Pricing & Reimbursement - Seven Major Markets Update

SUMMARY

Abstract

Overview

Introduction

Governments and payers across the seven major markets are implementing cost-cutting initiatives to combat escalating healthcare costs, putting even greater pressure on pharma companies. In addition to the credit crunch, ever fewer novel products are coming to market, contributing to the declining return on investment.

Scope

• Overview of P&R issues in the market today and their impact on branded Pharma
• Introduction to the current P&R tools utilized across the seven major markets to contain costs
• Analysis of each of the seven major markets, examining both the healthcare systems and the key P&R infrastructure
• Identification of trends and recommendations shaping national P&R environments

Report Highlights

It is now a perquisite to perform pharmacoeconomic assessments early on in the drug development process and provide cost effective evaluations to ensure access to reimbursement lists

In the, US pharma companies can expect the Federal government and insurance providers to seek out negotiations to cut drug costs. Presently, Medicare is unable to negotiate drug prices with Pharma, although a Democratic government will want to amend legislation giving it more power to challenge Pharma on drug prices

Parallel trade will continue to play a role in driving down drug prices in Europe. However, as drug price differences between EU countries decreases due to reference pricing, coupled with the claw-back system imposed on pharmacies, the incentive to use parallel traded products will progressively weaken

Reasons to Purchase

• Gain a clear understanding of the recent changes in the P&R environment across the seven major markets and how this is impacting pharma companies
• Review recent P&R trends in the seven major markets based on Datamonitor analysis and primary research conducted with key stakeholders in the industry
• Provides analysis of today's market situation, focusing on the up coming US presidential elections and the potential impact on future P&R initiatives

TABLE OF CONTENTS

Table of Contents

• CHAPTER 1 EXECUTIVE SUMMARY
  • Scope of the report
    • Chapter summary
  • Key findings
• CHAPTER 2 CURRENT MARKET SITUATION AND ITS IMPLICATIONSFOR P&R
  • Pharma companies under increasing pressure in a global cost conscious healthcare market
    • Pharma R&D productivity in decline
    • Generic usage forecast to rise
    • The future - more pressure on profit margins
• CHAPTER 3 GLOBAL OVERVIEW OF P&R TOOLS
  • Global pricing and reimbursement approaches
    • Price-optimization launch strategies - both a global and regional perspective critical
    • Key global pricing controls
      • Profit controls are an effective way of guaranteeing prices for both Pharma and payers
      • Reference pricing is used widely in Europe and Japan tocontrol drug expenditure
      • Price cuts, freezes and ceilings play a fundamental role in containing costs in several EU countries and Japan
      • Discounts and rebates are mandatory in the US and Germany
      • EU single price is still being debated
    • Key global reimbursement controls
      • Patient co-pays more prevalent in the US healthcare system than in Europe
      • Formulary positive/negative lists used more in the US than in Europe
      • Volume limitations used in Europe but not very effective
      • Pharmacoeconomics playing a pivotal role in P&R
      • Risk sharing is becoming a viable option for both payers and industry
      • OTC switching an alternative in markets with stiff generic competition
      • Pharmacist substitution used widely to increase genericuse
      • Step therapy and fail first used predominantly in the US
    • Parallel imports are still impacting on Pharma profits
    • Generic intrusion eroding branded pharmaceutical profits
• CHAPTER 4 US SPECIFIC P&R MEASURES
  • US - the world's largest pharma market gets cost-conscious
    • Escalating healthcare costs prompt introduction ofcost-effective initiatives
      • Reasons behind escalating healthcare costs
    • Medicare - overview
      • Medicare prescription drug benefit - Part D successful but expensive
      • Medicare needs to cut cost as current expenditure isunsustainable in the future
    • Medicaid - recent changes impacting the industry
      • Recent changes to Medicaid aimed at creating savings by increasing pricing transparency
    • Elections - implications for Pharma and P&R?
      • Potential impact of the US Presidential and Congress elections on Pharma
      • Democratic candidates mandates - focus on universal healthcoverage
      • Implications for the pharma industry of a Democratic presidency
      • Republican candidate mandate - focuses on cost containment
      • Implications for the pharma industry of a Republican presidency
      • Electoral outcomes for Pharma - pending legislation will depend on the level of representation in both Congress and the Senate
• CHAPTER 5 JAPANESE SPECIFIC P&R MEASURES
  • Japan's healthcare system in need of overhaul
    • Japan's P&R system in need of reform
      • Cost containment in Japan revolves mainly around biennial price cuts
      • Pricing of new drugs - outline of Japan's 2008 drug pricing system reform
      • Revision of NHI prices of existing drugs
    • Japan is slow to adopt generics
    • Industry frustrated by what it perceives as Japan's lack of encouragement for innovative drugs
• CHAPTER 6 SPECIFIC P&R MEASURES IN THE FIVE MAJOR EUPHARMACEUTICAL MARKETS
  • France pushes for cost containment initiatives, althoughis held back by lack of physician compliance
    • Overview of the French healthcare system
    • Overview of P&R system - retail market
      • Drug reimbursement in France is based on the seriousness of the disease being treated
      • Hospital market is relatively small but drug P&R hasconsiderable influence on the retail market
    • Cost containment - centers around promotion of generics and price cuts
      • Promotion of generics - France's uptake of generics isslow
      • Price cuts implemented to reduce overspending on healthcare budgets
    • Poor growth for the French pharma market set to continue
      • French Pharma expected to implement job cuts due to slow growth
  • Germany continues healthcare reform and cost cutting through the controversial jumbo reference pricing
    • Overview of the German healthcare system
      • Ambulatory care in Germany is by far the largest purchaser of pharmaceuticals
      • Hospital care subject to a lower level of regulation compared to ambulatory care
    • Reforms to the German healthcare system prompted by growing healthcare costs
      • Germany implements price freezes on branded drugs until2008
      • Amendments to the German reference price system
      • Rebate for generic drugs
      • Bonus-Malus system to be abandoned
      • The Statutory Health Insurance Competition Enhancement Law(GKV-WSG)
    • Impact of Germany's healthcare reform on the pharmaceutical industry
      • Germany continues to implement and review cost-cuttingpolicies
    • Generics - hit hard by latest reforms
  • Italy attempts to balance price cuts with sustaining pharmaceutical innovation
    • Overview of the Italian national health service
    • Overview of P&R system - becoming more decentralized
    • Italian cost containment measures center around price cuts
      • Price cuts continue to be Italy's preferred method of cost containment
      • Patient co-pays and limited prescriptions are re-emergingin some regions in Italy in an effort to cut costs
      • Pharmacist substitution - still more lucrative to dispense branded products over generics
    • Generics - slow uptake due to lack of awareness anddistrust
    • Recent developments in P&R in Italy include rewarding therapeutic innovation
      • Italy creates a ranking system rewarding therapeutic innovation
  • Spain's cost containment initiatives are keepinghealthcare costs stable
    • Overview of the Spanish healthcare system
    • Overview of Spain's P&R environment - considered openand transparent
      • Spain's pricing procedures examines both a drug's benefit profile and cost-plus profile
      • Spain's reimbursement procedures
    • Spanish cost containment strategies center aroundreference pricing
      • Legislative changes to Spain's reference pricing environment - further decentralization
    • Cost containment - generic market in Spain still has room to grow
      • Intellectual property laws and its effects on Spain'sgeneric market
    • Regionalized cost containment measures vary and are adapted to the needs of individual regions
    • Parallel trade body files complaint against Spain for dual pricing
    • Pharma warns Spain to balance cost containment with encouraging innovation
  • UK - NICE continues to play a major role in pharmaceutical cost containment
    • UK - cost containment strategies
    • NICE or NASTY (Not available so treat yourself)?
      • How NICE reaches its recommendations
      • NICE and risk-sharing - a compromise
      • Criticisms of NICE
      • Future role of NICE - taking on roles in pricing
    • Impact of generics on the UK market - a positive influence in the long term?
    • Parallel trade in the UK not producing beneficial savings
    • Pharmaceutical Pricing and Regulation Scheme to undergo new reforms, moving towards value based pricing
      • Pharma reaction to OFT proposed reforms to the PPRS
• CHAPTER 7 BIBLIOGRAPHY
  • Conference literature
  • Datamonitor resources
• APPENDIX
• List of Tables
  • Table 1: Top 10 Medicare Part D Plans, by enrollment,2007
  • Table 2: Potential outcomes for Pharma following the2008 US election
  • Table 3: AOK discount contracts, 2008-09
  • Table 4: Datamonitor exchange rates ($)
• List of Figures
  • Figure 1: Big Pharma sales growth rates from launches and expiries (%), 2006-2012
  • Figure 2: Preferred drug launch sequence in the US,selected European countries and Japan
  • Figure 3: Reference pricing pathways in the EU, 2007
  • Figure 4: Key stakeholders in the US healthcare system,2008
  • Figure 5: Healthcare coverage in the US, 2005-06
  • Figure 6: Prescription drug coverage among Medicare beneficiaries, 2008
  • Figure 7: Key healthcare reforms from the US presidential candidates, 2008
  • Figure 8: Japanese cost containment measures, 2008
  • Figure 9: Drug market assessment process in France, 2008
  • Figure 10: Germany's healthcare system, 2008
  • Figure 11: Italy's healthcare system, 2008
  • Figure 12: Italian pricing and reimbursement process,2008
  • Figure 13: Differences in drug expenditure among regions, 2007
  • Figure 14: AIFA drug innovation evaluation criteria in Italy
  • Figure 15: Spanish healthcare system, 2008
  • Figure 16: P&R controls implemented in Spain
  • Figure 17: UK pricing and reimbursement controls, 2008
  • Figure 18: Breakdown of NICE decisions to 2008
  • Figure 19: NICE's decision making process
  • Figure 20: UK generic sales as % of total sales, 2001-05