Pharmaceutical Pricing and Reimbursement - Reference Pricing and Economic Evaluations Will Dominate Future Pricing and Reimbursement Strategies

Published by: GBI Research

Published: Feb. 1, 2010 - 83 Pages

Table of Contents

1 Table of Contents

1 Table of Contents

1.1 List of Tables

1.2 List of Figures

2 Introduction

2.1 GBI Research Report Guidance

3 Pharmaceutical Pricing & Reimbursement Issues at Global Level - Innovative Mechanisms To Decrease the Healthcare Costs

3.1 Introduction

3.2 Issues at Global level

3.2.1 Value Based Pricing and Risk-Sharing Models

3.2.2 Increased Focus on Evidence-based Medicine and Health Technology Assessment (HTA)

3.2.3 Role of Pharmacoeconomics in Pricing and Reimbursement

3.3 Conclusion

4 Pricing and Reimbursement Issues in US - Government’s Cost Rationalization Efforts Will Make Future Tough for Big Pharma

4.1 New Nationwide Database to Set Healthcare Reimbursement Rates

4.2 Medicaid Pricing for Dual Eligibles of Medicare Part - D

4.3 New ICD-10 (International Classification of Diseases - 10) Coding System

4.4 Generic Price War at Retail Sector

4.5 MIPPA (Medicare Improvement for Patients and Providers Act), the AMP Rule Litigation

4.6 First DataBank/Medi-Span Settlement and the Impact on AWP

4.7 Conclusion

5 Pricing and Reimbursement Issues in Western Europe - Cost-Effectiveness is the Key to Success

5.1 Parallel Trade

5.2 EU Single Pricing - Still an Issue

5.3 International Price Referencing

5.4 Status quo of P&R in Western Europe

5.4.1 UK

5.4.2 France

5.4.3 Germany

5.4.4 Italy

5.4.5 Spain

5.5 Conclusion

6 Pricing and Reimbursement Issues in Central & Eastern Europe (CEE) and Scandinavia - Reference Pricing and Centralization Proves Detrimental for High Price Drugs

6.1 Central & Eastern Europe - Cost-Effectiveness is of Paramount Importance

6.1.1 Czech Republic

6.1.2 Poland

6.1.3 Austria

6.1.4 Romania

6.1.5 Hungary

6.2 Scandinavia - Moving Towards Centralized Healthcare Regime

6.2.1 Denmark

6.2.2 Norway

6.2.3 Sweden

6.2.4 Future Landscape

6.3 Conclusion

7 Pricing and Reimbursement Issues in Asia-Pacific - Negative Pricing Pressures Leaves Less Hope for Expensive Medicines

7.1 DPC (Diagnosis Procedure Combination) Reimbursement System in Japan - Immense Savings for the Government

7.2 Reforms in Chinese Pharmaceutical Market: Tougher Landscape for Generic and Off-Patent Brands

7.2.1 Active Ingredient Based Reimbursement: Restricted Market for Original Branded Products

7.2.2 New Regulatory Reforms: Stricter Rules for Innovation Seal

7.2.3 Price Cuts and Hospital Tendering Process: Erosion of Generic Margins

7.2.4 Future Scenario: Innovation is the Key for Western Pharmaceutical Companies

7.3 Transparency Issues with PBS in Australia

7.3.1 AUSFTA (Australia-United States Free Trade Agreement) - Boon for Branded Pharma

7.3.2 Access Issues for HCM (High Cost Medicines) and Controversial Selection Criteria

7.3.3 Consumer Participation in the PBS Drug Listing - A Move towards Greater Transparency and Cost-Efficiency

7.4 Conclusion

8 Pricing and Reimbursement Issues for Orphan Drugs - Excessive Prices of Orphan Drugs Increasing Financial Pressures on Government

8.1 Exploiting Orphan Drug Act; Maximizing Revenues

8.1.1 Ovation’s Indocin and Questcor’s H.P. Acthar Gel

8.2 Pricing of an Orphan Drug

8.3 Price Control Measures

8.3.1 Global Approach for Orphan Drug Development

8.3.2 Introducing Sales Ceiling and Flexible Market Exclusivity

8.3.3 Price Revisions

8.4 Conclusion

9 Key Takeaway

10 Appendix

10.1 Market Definitions

10.2 Key Support Data

10.3 Abbreviations

10.4 Research Methodology

10.4.1 Coverage

10.4.2 Secondary Research

10.4.3 Primary Research

10.4.4 Expert Panel Validation

10.5 Contact Us

10.6 Disclaimer

10.7 Sources

1.1 List of Tables

Table 1: Examples of Pharmacoeconomic Evaluations in Ireland

Table 2: Drug Manufacturers Receiving Largest Windfalls, ($m), 2006-2007

Table 3: Pricing and Reimbursement Mechanisms in Western European countries

Table 4: Pricing and Reimbursement Mechanisms in Czech Republic, Romania, Austria, Poland and Hungary

Table 5: Different Pricing Mechanisms used in Czech Republic, Poland, Austria, Romania and Hungary

Table 6: Box Model for Reimbursement in Austria

Table 7: Comparative Analysis of Per Capita Healthcare Expenditures in the Scandinavian Countries, 2006

Table 8: Pricing and Reimbursement Mechanisms in the Scandinavian Countries

Table 9: Norway - Step Price System, 2008

Table 10: Trend in the Revision Rates of Reimbursement Prices in Japan, 1992-2008

Table 11: Sales in Pharmaceutical Industry, China, $bn, 1998-2008

Table 12: Increase in the Per Capita Expenditure for Medical Services in the Urban and Rural Households, China, $m, 1990-2006

Table 13: Ratio of Retail v/s Wholesale Price in Eight European Countries and China, 2005

Table 14: Definition and Incentives for Orphan Drugs in US, EU, Japan and Australia

Table 15: Average Annual Premiums for Family and Single Coverage. US, ($), 1999-2009

Table 16: Australia Drug Price Components and Payment Structure

Table 17: GDP (Nominal) Comparison Between Western Europe and Central & Eastern Europe, ($bn), 2008

1.2 List of Figures

Figure 1: Comparison of Per Capita Expenditure on Health at Average Exchange Rate ($) v/s Life Expectancy, 2006

Figure 2: Comparison of CAGR of R&D Expenditure v/s Turnover Over the Last Five Years for the Top 5 Companies, 2003-2008

Figure 3: Value Based Pricing - Concept and Process

Figure 4: Impact Analysis: Value Based Pricing

Figure 5: Drivers and Restraints for EBM (Evidence Based Medicine)

Figure 6: Impact Analysis: Evidence Based Medicine

Figure 7: ISPOR 33 Guidelines for Pharmacoeconomics Assessment

Figure 8: Impact Analysis: Pharmacoeconomics

Figure 9: Average Annual Percentage Change in Manufacturer Prices for Most Widely Used Prescription Drugs in US

Figure 10: Case: An Example Of Data Tampering To Provide Artificially Low Reference Prices For Reimbursements Of Out-Of-Network Medical Expenses

Figure 11: Impact Analysis: New Database for Reimbursement Rates of Out-of-Network Medical Expenses

Figure 12: Comparison of Medicare Part D and Medicaid Discounts

Figure 13: Impact Analysis: Medicaid Pricing for Dual Eligibles in MPD (Medicare Part D)

Figure 14: ICD-10 Coding System; Features and Benefits

Figure 15: Impact Analysis: ICD-10 Coding System

Figure 16: Impact Analysis: Generic Price War

Figure 17: Impact Analysis: MIPPA (Medicare Improvement for Patients and Providers Act)

Figure 18: Impact Analysis: First DataBank/Medi-Span Settlement

Figure 19: Parallel Import Market Break-down, Europe, 2007, Total Size = $7.5bn

Figure 20: Impact Analysis: Parallel Trade

Figure 21: Price Level Indices for Pharmaceutical Products, EU25 = 100, 2005

Figure 22: Impact Analysis: EU Single Pricing

Figure 23: Impact Analysis: International Reference Pricing

Figure 24: Overshooting Actual Budget Expenditure, Hungary,(%), 1994-2005

Figure 25: Impact Analysis: P&R Issues in CEE and Scandinavia

Figure 26: Impact Analysis: DPC (Diagnosis Procedure Combination) Reimbursement System

Figure 27: Sales in Pharmaceutical Industry, China, $m, 1998-2008

Figure 28: Increase in the Per Capita Expenditure for Medical Services in the Urban and Rural Households, China, ($m), 1990-2006

Figure 29: Impact Analysis: Reforms in Chinese Pharmaceutical Market

Figure 30: Arguments For and Against the AUSFTA

Figure 31: Impact Analysis: AUSFTA

Figure 32: Number of Orphan Drugs Approved by FDA, 2000-2009

Figure 33: Factors Influencing the Pricing of an Orphan Drug

Figure 34: Correlation Between the Prevalence and the Annual Cost of Therapy for Orphan Drugs

Figure 35: Impact Analysis: Price Control Measures on Orphan Drugs

Figure 36: The US Healthcare Expenditure, Historical, $tn, 1980-2008

Figure 37: The US Healthcare Expenditure, Projections, ($tn), 2009-2018

Figure 38: GBI Research Methodology

Abstract

• Identification and analysis of major issues that are affecting the pricing and reimbursement decisions across five different geographies. These include North America, Western Europe, Asia-Pacific, Central and Eastern Europe and Scandinavia
• Analysis of the issues and potential impact of pricing and reimbursement decisions on the key stakeholders
• Study of the pricing and reimbursement mechanisms in different countries and the identification of trends in the context of a particular geography as a whole
• Qualitative analysis of the forces that are driving and restraining the prices and reimbursements within a particular geography
• Future outlook of the pricing and reimbursement patterns for geographies under consideration

• Build understanding of the major issues in the pricing and reimbursement landscape
• Identify the impact of each issue on your business and develop solutions for adverse impacts
• Negotiate better with the government agencies to maximize the reimbursement on the drugs by understanding the pricing and reimbursement mechanism
• Develop effective business strategies for pricing a drug which is to be launched in any of the markets considered in this report
• Identify and exploit the factors that could help to maximize returns on the drugs for a particular geography in future

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