Financing, pricing & reimbursement of medicines: opportunities & challenges for pharma companies in the Swedish single payor healthcare model

US Healthcare RoundtableTPG-IHA Sweden Executive Trade/Study Mission

Stockholm, Sweden - 15 October 2019

Anders Blanck, Director-General LIF Sweden

Anders BlanckDirector-General of LIF – Swedish Association of the Pharmaceutical Industry

• Director-General for LIF since 2011.

• Deputy Director-General for LIF 2005–2011.

• Director-General for Healthcare at Sw Ministry of Health & Social Affairs 2000–2004

• Different positions at Sw Ministry of Health & Social Affairs 1993–2000

• Member of Sw Government Life Science Advisory Board

• Member of IFPMA Council & Heads of Association Committee

• Member of EFPIA Board & Co-Chair of EFPIA Heads of Association Committee

• Chair of the Sw medicines e-Verification organization (e-VIS)

• Member of Sw Research Council Committee on Clinical Trials

• Member of the Board of semi-governmental Swecare Foundation

• Previously on the Boards of Sw Anti-Corruption Institute, Sw Health Policy Forum, Karolinska Institute, Karolinska Innovation Holding & Sw Institute for Health Economics

Agenda – Financing, Pricing & Reimbursement of medicines

• Brief intro to LIF Sweden

• Some basic facts on Sweden – setting the scene

• Swedish pharmaceutical market

• ‘Value-based’ HTA model

– 2002 Reform

• Pharmaceutical financing

• On-going developments of P&R model

90 members - the research-based pharmaceutical industry in Sweden

BGP Products AB

LIF Board

Malin Parkler (chair)CEO Pfizer

Amy van BuskirkGeneral ManagerRoche

Anna-Kaija GrönbladCEOSanofi

Björn BerglundCEOSwedish Orphan Biovitrum

Iddo LeshemCEOBristol-Myers Squibb

Judith LoveCEONovartis

Linn Mandahl (vice chair)CEOAbbVie

Niclas KarlssonCEOGlaxoSmithKline

Jan G. SmithFounder and CEOAbigo Medical

Adjunct Representative IML

Niels Abel BondeCEONovo Nordisk Scandinavia

Jacob TellgrenCEOMerck Sharp & Dohme

Michelle WernerCountry President, Nordics/Baltics Astra Zeneca

Tashia LentzCEOAstellas Pharma

Tomer FefferCEOBayer

Johan StrömCEOBiogen Sweden

Sweden - some basic facts• Large but sparsely populated country:

– 450 000 km² (10% of EU area) with 10.2 Mn inhabitants (2% of EU population)

• Universal tax-based healthcare & care governed at 3 independent levels:– National Government only influences healthcare & care by laws, Government agencies & complementary

financing– 21 Regions with taxation right have full responsibility for healthcare services & healthcare technologies – 290 Municipalities with taxation right have full responsibility for care & welfare technology (elderly,

disabled etcetera)

• Private providers: – 36 percent of all patient visits take place at private healthcare providers – 24 percent of hour worked in elderly care in the home are provided by private providers– 68 percent of persons with personal assistance (for disabled persons) have chosen a private provider

• Over 650.000 individuals have private healthcare insurance (nearly 14% of all employees)

Sweden = high rankings in global innovation scoreboards

2019-10-16

#1 “EU innovation leader” 2019 , followed by Finland, Denmark and the Netherlands.

#2 “The Global Innovation Index (GII) 2019” Creating Healthy Lives The Future of Medical Innovation

#7 “Bloomberg Innovation Index: 10 most Innovative Economies in the World”

Sweden = High healthcare qualityEFPIA Tweet on World Cancer Day (2019.02.04)

Conflict = balancing (national) interests

Innovation Agenda

Investments in R&D

Pharma production & Exports

Company RoI

Regional payers

Cost control

Minimizing risk

Responsibility ’only’ for HC

2019-10-16

Swedish pharmaceutical market

• Swedish Healthcare Act– The objective of the healthcare system is good health & healthcare on equal

terms for the entire population

– Healthcare should be given with respect for the equal value of all people & for the dignity of the individual. Those with the greatest healthcare needs should be given the highest priority

• Pharmaceutical legislation is a social insurance legislation to give all residents equal access to the treatments they need– Pharmaceutical market = ’mature market’ with strong cost (effectiveness) focus

• There are hardly any private insurances covering pharmaceutical expenses

6.6 million Swedes filled prescriptions in 2017

0

50,000

100,000

150,000

200,000

250,000

300,000

Nu

mb

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of

pe

op

le

Women Men

Source: Pharmaceutical Register, National Board of Health and Welfare 2017

Pharmaceuticals = a limited share of society’s total healthcare costs

Total healthcare expenditure SEK 402 billion

Curative and rehabilitating health care SEK 252 billion

Pharmaceuticals and other goods SEK 59 billion

GDPSEK 4,405 billion

Source: Statistics Sweden Health Accounts 2016

Pharmaceuticals = a limited portion of total healthcare costs

0 50 100 150 200 250 300

Inpatient

Outpatient

Total

SEK billion

Pharmaceuticals Curative and rehabilitating healthcare

7.9%

Source: Statistics Sweden Health Accounts 2016 and EHM Concise

21.4%

16.8%

Cost trend per capita - past 10 years

12,547

3,287 3,762

16,353

4,478 4,260

0

2,000

4,000

6,000

8,000

10,000

12,000

14,000

16,000

18,000

Specialist care Primary care Pharmaceuticals

SEK

2008 2017Source: SALAR and EHM Concise

+30%

+36% +13%

Sweden has high per capita healthcare costsHealthcare expenditure and pharmaceutical expenditure in outpatient care

0

1,000

2,000

3,000

4,000

5,000

6,000

7,000

8,000

9,000

Latv

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Luxe

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Swit

zerl

and

USD

per

cap

ita

Healthcare expenditure per capita Pharmaceutical spending per capitaSource: OECD 2017

Sweden invests a large percentage of GDP in healthcareHealthcare expenditure (range) and pharmaceutical expenditure in outpatient care

0

5

10

15

20

25

30

35

Luxe

mb

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Po

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Bel

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Net

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Den

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Au

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No

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Swe

den

Ger

man

y

Fran

ce

Swit

zerl

and

Shar

e %

Health expenditure as share of GDP Pharmaceuticals as share of health spending

Sweden is one of four countries where healthcare expenditure as a

percentage of GDP exceeds pharmaceutical expenditure as a

percentage of healthcare expenditure.

Source: OECD 2017

Sweden has average per capita pharmaceutical expenditure in outpatient careHealthcare and pharmaceutical expenditure, respectively, in outpatient care (range)

01,0002,0003,0004,0005,0006,0007,0008,0009,000

Den

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Po

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Net

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Icel

and

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Fin

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Swed

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zerl

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USD

per

cap

ita

Healthcare expenditure per capita Pharmaceutical spending per capitaSource: OECD 2017

The percentage of total pharmaceutical expenditure in

outpatient care varies by country

A small percentage of Swedish healthcare expenditure goes to pharmaceuticalsHealthcare and pharmaceutical expenditure, respectively, in outpatient care (range)

0

5

10

15

20

25

30

35

Den

mar

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Net

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lan

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No

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Swed

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Bel

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Spai

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Po

lan

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ece

Lith

uan

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Latv

ia

Hu

nga

ry

Shar

e %

Health expenditure as share of GDP Pharmaceuticals as share of health spending

The percentage of total pharmaceutical

expenditure in outpatient care varies by country

Source: OECD 2017

Three distinct markets for pharmaceuticals

Prescription medicines

administered by patient

Medicines administered by healthcare staff

Over the counter (OTC) medicines

administered by the patient

72% 19% 9%

Payers & price regulation for pharmaceuticals

Prescription medicines

administered by patient

Patient & Regions (via Gov’t subsidy)

Act on pharmaceutical

benefits, etc.

Medicines administered by healthcare staff

Regions

Public Procurement Act

(LOU)

Over the counter (OTC) medicines

administered by the patient

Patient

Free pricing both for pharma

companies & pharmacies

Patients protected from high costs

• First law 1955

• Residents in Sweden should be able to buy the medicines they are prescribed, regardless of financial means

Unsustainable cost increases in the 1990:s-> HTA reform in 2002 for reimbursed medicines

HTA reform 2002 - Pharmaceutical benefits Act

• Prior to 2002 essentially all prescribed medications = reimbursed

• Since 2002, only medicines approved for reimbursement based on the Pharmaceutical Benefits Act & the ‘ethical platform’ are subsidized

– Reimbursement decisions should be based on three ethical principles: • principle of human dignity

• principle of need and solidarity

• cost-effectiveness principle

• Costs under this Act are reimbursed by the patient’s residential Region

Pharmaceutical benefits Act (2002:160)

• Companies apply to have medicines covered by the pharmaceutical benefits scheme and may also request that a medicine no longer be covered by the pharmaceutical benefit scheme

• The company’s documentation must meet the criteria under section 15:

– the costs of using the product, subject to the provisions of the Health and Medical Services Act must be reasonable from medical, humanitarian and socio-economic considerations, and

– that there are no other available medications or treatment methods which after overall consideration of the intended effects and harmful effects can be judged as significantly more suitable for the purpose.

• The company and the Regions are provided with an opportunity to confer before the Swedish Dental and Pharmaceutical Benefits Agency (TLV) reaches a decision

• TLV may at its own discretion decide that a medicine shall be included in the benefits scheme, that a medicine shall be included only for a particular use and/or combine the decision with special conditions.

• Price changes may be made at the initiative of TLV, at the request of the marketing party, or by a Region. The party requesting the change has the right to confer with the agency.

Pricing during the life cycle of a medicine after 2002 HTA Reform - Prescription medicines

Value-Based Pricing

Product-based

Health economic data

Limitations & special conditions

TLV Committee takes decision

Reassessment of reimbursement status

Initiated by TLV

Sometimes based on price change application from Region

Focus on cost savings

Generic substitution

‘Product of the Month’

65% rule

15-year rule

15 year after the HTA Reform - Sweden is not extreme in any aspect..…except for very low prices on generics

Competition after patent expiry gives ‘headroom for innovation’

Generic competition

~ SEK 8 billion

~ 60% of volume

~ 20% of costs

Patented medicines

15 top selling products

~ SEK 6.5 billion

Cost does not reflect useBecause of Value Based Pricing & ‘Product of the Month’

0%

20%

40%

60%

80%

100%

Use (DDD) Cost

Other (usually older medicines of natural origin)

Generics/Biosimilars

Parallel import

Original

Source: IQVIA InformX 2017

Pre & post LoE – Sw prices in international context

Funding of pharmaceuticals• Specific Gov’t subsidy for Pharmaceutical Benefits Scheme (72% of market

value)– Based on forecast from the National Board of Health & Welfare

– Agreement between the Sw Government & SALAR (the Regions’ association)

– Allocation to the Regions based on ‘needs’ model

– Solidarity financing - HIV, hemophilia & Gaucher’s disease

– Regions have different models for how the Gov’t subsidy is allocated to operations• Often based on own forecast

• Mix of centralized & decentralized budget

• Certain Regions have special funds for new medicines in a central budget associated with local adoption, e.g. Region Västra Götaland

• Regional tax for in-patient medicines (19% of market value)– Usually budgeted together with other in-patient care expenses

– Enumeration by ‘a few percent’ yearly

Medicines are paid for by patients, a separate Gov’t subsidy for the Pharmaceutical Benefits & Regional tax

Patient – self medication 9%Patient/Region (Gov’t Subsidy) – no reimbursement9%

Patient –Co-payment in benefits13%

Region (Gov’t subsidy) – Benefits in tiers 14%

Region (Gov’t Subsidy) – Patient ‘free pass’ 36%

Region (Regional tax) In-patient care19%

Source: SoS, Pharmaceutical Register, 2016 and EHM Concise

Sw pharmaceutical market – on-going developments

• HTA for both prescription & hospital medicines – Increasingly complex system

• Increased collaboration between regions to secure equal access to new medicines

• Increased use of ‘confidential’ agreements – mainly rebates

Nationwide managed introduction of medicines

Source: www.janusinfo.se

HORIZON SCANNING

SELECT

ION

DECISION ON

NATIONAL

COOPERATIO

N

HEALTH

ECONOMICS

VALUATIONAPPROVAL NEGOTIATION/P

ROCUREMENT

RECOMMENDATION

ADOPTION

FOLLOW-UP

All county

councils and

regions are

involved

throughout the

entire process

Pre 2015

Dec. 18, 2018

Hospital medicines

Prescription medicines

Horizon scanning

(Four county

group)

Decision on level

of collaboration

(New Therapies

(NT) Council)

Adoption/follow

-up protocol

(Four county

group)

Preliminary

study

(TLV)

Health

economics

evaluation

(TLV

administration)

Negotiation/procu

rement

(Negotiation

delegation/company

)

New Therapies

(NT)

recommendation

(New Therapies

(NT) Council)

Agreement

(Company and negotiation

delegation/county councils)

Adoption/Use

(in each county

council)

Follow-up

(Four county

group/

TLV/companies)

Follow-up

(Four county

group/

TLV/companies)

Adoption/Use

(in each county

council)

New Therapies

(NT)

recommendation

(New Therapies

(NT) Council)

Decision

(TLV committee)

Health

economics

evaluation

(TLV

administration)

Subsidy

application

(Company)

Tripartite discussions, managed

entry agreements

(negotiation delegation/proxy group

representing county councils,

companies and TLV)

Today

Dec. 18, 2018

Hospital medicines

Prescription medicines

Horizon scanning

(Four county

group)

Decision on level

of collaboration

(New Therapies

(NT) Council)

Adoption/follow

-up protocol

(Four county

group)

Preliminary

study

(TLV)

Health

economics

evaluation

(TLV

administration)

Negotiation/procu

rement

(Negotiation

delegation/company

New Therapies

(NT)

recommendation

(New Therapies

(NT) Council)

Agreement

(Company and negotiation

delegation/county councils)

Adoption/Use

(in each county

council)

Follow-up

(Four county

group/

TLV/companies)

Follow-up

(Four county

group/

TLV/companies)

Adoption/Use

(in each county

council)

New Therapies

(NT)

recommendation

(New Therapies

(NT) Council)

Decision

(TLV committee)

Health

economics

evaluation

(TLV

administration)

Subsidy

application

(Company)

Tripartite discussions, managed

entry agreements

(negotiation delegation/proxy group

representing county councils,

companies and TLV)

Pricing during the life cycle of a medicine after2015 - both prescription & hospital products

Value-based pricing

Product based

Health economic assessment

- also for hospital products

Restrictions & special conditions

Three party negotiations

TLV Board makes decisions

Regions’ NT Council make recommendations

Reassessments

Initiated by TLV

More often based on applications for price change from Regions

Focus on saving potential

LoE

‘Product of the month’

65% rule

15-year rule

Biosimilars

‘Three party negotiations’ Motivated by risk sharing - main effect from increased competition

IntroductionCompetition

On PatentLoE

Competition

LoE

2019-10-16

A challenging transformation for industry … resulting in cost control

2019-10-16

+500 Msek

Hospital

THANK YOU!

2019-10-16

Back-up slides

2019-10-16

Increasing demographic pressure on public finances

Källa: SKL http://www.natverken.se/media/8008/roger-molin-effektiviseringsutmaningen-sammanfattning-nhd-170420.pdf

Sw Public healthcare debate & trends

• New public management & value-based healthcare

• Equal care & patient access

• Demographic & structural challenges – Ongoing reform to shift resources: hospital care > primary care

– Reform to centralise highly specialised healthcare

– National collaboration among regions for ‘knowledge management’

• eHealth vision 2025: ‘World leading in using opportunities offered by digitalisation and eHealth’

• Life Science in focus

Copyright © 2017 IQVIA. All rights reserved.

3 April 2019

EFPIA Patient W.A.I.T.

Indicator 2018 survey

44

The rate of availability, measured by the number of medicines available to patients in European countries as

of 2018: for most countries this is the point at which the product gains access to the reimbursement list*.

Rate of Availability

0 3 7 10 7 12 12 11 16 22 17 21 26 23 27 22 25 26 32 31 31 32 32 34 36 38 38 39 38 40 45

1 3 2 5 2 9 8 612 14 15

16 19 16 17 21 2221 19 25 25 24 30 26 29 32 34 32 35

38

01 4 5 5

2 5 6

9 15 12 9 10 12 23 18 20 17 23 19 18 2725 32 29 31 29 34 31

38

0

20

40

60

80

100

120

140

Rat

e o

f A

vaila

bili

ty

2015 2016 2017 Data N/A EMA approved

Data N/A- data is not provided by associations (companies have not sent data or are not members of the association)

*See next slide for country specific definitions

2019-10-16

46

The rate of availability, measured by the number of medicines available to patients in European countries as

of 2018, compared to the rate of availability in the 2017 W.A.I.T. indicator study

Rate of Availability (%)

Data N/A- data is not provided by associations (companies have not sent data or are not members of the association)

Note: there are differences in country scope and methodology for product selection between the 2017 and 2018 studies (26 countries included in 2017 study; 30

countries in 2018 study)

14% 20% 21% 23% 28%31% 37% 39% 40% 41% 47% 49% 51% 53% 53% 55% 59% 68% 69% 71% 73% 77% 79% 82% 85%

33%

86% 80% 79% 77% 72%

3%

60% 61%34%

59% 53% 51% 49% 47%28% 34% 38% 32% 31% 29% 27% 23% 21% 18% 15%

0%

20%

40%

60%

80%

100%

Rat

e o

f A

vaila

bili

ty

20

17

stu

dy

(20

14

-20

16

)

3% 9% 13% 14% 16%19% 20% 23%

36% 38% 40% 42% 43% 45% 51% 53% 56% 58% 60% 62% 62% 69% 74% 78% 79% 83% 84% 86% 88%

24%36% 23%

87%

11%

84% 81% 80% 77%64% 62% 60% 58% 57% 55% 49% 47% 44% 41% 40% 38% 38% 30% 26% 22% 21% 17% 16% 14% 12%

0%

20%

40%

60%

80%

100%

Rat

e o

f A

vaila

bili

ty

Available Not Available

20

18

stu

dy

(20

15

-20

17

)

47

The average time between marketing authorisation and patient access - the number of days elapsing

from the date of EU marketing authorisation (or effective marketing authorisation in non-EEA countries) to the

day of completion of post-marketing authorisation administrative processes

Length of market access delays (average)

925

726

634 618 612 603547 539

498 492 486449 445 428 426 417 402 401 395 385

333292 291 288 269

220 209171 146 119

0

100

200

300

400

500

600

700

800

900

1000

Ave

rage

de

lay

(day

s)

In most countries patient access equates to granting of access to the reimbursement list, except for hospital products in DK, FI, NO, SE where some products are not covered by the general

reimbursement scheme and so this shorter delay is artificially declining the median and average.

• In France, some innovative products without competitors can be made available prior to market authorisation under the system of Temporary Authorisations. As these are not taken into account in the analysis, the average for France is higher than in reality.

• Average of 29 European countries in the analysis (excludes Macedonia)

48

The average time between marketing authorisation and patient access - compared to the average delay

in the 2017 W.A.I.T. indicator study

Length of market access delays (average)

Note: there are differences in methodology for product selection between the 2017 and 2018 studies; chart only shows countries overlapping both studies

979

563

637

356

632

436

535

419

500467

408 391

479 494

383411

374

291250

329281

228

111 123155

106

925

726

634 618 612 603547 539

498 492 486449 445

417 402 395 385333

291 288 269220 209

171146

119

0

200

400

600

800

1000

1200

Ave

rage

de

lay

(day

s)

2017 study: 2014-2016 2018 study: 2015-2017

49

The average time between marketing authorisation and patient access - the number of days elapsing

from the date of EU marketing authorisation (or effective marketing authorisation in non-EEA countries) to the

day of completion of post-marketing authorisation administrative processes

Length of market access delays (median)

969

677

585 577 547 534493 492 457

418 411 407 398 382 369 352 351 344 340 320 303 272 259196 167 138 128

75 67 47

0

200

400

600

800

1000

1200

Me

dia

n d

ela

y (d

ays)

In most countries patient access equates to granting of access to the reimbursement list, except for hospital products in DK, FI, NO, SE where some products are not covered by the general reimbursement scheme and so this shorter delay is artificially declining the median and average.

• In France, some innovative products without competitors can be made available prior to market authorisation under the system of Temporary Authorisations. As these are not taken into account in the analysis, the average for France is higher than in reality.

• Average of 29 European countries in the analysis (excludes Macedonia)

50

The average time between marketing authorisation and patient access - compared to the average delay

in the 2017 W.A.I.T. indicator study

Length of market access delays (median)

1,021

525

638601

316

534

374 383

460429

387

454

282

419378

343 347

235288

216

0

163

44 56 73 51

969

677

585 577547 534

493 492457

418 411 407382

351 344 340 320272 259

196167

138 12875 67 47

0

200

400

600

800

1000

1200

Ave

rage

de

lay

(day

s)

2017 study (2014-2016) 2018 study (2015-2017)

Note: there are differences in methodology for product selection between the 2017 and 2018 studies; chart only shows countries overlapping both studies