WHO urges European Countries to work together to counter rising drug costs

March 27, 2015 | By Márcio Barra

Kalydeco, a new orphan drug priced at over US$300,000 per year

A new study released today by the WHO Regional Office for Europe provides an in depth look at the challenges faced by European Member States health systems by the introduction of new, costly therapeutic entities, and the troubling economic burden they bring to the Member States.

As an array of new drugs reach Europe, healthcare expenditure with new drugs is increasing at an accelerated pace. Some of new, costlier drugs include Gilead’s Hepatitis C drug Sofosbuvir (Sovaldi), orphan drugs with prohibitive price tags, and new anti-cancer agents costing $6,000-10,000 a month.

The report’s main takeaway message is that European governments need to cooperate and encourage collaboration between payers on standards and criteria for evaluation of benefits and cost–efficiency of new medicines, seeing as some member states do not have mechanisms in place to evaluate cost-effectiveness. Governments should also promote transparency on price deals between countries with price regulatory agencies (such as the UK’s NICE) and countries with less developed health technology assessment methodologies.

The study highlights the fact that medicines should be priced according to the added therapeutic value that they bring to patients, and pricing systems should distinguish and reward meaningful clinical innovation. However, most countries, including Portugal, still rely on external reference pricing methods. This pricing system has a host of limitations including arbitration of the targeting price, launch delays (as countries with more expensive prices tend to have new drugs available earlier)  and the lack of incentive for innovation. Only Germany, Sweden and the United Kingdom do not use external referencing pricing, but instead free pricing mechanisms for pharmaceuticals.

While external referencing pricing remains the most popular option, more and more member states are starting to adopt health technology assessment to guide their reimbursement decisions, following the steps of  UK’s NICE, which is responsible for conducting and reviewing cost effectiveness analysis for new drugs, relying particularly on the quality‐adjusted life-year (QALY).

You can read the full report here

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