The European Social Preferences Measurement (ESPM) studyproject: social cost value analysis, budget impact, commercial life cycle revenue management, and the economics of biopharmaceutical Research & Development (R&D)

The European Social Preferences Measurement (ESPM) studyproject: social cost value analysis, budget impact, commercial life cycle revenue management, and the economics of biopharmaceutical Research & Development (R&D)

2016 8th European Conference on Rare Diseases & Orphan Products (ECRD 2016), 26-28 May 2016, Edinburgh, UK

Schlander, M. | Holm, S. | Nord, E. | Richardson, J. | Garattini, S. | Kolominsky-Rabas, P. | Marshall, D. A. | Persson, U. | Postma, M. | Simoens, S. | de Solà Morales, O | Tolley, K. | Toumi, M. | Telser, H. | Volume: , Issue: , Pages: ,

The cost of new medicines has never been as controversial as nowadays. Health care policy makers are concerned that rising drug prices may lead to unsustainable growth of health care expenditures. The debate, however, frequently suffers from confusion of cost per unit and budget impact, i.e., the notion of “affordability.” In their quest for value for money, policy makers have turned to systematic health technology assessments (HTAs) as a tool to aid the appraisal of the clinical, economic, social, legal and ethical implications of the adoption, and the appropriate use, of medical technologies. HTAs of interventions for rare and ultra-rare disorders (URDs) present specific challenges. Some treatments for URDs are associated with acquisition costs exceeding 100,000€ per patient year, consequently not meeting conventional benchmarks for cost effectiveness (CE). On the other hand, the budgetary impact of orphan medicinal products (OMPs) has been limited and seems unlikely to escalate massively in the near future. Payers have often been more concerned about the cost of adding new programs than about their CE, and many HTA agencies have created exemptions for OMPs or URDs. This corresponds to the strategy of manufacturers to maximize life cycle revenues, in light of the high fixed / low variable cost structure of the R&D-based biopharmaceutical industry. Recent estimates of the average R&D cost per new product converge in a range between US- 1.0 and 1.9 billion, when factoring in out-of-pocket costs, risk of failure, development times, and cost of capital. The economics of R&D may, at least in part, explain the observed inverse relationship between acquisition costs per patient and prevalence. Exempting OMPs from CE benchmarks may have been a pragmatic work-around, but created controversy about the justification of a special status for OMPs (or URDs). The situation would be different if the focus of health economic analyses was shifted towards the social value associated with patient access to interventions. Then, opportunity cost would be represented by budgetary impact (or cumulative transfer cost). Since societal value is not fully captured by simple aggregation of incremental health gains (weighted based on individual preferences), social norms and preferences need to be taken into account, too. Despite the increasing number of studies showing the relevance of social preferences, empirical evidence has been limited regarding their relative importance, including their interaction, and the impact of framing effects. The ESPM project has been designed to further our understanding of relevant social preferences.