The political and policy focus on drug prices continues in 2022 in key markets across the globe. In particular, in the U.S., UK, and EU, policymakers continue work on alternatives to the current reimbursement and procurement regimes, potentially affecting research and development, including in areas of unmet need and of patient-friendly formulations of medications. In China, stakeholders should be aware that following a recent pricing negotiation with the central government, the average price cut for nearly 70 products for the next two years is approximately 60%. This update discusses material legislative, policy, and litigation developments affecting drug pricing across the globe. Key takeaways include:
- In the U.S., the recent actions taken by Congress, federal regulators, and state governments have resulted in a series of changes that could have significant impact on patient access, innovation in areas of unmet need, and fair pricing and reimbursement.
- Although passage of the Build Back Better (BBB) Act drug-pricing provisions is unlikely in 2022 due to insufficient votes for the overall bill, stakeholders should continue to monitor other legislative proposals that might seek to incorporate these pricing provisions. At least some of the BBB Act provisions may be included in the FDA user fee programs reauthorization legislation, which must be signed into law by September 30, 2022.
- Stakeholders can be expected to be on the lookout for, and prepare to react to, government efforts to implement an aggressive wave of new drug-pricing legislation and regulations, including mandatory refunds for drug wastage associated with certain physician-administered products.
- Litigation challenging drug copay assistance for commercially insured patients and other price-related actions will continue in 2022.
- Post-Brexit, the U.K. government and regulators as well as the health technology appraisal agency, the National Institute of Health and Care Excellence (NICE), have established a set of changes and new initiatives, including a new Innovative Medicines Fund and a real world evidence (RWE) framework, aimed at ensuring that the U.K. remains an attractive place to invest and develop innovative technologies in the healthcare sector.
- The UK has enhanced international collaborations with leading worldwide regulatory bodies, including Project Orbis for oncology and Access Consortium, aimed at accelerating approvals with concurrent submissions. Through a number of creative commercial deals with the NHS, accelerated pathways to market for drugs, digital health solutions, and initiatives incorporating RWE and patient involvement in the reimbursement process, it is expected that the UK will continue being the first market in Europe to gain access to innovative treatments.
- In the EU, Member States’ focus on drug pricing has been sharpened by the COVID pandemic, general budget pressures, and a series of so-called “excessive pricing” cases brought by antitrust authorities. There is growing attention to alternative pricing models, proposed by payors, which are based on the notion that drug prices should be based less on the value of the drug and more on the direct cost of development (R&D expenditure). Requests for disclosure of these expenditures may increase, and it remains to be seen whether development risks or other costs will be sufficiently taken into account.
- The European Commission is expected to propose, in Q4 2022, new EU legislation that could link the grant or maintenance of intellectual property (IP) and regulatory rights to launching a product in most or all Member States and, potentially also, to providing cost transparency.
- The EU will also set up a structure for centralized clinical health technology assessments, which will add an extra layer of pre-market product assessment, as of 2025.
- Procedural changes to the German market access framework could increase mandatory discounts and reduce the period during which pharmaceutical companies may set their own commercial prices.
- In China, the government will continue to implement its existing drug pricing regulatory mechanisms in 2022. In particular, the Volume-Based Procurement (VBP) program will continue to rollout across the country and cover more products, which will bring down prices to public hospitals with volume commitments.
It is critical for investors, owners, and executives of manufacturers to identify key potential policy changes in various jurisdictions that could affect fair pricing for existing and development-stage assets, and formulate a multi-prong strategy to address access to medication and continued innovation.
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