Walter Robinson

Vice President Government Affairs

October 30, 2014

PPF – Purpose of TodayA salient discussion to bring together senior leaders from across sectors to explore opportunities for collaboration in sustainably managing drug costs and enhancing health access in the Atlantic region

Rx&D – Purpose of TodayA salient discussion to bring together senior leaders from across sectors to explore opportunities to collaborate in sustainably managing drug costs and enhancing health access and improving health outcomes in the Atlantic region and across Canada

Health System SustainabilityAsking the right questions …

• Do our solutions support patients?

• Are policy solutions rooted in evidence?

• Do proposed approaches align with other policies?

• Are we thinking short-term & long-term … $$$ and outcomes?

• Have we unleashed the value of medicines?

About Rx&D

Our Members

• 55 research-based companies (international and Canadian start-up)

• Account for 46,000 Canadians jobs (direct and indirect)

• Annually invest over $1B into pharmaceutical R&D and related activities• 3,000+ clinical trials across Canada• $750M into hospitals/communities

• Annually contribute $3B to GDP• Support a vibrant and national

life-sciences community

Contribution to Canada

About Rx&D

Rx Medicines in Context

• Life expectancy in Canada1914

52 572014

80 84

• Public Health partner in newborn, school-age, seasonal and pandemic vaccination efforts

• Steady increases in cancer, cardiovascular, diabetes, HIV/AIDs and other disease survival rates due to new innovative therapies– Cancer survival rates, especially in prostate, breast, lung and colorectal

cancers have declined steadily since Canada’s peak of deaths/1,000 in 1988

• Total Rx medicines spend (public & private) in Canada -- 6.2%** PMPRB/CIHI derivation -- 2012

Rx Medicines in Context

-80%

-70%

-60%

-50%

-40%

-30%

-20%

-10%

0%

-77% -76%

-34%-40%

-45%

-78%

-26%

Acute MyocardialInfarction*

Heart Disease**

Respiratory Illnesses**

Breast Cancer****

Colon Cancer*

HIV***

Prostate Cancer*****

Sources: OECD Health Data, *1980-2009; ** 1970-2009, ***1995-2009; *****1990-2004; Canadian Cancer Society, Canadian Cancer Statistics, ****1986-2012.

Value of Medicines: Life and Longevity

Sources: OECD Health Data, *1980-2009; ** 1970-2009, ***1995-2009; *****1990-2004; Canadian Cancer Society, Canadian Cancer Statistics, ****1986-2012.

Value of Medicines: System Impacts

-80%

-70%

-60%

-50%

-40%

-30%

-20%

-10%

0%

-50%

-71%

-31%

-50%

-60%

-8%

-70%

-20%

-29%

Asthma

Breast Cancer

Diabetes

Hypertensive diseases

Acute Myocardial Infarction

HIV/AIDS**

Prostate Cancer

RespiratoryInfections/InfluenzaUlcers

Fewer days in hospital: Canada

Source: OECD Health Data 2012, 1980-2009, except **: 1986-2008.

About Rx&DRx Medicines in Context

Pan-Canadian Pharmaceutical Alliance (PCPA)

• August 2010 – “Bulk Purchasing” discussion at Council of the Federation (CoF)

• August 2014 – CoF announces $260M in total annual savings– Quebec to join, rumours of Federal Plans too, name change

• Pricing is the driver … value of medicines, patient access, and system sustainability are tertiary considerations

PCPA: Background

• Increase access to drug treatment options

• Improve the consistency of drug listing decisions across the country

• Capitalize on combined buying power of jurisdictions

• Achieve consistent pricing and lower drug costs

• Reduce duplication of negotiations and improve utilize of resources

* Presented by PCPA – February 2013 at Pharmacare 2020 conference in Vancouver

PCPA: Objectives *

• Increase access to drug treatment options

• Improve the consistency of drug listing decisions across the country

• Capitalize on combined buying power of jurisdictions

• Achieve consistent pricing and lower drug costs

• Reduce duplication of negotiations and improve utilization of resources

PCPA: Objectives

PCPA: Status as of September 30, 2014Therapeutic Area Completed

Oncology 22

CVS 8

COPD 3

MS 4

Allergy 1

C-Difficile 1

CF 1

HCV 1

HIV 1

PKU 1

Rare 2

Rheumatoid Arthritis 1

37 negotiations w/ 18 Rx&D Members 46

PCPA in Context10 million of 35 million Canadians covered by public drug plansAfter 4 yrs: $260M saved through CVPI / PCPA or $7.43 per CDN

10 public drug plans in 2014/2015 invest $11.3 billion$260M represents 2.3% of this amount

Provinces in 2014/2015 devote $138 billion to healthcare $260M represents 0.19% of this amount

Let’s address the other 99.81% ?

About Rx&DRx Medicines in Context

Pan-Canadian Pharmaceutical Alliance (PCPA)

The Real Driver: Utilization

• Patented Medicines Price increases have grown below the rate of inflation for 23 of the last 25 years (PMPRB PMPI -- 2013 Annual Report)

• Canadian prices below MIP for last 12 years … 2001 to 2013

• “Growth in use, not price, is driving cost increases” (PMPRB October 2011)

– Canada’s population is growing– The demographic mix is changing– There is a rise in the incidence of health problems that require drug therapy– The prescribing practices of physicians have changed– Drug therapy is becoming more popular than other forms of treatment– There are new drug therapies to treat conditions for which no effective treatment was

previously available

• Provincial transformation efforts can drive pharmacotherapy– Primary Care reform, age-in-place strategies and

expanded scope of practice

The Real Driver is Utilization

1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012f$0.00

$500.00

$1,000.00

$1,500.00

$2,000.00

$2,500.00

Hospitals, Institutions, CapitalPhysicians, ProfessionalsPublic Health, Administration, Other*Prescribed Drugs*Estimated Direct Spending on Patented Prescribed Drugs

Analysis: Canadian Health Policy Institute (CHPI).Data: Canadian Institute for Health Information (CIHI), Patented Medicine Prices Review Board (PMPRB).

25-Year Expenditure Trendline

Hospitals Other Institu-tions

Physicians Other Pro-fessionals

Drugs Capital Public Health Administra-tion

Other Health Spending

Total GDP Patented Drugs (est)

0.0%

10.0%

20.0%

30.0%

40.0%

50.0%

60.0%

34.5% 33.3%

44.2%

53.4%

26.7%

43.6%

21.7%

0.9%

27.2%

34.4%

18.2%

10.4%

Prov’l/Territorial Government Health Expenditure by use of funds vs. GDP5-year Aggregate Growth 2006-07 to 2011-12 in current $

Sources: CIHI NHEX 2012; patented drugs estimated using PMPRB 2011 Annual Report. Calculations: B. Skinner.

Public System Use of Funds

Rx Cost Curve: Already Bent

About Rx&DRx Medicines in Context

Pan-Canadian Pharmaceutical Alliance (PCPA)

The Real Driver: Utilization

Adherence Supports Sustainability

• Poor adherence to treatment of chronic diseases is a worldwide problem of striking magnitude

• The impact of poor adherence grows as the burden of chronic disease grows worldwide

• The consequences of poor adherence to long-term therapies are poor health outcomes and increased health care costs

• Improving adherence also enhances patients’ safety

• Adherence is an important modifier of health system effectiveness

WHO: Adherence is the Issue

• Disease with no symptoms• Complexity of regimen: once vs multiple times/day• Time gap around a visit to a healthcare professional• Side effects of a medication, adverse events tolerability• Levels of education, income, age, cognitive function, insurance coverage

• 1/3 to 2/3 of medication related hospital visits• Diabetes: less than 40% adherence, 15% hospitalization rate

close to 100% adherence, 4% hospitalization rate

Non-Adherence by Disease State *- CVS up to 50%; Depression up to 57%- COPD (Asthma), Diabetes, GI disorders, neurological and HIV/AIDS * Risk Management and Healthcare Policy July 2014 – Johns Hopkins University School of Medicine

Predictors of Non-Adherence

Public Drug Programs – Clients/Conditions• Disease with no symptoms• Complexity of regimen: once vs multiple times/day• Time gap around a visit to a healthcare professional• Side effects of a medication, adverse events tolerability• Levels of education, income, age, cognitive function, insurance coverage

• 1/3 to 2/3 of medication related hospital visits• Diabetes: less than 40% adherence, 15% hospitalization rate

close to 100% adherence, 4% hospitalization rate

Major Conditions Treated- CVS, Mental Health - COPD, Diabetes, GI disorders

50%According to the WHO 50% of patients don’t take their medications and 33% never even fill their first prescription 1

$290 billion

New England health care Institute (NEHI) estimates

that overall poor adherence cost as much as $290 billion/year 2

3.5XNon-adherent chronic diseases patients cost

their plan 3.5X more in claims 3

1 - Adherence to long-term therapies, Evidence for action, World Health Organization. 20032 - NEHI, How many more studies will it take? A collection of evidence that our health care system can do better. Low range around $100 billion/year. 20083 - Green Shield, GSC 2013 Drug Study, the inside story. 2013

Magnitude of Non-Adherence

4% to 11% of US $2.7 trillion spend on healthcare

Adherence Impact in Canada$215 billion spend (public and private)

11% estimate: $24 billion in cost avoidance

4% estimate: $8.6 billion in cost avoidance

About Rx&DRx Medicines in Context

Pan-Canadian Pharmaceutical Alliance (PCPA)

The Real Driver: UtilizationAdherence Supports Sustainability

Partnership = Leadership

• Agree to collaborate, involve all stakeholders

• Research, develop, fund and implement a Plan

• Support patients, don’t blame them– Tailor solutions to diseases and patients

• Train healthcare professionals

• Integrate adherence efforts into system transformation

• Multidisciplinary approach– HCPs, industry, governments, private payers, academe, PATIENTS

• Measure it, be accountable, improve and report to Canadians

Partnership = Leadership

Health System SustainabilityAsking the right questions about Adherence …

• Do our solutions support patients?

• Are policy solutions rooted in evidence?

• Do proposed approaches align with other policies?

• Are we thinking short-term & long-term … $$$ and outcomes?

• Have we truly unleashed the value of medicines?

@RxandD@walterrobinson

wrobinson@canadapharma.org

Broader Society

Broader Economy

Health Spending

Health Status

Better Health Outcomes• Superior clinical outcomes and prevent

downstream complication• Better SE profile• Better adherence

Health Spending• Decreased need for adjacent health services• Increased efficiency in health care resources• Better value compared to alternative therapies

Broader Economy• Productivity gains• Reduced disability and absenteeism claims

Broader Society• Better quality of life for patients and for the

informal caregivers

Value of Medicines

Milestones

Patent Filing

Completion of Phase III Research

HC Submission

Manufacturer submits to CDR/pCODR

pERC/CDEC makes recommendation to drug

plans

PCPA/provincial review

Pre-discovery

Clinical Trials

3-6 Years

6-7 Years

Health Canada Submission

Up to 2 Years

Negotiation with Payers

Variable

HTA ReviewUp to 1 Year

Pre-Clinical

Drug Discovery

Phase I

Phase II

Phase III

Manufacturer Submission

HC issues NOC & DIN

pCODR Reviews Product

CDR Reviews Product

OR

Negotiation with Provinces

Negotiation with PCPA

OR

Recommendation issued (CDR,

pCODR)

Tabled at next PCPA bi-weekly teleconference

Participation confirmed and lead assigned

Letter sent to manufacturer informing of

decision

Negotiation

Confirm no negotiation

on “DO NOT LIST”

FILES

≤ 2 weeks

≤ 2 weeks

≤ 2 weeks

Variable

Drug Funding Process: Patent Filing to PCPA Negotiations

C $Billions

PhamaFocus 2018 (IMS Brogan)

Country

Sales, US $ Billions,

MAT June 2014

% Market Share,

MAT June 2014

% Growth, ConstantUS $, MAT June 2014

CAGR2009-2013

United States 354.8 39.2 +10.7 +2.7

Japan 82.2 9.1 +2.5 +2.5

China 72.2 8.0 +13.0 +23.2

Germany 45.5 5.0 +5.3 +2.9

France 37.9 4.2 -0.6 -0.9

Italy 28.7 3.2 +4.0 +2.0

United Kingdom 23.8 2.6 +7.5 +2.8

Brazil* 22.9 2.5 +15.1 +17.7

Spain 21.2 2.3 +3.4 -1.0

Canada 21.0 2.3 +2.7 +0.5

10 Key Markets 710.1 78.5 8.2 3.9

Worldwide 904.7 100.0 7.7 4.9

Notes: Prices are reported at the ex-manufacturer level (price when sold from manufacturer to wholesaler or direct to pharmacies).Information includes OTC products where available. *Pharmacy market only. % growth, constant US $.Source: IMS Health. MIDAS. MAT June 2014