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      Affordability of Medicines a Top Priority for EHA: Toward a Fair Pricing Model for Innovative Medicines

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      HemaSphere

      Wolters Kluwer Health

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          Abstract

          Hematology, as we all know, is a highly innovative discipline that continues to generate new insights that carry the promise of revolutionizing diagnosis and treatment of blood disorders, potentially saving and improving the lives of patients suffering from even the rarest of illnesses. However, access to new treatments is at risk because of the steep, often excessive prices of those new drugs that do reach the clinic. The looming unaffordability of innovative medicines as a result of high prices poses a threat to both patient access and the sustainability of health care systems. In the current system of market exclusivity granted by patent rights drug manufacturers are primarily driven by recouping research and development costs and offering sizable profits to shareholders, often resulting in hefty price tags for medicines (particularly those with orphan designation). With increasingly strained health care budgets, even in wealthier countries, this causes limitations on the purchase and reimbursement of innovative medicines. In markets deemed too small—in terms of patient population size or purchasing power—an expensive medicine may not be made available at all. Although many of them affect only small numbers of people, the importance of treating blood disorders is clear. An estimated 80 million people in Europe suffer from a hematologic disorder (malignant or nonmalignant). In addition to the considerable physical and psychological burden, the economic cost is substantial, estimated by 2 European Hematology Association (EHA)-commissioned studies published in The Lancet Haematology at €23 billion a year across the European Economic Area (the 28 European Union-countries plus Switzerland, Norway, and Iceland). 1 Yet, as new therapies are being developed at a rapid pace and the study of blood is contributing significantly to break-through innovations in other disciplines such as oncology, the benefits for patients and society as a whole are limited by soaring drug prices. Although data on R&D spending and on pricing and reimbursement mechanisms are scarce, a recent study by US hematologists–oncologists Vinay Prasad and Sham Mailankody offered a clear indication of the wide gap between actual R&D costs and the price at which a new drug is sold. Based on their analysis of ten cancer drugs approved by the FDA in the years 2006–2015, the median cost of developing a single cancer drug was $648 million; the median revenue after approval of a drug $1,658,4 million. 2 Although health care systems vary across the continent, in Europe too authorities are challenged by the high prices of innovative drugs. Current business models based on long-lasting patents and rendering high profits and high prices are no longer tenable, negatively affecting all partners in the chain from drug development to patient treatment, including, ultimately, the pharmaceutical industry. Time for a new business model The findings of Prasad and Mailankody are in line with the conviction held by the European Hematology Assocation's Task Force on Fair Pricing that rapidly rising prices of new drugs—in hematology perhaps more than in any other medical discipline—are primarily a product of perverse incentives in current pricing models. Although it is only natural for companies to pursue a healthy profit, it is clear that profit levels in the pharmaceutical industry far exceed those in other sectors and certainly exceed what is acceptable from a public health point of view—especially in light of the large sums of public funding that go into health research, effectively making taxpayers pay for their medicines twice. What is needed, in our view, is a new economic model for the development of innovative medicines and for bringing them to the market. A model that offers a better balance between public and private interests, that is, transparent and involves all stakeholders. It goes without saying that for any new business model to be successful it needs to be beneficial for all involved: patients must have access to the best available, affordable care; hematologists should be able to deliver the best possible treatments; industry needs to be rewarded for developing, manufacturing and marketing high-quality drugs with a reasonable profit margin; and national health systems have to be able to procure and reimburse medicines without busting public finances. EHA Task Force on fair pricing What can EHA do to help curb medicine prices? After identifying “pricing” as a top advocacy priority, the EHA European Affairs Committee last year established the Task Force on Fair Pricing to provide direction and take action. Having concluded that the fundamental problem lies in the dysfunctionality of current business models, the Task Force set out to gather a working group of leading European health economists who will be assisting EHA in developing the guiding principles for new business models. The case for a new pharmaceutical pricing model was also made, convincingly and emphatically, at the EHA annual congress in Madrid last June, where Prof Richard Sullivan (King's College London), Andrew Rintoul (WHO) and Dr h.c. Peter Kapitein (patient advocate and Task Force member) spoke at a session dedicated to pricing. More can and must be done. An option would be to make a central EU authority responsible for determining maximum prices for new medicines approved for the European market. There should be no automatic market access for European Medicine Agency-approved drugs unless a reasonable price can be negotiated. More options will be explored; however, any approach to price maximization would need to take differences in the economic situation of countries into account. EHA also calls upon national and EU authorities to support publicly funded trials (PFTs). These would make the sale of approved drugs at cost price possible, speed up research (by offering direct access to trial results), thus helping to reduce drug prices. Biosimilars Promoting the acceptance and uptake of biosimilars is another important element in the Task Force's pricing strategy. Because biosimilars tend to be considerably less expensive than the reference biological medicine to which they offer an alternative, they have the potential to widen patient access and force down prices. Although so far price reductions on the European market remain relatively limited—mostly 20% to 30% 3 —we are convinced that under optimal market conditions, price reductions of well over 50% are realistic. Increased uptake of biosimilars requires trust and awareness among professionals and patients. EHA is prepared to actively endorse biosimilars, develop education tools, and support biosimilar companies willing to introduce their drugs against fair and substantially reduced prices. Alliances Naturally, EHA will not be able to make a sufficiently big impact on its own. Participation in alliances that are active on pricing and the broader issue of access to medicines, such as the European Public Health Alliance, and ongoing contacts and alignment with other stakeholders—including the European Parliament which, through the Cabezón Report, 4 has firmly placed these issues on the political agenda—are therefore essential complementing activities. Ultimately, all phases of and all actors in the “pricing chain” should be subject to critical review and revision. In the current situation too many “incentives” are clearly counterproductive, resulting in prices that are far from fair and that threaten patient access to newly developed and promising drugs, even in those (wealthy) countries where availability has so far hardly been an issue. Prices of innovative hematology drugs must go down, substantially—for the sake of patients, doctors, payers, and health care systems. EHA is determined to play its part, in close collaboration with all other stakeholders, including the pharmaceutical industry, in keeping life-saving and life-enhancing medicines affordable and accessible. The right treatment available to patients across Europe, no matter how rare their blood disorder, at a price that is fair to patients, manufacturers and tax payers—that is what we would call priceless.

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          Research and Development Spending to Bring a Single Cancer Drug to Market and Revenues After Approval

          This analysis of US Securities and Exchange Commission filings provides a contemporary estimate of research and development spending to develop 10 new cancer drugs. Question What is the estimated research and development spending for developing a cancer drug? Findings In this analysis of US Securities and Exchange Commission filings for 10 cancer drugs, the median cost of developing a single cancer drug was $648.0 million. The median revenue after approval for such a drug was $1658.4 million. Meaning These results provide a transparent estimate of research and development spending on cancer drugs and show that the revenue since approval is substantially higher than the preapproval research and development spending. Importance A common justification for high cancer drug prices is the sizable research and development (R&D) outlay necessary to bring a drug to the US market. A recent estimate of R&D spending is $2.7 billion (2017 US dollars). However, this analysis lacks transparency and independent replication. Objective To provide a contemporary estimate of R&D spending to develop cancer drugs. Design, Setting, and Participants Analysis of US Securities and Exchange Commission filings for drug companies with no drugs on the US market that received approval by the US Food and Drug Administration for a cancer drug from January 1, 2006, through December 31, 2015. Cumulative R&D spending was estimated from initiation of drug development activity to date of approval. Earnings were also identified from the time of approval to the present. The study was conducted from December 10, 2016, to March 2, 2017. Main Outcomes and Measures Median R&D spending on cancer drug development. Results Ten companies and drugs were included in this analysis. The 10 companies had a median time to develop a drug of 7.3 years (range, 5.8-15.2 years). Five drugs (50%) received accelerated approval from the US Food and Drug Administration, and 5 (50%) received regular approval. The median cost of drug development was $648.0 million (range, $157.3 million to $1950.8 million). The median cost was $757.4 million (range, $203.6 million to $2601.7 million) for a 7% per annum cost of capital (or opportunity costs) and $793.6 million (range, $219.1 million to $2827.1 million) for a 9% opportunity costs. With a median of 4.0 years (range, 0.8-8.8 years) since approval, the total revenue from sales of these 10 drugs since approval was $67.0 billion compared with total R&D spending of $7.2 billion ($9.1 billion, including 7% opportunity costs). Conclusions and Relevance The cost to develop a cancer drug is $648.0 million, a figure significantly lower than prior estimates. The revenue since approval is substantial (median, $1658.4 million; range, $204.1 million to $22 275.0 million). This analysis provides a transparent estimate of R&D spending on cancer drugs and has implications for the current debate on drug pricing.
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            Economic burden of malignant blood disorders across Europe: a population-based cost analysis

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              Author and article information

              Journal
              Hemasphere
              Hemasphere
              HS9
              HemaSphere
              Wolters Kluwer Health
              2572-9241
              December 2017
              20 December 2017
              : 1
              : 1
              Affiliations
              [1 ]Academic Medical Center University of Amsterdam, Amsterdam, The Netherlands
              [2 ]University Hospital of Cologne, Cologne, Germany
              [3 ]EHA European Affairs
              Author notes
              Correspondence: Robin Doeswijk, EHA European Affairs (e-mail: r.doeswijk@ 123456ehaweb.org ).
              Article
              HEMASPHERE-2017-0042 012
              10.1097/HS9.0000000000000012
              6745980
              Copyright © 2017 the Author(s). Published by Wolters Kluwer Health, Inc. on behalf of the European Hematology Association.

              This is an open access article distributed under the terms of the Creative Commons Attribution-Non Commercial-No Derivatives License 4.0 (CCBY-NC-ND), where it is permissible to download and share the work provided it is properly cited. The work cannot be changed in any way or used commercially without permission from the journal. http://creativecommons.org/licenses/by-nc-nd/4.0

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