Policymakers currently struggle to balance access to innovative treatments with affordability, while ensuring there is an incentive for innovation, the OECD said in a new report..
As therapies begin to be tailored to individual patients, and technologies like 3D printing and mobile health applications bring new opportunities, decision makers are faced with "a complex set of technical, ethical and financial challenges", the report said.
The use of personal data, too, can create great health benefits but data processing needs to be carefully managed to control risk, the OECD said. This data is often being used in medical devices, which have traditionally been subject to less stringent regulation than pharmaceuticals. This may need to be reassessed, it said.
"Policy frameworks governing the development and use of health technologies are not designed for the 21st century," the OECD said. "Decision makers should modernise these frameworks to make the most of new technologies while also protecting patients and the public, spending resources more wisely, and fostering the 'right' type of innovation in the future".
Governments also need to work with the pharmaceutical industry on the proliferation of high cost medicine and rising drug prices, which are increasing pressure in public health spending, the OECD said.
"Pharmaceutical spending is increasingly skewed towards high-cost products. The launch prices of drugs for cancer and rare diseases are rising, sometimes without a commensurate increase in health benefits for patients. For instance in the United States, the launch price of oncology drugs per life-year gained has been multiplied by four in less than 20 years - in constant terms - and now exceeds $200,000," it said.
"Payers, such as insurers or public health providers, are also increasingly struggling to pay for high-cost medicines targeting very small populations, which are expected to proliferate with the development of precision medicine. On the other side of spectrum, new treatments for hepatitis which are very effective and cost-effective in the long-term but target a wide population, are unaffordable to many who would benefit in almost all OECD countries because of their high budget impact," it said.
Prices must reflect the real-world benefits of technologies compared to alternatives, and adjusted based on evidence of how well they actually work, the OECD said.
Currently assessment of performance under real world conditions is rare, it said, and many technologies are use inappropriately "for little or no health gain".
Collecting real world evidence, smarter use of information, education and engagement of providers and patients, and more transparent reporting of outcomes can all help to inform decisions, the OECD said.
"Payers must be equipped with the necessary powers to adjust prices and withdraw payment for ineffective technologies," it said.
Life sciences expert Helen Cline of Pinsent Masons, the law firm behind Out-Law.com said that a flexible approach to pricing is one potential solution.
"Instead of a product being put on the market at a high initial price, as at present, it could start at a lower price for a narrow sample of patients. If the product is successful, the price would be allowed to increase".
An alternative would be for treatments to be paid for in instalments as long as they keep working, Cline said.
"In the UK, the Pharmaceutical Price Regulation Scheme (PPRS) allows a manufacturer to apply for an increase in price in the light of new evidence," Cline said. "Flexible pricing is currently being discussed as a possible model for drugs under UK's Early Access to Medicines Scheme and the European Medicines Agency’s (EMA) PRIME (PRIority MEdicines) scheme."
This sort of pricing model would, of course, require on-going patient monitoring and accurate data collection, she said.
The OECD report will be discussed at an OECD meeting for ministers of health in Paris on 17 January.
The UK government published the results of its own Accelerated Access Review (AAR) in October 2016, setting out recommendations on how to speed up access to innovative healthcare and technologies for NHS patients.
The AAR report also envisages a "patient first" approach to health care innovation, which includes shifting towards personalised medicines and increasing the use of new medical technologies and digital products.
"Developing a patient-first journey begins with the data," Cline said. "However, new capabilities to gather, analyse, disseminate and preserve vast quantities of patient data raise new concerns about the nature of privacy and the means by which individual privacy might be compromised or protected. Organisations that want to use health data need to gain and retain public trust in the way that data is handled and used.
The United Nations (UN) is also concerned about the issue of access to innovative medicine, and published a report on access to medicines in September 2016. The report made a number of recommendations including delinking prices from R&D costs, greater transparency in drug pricing, public health impact assessments in free trade agreements, and encouragement to better use international legal tools available to countries to ensure affordable medical products.
The UN report also recommended that universities and research institutions that receive public funding should prioritise public health objectives over financial returns in their patenting and licensing practices and called for negotiation of a binding international treaty on research and development.