Transcript Price-Volume Agreements

Price-Volume Agreements
– prospects for Poland
Norbert Wilk
[email protected]
Agency for Health Technology Assessment in Poland
Price-Volume Agreement
(PVA)
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One of drug policy measures
A volume control tool
The price of a pharmaceutical is agreed between
public authorities and a manufacturer on the basis of
a forecast volume of sales. If the actual sales volume
exceeds the forecast, the price of the pharmaceutical
is usually reviewed downwards [PPRI Glossary]
Particularly useful in situations where unit prices are
higher than comparators and there is potential for
high prescription volumes, or when there is
significant uncertainty about the estimated volumes
PVA – what it is, what it is not
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A penalty on success?
A penalty for inadequate market research and poor forecasting
A method of sharing risk between the manufacturer and the
public payer, based on pre-agreed relation of price of the drug
to the volume of sales
A method to put certain limits to sales forces („the armies of
sales representatives”)
In PVA the sponsor of a particular drug agrees to a price
reduction for any sales that exceed a pre-agreed sales volume
In rebate agreements the sponsor offers a rebate (of varying
size) for the cost of increased expenditure over a set annual
subsidisation cap / threshold
Rebate arrangements
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Rebating a percentage of the price of each unit sold that is in excess of
agreed annual set caps.
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any sales in excess of $20 million in a year.
Estimating the potential use outside the PBS restriction and rebating a
proportion of this use.
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Example: The sponsor agrees to rebate x % of the cost of each unit sold for
Example: The sponsor and the Department agree that up to y % of a
particular drug’s sales may be for uses that are not subsidised by the PBS.
The sponsor would thereby rebate y% of that drug’s total sales to the
Government.
Agreeing to a common annual sales cap for all the drugs used to treat
a particular condition and rebating any excess according to each
sponsor’s market share.
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Example: Four drugs are used to treat a particular condition and the agreed
cap for their combined sales is $80 million per year. In a particular year,
sales are $100 million, with the four sponsors having sold: $10 million, $20
million, $30 million and $40 million respectively. Sponsors rebate a total of
$20 million to the government, paying: $2 million, $4 million, $6 million and
$8 million, respectively, based on their market share.
[PBS, Australia]
Rebate arrangements (2)
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Absolute rebate based on the price of an alternative drug (where use
of drug A above a certain level may be inconsistent with the costeffectiveness recommendation of the PBAC).
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(say $100) for sales up to $15 million per year, but then supply the drug at
the price of the cheaper alternative drug B (say $60) for any sales in excess
of $15 million, rebating the difference in the prices to the Government.
For an additional indication to an already existing drug, limiting the
total cost to the PBS for the current indication(s) plus no more than
$10 million. This limits the cost to the PBS for the new indication, to
$10 million per year and may remove the need for Cabinet
consideration.
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Example: The sponsor agrees to supply drug A at the drug’s agreed price
Example: The use of a drug already listed on the PBS, and costing $25
million per year, is extended to include treatment for another condition or
indication. The sponsor agrees to pay back to the government any costs
that exceed $35 million ($25 + $10) in a given year. This caps the cost to
the PBS for the additional use to $10 million in any year.
Agreeing to rebate the full amount (100%) of any cost to the PBS for a
particular drug that exceeds $10 million per year. This limits the cost to
the PBS at $10 million per year and may remove the need for Cabinet
consideration.
PVA vs. Rebate arrangements
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Semantics…
For a manufacturer it is easier to accept
rebate idea than a reduction of price
(although both may lead to the very
same impact on turnover)
PVAs in Poland
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Some attempts were made, but never came into action
Reported lack of adequate legal solutions
Fears of accusation as to inadequate protection of public
interest
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Credible epidemiological data coupled with sales of comparators to
verify whether the sales forecasts applied for by the manufacturer
to be included in PVA are not over the top
Continuation of PVAs: what if a manufacturer does not want to
continue with arrangement? The payer would be put against the
wall with a number of patients on that drug and nobody willing to
share risk with him („free sample situation”)
Need for more pro-active approach from the MoH or the NHF
Price-Benefit arrangements
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The risk is shared on the basis of
clinical outcomes, not sales
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payment for effect (bortezomib NICE, UK)
Risk sharing scheme (DMD in MS, UK)
Other ways to control costs
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Claw-back
Pay-back
Thank you for your attention!