Australia's lifesaving drug scheme review could require new evidence of real-life benefits

Companies with drugs subsidized through the Australian Life Saving Drugs Programme (LSDP) may in future have to provide updated evidence of their products' real-life benefits or accept a price cut or delisting from the scheme, if proposals put forward in a government consultation document are taken forward.

The LSDP provides subsidized access to expensive and life-saving medicines for serious and rare diseases, and currently subsidizes 10 medicines for eligible patients. In 2013-14 the program treated 257 patients at a cost of around Aus$77.3m. On average it costs more than Aus$300,000 a year to treat one patient through the program.

Faced with the increasing cost of medicines and a paucity of evidence on the actual health outcomes provided by drugs subsidized under the LSDP, the government is undertaking a review of the scheme to look at questions such as whether the products are clinically effective and offer value for money, which products might become eligible for funding in the years to come, and how the LSDP should be administered in future.

The review began in 2014 with a consultation on the terms of reference of the review, and on the basis of the comments received the Department of Health has drafted and put out for comment an "issues paper" with the aim of ensuring all stakeholders' views are taken into account in the final report.

In it, the department says: "Given the costs of the medications, the inevitable increase in the numbers of these medications and the lack of clarity about many aspects of the clinical management, there is a substantial public interest in a more comprehensive, coordinated and ongoing collection of data on clinical outcomes, and targeted research on dosing regimens and therapeutic equivalence."

The industry association Medicines Australia is keen to keep the focus of the review on ensuring that patients continue to get equitable and timely access to therapies for rare and life-threatening diseases, rather than on cost containment.

In its submission to the first consultation, the association Australia said the review "should not focus on cost but should instead provide a safeguard that a program such as the LSDP is equitable and fit for purpose to meet the needs of Australian patients and broader society now and into the future". An earlier review conducted in 2009, it noted, had had a clear focus on cost, which led to tightened criteria for the listing of medicines on the program and "resulted in further limiting access to therapies for rare diseases in Australia".

Current situation

At present, submissions for a drug to be considered for inclusion in the LSDP must be filed together with submissions to the Pharmaceutical Benefits Advisory Committee for listing in the Pharmaceutical Benefits Scheme (PBS). If PBAC accepts that the drug is clinically effective for the proposed indication but considers that it is not cost effective and rejects it for listing on the PBS, the sponsor may ask for the application to be considered for inclusion in the LSDP.

To be included, the drug must satisfy all the criteria for LSDP funding – for example, the sponsor must submit evidence showing that a patient's lifespan will be "substantially extended" by the drug, and that there is no alternative product already listed on the PBS or available for hospital in-patients.

Where necessary, PBAC will also provide advice on the proposed price of the drug compared with the "effective price of the drug in comparable markets" and the proposed cost of any comparable drugs already funded through the LSDP.

The review

The review of the LSDP is being carried out in stages. The first public consultation was held from August to November 2014, based on the following terms of reference drawn up by a specially established Reference Group:

• Review the clinical effectiveness and safety of medicines currently subsidized through the LSDP.
• Review emerging treatments and diseases, including those that identify sub-groups by molecular target, which could seek an LSDP subsidy in the future.
• Conduct an international comparison of drug subsidies for rare diseases and the definition of a rare/ultra-rare disease.
• Compare the subsidy and equity principles of the PBS and the LSDP.
• Assess the value for money of the medicines subsidised on the LSDP by evaluating the benefit of each drug’s treatment outcomes, including in terms of quality of life achieved through the program and their cost.
• Review the administration of the LSDP, including the guidelines with which the programme is administered for each condition, and assess alternative administrative systems.
• Establish a framework for data collection on rare diseases in Australia and see how this could function internationally.

Second consultation

The second consultation, on the "issues paper" published by the Department of Health, opened on 10 April and ends on 30 April. It is intended to ensure that the final report represents the views of a wide range of stakeholders and that these views feed into the discussions on future options for the LSDP.

The issues paper was prepared by the Reference Group, which has received additional technical information on each of the terms of reference from a health technology assessment (HTA) report by the University of Adelaide HTA group and other sources including a report on the current administration of the program provided by the Department of Health.

Among other things, the document notes that the LSDP usually provides access to a drug before there is clear evidence that it is effective in the medium and long term, so it could be that drugs currently included in the program are less effective than was originally claimed.

The group advised that there should be explicit and pre-agreed criteria for continued LSDP funding of individual drugs, with companies having to provide additional confirmatory evidence of the product's original benefits, for example, or to show that the surrogate or biochemical markers used to make the original inclusion decision have converted to real improvements in health outcomes. If this evidence is not produced, the group suggested there should be an "automatic and substantial decrease" in the product's price (around 50% in the first instance) followed by loss of subsidy if the evidence is not provided within 12 months.

The group suggested that companies might be required to "share the uncertainty of benefit" through risk-sharing arrangements or a similar mechanism, and asked what criteria should be used to determine a "reasonable" price to pay for lifesaving drugs and who should decide to continue or stop therapy if the disease is progressing.

As for the individual LSDP drugs it assessed, the group said that there was not enough data to determine their value for money because the evidence was still based largely on changes in surrogate outcomes rather than on measured health benefits, and that information on the relative costs of the drugs compared with other countries was "very limited".

It noted that it had identified a number of reports or ongoing inquiries from other countries including Canada, Scotland and Wales that "suggest similar concerns about managing the growing cost of medicine to treat these diseases and the poorly defined health benefits".

Future candidates for the LSDP will have to be considered in terms of their suitability for the program, the issues paper notes, pointing out that some of the new treatments for genetically inherited diseases such as those currently treated under the LSDP "will not be drugs in the conventional sense", as some may be tailored to the specific genetic sub-types of each individual. In such cases, it suggests, the criteria of value and effectiveness currently used by the LSDP may not be relevant any more.

Future of the LSDP

Turning to the administration of the program, and the question of whether it should continue in its current form, the issues paper says that while there remains a need for a funding mechanism for drugs for rare conditions that are unlikely to meet the usual cost-effectiveness criteria of the PBS, there appears to be "no major practical reason" why such a mechanism would need to remain separate from the usual PBAC assessment processes.

"A parallel can be drawn with the process for decisions on the subsidisation of vaccines on the National Immunisation Schedule or listing on the PBS section 100 programmes," it says (the section 100 program is for medicines for the treatment of chronic conditions that are restricted to supply through public and private hospitals).

One possibility, it suggests, is that a special Section 100 program for rare diseases could be established that takes account of the rarity of the patients’ condition. "A set of criteria would need to be established for each rare disease and the administration of the program will be modelled on existing programs like the growth hormone program," it adds. Drugs would be listed through managed entry schemes and there would be opportunities for risk-sharing arrangements.

Another option is to subsume the LSDP into the state public health system, with funding transferred to the states. Responsibility for assessing clinical and cost-effectiveness would remain with PBAC, and the Commonwealth would still set the price subsidy, while the states would be responsible for negotiating lower drug prices. This, however, would require agreement on the distribution of subsidies across territories and there would be upfront costs and resources involved in setting up the system.

More transparency needed, says industry

In its November submission, Medicines Australia had welcomed the review, but raised a number of issues regarding the purpose and format of the review. It said, for example, that there should be more transparency in the methods that would be used to assess the value of medicines currently listed on the LSDP. If the purpose of these assessments was to "explore removal of certain medicines from the LSDP this should be explicitly stated on the review webpage and stakeholders should have the opportunity to respond to this aim," the association said.

Moreover, if the Department of Health was intending to use this review to apply "new and unexpected price reductions, this should also be made transparent," it declared. "Price reductions imposed without appropriate safeguards and consultation may significantly impact on the viability of the sponsors concerned, and affect their ability to continue to provide therapies to Australian patients."

It said that the overall intent of the review was "ambiguous" and it was "still apparent that this review conflates two separate and distinct analyses. Medicines Australia is of the view that the review of the programme should be separated from the review of the products currently funded through the programme."

It also stressed that the review outcomes should acknowledge the "significant challenges in identifying therapies to treat rare diseases and the obvious evidentiary barriers facing sponsors when developing these treatments and seeking appropriate funding to ensure patient access".