Market access update
Asia-Pacific life sciences market access and financing: key trends
In this update, Jeff Weisel, Managing Director, APAC, for PRMA Consulting, part of Fishawack Health, shares his perspective on the key trends impacting the access and financing of medicines, as well as vaccines, diagnostic, and medical devices in the Asia-Pacific region in 2023.
This update was first published in BioSpectrum Asia.
How will global macroeconomic trends impact the APAC payer environment and decision-making process in 2023?
Governments and other payers make decisions in the context of the broader economic environment. For 2023 we will continue to see the impact of these global economic trends on payer decisions as they increase financial pressure in the Asia‑Pacific (APAC) region.
- Though inflation is expected to ease in 2023, the price increases of the past 12 months will still affect purchasing decisions.
- The likelihood of global recession means that slowing economies in the region will have lower tax revenues available for drug budgets.
- In many countries in the region, most imported drugs are priced in USD which has strengthened against nearly all regional currencies in the past year.
- We will continue to see the increasing availability of new lower cost options such as biosimilars and Chinese biotech products in areas like immuno-oncology.
The impact of these headwinds on payers will be a greater focus on cost containment and reduced budget impact. This will likely drive lower net prices as payers seek to claw back more from both previously and newly reimbursed products.
In South Korea, for example, the method for calculating the foreign average drug price for referencing will be revised in 2023 to consider ex-manufacturer prices, exchange rates, value added tax, and distribution channels in each comparator country.
In some markets we are also likely to see increased switching to lower cost alternatives such as generics and local/regional products. Ultimately, there will be significant financial pressures that arise and continue into 2023 as a result of macroeconomic trends regionally and across the globe.
Drilling down into APAC territories, what do you see as the key trends for regional payers in 2023?
Overall governments are increasingly looking at and learning from each other in terms of health technology assessments (HTAs).
In the mature markets, in which decisions are largely driven through established systems for HTAs, we see several continuing trends:
- Processes for assessing and reviewing innovative technologies are being streamlined, especially for rare diseases and cell and gene therapies (CGT). This streamlining is impacting both domestic processes as well as when compared with global standards.
- We will continue to see HTA agencies increasing in importance in reimbursement decisions – in effect moving from being strictly advisors to core decision-makers.
- The importance of locally generated pharmacoeconomic and real-world evidence data is increasing – and with newly defined standards. Both China and Japan have already published recent guidelines on applying patient‑reported outcomes in mapping healthcare utilization.
- Finally, we will continue to see increasing use of Managed Entry Agreements and other Risk Sharing Agreements in reimbursement decisions.
How will this play out in emerging markets in the APAC region?
In emerging markets, where healthcare systems are still evolving and the use of HTAs is generally still new, we see several developments continuing to play out:
- The adoption of HTAs as a decision-making tool is expanding and the focus will mostly remain on capacity building. While the influence of the UK agency The National Institute for Health and Care Excellence will remain high for many countries as they develop their HTA systems, we also see increasing reference to Thailand’s Health Intervention and Technology Assessment Program as a more relevant role model for other emerging markets.
- Budget impact and pricing will remain the primary concern for emerging markets, with limited opportunities for advanced medicines to be funded by government payers.
- At the same time, private insurance continues to grow as an alternative in emerging markets such as China, India, and ASEAN countries and is increasingly becoming a focus of innovative approaches to funding.
- Finally, the impact of digital health on access, especially telemedicine and “super apps” but also including fintech and the convergence of mobile phones and medical devices, is still evolving and APAC markets have seen some of the fastest uptake in this space, especially since the Covid-19 pandemic hit the region.
Closing the access gaps
One challenge facing pharmaceutical companies across both developed and emerging markets is the “access gap” where products are launched in the region often much later than in the US and Europe. The main driver of this gap is that regulatory agencies in most APAC countries only start their process following the Food and Drug Administration (FDA) or European Medicines Agency’s approval, with Japan and Australia as the only major markets historically conducting their review in parallel with the US. Later launches mean lower peak and total sales – especially when combined with the lower prices or more restricted guidelines often seen in the region.
The good news is that several countries have made moves toward closing this gap.
- South Korea, for example, will soon introduce parallel reviews where the Ministry of Food and Drug Safety submission can be made just three months after US FDA submission. The country is also working towards a faster review system and conditional approval for marketing regenerative medicines. The Australian government has entered into strategic agreement with pharmaceutical companies to explore new evaluation and funding pathways to ensure more efficient assessment of innovative treatments and therapies that do not fit neatly into the system, such as CGT and precision medicines.
- Japan has been recently stepping up efforts to drive regulatory harmonization in Asia, with the Pharmaceuticals and Medical Devices Agency being the reference regulatory agency. As of 2022, Indonesia, Thailand, the Philippines, Vietnam, Taiwan, and India have been observed to provide expedited review or certain exemptions for drugs approved in Japan, leading to shortened approval timelines.
While such breakthroughs in innovation have transformed the quality and value of care, they have in some cases widened existing gaps in healthcare access across and within markets in APAC.
In oncology, for example, when the first targeted therapies were introduced just over two decades ago, the standard of care (SOC) in all markets was chemotherapy. A decade later, when the first immuno-oncology drugs were launching, the targeted therapies had become the SOC in mature markets while chemotherapy remained in place in emerging markets. Fast forward to 2023, with the first CGT treatments hitting the market, immuno-oncology products are now the SOC in mature markets while emerging markets are still mostly funding only chemotherapy. As a result, patients in mature markets (along with wealthier patients in emerging markets) have in effect had access to three generations of innovation beyond what emerging market patients can get through their public systems.
We see awareness and actions in this direction taking hold in the region in 2023, ranging from new manufacturing capabilities such as the BioNTech and GSK facilities in Singapore to the many initiatives around alternative funding models seen across the region.
What key trends are specific to China?
2023 is the year when developments in the Chinese market will start having significant impact in other regional and even global markets. Two key trends are quickly emerging.
First, the increasingly low reimbursement price levels on the National Reimbursement Drug List (NRDL) are not only affecting commercial decisions by global and domestic companies, these prices also raise the possibility of other countries including China for international reference pricing purposes. Though the NRDL prices are not openly transparent in public sources, they are available through research into cost-effective analysis and other sources. At this point, it seems unlikely that Chinese prices would be referenced in the US or Europe as the market wouldn’t be considered as similar. However, major emerging markets in the Middle East, Latin America or even in APAC may see the opportunity presented for leveraging the Chinese prices.
The second development we see is the rising impact of Chinese biotech companies in global markets. The combination of relatively low costs of clinical development with a highly competitive domestic industry has resulted in a growing number of locally developed, innovative drugs – especially in attractive categories such as PD‑L1 inhibitors. Many of these companies, such as Beigene and Legend, are actively seeking commercial opportunities in global markets, particularly in the US and other rich markets as lower price alternatives to products from MNC companies. The Chinese players are also looking at emerging markets where their price points may help make newer therapies available to local patients for the first time.
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