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What is really driving decision making by the new Brazilian HTA agency? A look at appraisals issued in the first year.
Brazil, the world's sixth largest pharmaceutical market, has joined the ranks of countries requiring a formal and transparent assessment of a drug's cost-effectiveness, budgetary impact, and medical need to gain access to the public sector. The action has wide-ranging effects: Brazil has a reputation as an innovator in global health policy, so it often serves as a precedent for reform in other countries. It also carries important implications for commercial success in the domestic drug market, which is growing at double digit annual rates. Public spending on health accounts for a significant share—46 percent—of total health spending. Hence, lack of access to this market not only limits the growth potential for foreign drug makers, it is poor public relations, because the majority of the population relies on the public system for healthcare.
Over the past few years, the government has made a significant effort to improve limited and unequal access to drugs through expanded federal financing. The Ministry of Health recently announced plans to spend $17 billion on drugs between 2013 and 2016. Significantly, 40 percent of current federal spending on drugs is on innovative biologics. This not a race-to-the-bottom pool comprised exclusively of cheap generics. For this reason alone, the actions of the government on this new strategic approach to health technology assessment (HTA) should be followed closely in the industry c suite.
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The Comissão Nacional de Incorporação de Tecnologias (National Commission of Incorporation of Technologies—CONITEC) was established in March 2012. All new technologies now require a positive recommendation from CONITEC for funding in the Brazilian public healthcare system. The new HTA process is significantly more transparent than that of the former HTA body, CITEC, since it is regulated by a federal law that requires assessments of technologies to be publicly disclosed.
An appraisal by CONITEC can be requested by the government, the manufacturer, or any other stakeholder after a drug receives market authorization from ANVISA, the Brazilian equivalent of the FDA, and has its maximum price set by CMED, the federal drug pricing body.
CONITEC has set a goal of conducting appraisals within 180 days of the request—and by and large it is meeting that target. CONITEC publishes all its appraisals and has opened a public consultation process online, allowing for feedback from patients, manufacturers, physician associations, and academia. Once there is a positive decision by CONITEC, the technology needs to be made available in the public sector within 180 days. This is a substantial improvement over the previous approach, where appraisals were not publicly disclosed, there were no clear timelines for review and no timelines for making a drug available after a positive recommendation.
Since its establishment in March 2012 through the end of February, CONITEC issued an impressive 32 appraisals, assessing 48 health technologies (85 percent of them drugs) for 26 therapeutic indications. This is almost twice the number of technologies the former HTA commission CITEC evaluated on average each year. Furthermore, 71 percent of the evaluated technologies received a positive funding recommendation from CONITEC. In comparison, the approval rate for the old CITEC commission was 55 percent.
Figure 1: Clinical factors driving CONITEC decisions. Sum does not need to add up to 100 percent. Multiple factors per appraisal possible. Selection of most frequent factors shown.
The primary focus of the CONITEC evaluation is on efficacy and safety data, cost-effectiveness studies, and budget impact analysis. Nevertheless, there have been a few surprises, such as evaluation of net prices in countries not included in the official referencing basket set by the federal pricing chamber CMED, including the United Kingdom and Turkey.
Figure 2: Economic factors driving CONITEC decisions. Sum does not need to add up to 100 percent. Multiple factors per appraisal possible. Selection of most frequent factors shown.
CONITEC is open to recommend innovative technologies, supported by the fact that 59 percent of the drugs with a positive appraisal are still on-patent. Significantly, however, all innovative treatments obtaining a positive recommendation target have relatively small patient populations. There are tough trade-offs involved here, because on a per capita level, public payers in Brazil have smaller budgets than government payers in mature markets. The government prioritizes spending on high-cost drugs for severe diseases, which most patients cannot afford to buy, while devoting most resources to generic retail drugs. This has not changed with CONITEC, which did not make a positive recommendation for a single branded retail drug. Branded retail drugs are mostly priced at significant premium to alternatives purchased by the government and are largely paid out of pocket by patients from the upper class and the growing middle class.
Figure 3: CONITEC HTA decisions versus NICE.
CONITEC typically considers clinical factors first, so positive coverage decisions are usually driven by a strong therapeutic improvement relative to publically available health technologies and a high perceived unmet need in the indication. Technologies that meet these two criteria represent 76 percent and 57 percent of the positive decisions, respectively. Additionally, the stated priority level of the indication within public healthcare policies supported 24 percent of the inclusions.
CONITEC prioritizes technologies that clearly demonstrate large efficacy improvements. For example, boceprevir and telaprevir proved this in the context of the high unmet need of the hepatitis C patient population. Despite their potentially large budget impact, both drugs secured a positive funding recommendation less than a year after their launch.
Snapshot: How Boceprevir and Telaprevir Obtained a Positive Recommendation
Lack of efficacy was the determining factor for 45 percent of the negative appraisals. For example, CONITEC argued that the clinical studies of biologic treatments for psoriasis did not clearly define the target patient population, lacked an active clinical comparator, and only evaluated short-term efficacy outcomes.
However, sources in the Ministry of Health stated that CONITEC may also cover technologies with similar efficacy in indications where there is already public funding in order to broaden the physicians' treatment arsenal and to stimulate price competition. This could have motivated the extensive coverage of biologics for rheumatoid arthritis.
Technologies considered to have insufficient safety represented 55 percent of the funding denials. For example, certolizumab pegol in Crohn's disease was evaluated as lacking data on long-term safety, despite having been approved by ANVISA for use in the Brazilian market.
In total, CONITEC concluded that 73 percent of the technologies which received a negative funding recommendation failed to show sufficient clinical evidence to back up their efficacy claims and safety benefits. Studies considered "too short" represented 36 percent of the negative appraisals; those with an insufficient sample size and a lack of Phase III /IV studies represented 20 percent of the denials, respectively.
Although CONITEC has not mentioned high budget impact as an explicit reason for a negative appraisal, low budget impact played a role in 33 percent of positive appraisals, such as clobetasol for the treatment of psoriasis. Furthermore, 27 percent of applications were denied because budget impact calculations did not include the perspective of the public healthcare system.
Solid cost-effectiveness studies versus technologies already covered by the public system are a mandatory component of an application for an appraisal. In 62 percent of the positive coverage decisions, this was considered a decisive factor for a positive appraisal; examples include lanreotide acetate, palivizumab, and vaccines for MMRV (measles, mumps, rubella, varicella) and hepatitis A. Important is that CONITEC prefers cost-effectiveness studies based on incremental cost per life year or per avoided event, not incremental cost per QALY.
Clear evidence on future cost reductions benefiting the public healthcare system, achieved for example through a reduction in hospitalizations, were considered in 24 percent of appraisals.
CONITEC advisors emphasize that while cost effectiveness is important, budget impact is even more important given the fiscal restraints. Budget impact should be assessed by a pharmacoeconomic model detailing all costs associated to the technology in the Brazilian public healthcare system.
To that end, gaining support from key stakeholders within the Ministry of Health to advocate for the funding of a new drug significantly increases the likelihood of a positive appraisal. None of the appraisals requested by the Ministry of Health were rejected, while almost all the rejected appraisals are from pharmaceutical companies.
Another pathway to obtain Ministry support is through technology transfers agreements. The Brazilian government is keen on these deals to encourage domestic development and production of pharmaceuticals. In these agreements, know how on production is transferred from the original manufacturer to domestic manufacturers supported by the government. The original manufacturers are rewarded by preferential access (e.g., by waiving the requirement to conduct tenders or price volume agreements with more favorable conditions for the manufacturer).
So far 64 technology transfer agreements have been signed. Drug with technology transfers represent 32 percent of the positive appraisals from CONITEC, such as rituximab and the vaccines for MMRV and hepatitis A.
A fine point is that this is still a learning process for industry in Brazil. Forty three HTA requests were denied prior to assessment by CONITEC due to non-compliance with the required documentation.
Even though CONITEC has similar functions to that premier HTA body, the United Kingdom's National Institute for Health and Clinical Excellence (NICE), in advising the government on funding decisions and the development of treatment guidelines, the decision criteria used by the two institutions differ. Cost-effectiveness is only one of several criteria considered for CONITEC recommendations, and there is no official incremental cost-effectiveness ratio threshold.
Positive NICE appraisals don't necessarily guarantee a recommendation from CONITEC. The Brazilian HTA body denied funding for technologies that had received positive appraisals from NICE in 35 percent of cases, including biologic treatments for psoriasis. For those reports where CONITEC reached a different conclusion than NICE, both HTA bodies criticized similar aspects of the data presented such as inadequate data or the lack of an active comparator.
The suggestion that CONITEC is more even handed than might be assumed must be balanced by evidence that pricing for positive recommendations is may be much lower than in most mature market countries. For high-cost drugs with a positive recommendation, CONITEC often recommends funding subject to usage restrictions, including observational studies. CONITEC may also demand economic concessions in exchange for recommending the funding of high-cost drugs, such as discounts of up to 50 percent below the maximum ex-manufacturer price set by CMED.
Final government prices may therefore reach levels lower than in developed markets. Compared to international prices, the government prices demanded by CONITEC for two recently approved high-cost drugs are, respectively, 50 percent and 42 percent lower than in Italy, which already has one of the lowest ex-manufacturer prices in the European Union. However, it can be said that there is less worry about the spillover impact of low net prices on other markets. Prices in Brazil do not affect mature markets. Smaller markets such as Colombia or Saudi Arabia may reference Brazil, but do not reference net prices.
In any case, demands for low prices from CONITEC may still leave some room for negotiation. The government purchasing contract for one of aforementioned drugs in 2013 features a net price which is almost 30 percent higher than the price demanded by CONITEC.
CONITEC should not arbitrarily be seen as a barrier to public funding in Brazil—the number of new technologies funded has never been higher. CONITEC can be an ally to obtain public funding, if manufacturers are prepared to do the following:
» Dedicate sufficient resources to evaluate opportunities in different market segments. Before even planning to apply for public funding, manufacturers must find out whether this is likely and desirable for the targeted indication. CONITEC is much more likely to recommend specialized care drugs in smaller patient population with high unmet need than retail drugs for blockbuster indications. The Brazilian marketplace is complex, with great differences between therapeutic areas and many relevant stakeholders. Therefore, every single drug to be launched merits an individual assessment of opportunities.
» Provide scientifically sound evidence on added value in terms of efficacy or safety. CONITEC prefers direct comparisons against an active comparator used in the public healthcare system. Trial length needs to consider the natural course of the disease. The sample size needs to be representative of targeted patient population.
» Target a well-defined patient population. Even if a drug shows significant benefit and is cost effective, the government has more limited resources per capita versus mature markets. Targeting a well-defined patient population from the outset and identifying potential subgroups that benefit more from the treatment will address budget impact concerns and increase the likelihood of a positive recommendation.
» Present solid budget impact studies adapted to the reality of the Brazilian public healthcare system. Showing cost effectiveness is useful, but presenting a budget impact model detailing all costs incurred by the technology in the public healthcare system is most important.
» Identify and engage with key stakeholders in the Ministry of Health. An HTA requested by stakeholders related to the government is much more likely to receive a positive recommendation versus an HTA requested by a manufacturer.
» Be flexible and explore opportunities for win-win solutions. Given the limited government budget, be prepared to make concessions—but also ask for a quid pro quo. Low net prices versus mature markets or technology transfer agreements can be accepted in exchange for locking in high volumes or preferential access. Don't worry about implications of low net prices in other markets.
» Prepare a realistic implementation plan to overcome treatment access and patient monitoring hurdles in the public system. Even if there is funding for a new drug, there is unequal access to quality healthcare including crucial elements such as diagnostic devices and access to specialist physicians, which ultimately limits access to the drug.
Ken Genenz is based in Madrid and leads Simon-Kucher & Partners Latin America Life Science practice. He can be reached at firstname.lastname@example.org. Andrea Dominguez is a Senior Consultant, Rafael Alencar is a Consultant, both within Simon-Kucher & Partners' Brazil Life Sciences team. They can be reached at email@example.com and firstname.lastname@example.org. Beatris Januário was an Associate Consultant for Simon-Kucher & Partners and is currently finalizing a degree in Business Administration at the Instituto de Empresa in Madrid.