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Maude Schmidt and Giovanni Saldutti look at the intergovernmental initiatives involving joint price negotiations developed across Europe as the Beneluxa Initiative on Pharmaceutical Policy to explore the outcomes and implications from these alliances.
The launch of perceived unsustainable high price medicines opened the door to concerns from the public and politicians over the availability and affordability of drugs. This highlighted the need for a supportive environment for innovation that bolsters medicines’ effectiveness, safety, and most importantly affordability, to optimize patient access to health innovations. The Council of the European Union established in 2016 conclusions on how to address issues in pharmaceutical systems including several activities such as joint horizon scanning, exchange of information, and joint price negotiations among others. Simultaneously to the European Union agenda, intergovernmental initiatives involving joint price negotiations were developed across Europe as Beneluxa Initiative on Pharmaceutical Policy (previously called Beneluxa) or the Valletta Declaration. In this article, Beneluxa, as the alliance with most activity to date, is presented in a case study to explore outcomes and implications from these alliances and offer recommendations for manufacturers on how to navigate and cooperate with alliances to achieve mutually beneficial outcomes.
The Council of the European Union identifies pharmaceutical policies as a major component in maintaining the core values of healthcare systems - accessibility, effectiveness and sustainability
. The launch of perceived unsustainable high-price medicines such as Sovaldi for Hepatitis C in 2014 opened the door to concerns from the public and, more specifically, politicians over the availability and affordability of drugs
. This highlighted the need for a supportive environment for innovation that bolsters medicines’ effectiveness, safety, and most importantly affordability
, to optimize patient access to health innovations
. Based on concerns over price and availability of medicine in Europe, in 2016, the European Union decided to set the priority to “re-balance” (p.5) its member states’ pharmaceutical systems
. Consequently, in 2017, the European Parliament also adopted resolutions to improve access to medicines
. In its conclusions, the EU Council proposed several activities to support this priority such as joint horizon scanning, exchange of information, and joint price negotiations among others
. Similarly, the World Health organization has identified joint procurements as a potential means in improving access to medicines worldwide
. Following the EU Council decision, Netherlands, Slovakia and Malta, drafted a 2017-2020 Long-Term Agenda to support voluntary cooperation on pharmaceutical policy
Simultaneously to the European Union agenda, intergovernmental initiatives involving joint price negotiations were developed across Europe. Beneluxa Initiative on Pharmaceutical Policy (previously called BeNeLuxA) – one of the first alliances – was initiated in December 2014 and signed in April 2015 between Belgium and Netherlands, joined by Luxemburg in September 2015
, and Austria in June 2016
. Furthermore, Ireland recently joined the initiative on June 22nd 2018, making it a five-member-state alliance
, representing a market with a population of about 43 million people. This market may expand as other countries are keen to connect with Beneluxa. For instance, Switzerland expressed interest in joining the initiative
, while other countries such as France and Italy, may collaborate in the near future on some areas of cooperation
. Joining countries can chose the nature of its involvement such as active contributor or observer
. Beneluxa has four main areas of cooperation: horizon scanning, health technology assessment, exchange of strategic information, and price/reimbursement negotiations
. These areas each have a role in helping to achieve Beneluxa’s four main objectives: 1. Guarantee patient access to innovative medicines; 2. Contain costs in response to rising pressure on social security across Europe; 3. Increase price transparency in order to try control rising prices that bolster healthcare expenditure; 4. Join forces in order to help tackle cost pressure on healthcare systems while guaranteeing access to innovative medicines for patients and, most importantly, to build knowledge by joining expertise and experience. Another alliance was initiated in May 2017 – the Valletta Declaration
– by Cyprus, Greece, Ireland, Italy, Malta, Portugal, Spain, Romania, Slovenia and Croatia. This alliance aims to share information on prices and markets and to jointly negotiate with the pharmaceutical industry
. Interestingly, Ireland is a member of both Beneluxa and Valletta and is likely to have to choose an alliance over the other. As outcomes obtained through Valletta are not publically available, there are no means to understand whether some results have been achieved, nor the nature of obtained outcomes since the initiation of the alliance in 2017. Consequently, the Valletta Declaration may be a “proof of concept”, which would imply that even if the initiative would have not started nor been progressed, the idea of a potential collaboration would be enough to initiate changes in pharmaceutical systems. Other alliances have started thoughout Europe (Table 1) and the rest of the world, such as the Gulf Cooperation Council
. Emergence of these alliances has led to different reactions from stakeholders. For instance, the EU Council perceives alliances as an opportunity for its member states to drive medicine prices down and thereby increase price transparency. Furthermore, EU alliances may improve availability of medicines, as manufacturers will be forced to launch in several countries simultaneously, rather than in one at a time
. This will also facilitate speed to market for medicines, as only one joint submission is necessary. On the other hand, the pharmaceutical industry may see alliances negatively for a number of reasons. First, manufacturers, depending on their size and scope, may lack the internal infrastructure to adapt to the changing market access and pricing negotiation environment. Second, if the pharmaceutical industry plays an important role as an employer or taxpayer in a country, legislators may be indisposed to take any actions that may upset the industry
Beneluxa is the European initiative that has led to the most well-defined objectives, and concrete and publicly available outcomes in terms of pricing and reimbursement negotiation. For this reason, a case study of Beneluxa is presented in the following section.
Since its initiation in 2015, concrete outcomes have been achieved through Beneluxa in several of its core four areas of activity. A summary of publicly available outcomes is presented in Table 2, completed by expert insights from Mr. Arickx, Head of Pharmaceutical Policy Department for the Belgium National Institute for Health and Disability Insurance (RIZIV INAMI), and Belgium Beneluxa Coordinator, and Ms. van Lessen Kloeke, a lawyer specialized in life sciences and healthcare regulations under EU and Dutch law.
The aim of horizon scanning is to join forces to collect data by scanning the literature and the research, and interviewing key opinion leaders and industry in order to identify potential new innovative products before they are launched in different markets. Horizon scanning allows Beneluxa to gather insights and develop understanding of the potential added value of an asset to estimate not only its expected costs, but also its impact on the organization of health care and health care financing. Such a process helps Beneluxa member states and other collaborators to, for instance, gain time in the preparation for potential joint reimbursement negotiations. Two types of horizon scanning were initiated:
1. Horizon scanning between the Beneluxa members, which is currently used by the Initiative in planning for joined HTA, policy discussions and joined reimbursement procedures;
2. Joint horizon scanning with all interested countries, whether or not they are part of Beneluxa †.
The joint horizon scanning initiative is in the process of implementation. However, as of now, Beneluxa has not officially communicated progress achieved with this activity. The focus of Beneluxa is on information sharing and exchanging of experience, including discussion and promotion of best-practice. In April 2018, a webinar on biosimilars was organized to encourage market penetration of this type of medicine. Moreover, in November 2017, a meeting was held in Vienna between Beneluxa member states, Hungary and the United Kingdom, to explore the potential creation of cross-border registries
. Collaboration on HTA assessments may be of different types – country-specific HTA reports may be completely or partially reused by other countries, HTA reports may be jointly written, country specific HTA reports may be recognized by other markets, and countries may act as external referees or experts. Since January 2017, a year plan has been set by Beneluxa with a focus on two types of HTA cooperation – HTA reports re-use and joint writing. However, all approaches are used when a company submits a dossier for joint assessment to at least 2 HTA bodies from the Beneluxa member states. HTA reports may be re-used by other countries, which can be markets outside the alliance, members of other HTA networks such as the EUnetHTA
. A number of HTA procedures have been carried by the alliance since its creation and the publication of results in October 2017
. This included two submissions for the medicine Orkambi from Vertex Pharmaceuticals, which resulted in a negative decision. In July 2018, an HTA submission for Spinraza was conducted followed by a successful price and reimbursement negotiation. Moreover, a second negative decision was published on the Dutch National Health Care Institute (Zorginstituut Nederland) in July 2018 following a joint HTA assessment between Netherlands and Belgium for the drug Ocaliva
. Several other HTA pilots are still in assessment
. The participation in pilot HTA submission is on a voluntary basis; therefore, no company will be obliged to take that route. The pilots include at least two countries from Beneluxa, begin with a joint HTA assessment and may be followed by a joint price negotiation. However, a negotiation without a prior HTA submission is not possible, as it is based on the added value of a product presented in the HTA report. Reimbursement procedures and decisions are run and made separately by each country, as national legislation has to be respected
. In fact, all preparatory and supporting work is done by Beneluxa. Mr Arickx stressed the aim of the price negotiation to be a negotiation over the added value of a product rather than bargaining to obtain the lowest price. Therefore, the negotiation is based on what the company considers fair and the countries reasonable. While several pilots are ongoing, two products have gone through price negotiation with Beneluxa. Orkambi by Vertex Pharmaceuticals was the first medicine to undergo HTA submission followed by a price negotiation. A first submission took place in 2016, and a re-submission dossier was provided to Beneluxa in 2017. The Zorginstituut Nederland [Health care Insitute in Netherlands] assessed Orkambi as not cost-effective, while recommending to not reimburse this product or negotiate its price. In May 2017, Beneluxa ended the negotiations with Vertex, as no agreement on an acceptable price could be reached. As a result, Orkambi could not be reimbursed in both Netherlands and Belgium
. However, negotiations were continued in the Netherlands, and the Dutch Ministry of Health decided to reimburse Orkambi in October 2017
. The first successful joint price negotiation was achieved in July 2018 for the medicine Spinraza by Biogen. Reimbursement has been granted in both countries for a specific subgroup of patients suffering from Spinal Muscular Atrophy
. However, the patient population eligible for reimbursement differs in each country
. A confidential agreement on price was reached between Biogen, Belgium and Netherlands to temporarily reimburse Spinraza until December 2020 while real world evidence is collected. Real world data will help ascertain efficacy and safety and also allow for additional sub-analysis. After this period, the Belgium Drug Reimbursement Committee will re-assess Spinraza with the additional evidence gathered
. Outcomes achieved by Beneluxa are innovative pricing and market access processes, which are likely to drive further cross-border collaboration in this field. For instance, the agreement on Spinraza is revolutionary as it is the first successful international joint negotiation that allowed inclusion of a drug onto two different countries’ basic coverage packages under similar financial parameters
. Other developments, such as potential creation of cross-border registries, may also have a non-negilgeable impact on evidence generation and exchange of information, leading to a deeper understanding of medicines, efficacy, safety and tolerability. Moreover, this may ultimately impact several structures such as health care delivery, patient access to innovative medicines, and global health, among others. Alliances such as Beneluxa are a starting point, opening the door to more collaborations. This new trend is unlikely to disappear and highly likely to expand and attract growing interests from third parties.
1. Risks and benefits of Beneluxa
Pricing alliances such as Beneluxa are associated with risks and opportunities for pharmaceutical companies. Beneluxa has listed benefits of participating in a joint HTA and price negotiation for society, the Beneluxa member states and the pharmaceutical companies. Society benefits from having the opportunity to address perceived high cost of medicines, allowing for a more sustainable healthcare system. For alliance member states, the advantage is that as they may combine their expertise in setting a value together, better informed decisions are likely to be achievable while supporting an economy of scale. Finally, for manufacturers, one advantage is that the workload is lowered, as only one joint submission is needed per asset, leading to a faster access of products to markets. More importantly, the negotiation is on an international level, and based on the perceived joint added-value of a product rather than a bargain for the lowest price †.
The potential cost offsets of joint submissions and negotiations compared to country-specific processes has been pointed out in the literature as well. For instance, Vogler and Paterson † specify that as companies will have to negotiate only once with the alliance rather than with each country separately, savings on transaction costs may be achievable. In the medium-to-long term, companies may also be able to save on other parameters such as country-specific labor, where one team rather than multiple country-specific teams will be needed to prepare for successful market access. Moreover, other opportunities may arise from alliances. For example, information sharing is likely to benefit companies, who may want to use data gathered to provide deeper analysis of the added value of their products, and identify potential line extensions or key disease-specific unmet need areas.
Most importantly, patients will benefit from alliances in various ways. While negotiating together, countries will jointly ensure access to innovative medicines in each of their markets at a perceived fairer and thus more affordable price. This is likely to reduce time to market and maximize patients access to innovative health technologies. Moreover, information sharing such as joint registries also have the potential of great benefits for patients. Understanding of diseases, medical conditions and medicine as a whole will be bolstered through data gathering and analysis, ultimately improving healthcare delivery, public health, and personalized medicine.
To fully benefit from the great value potential of alliances, challenges have to be overcome. Initiating such collaborations require overhead costs for companies and countries such as setting up registries to allow data gathering and analysis, while aligning on legal requirements across countries in scope such as data protection for instance. A key requirement to ensure successful initiation of alliances is the willingness of pharma companies to collaborate with several countries at once. Negotiating separately with each country leads to an asymmetry of information, where confidential discounts obtained in each market place pharma companies in a position of power. Such asymmetry leaves countries, especially smaller markets such as Belgium or Switzerland, in a weaker position. Therefore, the novel way of simultaneously and jointly discussing access to several markets may be seen by pharma companies as a threat to their negotiating power if asymmetry of information is perceived as the most important parameter in achieving the highest possible price to maximize profits. Raising awareness of the advantages gained in participating in joint negotiations may alleviate such concerns from pharma companies.
2. Strategies to adopt for manufacturers
Manufacturers have to adapt to a never-ending changing environment. With pricing alliance initiation and achievement of concrete outcomes such as those obtained by Beneluxa, companies have to stay informed in order to effectively design both their internal and external strategies. Therefore, in-house or outsourced international market access departments should be aware of the Beneluxa initiative, while national teams of specific countries involved should discuss and inform each other about the developments achieved and share such information internally. For instance, a change in Austria may have an impact on Netherlands or Belgium.
Companies should also start considering collaboration with Beneluxa. For example, a risk assessment may be conducted, where companies would evaluate the direction to take and the impact a potential collaboration is likely to have on PMA strategies and R&D programs. A risk assessment allows for an evaluation of internal resources and capacities, and further planification.
Companies should get involved in the development of alliances and their core activities. This is likely to help inform companies about what alliances have achieved but also to oversee potential future changes or disruptions that may arise from collaborations. For instance, participation in cross-border registries may support company R&D and PMA strategies.
If a decision to jointly submit a dossier and negotiate is taken, companies should have strong internal support from PMA direction in order to maximize chances of a successful negotiation with Beneluxa. Therefore, company executives should believe in the joint approach.
Moreover, when considering a joint submission dossier, companies should consider contacting Beneluxa as early as possible. Companies are advised to contact the alliance at least 6 months before a file submission. This allows for successful planning and obtention of feedback. For instance, Beneluxa welcomes test file submission before the official submission to provide feedback to pharmaceutical companies, agree on timelines, and also make sure the dossier is complete. Finally, companies should not fear to ask as many questions as they want.
As negotiation with Beneluxa relies on valorization of assets’ added-value, companies should think about their products in terms of their added value rather than optimization of value to obtain the highest achievable price. This means that Beneluxa member states will agree on granting access to a product only if they perceive the price as fair based on its added value.
In the long term, companies should consider restructuring PMA country-specific teams. For example, if Beneluxa becomes the major PMA route, skills and experience needed to successfully launch an asset in those countries will be different, and more importantly, will require one cross-country specialized team rather than multiple country-specific teams.
3. Beneluxa expectations from manufacturers
Mr. Arickx discussed the main three expectations Beneluxa anticipates from manufacturers. First, a close collaboration and transparency is expected from companies willing to cooperate with Beneluxa. The alliance principle is based on collaboration, where all parties involved such as manufacturers and countries, are seen as contributors aiming to provide patients with the care they need. Thus, close collaboration and transparency is necessary from all contributing parties including pharmaceutical companies. Second, companies are expected to come to the negotiating table with a mandate based on the added-value of their product. As explained earlier, negotiation is over valorization of the added-value of an asset rather than bargaining over the most expensive price achievable. Therefore, manufacturers should be prepared to negotiate over the added-value of their product, and open to find a common ground, where agreement on a perceived fair price is possible between parties. Lastly, all parties should be convinced in the added-value of a joint negotiation to see it successful.
We would like to thank and credit the following expert contributors in the redaction of this article.
Mr Francis Arickx - Head of Pharmaceutical Policy Department for the Belgium National Insitute for Health and Disability Insurance (RIZIV INAMI), and Belgium Beneluxa Coordinator - who discussed this topic with us and provided very relevant information and insights. Mr Arickx also reviewed this article prior to publication.
Ms Koosje van Lessen Kloeke - Lawyer specialized in Life Sciences and Healthcare Lawyer specialized in Life Sciences and Healthcare regulation under Dutch and EU law - who discussed this topic with us while providing very relevant insights and a fully-referenced and thourough presentation on Beneluxa from which we could retrieve relevant information and references. This presentation is available here. Ms van Lessen Kloeke also reviewed this article prior to publication.
Mr Guy Sherwin - Principal at ICON plc, London - who provided support and strategic insights throughout this article research project.
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