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In France, the value equation may change (a little)

A milestone event took place in France on July 10, when France’s healthcare industry strategic council CSIS met an agreement with the French Government to strengthen France’s appeal for HealthCare industries. The Government announced a long series of measures, some of them will impact the market access and pricing of pharmaceuticals and other healthcare products.

They may amount to anything between marginal but highly expected improvements of the system and a mini-revolution, like the much-debated reform of the evaluation methods carried out by the health technology assessment body HAS’s Transparency Commission (CT) – which still requires more work and was not part of the decisions.

Let’s focus on one specific aspect, which may modify the value equation in the short term.

The cheapest comparator in the therapeutic class will no longer be the sole price benchmark for ASMR IV products.

The Government is working on a new mission statement for the Pricing Committee (CEPS). In particular, they want to change the committee’s policies for products whose additional therapeutic value is found to be minor (ASMR IV). The objective is to allow the benefits of these products to be better taken into account, and the cheapest product will no longer necessarily be the only reference point in the committee’s negotiations.

What does this mean?

One of the well-known features of how authorities are setting the prices of new pharmaceutical products in France is the pricing according to medical value rule. In summary, it is a 2-step process.

  • At first, an HTA body, the CT grades the medical value of the product by way of stringent HTA review.  The grade is called “ASMR” which more or less translates into clinical/therapeutic improvement versus already existing alternatives, between level I (major improvement) and V (absence of medical improvement). The levels II to IV in-between relate to various levels of clinical improvements: important, moderate, minor.
  • The second step is the pricing negotiation with the CEPS, where the ASMR plays a major role.

Level V products get a price lower or at best on a par with products in the same therapeutic class (including generics).

ASMR IV products get a parity price or a very limited premium (depending on factors other than ASMR) over the cheapest available product.

One of the key issues for the industry is the disincentive to incremental innovation (e.g. new high performing galenic forms of already existing active ingredients). For manufacturers of these products, the choice lies between the worst of 2 evils:

  • Either heavily invest in comparative clinical trials, with the inherent risk of failure, in hope of getting the ASMR IV level, and be rewarded by … a very limited price reward
  • Or limit the clinical research investment, and be assured of getting a very disappointing price, despite the effort to invest in improving the product and the life of patients.

Observers of the French pharma pricing scene have noticed over the years a growing trend to squash the ASMR grades in the lower end, a majority of products getting the grades IV or V, few innovations getting III and the TC almost denying entirely access to the levels I and II. The year 2017 TC activity report shows that over 53 new medicines, only 13 were considered a therapeutic improvement: 11 minor (ASMR IV) and 2 moderate (ASMR III). This also means that 75% of the new products got the infamous “lack of improvement” grading.

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ASMR Ratings Granted by France’s Transparency Commission since 2008 as part of the Complete Appraisal Process – source: https://www.has-sante.fr/portail/upload/docs/application/pdf/2018-07/rapport_activite_commission_transparence_2017.pdf

Observers have also noticed the parallel trend in CEPS pricing practices over years, with average price premiums per ASMR level going downward, kind of a convergence to the bottom.

The Industry has long advocated for a better reward to incremental innovation products that have been completely crushed between the premiums granted to a small selection of highly innovative new chemical entities and the price erosion affecting older products, a way to generate funding for the newest most expensive innovations. It seems that they have now been heard… to some extent.

The experience with the CSIS has shown that there may be an ocean between announcements and the reality. Whether and to what extent the improved pricing situation for ASMR IV products – as well as the many other changes – will be enforced makes the industry cautious.