Carmelo Juárez-Castelló

Should health authorities offer risk-sharing contracts to pharmaceutical firms? A theoretical approach

In this paper, we characterise the risk-sharing contracts that health authorities can design when they face a regulatory decision on drug pricing and reimbursement in a context of uncertainty. We focus on two types of contracts. On the one hand, the health authority can reimburse the firm for each treated patient regardless of health outcomes (non risk-sharing). Alternatively, the health authority can pay for the drug only when the patient is cured (risk-sharing contract). The optimal contract depends on the trade-off between the monitoring costs, the marginal production cost and the utility derived from treatment. A non-risk-sharing agreement will be preferred by the health authority, if patients who should not be treated impose a relatively low cost to the health system. When this cost is high, the health authority would prefer a risk-sharing agreement for relatively low monitoring costs.

Some economics on personalized and predictive medicine.

ObjectiveTo contribute to the theoretical literature on personalized medicine, analyzing and integrating in an economic model, the decision a health authority faces when it must decide on the implementation of personalized medicine in a context of uncertainty.MethodsWe carry out a stylized model to analyze the decision health authorities face when they do not have perfect information about the best treatment for a population of patients with a given disease. The health authorities decide whether to use a test to match patients with treatments (personalized medicine) to maximize health outcomes. Our model characterizes the situations under which personalized medicine dominates the alternative option of business-as-usual (treatment without previous test). We apply the model to the KRAS test for colorectal cancer, the PCA3 test for prostate cancer and the PCR test for the X-fragile syndrome, to illustrate how the parameters and variables of the model interact.ResultsImplementation of personalized medicine requires, as a necessary condition, having some tests with high discriminatory power. This is not a sufficient condition and expected health outcomes must be taken into account to make a decision. When the specificity and the sensitivity of the test are low, the health authority prefers to apply a treatment to all patients without using the test. When both characteristic of the test are high, the health authorities prefer to personalize the treatments when expected health outcomes are better than those under the standard treatment. When we applied the model to the three aforementioned tests, the results illustrate how decisions are adopted in real world.ConclusionsAlthough promising, the use of personalized medicine is still under scrutiny as there are important issues demanding a response. Personalized medicine may have an impact in the drug development processes, and contribute to the efficiency and effectiveness of health care delivery. Nevertheless, more accurate statistical and economic information related to tests results and treatment costs as well as additional medical information on the efficacy of the treatments are needed to adopt decisions that incorporate economic rationality.

Is personalized medicine a panacea for health management? Some thoughts on its desirability

During the last decade we have witnessed a change in health care management. Predictive, personalized [1], individualized [2] or stratified [3] medicine are some of the terms that have been coined to describe a new approach to dealing with disease. In essence, the new paradigm is based on matching patients with the best treatments available according to each patient’s characteristics. Patients are classified through new tests, mainly genetic in nature, the growing proliferation of which is behind the extensive application of this new approach to managing disease. In parallel, new therapies, many based on new mechanisms of action and biological agents, allow ever narrower targets within the cell to be addressed. This combination of new diagnostic techniques and targeted therapies has improved the perspectives of managing some difficult conditions, such as some types of cancer, by controlling the progression of a disease and maintaining it rather as a chronic condition, even achieving a cure in some cases. This new paradigm is raising expectations for both patients and physicians. Health care systems are transforming the management of some diseases and re-writing treatment guidelines to incorporate the advantages of newly available therapies and approaches. However, notwithstanding the rapid development of these changes, there are some issues that should also be taken into account. Here, we highlight some elements that are frequently overlooked or taken for granted. Personalized medicine is frequently based on drug treatments that are more expensive than other, more traditional, therapies. These types of new drug generally target conditions that are more prevalent in developed countries, where a wide market in terms of potential patients and purchase capacity exists. To our knowledge, there is no experience of this kind of approach being used to address conditions whose prevalence is higher in less developed countries. It would be interesting to make personalized medicine accessible to lower income countries so that they could also benefit from the new advantages. A clear contribution of personalized medicine is that it aims to address the imperfect information related to diagnoses and effectiveness that generates uncertainties in healthcare. Personalized medicine reduces uncertainty by identifying more clearly those patients that will response better to treatment and by establishing new and more specific therapeutic targets. However, personalized medicine could also have the ‘‘side effect’’ of introducing undesirable effects into the system, in the sense that new diseases are seemingly created based on an identified gene mutation. Manufacturers intend to classify mutations of the general condition as potential new orphan diseases (prevalence lower than 50 cases per 100,000 persons), which, as a consequence, would attract a greater reward from health authorities in terms of higher prices for the new therapy, and probably better reimbursement policies. Of course, this process would imply higher costs for public health care systems. This is nothing new at this point, however, as this trade-off between improved health outcomes and higher health costs is already common practice. Within the last decade, new tests, mostly genetic, have gained access to the market. Currently, there are over 1,800 genetic tests that help define and classify new diseases and patients [4]. Some tests belong to the field of so-called companion tests, i.e., they must be applied to patients prior to the administration of a given drug to make sure that they are the right candidate to receive that medication. Other tests do not belong to this category and their link to drug F. Antonanzas (&) C. A. Juarez-Castello R. Rodriguez-Ibeas University of La Rioja, Logrono, Spain e-mail: fernando.antonanzas@unirioja.es

Impacto del Real Decreto-Ley 16/2012 sobre el copago farmacéutico en el número de recetas y en el gasto farmacéutico

Fundamentos: el objetivo del trabajo es es conocer si el impacto del Real Decreto-Ley 16/2012 en el numero de recetas y el gasto farmaceutico, evaluadas por el Ministerio de Sanidad, Servicios Sociales e Igualdad (MSSSI), se corresponden con las obtenidas por otros metodos estadisticos habitualmente empleados. Asimismo, se han elaborado unos modelos para predecir la evolucion de ambas variables entre septiembre de 2013 y diciembre de 2014. Metodos: se aplico la metodologia Box-Jenkins conjuntamente con el analisis de intervencion de Box-Tiao a datos del periodo 2003-13 para predecir mensualmente los valores de las series de recetas y gasto farmaceutico. Las predicciones se emplearon en un analisis contrafactico para compararlas con las series de recetas y gasto real. Tambien se efectuaron predicciones para el periodo de septiembre de 2013 a diciembre de 2014 para observar el impacto de la medida en un horizonte superior al real. Resultados: el analisis contrafactico estimo el descenso en el numero de recetas en un 12,18% y el del gasto farmaceutico en un 12,83%, mientras que al calcularse mediante el analisis de intervencion fueron 12,75% y 14,03%, respectivamente. Conclusiones: la reduccion estimada del numero de recetas para el periodo de junio de 2012 hasta agosto de 2013 es similar a la ofrecida por el MSSSI, mientras que para la serie del gasto farmaceutico fue inferior a la ofrecida por el MSSSI. La metodologia de Box-Jenkins genera errores de prediccion menores al 3% por lo que se considera util para anticipar fiablemente los consumos futuros.BACKGROUND this research aims to understand if the consequences on drug expenditures and number of prescriptions of Royal Decree-Law 16/2012 as estimated by the Ministry of Health, Social Services and Equality (MHSSE) are similar to those found by using common statistical approaches. In addition, several models have been built to forecast the evolution of both variables for the period September 2013-December 2014. METHODS the Box-Jenkins methodology and the Box-Tiao intervention analysis were applied to data of the period 2003-13 to forecast the monthly values of the number of prescriptions and pharmaceutical expenditures. Forecasts were used in a counter-factual analysis to be compared to the actual values of prescriptions and drug expenditures. Moreover, forecasts for the period September 2013 to December 2014 were obtained to observe the impact of the policy in the future. RESULTS the counterfactual analysis estimated a decrease in the number of prescriptions of 12.18% and 12.83% in the pharmaceutical expenditure; these figures were 12,75% and 14,03% respectively, when the intervention analysis was used. CONCLUSION the estimated reduction in the number of prescriptions for the period June 2012-August 2013 was similar to the figure offered by the MHSSE, while the reduction in the drug expenditure series was smaller. The Box-Jenkins methodology generated low forecast errors (less than 3%) what makes this procedure useful to reliably anticipate future consumptions.

Pharmaceutical patents, R&D incentives and access to new drugs: new ways of progress at the crossroad

Patents are defined as a right granted to innovators by governments for the exclusive production and marketing of an innovation for a limited period of time. Patent owners enjoy a legal monopoly. Patents rights have traditionally been considered a good mechanism to provide incentives to innovate as it allows innovators to obtain monopolistic benefits that compensate the R&D expenditures. In the case of the pharmaceutical industry, as imitation of new drugs is relatively easy and it is difficult to keep the ‘first mover’ advantage in the market, it seems that the patent system is the only mechanism to incentive the innovative activity.

Improving health care systems by building ‘more Europe’

Health results from a combination of different factors, but society tends to believe that health care systems have the highest responsibility to provide the inputs needed to increase quality of life and survival, the two major variables that allow us to quantify such an abstract and multifactorial concept as health. Health care systems require human resources, scientific knowledge and technologies to yield the expected output. A system is, by definition, a set of organized elements that interact among themselves to achieve a given target. But, so far, the context within which the interaction of the elements of health care systems has taken place has been national (or in some cases regional), rather than supranational. And that is the crucial issue we would like to address in this text. The organization of a national health system, in order to efficiently achieve its goals, should consider the organization of other neighboring systems, especially when the country belongs to an international structure such as the European Union (EU). So far, the Member States (MS) are competent to organize their own care systems, and the European Commission has mainly limited its directives to facilitate a common framework regarding a few aspects of the inputs related to health such as the supplementary protection certificates for extending the patent protection of technologies (mostly drugs and medical devices), the design of the clinical trials for drug research, the creation of the European Medicaments Agency to assess the value of new drugs, and patient data protection issues. The mobility of human resources across countries is not yet straightforward in all countries, and we still lack an EU common title of medicine, for instance. Furthermore, the differences in access requirements that each health system has make difficult the provision of health care to those who are not citizens of a specific country, despite the fact that the majority of the European systems are mostly public. To cope with all these issues several general policies are needed (educative, migratory as well as those related to the EU citizenship right to health care). These policies exceed the competence of the health departments of the MS and require a higher political consensus to be implemented. However, there are other policies that more directly belong to the area of influence of the health departments and could eventually be applied more easily. We will refer to them in the following paragraphs. The target of efficiency, i.e., higher quality care for less cost, is aimed at by every system. New health technologies are continuously launched to markets and the systems incorporate them to improve the quality of their services. In the WHO document of Health for all in the year 2000 for the European region it was already clear that health systems had to perform assessments of new technologies to guarantee a good level of quality and efficiency. Accordingly, EU national systems implemented assessment mechanisms and created many agencies to analyze the value and characteristics of health technologies (national, regional, specific for drugs, general for all technologies, etc.). Contingent to the results of the assessments, health technologies are priced and reimbursed in some countries, are positioned in the treatments algorithm in others and, finally, are prescribed or restricted in health care centers depending on each jurisdiction too. However, the assessment processes and methods, and the influence of their results in the health care systems deeply differ across regions and countries. As an example, the recent paper by & F. Antoñanzas fernando.antonanzas@unirioja.es

Should the patent system for pharmaceuticals be replaced? A theoretical approach.

This paper acknowledges the difficulties of providing access to innovative drugs in some jurisdictions under the patent system and it contributes to the current debate on mechanisms aimed at facilitating such access. We employ a highly stylized static model of two markets (North and South) to analyse the conditions under which a new system based on royalty payments would be preferred to a patent system for pharmaceuticals. In the welfare calculations we have considered explicitly the influence of marketing activities by the patent owner as well as the shadow price of public funds needed to finance the royalties. The bargaining power of the firm in terms of obtaining higher compensation is also considered. The result: are not unambiguously conclusive being heavily dependent on the relevant values of the parameters. Nevertheless, it seems that for realistic parameter values, the new system could be preferred by all the parties involved.

Coping with uncertainty on health decisions: assessing new solutions

Uncertainty is present in most human decisions. The introduction of health technologies in publicly funded systems is no exception. Sources of uncertainty in this domain come from different grounds, and a variety of means and tools have been developed to cope with unknown parameters and uncertain variables. Clinical trials were established more formally back in the 1950s and 1960s of the last century in most developed countries as a requirement to reduce uncertainties in general and primarily to guarantee safety and, later, efficacy. The outcomes of such clinical trials allowed us to understand the features of a given agent under certain controlled specific conditions, usually by comparing its medical performance versus a placebo. They have provided basic knowledge for registration, and to fix the price and reimbursement conditions for the majority of new drugs for several decades. However, in order to use this information on drugs, health authorities and physicians had to assume that the biological response of individuals to pharmaceutical agents and the clinical management of patients were similar across jurisdictions so that health outcomes held generally. That is to say, the basic and implicit assumption was that health outcomes from clinical trials were fully transferable to other health systems where decisions on the utilization of that drug had to be adopted. Needless to say, this basic assumption was subject to strong criticism and raised many questions with regard to whether similar health outcomes in different medical environments could be achieved. As a result of this debate, efficacy outcomes needed to be supplemented with real world data from other studies, i.e., data on effectiveness. In this sense, databases such as the Cochrane library—constituting a world reference since 1988—provide the medical community with real practice data. Additionally, once therapeutic areas became crowded with several similar agents, relative efficacy data started to be demanded by health authorities and physicians so that uncertainties about which drug would be more appropriate for each patients subgroup could be clarified. Although an old concern, this information requirement was considered more intensively during the 1980s and demand continues to grow. Furthermore, most current comparisons of the efficacy and safety of a new treatment with existing ones are still carried out using indirect methods, with the results again being subject to uncertainty (the already cited Cochrane library offers a collection of evidence that is easy to access but still many questions remain open to research). These uncertainties come from a variety of sources, such as differences in recruitment criteria, clinical management of patients in each trial, study duration, the statistical design of the trial, and so on. In this context, comparative efficacy studies (whose outcomes come from face-to-face clinical trials) began to be designed in response to requests from many health bodies to some rather reluctant pharmaceutical companies, who were unwilling to compare their new molecules with other, well-established treatments. This new route towards the reduction of uncertainty is still clearly under development and has a long way to go.

Personalized Medicine and Pay for Performance: Should Pharmaceutical Firms be Fully Penalized when Treatment Fails?

In this article, we model the behavior of a pharmaceutical firm that has marketing authorization for a new therapy believed to be a candidate for personalized use in a subset of patients, but that lacks information as to why a response is seen only in some patients. We characterize the optimal outcome-based reimbursement policy a health authority should follow to encourage the pharmaceutical firm to undertake research and development activities to generate the information needed to effectively stratify patients. Consistent with the literature, we find that for a pharmaceutical firm that does not undertake research and development activities, when the treatment fails, the total price of the drug must be returned to the healthcare system (full penalization). By contrast, if the firm undertakes research and development activities that make the implementation of personalized medicine possible, treatment failure should not be fully penalized. Surprisingly, in some cases, particularly for high-efficacy drugs and small target populations, the optimal policy may not require any penalty for treatment failure. To illustrate the main results of the analysis, we provide a numerical simulation and a graphical analysis.

EMA Priority Medicines scheme (PRIME): will more paying-for-performance agreements be needed due to immature data?

The EU’s centralized procedure for the authorization of a new drug is performed by the EMA. This well-known process requires the analysis of a large amount of data generated by clinical trials, as well as from other sources. This is a highly qualified activity and frequently becomes complex and needs additional input and requests from the pharmaceutical industry. In total, a maximum of 210 days can be devoted to the authorization of each product. Then, after this authorization, the dossier of the drug has to go on a pilgrimage to each Member State Ministry of Health’s desk for price and reimbursement authorization. These bodies usually undertake additional assessments of the drug, establish its position in the domestic market, and finally authorize the product with either a negotiated price or a price that is set by the firm but always requires a public reimbursement decision. Some products are distributed through hospital pharmacies and then a further assessment is done by these centers in order to include them in their formularies. As HTA agencies are also common in many EU countries, their assessments may also be requested by some institutions before adopting decisions about the introduction of a new drug in the public service catalog. In total, since the application for the centralized authorization by EMA until the drug can be prescribed to a given patient, the process can easily take 24 months, and sometimes even longer. All these activities can be understood as a reaction of public administrations to the monopolistic power that patent rights grant to manufacturers. In a pure unregulated monopolistic market, prices are fixed by companies and hence health authorities have to accept (as price takers) the imposed price. This is likely an undesired secondary effect of patent regulation, and it has no easy solution, as stated elsewhere [1, 2]. Since last century, this reaction has taken the form of a control system that analyzes new chemical entities, checks benefits and risks for patients, and assesses the degree of innovation and improvement of the drug over the existing ones. This lengthy process has several drawbacks: it delays the beginning of sales for the firm (which means that the actual monopolistic power granted by the patents will be enjoyed for a shorter period) and some patients at health risk will not be treated as soon as they could otherwise be. In order to overcome these drawbacks, health authorities have introduced different policies aiming to make market access more flexible, in fact bypassing the rather rigid administrative rules of the price and reimbursement process. These policies mostly apply to drugs addressing unmet crucial medical needs. In this sense, several decades ago, health care systems considered the introduction of still-nonauthorized-drugs through the so-called compassionate use that permitted prescription to selected patients under special conditions (mainly, for life-threatening diseases as soon as new drugs targeting them became available). Simultaneously, national health authorities also explored other mechanisms such as a kind of “fast track” assessment process to shorten the deadlines of the standard price and reimbursement decisions. The possibilities and combinations of legal procedures and policies addressing this problem across the EU countries during the last half century are far-reaching. In particular, the compassionate use approach has been widely applied by Member States (MS). However, the heterogeneity of formats of this policy makes the process cumbersome to pharmaceutical firms, meaning access is slower than it otherwise could be. Late developments of effective and complex drugs in several therapeutic areas where life expectancy was really low have demanded a faster response by regulators so that patients could have a more homogeneous and rapid access to these drugs. In this sense, the European Medicine Agency (EMA) has implemented (March 2016) the PRIME (Priority * F. Antoñanzas fernando.antonanzas@unirioja.es