Valery Paris, analista senior de Política Sanitaria, División de Salud, de la Organización de Desarrollo y Cooperación Económica (OCDE), ha destacado en su ponencia la importancia de considerar en la asignación de los precios de los medicamentos “los beneficios más allá del sector de la salud”, en referencia al coste de oportunidad y a otras variables económicas de lo que supone la entrada de un medicamento en un determinado mercado. París también ha señalado la dificultad de establecer una política común de asignación de precios en los diferentes países europeos: “Los países no siempre llegan a un acuerdo, por ejemplo, en el grado de innovación de nuevos productos”.

1. PHARMACEUTICAL PRICING
IN EUROPEAN COUNTRIES
Valérie Paris – OECD Health Division
Madrid, January 22, 2015

2. • Ensure affordable and equitable access to
effective medicines
• Contain cost growth to sustainable levels
• Ensure efficient use of resources today &
encourage innovation for the future
European countries share common goals in
pharmaceutical policies
2

3. Main source of basic health
care coverage
Countries
Non-
contributory
government
scheme
National health
system
Denmark, Finland, Iceland, Ireland,
Italy, Norway, Portugal, Spain, United
Kingdom, Sweden
Health
insurance
system
Single payer Greece, Hungary, Luxembourg,
Poland, Slovenia
Multiple insurers,
with “automatic”
affiliation
Austria, Belgium, France
Multiple insurers,
with choice of
insurer
Czech Republic, Germany, the
Netherlands, Slovak Republic,
Switzerland
They organised coverage in different ways
(OECD-Europe)…
Source: OECD Health system characteristics Survey 2012 and Secretariat’s estimates 3

4. • Benefit basket of medicines defined at central level for
drugs used in outpatient care (NHS, single SHI or
several health insurers).
• Most countries define « positive lists » of reimbursable
drugs. Exceptions: the UK, Germany
• Almost all countries impose user charges with exemptions
for vulnerable population and caps on copayments
• User charges are usually higher than for other types of health
services
… but have similar ways to define which drugs
are covered by public schemes
4

5. Pharmaceutical expenditure accounts for 0.6 to
2.5% of GDP in 2012 (or nearest year)
51,3
1,1
0,6
2,5
2,3
2,1
2,0
1,8
1,8
1,8
1,8
1,8
1,6
1,6
1,6
1,5
1,5
1,5
1,5
1,5
1,4
1,3
1,3
1,2
1,2
1,1
1,0
0,7
0,6
0,0 0,5 1,0 1,5 2,0 2,5 3,0
Iceland
Switzerland
Norway
Hungary
Greece 1
Slovak Republic 1
Croatia
Lithuania 1
Portugal 1
Belgium
Slovenia
France
Romania
Czech Republic
Germany
EU25
Spain
Ireland 1
Italy 1
Latvia
Poland
Austria
Estonia
Cyprus
Finland
Sweden
Netherlands
Denmark
Luxembourg
Public
Private
% GDP

6. … without accounting for pharmaceuticals
in inpatient setting
Source: OECD Health Statistics, 2014.
0,0% 5,0% 10,0% 15,0% 20,0% 25,0% 30,0% 35,0% 40,0%
Australia
Germany
Korea
Estonia
Czech
Republic
Spain
Israel
Portugal
In-patient as a share of Total Pharmaceuticals
Pharmaceuticals in an inpatient setting as a share of total pharmaceutical spending, 2012 (or
latest year)

7. The wealthiest countries are not always
those who spend the most
7
AUT
BEL
HRV CYP
CZE
DNK
EST
FIN
FRA
DEU
GRC1
HUN
ISL
IRL1
ITA1
LVA
LTU1
LUX
NLD
NOR
POL
PRT1
ROU
SVK1
SVN
ESP SWE
CHE
0
100
200
300
400
500
600
0 10.000 20.000 30.000 40.000 50.000 60.000 70.000 80.000
Totalpharmaceuticalspendingpercapita(EURPPP)
GDP per capita in EUR PPP

8. 8
Most countries use international
benchmarking to determine prices
Bulgaria
Romania
Turkey
Croatia
Latvia
Hungary
Poland
Lithuania
Estonia
SlovakRepublicPortugal
Greece
CzechRepublicSlovenia
Malta
Cyprus
Spain
Italy
UnitedKingdomFrance
Iceland
Finland
Belgium
Germany
Denmark
Sweden
Netherlands
Ireland
Austria
Switzerland
Norway
Luxembourg
Bulgaria Lowest
Romania Lowest
Turkey Lowest
Croatia Lower than average
Latvia 3rd lowest and <LT,EE
Hungary Lower than average
Poland n.a.
Lithuania 95% of average
Estonia + country of orgin
Slovak Republic Average of 3 lowest
Portugal Average
Greece 3 lowest
Czech Republic Average of 3 lowest
Slovenia 95% of average
Malta Average
Cyprus Average
Spain Lowest
Italy
United Kingdom
France Similar
Iceland Average
Finland Not defined
Belgium Average
Germany Not defined
Denmark
Sweden
Netherlands Average
Ireland Average
Austria Average
Switzerland Average
Norway Average of 3
Luxembourg Country of origin
Source: PPRI Network, 2014, provisional data
EU member states included in Euripid database

9. • United Kingdom: PPRS 2014 = cap on return on sales
(6%) and return on capital (21%) for NHS sales + value-
based pricing (flexible price, patient access schemes)
• Denmark: free pricing but reimbursement status can be
denied if the price is « unreasonable » by comparison to
the price of comparator drugs.
• Sweden: free pricing but medicines must be cost-
effective to be covered (central decision not binding for
county councils)
Only 3 European countries do not look at
what other countries’ prices
9

10. Many countries use price linkage for
generics
10
No price linkage Price linkage
Denmark
Germany
Iceland
Malta
The Netherlands
Sweden
UK
Austria
Latvia
Czech Republic
Estonia
Finland
France
Greece
Hungary
Norway
Slovakia
Slovenia (only if ERP impossible)
Spain
Switzerland
Source: PPRI network, 2013

11. Many countries use « reference prices »
for generic groups or larger clusters
11
Source: Dylst, Vulto, Simoens, Reference pricing systems in Europe:
characteristics and consequences, GaBI Journal, 2012;1(3-4):127-31, and OECD
estimates
 Medicines with RP accounts from 5% to 75% of volumes

12. WHERE ARE WE WITH
“VALUE-BASED PRICING”?
-
CONCLUSIONS OF THE OECD 2013 STUDY
12

13. Background: « Value-based pricing » recommended by national and
international organisations, envisaged in UK + recent changes in
Germany and France.
Objectives: Explore:
• How a sample of OECD Member Countries refer to “value” when
making decisions on reimbursement and prices of new medicines;
• How this value is assessed;
• Whether countries are willing to pay a price premium for innovation
• Which kind of innovations receives an extra premium;
• Whether specific rules apply for some medicines (orphan drugs, end
of life drugs, etc.)
The 2013 OECD study on value in
pharmaceutical pricing
13

14. Countries using formal
pharmaco-economic
assessment to inform
decisions on reimbursement
and/or pricing
Australia, Denmark,
Belgium, Canada,
Netherland, Korea,
Norway, Sweden,
United Kingdom
Countries using formal
assessment of the added
therapeutic value of new
products over comparators to
determine or negotiate price
premiums
Germany, France, Italy,
Spain, Japan
14
METHOD: Analyse of reimbursement and pricing
process in 14 countries (10 European)

15. METHOD : Sample of 12 Products,
marketed in 2004-2011
Bevacizumab: Cancer, several indications (breast, colorectal, lung, kidney)
with different therapeutic value
Cetuximab: Cancer, 2 indications (colorectal, head and neck)
Sunitinib: Cancer, oral, several indications (GIST, renal cell, pancreas)
Cabazitaxel: Prostate cancer
Dabigatran: Oral anticoagulant and prevention of stroke
Fingolimod: Multiple sclerosis
Eculizumab: Orphan drug
Boceprevir and Telaprevir: Hepatitis C
Ranibizumab: Age-related macular degeneration
Sitagliptin, Type 2 diabetes
Sitagliptin-metformin, Type 2 diabetes
Illustrative of different situations (severity, efficacy, cost-effectiveness,
social impact, size of population target, etc.), not representative of the
whole market
15

16. How is therapeutic value assessed?
Clinical outcomes
Therapeutic area Outcomes considered
Multiple sclerosis Annual relapse rate (all countries)
T2 lesions on MRI (NICE, England and CDR,
Canada)
Hepatitis C Sustained virological response (all countries)
Oncology
(gastrointestinal stromal
tumor; metastasic renal
cancer; pancreatic neuro-
endocrine tumor)
Time to tumour progress (all countries)
Progression Free Survival (all countries)
Risk of death for pancreatic tumor (pCODR,
Canada)
Overall objective response (tumor shrinkage) for
renal cancer (Spain)
Source: OECD survey on assessment and decisions for a sample of medicines.
• Final « endpoints » are preferred when available (i.e. survival)
• Intermediate and surrogate outcome are accepted (i.e. reduced cholesterol)
• Same clinical outcomes (from clinical trials) in all countries
16

17. • The unit of outcome in cost-utility analysis is the QALY: quality-
adjusted life year; it requires the measurement of “quality of life”
related to different health states
• Countries’ guidelines for economic evaluation often indicate a
preference for multi–attribute utility (MAU ) “generic” instruments
used in Randomised Clinical Trials;
• In practice: assessment reports use data provided by companies,
who use both generic MAU instruments and disease-specific
instruments which are more sensitive to specific outcomes
How is utility measured in countries using
economic evaluation?
Source: OECD survey on assessment and decisions for a sample of medicines.
17

18. • The perspective adopted is potentially influential on the price paid
• Several possible perspectives:
• Public payer only: considers costs (and savings) for public
payers for health system + social services where relevant (e.g.
England)
• All health care payers: including patients, families or private
complementary coverage (e.g. Belgium, France)
• Societal perspective: considers and monetizes all costs and
benefits for the society (cost-benefit analysis): preferred in the
Netherlands, Norway (limited), Sweden
• In our sample: public payers and direct costs only
What are the perspectives and methods adopted
for economic evaluation?
18

19. Observed for the sample of products studied:
• Comfort of use valued when it is likely to reduce costs
E.g.: The oral anticoagulant got a price premium over
competitors in some countries for its 1st indication but its price
was reduced when the second indication was approved (market
size x 4)
• No evidence that « innovation per se » is rewarded
• No evidence that recognition of wider societal benefits are
valued (even for the drug for multiple sclerosis)… but sample of
products is not representative
Not much consideration of « wider benefits » (beyond
clinical improvement) in our sample of products
19

20. • Only few countries have set an explicit threshold for the
incremental cost-per-QALY threshold (ICER) beyond which no drug
would be funded:
– NICE (England) set a range for the ICER threshold: from £20,000 to £30,000,
with guidelines on how other factors should be taken into account to make
decisions within this range.
– Netherlands: The Council for Public Health and Health care suggests an ICER
threshold value of €80,000 / QALY, but orphan drugs accepter beyond this
value.
• “Implicit thresholds” can be revealed by past decisions
• Accepted ICER vary across therapeutic areas, are higher for
life-threatening disease, end-of-life and orphan dugs
• No consensus on how this threshold should be defined
Setting limits? – ICER threshold
20

21. Setting limits? – budget impact
• Explicit consideration in the process:
– Norway: Drug agency consults MoH for any decision
with BI > NOK 5 mlo in year 5.
– Italy: impact on decision not clear
• No explicit consideration:
– Sweden
– France: by Pricing Committee, during negotiations
• In our 2013 study, budget impact did not seem to play a
big role in reimbursement decision, but things have
changed with the new Hepatitis C drug (reimbursement
restrictions).
21

22. Specific rules for severe diseases / orphan drugs?
• Severity
– Considered e.g. in France, the Netherlands (but no « formal »
weighting)
– NICE: excluded the principle of « rule of rescue » in 2008 guidelines,
but revised its position in 2009 for end-of-life treatments. It is possible
to recommend a treatment with an ICER > 30 000 GBP/QALY if:
• The treatment is indicated for patients with a short life(expectancy
(<24 months);
• The treatment extends life by at least 3 months;
• The treatment is indicated for a small patient groups.
• … and then the Cancer plan provided additional funds
• Rarity: agencies more flexible on the level of evidence + price
advantages + « rule of rescue » and special programs
22

23. How do countries rate “added therapeutic
value” and what are the consequences?
Country Assessment / Classification Implication
Countries using
Economic
evaluation
Assessment of the number of QALY
gained
Influences the methods used for economic evaluation
Belgium
Reimbursement
commission
Class 1: added therapeutic value
Class 2: analogous or similar
therapeutic value
Class 3: generics/copies ( =same
active ingredient)
Class 1 drugs are entitled to negotiate a price above
the comparator’s price
France
Transparency
committee
ASMR I: Major improvement
ASMR II: Significant improvement
ASMR III: Modest improvement
ASMR IV: Minor improvement
ASMR V: No improvement
Medicines with ASMR I to III are entitled to a price
premium, determined by the manufacturer and
benchmarked to foreign prices. Idem for medicines
with ASMR IV with limited market potential.
23

24. How do countries rate “added therapeutic value” and
what are the consequences?
Country Assessment / Classification Implication
Germany
Federal joint
committee
(reimburseme
nt)
Considerable additional benefit
Significant additional benefit
Small additional benefit
Additional benefit but not
quantifiable
No evidence of additional benefit
Less benefit than comparator
Medicines with some additional benefit are not
clustered in reference price groups and are given
price premium over comparators. The degree of
innovation is referred to in the negotiation process.
Italy Important,
Moderate
Modest innovation
Price premium for innovative drugs (no formal rule)
The
Netherlands
Annex 1A: similar therapeutic value
Annex 1B: added therapeutic value
Annex 1B drugs are entitled to a price premium
(evidence on Pharmacoeconomics and budget
impact required)
Spain No formal assessment/classification Price premium of 10-20% if a drug has added
therapeutic value after comparing the price
24

25. Countries do not always agree on degree of innovativeness
and impact on price is unclear. Ex Fingolimod
Country and
decision date
Added therapeutic value Cost per QALY Price at Market
Entry (28 caps x
0.5mg)
Reimbursement
Australia
1/07/2011
Incremental benefit
confidential (!)
AUD 15,000 to
45,000
AUD 2 312.98 (2)
(USD 2 478,03 )
Pricing Arrangements
(confidential)
Belgium
11/25/2011
Class 1 (added therapeutic
value)
EUR 18.803
/QALY
EUR 1.690,71
(USD 2 236,64)
Reimbursement with
restrictions (age,
EDSS score)
France
10/12/2011
ASMR IV
(minor improvement)
EUR 1739
(USD 2 393,91)
Covered at 65%
Germany
3/29/2012
No or small additional
benefit depending on sub-
population
Italy 8/11/2011 Potential innovation EUR 1800
(USD 2 481,84)
Covered only for
specific patients, for
24 months
Netherland
23/01/12
Same than Natalizumab
and lower than interferon
beta and Glatiramer
USD 2 379 Covered only for
specific patients
Sweden
25/08/2011
No added therapeutic value SEK 15,484
(USD 2 451,63)
General
reimbursement.
United Kingdom
11/04/2011
incremental QALY ~0.7 GBP 25,000-
33,000 *
GBP 1 470
(USD 2 355,93)
Recommended after
failure of beta
interferon

26. • Used to address:
– Uncertainties about clinical efficacy or effectiveness:
e.g. coverage with evidence development, registries
– Uncertainties about cost-effectiveness : performance-based
agreements, linking price to actual performance (for individuals
or for a group of patients treated)
e.g. Company must pay back part or all costs of treatment in case
of failure or pays the first cycles of treatment whose continuation
is publicly funded in case of success
– Uncertainties about budget impact : financial agreements aiming
to control budget impact and ensure value-based pricing
e.g.: cap on spending per patient or dose-capping.
• Also used for cancer medicines with variable ICER / by indication
(price discrimination across indications)
• Italy and the UK are big users
Countries use “product-specific agreements” for
some drugs or indications
26

27. A few examples
Cetuximab NICE: PAS for first line treatment of metastatic colorectal cancer (MCC): 16% rebate
on the cost of treatment by patients under the form of free stock
(other indications recommended without PAS OR not recommended)
SCM (Scotland): PAS for the treatment of metastatic colorectal cancer in combination
with chemotherapy for a selection of patients: undisclosed discount on acquisition costs
AIFA (Italy): Risk-Sharing for treatment of metastatic colorectal cancer (MCC): 50%
reimbursement in case of therapeutic failure within 2 months/ 8 weeks of treatment and
Payment by results for the treatment of recurrent and/or metastatic squamous cell cancer
of the head and neck: full reimbursement in case of therapeutic failure within 6 weeks of
treatment.
Sunitinib NICE: PAS for treatment of advanced or metastatic renal cell carcinoma (RCC) or gastro-
intestinal stromal tumours (GIST), the manufacturer offers the first cycle of treatment with
sunitinib free of charge to the NHS.
SCM (Scotland): PAS for treatment of gastrointestinal stromal tumour (GIST):
Each patient would receive the first 5 cycles of sunitinib free of charge.
AIFA (Italy): Cost sharing for treatment of advanced or metastatic renal cell carcinoma
(RCC): 50%discount for the first 2 cycles of treatment;
-Sunitinib is recommended for the treatment of gastrointestinal stromal tumour (GIST)
27

28. • In principle, the answer is « yes » but payers have to
make sure they are:
– appropriately used (to address uncertainty and/or
risks and not just to obtain discounts on list prices)
– well designed (low adm. costs, collection of
information on use and outcomes).
• Observed information on use and health outcomes
should be public.
• Public funding of medicines through MEAs is very
difficult to “reverse” unless serious adverse effects are
observed (public “loss aversion). Do they reduce payers’
purchasing power?
Can “managed entry agreements” help
to move towards value-based pricing?
28

29. • There seems to be a link between the price premium granted
and added therapeutic value but it is impossible to say “how
much does a QALY worth” – even within a given country
• Countries do not always agree on the level of “innovativeness”
of new products
• The price of a QALY (or ICER accepted) varies across
therapeutic areas
• Benefits « beyond the health sector » are most often not
considered
• International benchmarking and volumes are important
determinants of prices
Conclusions: are prices determined by the
“value” of new products?
29

30. Conclusions: are prices determined by the
value of new products?
• There seems to be a link between the price premium granted and
added therapeutic value but it is impossible to say “how much does a
QALY worth” – even within a given country
• Countries do not always agree on the level of “innovativeness” of
new products
• The price of a QALY (or ICER accepted) varies across therapeutic
areas
• International benchmarking and volumes are important
determinants of price
• Benefits « beyond the health sector » are most often not considered

31. 31
Contact: valerie.paris@oecd.org
Read more about our work Follow us on Twitter: @OECD_Social
Website: www.oecd.org/health
Newsletter: http://www.oecd.org/health/update
Pharma working paper:
http://www.oecd.org/health/valueinpharmaceuticalpricing.htm
Thank you!

32. Parallel trade
32
0,0% 0,7%
1,0% 1,2% 1,3% 2,0%
2,7%
7,0%
10,7%
11,8%
12,0%
24,3%
0,0%
5,0%
10,0%
15,0%
20,0%
25,0%
-
500
1.000
1.500
2.000
2.500
3.000
3.500
Commerce parallèle (en M€) (échelle de gauche)
% du marché ville (échelle de droite)

33. Households bear 17 to 60% of drug costs in
OECD countries (incl. self-consumption)
0,4%
4,2%
0,3%
68,1%
4,0%
1,2%
65,4%
6,3%
58,3%
16,2%
55,0%
50%
49,2%
1,6%
1,9%
34,6%
78,0%
71,4%
73,4%
0,638
65,4%
68,9%
66,8%
67,6%
0,2%
64,3%
62,5%
54,6%
55,9%
55,8%
55,0%
46,2%
46,9%
42,1%
37,5%
3,2%
3,3%
3,9%
0,5%
25,5%
6,2% 4,4%
0,5%
29,8%
19,9%
17,2%
26,3%
29,0%
0,284
30,6%
27,9%
17,3%
31,9%
32,3%
35,5%
37,5%
38,4%
41,7%
37,6%
43,6%
44,3%
42,9%
49%
44,6%
38,5%
45,7%
54,7%
59,8%
32,3%
0,0%
10,0%
20,0%
30,0%
40,0%
50,0%
60,0%
70,0%
80,0%
90,0%
100,0%
General government Social security funds Private insurance Private households out‐of‐pocket exp. Other
Source: OECD (forthcoming) Measuring health coverage 33

34. Spending per capita has decreased (in real term) in
most European countries since the 2009.
10,0
0,9 1,3 1,6 2,2
-0,6
-0,3
3,3
8,5
8,0 8,0
3,4 3,7
1,9 2,4
3,1
1,7
4,8
3,1
2,0
4,6
1,8 2,2
4,9
10,2
2,5
-0,2
1,2
-12,4
-7,2
-6,1 -6,1
-5,2
-3,9 -3,5 -3,3 -2,9 -2,9 -2,4 -2,2 -2,2 -1,7 -1,6 -1,3 -1,3 -1,0
-0,4
0,1 0,9 0,9
1,8
3,2
6,1
-4,9
-1,2 -1,0
-15
-10
-5
0
5
10
15
2000-2009 2009-2012
Annualaveragegrowthrate(%)
• Including medical non-durables.
• Source: OECD Health Statistics 2014, http://dx.doi.org/10.1787/health-data-en; Eurostat Statistics Database for non-OECD
countries.
Average annual growth in pharmaceutical expenditure* per capita, in real terms, 2000 to 2012 (or nearest year)