Beneluxa joint negotiation on Zolgensma: A step towards price convergence?

On the 8th October 2021, the Beneluxa initiative announced successful conclusion of a joint assessment and price negotiation on Novartis' Zolgensma between Belgium, Ireland and Netherlands. Zolgensma is a gene therapy for Spinal Muscular Atrophy, often referred to as the world's most expensive drug, with a list price of around US$ 2 million.

The case of Zolgensma is the first tripartite conclusion of a Health Technology Assessment (HTA) process for a new technology, while previous technologies have been appraised by only two countries. As a result of the negotation, Zolgensma will now be available to selected patient groups in all three countries.

Although the price negotiation outcome is confidential, a statement from the Belgian Minister of Health and Social Affairs Frank Vandenbroucke suggest the price is considered "affordable".

Net prices, i.e. the final price to the payer of a new technology minus any negotiated discount, are generally not known to the public, and such confidential prices are considered one way of maintaining a de-facto tiered pricing system, where prices are set according to individual countries' willingness to pay. One concern of making net prices transparent, as encouraged by the transparency resolution in 2019, is that net prices could converge to a single price across all markets, thus making them unaffordable in lower income countries.

The question, then, becomes whether the joint price negotiated by Belgium, Ireland and the Netherlands are indicative of a willingness to accept price convergence across markets. To address this question, we can consider fundamental indicators of national wealth and pharmaceutical spending. In the table below, it's clear that while the three countries differ substantially in size and national wealth per capita, even in their total health expenditure as a proportion of national wealth, their total health expenditures per capita in US$ are remarkably similar, ranging from US$ 4,913/capita in Belgium to US$ 5,489/capita in Ireland. The same goes for pharmaceutical spending per capita, which ranges from US$ 434/capita in Netherlands to US$ 608/capita in Belgium.

Although these are relatively crude measures, they do tell us that Belgium, Ireland and Netherlands can be considered in the same league when it comes to drug pricing. A more stark difference in national wealth, or pharmaceutical expenditures, might have suggested a different willingness or ability to pay for new technologies. However given the similarities in fundamental characteristics, the joint price negotiation between these three countries is more suggestive of an aggregation of countries with similar properties, than a convergence of net price across materially different settings.

The implication, if this interpretation holds, is that the recent announcement by Beneluxa maintains the status quo in drug pricing, rather than suggesting a willingness to accept price convergence across different markets.