Different forecasting methods in the US and Europe
Peter Mansell talks to Kevin Norell, senior vice president of advanced methods at Kantar Health, about the need to stay flexible with market forecasts.
By on Apr 13, 2010Peter Mansell talks to Kevin Norell, senior vice president of advanced methods at Kantar Health, about the need to stay flexible with market forecasts.
The operating environment for the pharmaceutical industry isnt getting any easier. That also goes for working out what will happen to a product when, or if, it finally makes it to market.
While the basic tools of pharmaceutical forecasting may be the same, regardless of whether the destination is China or Switzerland, different market environments put more or less emphasis on different parts of the forecasting process.
Inevitably, market restrictions are taking on more weight in these equations.
It always comes down to one large reconciliation, says Kevin Norell, senior vice president of advanced methods at Kantar Health.
No more crystal balls
That means factoring in elements such as the number of patients, current therapies and market shares, future competition, pricing and reimbursement prospects, and market access restrictions such as health technology assessment (HTA) or formulary committees.
With all of these influences coming into play, you cant just pull out the crystal ball, Norell points out.
For one thing, it is increasingly difficult for companies to know whether their own products will even get through clinical trials.
Then there are likely to be four or five other companies pursuing the same indication, all of them working very hard, he notes.
Multiple scenarios
Which is why Norell is a big advocate of constructing multiple scenarios. These scenarios need to remain as fluid and as iterative as possible, rather than just trying to pin down what sales might be eight or ten years down the line.
Businesses make decisions based on the best available data at the time, but that all may change when we revisit it as part of next years budget cycle, Norell observes.
The immediate response may be to say, You must have got it wrong last year. In reality, though, market forecasting is a constant refinement, Norell says.
The key is to ensure the best possible execution of each component of the forecasting process, whether it is epidemiology, market research or some other factor.
Clearly geography, and its attendant regulatory, political and economic conditions, will have a significant impact on what comes out of that process.
Different countries, different markets
Looking at the US and Europe, for example, there are any number of variables, from patient numbers to currency fluctuations, reimbursement systems, HTA mechanisms, medical culture, pricing, and patient access schemes.
These variables also occur between and within European markets, with their relative autonomy in health policy, different approaches to pricing and reimbursement, and the further influence of regional or local budget management.
Not only are issues such as reimbursement far more complex in Europe but the depth of data for a particular condition or therapy may not be as robust as in the US, where forecasters can usually get a fairly solid idea of patient numbers, according to Norell.
Cost pressures
All the same, cost pressures on healthcare systems worldwide, and the accompanying trend towards pharmacoeconomic assessment and comparative effectiveness research, may be closing some of these gaps.
Certainly the spirit of the reform bill just passed in the US is to introduce more government intervention into healthcare, Norell acknowledges.
And the days of launching me-too products at premium prices in the US market are already on the wane, he notes. In future, more and more payers are going to be asking, Why would we use this?
Norell cites the case of generic simvastatin (Zocor), which has cut into sales of the still patent-protected Lipitor (atorvastatin) in the US.
When Lipitor and Zocor were equivalently priced, Lipitor was the first-choice therapy for cholesterol reduction. With a much cheaper generic on the market, any difference in efficacy between the two drugs is starting to look marginal.
Norell expects to see more and more of that thought process.
The use of biomarkers
Another cross-market trend will be the use of biomarkers to determine efficacy in well-defined patient populations.
This potentially means a smaller patient pool but larger market shares within that pool, Norell suggests.
In these circumstances, there will still be opportunities for premium pricing, he believes, Otherwise you cant make your money back on the trials.
Given the high failure rate in categories such as oncology, industry needs an incentive to continue investing in high-risk research and development.
The impact of US healthcare reform
Norell is wary of making any straight extrapolations from the extension of healthcare coverage to more than 30 million Americans under President Obamas reform program.
While the general consensus is that the pharmaceutical industry in the US will come up trumps, I think its too early to tell, he comments.
An extra 30 million covered does not necessarily mean an equivalent boost to the treatment pool.
While many patients will get access to drugs they would otherwise have gone without, in large treatment areas such as high cholesterol which affects as much as one third of the US population effective generic products have been available for years at discounted prices that even some uninsured patients could afford out of pocket, Norell points out.
There are other points of access for patients without coverage in the US, such as through emergency rooms, he adds. The distinction between then and now is not so clear-cut.
The crucial question, Norell argues, is whether bringing 30 million Americans under the health insurance umbrella will actually change the way they access care.
It is not enough just to bump all of your forecasts up by 10% or so in anticipation of a health reform windfall.