In recent months, a profound transformation has been occurring right at the core of the Italian pharmaceutical industry as the most significant reforms to market access within two decades start to take shape. While Mario Draghi’s energetic government has been dominating the headlines primarily for other reasons – namely sweeping plans to revitalize a battered economy, overhaul public administration and slash red tape all under the grandiose title of a ‘new national reconstruction’ – the importance of drug pricing and reimbursement reform to one of Italy’s more vibrant and high-performance industrial sectors should not be underestimated.


Carrot & Stick

On the one hand, there are to be enticing new incentives for drug developers so as to make the country more appealing from the perspective of the international investor community. For a start, payback shares (essentially a form of clawback that kicks in when predetermined spending ceilings have been breached) are being considerably reduced. Whereas in 2020 the combined value of these repayments surpassed a whopping EUR one billion, it is estimated that, under the new regulations, this would have been reduced by at least a half. Moreover, the invitation for drugmakers to offer deals – also known as managed entry agreements (MEAs) – has been extended and there will be further experimentation with risk-sharing, outcome-based contracts in the healthcare sphere, thus consolidating the country’s status as something of a pioneer and leader in next-generation life science financing schemes.

This is a welcome and much-needed reform for our country that updates obsolete rules and processes dating back almost 20 years

Dr Luca Li Bassi, former DG, AIFA

On the other hand, unprecedented price transparency is being demanded in return. Italy will be breaking new ground as the first country to start requiring drug makers to disclose full data about public funding for any of their medicines during reimbursement negotiations. This means that the Italian Medicines Agency (AIFA) will gain a full birds-eye view insight not only into the production, R&D and marketing that innovative drug makers incur when developing and bringing to market a specific therapy but crucially visibility into the revenues generated and the prices that have been offered to authorities in other markets. All this should empower the regulator with the ability to cut fair deals: offering value for money to payers and patients while enabling the industry to finance new waves of innovation while still generating reasonable profits.

To a large degree, this builds upon Italy’s vigorous international efforts to champion price transparency in pharma both at the regional level — through the Valletta Declaration which brings together ten European countries with a combined population of 160 million — and globally, via the World Health Assembly, through which the government has committed to sharing pricing information it receives with like-minded nations.


The Quest for Value

While ostensibly about cost containment and reining in a worrying escalation in public health expenditure, the Italian reform program is eye-catching for its willingness to reward genuine innovation. Serious attempts are being made to better align pricing and reimbursement with value. This is reflected in proposals for a dedicated health technology assessment (HTA) which will shoulder some of the current functions of AIFA, as well as new regulations that mandate that incremental therapeutic value and economic value (in terms of cost-per-QALY) must now be demonstrated in order to avoid non-reimbursement. In other words, in instances where a drug is assessed not to provide additional therapeutic value over comparators, the pharma company must offer an equal or lower price if it is to get its therapy registered on the reimbursement lists.

At the same time, Italy’s notoriously fragmented and complex medical innovation financing landscape looks set to be streamlined, rationalized and rendered more fit-for-purpose. The managerialism of the 1990s had witnessed a decentralization of authority in public health policy to the regions and the introduction of a multi-level governance structure with individual regions to some extent competing for funding. Currently, the country’s regions can access two dedicated funds for innovative medicines for a limited time period of 36 months – each is worth approximately €500 million. Under the proposed reform process these look set to be merged into a single fund with greater flexibility permitted around both the timeframes and types of treatments eligible. The hope is this will also help target finite resources towards the worthiest innovative therapies that offer real clinical breakthroughs.


All Eyes Towards Italy?

“This is a welcome and much-needed reform for our country that updates obsolete rules and processes dating back almost 20 years. It will undoubtedly place AIFA in a far stronger position to negotiate reimbursement levels based on solid analysis and thorough evaluations and that is exactly what is needed to create win-win scenarios where all stakeholders can ultimately benefit,” opines Dr Luca Li Bassi, former Director-General of the agency. “But I am also confident that we will soon be a beacon to our markets and, before long, other countries will start to implement very similar steps,” he ventures.