challenges with fast-track reimbursement

Fast-track reimbursement in Europe: Six reasons why manufacturers don’t use it

Manufacturers don’t use fast-track reimbursement in Europe. Although this seems like an oversight, there are six reasons explaining why it is not happening.

Fast-track reimbursement in Europe

A relatively unknown access pathway in France’s rather complex drug funding framework is the fast-track reimbursement for products with no proven added clinical benefit over standard-of-care. Article 14 of the 2021 framework agreement between the industry and the French government offers “simplified and accelerated access to products with an ASMR V […] in exchange for a sufficient discount versus the comparator treatment”. Concretely, this fast -track concept means full reimbursement within 15 days of the publication of the Transparency Commission evaluation in exchange of an ‘important’ discount to the comparator.

Other Jurisdictions offer a similarly accelerated route to patient access:

  • England’s NICE offers access to patients in 30 days for products that offer ‘exceptional  value for money’
  • Germany’s GKV offers a reference price for product with no added benefit according tot the G-BA’s early benefit assessment

Fast-track reimbursement  is hardly ever triggered by manufacturers.

In its 2020 Annual Report, the Economic Committee for Health Products (CEPS) details that out of 680 dossiers of new molecules, formulations, or indications submitted to reimbursement for the first time, 95% were granted an AMSR V. Given that historically the pricing negotiations in France are among the longest of Europe’s main markets (508 days according to the latest EFPIA Patients W.A.I.T. Indicator), one would expect a large proportion of these companies to leverage the fast-track opportunity. However, in 2020, the staggering number of companies that have triggered a fast-track reimbursement was… 1 (read ‘one’). In 2021, the article 14 procedure was not used at all.

The routes in England and Germany  gain no more traction than France’s Article 14.

Why don’t more manufacturers take advantage of
these fast – track reimbursement routes?

Based on conversations with our clients and payers, and may I say with some level of speculation[1], here are the 6 main reasons for the mind-boggling level of under-utilization of these fast tracks:

[1] For consultants: please read ‘inference’.

1. It’s all about the 5Ps

The Per-Patient Per-Product Profitability has been dictating a lot of the choices made by pharma for many years. The era of top line seeking strategies defined around a small set of mega-blockbusters is long gone. Nowadays, companies build their profit and loss statements on more targeted populations, and specialty products have displaced primary care treatments on the list of blockbusters. The critical strategic factor to turn a profit in the specialty market is price more than it is volume. Global and local pricing teams know this too well and they will not compromise a product list price at launch. No matter how you look at it, price is the only variable that goes straight from your top to your bottom line.

2. Brace for erosion

Article 14 gives you a fast-track to reimbursement, However  unlike the record-breaking roll-out of COVID-19 vaccines, it does not offer immunity against future risks. Alongside its strong performance in negotiating some of the lowest entry prices in the developed world, France’s CEPS has also become a master of what it calls the ‘dynamic regulation of prices’. So, when companies negotiate their initial listing price in France, they need to set the bar high enough so as not to risk posting a net loss in the likely event of future erosion. Germany, via constant re-evaluation of the drug benefit and price blending, and England, via commercial contract renegotiation and rebate increases, have similarly efficient price-curbing weapons. In this era of ‘value-based pricing’, as crazy as it may sound, companies regularly find themselves under pressure to sell products at a loss,  They feel the squeeze between an eroding price[1] and increasing costs of distribution, manufacturing, risk management, or real-world data collection, to name just a few.

[1] For US readers: prices do not go up in Europe.

3. Mind the ripple effect

International reference pricing (IRP) is a silly an interesting price fixation mechanism whereby some pricing jurisdictions don’t bother to do their homework to decide which value-based price they are willing to offer. Instead, they copy-paste the price from foreign peer jurisdictions. In Inbeeo’s IRP matrix, France, Germany, and England top the list of most referenced countries by lazy resource-constrained pricing bodies. Value-based pricing decisions by the 3 prominent pricing bodies in these markets have an impact beyond their borders.

4. Time is on my side

Just like Mick Jagger used to sing, some manufacturers might think that time is on their side. In the case of pricing negotiation in France, indeed, time can become the adjustment variable to the ripple effect described above. While  negotiations are ongoing, there is no publicly available price in France. And Countries that would typically reference the French price such as Greece, Turkey, Poland or even Japan and Canada, could very well set a higher price benchmark in the meantime. Once a price is set in all these at-risk markets, the effect of accepting a relatively low price in France is down tapered. Of note, England and Germany have mechanisms to set higher list prices at launch via the Voluntary Scheme for Branded Medicines Pricing and Access (VPAS) and the year 1 free price, respectively. Something France could draw inspiration from to minimize patient access delays in a context of IRP.

5. Lack of pull through

In a commercial insurance healthcare environment such as the US, it is the job of insurers (sometimes with the help of pharma’s value communication efforts) to communicate to the doctor which drug presents better value for money vs the alternatives. It’s sometimes called the ‘pull through’. In France, there is no such prescriber guidance on cost-effectiveness. The hypothetical product that would gain accelerated access in exchange for a discount would remain a well-kept secret, and doctors would continue to write the older and more expensive product. This is a missed opportunity to realize immediate savings. England’s National Health Service offers some level of pull-through, as local payers usually communicate to prescribers the agreements they have made with manufacturers. Germany’s sickness funds also have control mechanisms in place to ensure doctors favour the most cost-effective options. But in most markets, the benefit (higher uptake) that comes in exchange of the price discount required for fast-track reimbursement is often too weak to justify such a difficult decision.

6. Conflicting messages

Fast-track access routes are triggered by manufacturers. In their application, they must acknowledge the fact that their product does not offer an incremental therapeutic value, and that they are ready to offer payers a discount in exchange. The value message would then be ‘Product X does not offer more life-years or QALYs than the others, but it does it for cheaper’. This would, as you can imagine, cause a massive clash with corporate communications guidelines. Companies tend to be in denial when it comes to their product’s true incremental value, even if they launch the nth product in the same class. And they can have a dystopian view on benefits seen as marginal by payers, such as new formulations or route of administration. And corporate messages revolve around innovation and value creation, which does not align well with cheaper products. One notable exception was EQRx, a company who admitted they would develop more affordable ‘me-too’ products for cancer. But they now have been acquired and dismantled for parts.

A Triple-lose ecosystem

Fast-track reimbursement options in Europe remind us of the constant trade-off faced by manufacturers at the point of marketing authorization: They have to choose between launching now at a sub-optimal price vs launching later at the desired price, or a price that comes close to it. Recent product launches clearly show that pharma preference is for the latter. This is counterintuitive given that delaying the launch has negative consequences not only for patients but also for manufacturers:

  •  Less time with market exclusivity as the price negotiation will not push back the date of patent loss. In turn this means reduced peak sales potential, as peak sales generally happen at the point of loss of exclusivity.
  • The risk of seeing other competitors launch first.
  • Lower price benchmarks, for instance in the case of genericization of comparators,

This situation exemplifies how Europe does not incentivize early launch or higher patient volumes in exchange for lower prices. We see this lack of incentivization in other areas as well, as described in our blog on how Europe is missing the boat on ATMPs. Manufacturers invariably conclude that these downsides need to be offset by the upside of a higher price. And unless something changes, there will be little incentive for manufacturers to change their behaviour.

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