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Sweden publishes more details on modifications of its VBP system. Years of ambiguity coming to an end?

17 June 2015 Maria McGee

Having been operating under a value-based pricing (VBP) system for pharmaceuticals since 2002, Sweden has for some time now been stewing over reforms to its pricing model. The initiative comes as part of wider pharmaceutical policy reform in the country, partly driven by cost-containment measures outlined in the 2014 budget proposal.

Sweden has already issued several interim reports relating to this ongoing P&R reform, with modifications to the VBP system having been organised as a government-commissioned investigation spearheaded by the Dental and Pharmaceutical Benefits Agency (TLV). The initiative aims to achieve a level of pharmaceutical pricing that is not "unnecessarily" high, while at the same time ensuring early and fair access to innovative drugs. Progress has however been slow, and it has proven to be a real challenge for the Swedish authorities to pin down the details of the enhanced VBP framework, such that the country's Pharmaceutical Industry Association, Lif, has referred to the process as "a few years of ambiguity."

Much like the VBP debate in the UK, which saw lengthy discussions and various proposals for a mechanism, it is evident that this concept has been far from straight forward in Sweden. As detailed by my colleague Kavita in her blog post last year, the UK´s VBP scheme was eventually watered down to a so-called Value Based Assessment (VBA) approach, before eventually being jettisoned. Sweden, however, is still exploring the mechanism, and in fact the Swedish authorities issued a more detailed report in April this year, outlining how the enhanced VBP scheme is to function, including amendments to the drug assessment methodology.

In particular, two modifications have been introduced, one affecting drugs with life-extending properties, and the other impacting products which improve quality of life (QoL):

  1. Life-extending indicator: Traditionally, the TLV has calculated the costs of increased survival by considering total consumption less total production during life years gained. Going forward, expected participation in the workforce will no longer be considered for life-extending products.

    In line with a consequence analysis undertaken by the TLV, this change is likely to improve the cost-effectiveness of most life-extending drugs. It is worth pointing out that the cost-effectiveness of a drug is only one of three principles meant to guide VBP in Sweden, alongside the principles of human dignity and needs and solidarity. The change means the human dignity principle will now take greater precedence, in line with the idea that everyone has the right to healthcare regardless of personal characteristics and functions in society.
  2. QoL indicator: The TLV will reportedly adopt a more cautious approach toward the weighting of the QoL indicator, which relates to a person's ability to return to work, in the calculations. The TLV will undertake two sets of calculations in relation to this indicator, one including the economic value of a person returning to work, and one calculation excluding this scenario.

The TLV´s reasoning behind this modification is that it will help counter the inherent bias against the elderly and other population groups unable to work. While it remains vague how this will work in practice, the fundamental idea is that decisions may not be made which discriminate against any group.

These modifications are directly related to the debate held in the UK a little over a year ago when the so-called wider societal benefit (WSB) framework was criticized for potential age discrimination. It is likely that Sweden has drawn on lessons from the UK´s VBP debate, although the Swedish authorities recognised the shortcomings of the country's current VBP system and the ethical dilemma as early as 2011, in the case of prostate cancer treatment Zytiga.

The outcome of the Zytiga assessment, for its pre-chemotherapy use, resulted in an increased "societal" cost due to the extended survival for the relevant age group. Stakeholders, including the TLV, recognised that this way of calculating was not necessarily compatible with ethical aspects, which eventually helped lead to the present proposal to VBP.
Since 1 June this year, Zytiga is now included under the reimbursement scheme for outpatient drugs in Sweden. The TLV point to clinical studies showing that treatment with Zytiga in combination with prednisolone has a life-extending improvement of 4.5 months compared to placebo in combination with prednisolone. The decision to reimburse the product to the specified patient population was made possible via a cost-sharing agreement with the manufacturer and the County councils, which allowed for the uncertainty of the QALY calculations to be reduced. TLV concludes in the report that Zytiga was priced at SEK26,000 for 30 days of treatment, generating a cost per QALY of SEK700,000 as a pre-chemotherapy therapy.

At the same time as these modifications are being mulled over in Sweden, reports are trickling in suggesting there is already a problem with over-medication in the elderly population in the country. The most recent data from a study, by Lund's University, in the South Region of Sweden, indicates that as many as 55% of elderly patients have been prescribed medicine for conditions for which they were not diagnosed.

Meanwhile, statistics from the National Board of Health and Welfare (Socialstyrelsen) show that, for the age group over 65, the number of prescriptions nation-wide has increased (from over 58.6 million prescriptions in 2010 to nearly 60.2 million in 2014), while at the same time, the number of patients per 1,000 population has steadily decreased (from 975.38 to 965.73/1,000 population) over the past few years.

In this context, it shall be interesting to see how the VBP methodology amendment will impact public pharmaceutical expenditure in Sweden, which already rose by 3.2% in value in 2014, equating to an additional SEK845 million (USD102 million). Indeed, in light of on-going reform, the Swedish authorities have expressed uncertainty over forecasting pharmaceutical expenditure this coming year, claiming they do not have a "full overview" of its impact. Interestingly though, a more recent report issued by the TLV in the first week of June suggests that the multi-annual cost savings are so far well in line with those set out by the government in the 2014 budget, with realised savings toward the 2015 target (SEK270 million) currently in excess by as much as approximately SEK190 million.

Adaptation of the new VBP model and a more complete roll out of the reform is anticipated for the remaining half of 2015, which the Swedish authorities themselves have defined as a "transitional year." Certainly it is a reminder to maintain close attention on this Nordic market.

Maria McGee is a life sciences analyst with IHS
Posted 17 June 2015

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