Value Based ReimbursementDo we want it? Do we already have it?

David Shum, PharmD, MBADirector, Reimbursement & Health EconomicsRoche Pharmaceuticals

CADTH SymposiumVancouver, April 2011

Agenda

1. Value based reimbursement – do we have it?

2. Benefits and challenges with our current VBR framework

3. Do we want it? Future considerations…

Disclaimer: Viewpoints expressed are of the presenter, not Roche or other organizations

The context – the business of pharmaceuticals

Ref: OECD 2008

Key Implications

Source: OFT

Agenda

1. Value based reimbursement – do we have it?

2. Benefits and challenges with our current VBR framework

3. Do we want it? Future considerations…

Disclaimer: Viewpoints expressed are of the presenter, not Roche or other organizations

What is value-based reimbursement?

•Canada, •UK•Australia•New Zealand

•Sweden •Norway •Germany •Italy

•Belgium •Portugal •Switzerland•…

The use of clinical and economic evidence to assess the benefits and value of innovation

Countries already using a form of VBR:

Soruce: OFT Report 2007

There are a number of ways to determine value

HTA markets favour QALYs as the ‘currency’ for appraisals

Optional

NoneUpcoming

Mandatory

IMS Health

Value: Weighing incremental costs vs. incremental benefits

Is decision making based on value (as defined by cost/QALY)?

Source:

1. Clement, Harris, Li, Yong, Lee, Manns; JAMA 2009

2. Ciapanna, Yunger, Shum, Milliken, Aissa, Longo: ISPOR 2010

Value informed reimbursement (VIR)

DecisionDecisionDecisionDecision

Clinical Clinical Clinical Clinical ValueValueValueValue

AffordabilityAffordabilityAffordabilityAffordability

Patient/PublicPatient/PublicPatient/PublicPatient/PublicOthers*Others*Others*Others*

* E.g. BOI, ethics, precedence, policy, legal, uncertainty, etc

Agenda

1. Value based reimbursement – do we have it?

2. Benefits and challenges with our current VBR framework

3. Do we want it? Future considerations…

Disclaimer: Viewpoints expressed are of the presenter, not Roche or other organizations

Benefits and challenges with the current VIR approach

Multi-factorial decision

making

QALYs are a useful tool, can

be used to compare health

gains across diverse

diseases

Patient and public input

into decision making

BenefitsBenefitsBenefitsBenefits ChallengesChallengesChallengesChallenges

a) Value of a drug is dynamic

b) QALY limitations –may not represent the true value

c) Value – a broader perspective

a) The value of a drug can change over the product life cycle

Value

Time

Indication 2Indication 2Indication 2Indication 2

New dataNew dataNew dataNew data

Indication 1Indication 1Indication 1Indication 1

b) QALY limitations: some disease states are disadvantaged

DrugDrugDrugDrug Condition (prognosis where Condition (prognosis where Condition (prognosis where Condition (prognosis where

available)available)available)available)

Survival gainSurvival gainSurvival gainSurvival gain NICE (manufacturer) NICE (manufacturer) NICE (manufacturer) NICE (manufacturer)

estimated cost /QALY (£000)estimated cost /QALY (£000)estimated cost /QALY (£000)estimated cost /QALY (£000)

Bevacizumab (1st line) Colorectal cancer (metastatic) 4.7 months 63 (88)

Cetuximab (2nd Colorectal cancer (metastatic) 2.6 months TTP A30 (33)

Pemetrexed Lung cancer (metastatic) None 60 (19)

Fludarabine (1st line) Leukaemia lymphocytic PFS 31% v 23% at 3

years

A30 (26)

Bevacizumab Renal cancer (metastatic) 5 months PFS 171 (75)

Sunitinib Renal cancer (metastatic) 6 months PFS 72 (29)

Sorafenib Renal cancer (metastatic) 3.3 months PFS 103 (91)

Temsirolimus Renal cancer (metastatic) 3.6 months 94 (102)

Lenalidomide Multiple myeloid leukaemia 1.8 months 47-69 (47)

Lapatinib Breast cancer (metastatic) 9.5 weeks PFS 70-94 (81)

Cetuximab (1st line) Colorectal cancer (metastatic) 0.5 week PFS A30 (63)

Ref: BMJ 2009;338:b67

Resource-allocation decisions (based on value) are not understood by the public.

Value to patients, caregivers, etc?

How are societal benefits, preferences, and WTP incorporated into trade-off decisions?

Ref: Toronto Star - Nov 2010

c) Value – a broader perspective

c) Value – a broader perspective WTP for the private / out-of-pocket market

Bev mCRC patients enrollingin RPAP

877

With Private Insurance647 (74%)

Without Private Insurance230 (26%)

Approved Coverage310 (48%)

Denied Coverage337 (52%)

Received Therapy204 patients (65%)

Received Therapy (paid cash)135 (40%)

Received Therapy (paid cash)

120 patients (52%)

Patients with private insurance: 48% approvedPatients with no coverage: 45% elected to pay for bevacizumab

Ref: S. Yunger, P. Douglas, P. Anglin, M. Crum , D. Shum, L. Phillips, D. Milliken – ASCO 2009

c) Value – a broader perspective Private market approval for IV oncology agents

Source: Roche Patient Assistance Program (RPAP)

Agenda

1. Value based reimbursement – do we have it?

2. Benefits and challenges with our current VBR framework

3. Do we want it? Future considerations…

Disclaimer: Viewpoints expressed are of the presenter, not Roche or other organizations

VIR, do we want it? Future considerations…

• Maintain reimbursement decision making as a multi-criteria endeavor (where efficiency is not the sole objective)

• Formally weight inputs that are not captured in the current framework

– patient / public input into decision making (at the policy level and drug decision level)

• Broaden the perspective and definition of value – e.g. end of life treatments, social value judgments

• How do we capture the value of innovation beyond health benefits?

VIR, do we want it? Future considerations…Opportunity to create value in the development process

Target Product Profile

Marketing

Payer Value

Early Development Integration & Alignment

Clinical

Technical

Full Development & Marketing

Selected Affiliates

Key Claims

Phase I Phase IIa NDA Filed Launch Post-LaunchPhase IIb Phase IIIPre-Clinical

Idea Successful Product

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