Jaime Espín, PhD Professor

1. Innovative Agreements for Financing Medicines: a new way of involving stakeholders in payingfor real health outcomes WS 5: Establishing multi-stakeholder pain platforms in Europe Jaime Espín, PhD Professor Copenhagen, 30th May 2012

2. Disclosure Statement of Financial Interest I, Jaime EspinDO NOT have a financial interest/arrangement or affiliation with one or more organizations that could be perceived as a real or apparent conflict of interest in the context of the subject of this presentation.

3. Agenda • Pharmaceutical Policies – Some general aspects to remember • New way of financing medicines • The role of different stakeholders in this new way of financing medicines • Some Conclusions (and proposals)

4. DIFFERENT STAKEHOLDERS - INTERESTSPharmaceutical Sector In Europe GOVERMENTS Control expenditure Accessibility PHARMA INDUSTRY Patents Profits EUROPEAN UNION Free movement of goods Competitiveness

5. Difficult balance for Goverments Industry policy goals Innovation Competitiveness Public Health Control Expenditure Access to affordable medicines

6. Difficult balance for Goverments Public Health Control Expenditure Access to affordable medicines Industry policy goals Innovation Competitiveness

8. New way of financing medicines

10. Why these new Agreements?

11. Low Level of Innovation

12. Source: Priority Medicines for Europe and the World. WHO. November 2004

14. NO CURE, NO PAY

15. New Trend Pharmaceutical Policies based on price regulation New Pharmaceutical Policies based on rational use of resources and cost effectiveness Macro Micro

16. Velcade Risk-Sharing Scheme Janssen-Cilag Individual NHS Trusts Provision of stock for first 4 cycles for each patient at cost to NH Patient initiated on Velcade Respond withim 4 cycles Fail to respond within 4 cycles Continue on Velcade at cost to NHS Discontinue Velcade Trust claims for replacement stock or credit Replacement stock or credit at cost to Janssen-Cilag Audit if “unusual” rebate pattern Fuente: PPR Sept 07

18. Incentives under traditional and risk sharing contracts (I) Under traditional contracts, the firm’s revenue does not depend on the realisation of the success rate. Once the medicine is accepted on the positive list, the company is guarantue revenue of π* per-unit sold, independently of the actual performance/outcome of the drug Source: “Risk-Sharing pricing models in the distribution of pharmaceutical”. Staff Working Paper 2003.1. Andrew Lilico. Febrery 2003

19. Incentives under traditional and risk sharing contracts (II) Under risk sharing scheme, if the succes rate is zero, the firm does not receive any money. But if the actual succes rate is far above expections, the per-unit profit π exceeds the π* level Source: “Risk-Sharing pricing models in the distribution of pharmaceutical”. Staff Working Paper 2003.1. Andrew Lilico. Febrery 2003

20. Incentives under traditional and risk sharing contracts (III) An intermediate solution (dotte line) is the the risk sharing scheme where the firm is guarantee some small fee per unit sold and a “bonus” per every successful treatment. Source: “Risk-Sharing pricing models in the distribution of pharmaceutical”. Staff Working Paper 2003.1. Andrew Lilico. Febrery 2003

23. Why about implementing these new agreements for pain medicines?

24. Thank you for your attentionJaime Espinjaime@easp.es