Simon-Kucher previously conducted a review of market access outcomes for innovative oncology agents in the EU back in 2014. The findings from that study demonstrated that oncology market access in the EU could be compared to a recipe for preparing Southern style BBQ pulled pork – low, slow, and shredded. Oncology prices in the EU are low, are very slow in coming to an agreement, and manufacturers sometimes find their trials shredded so that different sub-populations are deemed to have different benefits.
As an update to that prior work, Simon-Kucher has again conducted a thorough review of the market access outcomes for innovative oncology products in the EU5 to see if anything has changed in the last few years. Has the price gap between the US and EU started to close as more products launch? Has it become easier to achieve quick market access as payers become used to negotiations for these types of products? The answer, it seems, to all of the above questions is a resounding “no”.
Timing of EU market access
In our previous article, we found that a drug can expect a long wait before reaching most EU markets. While the process in Germany is much faster (with immediate market access and a negotiated price in the vast majority of cases in one year’s time), the process in the Southern European markets of France, Italy, and Spain can very often take one to two years after EMA approval. There was significant variability in the amount of time it took for a single drug to reach agreements across different counties, with no visible trend. In this article, we revisit this topic with more data points to investigate how market access timing may have changed in the past few years.
Figure 1 illustrates the time between EMA approval and price agreement in the negotiated markets of France, Germany, Italy, and Spain since 2011. Unfortunately for oncology manufacturers, the trend has continued over the last few years. The period of price negotiation can vary significantly from a few months to almost two years. No clear pattern can be seen across these three countries as there are plenty of examples where each country was the first to come to a negotiated agreement, as well as examples where each country was the last to come to an agreement.
We also investigated how the length of this time period has changed in the past few years. No pattern was observed in France, while in Italy and Spain, the observed average market access time appears to have decreased in recent years. However, it is important to note that that several EMA approved drugs since 2015 have not yet reached agreements and are therefore excluded in this analysis. When these more recent therapies finally reach an agreement, the average time will certainly increase.
EU-5 launch prices versus US launch prices
The price differences between US and EU was a second topic of focus in our previous article. We had previously found that the EU oncology drug price at launch was on average 30-40% lower than the US WAC price, and that this gap only widened post-launch. We made the same observation when including oncology drugs approved since 2015 (Figure 2). As before, Germany appears to have the lowest prices amongst the EU-5, but there is a significant caveat. All net negotiated agreements in Germany are publicly available, so the net price is truly the net price. In France, Italy, and Spain, there are additional confidential agreements that lower the actual net price.
Interestingly, the average price across all products across France, Italy, and Spain is remarkably similar – differing by only a few percentage points. However, there is rather unsurprisingly, significant variability when comparing across different drugs. Figure 3 shows the index of average prices in EU-5 markets against US WAC price at the time of first EU-5 agreement, revealing that the price for some drugs could be as low as 15-30% of the US WAC price. However, with a few exceptions, the EU-5 price was always lower than the US price. For the few drugs that achieved a higher launch price in the EU-5 than in the US, the HTA ratings were not superior to the ratings of other drugs we investigated; the reason why these drugs were able to achieve a higher launch price relative to the US price is unclear.
Price Trends over Time
With data from over a 7-year period, we also investigated if there were any noticeable trends in pricing over time. Specifically, we looked into the price gap between the US and EU-5, the price difference between the freely-set and negotiated prices in Germany, and the relationship of prices in France, Italy and Spain relative to the negotiated prices in Germany.
With increased public attention on drug prices in the US and more open access to information, we initially hypothesized that the price gap between US and EU-5 might have decreased over time. However, the opposite trend was observed from our data (Figure 4). The price gap for newly launched oncology drugs between the US and EU-5 has actually consistently widened over the past several years. In 2011-2012, the average EU-5 price was about 20% lower than the US WAC price at the time of first EU-5 launch. By 2016-2017, the average EU-5 and US price gap increased to about 47% when indexed to the US WAC price. This is certainly not a great news for pharmaceutical manufacturers thinking about launching in Europe. We believe this trend is due to the continuing use of price comparators and HTA assessments that are very common in European markets. In the EU-5, the price of price comparators does not increase over time and thus, the price of newly launched drugs are relatively controlled. On the other hand, oncology drug prices have continued to increase in the US, with new drugs often launched at a premium over their comparators. The combination of these two mechanisms has led to the widening of the price gap.
We observed minimal variation over time in the difference between the freely launched price and the eventual negotiated price in Germany (Figure 5). The post-negotiated price is on average at a 20% discount to the freely launched price, with most drugs being within the range of 10%-30% discount. This result suggests that manufacturers can generally expect a 10-30% price reduction post-negotiation. Since unreasonably high freely-launch prices would set a negative impression before entering negotiations and manufacturers would have to pay-back the government the price difference for the extended negotiation period if negotiations took more than a year, manufacturers should set a freely-launch price at most about 30% above the anticipated willingness to pay. In addition, manufacturers should set a launch price consistent with their international launch strategy since other countries may be referencing the Germany prices during their negotiation.
Finally, we found no significant changes in the prices in France, Italy and Spain relative to the post-negotiated price in Germany (Figure 6). According our research, the average price in the three countries was generally 5%-20% higher than the post-negotiated German price. However as mentioned previously, this is due to discounts in Italy, Spain and the UK being hidden in the net price and not reflected in the list prices used for this research. On the other hand, the post-negotiated German ex-manufacturer prices can be considered the true net prices.
“Shredded” clinical trial analyses
In the previous article, we discussed that some HTA agencies in Europe looked into patient subpopulations in the clinical trials to identify the subgroups of patients that would derive the most benefit, and consequently, which subgroups would receive less benefit. This practice is still actively being implemented today, especially in Germany. We looked at the oncology drugs that received EMA approval since 2011 and 46 of them have undergone G-BA evaluations. Of the 46 drugs, 27 of them (59%) have more than one patient subgroup evaluation for a single indication. These subgroup analyses were likely not intended by the manufacturers. Furthermore, 21 out of the 27 drugs (78%) received a “no benefit” G-BA rating in at least one of the patient subgroups (Figure 7), demonstrating the willingness of G-BA to “shred” the clinical trial results and pick out the bits that G-BA believes to provide no additional value.
For oncology products, the European market remains less rewarding to pharmaceutical manufacturers than the US market due to the long negotiation period, much lower prices relative to the US, and required price concessions for combination products. It is also noteworthy that the price gap between US and EU has increased over the years and will continue to grow. Given that many of the EU-5 countries are increasingly using HTA assessments to understand the additional benefit to patient subpopulations and to determine economic savings, pharmaceutical manufacturers will need to be realistic regarding the added value of their new products in order to determine achievable prices. Innovative products will still be rewarded, but “me-too” products with incremental improvements can expect long waits for market access and lower price potentials.