Global Pharma: is the "Emerging Market" a Dated Concept? (Part 3 of 5)

by Ben Comer, for Pharnaceutical Executive

Reimbursement Innovation

"If you don't have a vision of how a drug is going to be reimbursed, you don't really have a drug," said Alberto Grignolo, corporate vice president, Parexel Consulting, at the DIA conference. There are ways to improve a drug's chances of gaining reimbursement, the first of which begins in the developmental stages. According to Raj Long, head of international regulatory, AMAC, GEM, Latin America, at Novartis, the onset of historically Western diseases, such as type 2 diabetes, hypertension, and cancer, demands mass-market access, which in turn generates a demand for affordable and reimbursable healthcare. A key mistake, says Long, is made when comparative effectiveness research (CER) is conducted during the final stages of product approval, in Phase III or later. Long says that the result of late-stage CER reflects a developed market gold standard, which becomes non-comparable in the local context.

"You can demonstrate superiority, and that's fine, you might get approval, but you won't get reimbursed, because the products you compared aren't available" in a given emerging market, Long tells Pharm Exec. Additionally, the dose titration target for mature markets may not jibe with emerging market standards, says Long. By commencing CER on dosage, safety, and efficacy during Phase II, sponsors can better identify payer-oriented endpoints, seek and combine payer/regulator/sponsor input, and identify local practices and medical standards, Long says. This helps to create a "local system" value, rather than just claiming marginal improvements in efficacy in terms of global value.

It's also important to remember that innovative drugs do get reimbursed in some emerging markets, particularly the most innovative therapies. Bayer was able to gain reimbursement on Nexavar, an innovative cancer drug, in Korea, a notoriously difficult reimbursement environment, earlier this year. Compelling evidence relevant to the disease profile for kidney cancer in Korea as well as an aggressive clinician outreach strategy helped do the trick.

Another way to gain reimbursement favor in emerging markets is to invest in local manufacturing, as the political preferences for homegrown products pile up. Perhaps the most famous call for local production over the last year came from Russian Prime Minister Vladimir Putin, who, according to a report in the Moscow Times, said he wanted "90 percent of Russia's vital medicines, and 50 percent of its medical equipment to be domestically produced by 2020."Pharm Exec's IMS panel agreed that local investment can sometimes help to open reimbursement doors. "There are discussions around setting up bio parks to stimulate new industry [in Russia], says Campbell, but that presents new challenges, since Russia doesn't have established Good Manufacturing Practices (GMP). 

"A lot of organizations don't want to manufacture in Russia, because you can't export out" without GMP compliance. "Other organizations are making decisions about whether to build manufacturing plants, hedging on the fact that government may mandate local manufacturing to be included on its central drug list for any new national drug insurance scheme that goes forward," says Campbell. But that's a risky bet, since it could turn out that local manufacturing isn't mandated, but instead receives preferential pricing, which could in turn be offset by importation taxes.

For IMS's tier 1 and 2 markets—China plus Brazil, Russia and India—"making some direct investment, I think, has a real impact," said Benoff. But for the 13 tier 3 markets—which include Argentina, Egypt, Indonesia, Mexico, Pakistan, Poland, Romania, South Africa, Thailand, Turkey, Ukraine, Venezuela, and Vietnam—"the ability to drive local investment is much less significant," since "the tradeoffs aren't as strong."