Tag Archives: drugs

The politics of market access

Market access is wrapped in the politics of health

The attention politicians and stakeholders pay to healthcare and its challenges is a keen driver of the ease or difficulty companies experience with drug regulation and market access and has implications through the development process to discovery. How this manifests itself, in part depends on a country’s investment in research infrastructure, availability of scientific talent, as well as the competency and experience of experts in the various regulators, whether HTA or pricing.

One thing that focuses political minds is a crisis in the healthcare system, whether a cluster of unexplained deaths, systematic abuse of payment systems, medical corruption, poor hospital management, declining outcomes, drug shortages, golly, the list goes on. What drives reform, well as Harold Macmillan is reported to have said, “events, dear boy, events”.

Can market access be sensibly undertaken without consideration of political forces? Those who see market access as simply planning will no doubt be surprised when their plans are overtaken by events.

Politics is the exercise of power

Like bankers who need to know their customers, market access specialists need to have deep knowledge of regulators, and the very functioning of government.

In many countries, payers and governments exert monopsony power; they are often the only game in town when it comes to purchasing anything healthcare, whether doctors, hospitals or medicines. And regulators are monopoly suppliers of regulation, whether pricing, reimbursement decisions or HTA. Together, whether in a coordinated way or not, they set the tone for how market access will actually work, quite independently of the actual demand on the clinical ground for a new medicine or therapy.

Sense-making of political forces is a core competency for market access

Public bodies do not exist in a vacuum, but are determined by how political concepts are implemented by governments. In the main, if you are into archetyping, there are broadly three views of how government decides how a healthcare system will work:

1. some things are properly done by non-publicly owned agents because they have proved competent (pharmacies); but this does not mean they are unregulated;

2. some things are a mix of public (hospitals in some cases) and private entities (doctors and general practitioners);

3. some things are generally accepted to be public responsibilities (public health).

Over time, of course, events dictate how governments interpret these three broad roles, and they will move things from one area to another as a function of reform or policy.

What we are seeing right now is the emergence of new ways for governments to regulate through the availability of big data and data analytics. These show up in indicators of hospital performance for instance, or activity based funding. The ability to measure these accurately is necessary.

With even greater power from the data analytics, e.g. machine learning, we can anticipate greater use of predictive modelling of features of healthcare systems. Two examples stand out for me.

The first is pharmacovigilance. A ‘smart (in artificial intelligence sense) regulator’ could directly monitor for adverse drug reactions; this would alter how regulatory action occurs and impact the speed of decision making on safety.

The second is drug pricing. ‘Smart drug pricing’ would enable reimbursement regulators (pricing authorities) to build predictive analytical pricing models of new medicines performance in clinical use to more precisely model value pricing. This would obviously alter the pricing dynamic.

Other factors come and go in terms of acceptability by governments, most notably the role of contestable markets themselves in healthcare. Some, such as Alain Enthoven, believed that competition in managed markets could be a driver of service quality, improve responsiveness to patients, for instance. The purchaser/provider split, so-called, is one approach to apply what I have called a ‘game theory’ approach to setting service standards and quality. Actually, there are two ways to characterise quality in healthcare. One is through (rigid) specification of standards (the Crosby model) and the other is through continuous quality improvement [CQI] (the Deming model); there are others such as 6-sigma, Lean/Toyota, etc., but they are in my view just variants of these two main ways of understanding quality.

A lower tolerance for risk will lend itself to rigid standard setting with a corresponding impact on how new medicines are viewed, e.g. greater need for evidence prior to adoption, versus a higher tolerance for risk through CQI with e.g. conditional approval.

Risk and salience are key factors in politics and hence in market access

Politicians respond to events that are widely salient, while civil servants are tasked with dealing with ‘technocratic’ or procedural matters. Counterfeit medicines, something I’ve worked on, can be either a risk that can kill people, or a factor in intellectual property and copyright. The former is politics, the latter is technocratic. Focusing on the second means dealing with settled matters and the interpretation of rules and regulations. A health crisis, for instance, lifts the event to wider salience amongst the public and in so doing can constrain the freedom of politicians to act or not, indeed, whether they can ignore the issue or delegate it to civil servants. A crisis also creates a window of opportunity though which new ideas and changes can flow – as they say, you shouldn’t waste a good crisis.

Another source of political change comes from rights-based challenges to health policy. While often seen as only of relevance within legal rule sets, (i.e. technocratic), they are about citizens’ or patients’ rights and access to treatment and therefore have high public salience. In the US, right now, there is a major political issue around the ‘deferred action’ programme which funds care for immigrants. Hitherto a technocratic issue, it is now widely salient (people in general are learning about it) and politicians (a.k.a. lawmakers) actions are now constrained, perhaps tellingly by moral factors. Other noteworthy historical examples are the Chaoulli case in Quebec and the various cases decided by the European Court of Justice on portability of healthcare benefits in the EU.

Politics and policy options determine how costs and benefits are distributed

Underlying political positioning is how policy implementation distributes the costs of a policy and the benefits of a policy (whether in time, money or resources). This type of analysis, from the work of the political scientists James Q Wilson, is revealing as it lays bear these underlying assumptions and the real world impact of a policy and its implementation. Examples where this approach is useful includes analysing drug rationing (approvals, defining treatment cohorts), price controls, reimbursement (or not) of branded generics, health technology assessments, and more generally the logic of market access. What we learn is where the costs sit and where the benefits sit, and importantly, who pays and who benefits. Such an analysis is profoundly revealing for identifying, for example free-riders, and the NIMBYs, two groups where there are often strong socio-political beliefs arising from political ideology transferred into policy.

Approaching market access purely as a technocratic exercise will under-power the associated solutions for market access initiatives. There is a good reason to know how and in what way the benefits of a new medicine are distributed (to whom and how), and what those costs are, whether measured in money, time, risk or opportunity. These considerations, drawn from the ability to apply relevant political analysis and insight, adds explanatory power and relevance, for instance, market entry strategies, or identifying gaps in evidence.

Managerial control of medicines cost drivers

It is not unreasonable to have concerns about the cost of medicines.

Drug costs are usually influenced by government policies on pricing and reimbursement of medicines themselves. These range from simple discount seeking to more complex approaches such as conditional approvals, and value-based pricing (perhaps a subject for another posting). These can achieve a measure of drug cost control, but may also distort the market of medicines themselves.

For instance, tendering for generic medicines can sometimes lead to unacceptable consequences, such as unexpected product substitution by suppliers, patient and clinician confusion as medicines change appearance, and complications in medicines management or pharmacists. And a ‘winner take all’ award of contract can mean that the losers exit the market, removing a source of price competition and choice for consumers and governments. This is an unintended but avoidable consequence of using this crude procurement instrument.

Regulations and health technology assessment together are challenging to free pricing of medicines, but it is unsurprising that medicines should be subject to some assessment of efficacy and performance in the real world, and not just on the results of clinical trial evidence on a highly selected study population. HTA has also thrown into the spotlight the logic by which drug prices are established by the pharmaceutical industry. This scrutiny is not a bad thing as it highlights the methodologies used, whether they accurately produce a price reflecting the value of the medicine as used. Separately, the cost of the research to produce the medicine is a factor, and one should not be surprised that the prices of successful drugs should try to recoup the costs of all the failed drug research, even if those costs could be seen as the price of the risk of doing business for the industry.

Apart from these approaches to drug cost control, there are opportunities to reduce costs within the healthcare system itself.

Achieving improved cost control, value for money and improved health outcomes are consequence of better management of medicines procurement, patient adherence, dispensing and waste reduction and reduction in variations in prescribing practices.

These are processes and organisational interventions designed to enable improved professional practice through hospital formulary controls and best practice in medicines logistics. These enable the ability to reduce prescribing variance, strengthen quality systems and improve patient acceptability whilst strengthening the foundations of professional practice.

The following “logic map” shows how this works:

A central feature of any high-performing healthcare system or organisation includes best-practice in medicines use and clinical management.

As all aspects of healthcare are under varying degrees of financial stress, cost controls and appropriate use of medicines are a legitimate focus of scrutiny to achieve the highest standards of clinical practice and safe patient care.

Failure to achieve clinical and managerial control of the use of medicines across the patient treatment pathway may arise from:

  • misuse of medicines (failure to prescribe when appropriate, prescribing when not appropriate, prescribing the wrong medicine, failure to reconcile medicines use across clinical hand-offs
  • “clinical inertia” and failure to manage patients to goal (e.g. management of diabetes, and hypertension post aMI) [see for example: O’Connor PJ, Sperl-Hillen JM, Johnson PE, Rush WA, Blitz WAR, Clinical inertia and outpatient medical errors, in Henriksen K, Battles JB, Marks ES et al, editors, Advances in Patient Safety: From Research to Implementation Vol 2: Concepts and Methodology), Agency for Healthcare Research and Quality, 2005]
  • failure to use or follow best-practice and rational prescribing guidance
  • lack of synchronisation between the use of medicines (demand) and procurement (supply), with an impact on inventory management and
  • loss of cost control of the medicines budget.

The essential challenge is ensuring that the healthcare system and its constituent parts are fit for purpose to address and avoid these failures or at least minimise their negative impact.

Medicines costs are the fastest growing area of expenditure and comprise a major constituent of patient treatment and recovery.

The cost of drug mortality was described in 1995 [Johnson JA, Bootman JL. Drug-related morbidity and mortality; a cost of illness model. Arch Int Med. 1995;155:1949/56] showing the cost of drug mortality and morbidity in the USA and costed the impact at $76.6 billion per year (greater than the cost of diabetes).

The study was repeated five years later [Ernst FR, Grizzle A, Drug-related morbidity and mortality: updating the cost of illness model, J Am Pharm Assoc. 2001;41(2)] and the costs had doubled.

And costs and use have continued to rise since then.

Evidence from a variety of jurisdictions suggests that drugs within the total cost of illness can be substantial, for instance:

  • Atrial fibrillation: drugs accounted for 20% of expenditure [Wolowacz SE, Samuel M, Brennan VK, Jasso-Mosqueda J-G, Van Gelder IC, The cost of illness of atrial fibrillation: a systematic review of the recent literature, EP Eurospace (2011)13 (10):1375-1385]
  • Pulmonary arterial hypertension: drugs accounted for 15% in a US study [Kirson NY, et al, Pulmonary arterial hypertension (PAH): direct costs of illness in the US privately insured population, Chest, 2010; 138.]

There are upward pressures that increase costs, downward pressures that decrease costs and pressures that influence costs in either direction; the diagram illustrates a few:

Many of the drivers can be addressed through a combination of professional staff development, better use of information, particularly within decision-support systems to support guidelines and prescribing compliance, and organisational interventions.

An interventional strategy to manage medicines cost drivers involves a structured review of central drivers of drug cost and use within existing national or organisational priorities.

The range of possible solutions fall across of spectrum of interventions and any or all of these are good starting points:

  1. development of drug use policies
  2. development of clinical policies, guidelines, and clinical decision-support algorithms
  3. drug-use evaluation studies
  4. clinical and medical audit
  5. cost-benefit studies
  6. professional development
  7. procurement effectiveness performance review
  8. patient treatment pathway analysis
  9. analysis of waste reduction opportunities
  10. management/organisational improvements to support appropriate behaviours.

To start involves assessing the current state of these aspects, and determine any gaps with national or organisational policy, or evidence-informed best practice. As a proxy measure of the necessary changes, measurement of this gap becomes the focus, and requires evidence of current practice against the desired goal. In many cases, where systems are weak or poorly performing a comprehensive root-and-branch review may be needed, with a corresponding impact on existing managerial, organisational and professional practice.

All healthcare systems and organisations are different and whilst it is difficult to precisely quantify the outcomes in advance, organisations undertaking a sustained process of medicines review and optimisation should be able to release more than 10% of existing drug expenditure and possibly more.

In organisations with a less-well developed clinical pharmacy, where medicines information systems are not well developed, and where clinical guidance is not proceduralised, greater savings are likely, perhaps to 25% or more, reflecting the possibility that the lack of information conceals upward drivers of costs, masks inefficient medicines management or evidence of misuse and waste.

In the longer run, healthcare organisations will need to ensure sustainability of any medicines optimisation review, by ensuring strong organisational structures, practices and behaviours. Development of these frameworks is an important by-product of medicines optimisation interventions, with a corresponding improvement in medicines safety.