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To: John McCarthy who wrote (281)	5/5/2010 10:34:20 AM
From: John McCarthy	Respond to of 421

Charging schemes: Price hangs on patient outcomes By Andrew Jack Published: May 4 2010 00:02 \| Last updated: May 4 2010 00:02 +++++++++++++++++++++++++++++++++++++++ LUCENTIS - MONEY BACK GUARANTEE +++++++++++++++++++++++++++++++++++++++ A dozen variations on such outcome-based schemes have since been introduced in the country, ranging from money-back guarantees on drugs to free treatment beyond an agreed number of paid-for doses, such as Lucentis for age-related macular degeneration – an eye disease that causes loss of vision. +++++++++++++++++++++++++++++++++++++++ When the UK government’s medicines advisory body expressed doubts nearly a decade ago about the value of using several new drugs for multiple sclerosis, the Department of Health came up with a ground-breaking compromise to avoid the political backlash. It proposed an experiment by which it would pay for the medicines – Avonex, Betaferon, Rebif and Copaxone – at a discount to the manufacturers’ prices, on condition that their effects were monitored closely. If they performed much better or worse than initially claimed, the price would be modified accordingly. The government’s advisory body – the National Institute for Health and Clinical Excellence (Nice) – has been keenly watched around the world for its pioneering efforts to ensure new drugs offer cost as well as clinical benefits. So has the multiple sclerosis “risk sharing scheme” itself. On paper, it offered a tempting solution to the uncertainties of assessing innovative treatments before significant data have been collected in ordinary patients, rather than the smaller number recruited to the more artificial set-up of a trial. But the experience, in practice, is a cautionary tale for healthcare systems everywhere seeking better value for money from pharmaceutical companies, by taking innovative approaches to pricing that are more closely linked to patient outcomes. It took from 2002 until 2005 before 5,500 patients were recruited into the MS scheme, and until 2007 for the first evaluation phase to be completed. The results were only finally made public in the British Medical Journal at the end of last year. They were inconclusive, with the authors arguing it was too soon to judge whether or not the drugs had provided value. No changes in pricing were recommended. Some researchers who followed the programme questioned its value from the start. They argued it was ethically impossible to exclude MS patients, which meant it was difficult to establish a “control” group not taking the new drugs, against which to measure their impact. In the period since, critics have said that the scheme locked in an approach using drugs which have since become outmoded, while stalling the introduction of subsequent innovations. “There are serious questions about why this scheme has failed to deliver,” says Simon Gillespie, chief executive of the MS Society. “The Department of Health should face up to the reality that their scheme is not fit for purpose.” Yet pharmaceutical companies have since adapted and adopted many more innovative pricing schemes. “It is not uncommon for some classes of drugs to be effective in only one in three patients who take them,” says Steve Black, health systems specialist at PA Consulting Group, who cites anti-cancer treatments and psychoactive medicines. “We might have to spend tens of thousands before knowing whether a drug will have any effect.” In the UK, after Nice rejected Janssen Cilag’s drug Velcade for multiple myeloma – a cancer of the white blood cells – in 2006, the company agreed a risk-sharing scheme by which the NHS would pay only for that sub-group of patients in which it showed significant benefit. A dozen variations on such outcome-based schemes have since been introduced in the country, ranging from money-back guarantees on drugs to free treatment beyond an agreed number of paid-for doses, such as Lucentis for age-related macular degeneration – an eye disease that causes loss of vision. Elsewhere, a similar pattern is taking hold. Nathan Swilling, a partner at Simon-Kucher, a German consultancy, says risk-sharing for expensive new cancer drugs, such as Bayer’s Nexavar, has become all but obligatory in Italy. The drugs are offered at half the list price for up to three months, and then at the full price in the smaller group of patients who respond to treatment. In Germany, Novartis has agreed with two sick funds to offer refunds for patients who suffer bone fractures after taking Aclasta for osteoporosis. It believes its drug, taken once-yearly by injection, significantly improves outcomes by boosting compliance compared with alternatives requiring daily or weekly pills. One challenge is finding meaningful measurements to assess patients’ progress, and which can be credited directly to the drug under test. The risk to drug companies, is that once schemes are agreed, they spread to other markets, and become generalised discounts. But faced with the alternative – a growing reluctance on the part of health authorities to reimburse – companies increasingly accept that linking charges to outcomes is a price worth paying. Copyright The Financial Times Limited 2010. You may share using our article tools. Please don't cut articles from FT.com and redistribute by email or post to the web. Print articleEmail articleClip this articleOrder reprints ft.com