Ascenian
Aligning Evidence and Pricing To Support Innovation as The Belt Tightens

Total global spending on pharmaceutical research and development (R&D) continues to climb. In the past five years, estimated total global spending on pharmaceutical R&D increased by $78 billion¹. This rapid pace of development has resulted in more innovative therapies for patients but has also left pharmaceutical companies with the question of how best to price these new drugs.

Dr. Susanne Michel, Head of Health Technology Assessment (HTA) Consulting and Evidence Planning for Ascenian Consulting, has witnessed a dramatic shift in pharmaceutical market access needs. “If you compare market access consulting to ten years ago, we had maybe two types of products—biologics and chemicals—in one access pathway. But these days you have gene therapies, cell therapies, orphan-designated products and still biomedicines. You also have drugs that come with a full development cycle of a comparative Phase 3 study, compared to products that only have Phase 2 studies yet get regulatory approval under exceptional circumstances—like COVID treatments or orphan treatments that target a place where there has been no previous therapy.”

Identifying the Specific Business Question

Dr. Michel and her business partner, Michael Epstein, Head of Commercial Strategy and Pricing, founded Ascenian Consulting with the intention of being able to offer different tools to answer the breadth of different pricing and reimbursement questions. “Market access and pricing specifically is not a one-size fits all service,” says Epstein. “We have the experience and understanding of client needs to identify the right tool to answer the question at hand. For example, in pricing: We know how payers at each level in the system decide on making a treatment available to patients based on clinical guidance, affordability measures, and patients’ characteristics. ‘’

Whereas one project may demand economic forecasting and quantitative methods another project may require a qualitative deep dive to best understand how payers value the attributes of a new therapy. “It truly depends on the individual project and matching it to ‘how much a payer recognizes a certain health outcome in monetary terms.’ Decision making about reimbursement and pricing has become so highly individualized— but there is a formula. Is this a gene therapy or a cell therapy? Is it a product that’s first to market or one entering a highly competitive environment? This all determines how the project needs to be executed,” says Dr. Michel. “The advice we provide also depends on the customer. If you have a small biotech company they may have a need for an all-encompassing strategy, but with very specific questions. It’s an interlink of the environment, the business question, and the client.”

Since the pricing and reimbursement questions have become so individualized, Ascenian Consulting has focused on creating a strong Professional Learning Network (PLN). The PLN consists of former payers from around the world and pulls on a wide base of experience. Members of the PLN include former assessors at the Institute for Quality and Efficiency in Health Care (IQWIG), ex-members of the Commission de la Transparence (TC) and the Scottish Medicines Consortium (SMC), a former member of Canada’s Drug and Health Technology Agency, and advisers to the central government and regional Health Technology Agency (HTA) bodies in Spain, a former member of both the scientific and the reimbursement committee at Italian Medicines Agency (AIFA), along with a practicing oncologist, and a health economist among others.

Dr. Michel attributes Ascenian’s ability to provide actionable recommendations to the potency of the PLN. “Most of the people working with us are former payers and decision makers. This means that when it comes to providing price and reimbursement help on a new pharmaceutical, the advice we provide to our clients is from the perspective of the future client— not from a second-hand consultant,” says Dr. Michel.

Affordability Constraints Introduce Pricing Challenges and Put Pressure on Evidence Packages

Ascenian and their clients have been grappling with how to price new technologies and new therapies that have only come into existence relatively recently. Gene and cell therapies hold the promise of cure by re-engineering errors in genes and cells so they function in the way that they were intended. If these gene and cell therapies work as intended, patients would receive a one-time therapy rather than numerous therapies over the lifetime of the disease. Yet, it is unclear how to price these new therapies.

“Gene and cell therapies are extremely expensive,” notes Epstein. “One administration of a gene therapy can be upwards of a million Euros. Given the potential for these therapies to eliminate the disease with one dose, we need to find ways to evaluate pricing for these new therapies. Could they potentially outweigh the cost of ongoing chronic treatment? And we need to figure out how to make these therapies affordable for healthcare systems.”

Ascenian assists companies developing gene and cell therapies at several different points along the pathway to market launch. At the beginning stages, Ascenian helps clients with early scientific advice—in other words, helping clients present their developing technologies to HTA agencies and ask the right questions to ensure registrational studies are designed with access, reimbursement, and pricing in mind from the start. Dr. Michel leads these projects from a vantage point “across the table” from Ascenian’s clients.

Companies closer to launching a gene or cell therapy look to Ascenian for guidance on pricing and contracting. Epstein notes that pricing studies for gene and cell therapies must carefully balance evidence uncertainty and time horizon, and clearly incorporate changes and improvements to the health systems in question. These elements are becoming increasingly important in an era of increasing affordability and human resource constraints, and they are drawn in sharp relief in the case of gene and cell therapies. Hence, aligning better how each evidenced health outcome functions in price potential is important.

The long-term uncertainty associated with these types of therapies means that reimbursement contracts may differ from those of more traditional therapies. With so many unknowns and a longer time horizon, payers may not want to pay for the therapy upfront. “What if we only have data for five years and we find that in year six the patient is no longer responding to the therapy?” asks Epstein.

“It may be in the best interest of the payer to tie payment to meeting specific efficacy end points each year. That way if the therapy turns out not to be the ‘cure all’ we hoped for then the costs to the payer have not exceeded the value.”

The Pressures of the Political Climate

Dr. Michel is especially concerned with how the political climate will influence pricing. “Germany agreed at the end of October 2022 on new price-cutting measures. Policy makers are pointing their fingers at the pharmaceuticals because they make up a large chunk of our health care budgets,” said Michel. “The choice is: either people pay more on insurance premiums, or the increased costs of health care delivery is differently distributed. The increased budget scrutiny leads to a lot more questions surrounding the demonstration of value. Systems need to ensure they get value for money for each new therapy, and especially that they manage through price any uncertainty in health outcome evidence.”

Dr. Michel postulates that this belt tightening will lead HTA agencies in Europe to seek more evidence with greater certainty in value demonstration, for example on the impact of a new therapy outside the target position along the patient pathway. Dr. Michel expects that pharmaceutical and biotechnology companies will need to generate increasingly complex evidence justifying the price of the therapy. There are already signals in multiple systems that HTA agencies seek evidence of benefits beyond the duration of dosing in trials. How does the new therapy affect the use of other products down the road? What about the effects on the patient’s survival and quality of life later on? Michel asserts that these factors will play an increasingly important role and is positioning Ascenian to be able to help.

In this climate, even orphan drugs, which previously benefitted from a less stringent eye in HTA, are being scrutinized more closely. Since orphan drugs were developed for rare diseases that impacted only a handful of patients, pharmaceutical companies were able to set prices for their drugs without having to tie the price so closely to the evidence of clinical and economic benefits. Now companies developing orphan drugs increasingly need to provide clinical data that justifies the price.

As Dr. Michel notes, “Germany just finalized its plans to lower the annual revenue threshold for orphan drug benefits in HTA from 50 million euros to 30 million euros. The belt is getting tighter. What does that mean for pharmaceutical and biotech companies? It means you need to be ready for the affordability assessments that HTAs may be asking for in the future. Companies will need to develop the right evidence to support the reimbursement decision. And, Ascenian has on its team the right policy experts to address these exact concerns.”