Man i & O ’Qu i n n R e imbu r s emen t S t r a t e g y E x p e r t s (MORSE )

Pricing&ReimbursementExercise:Se4ngthePayerContext

SherryO’QuinnManagingPrincipal

March29,2017

Objec&ve

ProprietaryandConfiden?al 2

Toprovideallpar?eswithabeFerunderstandingofthefactorsthatpayersmustconsiderwhenmakingfundingdecisions.

Health spending as a share of total spending has stabilized at 38%.

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Provincial/territorialgovernmenthealthexpenditureasapropor?onoftotalprovincial/territorial

governmentprograms,Canada,1993to2015.

Drugs are the 2nd largest share of health expenditure Thedrugexpendituresharehasbeenincreasingsincethemid-1980s,andithadaccountedforthesecond-largestshare(16.0%in2014),aWerhospitalspending,since1997.

ProprietaryandConfiden?al 4

Totalhealthexpenditure,shareofselecteduseoffunds,Canada,1975to

2014

42.6% of prescrip&on drug spending is funded by public payers

•  In2014,$12.5billion(42.6%)ofprescribeddrugspendingwasfinancedbythepublicsector.•  In2014,thepublicshareofprescribeddrugspendingvariedamongprovinces,rangingfrom:o 29.8%inNewBrunswick;o 33.0%inPrinceEdwardIsland;o 45.5%inQuebec;ando 49.9%inSaskatchewan.

ProprietaryandConfiden?al 5

Source:Canada’shealthexpenditure:Spendingonprescribeddrugsincreases,totalgrowthremainsslow(CIHIMediarELEASE-2016.12.15)

Public drug spending reached a high from 2014-2015

•  Comparedwithoverallslowgrowthinhealthspending,publicdrugprogramspendingincreased9.2%from2014to2015.o  In2014,public-sectorspendingonprescribeddrugsincreasedby4.0%.

•  Theintroduc?onofnewandexpensivechemicalstotreathepa??sCàtwo-thirdsofthegrowthinspendingin2015.•  Patentexpira?onsandgenericpricingpoliciesarenolongerleadingtosignificantreduc?onsinyear-over-yeargrowth;however,thesavingstheyachievedpersist.

ProprietaryandConfiden?al 6

Source:PrescribedDrugSpendinginCanada,2016(CIHI-2016.12.16)

Payers struggle to manage current budgets within their constrained system.

ProprietaryandConfiden?al 7

StakeholderPressureSignificantstakeholderpressureto

fundmostdrugs(e.g.manufacturers,pa?entgroups,

media,poli?cal,etc).

BudgetsForecastsfarexceedthebudgetsset

bygovernments.

ResourcesTimeandpeoplearerequiredtooffsettheincreasingvolumeof

workload:newlaunches,nego?a?ons,re-evalua?on

Payers have developed strategies to manage drug plan expenditures

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DrugSpecificapproaches:•  pCPAstandardnego?a?on

approach•  Therapeu?cclassre-

nego?a?ons•  Revisionofcriteria,

disinvestment/de-lis?ngs•  Morerestric?veand/or

administra?velyburdensomeaccess

Program/Policyapproaches:•  Programchangesrelatedto

eligibility,co-pays&deduc?bles•  Genericpricinganduptakepolicies•  Biosimilarpricinganduptake

policies•  Broaddecisionsnottolistorto

delaylis?ngdrugsthatwillhavecostimpact

•  Convincegovernment/financetoincreasetheirbudgets

Mostofthedrug-specificandprogram/policytoolsareinuseorhavebeenused…manyarenotidealandlikelynolongerenough.

Payer “toolkits” are likely to evolve

•  Drugplanmanagershavebeendiscussinghowtomanagetheirchallengesinpublicforumsandtheirneedtomake“toughchoices”.

•  Someofthesearealreadyunderwayincertaindis?nctcircumstances:o  Saying“no”tomoredrugso  Therapeu?cre-nego?a?ons

•  Somearenotformallyinplacebutarebeingdiscussedinvarioussehngs:o Disinvestment(Oncology)o  Priori?za?on(pCPAandjurisdic?ons)

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Drug plan “solu&ons” will be imposed unless other alterna&ves are presented

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•  Manyoftheapproachesbeingtakenorconsideredarenotidealforanyparty,includingpublicpayers(government).

•  DrugPlanManagersdonotfeeltheyhaveothertoolsthatcanbeusedtomanagetheirbudgetsinasustainableway.

• Withoutsomeassistancefromotherstakeholders,governmentswilllikelymakedecisionstomanagetheirbudgetsthroughthesetypesofpolicyanddecisionmechanisms.