‘I’d known Andrew [Carter], CEPL’s CEO, for many years, having used CEPL as a client, and it happened that they had a gap for someone like me who could help in the area of health economics,’ Andrew reflects, adding that the flexibility that consulting affords was also attractive.

He says he didn’t want to just head to another company and do the same thing he’d been doing. He wanted the opportunity to have his thinking and his ways of doing things challenged.

‘That was appealing for me and I also think that, where industry is headed at the moment, consulting is going to be the growth space. It’s going to be difficult for the big companies to maintain resource loads to do everything themselves.’

Andrew says that, apart from the obvious size difference between Glaxo and CEPL, the difference in mindset is refreshing.

‘When you are in one of the big companies, you get a bit insular and internally focused. You don’t always look around and see what else is happening in the world and you become a bit obsessed with your own problems.’

Reimbursement and Pricing consultancy with CEPL, he says, is different because he must have a wider vision due to the fact that he works for a broader client base with a different – and wider – mix of reimbursement issues. He also says the way CEPL operates internally is part of that different mindset he has experienced.

‘When you are in industry, relationships with the Department of Health tend to be a little more “them and us”. In a consulting role there is a broader perspective that probably takes you into something of a third way [of doing business]. It also gives you a new or greater understanding of where the PBAC is coming from and how it sees things.’

Andrew has only been at Commercial Eyes for about three months so he says he is still settling into his new role. He is on a fact finding mission, seeking to understand the nature of the service CEPL’s clients require.

‘Our clients are diverse and some have no internal capacity for reimbursement or health economic activities so we are a full service to them. But a lot of our clients have large health economics and health outcomes teams. We have to assess where we can help them and ease their workload, figure out what it is they most need from a consulting group.’

He says the advantage of building a consulting team is that it becomes a multi-functional work group.

‘Internally, within companies, the tendency is to have people manage whole projects on their own. But one of the advantages in consulting is you don’t have to do it that way; there are in fact advantages in not doing it that way. You pull together the resources for a specific project and you can even outsource some of them,’ he says, citing CEPL’s partnership with the statistics group at the University of Melbourne. ‘You can use some of those top end biostats or other specialist skills for parts of the submission process while maintaining control of the project and the quality yourself. It is about pulling together a multidisciplinary team, a mix of different levels of experience and resources to get the job done to the required standard, most efficiently.’

The Reimbursement and Pricing space has always been a tough environment, but Andrew says it’s getting tougher. He says the evidence base is becoming higher and the financial pressures are extreme.

‘There is a lot of scrutiny of reimbursement applications, pretty high thresholds for positive decisions. That’s on the decision making side, but on the company side, all companies are under resource pressure, somewhat driven by patent expiry on some of the big products, but some of it also from the broader economic cycle.’

‘This means that industry’s workload is increasing while its resource capacity is decreasing. And that is where CEPL can most likely help out, providing  a way of getting through the peak workload at a high level of expertise. Because we’re servicing the whole industry, we can carry that resource the whole way through the cycle.’

It is unclear exactly how this perception emerged. It is, however, an elaborate and counterproductive illusion that is detrimental to everyone with an interest in health technology assessment (HTA), including industry, physicians, patients, regulators and payers.

In reality, health economic modelling is nothing more than a set of often simple equations based on reasonable and evidence-based assumptions. It is supposed to be a simplification of real world complexity, not a convolution of matters that are intuitive and broadly understood.

Careful predictions

In the health sciences, economic modelling is typically used, where all else is equal, to compare the total health care costs and health outcomes associated with two or more treatment options in a given population. It is an attempt to predict what would happen in the perfect randomised controlled trial, in which normal constraints of ethics, time, logistics, measurement and cost no longer apply.

These comparisons synthesise available clinical, pre-clinical, epidemiological and other real world evidence to construct an appropriate sketch of the disease process for any given condition. The process is rendered manageable by breaking the continuum of the relevant disease or condition into discrete ‘health states’, and carving the time during which it is experienced into defined chunks.

There are several general approaches to this task, each with its own technical jargon, but all representing an essentially simple idea.

The models

• Trial-based models take observed experience from a clinical study and stretch it to a slightly different setting, a longer time horizon, or a more relevant patient outcome.
• Decision trees map out a range of nested chance events in order to calculate the conditional probability of different disease outcomes and associated health care costs in a single time period.
• Markov models see patients move, in explicit time cycles, between discrete health states that, according to defined transition probabilities, are associated with different health care costs and health outcomes.
• Survival models are similar to Markov models, but patients make the transitions between different health states continuously over time.
• Microsimulation models map out a number of individuals’ disease experiences as opposed to a cohort of average patients.

Simplicity rules

Underlying these approaches, and the choices made within and between them, are two fundamentally different ideologies for ascertaining truth: one says only reason and deduction can do it, the other says only observation and measurement can be trusted.

In the world of HTA in Australia, it is the latter view, with its emphasis on what can be clearly demonstrated through robust scientific experimentation, that prevails; occasionally at the expense of well-reasoned and generally accepted truths about particular diseases’ physiological and epidemiological processes.

This leads to local decision-makers emphasising simpler models. These are more closely linked to relevant clinical data than those abounding in the medical literature, which tend to reach for a broader version of the truth about the causes and consequences of disease than can be directly observed in an experimental trial.

Dark art unveiled

Neither broad modelling approaches nor any particular health economic model will ever be ‘right’ in an absolute sense. Rather, such models must be viewed cautiously, alongside all other sources of information, as tools that can help to understand, interpret and predict the impact of different treatments. That’s all they can do.

This is not to say that modelling is easy. Reducing complex diseases to simple mathematical processes can be conceptually challenging. Programming models is a specialist expertise requiring training and extensive practice. Synthesising all available data can be an enormous and time– consuming task, and deriving the optimal set of equations and assumptions to accurately define a disease process can be repetitive and frustrating. Mistakes are easy to make and difficult to find.

Ultimately, however, any modeller’s aim should be a transparent and well-explained product. It should be open to interrogation and evaluation, amenable to revision as new evidence or information is obtained, and clearly understandable, if not to the average person in the street, then at least to the average person in the health sciences industry; the polar opposite of the ‘dark art’ of popular myth.

When a cabinet decision in February saw the deferral of the PBS listing of eight medicines, the pharma landscape changed overnight and the medicines industry was blindsided. This decision was made without industry consultation, and with the ink still wet on the MOU between MA and the Government, it caused major unrest in the industry.

Uncertainty in the operating environment spilled over to Federal Budget night as a delegation of MA member company MDs descended on Canberra, ready for more bad news. Thankfully, the expected budget night pain was averted, but then the hard work really began: MA joined forces with the Consumer Health Forum, AMA and GMiA to launch a campaign stating industry’s opposition to the deferrals as bad policy.

This unrelenting combined effort resulted in new listings and overturned the February deferrals. It also saw the Government make a 12-month commitment to not defer medicines costing less than $10 million dollars.

But this by no means indicates a return to certainty for industry. With the Government steadfast in its desire to return the budget to surplus, and despite its commitment to more industry consultation, we should expect the unexpected in 2012.

Pfizer Direct

With the industry already reeling from the PBS deferrals, Pfizer changed the landscape again when it launched ‘Pfizer Direct’ in March. This bold move to a direct and exclusive distribution model seemed a carefully considered move to secure Pfizer business in a post-patent environment, bypassing the Community Services Obligation (CSO) designed to ensure the timely and reliable supply of medicines to all Australians.

The move angered pharmacy owners and they made their feelings known in a demonstration at the Pharmacy Guild’s annual conference in March. The main concerns rested with on-time supply of medicines and re-negotiation of trading terms. Wholesalers were also surprised by the move and are still concerned for their financial sustainability without Pfizer products, especially if other companies follow Pfizer’s lead.

In the interest of CSO wholesalers, the NPSA is calling for a ban on exclusive PBS supply arrangements and has launched a ‘No Monopoly on Medicine’ campaign in pharmacies. With medicines worth billions set to lose patents over the next three years, we should expect innovators to adapt their operating models to secure their businesses, again changing the pharma landscape.

Medicines Australia self-promotion

In an ambitious move, Medicines Australia launched its brand project – ‘The Australian Medicines Industry’ – to raise the medicines industry’s profile amongst the general public, the media and government. Considerable resources have been allocated, with a three-year commitment from the MA board.

Finally, MA has taken a positive move towards self-promotion, driving a culture change to ensure government and the community recognise the value of the industry, and the contribution it makes to the health and wealth of the nation.

This is a welcome change in message from the “Hands off the PBS” line that has been the mainstay of communication to government. It won’t happen overnight, but this initiative will continue to change industry’s image and the pharma landscape.

Commercial Eyes’ 10^th Birthday

And finally, 2011 saw Commercial Eyes celebrate its 10^th birthday. From a humble beginning, Commercial Eyes has grown to be Australia’s leading health technology commercialisation company. Thank you for your support in 2011 and we look forward to helping you navigate your business through an ever-changing pharmaceutical landscape into the future. We wish you all the best for the Christmas season and a peaceful and prosperous 2012.

If in doubt, put it in. The PBAC guidelines are explicit: the submission must identify and list all relevant direct randomised trials, and if other relevant trials are identified during the evaluation, processing of the submission will stop until the matter has been resolved.

4. Adopt a tone that is too emotive.

Everyone is passionate about their product and what it can do for the lives of patients. And the evaluation system is adversarial, relying to an extent on sponsors putting forward the best possible case for their product, which is then subject to thorough review. But PBAC is a scientific committee and too much emotion can prove counterproductive.

3. Include a model with complex hidden calculations and/or inadequate technical documentation.

PBAC evaluators are expert at dismantling and understanding health economic models. But if they can’t see it, they can’t evaluate it. If they can’t evaluate it, they won’t understand it, and if they don’t understand it, they won’t believe it.

2. Include the wrong price, or a price that has not been absolutely ‘signed off’ internally.

This is not so much of an issue if the correct or approved price is lower than the one included in the submission, but if it is higher it is almost impossible to recover.

1. Miss the deadline.

There is little or no flexibility in the evaluation process, which runs to a very tight schedule. Hence there is minimal sympathy for sponsors who miss a deadline, no matter how valid or worthy the excuse. And the next deadline is usually four months away!