Introduction
6.1
Once a medicine or medical device is granted regulatory approval by the Therapeutic Goods Administration (TGA) it can be marketed by the sponsor, and purchased by patients. However since most patients cannot afford the expense of many new medicines and devices, they must wait until it is reimbursed by the Government, which requires it to undergo Health Technology Assessment (HTA).
6.2
HTA process is conducted by a number of bodies, the most prominent being the Pharmaceutical Benefits Advisory Committee (PBAC) and Medical Services Advisory Committee (MSAC). Many submitters discussed HTA in general rather than one specific body, although their focus was directed towards medicines, and the PBAC was the individual body that attracted the most attention. Consequently this chapter addresses both the evidence concerning the PBAC and that concerning HTA in general, while the following chapter focuses on the evidence concerning the MSAC and related matters, such as the Prostheses List Advisory Committee (PLAC).
Overall performance of the Health Technology Assessment system
6.3
The Committee heard a wide range of views on the performance of the current HTA system, ranging from academics who claimed there is, for the most part, no problem with access to medicines to pharmaceutical companies who asserted that the system’s poor performance is preventing some medicines from being available in Australia at all.
6.4
Nonetheless submitters raised more issues about the performance of the HTA system in general and the PBAC in particular, than the TGA. BioMarin Pharmaceutical Australia (BioMarin) commented that:
BioMarin’s experience, like many sponsors, has demonstrated that the bottle neck for access to new drugs and novel medical technologies in Australia rests not with initial approval by the [TGA], but with the subsequent approval processes for reimbursement, and therefore should be the focus of the inquiry.
6.5
BioMarin argued that ‘the expedited processes for TGA registration have not been replicated across the respective reimbursement pathways for human therapeutics in Australia.’ Novo Nordisk Oceania (Novo Nordisk) similarly submitted that ‘the benefits from these shorter regulatory pathways will continue to go unrealised without PBAC and MSAC pathways also being improved to match the expedited TGA pathways’.
6.6
LEO Pharma had a somewhat different view, namely that the HTA system works well for some types of conditions but not for others. It suggested that certain conditions such as dermatological diseases have been neglected by the Pharmaceutical Benefits Scheme (PBS) while cancer therapies
…have in the last decade garnered more attention and public interest with sustained advocacy by the patients, clinicians, and the pharmaceutical industry. This has resulted in better support by decision makers and key stakeholders for reimbursement on the PBS.
6.7
BioMarin submitted that:
Apart from the ability to make a ‘parallel’ submission to PBAC whilst the sponsor anticipates registration approval from TGA, the Australian registration and reimbursement processes are entirely separate with virtually no alignment of evaluations and approvals. Indeed, even though the TGA assesses the safety and clinical efficacy of a medicine for the purposes of registration, the PBAC performs yet another evaluation of safety and efficacy.
6.8
Novartis Australia and New Zealand (Novartis) recommended the creation of:
…a forum for parallel and/or joint pre-submission consultation between sponsors and with all key decision-makers (regulators and payers) and a single format and point of entry for the subsequent submission covering all evidentiary requirements for novel therapies in areas of urgent clinical need.
Length of review for assessment and resubmissions
6.9
There was a widely held view among submitters that the HTA system currently takes too long to provide access to medicines. Many submitted that there is a need to ‘streamline’ the HTA system, before going on to make more specific recommendations. A particular concern was how often multiple submissions are required for a medicine to receive a positive recommendation from the PBAC. In the words of Professor John Zalcberg OAM, Chair, Australian Clinical Trials Alliance (ACTA):
…we face sometimes years of backwards and forwards with resubmissions, minor submissions and major submissions going on. In the period when these resubmissions are occurring, sometimes over a year or two or more, patients don't have access, and that is a problem.
6.10
The Department of Health (the Department) advised that 29 per cent (38 out of 132) of first time submissions considered by the PBAC between its March 2020 and March 2021 meetings inclusive received a ‘not recommended’ outcome. Dr Haitham Tuffaha explained that his research on the 179 new cancer drug submissions between 2010 and 2018 showed that positive recommendations were made for only 37 per cent of submissions, with drugs taking an average of 2.1 submissions for approval.
6.11
The Department noted that there has been a substantial reduction in processing times since the implementation of various process reforms from
1 July 2019.
6.12
The PBAC itself provided a suggestion to further streamline the process, which it explained as follows:
The establishment of the PBAC Executive consisting of the Chair, Deputy Chair and Chairs of the Drug Utilisation and Economic sub-committees provides an opportunity for further efficiency in PBS processes.
This would be enhanced if decisions around some matters could be formally delegated to the PBAC Executive.
This could include approvals for Section 19A exemptions for medicine shortages, changes in dispensed amounts, and changes to doses or minor changes to product content in the case of nutritional food products.
Flexibility
6.13
A related criticism was that the current system lacks flexibility, particularly in the face of increasingly advanced medicines and technologies. Pfizer Australia (Pfizer) explained that:
The emergence of innovative, targeted therapies has tested the limits of our [HTA] process and created tension between assessors, industry and patients. Attempts to address this have led to increasing layers of red tape. The result is a system that is increasingly complex, rigid and costly.
6.14
Medicines Australia similarly submitted that:
An emerging issue relates to the lack of flexibility in funding assessment pathways. For some medicines, there appears to be no pathway at all, which acts as a brake on both innovation and access. For others, even as approaching regulatory approval, there is no clarity on the funding pathway.
6.15
The Australian Cardiovascular Alliance (ACvA) recommended that the ‘flexibility of processes’ be improved to ‘fast-track urgent medicines and devices,’ a sentiment echoed by AstraZeneca. Bayer Australia and New Zealand (Bayer) put forward a similar view, and submitted that ‘no truly innovative medicines can receive a positive recommendation from reimbursement agencies without more flexibility in assessment methodologies.’ Novo Nordisk likewise suggested there is a need for ‘flexibility, transparency and adaptability in assessment and funding for new technologies where there are no defined pathways.’
6.16
Albireo Pharma identified flexibility as a particular requirement for assessment of rare diseases. Merck Sharp and Dohme Australia (MSD) suggested that the PBAC is less flexible than equivalent overseas bodies, but emphasised that flexibility ‘needs to be built around clear and transparent processes backed by independent scientific method.’ Mr Stuart Knight, General Manager, Roche Australia (Roche), told the Committee:
If I could leave you with one word, I think it would be just to make our system more flexible so that the processes that we have are more capable of dealing with uncertainty. For the data that is not perfect, how are we going to deal with that? How do we work through that together? Where there's inflexibility is where we are having problems.
Interaction with hospitals
6.17
Another difficulty that was raised with the current system was the potential for inconsistency where hospitals are involved. Alexion Pharmaceuticals Australasia (Alexion) submitted that:
…there is no clear assessment or funding pathway for Rare Disease treatments that need to be initiated as inpatient supply at the time of diagnosis but transition to chronic management in the outpatient setting post the acute event. It is recommended to have a clear and transparent pathway documented for highly specialised drugs that are initiated in tertiary hospitals, but the patient’s chronic management continues in an outpatient setting.
6.18
The Medical Oncology Group of Australia and Private Cancer Physicians of Australia (MOGA and PCPA) likewise expressed concern that ‘the different coverage of on-label and off-label indications in hospital and PBS formularies may affect the continuity and affordability of treatment for patients.’Meanwhile Amgen Australia (Amgen) wrote that:
Many new cancer medicines are very effective, very quickly, in reducing the size of a tumour, or the number of tumorous cells. These medicines have potential side effects such as Tumour Lysis Syndrome (TLS) or Cytokine Release Syndrome (CRS) which have symptoms which may need treatment in hospital.
Therefore, it is appropriate for these patients to have their first treatment in hospital. As hospitals are state run, the patient may not be eligible for PBS-subsidised medicines. Amgen recommends that the federal and state governments work together to ensure equitable access to these new and highly efficacious medicines in an appropriate clinical setting.
6.19
The evidence received by the Committee was limited but not particularly positive on the issue of how HTA or HTA-like processes are conducted for the hospitals themselves. The Australian Healthcare and Hospitals Association (AHHA), which represents public and non-profit hospitals amongst others, submitted:
Currently in Australia, processes differ across jurisdictions and public hospitals in relation to how new technologies are assessed and implemented, making it difficult to know if the technology leads to better patient outcomes at an efficient cost.
As noted in the Addendum to the National Health Reform Agreement 2020-2025…the current approach to health technology assessment to inform investment and disinvestment decisions in Australia is fragmented and does not facilitate coordinated and timely responses to rapidly changing technologies. Separate processes exist across all levels of the health system, which has the potential to duplicate effort, create inefficiencies and inconsistent advice, and delay access to innovative and emerging technologies.
6.20
This view was supported by the private sector. Stryker South Pacific argued that:
The current processes for assessing new health technologies in public hospitals differ vastly across states, territories and public and private health systems, leading to inequities in access between the public and private health systems...
There needs to be a clear and consistent approach across governments, health services and clinicians to ensure that evidence to support the value of new technologies can be demonstrated in terms of both costs and patient outcomes.
6.21
Edwards Lifesciences added that:
Separate processes exist across all levels of the health system, which has the potential to duplicate effort, create inefficiencies and inconsistent advice, and delay access to innovative and emerging technologies. We would welcome a coordinated national approach but not at the expense of speed to market.
Currently the ability to provide new technology to the public hospital system is more flexible and not exclusively dependent on MSAC approval. However, we would be concerned if a national coordinated HTA process meant that state hospital systems stop purchasing new technology unless it had an MBS item. This could potentially further slow access of new technology to Australian patients.
Coordination within Government
6.22
The complexity of the Government’s system for providing access to medicines and medical devices was reflected in the fact that many submitters felt that the different parts of the system need to coordinate better with each other, and indeed the fact that many nominated different parts to be involved in this coordination. AstraZeneca, for example, addressed the ‘HTA committees,’ recommending ‘improvements to the cross-talk/ coordination’ between them.
6.23
AbbVie submitted that:
Early dialogue between the TGA and PBAC, for orphan medicines, paediatric oncology medicines and advanced therapies for rare diseases where the patient population is small, would be particularly beneficial.
6.24
The Victorian Comprehensive Cancer Centre recommended ‘dialogues between market authorisation and Health Technology Assessment, so the clinical evidence is efficiently used by regulatory and reimbursement agencies’ and ‘early dialogue and alignment’ between the TGA and PBAC. Alexion commented:
As TGA assesses safety, efficacy and quality, the existing PBAC/MSAC evaluation process for drugs/therapies duplicates that assessment. The PBAC/MSAC could have their roles changed to determining:
Restriction criteria; and
Managed entry requirements
6.25
AusBiotech made its submission in more general terms, and called for:
Alignment and harmonisation of registration and reimbursement frameworks and better connection within the…TGA and Health Assessment workforces to expedite approvals for therapeutic products that cut across a number of disciplinary practices.
6.26
Dr Tuffaha argued that ‘better alignment is required between the registration and reimbursement processes. Parallel submissions to TGA and PBAC should be encouraged and facilitated through active engagement between sponsors and PBAC.’ The ACvA supported more use of parallel processing.
6.27
The MOGA and PCPA made one of the strongest submissions on this issue, writing that:
The governance culture and silo-approach within various authorities and government departments need to be challenged and a single, coordinated agency and decision-making process with supporting legislation is required to achieve greater process efficiency. We strongly recommend legislative reform that combines the TGA and PBAC process and MSAC process when appropriate.
It recommended ‘harmonisation of evidentiary requirements between regulatory and reimbursement authorities.’
6.28
Better Access Australia (Better Access) criticised the ‘assessment of subsidies by different committees noting the convergence of technologies is confounding the arbitrary placement in the subsidy assessment process.’ It suggested the system be reviewed to investigate ‘the viability of creating a single assessment system combining the skills and expertise of the various committees to be deployed as needed for the technology or treatment.’ ARCS Australia likewise claimed that ‘another area where barriers to accessing new medicines and devices exist is in the separation of funding pathways between the PBS (PBAC) and MSAC.’
6.29
Medicines Australia commented that ‘the lack of integration and predictability across the regulatory and reimbursement processes involving multiple bodies extends timelines needed to reach an outcome that enables patient access.’ In response it recommended the creation of a ‘joint [(TGA]; [PBAC]; [MSAC], Australian Technical Advisory Group on Immunisation (ATAGI) pre-submission advice framework to improve alignment of end-to-end processes.’
6.30
Novo Nordisk supported a ‘joint [TGA]/[PBAC] pre-submission advice framework to ensure alignment of end to end processes’ as well as ‘collaborative meetings between TGA, PBAC and MSAC becoming the standard approach for bringing new or novel technologies to Australia.’
6.31
Specialised Therapeutics Australia (STA) made the same point about the need for ‘collaborative meetings’ between the HTA bodies. It argued:
That Australia’s subsidy systems need to be aligned with the same timeframes of certainty and transparency as the TGA, and further, that the role of the TGA in determining safety and efficacy should be given higher weighting by the MSAC and PBAC.
6.32
In its submission the Department highlighted its new Health Products Portal (HPP), which it suggested would greatly assist with coordination within Government:
The HPP Program vision is to realise a single, secure and easy to use place where industry can interact with Government to apply, track, pay and manage listings for regulated and subsidised health‐related goods and services. The aim of the HPP is to create consistent and simplified business processes through a digital solution that supports legislative compliance and evidence‐based policy and decision making.
This digital solution will provide a consistent user experience for sponsors and other stakeholders, reducing duplication of effort and enabling a single, digital and trackable user journey through the regulatory and subsidisation lifecycle. Further, it will create a cohesive end‐to‐end HTA process, where information is gathered at any stage of the process with a view to its purpose, its use and reuse throughout, and availability at the right time. This will streamline and improve the process and efficiency in which medicines and medical devices enter the Australian market. The HPP has already enabled a streamlined approach for PBAC submissions, and over time, will link data and services to include other areas including TGA, PLAC and MSAC.
International cooperation and harmonisation
6.33
Many submitters recommended that international cooperation and harmonisation should be increased in Australia’s HTA system more generally. The MOGA and PCPA submitted that ‘the national approval process for new drugs and novel medical technologies must be made more efficient and responsive to international best practice’ and recommended ‘continuing to align the Australian system with international approval processes where possible.’ Medicines Australia encouraged the Government to ‘modernise and improve HTA evaluation processes in line with international best practice HTA.’
6.34
Many submitters drew a contrast between what they viewed as the significant progress the TGA has made in improving its cooperation with international regulators in recent years, and the lack of comparable progress by the PBAC and other HTA bodies, and urged the latter to learn from the former. AbbVie, for example, after praising the work the TGA has done to improve its international cooperation recently, noted that this has lagged for HTA, submitting that ‘there is an opportunity for the reimbursement pathway to adopt similar concepts to Project Orbis to accelerate access to medicines.’
6.35
The Macquarie University Centre for the Health Economy (MUCHE) explained that currently ‘submissions to the PBAC must report relevant published economic evaluations involving the proposed drug or similar drugs, including those considered by other HTA agencies or committees.’ It stated that the benefits of the PBAC considering other HTA bodies’ decisions include ‘insights into whether the drug was approved only in sub-populations due to greater efficacy or safety concerns, economic model structure and inputs, and key drivers of the results.’ It noted however that there are various differences between countries that need to be taken into consideration, including in population characteristics, comparators, clinical practices, health system costs, cost effectiveness thresholds and weighting between cost effectiveness and other criteria. It recommended that ‘PBAC should consider, but not rely on, the deliberations made by other HTA agencies or committees if available, including funding recommendations.’
6.36
The MUCHE noted that benefits of increased collaboration between HTA agencies include ‘reduced resources incurred by sponsors/applications to generate evidence and HTA agencies in assessing evidence; and improved transparency and timeliness in decision making,’ and that such collaboration is already occurring overseas, such as through the European Network for Health Technology Assessment. It recommended the Committee ‘consider the need for increased collaboration between PBAC and other HTA agencies, including the harmonisation of PBAC methods guidelines.’
6.37
Dr Falk Pharma Australia commented that for medicines for rare diseases:
…it would simplify PBS submissions if economic modelling used in other countries could be used here, rather than creating Australian-specific ones. Naturally, it is accepted that these models would need updating with local population and prevalence data (if separately available). These models are expensive to create and are generally a re-configuration of data previously reviewed in these other markets.
6.38
Medicinal Cannabis Industry Australia (MCIA) explained that Australia has ‘lagged some other parts of the world’ in the approval and use of medicinal cannabis, and consequently recommended ‘enabling drugs that have been given approval overseas in jurisdictions equivalent to Australia to be fast-tracked for approval in Australia.’
6.39
The PBAC noted in its submission to the inquiry that the TGA’s work in this area in recent times, and commented that:
The PBAC is interested in examining how similar types of sharing of health technology assessments could be implemented with other reimbursement authorities. Health technology assessments require more inputs that are country specific, such as local clinical practice, costs and availability of other therapies and supports, so there will always be a need for Australian specific assessments. However, there are elements that are likely to be very similar across countries.
A barrier to this is the confidentiality arrangements that companies have with different countries. While the PBAC understands the sponsor’s reason for this in relation to pricing aspects, there would still seem to be substantial room for sharing of other aspects including economic modelling. Economic inputs would need to be adjusted to reflect country specific clinical practice, comparators and healthcare resource costs. It would appear to the PBAC that some global sponsors sometimes already use common models in their submissions to the PBAC.
Measuring Pharmaceutical Benefits Advisory Committee performance
6.40
Amgen asserted that ‘unlike other major areas of public health expenditure (Commonwealth or State), no data are currently collected and published by the Government’ on how long medicines are taking to be listed on the PBS after their registration on the Australian Register of Therapeutic Goods or on the broader performance of the PBS. It argued that:
Australian patients and taxpayers need to know how long they are waiting for access to the safe and effective medicines that they need. Data against a well-defined set of metrics are fundamental to both good and accountable government and well managed businesses. The collection and publication of such performance data would bring the PBS in line with other major areas of healthcare expenditure and delivery.
6.41
Sanofi similarly recommended the implementation of ‘an open and transparent tracking system designed to measure speed to access from registration to reimbursement for new therapies.’ It suggested that ‘this system should include benchmarks to other comparable countries and healthcare systems.’
Reviewing the system
6.42
Many stakeholders called for a wide-ranging review into the HTA system. Roche stated that ‘a review of the HTA processes and methods that will be challenged by precision medicine technologies is required.’ Biotronik submitted that:
…the Health Technology Assessment resources within Australia [are] in need of a whole of health review. This process was last under review back in 2011 and one of its key recommendations was to revisit the landscape every three years, which the government of the day remained silent about.
…the review of the National Medicines Policy (NMP) provides the ideal mechanism to achieve the integrated and comprehensive reform required to ensure Australia’s approval processes remain efficient, fit-for-purpose and equipped to appropriately inform decision-making about how best to allocate investment to optimise health outcomes for all Australians.
6.44
LEO Pharma and Better Access made similar comments on the need for the review of the National Medicines Policy to be used for such a purpose, with the latter suggesting lessons should be learned from the review announced in November 2020 by the United Kingdom’s (UK) National Institute for Health and Care Excellence (NICE).
6.45
Amgen reiterated the claim that there is an incongruity between the performance of the TGA and that of the HTA system in its argument that:
The Australian Government recently implemented reforms to the TGA based on recommendations made by an Independent Expert Panel Review. Many of these reforms are explicitly designed to speed up access to medicines. Nonetheless, the TGA is effectively only one-half of the access system in Australia and therefore the reform of its processes has achieved only half the job. Amgen believes that a companion Independent Expert review focussed on the PBS … is required.
6.46
Amgen emphasised that a review should look not just at ‘the HTA methods used by the PBAC in its evaluation and decision-making’ but include the ‘processes, timelines and the relationship between patient access and finalisation of PBS listing terms with sponsors.’
6.47
The Department advised that the review of the NMP was to commence in August 2021, chaired by Professor Michael Kidd AM. On 7 September 2021 the Government announced that it would conduct a comprehensive Health Technology Assessment Policy and Methods Review as part of its new five year Strategic Agreements with Medicines Australia and the Generic and Biosimilar Medicines Association, discussed in Chapter 2.
The application process
Engagement with sponsors
6.48
There were strong views among submitters that more pre-submission engagement is required, both from the HTA system in general and the PBAC in particular. The Rare Disease Industry Working Group (RDIWG) submitted that:
Earlier engagement with the Department of Health would be welcomed by Industry in order to be able to identify the appropriate reimbursement pathway, provide the patient voice and establish clinical need so that all parties facilitate the path to access without increasing submission churn.
6.49
It called for the PBAC pre-submission process for rare and ultra-rare diseases to be ‘enhanced,’ including by involvement of a Life Saving Drugs Program (LSDP) representative in the case of medicines that may be eligible for the LSDP.
6.50
Noting the complexity of HTA for rare disease medicines in particular, Takeda Pharmaceuticals Australia (Takeda) argued that ‘a central entry point for discussions on HTA for rare diseases could improve the efficiency of review by initiating a discussion on the current standard of care and the unmet medical need earlier in the review process.’
6.51
MSD took a more general view, stating that:
Those with a stake in HTA should be involved, including industry, to develop a collaborative approach to assessment. In particular, broad involvement can facilitate the exchange of information in confidence to ensure the reviewer has complete clinical, epidemiologic, and economic information to formulate a review.
6.52
LEO Pharma argued that ‘genuine and active engagement between the PBAC and companies to better understand the requirements and expectations would lead to fewer first time rejections and better informed decision making by the PBAC.’ It stated that the current hour-long pre-submission meeting (for which the PBAC charges $15,800) does not provide ‘sufficient clarity’ and does not include PBAC decision-makers. It recommended that the Chair of the PBAC attend the meeting ‘for therapy areas where the PBAC lacks understanding of new treatments and where an area of disease has not had a recommendation in the last 5 years.’
6.53
STA described the current rules governing engagement between a sponsor and the PBAC as ‘very strict,’ which it said ‘effectively prevents open, frank dialogue with evaluators once a submission has been lodged.’ To remedy this it recommended the provision of ‘additional opportunities for rigorous and robust engagement prior to the submission decision (rather than at a post-decision meeting).’
6.54
There were concerns about the general tenor of the relationship between industry and the Department. Shawview Consulting submitted that:
The level of constructive engagement, or ‘vibe’, in the dialogue has waxed and waned over the years. My sense is that the day-to-day relationship between government officials and industry on PBS policy and process issues is today more transactional and less solution-focussed than in the past. This may be an understandable response to budgetary pressures, industry and business changes and the changing dynamics of Australia’s place in the global health landscape, but the result is that many interactions between government and industry are short-term exercises in cost-saving and damage control. I encourage government officials to embrace a more cooperative, solution-focussed, appropriate, professional, long-term relationship with industry.
6.55
This was a view shared by Omico, which argued:
It is also envisioned that greater public sector-industry collaboration based around coordinated, mutually compatible areas of expertise and investment, could give rise to enhanced opportunities for negotiations between government and industry in regard to drug pricing, compared to the current adversarial model. Since there is no future for therapeutics in general that will not depend on industry for drug development, a collaborative rather than adversarial model for innovative health systems is both logical and desirable.
6.56
The MUCHE, meanwhile, suggested that smaller pharmaceutical companies in particular ‘may also see the process as combative rather than one of information seeking and negotiation.’
6.57
Novo Nordisk took a broader view, and recommended ‘dialogue between industry and the PBAC to consider future policy issues to guide the HTA process.’ Medicines Australia submitted that:
In the past, there was regular dialogue between Medicines Australia and the PBAC on issues of importance to the HTA process. Medicines Australia believes the re-introduction of such a dialogue would be beneficial, given the lack of certainty for new therapies in terms of HTA assessment.
6.58
Biotronik made a similar proposal:
A government instigated regular ‘Innovation Forum’ to bring manufacturers, payers and providers together could act as a platform for dialogue, mutual understanding and sensible decision making to bring clinical innovations with health‐economic benefit to market sooner.
Fees
6.59
Many pharmaceutical companies expressed unhappiness with the current PBAC fee regime, particularly as it applies to medicines for rare diseases. Novartis explained that while medicines granted an orphan drug designation by the TGA are fee exempt for their first submission to the PBAC, since June 2019 full fees have been payable for any subsequent resubmission; it is possible to request further exemptions but ‘this is uncertain as it can only be requested during the process.’ It submitted that ‘an expansion of the criteria for a fee exemption, which is known in advance of the PBAC submission would provide certainty and clarity for sponsors about the potential costs.’
6.60
UCB Australia (UCB) and MSD merely raised the limited exemption as a problem, but other companies wanted it expanded: Recordati Rare Diseases Australia (RRDA) proposed the first two to three applications; STA nominated two major and one minor submissions; and Amicus Therapeutics recommended five years.
6.61
Bayer proposed extended the exemptions beyond designated orphan drugs to drugs that treat ‘diseases affecting small populations (but not given orphan designation).’
6.62
Novartis expressed concern that the current orphan definition does not capture ‘personalised medicines’ that ‘breakdown a previously large homogenised patient population for say lung cancer, into smaller population subsets that are heterogeneous,’ and accordingly recommended ‘a review of the existing criteria or new fee exemption criteria for personalised innovative medicine.’
6.63
There was discussion of the possibility of deferring payment of fees until after reimbursement is granted, which was supported by BioMarin for all applications for orphan medicines. STA suggested this should apply for ‘at least the first two applications’ for any medicine for companies with revenue less than $50 million per annum, with fees to be paid in instalments once the PBS expenditure on the medicine exceeds $3 million per annum.
6.64
Noxopharm Limited proposed ‘deferral of payment of fees for Australian-owned companies would permit early-stage companies to begin to receive revenue before paying off the balance of submission fees.’
6.65
Better Access recommended ‘considering fee processes and payment plans commensurate with the size of the company.’ RRDA argued that fee relief should be ‘means tested,’ meaning companies below a certain annual turnover – it nominated $50 million – would receive the exemptions, but larger companies would not. It based this argument on the claims that this would provide more resources to the PBAC and TGA, larger companies do not need the exemptions, and they would not be deterred from making orphan drug applications because ‘their business now depends on sales of orphan drugs.’
6.66
By contrast the RDIWG suggested that this be done on a medicine by medicine basis, arguing ‘consideration of implementation of a fee structure based on budget impact would increase access to treatments for very small populations.’
6.67
The Department advised that it ‘previously has been asked to consider a sliding scale of fees based on company size,’ although it is bound by the Government’s cost recovery policies. It noted that ‘the fees charged reflect the costs and efforts undertaken by the Department, commensurate with each submission type, regardless of company size.’ On the question of fee waivers, it commented:
Fee exemptions apply to all applications that meet the criteria set out in the Regulations. Fee waivers are granted at the discretion of the Secretary or a delegate where an applicant demonstrates that their application is in the public interest and that cost recovery fees would genuinely make the application financially unviable.
6.68
Professor Andrew Wilson (Prof Wilson), Chair of the PBAC, made the following comments on the issue of the PBAC’s fees and resourcing:
I think it's inappropriate for me to comment on whether cost recovery, which is a government policy, is working. It depends a little bit on what you mean by 'working'. It has little impact on what we receive…I've already flagged that, if we want to enhance our consumer-involvement processes even further, that is an area where I think we need to think about resourcing. As flagged…if we want to allow for some alternative pathways for submission and some more active surveillance of need, there would need to be additional capacity to do that. The existing system keeps up with the submissions based process, but, if you were to add additional, unfunded applications to be made, that would be very challenging.
Provisional access
The existing system and opportunities for change
6.69
A significant issue raised by the pharmaceutical sector was the need to strengthen and expand provisional subsidised access to medicines, currently provided through managed access programs.
6.70
Bristol Myers Squibb Australia (BMS) explained that these programs ‘…are intended to allow listing when the clinical data remains incomplete, potentially speeding up the approval process; however, agreeing [one] can be complex and does not necessarily address the gap between regulatory and reimbursement approvals.’ Johnson & Johnson stated that:
The ‘Managed Access Program’ (MAP) framework is an existing mechanism which is intended to facilitate access to new therapies in areas of high clinical need. Whilst the uptake of this mechanism has been very limited, there is an opportunity for this framework to be re-invigorated and adapted to better support the medicines access needs of patients. Therefore, it is recommended that the existing MAP framework be formally reviewed in consultation with relevant stakeholders.
6.71
Novartis noted the problem that evidence that is sufficient for a medicine to receive provisional approval from the TGA is often insufficient for it to receive a positive recommendation from the PBAC, including for a MAP, meaning the provisional approval does not actually provide access any faster. Similarly, Roche submitted that:
There is similar need for alignment for the managed entry scheme [i.e. MAPs] to be more flexible with parallel filing to the TGA and PBAC for new medicines that have substantial benefit based on early data. With the TGA provisional pathway fast tracking evaluations, alignment of these timeframes with the PBAC processes will reduce delays and provide greater certainty for sponsors. This will help sponsors to navigate the regulatory and reimbursement processes in the most efficient way possible.
6.72
The RDIWG argued that many new technologies may provide long-term benefits for patients and consequently ‘may have limited data at the time of assessment.’ It urged that ‘there should be a focus on the development of innovative access mechanisms to ensure patients have the advantage of being able to access treatment in parallel to the long-term collection of [RWE].’ Many other submitters were supportive of similar ideas, emphasising the opportunity for RWE collection. BMS, which claimed that it had participated in Australia’s ‘first significant managed access scheme’ for a melanoma drug, submitted that:
…conditional approvals could reference, rather than duplicate, the post-marketing studies being conducted in other countries….In some cases, it may be necessary to conduct local studies, although this should be justified on an exceptional basis, rather than assumed for all cases.
6.73
It argued that relying on overseas studies would reduce the administrative burden on doctors and lower costs for sponsors, thereby encouraging them to bring their medicines to Australia.
6.74
Companies such as AstraZeneca, MSD, Johnson & Johnson, Pfizer, Novartis and LEO Pharma stressed the importance of the risk of this type of arrangement being appropriately shared between the sponsor and the Commonwealth. The New South Wales Government (NSW Government) argued the arrangements need to include ‘agreed timelines for evaluation post implementation with a focus on disinvestment, or renegotiation on price for therapies that do not meet expected value to patients and/or the health system. ‘It also argued that they should only be put in place where the medicine meets ‘baseline safety and efficacy.’ The Australasian Sleep Association recommended that these programs be designed in consultation with ‘patients and clinical stakeholders (e.g. not for profit clinical or patient support organisations).’
6.75
Dr Tuffaha recommended that the utilisation of Managed Access Programs be increased, and noted:
It is vital to engage major stakeholders, including patient representatives, in the development and implementation of managed access schemes.
Objective criteria and methods (e.g., Value of Information analysis) are required to systematically examine the need for, and the value of, these schemes.
The conditions governing the implementation of the schemes should be clear, transparent and balanced to address the expectations of various stakeholders.
The scheme should be continuously evaluated and improved to ensure that it serves its purpose.
The consequences of any potential delisting decisions on stakeholders, should be carefully considered and managed, possibly through certain managed exit schemes (MEXITS).
Overseas examples
6.76
One model for provisional access that drew particular support was that used by Germany. Medicines Australia explained ‘the German model’ as follows:
On market entry, a new medicine is reimbursed at its launch price for the first year, pending the completion of an early benefit assessment. In the second year of launch, depending on the outcome of the early benefit assessment, the reimbursement price is determined either by:
Compulsory rebate negotiations…for medicines with an additional benefit versus a competitor.
Reference price system where medicines with no additional benefit are reimbursed at the reference price
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Better Access provided a diagram illustrating the German model, Figure 6.1. It claimed that ‘the German reimbursement process does not come at the cost of a rigorous value assessment,’ it merely means that ‘the negotiation of prices does not… stand in the way of access for patients.’ It did however concede that the system ‘has faced fiscal challenges with some companies overpricing and failure of the system to clawback excess from use beyond indication, or failure to achieve health outcomes in real world application versus clinical trials.’ It argued that :
Australia’s experience in the utilisation of Risk Share Arrangements and improving data accessibility through electronic health records places us well to modify a system with suitable ‘carrots and sticks’ to get the balance of access, affordability and transparency right.
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BMS outlined France’s Temporary Authorisation for Use program. It is available where a drug meets three criteria:
The drug must be intended for a serious or rare indication
There must be no other appropriate therapies available for this indication in France
The drug must have presumed efficacy and safety in light of the available scientific data, and the treatment cannot be delayed for patients
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The drug price is ‘set freely’, but subject to an annual cap. Data is collected while the temporary authorisation is in force.
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Medicines Australia stated that in the UK ‘the Cancer Drugs Fund (CDF) acts as a managed access pathway for new cancer medicines.’ MSD suggested that this has been more successful than its Australian equivalent, as it has been used for considerably more medicines. BMS described the CDF as having two roles: funding managed access arrangements, and providing ‘interim funding for all newly recommended cancer drugs.’
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The Committee’s UK witness Mr Meindert Boysen, Deputy Chief Executive Officer and Director of the Centre for Health Technology Evaluation, NICE, explained that:
We have a specific fund—it's called the Cancer Drugs Fund at the moment, but there are plans to expand that. That fund is used to allow companies to bring a drug to market at an earlier stage while data is collected. The one test we apply in the Cancer Drugs Fund is to make sure these products have a plausible potential for being cost effective. So we do our work. If the Cancer Drugs Fund wasn't available, our committees probably would not have supported the technology. But, because there is a Cancer Drugs Fund, they can recognise the uncertainty that is inherent in the evidence base, often for rare cancers in particular, and allow a period of what we call 'managed access'—two to three years of use in the NHS—combined with data collection.
Proposed models
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Mr Michael Smith, an industry consultant, put forward a detailed model for an interim access scheme, which is illustrated by Figure 6.2. Noteworthy features of his proposal include:
It would be available for technologies (medicines or devices) considered to meet a high and unmet need by the PBAC or MSAC, eligible for the TGA’s orphan drug designation or registered through its provisional or priority approval pathways, or for a ‘special population’ (such as paediatric or Indigenous)
The PBAC or MSAC would recommend that the technology is suitable for interim access, but the rest of the process would then be left up to the Sponsor and the Government
The duration of the interim access period would be agreed between the Sponsor and the Government, and could be extended by mutual agreement
The price would be divided into two components: the price the PBAC or MSAC considers reasonable on the basis of the available evidence, which would be paid immediately, and the difference between that price and the price requested by the Sponsor in its submission, which would be deferred
If the technology is not listed on the PBS or MBS at the end of the interim period, the Sponsor would not receive any of the deferred payment. Access would continue for existing patients but would not be available for new patients.
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The MUCHE likewise recommended that the PBAC be allowed to recommend a MAP for any submission, even if it has not been requested by the Sponsor. It also included MAPs for LSDP listing in this recommendation – it was unclear on the evidence whether any form of managed access is currently available for the LSDP.
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The University of Melbourne suggested that standard ‘post market surveillance mechanisms…are often unreliable.’ On that basis it proposed a more restricted form of provisional access to medicines:
The creation of nationally accredited centres for early, proactive assessment of a new innovation’s efficacy, safety and health economic outcomes to provide the evidence to support broader dissemination (or not), and disinvestment from existing, ineffective health care practices.
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The ACTA recommended that the Government:
Establish a rigorous pathway for treatments, services and technologies that are unproven in the real world to enter practice as quickly as possible through a conditional scheme. This scheme would require participation in either a trial conducted by Clinical Trial Networks (CTNs) and/or Clinical Quality Registries (CQRs) capable of generating important real-world data about the clinical effectiveness and value of the intervention in the real-world context.
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It pointed out that such a pathway would provide three benefits: earlier access for patients, better data for the Government, and more experience with the new therapies for doctors.
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The MOGA and PCPA submitted that the evidence base for cancer medicines often has more uncertainty than the current system is willing to accept, and consequently:
For diseases with significant unmet clinical need and technologies that have proven to be efficacious and safe, making decisions based on surrogate endpoints may be appropriate, on the condition that the sponsor is obliged to undertake post-marketing evaluation.
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The Pharmacy Guild of Australia argued for the implementation of ‘a standardised protocol-based post-market pharmacovigilance consultation in community pharmacy to enable earlier and reliable access to and ongoing clinical support for new and novel treatments.’
The Pharmaceutical Benefits Advisory Committee’s View
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When asked by the Committee how many MAPs are in place currently, Prof Wilson replied:
A very small number. I think in practice we have two which are still operational at the moment. The challenges in the managed access program, which I talk about in the paper, are that you have to have the right sort of question; you've got to be able to actually answer the uncertainty that you want to address; you've got to have the capacity to collect the data; and all parties need to be willing to submit the data. That requires resources to be able to do that, and there is expertise involved in doing it. It's sometimes easier. There's a registry that sometimes makes it a lot easier, from our perspective. But we would certainly be much more comfortable if it also had a specific legislative basis.
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In the paper, Prof Wilson refers the PBAC’s submission that:
…based on our observations in countries with similar health systems to ours, such a program should have a legislated framework which is binding on sponsors in relation to negotiated entry price, the period and requirements for establishing a cost-effective price as determined by the PBAC, and agreement to continuation [sic] of supply for existing patients for free in the event that the cost-effective price is not agreed between the parties….Legislated frameworks will enable requirements for data collection and patient participation to be reasonable, relevant and mandated for the PBAC purposes. Such a program would require resourcing for clinical and patient participation, as well as the oversight of access protocols….
The PBAC strongly believes an early access program should not be limited to a specific disease or condition although the eligibility criteria of a medicine for such a program should refer to high unmet need and disease severity/prognosis.
Real World Evidence
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While the central role that real world evidence (RWE) plays in provisional access schemes has just been discussed, submitters commented on various other issues relating to it. Takeda stated that RWE ‘offers additional insights into the value of treatments’ when used alongside clinical trial data and ‘has the potential to reduce uncertainty and enable more informed decision-making’ when generated through ‘appropriate methodologies.’ It noted that there will be particular opportunities to gather RWE when ‘patients will be followed up for a long time for safety monitoring,’ as will be the case for many gene and cell therapies, and emphasised the importance of disease registries for this purpose.
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Medicines Australia submitted that there are two ‘major challenges’ to more use of RWE in Australia’s HTA system:
Methodological challenges – where the lack of a specific framework and language for provision of real-world evidence leads to under-generation and under-acceptance.
Procedural challenges – where the pre-reimbursement process is not conducive to the generation of real-world evidence for inclusion in HTA submissions
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It noted that there is a ‘comparatively low ability in Australia to link datasets (compared with the rest of the world).’ It noted that patients expect more use of RWE in HTA than currently occurs, and highlighted the importance of including Patient Reported Outcome Measures (PROMs) in such evidence.
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In the context of a discussion of the PBAC’s approach to assessing medicines for rare paediatric diseases, the Luminesce Alliance explained that:
…there is an opportunity to change the onus of approval to include different levels of evidence required for approval, such as the inclusion of real world evidence outside the gold standard of randomised controlled trials, such as observation in clinical practice and the use of clinical quality registries for a staged approval of drugs for paediatric indications.
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It called for better collection of data on compassionate access schemes - under which pharmaceutical companies provide their medicines to patients for free in certain circumstances, such as before reimbursement - in order to generate more RWE, including through use of registries. Both these points were echoed by the Children’s Cancer Institute, one of the Alliance’s members.
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The Australasian Leukaemia and Lymphoma Group and Haematology Society of Australia and New Zealand recommended a ‘commitment to fully mobilise real-world data programs’ for HTA purposes through better data collection, particularly ‘increased focus and funding’ for ‘clinical quality registries.’
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Roche submitted that ‘there has been a growing recognition of the value of RWE in making regulatory and reimbursement decisions, but the way in which RWE is being used in these processes is unclear.’ It explained that the ability to capture RWE is growing thanks to technological advances, and that this growth offers increased opportunities for it to be used to mitigate uncertainty in assessment of therapies for small patient populations, as well as to assess repurposed medicines better. It noted the importance of improving ‘data infrastructure’ for the potential of RWE to be fulfilled.
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Sanofi recommended the development of ‘clear and more inclusive processes, including the acceptability of several sources of scientific evidence, such as [RWE] to capture the value for patients and their families.’ Novartis similarly asked for ‘a consistent approach, supported by Government, for the generation of [RWE] via registries to address evidence gaps in economic evaluations.’ AbbVie submitted that :
…when unmet medical need is high and where randomisation is not ethical or feasible, other options such as [RWE] could be a viable option to provide pivotal evidence of the benefit of new medications. Fit for purpose HTA processes which allow more flexible evidentiary requirements which take into account the clinical and ethical complexity will need to be developed.
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BMS noted that HTA bodies in the UK (NICE) and Canada have ‘signalled their intent to formally incorporate RWE into HTA guidance.’ It stated that:
PBAC and MSAC do currently consider RWE in evaluating medicines and RWE is referred to in the HTA Guidelines for both agencies. The guidelines do not, however, give sufficient details about how RWE will be considered. Further guidance would provide greater clarity to sponsors.
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It suggested the guidelines should address the same matters NICE is considering, namely types of RWE accepted, required quality and ‘detailed methodological framework for best practice for consideration and use of data analytics.’
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UCB called for more use of RWE in assessment of ‘drug device mechanisms’ (that is, a form of combination therapy). MCIA advocated for the use of both ‘inclusion of large-scale observational studies as supporting evidence’ and ‘allowing the use of the TGA’s SAS data as an observational instrument’ in assessment of medicinal cannabis products. Alexion argued that ‘there is a need to develop detailed and transparent explanatory notes’ for the LSDP’s eligibility criteria to ‘allow the company to make a more accurate assessment of [RWE] needs.’
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The MUCHE, while supportive of a role for RWE in the context of provisional access, commented that ‘it should be noted that [randomised controlled trials] are considered to be the gold standard, and real world, observational data is often subject to confounding.’
The valuation process
A broader concept of value
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The valuation process was of particular interest to industry. Better Access submitted that value should be ascribed to factors such as economic productivity, workforce participation, ‘a sense of self’ and ‘a sense of confidence and opportunity.’ It suggested it was telling that the Government has bypassed the HTA process entirely in its funding decisions regarding COVID-19 vaccines, particularly in regard to how that process values other vaccines.
To demonstrate value, health technology assessments must also include consideration of equity. Are the right patients receiving the right treatment? Value is only achieved across the whole health system if everyone that needs it can access it.
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Viiv Healthcare Australia (Viiv) similarly argued that the current approach:
…doesn’t recognise that some individual consumers may have better or worse outcomes from medicines that are considered clinically equivalent on average across the whole target. For example, a patient may have side effects from the old medicine but not from the new one. So, patient choice is also important at a personalised level.
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STA provided one of the most concise comments on this issue, proposing the introduction of ‘new objectives for subsidy processes aligned to patient need.’
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Medicines Australia argued that ‘the current PBAC evaluation of medicines, inadequately considers the evaluation of social and economic impacts of a particular medicine or intervention.’ It claimed that ‘there are validated methodologies for assessing many of the key determinants of success, used often and with useful context in other areas of health and social research,’ citing studies on the valuation of treatments for osteoarthritis and haemophilia. It suggested that the problems with the current system are particularly acute for vaccines, ‘preventative medicine approaches’ and other therapies with particularly long-term benefits.
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In its submission Eli Lilly Australia (Eli Lilly) asserted there is a problem with the valuation of ‘innovative medicines,’ and made two recommendations to address this:
Development of a more comprehensive assessment of value when it comes to innovative medicines that takes into account the second-round effects of keeping people well and productive members of society.
Inclusion of a data-based matrix that considers and measures the long-term benefits of listing innovative medicines on the PBS. Data should include not just dollar savings to the health system more broadly, but also the financial and associated socioeconomic benefits of improved workforce productivity and reducing disability.
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Roche likewise argued that, particularly in face of ‘new precision medicine technologies,’ ‘broader dimensions of value, including societal value, need to be included, and encouraged, in assessments for reimbursement.’ It went on to explain:
While both the MSAC and PBAC Guidelines state that they do consider the value of societal outcomes, they do not do so in a quantitative manner - i.e societal outcomes are not included in the cost-effectiveness calculation. It would be valuable for the Government to provide transparency and clarity around how opportunities for more formal inclusion of societal benefits in cost-effectiveness calculations can be undertaken.
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Johnson & Johnson was also critical of the view of value taken by both the PBAC and MSAC, which it described as ‘narrow.’ It recommended ‘greater recognition’ in the Guidelines ‘of societal value to reflect the overall benefit to the Australian Government and the Australian people of new and innovative therapies,’ as well as ‘consideration of leveraging innovative international assessment model…such as a Value Appraisal System or Multi-Criteria Decision Analysis tool designed specifically for the Australian environment.’
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UCB raised the valuation of innovation in a more specific context, the valuation of ‘drug device mechanisms,’ stating it wished to see ‘a broadening of the criteria (e.g. acceptance of real-world data) for the cost effectiveness assessment of drug device mechanisms, to appropriately recognise the value of the delivery device to the holistic treatment.’ MSD likewise argued the current system does not ‘appropriately value’ diagnostic devices. The ACvA argued that:
Widespread adoption of digital health technologies is inhibited by the lack of a coordinated framework for assessing the value of digital technologies and incorporating such value assessments into reimbursement mechanisms.
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Some submitters focused particularly on the question of valuing products for rare diseases. CSL Behring, for example, called for ‘allowing a broader consideration of value’ for blood products and therapies for rare diseases.
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Alexion Pharmaceuticals made the following point:
There is a need when considering the value of medicines for rare diseases to consider matters beyond cost-effectiveness such as these broader societal impacts i.e. impact on carers, broader community care and economic costs. A fit for purpose process to assess rare disease treatment should also consider the use of multi-criteria decision-making (MCDM) to incorporate all relevant elements of the rare disease treatment value into a funding decision. Any future modification to the review system for rare disease treatment should limit the use of cost-effective ratios to allow broader assessment of value for pragmatic decision-making or allow for more flexibility in dealing with uncertainty.
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In contrast to the focus of many submitters on rare diseases, the Australian and New Zealand Headache Society commented that the PBAC is rejecting migraine medications on cost effectiveness grounds when ‘the same pharmaceutical companies succeed in approval for similar medications at much greater individual costs for rare diseases.’ It recommended that:
…for common conditions such as migraine, the broad economic benefits of treatments under consideration such as productivity, avoidance of absenteeism and ability to engage in the workforce or in productive but unpaid domestic and community activities be given greater emphasis by PBAC.
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The sentiment was echoed by LEO Pharma, which stated ‘not all diseases are viewed equally by the PBS….this has been particularly obvious in the space of dermatology…where the societal and economic contributions a treated patients can add are often overlooked.’ It argued that better horizon-scanning would make the PBAC ‘better equipped to assess the value of new and innovative medicines for Australians.’
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MSD did not raise the issue of rare versus common diseases, but submitted that:
The assessment of treatment value must be kept separate and apart from considerations of affordability. Accepting budget impact as a component of treatment value wrongly suggests that curtailing pharmaceutical spending will solve system affordability issues and ignores the existence of numerous inefficiencies throughout health systems.
Valuing future benefits and vaccines
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One particular criticism that submitters had of the current valuation system was its approach to valuing longer-term benefits. Mr Ian Noble, Director, Value, Access and Policy, Amgen, explained the problem as follows:
In an economic evaluation you model things out into the future and you have a discount rate which you apply, because values in 10 years’ time aren't the same as values now; it's like interest rate. In Australia, we have a five per cent discount rate. At five per cent every year, by 10 years you've discounted the benefits quite a lot. For a medicine like a gene therapy or a vaccine, where all the cost is today but the benefit is over the lifetime for those children, you're discounting all their benefits away, then you're looking at the costs undiscounted. I know that in the UK and Canada they're looking at three per cent and 1½ per cent discount rates. Why we've got five per cent in these modern times I do not know at all. That's a practical thing that has a massive impact on those sorts of technologies.
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Novartis similarly noted that:
The current HTA evaluation process is limited in its ability to allocate value to single-use products with the potential for long-term patient benefit given the constraints of evaluating costs and benefits within the ‘health care’ budget only and heavily discounting future benefits to patients.
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Medicines Australia said of the current approach:
The resultant impact on pricing is that it may not accurately reflect a treatment’s value. Key examples include vaccines and other preventative medicines approaches, where the outcome may be distant to the intervention. There are simple means to address these issues methodologically, even adjusting discount rates in economic modelling; the system ought to be sufficiently flexible to ensure accurate and appropriate valuation.
The issue of appropriate valuation is particularly acute where the value of health benefits and healthcare savings accrue over many years. Future benefits and costs are discounted to reflect society’s time preference for benefits now over benefits in the future or the cost of capital. Australia appears to apply one of the highest discount rates in the world to the assessment of future healthcare benefits and costs.
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It illustrated the effect the difference in discount rates makes with the example of a treatment ‘preventing a death in a child with a life-expectancy of 80 years:’ Australia would value this at 20.5 life years, compared to the UK and New Zealand at 27.7 life years and Canada at 47 life years. It concluded:
[a]t a time when healthcare systems worldwide are calling for a rebalance of effort towards prevention, Australia’s discount rate risks pulling resource allocation in precisely the opposite direction.
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MSD submitted that a study has shown the PBAC to underestimate survival benefits and that ‘the underestimation of survival benefits and the relatively short time horizon preferred by the PBAC for economic analyses suggest that that the value of medicines with longer-term benefits may be underestimated.’ It argued that there are four problems with how vaccines in particular are valued: the high discount rate for future benefits; the narrow ‘healthcare system perspective’ used in assessment of costs and benefits (discussed in the previous section); a low tolerance for uncertainty; and ‘the lower cost-effectiveness threshold (willingness to pay per unit of health gained) applied for preventive interventions like vaccines as compared to therapeutic medicines.’ It suggested that none of these issues is unsolvable, and proposed ‘establishing pathways for vaccines to make them accessible for public health issues with high unmet need.’
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Pfizer echoed these concerns, and similarly identified the high discount rate, the ‘narrow assessment scope’ and ‘the lower cost-effectiveness threshold applied for preventative interventions like vaccines as compared to therapeutic medicines.’ It recommended applying a lower discount rate, using a broader perspective on costs and benefits and removing the cost-effectiveness disadvantage. Ms Anne Harris, Country Manager, Pfizer, told the Committee:
…for vaccines, in particular, we do have some challenges currently with the process for vaccine evaluation. We know vaccines have a huge public health benefit, but it does take time for those benefits to come through. The current system devalues—the benefit upfront is valued more than the benefit later on. As you say, there are these broader benefits. I would say that one example would be meningococcal B vaccines. We have struggled to get that through evaluation, not just with Pfizer, but across the industry. There've been several attempts, but it has not been able to be demonstrated, to get a positive recommendation. If there were an approach which truly valued preventative treatments differently to how they are valued against medicines, we would be able to have further access.
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Ms Harris noted that the assessment process is longer and more expensive for vaccines than for therapeutic medicines, as they must be assessed by the ATAGI before going to the PBAC, which requires a separate submission and $180,000 fee, and must go through a tender process after approval by the PBAC.
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Ms Vanessa Xavier, Head, Market Access, Australia and New Zealand, Sanofi told the Committee:
…with a vaccine, it is not possible to conduct a clinical trial that will capture every potential benefit of that vaccine. If we look at influenza specifically, there's something called seasonal variation….Our recent experience with flu vaccination was that we submitted 16 years’ worth of seasonal data to show that, on average, the vaccine was highly cost effective. But, during the evaluation process, the focus was on, 'Okay, what is that one year in 14 where you're not matched and your efficacy is not as high as the other years?' Our response to that is that value has to be determined by the overall benefit that the product is going to deliver. So that's the first issue. You can never conduct a 16-year trial across all different seasonal variations to calculate efficacy.
The second issue is then the broader benefit….Under the current evaluation process it is actually not possible as part of your base case to include broader societal benefits. You must limit your economic evaluation to healthcare costs only….So, if you have to curtail the number of benefits that you're allowed to include in your evaluation, clearly what that means is that the price or the value that is attributed to your vaccine is significantly lower than other jurisdictions where you may be able to consider those broader societal benefits.
What that means specifically for us in Australia is also—I'm sure you've heard through this inquiry about ICER [incremental cost effectiveness ratio] thresholds. It's the willingness to pay for different types of interventions. We don't have specific thresholds, but you can see in the decision-making that there are different ICERs that are recommended for different types of therapeutics, which relate specifically to unmet need. So you'll see that oncology life-saving drugs generally accept listings at higher ICER thresholds. Vaccines have the lowest ICER threshold of all interventions. So not only are you not allowed to include the full scope of the benefits; the willingness to pay is significantly lower. This is why, unfortunately for us, we have been through quite a few processes for vaccines and we've actually not been able to bring our vaccines to the market in Australia.
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Sanofi submitted that ‘no review of the National Immunisation Program has occurred since the Program was created in 1997.’ It suggested that ‘a review into the evaluation processes for vaccines should be conducted.’ The University of Melbourne similarly commented that:
We also note the opportunity, driven by COVID-19, to review the PBAC assessment process for publicly funded vaccines. The current assessment, which is designed for drug assessment, should consider the societal, health and economic benefits of vaccines that offer future reductions in mortality/mobility.
The use of comparators
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Another aspect of the PBAC’s valuation method that submitters supported reforming was the use of comparators. These are defined in the Department’s HTA glossary as simply ‘the existing health technology (or other current clinical management) that most health care practitioners will replace in practice should the proposed health technology be implemented as proposed.’ The Department told the Committee that ‘the comparator really is meant to capture a new proposal in comparison with the existing state of play.’
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Viiv explained that:
The National Health Act 1953 (Cth) requires the PBAC to assess cost-effectiveness of a medicine relative to an alternate therapy or therapies. This is referred to as the comparator. This is to ensure the listing of new medicines represent a value for money investment in the PBS. New medicines can face challenges in demonstrating cost-effectiveness when compared to older medicines, whose prices have been significantly eroded over time through statutory pricing cuts. Even in cases where the new medicine is safer or more effective than the older medicine, it can be difficult to justify an appropriate price where the older medicine is very inexpensive. As more medicine patents continue to expire and Government generic savings are achieved, the impact of this ‘comparator price erosion’ will increase.
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Viiv noted that this is closely linked to the policy of reference pricing, which it described as:
…a policy that applies when drugs considered to be of similar safety and efficacy for pricing purposes are linked and recommended by the PBAC as cost minimised. The lowest priced brand or drug (i.e. the lowest cost comparator) sets a benchmark price for either the other brands of that drug or the other drugs within the same sub-group of therapeutically related drugs.
In many cases, the lowest cost comparator has limited use. This will often result in there being a clinical comparator defined by the market leader with high quality evidence supporting the relative efficacy and safety being different to the price comparator with limited evidence of relative benefit.
It suggested this problem could be solved by the institution of a system similar to that used by the UK’s NICE, under which ‘a scoping document is developed with the input of clinicians and patient groups to determine patient population, place in clinical practice and most appropriate comparator for the therapy.’
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In his appearance before the Committee Mr Meindert Boysen, Deputy Chief Executive Officer and Director of the Centre for Health Technology Evaluation, NICE, did not comment directly on NICE’s approach to comparators, but when asked about the involvement of patients in NICE’s processes said:
It starts when we scope a technology evaluation, so we set the question for the work. That's where patients are involved. When we seek submissions not only are we seeking submissions from the company, but we get them from patients, from patient organisations and from clinicians.
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When asked about NICE’s approach to health economics in general Mr Boysen replied:
My experience is that there are always two versions of what might be considered as the truth, although it's really difficult to establish what the true value of a technology is, because all the research is short term. It's all about modelling. Modelling—and we know this from COVID, of course—is all to do with managing uncertainty. I don't think the complexities of the health economics is the point. It's: How do you manage uncertainty? How do you deal with risk? That, I think, is the big question for HTA agencies: Do you deal with risk by saying no? Do you deal with it by having an arrangement in which you manage risk together and you collect the evidence? Health economics ought to be about uncertainty and risk and not about just one number. That's where I am at.
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Viiv’s concerns were shared by other submitters, including MSD, UCB, AbbVie and LEO Pharma. Gilead Sciences gave an example of a hepatitis B treatment that the PBAC rejected by comparing it to the ‘lowest cost comparator’ even though the PBAC agreed another drug was the ‘appropriate clinical comparator.’ Gilead submitted that
Australians are missing out on new medicines as a result of a policy that seeks to anchor the cost of new drugs to the lowest cost drug (including generics) and not the price of the medicine it will replace.
Changes to this process should urgently be considered to ensure the independent PBAC is selecting comparators that reflect current clinical practice, in preference to defaulting to a comparator with the lowest cost. This may include, if necessary, amending the legislative powers under which the PBAC operates.
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Pfizer drew attention to the problems of ‘comparator price erosion’ and the ‘application of “lowest cost comparator.”’ Its recommended response was:
Resolution of the comparator selection issue as agreed in the current Strategic Agreement between Medicines Australia and Government without further delay. This could include establishing a clinical and pricing comparator before lodgement of a PBAC submission and the application of shadow pricing to allow F1-like price for F2 medicines that have undergone significant price reduction.
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The second part of the recommendation is targeted at the comparator price erosion problem, and refers to the mechanics of how that erosion occurs through the PBS formularies. As Pfizer explained earlier in its submission: ‘in general, on-patent medicines sit in the F1 formulary and off-patent medicines sit in the F2 formulary, and the prices of medicines in the F2 formulary reflect competition in the market.’
International reference pricing
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Another dimension of the valuation issue that several submitters were keen to emphasise is the comparison between Australia’s pricing and other countries. They argued that this is important because of ‘international reference pricing.’ As Pfizer explained:
The relatively low prices…can also impact on other markets, due to international reference pricing of PBS list prices. Australian PBS prices are referenced by numerous other countries. Ultimately, this can result in medicines not being PBS listed in Australia.
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Mr Benjamin Basil, President and General Manager, Australia, New Zealand and North Asia-Pacific, Eli Lilly responded to the suggestion that more pricing transparency would benefit Australia patients by saying:
One of the obvious threats is around the international reference pricing and visibility. These special pricing arrangements that we have with 80 per cent of our overall revenue doesn't make that visible. If that becomes visible, then we're going to face more and more situations where we have an innovation and, in order to dispense it and make it available to Australians or in any particular market, it would be a loss for the company.
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Johnson & Johnson submitted that:
In the context of an increasing global focus on International Reference Pricing, including the potential for its adoption in major pharmaceutical markets like the United States, it is becoming increasingly difficult for us to justify to our global organisation why a lower value for the novel therapy should be accepted. Consequently, there is a real risk that Australian patients will miss out on receiving treatment with new and novel therapies as product sponsors will not be able to accept the terms for reimbursement in Australia.
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Johnson & Johnson’s particular concern about the situation in the United States (US) was shared by other submitters such as STA. This situation was explained by Medicines Australia as follows:
US President Donald Trump has signed the ‘Most Favored Nation’ executive order (EO), which aims to introduce international reference pricing (IRP) into the Medicare pharmaceutical drug programmes (Part B and Part D) to lower drug prices in the United States. The new order calls on the Secretary for Health and Human Services (HHS) to test a new payment model for which Medicare would pay no more than the most-favoured-nation price for “certain high-cost” physician-administered Part B drugs, as well as Part D pharmacy drugs with “insufficient competition”. According to the federal administration, the most-favoured-nation price would be calculated as the lowest price for a particular prescription drug or biologic that is sold in another Organisation for Economic Cooperation and Development (OECD) country with a “comparable” per capita GDP to the US.
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Medicines Australia submitted that Australia’s prices for the relevant medicines are up to 81 per cent lower than those in the US, equal lowest in the OECD with France and slightly than Norway at 80 per cent. Amgen submitted that ‘potential US brand market sales losses based on Australian prices could be nearly 50 times the total Australian market,’ namely $338 billion in losses compared to the $7 billion Australian market.
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Ms Leah Goodman, Managing Director, Australia and New Zealand, Merck Healthcare, similarly told the Committee:
The problem is that Australia is actually a price reference country. I can give you an example from 2018 when I had to decide—not me but my global company—not to bring a product into Australia for a very rare type of head and neck cancer, because the value given by the Australian system was so low that it would have impacted China.
It's going to get worse, because the US is now talking about, through the executive order and the Pelosi bill, price referencing Australia. As soon as that happens - …the US revenue pays for the majority of the global research and development costs. You can imagine me…saying: 'Give us priority. Make us make a wave 1 country at an intensely low value that puts at threat both China and the US.' It's not going to happen….the end result will be that Australia is left behind in access to innovative medicine.
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The ‘Pelosi bill’ is a reference to the Elijah E. Cummings Lower Drug Costs Now Act, HR Res 3 117th Congress (2021). That Bill refers to an ‘average international market price’ calculated by reference to prices in Australia, the UK, Canada, France, Germany and Japan.
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Medicines Australia stressed the important of ‘confidentiality of pricing to ensure that other markets do not either reference or apply Australian-derived pricing to their markets’ – a reference to the Special Pricing Arrangements discussed above by Mr Basil– and recommended that ‘there should be a regular forum established to consider global actions and policies that may impact on both Australia’s health outcomes and competitive position.’
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Mr Michael Smith was more hesitant than other submitters to predict what the impact of American developments on Australia will be. He submitted that:
One view is that this represents a challenge to access in Australia because, if medicines’ prices in Australia are referenced by the USA (i.e. prices in Australia are used as reference points to adjust prices in the USA), it will delay or prevent availability in Australia. This is because Australia is a small market globally, and in comparison to the USA.
While this potential development is beyond the scope of this Inquiry, it will be seen by some submitters as impactful. Because reference pricing by the USA would be a new development, its impact remains to be seen.
6.144
The Trump Administration Executive Order faced multiple court challenges, which suspended its implementation. As of September 2021 the current US Administration had indicated that it intended to revoke the Order, but was still pursing options to lower medicine prices in the US. The HHS stated that:
On July 9, 2021, President Biden signed an Executive Order on Promoting Competition in the American Economy that, in part, directs the Secretary of HHS to take steps to lower the prices of and improve access to prescription drugs and biologicals. HHS is exploring opportunities to promote value-based care for our beneficiaries; to address the high cost of Medicare Part B drugs, manufacturers’ pricing, and the resulting growth in Medicare Part B drug spending; and to modernize the Medicare program to improve the quality and cost of care for beneficiaries. We will continue to carefully consider the comments we received on the November 2020 interim final rule as we explore all options to incorporate value into payments for Medicare Part B drugs and improve beneficiaries’ access to evidence-based care.
6.145
The ‘November 2020 interim rule’ is a reference to the previous Executive Order. Meanwhile H.R. 3, Elijah E. Cummings Lower Drug Costs Now Act passed the US House of Representatives on 12 December 2019, but as of October 2021 still had not passed the US Senate. It is therefore unclear what role, if any, international reference pricing will play in US pricing in the future.
The Pharmaceutical Benefits Advisory Committee’s response
6.146
The PBAC noted many of the issues just discussed, which it suggested were too technical to be considered in depth by this inquiry. Instead it proposed they be considered in a review of the PBAC Submissions Guidelines:
The PBAC notes that a number of submissions to the Inquiry raise issues about the extent to which the committee takes into account non-health care benefits and costs in assessing cost-effectiveness; the discount rates applied in economic analyses especially in relation to vaccines and preventive medicines; the choice of comparator; and the use of real-world data. These, and other methodological issues would be better considered as part of a broader PBAC Submissions Guidelines review and the PBAC would be happy to do so. As with previous reviews, there would be wide consultation and an industry liaison working group and any changes to Government policy parameters would be taken into account.
Pricing
The Pharmaceutical Benefits Advisory Committee and pricing
6.147
After a medicine is given a positive recommendation by the PBAC, the sponsor must then negotiate a price and other matters with the Department before it can be listed on the PBS. However concerns were raised that the PBAC itself is effectively becoming involved in price negotiation, and that this helps explain why multiple submissions are often required for a medicine to receive a positive recommendation. Kyowa Kirin Australia, speaking as a new entrant to the Australian market, submitted that while it was generally impressed with the PBAC:
Where we have some initial concerns is in the potential use of submission and evaluation processes for primarily pricing and commercial negotiation purposes. However, we will reserve further comment and suggestions about this issue until our current engagement with the system is complete.
6.148
MSD claimed that this tendency is real and has already had negative effects on medicine access:
PBAC decisions are increasingly creeping beyond the scope of cost-effectiveness assessment to include budgetary cost containment considerations. These types of conservative HTA decisions, conflated with budgetary concerns, have resulted in Australian patients missing out on medicines.
6.149
Mr Ian Noble of Amgen told the Committee about an Amgen drug for familial hypercholesterolaemia, which was approved for one patient population (homozygous patients) almost five years before it was approved for another (patients needing secondary protection). He explained the gap in the following terms:
There's a budgetary consideration in this process. The homozygous population is an extremely rare patient group—we're looking at 20 or 30 patients—and it's not a big cost. Whereas when you talk about patients needing secondary prevention—so they're already on lipid-lowering therapy; they've already had heart attacks—that is still a relatively large population and potentially a larger financial impact.
This is the problem I'm trying to illustrate. It's a very inefficient process to have what is effectively a negotiation via a committee that meets three times a year. It's just not geared up for negotiation. We need to have…one submission do a good job, say yes to that and then have a negotiation. But that negotiation post-PBAC doesn't really happen. It's: 'You've got a rejection. You've got to go back to the start again.'
6.151
BioMarin did not go into the same degree of detail, but recommended:
development of a policy framework to deal with pricing negotiations and funding arrangements, to enable evaluation of new drugs and emerging medical technologies to be delinked from the funding decisions, and the selection of the appropriate evaluation pathway for human therapeutics to be made in accordance with evaluation expertise rather than the funding mechanism.
6.152
LEO Pharma did not directly raise the issue of whether pricing considerations are contributing to rejections, but commented that:
The current approach of rejecting a submission due to the need for more information rather than having ongoing dialogue between the payers, sponsors and clinicians meant the reimbursement process is taking longer, with a higher overall cost to sponsors.
Price negotiations
6.153
Turning to medicines that do receive a positive recommendation from the PBAC, several submissions expressed unhappiness with the price negotiation process and how long it often takes. The MOGA and PCPA submitted that:
…over the last decade some important new oncology drugs and therapies in areas of high unmet clinical need in Australia have received positive recommendations from the PBAC, however the decisions have been followed by delays due to Government fiscal considerations, or prolonged and often unsuccessful negotiations between the sponsor and Government regarding price. These delays to PBS listing have negatively impacted on timely access to key oncology treatments in Australia.
6.154
The MOGA and PCPA recommended that ‘the delay between PBAC approval and PBS listing be reviewed. Efforts should be made to reduce the time from PBAC recommendation to PBS listing as this is likely to have a positive impact on patient care.’ However when asked how negotiations could be shortened its Deputy Chair, Dr Deme Karikios replied:
It's very practically challenging. My understanding—I'm not in the room with drug companies when they figure out the prices—is that someone from global says what they need to go in at, and it's always above; they're not going to shoot low. I don't know. If we could somehow put to them what's appropriate. It probably does get put to them; I don't know. I did some research on this during my PhD. The biggest factor that leads to rejection is price. But if a global company is saying to the Australian subsidiary, 'You've got to go in at that price first; we're not going to accept anything lower,' then what can we do? I don't know the answer to that.
6.155
Medicines Australia offered a potential solution that it claimed would both improve the negotiation process and address the problem of the PBAC’s potential involvement with negotiation discussed above. It submitted that:
Since the abolition of the Pharmaceutical Benefits Pricing Authority (PBPA) in 2014, the PBAC has arguably taken a more active role in considering not just the cost-effectiveness of medicines but also budgetary impacts, deeds of agreements, net prices, and risk sharing…
In Medicines Australia’s view...questions of funding, pricing, business viability and investment should be the remit of a separate body.
The former PBPA had as its objective “to secure a reliable supply of pharmaceutical products at the most reasonable cost to Australian taxpayers and consumers, consistent with maintaining a sustainable pharmaceutical industry in Australia”. It provided some semi-independent oversight of the Department of Health’s administration of the post-PBAC price negotiation process, where many medicines struggle to achieve PBS listing.
Medicines Australia believes the system would benefit from the introduction of a new oversight committee, which could add value to governmental processes, improve decision making and accountability, and assist in achieving the appropriate balance between value-for-money reimbursement and ensuring sustainable supply.
Value-based payment models
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There was considerable interest in the potential of ‘value-based payment models,’ particularly for the supply of antimicrobials. The AHHA commented that:
From a funding perspective, while fee-for-service or activity-based funding models have provided greater transparency in terms of variation of costs in the public hospital system, many commentators are seeing a ‘value’ based approach as better suited to drive overall improvements in patient outcomes as well as cost efficiency. The discussion around value-based health care to date has largely been around organisational transformation and system design, with limited consideration of the impact of new technologies. Ultimately, new technologies are only useful if they provide better patient outcomes at an efficient cost, and this may not be easy to demonstrate in the short-term.
6.157
AHHA emphasised that data on patient outcomes and experiences will have to be collected and utilised effectively and consistently for any move towards value-based payment to be a success. This point was echoed by Takeda, which described it as essential for the use of performance-based contracts. It stated that ‘performance-based contracts (where payments are linked to clinical outcomes) are a formal arrangement to jointly address an identified risk in the expected outcomes of treatment,’ and suggested that they are ‘likely to be required to bring high cost innovative therapies to Australia.’
6.158
The ACvA likewise submitted that the payment system should ‘reward technologies for their clinical and economic value.’ It then elaborated what it believes this should involve:
Promote and incentivise Innovative Payment Schemes, namely value-based healthcare (Defined by the World Economic Forum and used by NSW Health: The health outcomes that matter to patients relative to the resources or costs required), to foster early coverage of innovation, and help subsequent evaluation by relevant payers and authorities. For example, novel devices such as wearables are often fitted in the hospital on the day of discharge and worn by the patient in the community. This could be regarded as a service to the hospital (freeing up beds), the patient (allowing them to recover at home) and the physician (giving them flexibility in patient treatment).
6.159
Johnson & Johnson similarly suggested that ‘value-based healthcare….has the potential to improve system outcomes.’ It identified two varieties: value-based contracting, ‘where drug or device contracts are negotiated directly with payers based on the achievement of desired outcomes;’ and value-based procurement, where ‘tenders reflect consideration of broader outcomes beyond the lowest price.’ It was particularly supportive of the use of the latter ‘to guide investment decisions in public hospitals,’ arguing that the Commonwealth and state and territory government should incorporate it into their reform activities under the National Health Reform Agreement.
6.160
The issue of the development, approval and funding of antimicrobials is discussed in Chapter 10.
Post-assessment matters
The appeal process
6.161
STA submitted that the PBAC’s independent review (that is, appeal) process should be ‘extended to independent review of positive recommendations where that recommendation is not consistent with the original application.’ It also recommended that ‘fees for independent review be removed so that individual patients and patient groups can seek an independent review.’ Better Access similarly suggested ‘include options for introducing independent review and appeals processes accessible to the community and individual consumers not just the sponsors of medicines and technologies.’
Delisting and ensuring supply
6.162
The process by which medicines are delisted, or removed from the PBS, received comparatively little attention during the inquiry. The NSW Government submitted that:
Currently, regulation in Australia is too focused on the approval process. Early access could be further expedited if a robust process for renegotiation of prices, disinvestment and delisting was developed by the Commonwealth in collaboration with States and Territories. This could lower the threshold for approval and simplify economic analysis if approvals were initially time-limited to enable local collection of data.
6.163
The Department told the Committee:
From time to time, medicines are delisted from the PBS Schedule. This generally occurs at the request of the company responsible for the supply of the medicine in Australia. Reasons vary, but may include the listing of newer, more advanced alternatives or changes in clinical practice that reduce market share, supply issues, a material change in the cost of imported supply, that the medicine is now available without a prescription (over-the-counter), or it is discontinued for other commercial reasons.
When a sponsor submits a request to remove a medicine from the PBS Schedule, advice is often sought from the PBAC. In these instances, one of the matters which the PBAC provides advice on is whether the delist will result in an unmet clinical need for patients. If the PBAC notes the potential for an unmet clinical need, then it may ask the Department to investigate alternative arrangements.
Ultimately, pharmaceutical companies make their own decisions about whether they intend to delist a medicine from the PBS Schedule and cannot be compelled by the Government to keep supplying a medicine on the PBS.
6.164
It noted that as of July 2021 there were 905 drugs in 2428 forms, marketed as 5401 brands, so ‘collating statistics on the average time a medicine stays listed on the PBS would represent a substantive resource investment by the Department.’
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The Association of Australian Medical Research Institutes argued that where a sponsor decides to delist a medicine on commercial grounds but a patient population relies on that medicine:
A funding mechanism needs to be developed to continue the treatment for those patients…as well as to allow others to acquire the necessary intellectual property or licencing to allow broader continued production and supply.
6.166
This was a view echoed by the PBAC itself, which submitted:
The PBAC is aware of a number of situations where requests for deletion of medicines from the PBS have been driven by small demand for a product even though it may have an important place in current clinical practice. It is also aware of repeat requests for deletion, in effect repeated requests for price increases, claiming that the PBS price is not financially viable but where the size of the requested price increase is poorly justified.
The PBAC notes there may be a need for last resort mechanism to directly source providers for such medicines including potentially from suppliers not currently active in Australia to keep essential medicines available on the PBS.
Committee Comment
6.167
The Committee thanks the members of the PBAC and the staff of the Department’s Technology Assessment and Access Division for their information sharing and assistance with this inquiry.
6.168
The Committee believes that the volume and variety of evidence it received on the HTA system in general and the PBAC in particular, is a testament to the pressure on the system, and the various interests it must try to balance. The Committee’s overall view is that the PBAC is generally performing well in coping with that pressure and balancing those interests.
6.169
The Committee agrees with the widely held view among submitters that after the reforms that were made to the TGA following the Sansom Review the other aspects of the HTA system are lagging behind. Consequently the Committee welcomes the Australian Government’s announcement of the forthcoming independent Health Technology Assessment Review (the HTA Review), which it hopes will finish the job the Sansom Review started in improving patients’ access to medicines.
6.170
While the Committee recognises that many of the issues raised in this inquiry will be considered as part of the HTA Review, it believes that there are reforms that can be implemented now for the benefit of patients.
6.171
The Committee welcomes the development of the role of the PBAC Executive, and believes its role should be expanded and formalised to fast track specific assessment processes. The Committee believes that the PBAC and Department of Health (the Department) should determine what the scope of the Executive’s role should be and what changes are required to legislation.
6.172
While it was understandable that concerns were raised regarding the interaction of the PBS with hospitals and the conduct of HTA by hospitals, some of these concerns were more relevant to the structural organisation of the health system than the subject matter of the current inquiry. The Committee notes that it has long been common for patients to receive some of their treatment in a hospital setting and some as outpatients, although this may become more frequent as medical technology advances. The Committee urges the Australian Government to continue to work with the states and territories to ensure that patients receive treatment where it is safest and most efficacious for them, and that there are no gaps in continuity of care.
6.173
The Committee acknowledges that the HTA system is complex and sometimes confusing. The Committee welcomes the Department’s creation of the Health Products Portal (HPP) for PBAC applications and the plans to expand it to cover the TGA and other HTA bodies. The Committee believes there is potential for a ‘pre-submission advice framework,’ as was proposed by some submitters, to be made available to users of the HPP. In the Committee’s view, the broader relationship of the TGA, PBAC and MSAC should be considered as part of the independent HTA Review. On the evidence before this inquiry – including on the unique role of the MSAC, discussed in Chapter 7 – the Committee regards them all as fulfilling important and distinct roles and does not support any proposed merger, but recognises the value of enhanced integration and an increased harmonisation of evidentiary requirements.
6.174
The Committee believes that there is an opportunity for more international cooperation and alignment in HTA. This is such a broad subject that the Committee considers it should be left up to the HTA Review to finalise what approach Australia should take in this area, but in the meantime it encourages the Department to work to strengthen relationships with comparable HTA bodies overseas. The Committee believes that a formal arrangement similar to the Access Consortium of which the TGA is a member would be the best mechanism to facilitate this.
6.175
The Committee believes that the HTA system should be as transparent as possible, and that the performance of the PBAC and other HTA bodies should be measured just like other elements of the health system. The Committee notes that the PBAC is in a unique position, in that its performance is heavily dependent on the quality of submissions made to it by sponsors, and is closely tied to the conduct of price negotiations between sponsors and the Department of Health. Nonetheless, the Committee believes that the international benchmarking would increase the transparency of the HTA system. In addition, the Committee believes the Department of Health should table an annual update of its KPIs regarding TGA regulation and HTA processing times in Parliament.
6.176
The Committee received mixed evidence on the state of communications between industry and the Government, both during the HTA process and more generally. On communication during the HTA process, the Committee is hopeful that the joint pre-submission advice and HPP’s will go some way to steering sponsors in the right direction to submitting successful first-time applications. The Committee encourages the Department of Health and PBAC to be as communicative as possible during the HTA process and that this should be further refined during the HTA Review.
6.177
In relation to the PBAC’s fee regime, the Committee believes that a different approach is needed. Instead of trying to define the appropriate scope of a fee waiver, the Committee supports a move to a HECS-style system providing application fee waivers for Australian start-up companies, orphan drugs and companies with revenue of under $50 million per annum. Submission fees would only be payable for successful submissions once the drug has been listed and has earned a specified amount of revenue in the Australian market to promote innovation. In addition, the Committee believes a sliding scale of fees should be considered for resubmissions, with fees being lower for resubmissions.
6.178
It was clear to the Committee that there was great interest in the potential of Managed Access Programs (MAPs), although this was very much out of step with the low uptake of such programs currently. The Committee shares the optimism of many submitters about these programs, and believes that should form a key feature of the system in the future. However, the Committee is mindful that they come with considerable risks for the Australian Government, both in terms of managing patient expectations and understanding and preventing industry from exploiting them in price negotiations. Given the importance of these programs and the difficult balance to be struck, the Committee considers that these should be considered more fully by the independent HTA Review, together with the closely related issue of the collection and use of Real World Evidence (RWE). In the meantime, the Committee believes that the Australian Government should do what it can to encourage uptake of these programs, specifically providing for them in legislation, as was requested by the PBAC.
6.179
The Committee agrees with the PBAC that the issues raised about how it values medicines are for the most part too technical to be considered properly in the context of this inquiry. The Committee’s opinion is that the HTA process should take a broader view of the costs and benefits associated with a particular submission, and that it should ascribe more value to long-term benefits, including lifestyle benefits, and the long-term benefits of preventative medicines such as vaccines in particular. The Committee believes these matters should be considered as part of the independent HTA Review.
6.180
The Committee notes that there has not been a review of the National Immunisation Program since its establishment over 20 years ago. The Committee recognises the vital role that vaccines play in addressing many diseases, including its importance in providing protection against COVID-19, and therefore recommends that the Department of Health conduct a review of the National Immunisation Program. The Committee believes it is important that this review reform existing approaches used to value vaccines to facilitate early and rapid deployment of vaccines in Australia.
6.181
The Committee is particularly concerned by what appears to be a narrow focus on other medicines or devices in the selection of comparators, rather than a more holistic consideration of what other treatments might benefit the patient. On the evidence provided to the Committee, the current system depends almost entirely on the commercial initiative of sponsors. While there is a mechanism for the sponsor of a new medicine, drug A, to have that medicine displace an old medicine, drug B, in clinical practice, there is no mechanism to compare how another modality such as a lifestyle therapy performs against drugs A and B. The Committee believes that the PBAC process would benefit from adopting elements of NICE system in the UK, in which comprehensive scoping is conducted with input from patients and clinicians. The Committee hopes that this may assist in the problem identified by some sponsors of comparators being chosen on cost rather than clinical efficacy. The Committee recommends the establishment of an Office of Clinical Evaluation within the Department of Health to assess the best and most effective care for patients in the context of new and emerging health technologies.
6.182
The Committee notes the concerns expressed by many pharmaceutical companies about the use of international reference pricing overseas, particularly its potential use in the United States. This could have profound impacts on the Australian HTA system and access to medicines and technologies by Australian patients. The Australian Government must therefore maintain a watching brief on this issue and be prepared for changers that may be required to our own reimbursement system.
6.183
The Committee was interested to hear about the experiments that are being conducted in value-based payment models, including in Australia, and believes that there is much potential for these in the future. Accordingly, the Committee considers that their potential should be evaluated by the independent HTA Review.
6.184
If an application has been rejected by the HTA process, the Committee is supportive of the need for an independent review process. Such a process should be triggered where there is agreement between the Department and the applicant, sponsor, clinician and or patient advocacy group, that there is a clear case for a review.
6.185
The issues of delisting of medicines from the PBS and securing ongoing supply are further problems on which the Committee heard relatively little evidence. The Committee however, believes that there is considerable merit in the PBAC’s suggestion of a last resort mechanism to secure supply of necessary medicines that are in danger of being delisted.