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08 Jul 2024
In the ever-evolving pricing, reimbursement, and market access (PRMA) environment, European health systems face growing cost pressures and explore avenues to relieve them. At an advisory board hosted in April 2024, we asked European payers / ex-payer advisors to discuss the current critical developments in their health systems and the implications on the near-term and distant-future state of PRMA across Europe.
This session was the latest in a continuing series of meetings to discuss key pharma market access challenges and the future of PRMA within, and across, Europe. Advisors included ex-CEPS (Comité économique des produits de santé) and ex-TC (Transparency Committee) payers from France, an ex-head of the Department of Medicines at a large sickness fund and KV (Kassenärztliche Vereinigung) payers from Germany, an ex-regional payer from Italy, and an ex-SMC (Scottish Medicines Consortium) advisor from the UK.
1. Growing Cost Pressures in Europe
Cost pressures continue to grow in key European health systems. While much of the focus is on pharmaceuticals, these pressures must also be viewed in a broader context. Financial constraints, insufficient investment in healthcare, systemic inefficiencies, and changing demographics continually strain these institutions. Staffing shortages and waiting lists are creating dissatisfaction with patients and caregivers, leading to growing calls to address the bottleneck in patient access. While reforms are meant to improve health systems, implementing such changes can be difficult. During our advisory board, we heard the following comments by German advisors about their ongoing reform:
The big issue is currently the ongoing reform of the Germany DRG system […] there's a clash between the federal states and the Prime Ministers of each federal state against it and the Minister of Health on the other side, with the support of the coalition of the government. No one knows who this will affect and when we can implement a new payment system for hospitals.
– Germany KV member
DESCRIPTION
…as well as other broader context rising cost pressure comments by advisors from France and the UK:
Currently the main concern of the French government is the lack of availability of health professionals… French citizens do not have access to health care simply because, to get an appointment with the doctors, they need maybe two to six months, and maybe they have no doctors at all.
– France ex-TC payer
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In early 2023 energy prices went up, inflation went up, index-linked contracts went up as a result and the NHS suddenly had to 'find' €1.5 billion. There is nothing on the new medicines side that even comes close [to these cost pressures].
– UK ex-SMC advisor
DESCRIPTION
With the broader context of growing European cost pressures in mind, payers moved our conversation toward the effects of pharmaceutical spending/cost. Pharmaceutical expenditure is a small portion of the overall healthcare spend, averaging 13% across the four countries of focus from our advisory board and ranging from 9% in the UK to 17% in Italy in 20211. It is, however, increasingly a topic of debate within health systems as pharmaceutical costs continue to grow year-over-year. Payers in our advisory board noted the debate is no longer about their health systems’ willingness to pay, but on their ability to pay for pharmaceuticals at all.
Areas of particular concern for payers in the pharmaceutical sphere include high-cost therapies for oncology / rare diseases and large and growing markets such as obesity. The latter concern is gaining more and more attention across health systems as manufacturers pursue back-channel entry points in markets not reimbursing for “lifestyle” conditions (e.g., cardiovascular disease (CVD), NASH indications).
90% probably of obese patients have Nash if not 100% and there is another 50% in the other part of the population that is not obese… that's reimbursing semaglutide through the back door. I think that makes it very problematic.
– Germany ex-sickness fund Head of Department of Medicines
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2. Potential Avenues to Cost Relief
To keep up with the growing cost pressures on budgets, payers are employing cost containment strategies tailored to their countries’ needs. With the gap between gross (visible) and net prices increasing, there is a growing emphasis on limiting both as much as possible, as a key cost containment measure across health systems (more on this in our next blog post - Evolving Gross to Net Pricing Landscape in Europe). Strategies/avenues to contain costs being employed by European health systems discussed in this blog post include access restrictions and the adoption of biosimilars.
Some health systems are restricting access to emerging, high-budget impact markets to subdue costs. A prime example of this is in obesity where Germany and Spain are not reimbursing the “lifestyle” indication. The UK is taking a slightly different approach, restricting use in the indication instead of ubiquitously not reimbursing for it. In either case, the result is the same: throttling pharmaceutical use in the otherwise high-budget impact emerging market is reducing costs.
Obesity, for example, NICE did say yes, but in quite a restricted way. And you have to access specialist service brackets which don't exist to close brackets to even get on the drug in the 1st place. So, I think you know we've developed a system that's good at dodging bullets.
– UK ex-SMC advisor
DESCRIPTION
Another prominent cost containment avenue discussed with our advisory board payers was the adoption of biosimilars – an increasingly utilized tool to free up resources and relieve cost pressures. Payers view them as the “low hanging fruit” of cost savings, setting targets for their adoption and the switching of patients from originator molecules to them, where systems / local laws (and supply chain constraints) allow.
Everybody who works in the healthcare system has grown up keenly aware of their obligations to do things in the lowest cost way. It's a mentality now, so when we get biosimilars, etcetera, there's a very rapid, you know, 99% uptake of biosimilars very, very quickly in all health care systems.
– UK ex-SMC advisor
DESCRIPTION
There is a clear trend of increasing biosimilar use across Europe, although the adoption rates differ. While France is currently the only country whose regulations require “mandatory” substitution of biosimilars at the pharmacy level, in practice, switching has been very limited due to safety concerns of providers and patients. Germany and the UK have successfully used target quotas (on biosimilar market share and annual savings) as the main tool to promote biosimilar use. On the other hand, our Italian payer noted Italy as a bit behind the curve of other European countries in terms of biosimilar use:
For biosimilars, as far as I know, when they started to come into the market, it seems that the minimum discount related to the originator for biosimilar is about 30%... for many products, there is more and more centralized utilization than regional… And finally, Italy, in terms of spending on generics [and biosimilars] as a whole is a little bit behind the other European countries.
– Italy ex-regional advisor
DESCRIPTION
The increasing trend in biosimilar use may accelerate in coming years as existing high-cost pharmaceutical markets mature. Loss of exclusivity for huge blockbusters such as Keytruda (pembrolizumab) anticipated in the near future is likely to create headroom in health systems for greater biosimilar utilization from a funding perspective.
The various cost control measures need to be viewed through the lens of the similarities and differences between these countries. A significant one is the time it takes for new products to be reviewed and achieve access in these different health systems. The typical time it takes for a product to move from EMA approval to full pricing and reimbursement in the major 5 EU countries is recapped in Table 1 below.
Overall, European health systems are adapting their cost-containment strategies to the increasingly complex healthcare/pharmaceutical world. They are restricting access to high-cost disease areas like obesity, leaning on the budgetary benefits of lagging time to market for new drugs, and leveraging reduced costs of biosimilar substitution wherever possible. While all these measures look different in each country, one other key mechanism used to control costs is the same – containing gross and net prices. We will dive deeper into this mechanism in our next blog post, Evolving Gross to Net Pricing Landscape in Europe.
This blog post is the first in a 3-part series following our EU Advisory board. Be sure to check out our other upcoming posts as well:
Growing European Cost Pressures and Efforts for Relief
If you enjoyed this post and are interested in any of these topics, please get in touch. We plan to discuss, monitor, and report back on these in future blogs/whitepapers and at conferences.
Contact us to learn more!
*Abbreviations: TC: Transparency Committee; CEPS: Comité économique des produits de santé, KV: Kassenärztliche Vereinigung, SMC: Scottish Medicines Consortium
Sources
2.
Mycka et al. (2023, May 7-10). Market Access Trends of Pharmaceutical Products in the US, EU4 and UK 2016-2021 [Poster Presentation]. ISPOR, Boston, MA, United States.
3.
Table 1: Mycka, Jack. “Cell and Gene Therapy Access in the US and Europe.” ISPOR 2024. Georgia World Congress Center Atlanta, Georgia, USA. 6 May 2024. Poster presentation.
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