Life Sciences Blog

Three trends that will shape EU market access in the next decade




The pharmaceutical industry is under tremendous pressure from governments and society to reduce the cost of drugs in most parts of the world. There is growing activism to link prices to the value of drugs in most Western countries. The companies themselves are trying to understand the emerging reality (and calls for change) for pricing and reimbursement of pharmaceutical products while balancing the need to support investment in R&D.

Many policy makers and payers believe, even in markets like the US, that pricing of pharmaceuticals is currently unsustainable and must be contained along the lines of European P&R systems. Meanwhile, European systems are going through further re-alignment with increasing demands from both national (and regional) payers to prove the value of drugs beyond established value dimensions. There are clear signals in the EU that the market access environment will become more stringent in the coming years.

The stakes are now higher than ever to understand and prepare efficient market access strategies for the next decade. Moreover, it will be interesting to decipher how much of the European market access perspectives translate over to the Atlantic.

For keeping a close watch on the European market access entanglements, we have identified three trends that we believe will take deeper hold on EU healthcare systems’ consciousness in the next ten years. These three trends will likely influence our judgement on Market Access Risk Scores (MARS) in the coming years.

A. Increasing use of patient access schemes

  • Current impact on market access– Medium
  • Likely future impact on market access – Very High
  • Difficulty in implementation – Low / Medium

There has been a consistent rise in the number of patient access schemes (PAS), or widely known as risk sharing agreements, not only in the UK but also in other European countries. These schemes, particularly finance-based ones, offer opportunities for manufacturers to have early interaction with payers to inform evidence generation and commercialisation strategy while helping payers understand the actual utility of the pharmaceutical product in real-world settings such as identifying the expected patient population who should benefit from treatment. Hepatitis C drugs such as Viekirax and Zepatier in Sweden and Epclusa in the United Kingdom are classic examples of the recent (January 2017) finance-based PAS tied to identifying treatment usage in specific population segments.

B. Wider adoption of payment by outcomes/results framework

  • Current impact on market access– Low
  • Likely future impact on market access –High
  • Difficulty in implementation – High

Payment by outcomes or results is a mechanism that is being widely adopted within the European healthcare landscape where all or part of the payment depends on a particular product achieving pre-specified outcomes. One of the key features of any payment by outcomes or results agreement is the collection and analysis of real-life health outcomes and effectiveness data, either from a cohort of patients or on a per-patient basis. One of the most important challenges in implementing a viable payment by results or outcomes agreement is the need to monitor the outcomes effectively. It puts the additional administrative burden on providers, who already suffer from a lack of adequate resources to monitor such arrangements.

Many experts believe that payment by results or outcomes agreements answer the dilemma where the payer perceives high risk related to paying for a medicine while the manufacturer is confident that the product has good efficacy. A recent example (February 2017) of one such collaboration to develop an effective pay for outcomes or results framework is the establishment of the new collaborative entity between the UK pharma industry and the Greater Manchester Health and Social Care Partnership (part of the UK's National Health Service [NHS]) in order to facilitate patient outcome-based research by companies on new medicines in the Manchester area, in collaboration with the NHS.

C. Rise of tendering of products in the same class

  • Current impact on market access– Medium
  • Likely future impact on market access –High
  • Difficulty in implementation – Low

There is increasing pressure on payers to justify the use of expensive medicines, especially when there are several therapeutically substitutable products within the same class of drugs. Tendering in such situations offers payers significant cost-saving opportunities while still allowing patients and physicians access to branded products. Implementation of tenders for outpatient drugs presents an attractive option for payers to drive prices close to marginal cost and over time – through successive tendering cycles – achieve savings target. However, an increasing preference for tendering can lead to a challenging market access environment for pharmaceutical companies as it can compress the prices to marginal cost, force companies to change the existing business model due to price reductions and increasing rebate contracts, and can even force companies to diversify their product portfolios to stay in the market.

The trends described above are likely to shape healthcare policy in the coming decade. A deeper understanding of these trends along with a sharper and up-to-date insight into various factors that drive market access risk in different countries will help companies develop strategies to address the price-value conundrum.

Praful Mehta is a Senior Life Sciences Analyst for IHS Markit
Published 17 May 2017

About The Author

Praful Mehta is a Senior Life Sciences Analyst for IHS Markit and is responsible for the development of new tools, platforms and capabilities. Praful has been a long-time advisor to senior teams within the pharma industry on issues of market competitiveness, business integration, and commercialization strategies.