Guideline Modernization: Case Studies

Summary of Cases

Acronyms

• HIPC – Highest international price comparison
• MIPC –Median international price comparison
• LIPC – Lowest international price comparison
• TCC – Therapeutic class comparison
• MLP – Maximum list price
• MAPP – Maximum average potential price
• MRP – Maximum rebated price
• NEAP – Non-excessive average price
• HTA – Health Technology Assessment
• QALY – Quality-adjusted life year gained
• ICER – Incremental cost-effectiveness ratio
• PV – pharmacoeconomic value
• $/QALY – cost per quality adjusted life years gained
• RWE – Real world evidence

Case 1 – Large population, therapeutic comparators

• Treats a chronic condition
• Has therapeutic comparators
• One approved indication by Health Canada (HC)
• Very large potential treatment population
  • Possible indications: diabetes, mental health disorders, etc.
• Annual treatment cost (list price): $1,000*
• Population with the condition: 500,000
• Potential annual revenues based on the total treatment population: $500M
• Category 1 due to market size

* Assumed a once-a-year dose for ease of calculations.

Case 1 – Application of the Proposed Guidelines

*MLP/MRP frozen.
**CADTH estimated ICER is $100K. PV threshold used is $60,000/QALY.
***A progressive discount applies to the total annual drug cost (revenue) at the cost-effective price, where each successive $10M above $40M is discounted by an additional 10%, up to a maximum of 50%. This $40M market size threshold has been used for demonstration purposes only.

Case 1 – Current vs New Proposed Guidelines

Case 2 – Large population, no therapeutic alternatives

• Treats a chronic condition
• One clinically significant approved indication
• No therapeutic alternatives
• Large treatment population
  • Potential disease areas: age-related macular degeneration (AMD).
• Annual treatment cost (list price): $7K
• Population with the condition: 100K in any given year
• Potential annual revenues based on the total treatment population: $700M
• Category 1 based on projected market size, no therapeutic alternatives

Case 2 – Application of the Proposed Guidelines

*MLP/MRP frozen at year 3.
**CADTH estimated ICER is $100K. PV threshold used is $60K/QALY.

Case 2 – Current vs New Proposed Guidelines

Case 3 – Two indications with different therapeutic benefits and prevalence rates

• Treats 2 chronic conditions
  • Condition 1 (first indication): estimated 3,000 people in Canada, first in class, brings significant therapeutic improvement over standard of care
  • Condition 2 (subsequent indication): Estimated 100,000 people in Canada, Therapeutic alternatives available, brings slight or no therapeutic improvement
• No therapeutic alternatives for condition 1, therapeutic alternatives for condition 2
• Annual treatment cost: $20K
• Potential annual revenues based on the total treatment population: $2B
• Category 1 based on projected market size.

Case 3 – Application of the Proposed Guidelines (first indication)

*MLP frozen based on 7 countries.
**MRP frozen after 3 years.
*** ICER threshold used is $60K/QALY.

Case 3 – Application of the Proposed Guidelines (second indication)

Several therapeutic resulting in median TCC $6,000; LIPC = $14K

Case 3 –Current vs New Proposed Guidelines

Case 4 – 2^nd line oncology medicine

• One clinically significant approved indication
• Several therapeutic alternatives exist
• Low 5-year survival rates
• Small treatment population: 3,000
• Annual treatment cost: $50,000
• Potential annual revenues based on the total treatment population: $150M
• Category 1 based on projected market size, annual treatment cost above GDP/capita

Case 4 – Application of the Proposed Guidelines

*MLP/MRP frozen.
**CADTH estimated ICER is $250K. PV threshold used is $60K/QALY.
***Positive market size adjustment owing to small market size – lower of MIPC, 2xPV Threshold price

Case 4 – Current vs New Proposed Guidelines

Case 5 – Curable condition, large treatment population

• Provides cure for a common and serious condition
• Large treatment population: estimated 200,000 Canadians are living with the condition
  • All could be treated in seven years assuming no rationing
• As of 2018, the health care system cost associated with the condition is estimated at $10 billion annually.
• Annual treatment cost of $50K (based on the manufacturer’s suggested list price)
• Potential annual revenues based on the total treatment population: $1.5B
• Category 1 based on projected market size, annual treatment cost above GDP/capita

Case 5 – Application of the Proposed Guidelines

*MLP frozen based on 7 countries.
**MRP frozen.
***CADTH estimated ICER is $50K, below PMPRB PV threshold
****Maximum market size adjustment of 50%. Assuming competitor entry in Year 6.

Case 5 – Current vs New Proposed Guidelines

Case 6 – Rare disease drug

• Rare disease drug with one indication
• Limited clinical significance (moderate improvement over placebo) but offers hope for the first time for a severe condition with high burden of illness and high unmet need.
• Small treatment population: 1,000 Canadians diagnosed with the condition, 2% increase per year.
  • One in every 4,000 children born are affected by the condition.
• Annual treatment cost: $300,000
• Potential annual revenues based on the total treatment population: $300M
• Category 1 based on projected market size, annual treatment cost above GDP/capita

Case 6 – Application of the Proposed Guidelines

*MLP/MRP frozen.
**CADTH estimated ICER is $300K-700K, depending on population and severity. Assume 80% price reduction required to meet PMPRB PV threshold of $60K/QALY.
***Positive market size adjustment owing to small market size – lower of MIPC, 2xPV Threshold price.

Case 6 – Current vs New Proposed Guidelines