By Nuala Moran
BioWorld International Correspondent
VANCOUVER, British Columbia - Forecasting the market for biotechnology products is becoming increasingly complex, with rapidly changing national approaches to pricing and reimbursement, and a global move to require pharmacoeconomic data.
That is impacting on the business plans of biotechnology companies and forcing them to factor these issues into the design of clinical trials.
"Many biotech companies' estimates and projections for markets fail to take account of pricing and reimbursement in different markets, and the increasing tendency for government to demand that a treatment represents a medical advance, rather than being technically novel," Neil Palmer, principal consultant at Palmer D'Angelo Consulting Inc., told the Seventh Pacific Rim Biotechnology Conference here.
"It does not matter if a drug is a biotechnology drug or not, the evaluation is identical," said Bob Nakagawa, director of pharmacy for the province of British Columbia. Biotechnology drugs tend to be very expensive per dose, and frequently need to be injected, putting them at a disadvantage in pharmacoeconomic terms. "So the challenge is to make sure they are worth it," he said.
"In the U.S., FDA approval no longer ensures commercial success," said Nancy Watson, vice president of reimbursement at the Lewin Group. "Reimbursement must be considered throughout a product's lifecycle."
Way back at the concept stage, biotechnology companies should ask themselves if the design of the project could be modified to maximize coverage, coding or payment, Watson said. Clinical trials should be designed to collect information that will be critical in getting insurer coverage. "You need to be looking for data over and above what is needed for FDA approval," she said.
Similarly, in Europe, new post-approval barriers to market are proliferating. "There are more and more hurdles to market access, and approval does not necessarily mean you can market the drug," said Francois Schubert, worldwide director, global health outcomes at Glaxo Wellcome plc.
For example, in the UK, the recently established National Institute for Clinical Excellence (NICE) makes stringent post-approval assessments of cost and effectiveness, whether, given the level of patient need, the National Health Service (NHS) can afford the drug, what influence it will have on how and where care is delivered, and whether, in the case of drugs such as Viagra, it is appropriate to fund it. "Cost containment is winning the upper hand over efficiency," Schubert said.
In its infamous first ruling, NICE said the NHS should not pay for Glaxo Wellcome's Relenza flu treatment because it had insufficient cost benefits. This had an impact around the world, delaying registration of Relenza as countries asked for more data. "In other words, you now have to change trials to prove that drugs are good value," Schubert said.
The cost-containment approach adopted by European governments is having an impact on drug pricing in North America and worldwide. For example, reference pricing, in which new compounds are compared to equivalent older and usually cheaper products, is now under consideration in Japan.
Countries also have adopted external reference pricing in which they compare the price of a drug in different countries. For example, Italy and Ireland refer to the price in four or five other countries and give the lowest price. "External reference pricing is driving prices lower," Schubert said.
More and more countries are demanding pharmacoeconomic data, and this is putting the previously free pricing environment of the U.S. under pressure. "Now you must show the value of your products. Cost containment is here to stay," Schubert noted.