Striving for affordable medicine: Lessons in price negotiation learned from the United Kingdom

Abstract

In August 2022, the Centers for Medicare & Medicaid Services were granted unprecedented power to negotiate the price of some pharmaceuticals covered under Medicare Part D of the Inflation Reduction Act. Price negotiation was previously banned by Medicare Part D legislation but is not a new idea globally. For decades, nations like the United Kingdom have price set or negotiated the cost of medicine with manufacturers, fine-tuning their methodologies, with mixed success. The United States can learn from other countries’ work to develop a methodology capable of achieving increased affordability and patient access to medicine. Secretary Xavier Becerra should consider the United Kingdom’s policy approach, which facilitates early and transparent collaboration with key stakeholders like patient groups and industry but limits flexibility in evidence submission, to help the United States minimize unintended damage to patient access to new medicines and achieve the Inflation Reduction Act’s goals.

Plain language summary

The US government is going to start lowering the price of some drugs but is still deciding what methodology to use. The UK government has been lowering the price of drugs for many years. Learning from the United Kingdom could improve US policy.

Implications for managed care pharmacy

A deep dive in the UK price negotiation practice and case studies of medicines that have undergone price negotiation that resulted in limited patient access can help inform methodology currently being developed by the Centers for Medicare & Medicaid Services. Maintaining high patient access to medicines in the United States is vital—especially for patient groups experiencing racial and social inequities who may be more susceptible to negative health outcomes.

The Inflation Reduction Act (IRA) was signed into law in August 2022 and grants the Centers for Medicare & Medicaid Services (CMS) unprecedented power to negotiate the price of some pharmaceuticals covered under Medicare Part D.¹ Price negotiation in this federal government program was previously banned by the legislation that created Medicare Part D, the Medicare Modernization Act of 2003, but is not a new idea globally.² The IRA was passed with the intention of improving sustainability of the Medicare program for the next generation and expanding access to innovative medicine.³ Many countries have negotiated the cost of medicine with manufacturers for decades, fine-tuning their methodology with varied results. While developing the methodology that CMS will use for price negotiation, Secretary Xavier Becerra should consider the benefits and consequences encountered by other countries that have undergone this process. Early and transparent collaboration with key stakeholders like patient groups and industry and flexibility in evidence submission can help minimize unintended damage on patient access to new medicines and achieve the IRA’s goals.

The United Kingdom is the most instructive example to study: it has negotiated medicine prices with manufacturers for more than 2 decades, and its approach embodies the principles that the United States should follow. Moreover, the UK drug review process is transparent, it listens to the voices of patients during assessment, and it includes pharmaceutical manufacturers early in the negotiation process.⁴ However, the United Kingdom can be rigid in the kind of evidence it accepts from manufacturers and vague in creating opportunities for patients to actually influence policy decisions, and it is often unintentionally disadvantageous for companies that have invested in the UK market. Although the United Kingdom’s process has helped keep the costs of medicine to the national health system more controlled than the United States, UK patients get access to fewer new medicines after longer periods of time.^4,5 It has been estimated that, although a record number of new medicines were approved by regulatory agencies including the US Food and Drug Administration, the European Medicines Agency (EMA), and Japanese Pharmaceuticals and Medical Devices Agency, less than 60% of them launched in the United Kingdom.⁶ On average, new medicines came to the United Kingdom a year after their first global launch and were reimbursed by the government 15 months later.⁷ Later launch may be influenced by the National Institute for Clinical Excellence’s (NICE) funding approval of only 34% of new medicines for full market authorization and all EMA-approved indication.⁸ Such limitations and delays in access can hurt patients who would otherwise benefit from earlier use of new medicines. An instructive example of this challenge can be seen in the cases of access to IMBRUVICA (ibrutinib) in the last decade and continued access to ZYNETEGLO (betibeglogene autotemcel) in the future for British patients with blood disorders and cancer. Looking closer at these cases, and the United Kingdom’s administrative process in price negotiation as a whole, will help CMS consider what values to emulate and pitfalls to avoid.

Medicine Price Negotiation in the United Kingdom: An Introduction to NICE

Secretary Becerra should pay particular attention to the experience of the United Kingdom’s NICE. This was created in April 1999, with the aim of providing consistent guidelines for health care treatment and directing funding across the country.⁹ In the following year, NICE issued its first technology appraisal (TA), reviewing clinical and economic evidence to estimate if the health care service or product represents appropriate value for money.¹⁰ NICE continues to issue dozens of recommendations each year, determining which patients are appropriate candidates for funding after regulatory approval and setting a cost-effectiveness threshold that they are willing to pay per quality-adjusted life-year (QALY).¹¹ QALYs are calculated by estimating a patient’s years of life remaining if they underwent the health care intervention being evaluated and weighting each year with a quality-of-life score indicating benefit of treatment.¹² Incremental cost-effectiveness ratios are then used to assess the incremental cost of that benefit.¹³ This method was banned by the IRA, which states that “the secretary shall not use evidence from comparative clinical effectiveness research in a manner that treats extending the life of an elderly, disabled, or terminally ill individual as of lower value than extending the life of an individual who is younger, non-disabled, or not terminally ill.^”1 Despite this mandated difference in methodology, the types of evidence that NICE will consider in their reviews, and the transparency with which they communicate this to stakeholders, is vital to consider as Secretary Becerra develops criteria for Medicare price negotiations. NICE, which is rigid, though transparent, in evidence acceptance, highlights patient voices, though their points are not necessarily implemented into policy. They seek to include pharmaceutical manufacturers as partners early in the negotiation process, but some find the negotiations untenable, leading to limited patient access.

NICE: Transparent but Inflexible

NICE’s technology appraisal process seeks to promote transparency by including clearly defined methods from scoping and evidence review to committee deliberations, publishing cost-effectiveness results, and using external review for validation. NICE also provides technical support to manufacturers when requested, helping them adhere to a clearly defined methodology and allowing for clarification of more technical aspects of the evaluation process. During the scoping phase of this process, NICE defines an extensive list of potential comparators, which manufacturers have the opportunity to comment upon and follows clearly defined incremental cost-effectiveness ratio thresholds. NICE decides on the final comparator selection based on a clear set of criteria, and NICE’s rationale for final determination is easily traceable. Secretary Becerra should incorporate this early communication and transparency in CMS guidelines but also note the unique challenges that implementing price negotiations will have on US manufacturers pressed to negotiate at a different point in a drug’s lifecycle. All drugs selected for CMS negotiation will have been on the market for at least 7 years with no generic or biosimilar competitor when many medicines achieve market expansion after being approved for new indications.¹

However, although price negotiation may be occurring at a different time in product lifecycle, UK implications are still relevant to the United States. For example, the United Kingdom’s rigid criteria for the evidence it accepts from manufacturers can limit patient access to new medicines. Head-to-head randomized controlled trials (RCTs) between the medicine being evaluated and selected comparator are NICE’s preferred choice of evidence. Submission of RCTs is not always possible for the manufacturer—which often develops clinical trials years in advance of its initial goal of regulatory approval and is constrained by ethics in structuring trials that will maximize benefit to patients. Moreover, comparative effectiveness between treatments and the standard of care may be required beyond what is provided by a clinical trial.¹⁴ As a result, filing the evidence gap for government funding negotiations can be difficult in the UK market, where standard of care may have changed over time, prompting a different comparator to be chosen for NICE funding evaluations years after the clinical trial has begun. In the absence of direct evidence, real-world evidence (RWE) and indirect treatment comparison (ITC) is often technically accepted by NICE but can be devalued.

NICE established an RWE Framework in 2022 in an attempt to improve flexibility in evidence consideration.¹⁵ However, RWE and ITC may be deemed insufficient to achieve government coverage though they are technically accepted. This happened in the case of IMBRUVICA (ibrutinib), a product approved by the EMA in 2015 for treatment of Waldenstrom macroglobulinemia, a rare blood cancer.¹⁶ When NICE considered funding this medicine nearly 7 years after EMA approval, the manufacturer Johnson and Johnson submitted a matching-adjusted indirect comparison (MAIC). This type of ITC is a form of propensity score weighting, whereby individual patient data in one or more trials are used to adjust for between-trial differences in the distribution of variables that influence outcome. Individuals in the individual patient data population are weighted by the inverse of their propensity score, which balances the covariate distribution with that of target aggregate population.¹⁷ NICE reported that “the committee accepted, based on the results of the indirect comparison and the testimonies from patients and clinical experts, that ibrutinib appears to be more clinically effective than existing treatments but concluded that there remains significant uncertainty.”¹⁸ MAIC is often used over other forms of ITC because it compares studies with precision and reduces bias and uncertainty.¹⁹ However, although this format of evidence is technically accepted by NICE and reviewed in a very transparent way, in the case of IMBRUVICA (ibrutinib), it was devalued by the organization and led to a decision that limited patient access.

NICE: Including Patients in Decision-Making

When developing guidance for CMS drug negotiation rules, Secretary Becerra should seek to replicate NICE’s willingness to listen to patients but work to ensure that patient voices are actually impactful to policy. NICE systemically requests patient inputs in its process, listening to patients’ perspectives through multiple public consultations, formally collaborating with patient groups in their review process, and publishing summaries of these contributions as part of their formal guidance. NICE has developed and published a Patient and Public Involvement Program, which established their commitment to providing opportunities for contribution for both patients and organizations that represent their interests.²⁰ This program includes patients and caregivers with personal experience of the medicine being assessed in committees, advisory groups, and guideline development panels. Aspects of medicine that are vitally important to patient experience, particularly mode of administration (self-administration or dosing frequency), are explicitly considered by NICE in technology appraisals.²¹ Moreover, NICE often considers patient inputs in determining unmet need, which can directly impact government value determinations or willingness to pay for innovative medicine.²²

Although NICE creates venues for patient voices to be heard, it is unclear what specific impact these voices have on funding decisions. Patient-reported outcomes (PROs) are accepted by NICE, but the organization’s primary focus on clinical data and cost-effectiveness outcomes may still not fully capture the patient experience and the impact of a treatment on quality of life.²³ In one evidence review, it was found that 38% of trials that NICE considered in TA recommendations used PROs as primary outcomes, whereas 82% were used as secondary outcomes.²⁴ There remains uncertainty around appropriate tools to collect patient input and weight of the patient voice compared with other TA impacts. NICE uses patient inputs mainly to support other evidence that is perceived as strong. This tension is apparent in NICE’s TA recommendation for IMBRUVICA (ibrutinib), which states that “the patient expert explained that he had been having ibrutinib for several years. He found it to be a life-transforming drug that had dramatically improved his quality of life, allowing him to take part in general day-to-day activities and very quickly return to normal life. The clinical experts noted that although the condition often responds to chemoimmunotherapy, the speed and durability of response is better with ibrutinib, meaning that people having ibrutinib “feel better” a lot more quickly than with chemoimmunotherapy.”²⁵

Despite this, the perceived limits of the MAIC submitted by the manufacturer resulted in a negative funding decision. Although the exact financial details of this price negotiation are confidential, Secretary Becerra should generally strive to increase weight of the patient voice in US price negotiations.

NICE: Communication With Key Stakeholders

The United Kingdom is effective in its inclusion of pharmaceutical manufacturers at an early stage of their price negotiation process at both a system and product level. However, the agreements reached can lead to limited patient access to new medicines. Approximately every 5 years, ABPI (the UK trade association that represents drug manufacturers in the innovative medicine space) negotiates a voluntary agreement with the UK government to agree on overarching funding policy.²⁶ This agreement, the voluntary scheme for branded medicines pricing and access, sets a cap on the total allowed sale value of branded medicines to the NHS each year.²⁷ The cap rate grows at an agreed rate per year and the manufacturer pays a rebate of revenue to the government if its total spend on branded medicines exceeds a certain threshold.²⁸ In theory, this agreement supports the innovation industry by giving manufacturers faster access to the market, and keeps medicines affordable.²⁷ In practice, however, unforeseen events like pandemics can upset these calculations and skew this agreement structure to be unintentionally disadvantageous to companies that have invested in the UK market when more people require care than either negotiator anticipated when agreements were reached. In 2023, medicine manufactures were required to pay back to the UK government 26.5% of brand drug revenue, compared with 15% in 2022 and 5% in 2021.⁶ As a result, 2 major pharmaceutical companies, AbbVie and Eli Lilly, withdrew their participation in the voluntary scheme for branded medicines pricing and access, with representatives citing the increasing difficulty “of securing investment, jobs, and ultimately, delivering improved health outcomes for UK patients.”²⁹

The United States can also learn from implications of unsuccessful price negotiations in the United Kingdom at the product level, where communication with manufacturers is also prominent but can lead to market withdrawal. NICE gives pharmaceutical companies advance notice of comparator selection and what kind of evidence may be considered. This information is provided to manufacturers to ensure transparency and open communication. Other steps are taken to facilitate this information flow, including provision of regular opportunities for comment submission, as well as the holding of public hearings, and regular meetings between industry and government officials. However, the inflexibility of cost-effectiveness thresholds applied, even if applied transparently, to medicines in this system can result in companies being turned down for government insurance coverage for their product and resulting limits in patient access.

For example, after ZYNETEGLO (betibeglogene autotemcel), a one-time treatment for patients with a blood disorder called β-thalassemia, received a negative TA decision in 2021, the manufacturer of this product, Bluebird Bio, announced that it would not be sold in the United Kingdom, because “it would cost Bluebird more to deliver these therapies to patients than what European authorities were willing to pay.”³⁰ Transfusion independence was the primary endpoint of the clinical studies that Bluebird Bio submitted to NICE, with more than 80% of patients enrolled achieving this medical milestone.³¹ But despite clear unmet need in the UK patient population, NICE determined that the trials did not have sufficient length to prove continued patient benefit and that the cost-effectiveness estimate for this medicine was higher than they were willing to pay.³² Coming to agreements with medicine manufacturers to fund medicine while long-term data are being developed and finding new ways to formally weight improved patient experience beyond cost savings is vital to ensure patient access to innovative new products.

Conclusions

The IRA has given Secretary Becerra a unique opportunity to shape drug negation policy for CMS. As shown in the cases of ZYNETEGLO (betibeglogene autotemcel) and IMBRUVICA (ibrutinib), methodology for this practice must be carefully shaped to protect patient access to medicine. Considering the United Kingdom’s policy approach to price negotiation, emulating its early and transparent collaboration with key stakeholders like patient groups and industry, and avoiding inflexibility in evidence acceptance can help minimize unintended damage on patient access to innovative medicines and achieve the IRA’s goals.