Joint clinical assessment and general pharmaceutical legislation in the EU

The pricing and reimbursement landscape in Europe is evolving rapidly, with the implementation of joint clinical assessments (JCA) looming ahead. While primarily affecting European launch strategy, this will also inevitably impact strategy at a global level.

Manufacturers will need to understand and evaluate the potential consequences of JCA as part of their early pipeline planning, taking into account potential impacts such as the shift towards considering Europe as a single market requiring a single launch as opposed to staggering launches across Europe in waves, the shortened timeframe between regulatory and reimbursement processes, and a reduction in manufacturers’ flexibility to define different market access goals in different European markets.

Another key change underway is the revision to the general pharmaceutical legislation (GPL) in the EU. Some of the key objectives of this revision are to eliminate single market access and incentivize manufacturers to launch products in all European markets, to secure the supply chain and to improve the affordability of innovative medicines, including combination regimens.

Taken together, these changes seek to reduce disparity of access across the member states of the EU and shorten time to patient access. However, a one-size-fits-all approach may not be appropriate for orphan drugs and advanced therapy medicinal products (ATMPs), and may not be feasible for smaller manufacturers or manufacturers of medical devices.

 

 

The Inflation Reduction Act and its impact on the US pharmaceutical market

In the US, the Inflation Reduction Act 2022 (IRA) introduced significant changes to the pharmaceutical industry and broader healthcare delivery landscape. Its main drug pricing provisions were enacted to reduce drug costs to the Medicare program, following a heightened focus on cost-containment. While provisions primarily apply to Medicare, spillover effects to other payer markets are expected. Provisions are drug pricing and costs include price negotiation for drugs with the highest Medicare spending, the redesign of the Part D benefit, which significantly changes stakeholder financial liabilities, and mandatory rebates for drug prices that increase at a higher rate than inflation. These provisions introduce new pressures and incentives for life sciences companies, with resulting implications for a manufacturer’s launch pricing strategy and pipeline investment decisions.

In addition, the IRA has formalized an evidence-based pricing approach in the US market, increasing the need for rigorous real-world evidence generation.

 

 

Organizations such as the Institute for Clinical and Economic Review (ICER), which conducts health technology assessments (HTA) and provides recommendations for appropriate, cost-effective pricing, may seek to leverage this opportunity to increase its influence in the US market. Since the passage of the IRA, ICER has adopted a new framework and commented on the first round of IRA negotiation with its own report on the evidence for two negotiated drugs. ICER also releases annual reports on drugs with “unsupported” price increases that increasingly draw industry’s attention. Prior to the IRA, the Centers for Medicare & Medicaid Innovation Center had proposed a model to lower drug costs in the US by tying prices to those in ex-US markets. That proposed model was rescinded prior to the passage of the IRA, representing a shift in the US approach to containing drug prices.

The way the pharmaceutical industry prices drugs and negotiates rebates and discounts with individual health plans and pharmacy benefit managers in the US continues to evolve as policy across the market shifts. Pricing strategy, indication launch sequencing, relative focus on commercial patient population, investment priorities—all of these are areas of uncertainty that stakeholders need to learn to navigate soon. Recent policy changes such as the IRA raise questions about whether the US will continue to be the primary market for the pharmaceutical industry and the main arena for research and innovation.

 

 

Pharmaceutical industry developments in the Asia-Pacific (APAC) region

Across the APAC region, policy developments are evolving to support faster launch of innovative treatments, improved incentives for pediatric and rare diseases, and increased overall transparency in decision-making.

For instance, the 2024 drug pricing reform in Japan includes measures to accelerate market entry for innovative drugs and improve flexibility to enable more pediatric drugs to receive premium pricing. Another recent development in the region is the ongoing HTA policy and methods review in Australia, expected to conclude in April 2024. With this review, Australia is exploring ways to:

• Enhance responsiveness to new medical advancements and increase transparency in decision-making processes
• Expand the evidence base by incorporating real-world data (observational data) alongside traditional methods
• Incorporate broader value factors within the HTA framework, considering not just cost-effectiveness but also broader societal impacts.

The National Health Insurance plan (2024-2028) in South Korea aims to speed up approval and improve access to life-saving drugs and innovative treatments by shortening registration procedures and relaxing cost-effectiveness thresholds. Policies in China, meanwhile, continue to favor increased approval and adoption for treatments targeted towards orphan conditions.

Developing markets in the region are also increasingly becoming a key growth sector for manufacturers, not least because of their large population and expanding middle-class demographic with higher public and private insurance coverage. These markets are slowly making up ground in terms of access to innovative medicine, though they are still a long way behind the developed markets. For most, however, a considerable access gap with inadequate insurance coverage of innovative drugs is likely to continue to exacerbate equity issues.

Overall, APAC markets hold the potential to be a bright spot amid a global cost-containment drive, provided all the stakeholders come together to deliver on the promise of addressing affordability and access barriers.

 

Outlook: creating the connections for developing flexible and agile global launch strategies

In the wake of the financial burden that emergency COVID-19 measures left on healthcare systems worldwide, many markets across the globe are introducing far-reaching policy changes with the aim of cost-containment. Manufacturers need to monitor these ongoing policy changes carefully and be prepared to adapt traditional ways of working to ensure that patients can access and benefit from new and innovative treatments across the globe.

In Europe, changes at both the registrational and value assessment level mean that manufacturers cannot tailor pricing and reimbursement strategies per market but must instead approach the EU as a single market. JCAs could result in delayed patient access in certain markets, and changes to the GPL are likely to drive the price potential down for specialized treatments like ATMPs and orphan drugs, as well as combination regimens.

In the US, life sciences companies may need to adjust their research and development decisions and asset mix to minimize risk from exposure to the IRA provisions, and should consider evolving launch pricing strategies or shifting indication sequencing approaches to reduce the impact of the IRA and other cost-containment changes.

While APAC markets have made progress in speeding up access to treatments and encouraging reimbursement for innovative medicines that address critical unmet needs, affordability remains a hurdle in developing countries where out-of-pocket payments are the norm. The region offers significant potential for drug developers to bring treatments to market, but addressing affordability and access challenges will require continued market-shaping policy work and stakeholder collaboration.

With parallel policy changes happening in multiple key markets, which have the potential to switch up traditional launch sequencing and impact market access strategies, it is vital that manufacturers engage with truly global commercialization partners, such as Avalere Health, that have the cross-functional ability to join up the dots and develop flexible and agile global launch strategies.