NICE will now evaluate all new drugs on their first indication and major new indications. NICE had been established to deliver recommendations on access to drugs that could pose funding problems. It conducts a medico-economic assessment of the cost per QALY (Quality-Adjusted Life Year), an economic indicator measuring the quality-adjusted gain of years of life. If it is too high, NICE issues a negative recommendation for use by the NHS. This guideline is typically followed up, given that British doctors are directly under contract with the NHS. The notion of "value-based pricing" is particularly important so that pricing is fixed depending on the value given to the product.
While the medico-economic approach is fundamental in the United Kingdom, it is not without its limits, since it can restrict access to innovative treatments, in cases where uncertainty about the drug’s effectiveness is too high or the cost per QALY is assessed to be excessive.
Innovative mechanisms for innovative medicines: the Italian case
In Italy, the AIFA (Agenzia Italiana del Farmaco) is responsible for pricing, after negotiation with pharmaceutical laboratories, while care is provided by the SSN (Servizio Sanitario Nazionale) with highly decentralized management. The SSN is organized in the form of a network of local health agencies, each able to define its modalities and level of care. Price negotiations are held on the basis of the product's cost-effectiveness ratio, risk-benefit, foreseeable financial impact, forecasted sales volumes, as well as prices and consumption in other European countries. Prices are usually set for two years. If no price agreement is reached, the drug is reclassified as non-refundable. As in Germany, price references exist with cap mechanisms.
To contain drug prices, Italy has also introduced new types of agreements where pricing can be set conditionally, through performance contracts. These are contracts where the terms of payment are contingent on subsequent measures of the drug’s effectiveness. There are four types:
- cost sharing contracts (negotiation of a discount for all patients eligible for treatment during the first treatment cycles),
- risk sharing contracts (negotiation of a discount for "non-responder" patients for whom the treatment did not work after clinical evaluation),
- payment by results (full reimbursement of treatments by the manufacturer for "non-responder" patients) and,
- success fee (treatment is only paid to the manufacturer for patients for whom the treatment worked. Health insurance does not make advance payments and only pays if the result is verified in real life).
These types of innovative pricing agreements are favoured by the use of a database collecting real-life evidence, pending the timely update of the database. An Italian study in 2015 demonstrated the relative effectiveness of the first three mechanisms: in 2012, laboratories paid €121 million to the Italian health insurance through the first three types of performance contracts out of a total of €3.7 billion in drug expenses. In 2015, this amount reached approximately €200 million according to the National Cancer Institute (INCa). Success fee contracts thus seem promising for containing drug expenses.
Performance contracts at the local level: the Swedish case
In Sweden, the Tandvårds-Läkemedelförmånsverket (TLV), the pharmaceutical and dental authority decides both drug pricing and the health insurance coverage rate. Manufacturers first issue price proposals, which are then analysed by the TLV. This is done in close collaboration with the Sveriges Kommuner och Landsting (SKL), an association of Sweden’s 21 local authorities, counties, which are responsible with municipalities for health policies.