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2017: A Year of Brexit Backlash, Regulatory Upheaval, and Waiting

by Katie Hayes , Product Marketing Life Sciences April 14, 2018

Throughout 2017, the life sciences industry has experienced regulatory changes and market access fluctuations, all while continuing to emphasize a consumer-facing business model that delivers innovative medicines to targeted populations. A few major trends of the last year have especially set up the industry for 2018 and beyond, such as the implications to the Brexit referendum and market access changes due to standardized health technology assessments (HTA) in various countries—and there’s little chance of slowing down any time soon.

Health Technology Assessment Developments

With any move to a national (HTA), there is the risk that innovation and access to needed medicines may be delayed or eliminated altogether. Health agencies are therefore tasked with carefully balancing any cost-effectiveness assessment with their country’s responsibility to increase patient access to innovative drug products. Globally, the industry is facing a rapidly aging population, with individuals over the age of 65 projected to outnumber children under 5 by 2020, meaning more individuals will require specialty treatments.

In parallel, Japan is looking to finance their healthcare system by introducing a HTA, a pilot program of which was introduced in 2016. As the world’s third-largest pharmaceutical market, the system Japan opts to utilize will have a ripple effect across the industry. For example, once Japan strengthens their assessment criteria, expected to be in effect by 2019, companies will need to demonstrate their product’s cost-effectiveness as it applies to the Japanese healthcare system. Initial proposals of the HTA include evaluating a product’s social factors, in addition to the standard clinical criteria, which can possibly boost the overall cost-effectiveness profile.

Regulation Reform

On the regulatory side, Brexit’s impending “divorce” from the European Union (EU) has required the industry to prepare for a variety of potential regulatory and trade challenges before the March 2019 exit date. This uncertainty will be alleviated once the exit scenario has been decided; becoming an EEA member, entering into a Free Trade Agreement, a bilateral agreement, or a WTO scenario are among the most plausible scenarios. However, the European Medicines Agency (EMA) has issued Brexit preparation guidance for pharma manufacturers that assumes the UK will become a third country, leaving many companies to plan for even more outcomes. Manufacturers are advised to closely monitor EMA’s webpage on Brexit.

Within the US, the election of Donald Trump propelled movement to repeal and replace the Affordable Care Act (ACA). Though the repeal process is expected to be lengthy, many manufacturers have already begun to emphasize pricing transparency—a stipulation proposed in many state bills. At the end of 2017, the individual mandate was repealed, no longer making it a requirement for Americans to purchase health insurance after 2018. Americans without insurance through their employer or are ineligible to participate in government programs are expected to drop their private insurance. Given its expense, approximately 13 million Americans will choose to be without insurance by 2027, according to the Congressional Budget Office, therefore hiking premiums by 10% for those remaining on private insurance.

While much of the focus has been centered on the individual mandate, pharma manufacturers will likely be more affected by the changes to the orphan tax credit. Currently, companies receive a 50% credit of qualified clinical trial costs for developing drugs to treat rare disease, though under the new bill passed at the end of last year, that credit would diminish to 25%. It’s unclear how impacted the industry will be as a result of the healthcare reform, however, much like the guidance for Brexit, manufacturers are advised to watch and wait.

Revenue Management as a Service (RMaaS)

Being able to proactively update remains more important than ever in the midst of industry changes. Manufacturers must continue to vigilantly monitor regulatory changes as a result of Brexit, the ACA, and other reforms. The risk of being outdated comes with severe market access limitations, financial penalties, and diminished profits.

With constant change expected of the industry, moving to the cloud is more important than ever. Model N can help with our SaaS delivery model, Revenue Management as a Service (RMaaS). A cloud delivery system, RMaaS provides transparency into the driving factors that influence price change across the revenue life cycle. With RMaaS, software is kept up-to-date against every version and is seamlessly fine-tuned with support from Model N experts. As the population continues to age and more specialty medicines are required to treat a variety of diseases, having the supportability of the cloud will redistribute resources that can be better utilized to focus on innovation.

Learn more about how Model N can support your business in the cloud by attending our Commercial Pricing and Innovation Forum in Stresa, Lake Maggiore, Italy, June 12-14.

Sources: DRG’s Global Market Access Key Events in 2017, PhRMA, PwC, EMA, CMS, CBO


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