The Fourth Hurdle: The Call for Pharmacoeconomic Data

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Denise Myshko

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Managed MARKETS

What began as a movement by government payers in other parts of the world is now making its mark here in the United States. Pharmacoeconomics — the scientific discipline that compares the value of one pharmaceutical drug to another to assess its value and costeffectiveness — has become the fourth hurdle companies have to address,behind efficacy,safety,and quality. “Where pharmacoeconomics, as a tool to understand the impact and the value of different treatment decisions, impacts reimbursement decisions or formulary coverage decisions is how well a payer can understand the overall impact and the overall value of using a product,”says Bob Mauch, Ph.D., Pharm.D., president of Xcenda. “Given that, pharmacoeconomics, or the need to understand the value products create in the mar ketplace, is increasing rather dramatically.” In somecountries — Australia,Canada,and the United Kingdom, for example — pharmacoeco nomic data are a requirement before a reimburse ment decision can be made. Lynn Okamoto, Pharm.D., general manager, healthcare analytics, at United BioSource, says there are two aspects of drug evaluation where pharmacoeconomic outcomes are integrated. “There is the regulatory component and the payer perspective,” Dr. Okamoto says. “As a new drug is coming through thepipeline,it’s important to determine two things in parallel to address the requirements of these different audiences:what is the unmet need for the product and how will it reduce the burden of disease for patients and the healthcare system.” Rebecca Hyde, partner at Strategyx, says phar macoeconomics is moving into economies where the government is not the only payer. “This is why it’s been somewhat slower to come to the United States,”she says.“In our analy sis, the more government involvement in health care, the greater the demand for pharmacoeco nomic evidence.” Europe is far more sophisticated and more comfortable with complicated pharmacoeconom ic models,says Cheryl Hankin,Ph.D., founder,presi dent,and chief scientific officer of BioMedEcon. “Payers in the United States look askance at complicated models,” she says. “They’re viewed with some suspicion, especially when created in house by a pharmaceutical company.” Dr. Hankin says it’s in a manufacturer’s best interest to sponsor an outside organization to conduct pharmacoeconomic analyses — this is more believable than the inhouse approach. In general, the simpler and more transparent the models are, the better. According to JonothanTierce,general manag er, global health economics outcomes research (HEOR) and the Center of Excellence Leader at IMS Health, in the United States there is likely to be a stronger call by many people within the health policy arena to have a health technology assess ment requirement within Medicare. “If we did that, managed care would probably follow suit with requirements for health technolo gy assessments,” he says. “This macro trend is sit ting side by side with another macro trend: evi dencebased medicine and economic evaluations of medical technology as a whole.” DEMONSTRATINGVALUE According to the International Society for Phar macoeconomics and Outcomes Research, phar macoeconomics incorporates health economics, clinical evaluations,risk analysis,technology assess ment,and healthrelated quality of life, epidemiol ogy,decisionsciences,andhealthservices research in the examination of drugs,medical devices,diag nostics, biotechnology, surgery, and diseasepre vention services. Potential uses for pharmacoeco nomic analyses are in pharmaceutical reimbursement, price negotiations, formulary dis cussions, clinical practice guideline developments, and communications to prescribing physicians. Mr. Tierce says pharmacoeconomics is all about trying to understand and demonstrate the value of healthcare interventions. “At times when we talk about pharmacoeco nomics,the focus is narrow and addresses just the techniques used to assess drugs for pricing and reimbursement,” he says. “My argument is this is too limiting; pharmacoeconomics is about demonstrating the value of healthcare interven tions and the value of medicines.” Dr.Mauch says the demand for pharmacoeco nomic data is growing every year. “Fromabrand standpoint,historically products weredifferentiated bycommunicatingclinicaleffi cacy to prescribers,” he says. “Going forward, the pressure to manage healthcare costs will only increase.The payer component of brand strategy, where pharmacoeconomic value fits in is much more important.It is acritical success factor for any brand to be able to clearly communicate its value to payers.“ Ms.Hyde points out that pharmacoeconomics THENEEDTODEMONSTRATETHEVALUEOFPHARMACEUTICALPRODUCTS IS NOWUNIVERSAL.EXPERTS SAY A PHARMACOECONOMICANALYSIS IS NOT JUST AMARKETINGTOOL; IT’S ALSOAPRODUCT LIFECYCLE MANAGEMENTTOOL. BY DENISE MYSHKO Pharmacoeconomics is a tool that continuously informs the brand strategy and the development of Phase IV protocols. REBECCA HYDE STRATEGYX Pharmacoeconomics, or the need to understand the value products will create in the marketplace, is increasing rather dramatically. DR.BOB MAUCH XCENDA As a new drug comes through the pipeline, it’s important to determine two things: what is the unmet need for the product and how will it reduce the burden of disease for patients and the healthcare system. DR.LYNN OKAMOTO UNITED BIOSOURCE PV0508 Issue Proofs 4/25/08 9:35 AM Page 88 89 PharmaVOICE M a y 20 08 make sure that payers have as much information as they can ahead of time by having the phar macoeconomic analyses available in advance of formulary, medical,or technology review.” Ms. Hyde stresses that pharmacoeconomic data are more than just a marketing tool. “Companies that are doing pharmacoeco nomics right recognize that there is a need for this kind of consideration at every point in the product life cycle,” she says. “Pharma companies must address pharmacoeconomics earlier in the product life cycle to steer prod uct development and enable efficient capital and resource allocation. Pharmacoeconomic analyses should begin when a product is first put into man and shouldn’t end until the drug goes generic. Highquali ty PE information can make a case for a unit price determination and can put the manufacturer in a winwin situation with the payers, facilitating reimbursement and uptake. “Companies that are doing pharmacoeco nomics right understand that a PE dossier must be developed to support the reimbursement evaluation, and that the dossier must be con stantly updated and assessed,” Ms. Hyde contin ues. “Companies have to monitor the formulary status of every product and ensure that they are in a position to respond to class review.” They are developing organizational struc tures that enable coordination across multiple business functions while accounting for global variation in reimbursement policy, she says. This has been a significant change in the last five to seven years. Dr. Okamoto says the key to building the value story is to align perspectives. “Companies that are successful in developing a brand strategy are establishing better studies early on to support the product at launch,” she says. “At the same time, they are preparing real world studies for postlaunch. Payers today are demanding more than just Phase III trials. Using this dual approach, pharma can focus on both the immediate regulatory need to establish clini cal and safety endpoints, while meeting payer concerns to demonstrate the value of these products. In the United States, there has often been a disconnect between these two elements. In Europe, by contrast, there is greater emphasis on looking at the total picture: safety, efficacy, and value. NICE is involved in promoting this holistic approach. Other European countries, as well, are planning ahead. Consider, for example, the new IQWiG guidelines in Germany.” Dr. Hankin says it is not always necessary to develop a pharmacoeconomic model, because the value of a pharmaceutical product can be presented in many ways. “There are other strategies that companies can use to justify coverage and reimbursement,” she says. “Those pharmacoeconomic strategies include conducting retrospective claims analy ses to show the burden and cost of illness; this technique can then be used to support costoff sets offered by the pharmaceutical product. Or, metaanalyses can be used to highlight the clini cal efficacy or safety profile of the pharmaceuti cal company’s product compared with competi tive products. Sometimes, the strategy can include evaluation of patient satisfaction and quality of life with the pharmaceutical product, which can then be quantified in terms of quality adjusted life years.”# PharmaVOICE welcomes comments about this article.Email us at feedback@pharmavoice.com. is not entirely about saving money as much as it is abouthow to spendmoneymorewisely.Expendi tures, she says, can be evaluated on three levels: societal, institutional,and individual. “At the societal level, economies of the world’s major pharmaceutical markets are under strain, facing both limited budgets and increasing drug costs,”Ms.Hydesays.“At the institutional level,man agedcare plans have to understand how a new drug is going to impact the longterm budgets for all patients.Hospitals are using pharmacoeconom ic data to bolster their decision making processes. And, increas ingly, employers, who bear most of the cost for drug budgets in the United States,are using phar macoeconomic tools to design the benefits for their employees. At the individual level, we all are using pharmacoeconomic infor mation every time we make a decision on how to allocate our personal resources for healthcare.” IMPACT ONBRANDS Mr. Tierce says in the future, all brands, espe cially products that expect to be significant play ers in the market, will need a health economics research strategy embedded within the market ing plan. “Health economics research should be an early and ongoing part of developing a brand strategy,”he says. Dr. Hankin says it’s in a manufacturer’s best interest to do pharmacoeconomic analysis. “In the absence of providing simple, transpar ent, and unbiased pharmacoeconomic data to payers, the payers themselves will conduct anal yses and they may not use all or the appropriate information in the process,”she says.“It’s always a good idea for pharmaceutical companies to CHERYL HANKIN,PH.D. Founder, President, and Chief Scientific Officer, BioMedEcon,Moss Beach,Calif.; BioMedEcon applies rigorous scientific methods to create coherent,objective, and practical formulary decision models, pharmaceutical and drugdelivery market entry strategies, and healthcare policy recommendations.For more information, visit biomedecon.com. REBECCA HYDE. Partner, Strategyx LLC, Somerville, N.J.; Strategyx, an inVentiv Health company, is a strategic management consultancy dedicated to Experts on this topic the development of actionable and effective brand,market segment,and organization design strategies. For more information, visit strategyx.net. BOBMAUCH,PH.D.,PHARM.D. President, Xcenda,Palm Harbor,Fla.; Xcenda,an AmerisourceBergen Specialty Group company, is a manufacturerfocused consulting company providing customized solutions for facilitating patient access to pharmaceutical and biotechnology products.For more information, visit xcenda.com. LYNN J. OKAMOTO,PHARM.D. General Manager,Health Care Analytics, United BioSource Corp.,Bethesda,Md.;UBC is a global pharmaceutical services organization that helps emerging and established lifescience companies develop and commercialize medical products.For more information,visit unitedbiosource.com. JONOTHANTIERCE.General Manager and Center of Excellence Leader, Global Health Economics and Outcomes Research (HEOR), IMS Health, Norwalk,Conn.; IMS Health is a provider of market intelligence to the pharmaceutical and healthcare industries. For more information, visit imshealth.com. Health economics research should be anearly andongoing part of developing abrand strategy. Managed MARKETS PV0508 Issue Proofs 4/25/08 9:35 AM Page 89

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