Developing effective affordability strategies
We live in an era of medical innovation, driven by a better understanding of the genetic and biological roots of disease, and a burgeoning use of data analytics and digital technology in science and healthcare. At the same time, the world’s population continues to grow and people are living longer, fueling a rise in chronic diseases. Together, these factors are increasing demand for healthcare worldwide and pressuring healthcare systems to contain spending growth. The COVID-19 pandemic has exacerbated this pressure on healthcare budgets.
In 2020, the WHO published an updated policy guideline on country pharmaceutical pricing policies, making recommendations on 10 pricing policies commonly considered in countries to manage medicine prices, as well as pragmatic considerations for what is required to implement these policies according to the objectives and context of individual health systems.
Novartis welcomes the WHO’s conditional recommendation on value-based pricing and is committed to pricing our medicines according to the value they deliver. Yet most healthcare systems base their payment models on volume of procedures – such as the number of visits to the doctor, days spent at the hospital, or the number of medicines delivered – which often results in a suboptimal allocation of resources.
We believe medicine prices should be based on four value pillars: clinical value, patient value, value to the healthcare system, and value to society as a whole. As an example, cost offsets from prevented hospitalizations have been considered in pricing our treatments for heart failure.
A value-based approach to healthcare incentivizes the healthcare sector to focus on the interventions that deliver the most effective, efficient and sustainable outcomes. Novartis was among the first pharmaceutical companies to enter into value-based contracting for medicines, linking pricing and reimbursement rates to specific outcomes.
For example, outcome-based agreements are in place for our breakthrough therapy Luxturna, which can be sight-saving by treating a gene mutation causing an inherited retinal dystrophy. To address payers’ concern about the durability of the effect of this one-time treatment, payment is dependent on the accepted clinical threshold reached by patients at agreed time points based on a commonly used light sensitivity test. In addition, to help improve affordability and increase access, we have developed an overarching tiered pricing approach taking local economic considerations into account. We are also exploring other innovative payment models, such as installment payments and deferred payments. In markets where Luxturna is not yet approved, we implemented early access schemes, such as providing individual named patient funding and facilitating cross-border treatments whereby patients from smaller countries lacking the necessary infrastructure are treated in centers in larger countries. In addition, we are working with local partners to increase the low level of symptom awareness and genetic diagnoses in developed and emerging markets, establishing patient support programs and referral networks to address these hurdles.
To help improve the affordability of our medicines in countries around the world, we take local economic realities into account in considering a range of approaches to expand access across the income pyramid, including tiered pricing, innovative business models, emerging market brand strategies, patient access programs and off-patent solutions.
Emerging market brands
Novartis access principles
We systematically assess our product portfolio against the unmet needs of underserved populations and integrate these needs, as appropriate, into our drug discovery and development strategy
We work to make our medicines available by considering both effective affordability strategies and innovative solutions to disease management
We seek opportunities to lower local barriers to healthcare delivery, working in collaboration with governments and other partners to support quality patient care in areas where we can have the greatest impact
The WHO estimates that up to 90% of the population in LMICs purchases medicines through out-of-pocket payments. In 2014, Novartis introduced an emerging market brand (EMB) strategy to expand access to innovative medicines to people in LMICs, in a way that is sustainable for the business and supports governments in responding to unmet medical needs. One of the key objectives of the EMB strategy (previously known as our local brand strategy) is to provide access to innovative drugs as early as possible at a price patients can afford. We continue to expand this strategy in LMICs to reduce the out-of-pocket burden for patients, improve access, and help shorten the time lag between the availability of our innovative medicines in higher-income countries and in LMICs.
In 2020, we launched EMBs for therapies in our Innovative Medicines portfolio, including Piqray (advanced breast cancer), Kisqali (metastatic breast cancer), Tafinlar + Mekinist (lung cancer and metastatic melanoma), Rydapt (acute myeloid leukemia), Entresto (heart failure), Aimovig (migraine) and Beovu (wet age-related macular degeneration). Novartis is systematically evaluating the feasibility of implementing EMBs for key launches. This has proven to be an effective tool to reach more patients. For instance, the EMB of Entresto is benefiting more than 230 000 heart failure patients, a 50% increase in patient reach in LMICs compared to the same period last year. In 2020, we reached more than 355 000 patients and launched 15 EMBs in Pharmaceuticals, and we reached more than 13 900 patients and launched seven EMBs in Oncology.
The Access to Medicine Foundation estimates that innovative drugs reach less than 1% of patients in emerging markets five years after launch. One of our priorities has been to reduce the time it takes us to bring new therapies to patients in LMICs compared to the original brand in higher-income countries. In 2019, we reduced this time lag to five months for the first EMB of Kisqali, six months for Aimovig, and seven months for Beovu by more effectively integrating access considerations into the launch process. In 2020, we launched the EMB of Piqray in India one month ahead of the first European country launch thanks to early planning and more formalized processes.
Expanding access to high-quality generics
Our Sandoz Division drives access through the provision of affordable, quality generic medicines and biosimilars. It focuses increasingly on segments where it can make a difference, either by making available a competitive generic alternative or by offering a novel and more affordable alternative to existing therapies (such as leading biologic medicines through its global biosimilar business). In 2019 alone, the US generics industry contributed more than USD 313 billion in savings, with Sandoz medicines accounting for USD 12.1 billion.
In February, Sandoz was the first company to commit to maintaining stable prices for 23 essential medicines for the treatment of COVID-19-related symptoms and disease complications, including antivirals to reduce the impact of COVID-19, and antibiotics to combat pneumonia.
Further, the Novartis COVID-19 portfolio launched in July includes 15 Sandoz drugs that treat key symptoms of COVID-19, such as fever, coughing, respiratory problems and pneumonia. The medicines – including dexamethasone, which has been shown to reduce deaths in severe COVID-19 pneumonia – are made available to governments, nongovernmental organizations (NGOs) and other institutional customers in up to 79 eligible LMICs at zero profit.