This document discusses health economics and reimbursement implications for emerging pharmaceutical and biotechnology companies. It outlines the roles of the federal and provincial governments in regulating drug prices and approving drug coverage in Canada. It emphasizes the importance of demonstrating a drug's value and return on investment to payers through strong clinical evidence, health economic analyses, and addressing payer priorities. Adopting early life-cycle strategies in these areas can help companies achieve faster market access and maximize a product's potential.

1. Health Economics and
Reimbursement Implications for
Emerging Pharmaceutical/
Biotechnology Companies
Quality Work • Valuable
Strategies and Perspectives
Results
MaRS • Future of Medicine Series 1

2. Agenda
 Quick Intro
 Pharmaceutical/biopharma policy in
Canada
 Health Economics and Reimbursement
 Delivering ROI
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3. Introduction
 Focus on Health Economics,
Reimbursement and Pricing
 Which innovations deliver ROI and how?
 Past decade working with or for industry
 Evolution of Patented Medicine Prices Review
Board (PMPRB)
 Creation of Common Drug Review (CDR)
 Bill 102+, payer negotiations
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4. 1984 - Canada Health Act
 Federal legislation
 Physician services
 Hospital care
 Universality, accessibility, comprehensiveness,
portability, public administration
 Not pharmaceuticals / Biotech / medical
devices
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5. Federal Government
 Federal Focus – Regulatory
 Safety & efficacy
 Line of questioning = “can the drug be used”
compared to (usually) placebo
 Product assessment (NOC) / Post-marketing
 Ensure Patented Medicine Prices are not
excessive (PMPRB)
 Drug coverage for
 Military, Prisoners, First Nations & Inuit Canadians
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6. Provincial Government
 Provincial Focus – Providing Coverage
 Will we pay for this drug?
 Line of questioning = “Is it worthwhile
compared to what’s available”
 Formulary Assessment
 Drug Coverage Programs
 Hospital-Based Care
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7. Total Drug/Biopharma Expenditures, Canada
1985 to 2005
Source: Canadian Institute for Health Information. Available at http://secure.cihi.ca/cihiweb/products/
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drug_expenditure_1985_2008_e.pdf

8. Factors Driving Pharmaceutical
Expenditure
 Increased drug consumption
 More patients are taking medications
 Patients are taking more medications
 More expensive new drugs
 New drugs have higher acquisition costs
 Increased price of existing drugs
 Prices increase just as they do with other
products
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9. Product Assessment
 Until early – mid 20th century – None
 1950s-1960s – Safety
 1970s-1990s – Efficacy
 1997- Access (i.e., reimbursement)
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10. Product Assessment
 2009 and beyond
 Remember this –
 And don’t forget this…..
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11. Product Assessment
 2009 and beyond
 US Health Care Reform
John Andrews, President and Head of R&D for NeurAxon,
“Currently the US offers the quickest access to market for companies like
mine, and if there is going to be a change to reimbursement rates,
and if there is going to be reimbursement at different rates, then it is
certain to extend timelines for getting to the market and increase
costs.”
 Further Globalization
 Comparative Effectiveness
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12. Making Sense Of It
Pricing Reimbursement
Health Canada
PMPRB - Federal
Product Assessment
Price Ceiling
CDR - National
More Product Assessment
Provinces
Negotiate Prices/Rebates Provinces
Further Product Assessment

13. ROI for Payers
The 3 Pillars Leading to Reimbursement
Health
Clinical Payer
Economic
Evidence Priorities
Evidence
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14. Importance to Pharma/Biotech?
Successfully Demonstrating Product Value:
– Faster Time to Market
– Quicker Uptake
– Maximizing Product Potential
$
Doing
it right
Time
Development Launch Post-Launch
Doing
it wrong
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15. Clinical Pillar
Clinical Trial Design
1. RCT Evidence
2. Active Comparator
3. Appropriate duration
4. Meaningful endpoints
5. Representative patient population (??)
Remember the payer’s line of questioning…..
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16. Health Economic Pillar
Translating and communicating “value for money”
Health Economics Health Outcomes
& Pricing
Reimbursement
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17. Industry – R&D Phase I
 Phase I – Clinical trials
- Safety data, no efficacy data
 Role of Health Economics
 Modeling target product profile (TPP)
 Understanding disease burden
 Price justification
 Is a drug worth developing?

18. Industry – R&D, Phase II
 Phase II Randomized Controlled Trials
(RCTs)
 Applications of studies planned from
pharmacoeconomic perspective
 Role of Health Economics
 Answers questions posed in Phase I
 Is the TPP being met?
 To what extent?
 Proceed to Phase III?

19. Industry – R&D, Phase III
 Phase III RCT - Efficacy & Safety
 Comparative Evidence
 Role of Health Economics
 ‘Piggy-back’ pharmacoeconomic analysis
 Best evidence for
 Federal approval
 Payer Reimbursement
 Quality of Life/resource utilization

20. Industry – R&D, Phase IV
 Phase IV - Post-marketing
 Role of Health Economics
 Assessment of actual use
 Effectiveness rather than efficacy
 Comparison to other drugs and services
 Modelling

21. Importance to Pharma/Biotech?
Successfully Demonstrating Product Value:
– Faster Time to Market
– Quicker Uptake
– Maximizing Product Potential
$
Doing
it right
Time
Development Launch Post-Launch
Doing
it wrong
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22. Health Economic Pillar
 Demonstrating “Value for Money”
 Early development and validation of cost
-effectiveness models
 Incorporating appropriate outcomes in your
clinical trials
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23. Other Factors to Consider
 Affordability
 Budget Impact
 Public Outcry
 High profile or underserved diseases
 Many provinces have defined priorities
 Physician/patient advocacy
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24. Some Examples
1. Stelara - Psoriasis
2. Herceptin – Breast Cancer
3. Xarelto – THR/TKR
Future Examples…..
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25. In Summary
 Health care expenditures will continue to rise
putting greater pressure on all stakeholders
 Successful companies will be those that see
a need to deliver ROI to payers and adopt
early life-cycle strategies
 Clinical
 Economic
 Payer Priorities
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26. THANK YOU!
Colin Vicente
(T) 647-669-1483
cvicente@pivina.com
www.pivina.com Its all about ROI
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