The pharmaceutical industry is considering a radical shift in the way it prices drugs in Europe so companies are rewarded for the clinical benefit of treatments rather than the number of pills sold.
KPMG UK’s Chief Medical Advisor, Hilary Thomas, said: “These discussions around pricing will ensure pharmaceutical companies articulate the value that innovative medicines bring more effectively than they have in the past. The drugs have really got to work for patients in the real world. European health systems are under financial pressure and can’t afford to pay any more for drugs, so there’s only one direction of travel.
“The Pharmaceutical industry will need to develop much more innovative and flexible pricing models that look at rebating the payer, or hospital, when the drug doesn’t work, but charging them a premium when it works well. Some big players are already looking at these contracts, such as Novartis who have negotiated outcomes based contracts for their new heart failure drug Entresto, where they are responsible for the efficacy of the product in the total cycle of care.
“Areas where the cost of treatment is expensive, such as oncology, ought to be ripe for this model.
“It won’t be easy to implement this approach however, and there aren’t any examples globally where this has successfully got off the ground. Pharmaceutical companies and healthcare providers will have to work together to develop a system that captures and proves a drug’s value. At the moment the systems and data to achieve that are only just developing.
“Keeping patients out of hospital through successful drug treatments is worth achieving, not least because the cost of keeping patients in hospitals in Europe is so expensive."
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KPMG LLP, a UK limited liability partnership, operates from 22 offices across the UK with approximately 12,000 partners and staff. The UK firm recorded a revenue of £1.96 billion in the year ended September 2015. KPMG is a global network of professional firms providing Audit, Tax, and Advisory services. It operates in 155 countries and has 174,000 professionals working in member firms around the world. The independent member firms of the KPMG network are affiliated with KPMG International Cooperative ("KPMG International"), a Swiss entity. Each KPMG firm is a legally distinct and separate entity and describes itself as such.
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