This presentation was made by Valérie Paris, OECD Secretariat, at the 6th meeting of the joint OECD DELSA-GOV network on fiscal sustainability of health systems held in Paris, on 18-19 September 2017

1. Valérie Paris, OECD
6th MEETING OF THE OECD JOINT NETWORK ON FISCAL
SUSTAINABILITY OF HEALTH SYSTEMS
OECD, Paris, 19 September 2017
A Look into the Future.
Advanced Health Technologies and
their budgetary Implications

2. Health technologies have generated health benefits
… and contributed to health care costs
0
50000
100000
150000
1960s 1970s 1980s 1990s
Spending per life year gained
(2002 USD)
65 years 45 years 15 years Newborn
Adapted from: Cutler, D., A. Rosen and S. Vijan (2006), “The Value of Medical Spending in the United States, 1960–2000”, New England Journal of Medicine, Vol. 355,
No. 9, pp. 920-927.
Longitudinal trends in the costs per year of life gained in four age groups in the United States
2
 Technology has improved health systems capacity to diagnose and treat
diseases and help patients
 Technological progress contributed by 20% to 70% of health spending
growth depending on estimates
 Health care costs have shown decreasing returns between 1960 and 1990

3. Technologies have different value for health systems
High-value
technology
(type A)
Process innovation
- Aseptic technique; Wound sterilisation
Low-cost, highly effective
- Aspirin and beta blockers
- Vaccines
- Public health and preventive interventions
High-cost, highly effective, clearly defined target population
- Antiretroviral treatment
- Cataract removal
- New-generation hepatitis C medication
Effective
technology with a
risk of expanding
use
(type B)
Effective for some patients, but broad application diminishes marginal and overall
benefit
- Diagnostic imaging
- Cardiac catheterisation and angioplasty
- Laparoscopic surgery
- Intensive care (end of life)
Low-value
technology
(type C)
Little evidence of effectiveness or low effectiveness
- Expensive substitutes (e.g. robot-assisted surgery for some indications)
- Spinal surgery in low back pain
- Many diagnostic tests
- Many high-cost cancer drugs
- Pulmonary Artery Catheterisation (PAC)
Source: Based on Chandra, A. and J. Skinner (2012), “Technology Growth and Expenditure Growth in Health
Care”, Journal of Economic Literature, Vol. 50, No. 3, pp. 645-680; and Chandra, A. and J. Skinner (2008),
“Technology and Expenditure Growth in Health Care”, NBER Working Paper, Cambridge, United States.
3

4. • Treatments are increasingly tailored to individual patients (precision
medicine)
• In 2015, 165 000 mobile apps were available (x2 since 2013) – not
all MD and most are not covered... but need to be reliable,
performant, safe and to guarantee protection of personal data. This
is not always the case.
• Combination products (drug+medical device; medical device + IT,
etc..) blur traditional lines between separate technologies
• Disruptive technologies (3D bio printing, IA) are arriving
4
New technologies are flooding the market, raising new
challenges for policy makers,

5. • More than 200 000 medical devices - about 4 500
new devices are approved in a given year.
• New products, which combine drugs and medical
devices or medical devise and digital tools
• Regulation of MD weaker than that of
pharmaceuticals (because of SME, short life-cycle).
• Performances of MD not really monitored after
market approval, only serious safety concerns.
• Yet, relative performances of competing medical
devices may be very different (e.g. hip prostheses).
5
Challenges raised by medical devices

6. 6
What can we do?
Harness health data to assess the performance
of medical devices in clinical practice...
… and better guide clinical practice and
inform coverage/disinvestment policies
Assess the potential of bundled and
outcome-based payments

7. What can we do? Promote a life-cycle
approach for HTA, coverage and funding
7
New medical device (and procedure)
Coverage, funding & reimbursement
Effectiveness – clinical utility
Review
Regulators
Payers
Evidence gathering & analysis
• Administrative/activity data
• Clinical , imaging and lab data
• Patient-reported data
• Cost data
• Registries
• Mortality data
Market authorisation
Safety - performance - effectiveness
Phased entry
Updating reimbursement
schedules & financing model
Governance
• Clear objectives and principles
• Transparency
• Independence
• Stakeholder engagement
Health information
infrastructure
• Legislative enablers
• Technical capacity
• Unique patient identifier
• Unique device identifier
• Electronic health record
• Human capital and expertise
CE
D

8. Challenges raised by pharmaceuticals
0
50
100
150
200
250
300
350
400
2000200120022003200420052006200720082009201020112012201320142015
Number of
orphan drug
designations/ap
provals
US designations EU designations
US approvals EU approvals
Source: Based on FDA Office of Orphan
Drug Products; European Commission.
Number of orphan drug designations
& approvals in the United States and
the European Union, 2000-15
8
• Medicines increasingly target small
populations
• ¼ of medicines approved in the US
are targeted therapies in 2015 (often
in oncology)
• Almost one half of medicines
approved in the US are orphan drugs.
• These drugs typically have high prices,
are often not cost-effective
• High prices compromise access

9. Health gains are not always
commensurate to price increases
• Launch list prices of new oncology
drugs in the US, adjusted for
inflation and for year of life saved,
have been multiplied by four in 20
years
• Oncology drugs account for 1/3 of
new active substances approved
annually in the US and 1/3 of
products in development
• New anti-cancer drugs are
generally not cost-effective at
« standard » cost-effectiveness
thresholds
 These trends compromise
access, efficiency (and
sustainability?) of health
spending
Launch price of an oncology drugs per life-
year gained, in 2013 USD, in the United States

10. What is the right price for innovative
medicines?
10
https://www.forbes.com/sites/matthewherper/2017/08/30/novartis-ceos-dilemma-is-475000-too-much-for-a-leukemia-breakthrough-
or-is-it-not-enough/#86f550556ec5
https://www.statnews.com/2017/08/31/475000-price-tag-new-cancer-drug-crazy-meh/

11. When is expensive too expensive? The price of the
first DAA for hepatitis C
Would countries have
reacted differently if
better prepared?
How will we react if a
miracle drug cures HIV or
if a useful drug can
• Sofosbuvir’s list price (84 000
USD/cure) at market entry
• Game changer for patients
• Unaffordable budget impact
• First experience of “rationing in
wealthy” countries’ and price
negotiations
• Record profit for the company
• Now: competition has reduced
prices

12. What can we do?
12
Reduce research and development costs (e.g.
harmonisation of approval standards)
Improve (joint) horizon scanning
Envisage cooperation in HTA / cooperation in negotiation
/ cooperation in procurement
Define clear , transparent and consensual criteria for
coverage or pricing and not depart from them
Increase transparency in pricing / Establish best practices
for managed entry agreements
Increase competition in on-patent markets (tendering,
bundled payments)
Exploit the potential of routinely-collected data to adjust
coverage conditions

13. Using health data can improve care
and build knowledge
There are obstacles to using health data
effectively in most countries
Better policy frameworks are needed to get
more out of health data
Harness the potential of health data is crucial

14. Countries are not all ready to use health data
Australia Austria
Canada
Chile
Croatia
Czech Rep.
Denmark
Estonia
Finland
France
Greece
Iceland
Ireland Israel
Japan
Latvia Luxembourg
Mexico
New
Zealand
Norway
Poland
Singapore
Slovakia
Spain
Sweden
Switzerland
UK
Eng.
UK N. Ireland
UK
Scot.
United
States
Datagovernancereadiness
Technical and operational readinessLow High
LowHigh
Source: HCQI Survey of Electronic Health Record System Development and Use (2016).
Data governance and technical/operational readiness to develop national
information from EHRs, 2016
14

15. 1. Establish national health data governance frameworks
• Encourage availability & use of health data to advance public policy objectives
• Promote privacy protection & data security
2. Harmonise frameworks between countries
• Enable multi-country statistical and research projects
OECD Council recommendations for health data governance

16. Pour plus d’information…
valerie.paris@oecd.org
www.oecd.org/sante
@OECD_Social