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Administration in 2013 and 2014.
We found a significant discrepancy in
reimbursement decisions for similar
drugs among four large E.U. payors:
• France’s Haute Autorité de Santé:
Reviewed 19 drugs and approved all for
reimbursement. Approval criterion was
comparative clinical effectiveness.
• Sweden’s Tandvårds- och
läkemedelsförmånsverket (TLV):
Reviewed 16 drugs and approved 13
for reimbursement. Approval criteria
focused on cost-effectiveness.
• Germany’s Institut für Qualität und
Wirtschaftlichkeit im Gesundheitswesen
(IQWiG): Reviewed 18 drugs and
approved 12 for reimbursement.
Approval criterion was comparative
clinical effectiveness.
• U.K.’s National Institute for Health
and Care Excellence (NICE): Reviewed
nine drugs and approved six for
reimbursement. Approval criteria
focused on cost-effectiveness.
Separately, we found that, as with
Sweden’s TLV, the U.S. Centers for
Medicare & Medicaid Services reviewed
16 of these drugs and approved 13.
Decision making appears to be even less
predictable in specific therapeutic areas
(see Exhibit 2). For example, the three
metabolic drugs under consideration
in the two years we analyzed received
approval from all payors and regulators
except IQWiG, which rejected all of them
because the agency was unhappy with
the choice of comparator drugs used in
the clinical studies.
Moreover, even the terminology
used in the approval process can be
confounding, forcing pharmaceutical
companies to work their way around
mutable definitions. For oncological
and neurological drugs, Strategy&’s
review found that half of the time,
clinical outcome — that is, mortality
rate — was the primary factor. But for
the other half, surrogate endpoints,
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world monitor
Exhibit 2: E.U. payor approval rates for drugs, 2013–14
such as changes in a diabetes patient’s
glucose level, were favored metrics.
With the metabolic drugs, surrogate
endpoints were the sole criterion for
reimbursement, and with respiratory
drugs, this approach was preferred in
75 percent of the cases.
Pharmaceutical companies are at
a disadvantage — especially in
comparison with other healthcare
stakeholders (for example,
national health programs or payor
organizations), which are increasingly
working together to accomplish critical
goals, such as lower prescription
costs. Some of this is a problem of
the pharma industry’s own making.
Over the years, insularity has begun
to infect many pharmaceutical
companies. Silos have emerged that
separate, for example, R&D from the
commercial, production, and supply
chain parts of the business. And all of
these parts are disconnected from the
critical outward-facing aspects of the
industry: regulatory affairs, pricing and
market access, government affairs,
and medical affairs — the very parts
of the business that must cope with
the greatest degree of disruption in
the current environment. The result is
myopia: pharmaceutical companies
that fail to see clearly how the
disjointed approval system is affecting
patients, payors, and providers.
The dangers of silos may not always
have been obvious, but today,
with more stringent regulatory
requirements, greater oversight
of healthcare spending, and more
demanding patient and doctor
constituencies, there is much less room
for inefficiency and waste. A product’s
costs and returns will be disappointing
if a company makes decisions
without considering the impact on
all stakeholders. Say, for example, a
company launches a new compound
without a clear window into how much
payors will earmark for the product,
or what regulators will accept as the
minimum data set for accelerated
approval, or even the education and
support that will be needed to prepare
the medical community to embrace
the drug. These examples are not