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Foto del escritorRamiro Gilardino

Do we pay too much for innovative drugs?

Actualizado: 16 jun 2021

Across low-to-middle income countries (LMICs) the objective to progress towards Universal Health Coverage (UHC) stemming from the commitment of all Member States of the United Nations to the Sustainable Development Goals (SDGs) can translate into either improving the health service coverage or the financial protection by increasing public healthcare expenditure.



However, 20–60% of the health expenditure in LMICs accounts for drugs, and the out-of-pocket health expenditure continues to increase, putting households at risk of impoverishment.


In a recent paper published in the Journal of the American Medical Association, Dr. Olivier Wouters from the LSE Health Policy Department wondered whether the high price of some of the innovative drugs was reasonable, and even considered whether pharmaceuticals companies ought to keep researching and developing new ones.

If somebody were to ask me: Do we pay too much for innovative drugs?My answer would probably be: "it depends." Depends on what?: On the value, willingness to pay,and affordability (ability to pay) of these drugs.


The value is what someone is (actually) willing to pay or forgo to obtain something (opportunity cost). Given the difficulty in measuring the value in health and linking it with the price, the latter continues to be the main driver for technology adoption in many parts of the world, especially the LMICs.


Willingness to pay


The decision pertaining to which health technologies to fund is one that involves multiple phases, methodologies, criteria, stakeholders, and organizations that are often represented in the traditional Health Technology Assessment (HTA) process. Since HTA is still a new or emerging mechanism across LMICs, it entails that many of these countries lack structure and processes, and even that its recommendations are not bound to coverage and reimbursement decisions. Being the budget caps represent an additional driver for the access.


Affordability


LMICs raise concerns triggered by the pressure for increased financial risk protection mechanisms financed collectively to reduce out-of-pocket expenses and guarantee access to innovative health technologies. Even in many of these countries where health services are generally accessible and affordable, the governments are struggling with the increasing healthcare costs and the growing health needs of their populations.


Over the last decades, pharmaceutical innovation provided new treatment options, reduced the morbimortality, and improved the lives of billion people globally. For example, from 2000-2010 vaccines and immunization eliminated a half-million deaths from preventable diseases.


As innovation brought a substantial contribution to society, either by health or economic gains, perhaps, I would rewrite the question: Is it worth paying for these value-added drugs?

Several high-income countries and some LMIC have built capacities to characterize the health benefits and isolate the value of innovation. This is achieved either by implementing Value Assessment Frameworks (VAF), Multi-Criteria Decision Analysis (MCDA), or building health benefits packages.


Other countries have taken a step forward by considering the opportunity cost of alternative use of limited resources. Considering a Value-Based Approach might support decision-makers when financial constraints challenge access to health technologies.


Employing value attributes beyond the Quality-Adjusted Life Years (QALY) and net costs would support a broader perspective in the HTA process. If caregiver burden, scientific spillovers, and social value are incorporated, this perspective would ultimately be benefiting more people. The process could be further improved if different organizations collaborate to pursue a common goal: ensuring the efficient and equitable use of health resources by using common evaluation frameworks.


Prioritized health services baskets, also called “health benefits packages” (HBPs) have been shown to be a cost-effective method to improve progress towards UHC by ensuring delivery of services (eg, pharmaceutical products, medical devices, diagnostics tests, and diagnostic/therapeutic procedures), while reducing costs that could impoverish patients.


As HTA is at different levels of implementation across LMICs, HBPs might find a promising role in informing what new technologies to incorporate according to the local healthcare needs as well how to standardize innovative technologies incorporation to avoid inequities and inequalities in their access.


If the question is how to sustain the affordability: policymakers in many LMICs are considering a number of policy ammunition tactics for this purpose, including price negotiation of healthcare commodities and the implementation of Management of Entry Agreement (MEA).

MEAs might grant early access to innovation while the outcomes are measured. Considering the financial agreement route, it is worth noting increasing attention in the indication-specific pricing or differential pricing across clinical indications.


By the end of 2019, this topic was presented in two rounds of decision-making meetings (ISPOR 2019 Latin America, Bogotá Colombia and P4H Private Sector Participation in Health Financing meeting, Shanghai, China) while financial agreements followed by hybrid schemes were the most common type of MEA in aware. Among the two rounds of discussions, there was consensus on the following statements:


MEAs should be a joint effort initiated by the payer (either public or private) and the technology producer.

The lack of financial incentives (eg, pay for performance), lack of administrative and clinical data collection or a strong set of data, and internal government legal barriers could possibly constitute points of conflict for implementation.

In sum, I would say that understanding the value and social benefits of innovative medicines could improve coverage and reimbursement decisions.


These require adequate regulatory and legal frameworks that ensure transparency of the process and collaboration among payers, technology producers, civil society, and governments.
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