PMA perspective Feb 2015

PMA Perspectives February 2015


Our latest newsletter covers recent developments in EU drug procurement, biosimilar discounts in Norway and the increasing government sponsored use of off-label medicines:

Hello and welcome to the February 2015 Newsletter from Remap Consulting. This issue covers diverse topics such as the recent developments in centralised EU drug procurement and P&R transparency; the radical 72% infliximab biosimilar discounts that has been offered in Norway and the recent AIFA approval of Avastin for off label use in Wet-AMD in Italy.

Graham recently presented on NICE’s new methodology for Highly Specialised Technologies (products for ultra-orphan diseases with a prevalence of <1:50,000) at the EUCOPE (European Confederation of Pharmaceutical Entrepreneurs) P&R & Market Access Working Group in Brussels. Please contact Graham for more details ( and the full presentation can be found here

We always welcome your thoughts and opinions on the topics raised here. Do contact us ( or share your thoughts with us on Twitter (@remapconsulting), where you can also find the latest news.

Paul Craddy & Graham Foxon
Managing Directors – Remap Consulting

Centralised EU drug procurement and P&R transparency – Is this the future for expensive drugs?

Are the EU member states heading for increased P&R transparency and potential centralised drug procurement? A number of recent initiatives seem to indicate this is the direction of travel. In October 2014, the EU Member States and Commission voted in favour of joint procurement for pharmaceuticals (Decision 1082/2013/EU: Art. 5), whilst on 1st December 2014 the Council of the European Union approved the “Conclusions on innovation for the benefit of the patients” which included provisions for “initiatives for exchange of information and collaboration in the field of pricing and reimbursement facilitated by the European Commission”.

The price controversy surrounding Sovaldi (sofosbuvir), Gilead Sciences’ breakthrough Hepatitis C drug, has been a great example of how EU cooperation in data sharing has increased recently. The high cost of the treatment (~€49 000/treatment) and the potentially huge patient population is a significant concern to payers. Faced with this, the French government convened a meeting of EU member states in July 2014 to share drug pricing information on Sovaldi. It then utilised this information within its pricing negotiations, with the French Health Ministry announcing in November 2014 that the Sovaldi price in France was the cheapest in the EU at €13 667 per 28 pack.  

Similarly, Portugal’s Infarmed proposed, in co-operation with other EU states, that the new joint procurement agreement should be used to procure Sovaldi across the whole of the EU. A number of smaller EU countries were in favour of this, as it would reduce their acquisition costs by being part of a larger buying group. As yet this initiative has not translated into action, but it demonstrates that payers are seeking new approaches to reduce their pharmaceutical budget.

For a number of years the EU has been seeking ways of sharing and rationalising pharmaceutical HTA assessments and pricing data (e.g. EUnetHTA and the Pharmaceutical Pricing and Reimbursement Policies (PPRI)). The recent financial crisis and austerity drive have only hasten the implication of these measures. It appears that Sovaldi has been the “wrong product in the wrong place at the wrong time” given its controversial price level that has acted as a new stimulus for payers across the EU to try these new EU procedures to reduce their pharmaceutical drug budgets.

So what does this mean for EU pharmaceutical pricing in the future? In the short term, the current situation is unlikely to change, with individual governments still making the final P&R decisions and sharing P&R information on an informal basis. However, given that the EU procurement decision has been passed and Portugal has already expressed an interest in using it, it is likely that joint procurement will be used in the near future. The question is what will the trigger be – will this be the “next Sovaldi”, another financial crisis or an unknown factor?

There will be an increased sharing of pricing information both formally and informally between governmental health institutions, particularly for high cost medicines. This has been a trend over recent years which is expected to continue and may have significant impact on international reference pricing and country launch sequences if net prices are known. Yet the EU is still a long way from a comparable situation to the Gulf Cooperation Council (GCC), which is currently harmonising CIF (equivalent to Wholesaler purchase prices) prices between its six Middle East markets.

In summary, the direction of travel is clear at the policy level, with the EU member states favouring sharing of pricing information and the principles of joint pharmaceutical procurement. However, only tentative steps have been made into turning these initiatives into practice. Fundamentally, pricing decisions will remain the responsibility of individual EU states, although it is likely their price awareness of other markets will increase over time, increasing the pressure on Pharma companies.

Recommended articles that caught our attention

  • Trends and analysis of scientific advice provided by NICE since 2009: Interesting investigation from NICE analysing data from its scientific advice over the past 6 years.
  • Gathering pace – The EMA adaptive pathway: Latest insights on the EMA adaptive pathway, including details of the six medicines selected to spearhead its adaptive pathways project.
  • The cost and value of drugs: A thought provoking look at the factors behind high drug development costs and what can be done to alter them.
  •  UK QALY CE threshold should be set at £13000: Recent publication arguing that the current NICE cost effectiveness threshold is too high and should be lowered to ensure best use of resources.

Biosimilar pricing – How low is too low?

The conventional view of biosimilar pricing is that a discount of up to 30% is sufficient to secure reimbursement and enable patient access, as recently observed in the UK where Napp launched Remsima, the biosimilar of Remicade (infliximab) at a 30% discount. However, the recent announcement of a 72% price discount for Remsima, in the annual Norwegian tender of anti- tumour necrosis factor (TNF) products has blown this conventional view out of the water.

Every year in Norway there is a national tender for anti-TNF products, where each anti-TNF manufacturer is invited to submit a price for their own product for the following year.  2014 was the first year the tender was awarded to Remsima (from Hospira), a biosimilar of infliximab, who had offered a discount of 39% to win the tender.  However in 2015, the tender was won by Orion, another biosimilar company, who offered a huge 72% discount. The high level of discount offered by biosimilars is alternative strategy to gain new patients, which may capture significant value in the long term due to the lack of switching that currently occurs across the anti-TNF products.

It is interesting to note that the 2015 tender price has been made publically available and that the discounts offered are significantly greater than the ‘official’ prices published by the Norwegian’s medicines agency, where biosimilars are priced at a 10% discount to Remicade’s price. The level of discount offered in the tender far exceeded the expectations of many, as summarised by Dr. Steinar Madsen, medical director at the Norwegian Medicines Agency:

“I had hoped to see discounts around 50 percent, but I did not anticipate a 72 percent price reduction… with the prices we have seen today, the biosimilar infliximab will probably be a game changer in Europe… this is a great day for our patients, as we will be able to extend treatment to many more in Europe”.

The level of discount offered is likely to have repercussions for both branded manufactures and biosimilar manufacturers alike. Branded manufacturers are now seeing copies of their drugs priced at generic price points and must now reconsider their marketing strategy for off-patent biologics, if they are to maintain a significant level of market share for their products.

Biosimilar manufacturers should also reassess their strategy, primarily to ensure that they can compete at these generic price points. Pricing at a discount to the original brand was always going to be the main ‘ticket to entry’ for biosimilar manufacturers. However, the higher cost of manufacturing and developing biosimilars (unlike generics, there is a need to conduct phase III bioequivalent studies to secure regulatory approval) means that biosimilar companies have significantly higher investments compared to generic manufacturers.

Furthermore, biosimilar companies still need to invest in their communication strategies to convince both physicians and patients that biosimilars are safe and effective treatments.  A 72% price discount over the branded product will put significant pressure on the profit margins of biosimilar products and may make the biosimilar marketplace significantly less attractive for new entrants.

Government sponsored off label use – new frontiers for Avastin?
The on-going saga of Avastin and Lucentis for the treatment of neovascular age-related macular degeneration (wet-AMD) patients has recently taken an interesting new direction in Italy. New legislation has enabled AIFA to approve reimbursement for Avastin for off-label usage in the treatment of wet-AMD.

Both Avastin (bevacizumab) and Lucentis (ranibizumab) are anti–vascular endothelial growth factor (anti-VEGF). Avastin, marketed by Roche, is indicated predominately for cancer indications, whereas Lucentis, marketed by Novartis, is indicated for wet-AMD, one of the leading causes of blindness in the elderly. Both products have become mega blockbusters in their respective indications, even with Lucentis costing ten times more than Avastin in the treatment of wet-AMD. This price difference and the associated large budget impact of Lucentis in wet AMD has been a significant driver for a number of organisations to investigate if Avastin is as effective and safe as Lucentis (such as the CATT and IVAN trials). Roche has consistently argued that the safety profile of Avastin is not sufficiently robust to seek marketing authorisation, providing evidence of potential microbial contamination during syringe preparation from Avastin vials.

In May 2014, the Italian government approved a decree allowing off-label use of drugs. This decree is partly in response to an anti-trust investigation where Italy’s antitrust regulator fined Novartis and Roche €180m for allegedly colluding to prevent the use of Avastin as a treatment for wet AMD. The decree allows products to be reimbursed off-label if there is no valid alterative but also if a therapeutic alternative exists. The approval of off-label usage must be justified by national and international research showing its cost-effectiveness and suitability. Naturally, the decree caused a significant backlash, particularly from EFPIA and EUCOPE, which accused AIFA of infringing and undermining the European Union’s marketing authorisation system.

Nevertheless, several Italian regions have formally asked AIFA to consider Avastin for reimbursement in wet-AMD in response to the new decree. AIFA’s Scientific and Technical Committee (CTS) agreed and gave positive approval for using Avastin in wet-AMD and on the 18th Feb, AIFA’s official decision approving reimbursement for wet-AMD was published in the Gazzetta Ufficiale.

So what does this mean for the future? It is obvious that there will be an increase in Avastin use in wet-AMD, particularly in the regions that requested the AIFA review. If the budget impact of wet-AMD is significantly decreased, it will be interesting to see the extent to which regions will start to use this new legislation as an additional cost containment tool and which products will be the next ones considered for off-label reimbursement.

It is not only Italy that has expanded the reimbursement for off label drugs. The FDA authorized the off-label use of Avastin for wet AMD in 2008 and France has recently taken steps to allow the Temporary Recommendations for Use (RTU) to be issued to off-label treatments, even if an alternative therapy already exists. Also in the UK, 120 Clinical Commissioning Groups have recently petitioned the General Medical Council, the Department of Health and NHS England to allow them to use Avastin off-label. The CCGs complain there are barriers which are conspiring to stop prescription of Avastin, which could result in yearly saving of £102 million to the NHS.

It is interesting to note that the driving force behind implementation of these measure is coming from the local level budget holders, such as the regions in Italy and the CCGs in the UK, who appear to be convinced of the safety and efficacy and the potential savings that can be made. These measures are all part of a growing trend by governments and budget holders to utilise and reimburse medicines where effectiveness and safety has been clearly demonstrated, despite the lack of regulatory approval, if significant cost savings can be realised.

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