A Case Study in Differing Approaches to Reimbursement Approval in Europe and the US

In November 2013, the National Institute for Health and Care Excellence (NICE) in the UK began its assessment of Sovaldi® (sofosbuvir) for Hepatitis C. Fifteen months later, in February 2015, NICE published its final recommendation, recommending Sovaldi for use and reimbursement for Hepatitis C genotypes 1-6, with various conditions set to ensure the drug reaches those populations for whom the drug was found to be the most cost effective.

NICE made its recommendations based on a detailed independent analysis of clinical and economic evidence submitted by the manufacturer. The agency engaged and received comments from numerous stakeholders, including patient advocacy groups such as the British HIV association, professional organizations such as the Royal College of Physicians, government organizations such as the National Health Services, and other pharmaceutical companies including Roche and MSD.

As we’ve discussed before, the United States Senate Committee on Finance launched its own evaluation of Sovaldi in July 2014, the results of which were released eighteen months later in December 2015. The aims and outcomes of the investigation were very different than the NICE assessment process. Though the US committee recognized that Sovaldi was “the first to offer more effective treatment,” it sought to understand why, exactly, the cost of Sovaldi was so high. The conclusion of the committee’s investigation was that the manufacturer, Gilead, priced the drug in order to maximize revenue and not in order to maximize access to the drug.

To reach this conclusion, the committee spent 18 months investigating numerous features of the new drug: the costs of Gilead’s acquisition of Pharmasset, the company that conducted the original research on sofosbuvir; the research and development and marketing costs of the drug, internal communications about the drug’s cost, and communications between Gilead, payers, and other stakeholders about the potential impact of the drug’s price.

The Senate Finance Committee’s report defined critical policy questions that must be addressed within the US healthcare system as more and more expensive drugs are entering the market. For example, the report asks:

  • What are the effects of a breakthrough, single source innovator drug on the marketplace?
  • What role does the concept of “value” play into this debate, and how should an innovative therapy’s value be represented in its price?
  • What tools exist, or should exist, to address the impact of high cost drugs and corresponding access restrictions, particularly on low-income populations and state Medicaid programs?

We recently conducted a webinar that highlights some of the fundamental criteria that differentiate the European system of HTA agencies from the current approach undertaken in the United States, which has no centralized system for determining reimbursement. The questions posed by the Finance Committee highlight some of the most important issues facing the US healthcare system today. Looking at other countries’ approaches could help identify potential solutions to some of these issues, though no one solution is a perfect fit for every healthcare system.

 
 

In the case of Sovaldi, NICE was able to recommend the drug for use in specific populations that would benefit the most because it sought to understand the effectiveness and cost-effectiveness of the drug through detailed evaluation of the clinical evidence and cost-effectiveness models. Understanding the value was the first step toward ensuring the drug would reach those whom it would benefit the most. The Senate committee’s conclusions underscore the absence of a lexicon for value in the US healthcare system where the struggle continues to answer the question of how to integrate discussions about value into discussions about drug prices.

Even extremely expensive drugs, if effective, may save the healthcare system money in the long run. Conversely, inexpensive drugs may work poorly, result in higher rates of hospitalization, and ultimately cost more money than more expensive alternatives. Focusing on drugs’ price tags without sufficient context from clinical effectiveness data does not allow us to distinguish between such situations.

Consider this scenario. Instead of asking the question: “Is this drug price too high?”,  a value-based societal re-framing would result in a question more along the lines of: “Is this drug price appropriate for the subpopulation who will most benefit from the drug versus the current alternative?” Rather than focusing on the ROI or how much money was invested in the development of a drug as a proxy or determinant of what is an acceptable and subjective level of profit permitted, asking questions with a comparative or contextual approach may allow us as a society to work our way through the shades of gray rather than the black-and-white for innovation pricing.

Examining value through comparative effectiveness research forms the foundation for making decisions around pricing. Knowing how well a drug compares to other established treatments based on a well-reviewed evidence base is the first and most essential step in determining the value of a drug. A focus on effectiveness gives us a common framework and a common language for discussing the broader problems of value and pricing. The Finance Committee’s investigation identified a number of important issues that the US healthcare system must address in the future. Perhaps lessons from other countries’ approaches could inform the future of value and pricing discussions in the United States, or at least provide us the concepts and lexicon to talk about the overall and specific context of drug pricing in the US.