High stakes over expensive medicine

The difficult grant agreement between the government and the pharmaceutical company Vertex on a treatment for cystic fibrosis illustrates the complex problem with expensive medicine. “Pharmacies play the member states against each other.”

The difficult negotiation between the Federal Minister of Social Affairs and Health Frank Vandenbroucke (Vooruit) and the American pharmaceutical company Vertex on the reimbursement of the cystic fibrosis drug Kaftrio had the appeal of a soap opera.

Vertex first announced that it would pull the plug, after which the Belgian Phlegm Association accused Vertex of raising the price of the cap for phlegm patients.

What is it about?

The difficult grant agreement for an expensive drug for cystic fibrosis illustrates the delicate balance between access to innovative medicine and the affordability of the entire drug budget. Such discussions will remain a fixture as a wave of expensive medicine is headed our way.

What happens?

After the European Medicines Watchdog has approved a medicine, the reimbursement process can vary greatly from country to country. Partly because of procedures, partly because of the pharmaceutical company’s strategy and budgetary considerations.

What is the solution?

Among other things, countries can negotiate prices together with pharmaceutical manufacturers, as Belgium already does, and place part of the financial risk with the pharmaceutical companies.

The Vandenbroucke cabinet was under great pressure from patients, specialists and public opinion to make a deal, especially since Kaftrio had already been repaid elsewhere. This concerns 32 countries, including the Netherlands.

‘A pharmaceutical company is classically strong with a significantly better medicine for a condition for which there are hardly any alternatives,’ describes health economist Dominique Vandijck (UGent). ‘At least when the pressure comes from patients, doctors and the media.’

Cystic fibrosis experts emphasize that Kaftrio, a combination of three drugs, works better than the existing drugs. It doesn’t cure the condition, but it improves lung capacity by an average of 15 percent and there are 60 percent fewer infections. The life-threatening metabolic disease causes tough mucus in the lungs. The average life expectancy for patients born today is 45 to 50 years.

baby pia

The subsidy saga echoes from autumn 2019, when the parents of baby Pia, who suffered from the rare, fatal muscle disease SMA, organized a fundraiser via SMS to pay for the expensive drug Zolgensma from Swiss Novartis. That medicine, a one-time gene therapy of 1.9 million euros, was not yet reimbursed in our country at that time. This has been the case since the end of 2021.

To fully understand why new medicines do not reach patients equally quickly in all Member States, we briefly review the process from approval to eventual reimbursement.

When the European Medicines Agency (EMA) gives a pharmaceutical company the green light for a new medicine, it can be used anywhere in Europe. But then repayment negotiations only start at Member State level, the duration of which may vary. This is illustrated by figures from the European Medicines Association EFPIA on the number of days between the EMA’s approval of a new medicine and its reimbursement. While Germany (133 days), Denmark (176 days) and Switzerland (191 days) occupy the top 3, Belgium is in 23rd place after Serbia and Bosnia.

In our country, it takes an average of 534 days between obtaining the market authorization and the repayment. “One of the explanations is that a reimbursement case in Belgium is very comprehensive and must provide an answer to all possible criteria laid down by law. It is time-consuming’, says Vandijck.

Faster procedure

“Pharmaceutical companies, especially the smaller ones that do not have large resources, often do not submit their reimbursement dossiers everywhere at once, but first in the countries where it is doing best. These are Germany, Denmark, Switzerland, Austria and the Netherlands. Financial strength also plays a role in that choice.’

This is confirmed by an initiate who is well versed in the subject. “The slower introduction of new medicines in certain Member States is not only related to reimbursement procedures, but is the joint responsibility of pharmaceutical companies.”

‘They are playing member states off against each other’, it says. “For example, they choose to submit a repayment file first in Germany because they can negotiate a high starting price there. This can serve as a reference when they later start negotiations with other countries. If the medicine only comes on the market in other European countries later, it is partly connected to that strategy’.

The Belgian industry association pharma.be is calling on politicians to work on modernizing and speeding up reimbursement procedures. Insiders outside the pharmaceutical sector also agree that these procedures need to be reviewed. There has been a wider discussion for some time about a pharmaceutical pact between the Belgian government and the pharmaceutical industry, which should take shape later this year.

534

In Belgium, there is an average of 534 days between the European approval of a medicine and the green light for reimbursement.

“Belgium can play a pioneering role in Europe as a testing laboratory for marketing authorizations of medicines and innovation in reimbursement,” says an insider. “With a pharmaceutical company like Vertex, which in recent years has brought new treatments to the market in rapid succession for the same indication, i.e. cystic fibrosis, you could, for example, enter into a kind of Netflix contract. As a government, you agree on a fixed amount per patient, which remains unchanged, even if the company receives the green light from the EMA for a new drug. You then pay for a service. In this way, as a government, you also create budgetary predictability at the same time.’

Vertex does not resolve anything about the price of Kaftrio. The repayment negotiations with the Belgian government were confidential. But an advice from the Dutch health institute to the competent minister shows that last year there was around 194,000 euros per patient per year. More than 800 of the 1,376 patients with cystic fibrosis in our country are eligible for full reimbursement from Kaftrio, according to the Vandenbroucke cabinet. In his deliberations on reimbursement, Vandenbroucke had to weigh the budgetary impact and the therapeutic added value against the affordability of the entire pharmaceutical budget – with the warm breath of public opinion, patients and specialists.

A study from the CM health insurance fund from October 2021 illustrates that expensive medicines put increasing pressure on health insurance. Cancer drugs in particular, and to a lesser extent drugs that suppress an immune response in certain chronic inflammations, take an increasing part of the budget.

Ten medicines together cost our health insurance about 911 million euros in 2019, or about 17.3 percent of the entire budget for medicines, which amounted to 5.26 billion euros in 2019.

Some medicines are much more expensive per patient, but did not make the top 10 because few patients are treated with them. Figures from the National Institute for Health and Invalid Insurance (RIZIV) show that medical expenses rose from 4.3 billion to 5.9 billion euros between the end of 2016 and the end of 2021. At the same time, in 2021, 1 billion euros came in receipts that the government obtained in confidential agreements with pharmaceutical companies, whereby the agreed price and discount on the medicine remains secret.

There is no doubt that reimbursement discussions about expensive drugs – à la Zolgensma and Kaftrio – will remain a fixture because more innovative drugs are on the way. “The European Medicines Agency expects ten to twenty new applications for medicines per year over the next five years,” says David Gering, spokesperson for pharma.be.

The rising prices of the most expensive medicines, the rare medicines for rare diseases such as Zolgensma, are cause for concern. For example, Libmeldy, a gene therapy for young patients with the rare metabolic disease MLD, has a price tag of 3 million euros. The procedure for possible reimbursement in our country is still ongoing.

Pharmaceutical companies have traditionally relied on the combination of high research costs, life years gained from their drugs and small patient populations to justify high prices. Subsidy experts argue that companies are not very transparent about their costs and are therefore largely blind. They indicate that it is difficult to estimate the (added) value based on the available clinical data and whether this is in line with the desired price.

Back against the wall

‘In order to try to objectify the pricing of such drugs for rare diseases, Belgium applies an unofficial upper limit of 40,000 euros per healthy years of life to which a medicine is added, approximately the gross domestic product per inhabitant,’ says Vandijck. But in reality it is not always a hard limit. “When it comes to a small group of patients in dire need, whom you can easily put a face to, it is sometimes easier to allow high prices. Because as a government you have your back against the wall.’

In this extremely difficult context, our country, like all European member states, must maintain a balance between flexible(s) access to new medicines – so as not to leave patients out in the cold – and the controllability of drug costs, because the government does not have an infinite deep pockets.

‘One way forward is to place the financial risk, which now lies exclusively with the government, partly with the pharmaceutical companies,’ suggests Vandijck. ‘This would mean that the government contractually enforces that a pharmaceutical company refunds part of the money paid if it appears from patient data that its medicine is not as promising as it had claimed during the negotiations.’ Another tried-and-tested recipe for tackling the rise in prices of expensive medicines is to improve your negotiating position as a Member State.



Belgium could enter into a kind of Netflix contract with pharmaceutical companies. The government then pays a fixed amount per patient, which does not change if the EMA gives the green light to a new drug.

Because Belgium is too small to make a fist of it alone, international cooperation is essential. It worked for Zolgensma. Among other things, thanks to joint negotiations between Belgium, Ireland and the Netherlands, an agreement was reached and an undisclosed discount was negotiated. Since 1 December last year, Zolgensma has been subsidized in our country, the patient does not have to pay for it.

Already in 2015, then Minister of Health Maggie De Block (Open VLD) entered into a cooperation agreement with the Netherlands and Luxembourg to jointly negotiate more competitive medicine prices. Austria and Ireland were added later. “The ideal scenario, of course, is for Europe to negotiate en bloc with a pharmaceutical company,” says an insider. “Then you negotiate even more competitive prices. Belgium has been pulling that wagon for years, but it is difficult. There is no European legal framework. And such a scenario is difficult for member states with a strong pharmaceutical sector, such as Germany and France, because they fear that such collective price negotiations would harm their pharmaceutical companies.’

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