmaceutical expenditure
Retail pharmaceutical spending per capita is more contained than
growth in total health care expenditure per capita (2000-2012)
Annual average growth rate in per capita healthcare and pharmaceuticals expenditures
(in real terms between 2000-2009 and 2009-2012)
5
Growth in expenditure in %
4
Growth in total health
expenditure per capita
4.3%
3.7%
Growth in retail pharmaceutical
expenditure per capita.
3
2
1
2000-2009
0
2009-2012
-1
-0.8%
-2
-2.2%
-3
Countries included are Greece, France, Romania, Austria, Poland, Cyprus, Lithuania, Czech Republic, Slovenia, Netherlands, Estonia, Finland, Germany, Latvia, Croatia, Denmark, Sweden, Luxembourg, Belgium, Hungary, Portugal,
Spain, Slovak Republic, Norway, Iceland, Switzerland.
OECD health statistics database and Europe at glance 2014 (accessed via elibrary in April 2015)
27
Part 2: pharmaceutical expenditure
Within cardiovascular, industry’s innovation model ensures clinical cost
effectiveness in the short- and major social surplus in the longer term
Simvastatin patients treated and total
associated cost of treatment
Zocor® patent
expiry
Patients (‘000)
700
Patient- and manufacturer surplus
in on- and off-patent period
€mn.
500
90
80
600
70
500
350
400
50
250
300
40
200
30
150
20
100
10
50
0
1985
1990
Treated Patients
1995
2000
2005
0
2010
Simvastatin Cost
Source: Lindgren et al.: Cost–effectiveness of statins revisited: lessons learned about the value of innovation, (2011)
454
400
300
100
Off-patent
period
450
60
200
On-patent
period
237
54
40
4
1987 - 2002
Patient Surplus
2003 - 2008
5
2009 - 2018
Manufacturer Surplus
28
Part 2: pharmaceutical expenditure
Combination of generic price erosion & price regulation resulted in a
24% decline in nominal medicines prices vs. a 30% rise in consumer
prices in Europe
Consumer Price Index (CPI) vs. Medicines Price Index, population weighted, year 2000
= Index 100
Popula on-weighted - Europe
Population-weighted - Europe
140
130
130
120
110
Index
140
130
120
110
100
90
80
70
60
50
40
30
20
2000
100
90
80
76
70
2000
2013
CPI
140
130
120
110
100
90
80
70
2013
Index
140
130
120
110
100
90
80
70
2000
Index
2000
2013
Index
2000
2000
2010
2013
Index
140
130
120
110
100
90
80
70
2000
Index
140
130
120
110
100
90
80
70
60
140
130
120
110
100
90
80
70
140
130
120
110
100
90
80
70
2012
`
Index
120
100
80
60
40
2000
2012
Index
140
130
120
110
100
90
80
70
2013
Index
140
2000
2000
2013
Index
140
130
120
110
100
90
80
70
2013
2000
2013
Medicines Price Index
Note: Countries included: Belgium, Finland, France, Germany, Italy, Spain, Sweden, Netherlands. For Spain, only data available until 2012 (include only big countries)
Source: various OECD databases (accessed in April 2015), Austria: pharmig based IFP; Belgium: Pharma.be; Finland: Pharma Industry Finland based on Statistic Finland;
France: Leem based on INSEE; Germany: vfla based on GKV; Greece: SFEE based on Eurostat; Italy: farmindustria based on ISTAT; Spain: Farindustria based on INE; Sweden:
LIF Sweden based on Apotekens Service, Netherlands: Farmingform based on the Central bureau of Statistics
29
Part 2: pharmaceutical expenditure
On average, the volume share of generic has increased by 11% in the last
four years, showing improved efficiency in European pharmaceutical
markets
Generic volume share of the Prescription bound, un-protected retail market, 2009-2012
(SU,%)
Europe, non weighted average
Ireland
+11%
70%
60%
58% 60%
57%
54% 55% 56%
• Reference price reimbursement and generic
substitution implemented in 2013
• Increase of 10% of the generic volume share in
the unprotected retail market between 2009
and 2011.
• The government and the National Association of
Pharmacies (ANF) concluded an agreement in
April 2014 which contains measures to promote
generic dispensing
+36%
+28%
50%
60%
40%
Portugal
50%
30%
40%
20%
30%
45%
42% 43%
48%
52%
57%
20%
10%
10%
0%
2014
2013
2012
2011
2010
2009
0%
2009 2010 2011 2012 2013 2014
70%
60%
50%
40%
30%
20%
10%
0%
59% 60%
56%
53%
50%
47%
2009 2010 2011 2012 2013 2014
Note: countries included: Romania, Poland, Slovakia, Germany, Czech Republic, Netherlands, UK, Hungary, Sweden,Italy, Finland, Portugal, Norway, France, Spain, Switzerland, Greece, Ireland, Austria, Belgium. Average non weighted.
Source: IMS MIDAS data (accessed in April 2015)
30
Part 2: pharmaceutical expenditure
Generic volume share in selected countries vary widely across European
countries
Generic volume share of the Prescription bound, un-protected retail market, 2014 (SU, %)
90%
X 2.3
80%
70%
60%
50%
40%
30%
20%
10%
0%
Source: IMS MIDAS data (accessed in April 2015)
31
Part 2: pharmaceutical expenditure
In the mid-term, biosimilars will contribute to the continued
sustainability of medicines spending
Sales in 2018 ($bn.) by Therapeutic Area*
Disease Indications for biosimilar mAbs
currently in clinical trials†
Top 20 Global Therapeutic Areas (42% of total)
5%
Oncologics
Diabetes
Autoimmune
Pain
Mental Health
Respiratory
Hypertension
Viral Hepatitis
Dermatology
HIV antivirals
Cholesterol
Anticoagulants
other CNS
Immunosuppressants
Antibiotics
Altiulcerants
Vaccines
Other cardiovascular
Immunosuppressants
ADHD
$71-81Bn
$61-71Bn
$47-52Bn
$38-43Bn
$33-38Bn
$33-38Bn
$21-24Bn
$22-24Bn
$22-25Bn
$21-24Bn
$21-24Bn
$20-23Bn
$19-22Bn
$16-19Bn
$15-17Bn
$14-16Bn
$13-15Bn
$12-14Bn
$10-12Bn
$7-9Bn
Source: * IMS Health: Global Outlook for Medicines through 2018, November (2014) † Parexel Statistical Yearbook 12/13
10%
10%
51%
24%
Oncology
Rheumatoid Arthritis
Thrombotic Disorders
Other
Acute Coronary Systems
32
Part 3: need for differential pricing in Europe
How can a more differentiated approach to pricing across European
member states contribute to more sustainable healthcare systems ?
Health expenditure is a function of wealth and varies by a factor of 6 across Europe
External reference pricing is widely used to establish and regulate medicines prices in Europe
Countries mostly construct their pricing baskets referencing similar or slightly poorer economies, however this
leads over time to an ‘averaging down’
In a single trading zone, price disparities across borders can create significant supply chain disruptions and
product shortages
Out-of-pocket expenditure is higher in markets with comparatively low GDP
The current and future wave of multi-indication products will require a more flexible approach to value
definition and price evaluation
33
Part 3: need for differential pricing in Europe
Health expenditure is a function of wealth and varies by a factor of 6
across Europe
GDP per capita and Healthcare Spend per capita (€ 2012)
Healthcare Spend per Capita (€ 2012)
8,000

Positive and very strong correlation between
expenditures on healthcare and overall wealth
across Europe

6-fold difference in healthcare expenditure per
capita between the highest and lowest
R² = 0.9439
7,000
6,000
Denmark
5,000
Netherlands
4,000
France Austria
3,000
1,000
Sweden
Portugal
2,000
Luxembourg
Finland
Belgium Germany
Spain
Latvia
Romania
Lithuania
Cyprus
Greece
0
GDP per Capita (€ 2012)
Note: Cyprus, Latvia 2009 data. Denmark 2010 data. Netherlands, Portugal Slovenia Slovakia Lithuania Bulgaria in 2011 data.
Source: Eurostat database (accessed in March 2015)
34
Part 3: need for differential pricing in Europe
External reference pricing is widely used to establish and regulate
Medicines prices in Europe
Usage of External Reference Pricing
(23 out of 27 EU Member States)
Countries using external price referencing
Countries not using external price referencing
Variations in constructions of pricing
baskets
Average Basket Pricing
Lowest basket Pricing
Average Basket pricing minus 5%
91% of the average of the basket
Average of 3 lowest
Source: Leopold, C et al.: Differences in external price referencing in Europe (2012).
35
Part 3: need for differential pricing in Europe
Countries mostly construct their pricing baskets referencing lower GDP
per capita economies leading over time to an ‘averaging down’
GDP per Capita and Average GDP per capita of “pricing basket countries”
Avg. GDP per capita of basket countries
60,000

Out of 23 EU-27 countries using external price
referencing, 15 (65%) have constructed their
pricing basket to reference countries with lower
affordability (measured as GPD / Capita)

Ongoing re-referencing drives prices down on an
ongoing basis (‘a gift that keeps on giving’).
Finland
50,000
Cyprus
Slovenia
40,000
Portugal
30,000
Lithuania
10,000
Hungary
Poland
Netherlands
France
Czech Republic
20,000
Ireland
Italy
Austria
Belgium
Malta
Estonia
Bulgaria
Latvia
Romania
Greece
Slovak Republic
Spain
0
0
10,000
20,000
30,000
40,000
50,000
60,000
GDP per Capita
Average Pricing
Lowest Pricing
Average of 3 Lowest
Average Pricing minus 5%
Source: WorldBank database (accessed 2013); Leopold, C et al.: Differences in external price referencing in Europe (2012).
91% of the average of the basket
36
Part 3: need for differential pricing in Europe
In a single trading zone, price disparities across borders can create
significant supply chain disruptions and product shortages
Current overview of supply chain imbalances - 2013
Norway with PE/PI,
but mainly exports
and top
destinations are
SWE and DNK
Ireland has relatively high prices
and mainly an importer
typically from UK, exports on
some brands may grow
UK is a mixed market.
High level of retail trading
compared to other import
markets
Portugal and Spain are
mainly exporters of primary
care products classically but
not exclusively to UK.
Source: IMS Health (2013)
Sweden the main importer in
Nordic, significant growth in
latest year, driven by currency
and likely to grow further up to
2014, and then some price cuts
are expected
Baltic, new and growing
export source
Poland with significant exports,
also some imports, pharmacy
export is illegal
Czech, Romania and Hungary
are major exports due to their
low prices,
Primarily imports
Net importer
Italy trade mainly on primary care
typically into UK and Germany
Net exporter
Primarily exports
37
Part 3: need for differential pricing in Europe
Out-of-pocket expenditure is higher in markets with comparatively low
GDP
Out of pocket expenditure as a % of total health expenditure (2012)
Out of Pocket Expenditure as % of total health expenditure
0%
10%
20%
30%
40%
Netherlands
France
United Kingdom
Luxembourg
Slovenia
Denmark
European Union
Croatia
Czech Republic
Austria
Ireland
Sweden
Estonia
Finland
Belgium
Italy
Spain
Romania
Poland
Slovak Republic
Hungary
Lithuania
Greece
Portugal
Malta
Latvia
Cyprus
Source: World Bank latest figures (accessed in March 2015). Available at/http://databank.worldbank.org/data/views/reports/tableview.aspx#
50%
60%

In general, a correlation between the level of
wealth and the state’s willingness to fund
medicines can be observed
38
Part 3: need for differential pricing in Europe
The current and future wave of multi-indication products will require a
more flexible approach to value definition and price evaluation
Example: Oncology
Clinical Value over Time
Clinical value
over time
Clinical value
over time
Imatinib (Glivec®)
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
New disease indication
Ealier treatment pathway or disease stage usage
Cetuximab (Erbitux®)
2004
2005
2006
New combination
2007
2008
2009
2010
2011
2012
Initial FDA indication
Examples of added clinical value over Time
Examples of added clinical value over Time






 2004: Initial Indication: Combination treatment of EGRF metastatic
cancer
 2006: Combination with radiation therapy for treatment of squamous
cell carcinoma
 2007: Single treatment of EGRF metastatic colorectal carcinoma
 2011: 1st line treatment of recurrent locoregional disease or metastatic
squamous cell carcinoma
2001: Initial Indication: Patients with chronic myeloid leukemia
2002: Patients with KIT positive inoperable or GISTs
2003: Pediatric patients with Ph+ CML-CP after stem cell transplant
2006: Adults with relapsed Ph+ ALL and with myelodysplastic diseases
2008: Treatment of adult patients following resected Kit positive GIST
2012: 36 months post-surgery in patient with resected KIT positive GIST
Note: Representation of the change in clinical value over time as additional data and evidence became available such as new clinical benefits, new possible use or combination use
Source: Goss et al.: Recognizing value in oncology innovation (2012)
39
Sustainable Financing
1/10
Sources
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Agvall, B et al. (2014).
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Alzheimer’s Association (2010)
Changing the trajectory of Alzheimer’s Disease
BCG (2013)
Alternative Payer Models show Improved Healthcare Value
BCG expertise
based on various sources.
Boccalini, S. et al. (2013)
Economic analysis of the first 20 y of universal hepatitis B vaccination program in Italy Human Vaccines &
Immunotherapeutics 9:5, 1–10; May 2013; Landes Bioscience
40
Sustainable Financing
2/10
Sources
Bredin, C. et al. (2010)
Drug cost avoidance from cancer clinical trials (2010)
Busse, R & Stahl, J. (2014)
Integrated cares and outcomes in Germany, the Netherlands and England, Healthcare affairs.
Damm, O. el al. (2012)
Cost-of-Illness of Common Cancer Types: Results of a Health Insurance Claims Data Analysis
Presented at the ISPOR 15th Annual European Congress, 3-7 November 2012, Berlin, Germany
Cleveland Clinic (2011)
Transplantation report (accessed in April 2015)
https://my.clevelandclinic.org/ccf/media/files/Transplant/transplantation-2011-ar.pdf
Department of Health Ireland (2011)
Health in Ireland: Key Trends 2011
Dönitz, Amelung et al (2009)
Intention to treat analysis (ITT) of the impact of a telemedical care programme on overall treatment costs
and mortality rate among patients with chronic heart failure.
41
Sustainable Financing
3/10
Sources
EFPIA (2011)
Role and impact of Health Technology Assessment
EFPIA (2015)
The industry in figures, edition 2015.
European Commission (2015)
The 2015 Aging Report: Underlying Assumptions and Projected Methodologies
European Economy 8/2014
European Commission (2015)
The 2015 Ageing Report: European Economy 3|2015. Economic and Financial Affairs. Economic and
budgetary projections for the 28 EU Member States (2013-2060).
Eurostat
Database on GDP per capita in Europe (Accessed in 2015)
Database on healthcare spending per capita in Europe (Accessed in 2015)
Database on life expectancy (Accessed in 2015)
42
Sustainable Financing
4/10
Sources
EvaluatePharma
Database of sales and patent expiries (accessed 2013)
Friling et al (2013)
Six-year incidence of endophthalmitis after cataract surgery: Swedish national study, J Cataract Refract Surg;
39(1): 15-21
Getsios, D. et al. (2012)
Economic evaluation of early assessment for Alzheimer’s disease in the UK
Alzheimer’s & Dementia 8 (2012)
Goss et al. (2012)
Recognizing value in oncology innovation
White Paper June 2012
Agvali, B et al. (2014)
Resource use and cost implications of implementing a heart failure program for patients with systolic heart
failure in Swedish primary health care, International Journal of Cardiology.
IMS
Market Prognosis, April 2011
43
Sustainable Financing
5/10
Sources
IMS Health (2012)
The Global Use of Medicines, July 2012 (2012)
IMS Institute for healthcare informatics (2012)
Advancing the responsible use of medicines
IMS
Midas database (accessed in April 2015)
IMS (2014)
Global Outlook of Medicines through 2018
IOM Institute of Medicines (2012)
Best care at lower cost: the path to continuously learning Health Care in America
Leopold, C. et al. (2012)
Differences in external price referencing in Europe (2012)
44
Sustainable Financing
6/10
Sources
Lichtenberg, F. (2008)
Have Newer Cardiovascular Drugs Reduced Hospitalization? Evidence from Longitudinal Country-level Data
on 20 OECD Countries, 1995–2003
NBER Working Papers 14008, National Bureau of Economic Research, Inc. (2008)
Lindgren, P., Jonsson, B. (2011)
Cost–effectiveness of statins revisited: lessons learned about the value of innovation
Springer-Verlag 2011
Lopez, O. et al. (2005)
Clinically meaningful outcome in Alzheimer’s disease
Luengo-Fernandez, R. et al. (2013)
Economic burden of cancer across the European Union: a population-based cost analysis
The Lancet: http://dx.doi.org/10.1016/; S1470-2045(13)70442-X
McClellan and Kent et al. (2013)
WISH accountable care report
http://www.brookings.edu/research/papers/2013/12/accountable-care-outcomes-doha-wish-mcclellan
45
Sustainable Financing
7/10
Sources
Johnson, SJ et al. (2012)
Economic value of slowing Parkinson’s Disease in Germany
NCR
Annual reports 2000-2009
NHS
Hospital Episode Statistics: Admitted Patient Care 2011-12
NHS confederation (2011)
The search for Low-cost Integrated Healthcare, the Alzira model – from the region of Valencia
OECD
Health Statistics Database
Parexel (2013)
Statistical Yearbook 12/13
46
Sustainable Financing
8/10
Sources
PWC (2010)
Clinical Trials in Poland
Rapp, T. et al. (2012)
Exploring the relationship between Alzheimer’s disease severity and longitudinal cost
Value in Health 15 (2012) 412 - 419
Roebuck, C. et al. (2011)
Medication Adherence Leads To Lower Health Care Use And Costs Despite Increased Drug Spending
Health Affairs, 30, no.1 (2011):91-99 doi: 10.1377/hlthaff.2009.1087
Surg, A (2007)
A provider-driven pay-for-performance program for acute episodic cardiac surgical care, ProvenCare.
Schwarzkopf, L. et al. (2010)
Results of the German IDA Study – Assessing the financial impact of informal care amongst communityliving dementia patients
Presented at ISPOR 13th Annual European Congress Prague, Czech Republic November, 2010
47
Sustainable Financing
9/10
Sources
Schmier, J. K. et al (2007) Evaluation of Medicare Costs of Endophthalmitis among Patients after Cataract
Surgery, Vol. 114, No. 6, pp.1094-1099;
Sorensen et al (2009)
Ensuring value for money in health care
Observatory Studies Series No 11
The Access to Medicine Index 2012
http://www.accesstomedicineindex.org/
The Pharmaceutical Industry and Global Health (2011)
Facts and Figures 2011
The World Bank
Database on GDP per capita
http://data.worldbank.org/indicator/NY.GDP.PCAP.CD (accessed April 2013)
Thomson Reuters (2013)
Bibliometric analysis of ongoing projects
48
Sustainable Financing
10/10
Sources
Tsichristas, A. et al (2009)
Medical innovations and labor savings in health care
Aarts De Jong Wilms Goudriaan Public Economics by (APE) and Maastricht University
Vernon, J et al (2010)
Alzheimer’s Disease and Cost-effectiveness Analyses
World Bank database (accessed in May 2015)
WHO (2009)
Vaccine-preventable diseases: monitoring system 2009 global summary
49
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