Friday, March 18, 2011

Industry Still In The Dark About UK Value-Based Pricing

A few of the light bulbs in the room in which the Association of the British Pharmaceutical Industry (ABPI) held its March 14 press conference on value-based pricing (VBP) refused to shine. They were not alone in failing to shed any real light on even the broadest aspects of a new and wholly untested pricing system set to come into force in less than three years.

The idea is that VBP will take into account wider benefit measures than are currently used, including societal ones, in order to improve access to high quality medicines whilst ensuring that industry continues to enjoy healthy profits. But while interested parties seem to understand (and agree on) the aims of the UK government's VBP proposal - which is out to public consultation until March 17 - all sides, the government included, appear, at least as far as this blogger could tell from the aforementioned press conference, in the dark as to how it should function.

And somewhat disconcertingly for industry, ABPI Director General Richard Barker said that there is no guarantee as yet that the government won't impose random price cuts, of the variety seen in most other European countries during 2010, either before or after VBP arrives. He instead exclaimed how "striking" it was that "while other European countries have, as part of their cost controls, already introduced arbitrary price reductions for medicines, the U.K. hasn't."

We know already that the new pricing system will include a cost-effectiveness element, a disease burden element and an innovation element. But their relative weighting and relationship to one another is still unknown. And although the National Institute for health and Clinical Excellence will be an important agent in assessing cost-effectiveness, how and by whom the other two elements will be determined is as yet unclear. So, therefore, is what happens when the "value-based" price provided by the assessing authorities (whoever they may be) does not conform to the price proposed by the industry.

Light has also yet to be shone on the thorny question of precisely how the VBP scheme will fit in with another element of the government's health care overhaul: the granting of commissioning powers, budgetary responsibility and hence huge prescribing influence to a series of GP consortia across the country. On paper this risks leading to an even worse case of "postcode lottery", the term used to refer to variations in treatment access across the country, than is currently the case. Instead of NICE dishing out nationwide reimbursement advice, each region may choose to fund different drugs.

There was also little sign of forward momentum in establishing precisely how the new VBP system will provide the necessary incentives for innovation. There are two fundamental issues that need to be defined: the cost of incremental - or what Barker termed "progressive" - innovation; and how to assess the cost-effectiveness of a new technology against a rock-bottom priced generic.

Here's a suggestion: why can't the UK just cherry-pick the best of value assessments of drugs from the rest of Europe? They could pluck, for instance, societal aspects from Sweden, emulate France's consideration of innovation, and pick some of Germany's assessments of value which the ABPI considers to be quite advanced. The ABPI claims that it's looking at other nations' systems as they help design the UK's VBP ... but few concrete details were forthcoming.

Ok, so there's still two and a half years to run before VBP is slated to arrive. And the government has bigger fish to fry right now: it's still struggling against opposition to its broader health care system reform proposals, which is probably why it hasn't given industry much to work with.

But, at the risk of delaying the arrival of a system that appears fair in theory - and certainly better for industry than most alternatives - we would have expected at least mini-steps of progress by now. The ABPI appears to have missed an opportunity to seize the bull by the horns and lay out what it would like to see in a VBP scheme. That, at least, would have been a reason to hold a press conference. -- By Faraz Kermani

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