One of the many perks of my recent shift to consultancy is that I get to work on more diverse therapy areas – such as vaccines – as compared to when I was a pharma employee. With the vaccine market being concentrated among a handful of players, you can spend an entire career in pharma without being directly involved with vaccines. In fact, you could even be developing drugs at one of the top vaccine players such as GSK or Sanofi, without having much interaction with your vaccine colleagues who operate in a standalone business unit at a different site. Which means you are missing out because one – it is a fascinating business that has been reinventing itself for more than 2 centuries and two – it is a gold mine of insights for the broader curative pharma business. In this brief post, I have selected three major aspects of the vaccines value chain that could bring a positive change to pharmaceutical drugs market access and commercialization – if applied with discernment.
Vaccines are Contributing to Public Health
In a recent post, I tried to explain some of the pricing challenges faced by drugmakers by the very nature of the goods they are producing. Some patients, caregivers, healthcare providers, and regulators are inclined to think that they are public goods. Although vaccines are commercially sold private goods, they are broadly viewed as an integral component of public health. This view can be explained by some very rational observations, for instance, the concept of herd immunity according to which reaching a given vaccination rate will protect an entire population from future epidemics. But it can also be explained by the emotional connection with vaccines which for instance help make schools and nurseries safer places for our children. Being a public health contributor comes with some benefits. Vaccine makers have a more direct and less conflictual dialogue with public health authorities as compared with traditional pharma companies. With national and regional vaccination committees having the possibility to mandate vaccines, and the broad use of tendering, manufacturers do not have to operate a heavy and largely ineffective sales structure. If you are a pharma sales manager, imagine for a second a team member giving you a call to announce ‘I’ve just sold 50 million units’. Of course, I am over-simplifying. But pharma companies must aspire to get involved at a decision-making level, with departments of health, governments, and regulators. Too often they communicate via statements in journal ads or on their corporate website. Or they delegate this strategically important dialogue through their membership in trade groups. If your website says ‘we want to work with governments to improve people’s health’ (chances are it does), it is probably time to ask your vaccine colleagues some tips on how to ‘walk the talk’. They might give you some insider scoops into some interesting observations:
- How did France-based Sanofi manage to support the launch of Gardasil (HPV) in France with a branded TV ad in 2008 while branded ads are illegal in France and unbranded ads are allowed for some vaccines that do not include HPV? (you can watch the ad here, a very unique piece in French with an American touch)
- How did UK-based GSK secure a 3-year contract with the UK NHS in 2009 for Cervarix (HPV) going against experts’ recommendations before the contract was finally overturned to favor Gardasil in 2012?
- How did US-based Pfizer gain a positive recommendation to routinely use Prevnar 13 (pneumonia) from the US Advisory Committee on Immunization Practices in record time right after its marketing authorization in 2010?
Vaccines’ Value Demonstration is an Art
All these coincidences put aside, being an integral part of the public health delivery ecosystem also comes with challenges. Demonstrating the value of vaccines is not the least of them. The pressure on vaccines’ prices is equal to that on other prescription drugs. But it is further amplified by several converging forces:
- government-mandated and/or -funded vaccination programs are widely publicized. For the general public, the total cost of these programs can seem quite staggering because they often generate a one-off payment and because there is a direct connection with the use of tax money
- because of the view that vaccines are public health goods (see above), the sentiment that vaccines should be affordable to all is further reinforced
- there is a perception that vaccines are cheaper to discover, develop and produce, which is not necessarily justified, in particular for most recent vaccines. But as they say, “perception is reality”
This pressure has pushed vaccine makers to ramp up their investments in health economics and real-world evidence. With mixed results, judging by the multiplication of negative appraisals made by Health Technology Assessment bodies, in particular when it comes to multi-valent vaccines that come to market with a much higher price tag than the older ones they are supposed to replace.
For simplification, let’s assume the value of vaccines is embedded in their incremental cost-effectiveness ratio (ICER). Generally speaking, ICERs are challenged because of the uncertainty that surrounds their estimate. When it comes to vaccines, that uncertainty is at an unmatched peak. Let me explain:
- on the heath outcomes side of the equation – or the incremental effectiveness in the denominator of the ICER – the level of proof provided by available studies is generally speaking of a lower standard compared to other drugs. Study results are mostly nonreproducible, of samples are small, and designs are less rigorous (very often for perfectly understandable reasons)
- worse, the ICER estimate requires predicting future health outcomes gained in the context of a given population, and this particular exercise is as tricky as playing the national lottery. For a vast majority of vaccinated subjects, they will in fact never be exposed to the virus or infectious agent in question. For others, they might be exposed to another strain against which they are not protected. Or they could be exposed to a strain included within the vaccine ‘spectrum’ but not have developed the sufficient level of immunogenicity.
- adding herd immunity thresholds to cost-effectiveness models will add more fog to the whole landscape because these thresholds are inferred from epidemiological models based themselves on efficacy estimates (cf. previous bullet point…)
So why are vaccines so broadly reimbursed by public and private payers? Because they work, and vaccine companies have learned to master the art of demonstrating their value without falling into the trap of the ICER impasse. For instance, most companies are sponsoring studies and registries at a population level, showing the correlation between the introduction of a given vaccine and the decline in the prevalence of the virus it prevents. Other pharma companies rarely produce population-level data on how their products help reduce the overall burden of a disease, even if they do. Also, vaccine makers have developed a rather ‘actuarial’ view of the value of their products, similar to an insurer’s view on risks. They know that the value of their products is largely dependent on a particularly elevated risk in a given population of subjects – younger, older, immunosuppressed etc. – and they will not hesitate to take huge restrictions to their labeled indication in their reimbursement criteria, something other drug makers are still hesitant to accept.
Vaccines are Paving the Way for Affordable Access
Like me, you may have heard the news a couple of months ago of a standoff between Medecins Sans Frontieres and Pfizer, as the Non-Governmental Organization turned down the US Pharma giant offer of 1 million free doses of Prevnar 13. Like me, you may have missed the news a couple of weeks ago that both parties reached a long-awaited agreement as Pfizer accepted to add a new tier to its Prevnar 13 prices for NGOs such as MSF (what? would the media be negatively biased against the pharmaceutical industry? Shocking). The price point agreed for MSF is US$3.30 per dose. That’s about 50 times less than what private payers are charged in the US. That is a staggering price band which I bet is not matched by other products in Pfizer portfolio. Why such a bold move? Because in the vaccine business, companies have long understood that being rigid with pricing in low-income countries and with low-income populations is unjustified. Most pharma makers are often reluctant to widen the price band of their innovative products, for the wrong reasons – parallel trade that is immaterial into higher income markets, external reference pricing that will never really occur as payers favor domestic measures to cut prices, etc. In fact, in the recently published update of the Access to Medicine Index, the companies that top the index (GSK, J and J) or progress on it (Sanofi, Merck), also promote a vaccine portfolio, and those two facts could be correlated. Vaccine makers have consistently been ahead of the curve when it comes to affordable access, for instance by indexing their prices to the Gross National Income per capita index, or by joining forces with the public sector in the Gavi alliance. They are now looking at ways to tackle the inequalities that persist in high-income countries, trying to close the gap between uninsured in the US or migrants in Europe and the rest of the population by applying differential pricing within the same geography. Hopefully, this will inspire other drug makers to follow suit.
I could have selected other aspects of the vaccine business but I will stick to my rule of 3 points max to keep these posts sweet and short. As usual, please join the conversation. If you work in vaccines and think I got it all wrong, please reach out to avoid any further embarrassment!