Pharmaceutical Pricing and Reimbursement - Adoption of Health Technology Assessments (HTA) Optimizes Drug Pricing and Accelerates Reimbursement Decision-Making by GBIResearch

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									Pharmaceutical Pricing and Reimbursement
Adoption of Health Technology Assessments (HTA) Optimizes Drug Pricing and
Accelerates Reimbursement Decision-Making
GBI Research Report Guidance




                                              GBI Research Report Guidance
                                              ·     Chapter two provides an introduction to pharmaceutical pricing and reimbursement.
                                              ·     Chapter three gives an economic overview of the countries covered in the report. This chapter includes
                                                    trend analysis of healthcare expenditure per capita, public expenditure as a percentage of total
                                                    healthcare expenditure, out-of-pocket expenditure as a percentage of private expenditure on
                                                    healthcare, and an analysis of the number of healthy life years beyond the age of 65.
                                              ·     Chapter four gives a detailed view of the pharmaceutical industry, the role of pharmacoeconomics in
                                                    pricing, and different pricing models such as reference pricing, international price referencing, generics
                                                    price capping, use of positive and negative price formulary, value-based pricing and risk-sharing
                                                    models, as well as single pricing in Europe, the impact of parallel trade, and the proposal to speed up
                                                    pricing and reimbursement decisions.
                                              ·     Chapter five provides pricing and reimbursement information for the US, covering PEST analysis, the
                                                    healthcare system, and trends in pricing and reimbursement.
                                              ·     Chapter six provides pricing and reimbursement information for the top five Europe markets, covering
                                                    PEST analysis, the healthcare system, and trends in pricing and reimbursement.
                                              ·     Chapter seven provides pricing and reimbursement information for Asia-Pacific (China and Japan),
                                                    covering PEST analysis, the healthcare system, and trends in pricing and reimbursement.
                                              ·     Chapter eight briefly provides pricing and reimbursement information for Australia, covering PEST
                                                    analysis, the healthcare system, and trends in pricing and reimbursement.
                                              ·     Chapter nine presents the appendix of the report.




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Executive Summary




                                              Executive Summary
                                              Increasing Healthcare Expenditure as a Percentage of Gross Domestic Product by Country
                                              Globally, the US is ranked number one in healthcare expenditure, and for setting benchmark standards. It
      The US was the biggest                  has planned to spend more than $1.1 trillion on healthcare in 2012. The country was also the biggest
      healthcare spender in per               healthcare spender in per capita terms in 2010, spending $8,300 in 2010 per person. The government plans
      capita terms in 2010,                   to increase this to $12,500 per person by 2020.
      spending $8,300 in 2010 per
      person. The government                    Pharmaceutical Pricing and Reimbursement, Healthcare Expenditure as a Percentage of GDP,
      plans to increase this to                 2008–2010
      $12,500 per person by 2020
                                                                                        20


                                                                                        18


                                                                                        16
                                                   Healthcare Expenditure as % of GDP




                                                                                        14


                                                                                        12


                                                                                        10


                                                                                         8


                                                                                         6


                                                                                         4


                                                                                         2


                                                                                         0
                                                                                             The US   The UK   Germany   Spain          France      Italy   China     Japan    Australia

                                                                                                                                 2008    2009    2010

                                                Source: GBI Research; WHO Database, 2012




                                              France had the greatest healthcare expenditure out of all of the European countries, with 11.9% of Gross
                                              Domestic Product (GDP) spent on healthcare in 2010. Healthcare expenditure in China is lower in
                                              comparison to its western counterparts; however, pharmaceutical companies expect the Chinese
                                              government to accelerate spending in the coming decade owing to its aging population. GBI Research
                                              predicts healthcare expenditure in the US will also rise as the Patient Protection and Affordable Care Act
                                              (PPACA) seeks to extend insurance coverage to 30 million uninsured Americans. The increase in expenditure
                                              predicted across European countries could be attributed to the aging population and growing cost of
                                              treatment. A study conducted by the Congressional Budget Office (CBO) in the US estimates that the US
                                              government could spend more than $1.8 trillion a year on Medicare and Medicaid by 2022; this can be
                                              attributed to an increase in treatment cost. More than 50% of the budgeted spending will be on the elderly
                                              population, and the rest is expected to go towards insurance for low-income groups (CBO, 2012). GBI
                                              Research estimates that growth in healthcare expenditure will be faster in emerging economies such as
                                              India, China, and Brazil.




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Executive Summary




                                              Single Pricing Strategy in the European Union Remains a Debatable Issue
                                              Parallel distributors take advantage of the pricing differences across European Union countries by taking the
                                              parallel trade route. The distributors buy pharmaceutical products from countries where the prices are low
                                              and sell them to countries where the prices are high. This allows them to maximize their profitability.
                                              However, pharmaceutical companies experience a loss in parallel trades, so to eliminate this problem, price
                                              consistency across the European Union has been suggested. The reference pricing policy adopted by some
                                              countries, which contributes to the losses of pharmaceutical companies, would also be abolished.
                                              All of the countries in Europe have differences in social and economic factors, such as healthcare spending
                                              and income per capita. This difference in parameters makes it difficult for the pharmaceutical regulatory
                                              authorities to be in unison with the single-pricing structure.
                                              Value-Based Pricing System is Set to Replace the Current Price Regulation Scheme in the UK
                                              The prices of branded drugs in the UK are regulated by the Pharmaceutical Price Regulation Scheme (PPRS).
                                              This scheme was set up in 1957 and is updated every five years. The Department of Health and the branded
                                              pharmaceutical industry co-operated to design the scheme. However, the government feels there are
                                              significant shortcomings in the PPRS affecting pricing and access to branded products. The government
                                              intends to introduce a Value-Based Pricing System (VBPS) for medicines by replacing the PPRS on its expiry
                                              at the end of 2013. The government believes that a value-based pricing approach would provide patients
                                              with better access to innovative and effective medicines.
                                              The UK government is in consultation with pharmaceutical industry leaders and other stakeholders to
                                              discuss the pros and cons of implementing a VBPS. The government intends to place a VBPS in effect from
                                              January 1, 2014.
                                              Government agencies aim to improve patient treatments through access to effective pharmaceutical drugs,
                                              encourage innovation in developing new medicines, and optimize National Health Service (NHS) resources.
                                              Faster Pricing and Reimbursement Decisions Ensure Quicker Medicine Access and Return on Investments
                                              There has been a proposal to decrease the time limit for pricing and reimbursement decisions from 180
                                              days to 120 days for innovative medicines, and 30 days in the case of generics. The proposal was made by
                                              executives of the European Commission in March 2012. It addresses directive 89/105/EEC, passed in 1989,
                                              that requires amendment as it is not applicable to the present-day pharmaceutical market, where the trend
                                              has been shifting to generics from branded products. Patients would benefit from the proposal by gaining
                                              faster access to medicines, while pharmaceutical companies would benefit as return on R&D investments
                                              would be faster.




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Table of Contents




                                              1         Table of Contents
                                              1   Table of Contents ........................................................................................................................................ 5
                                                  1.1      List of Tables .................................................................................................................................... 7
                                                  1.2      List of Figures................................................................................................................................... 8
                                              2   Pharmaceutical Pricing and Reimbursement – Introduction .................................................................... 10
                                              3   Pharmaceutical Pricing and Reimbursement – Global Economic Issues ................................................... 11
                                                  3.1      Trend in Global Pricing and Reimbursement Regime .................................................................... 11
                                                  3.2      Trend Analysis of Healthcare Expenditure Per Capita ................................................................... 12
                                                  3.3      Public Health Expenditure as a Percentage of Total Health Expenditure ...................................... 13
                                                  3.4      Out-of-Pocket Health Expenditure as a Percentage of Private Expenditure on Health ................. 15
                                                  3.5      Healthy Life Years beyond the Age of 65 ....................................................................................... 16
                                              4   Pharmaceutical Pricing and Reimbursement – Global Issues.................................................................... 17
                                                  4.1      Reference Prices ............................................................................................................................ 17
                                                  4.2      International Price Referencing Adopted to Contain Healthcare Expenditure.............................. 17
                                                  4.3      Pharmaceutical Price Capping to Encourage the Use of Generic Drugs ........................................ 17
                                                  4.4      Positive and Negative Price Formulary to Provide More Clarity on Drugs Covered by Health
                                                           Insurance ....................................................................................................................................... 17
                                                  4.5      Value-Based Pricing Systems and Risk-Sharing Models Evaluate Drugs Based on Value and Not
                                                           Cost................................................................................................................................................ 18
                                                  4.6      Single Pricing Strategy in the European Union is a Debatable Issue.............................................. 19
                                                  4.7      Faster Pricing and Reimbursement Decisions Ensure Quicker Medicine Access and Return on
                                                           Investments ................................................................................................................................... 19
                                                  4.8      Issues in Pricing and Reimbursement in Orphan Drugs ................................................................. 19
                                                  4.9      Difficulty in Economic Evaluation of Orphan Drugs ....................................................................... 19
                                              5   Pharmaceutical Pricing and Reimbursement – Pricing and Reimbursement by Geography ..................... 20
                                                  5.1      The US ........................................................................................................................................... 20
                                                      5.1.1      Macroeconomic Factors (PEST Analysis) ............................................................................... 20
                                                      5.1.2      Healthcare System in the Country ......................................................................................... 20
                                                      5.1.3      Healthcare Expenditure as a Percentage of GDP .................................................................. 21
                                                      5.1.4      Private and Government Expenditure on Healthcare as a Percentage of Total Healthcare
                                                                 Expenditure ........................................................................................................................... 22
                                                      5.1.5      Drug Pricing and Reimbursement Authorities ....................................................................... 23
                                                      5.1.6      Issues in Pricing and Reimbursement .................................................................................... 23
                                              6   Top Five Countries of Europe .................................................................................................................... 25
                                                  6.1      Proposal to Speed Up Pricing and Reimbursement Decisions in Europe....................................... 25
                                                  6.2      The UK ........................................................................................................................................... 25
                                                      6.2.1      Macroeconomic Factors (PEST Analysis) ............................................................................... 25
                                                      6.2.2      Healthcare System in the Country ......................................................................................... 26
                                                      6.2.3      Healthcare Expenditure as a Percentage of GDP .................................................................. 27
                                                      6.2.4      Private and Government Expenditure on Healthcare as a Percentage of Total Healthcare
                                                                 Expenditure ........................................................................................................................... 28
                                                      6.2.5      Drug Pricing and Reimbursement Authorities ....................................................................... 29
                                                      6.2.6      Trends in Pricing and Reimbursement ................................................................................... 29
                                                  6.3      France ............................................................................................................................................ 31
                                                      6.3.1      Macroeconomic Factors (PEST Analysis) ............................................................................... 31
                                                      6.3.2      Healthcare System in the Country ......................................................................................... 32
                                                      6.3.3      Total Expenditure on Healthcare as a Percentage of GDP .................................................... 33
                                                      6.3.4      Private Expenditure and General Government Expenditure on Healthcare as a Percentage of
                                                                 Total Healthcare Expenditure ................................................................................................ 34
                                                      6.3.5      Drug Pricing and Reimbursement Authorities ....................................................................... 35
                                                      6.3.6      Trends in Pricing and Reimbursement ................................................................................... 36
                                                  6.4      Germany ........................................................................................................................................ 37


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                                                       6.4.1    Macroeconomic Factors (PEST Analysis) ............................................................................... 37
                                                       6.4.2    Healthcare System in the Country ......................................................................................... 38
                                                       6.4.3    Total Expenditure on Healthcare as a Percentage of GDP .................................................... 39
                                                       6.4.4    Private and Government Expenditure on Healthcare as a Percentage of Total Healthcare
                                                                Expenditure ........................................................................................................................... 40
                                                    6.4.5       Drug Pricing and Reimbursement Authorities ....................................................................... 41
                                                    6.4.6       Trends in Pricing and Reimbursement ................................................................................... 41
                                                6.5      Spain .............................................................................................................................................. 42
                                                    6.5.1       Macroeconomic Factors (PEST Analysis) ............................................................................... 42
                                                    6.5.2       Healthcare System in the Country ......................................................................................... 43
                                                    6.5.3       Total Expenditure on Healthcare as a Percentage of GDP .................................................... 43
                                                    6.5.4       Private and Government Expenditure on Healthcare as a Percentage of Total Healthcare
                                                                Expenditure ........................................................................................................................... 44
                                                    6.5.5       Drug Pricing and Reimbursement Authorities ....................................................................... 45
                                                    6.5.6       Trends in Pricing and Reimbursement ................................................................................... 45
                                                6.6      Italy ................................................................................................................................................ 46
                                                    6.6.1       Macroeconomic Factors (PEST Analysis) ............................................................................... 46
                                                    6.6.2       Healthcare System in the Country ......................................................................................... 47
                                                    6.6.3       Total Expenditure on Healthcare as a percentage of GDP .................................................... 47
                                                    6.6.4       Private and Government Expenditure on Healthcare as a Percentage of Total Healthcare
                                                                Expenditure ........................................................................................................................... 48
                                                    6.6.5       Drug Pricing and Reimbursement Authorities and Procedures ............................................. 49
                                                    6.6.6       Trends in Pricing and Reimbursement ................................................................................... 49
                                              7 Pharmaceutical Pricing and Reimbursement – Asia-Pacific ...................................................................... 51
                                                7.1      China.............................................................................................................................................. 51
                                                    7.1.1       Macroeconomic Factors (PEST Analysis) ............................................................................... 51
                                                    7.1.2       Healthcare System in China ................................................................................................... 51
                                                    7.1.3       Total Expenditure on Healthcare as a Percentage of GDP .................................................... 52
                                                    7.1.4       Private and Government Expenditure on Healthcare as a Percentage of Total Healthcare
                                                                Expenditure ........................................................................................................................... 53
                                                    7.1.5       Pricing and Reimbursement Approval Process ...................................................................... 54
                                                7.2      Japan ............................................................................................................................................. 55
                                                    7.2.1       Macroeconomic Factors (PEST Analysis) ............................................................................... 55
                                                    7.2.2       Healthcare System in the Country ......................................................................................... 55
                                                    7.2.3       Total Expenditure on Healthcare as a Percentage of GDP .................................................... 56
                                                    7.2.4       Private and Government Expenditure on Healthcare as a Percentage of Total Healthcare
                                                                Expenditure ........................................................................................................................... 57
                                                    7.2.5       Revisions to the National Health Insurance Drug Price List ................................................... 58
                                                    7.2.6       Trends in Pricing and Reimbursement ................................................................................... 58
                                              8 Pharmaceutical Pricing and Reimbursement – Australia .......................................................................... 59
                                                8.1      Macroeconomic Factors (PEST Analysis) ....................................................................................... 59
                                                8.2      Healthcare System in the Country ................................................................................................. 60
                                                    8.2.1       Expenditure on Healthcare as a Percentage of GDP.............................................................. 60
                                                    8.2.2       Private and Government Expenditure on Healthcare as a Percentage of Total Healthcare
                                                                Expenditure ........................................................................................................................... 61
                                                8.3      Flow Chart for Flow of Funds in Australia ...................................................................................... 62
                                                8.4      Trends in Pricing and Reimbursement .......................................................................................... 62
                                                    8.4.1       Remuneration Issues of Section 94 Private Hospitals ............................................................ 62
                                                    8.4.2       Pharmacy Mark-Up Charts .................................................................................................... 63
                                              9 Pharmaceutical Pricing and Reimbursement – Appendix ......................................................................... 64
                                                9.1      Market Definitions......................................................................................................................... 64
                                                9.2      Abbreviations ................................................................................................................................ 64



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                                                  9.3      Bibliography .................................................................................................................................. 65
                                                  9.4      Research Methodology ................................................................................................................. 67
                                                  9.5      Healthcare System......................................................................................................................... 67
                                                  9.6      Pricing and Reimbursement Process ............................................................................................. 67
                                                  9.7      Key Trends ..................................................................................................................................... 67
                                                  9.8      Contact Us ..................................................................................................................................... 68
                                                  9.9      Disclaimer ...................................................................................................................................... 68


                                              1.1       List of Tables
                                              Table 1:     Pharmaceutical Pricing and Reimbursement, Trend Analysis of Healthcare Expenditure Per
                                                           Capita, ($), 2008–2010 ................................................................................................................. 12
                                              Table 2:     Pharmaceutical Pricing and Reimbursement, Public Health Expenditure as a Percentage of Total
                                                           Health Expenditure, 2008–2010 ................................................................................................... 14
                                              Table 3:     Pharmaceutical Pricing and Reimbursement, Out-of-Pocket Expenditure as a Percentage of
                                                           Private Expenditure on Health, 2008–2010.................................................................................. 15
                                              Table 4:     Pharmaceutical Pricing and Reimbursement, Healthy Life Years beyond the Age of 65 for Males
                                                           and Females, 2010........................................................................................................................ 16
                                              Table 5:     Pharmaceutical Pricing and Reimbursement, Healthcare Expenditure as a Percentage of GDP,
                                                           The US, 2001–2010....................................................................................................................... 21
                                              Table 6:     Pharmaceutical Pricing and Reimbursement, Private and Government Expenditure on
                                                           Healthcare as a Percentage of Total Healthcare Expenditure, The US, 2001–2010 ..................... 22
                                              Table 7:     Pharmaceutical Pricing and Reimbursement, Total Expenditure on Healthcare as a Percentage of
                                                           GDP, The UK, 2001–2010.............................................................................................................. 27
                                              Table 8:     Pharmaceutical Pricing and Reimbursement, Private and Government Expenditure on
                                                           Healthcare as a Percentage of Total Healthcare Expenditure, The UK, 2001–2010 ..................... 28
                                              Table 9:     Pharmaceutical Pricing and Reimbursement, The UK, General Price Changes (%), 2009–2013... 29
                                              Table 10:    Pharmaceutical Pricing and Reimbursement, The UK, List of Treatments with Approved Patient
                                                           Access Schemes, Recommended by National Institute for Clinical Excellence for Use in the
                                                           National Healthcare Service, 2012 ............................................................................................... 30
                                              Table 11:    Pharmaceutical Pricing and Reimbursement, List of Drugs Not to be Reimbursed from March 1,
                                                           2012, France ................................................................................................................................. 32
                                              Table 12:    Pharmaceutical Pricing and Reimbursement, Expenditure on Healthcare as a Percentage of GDP,
                                                           France , 2001- 2010 ...................................................................................................................... 33
                                              Table 13:    Pharmaceutical Pricing and Reimbursement, Private Expenditure and General Government
                                                           Expenditure on Healthcare as a Percentage of Total Healthcare Expenditure, France, 2001–2010
                                                           ...................................................................................................................................................... 34
                                              Table 14:    Pharmaceutical Pricing and Reimbursement, Examples of Drugs Affected by Reimbursement
                                                           Cuts, France, 2011 ........................................................................................................................ 35
                                              Table 15:    Pharmaceutical Pricing and Reimbursement, Expenditure on Healthcare as a Percentage of GDP,
                                                           Germany, 2001–2010 ................................................................................................................... 39
                                              Table 16:    Pharmaceutical Pricing and Reimbursement, Private and Government Expenditure on
                                                           Healthcare as a Percentage of Total Healthcare Expenditure, Germany, 2001–2010.................. 40
                                              Table 17:    Pharmaceutical Pricing and Reimbursement, Expenditure on Healthcare as a Percentage of GDP,
                                                           Spain, 2001–2010 ......................................................................................................................... 43
                                              Table 18:    Pharmaceutical Pricing and Reimbursement, Private and Government Expenditure on
                                                           Healthcare as a Percentage of Total Healthcare Expenditure, Spain, 2001–2010........................ 44
                                              Table 19:    Pharmaceutical Pricing and Reimbursement, Changes in Pharmaceutical Expenditure in 2012
                                                           from 2011 (%), Spain, 2011–2012 ................................................................................................ 45
                                              Table 20:    Pharmaceutical Pricing and Reimbursement, Expenditure on Healthcare as a Percentage of GDP,
                                                           Italy, 2001–2010 ........................................................................................................................... 47
                                              Table 21:    Pharmaceutical Pricing and Reimbursement, Private and Government Expenditure on
                                                           Healthcare as a Percentage of Total Healthcare Expenditure, Italy, 2001–2010 ......................... 48
                                              Table 22:    Pharmaceutical Pricing and Reimbursement, List of Innovative Drugs for Regions, AIFA, Italy,
                                                           2010.............................................................................................................................................. 50
                                              Table 23:    Pharmaceutical Pricing and Reimbursement, Total Expenditure on Healthcare as a Percentage of
                                                           GDP, China, 2001–2010 ................................................................................................................ 52


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                                              Table 24:    Pharmaceutical Pricing and Reimbursement, Private and Government Expenditure on
                                                           Healthcare as a Percentage of Total Healthcare Expenditure, China, 2001–2010 ....................... 53
                                              Table 25:    Pharmaceutical Pricing and Reimbursement, Total Expenditure on Healthcare as a Percentage of
                                                           GDP, Japan, 2001–2010 ................................................................................................................ 56
                                              Table 26:    Pharmaceutical Pricing and Reimbursement, Private and Government Expenditure on
                                                           Healthcare as a Percentage of Total Healthcare Expenditure, Japan, 2001–2010 ....................... 57
                                              Table 27:    Pharmaceutical Pricing and Reimbursement, Expenditure on Healthcare as a Percentage of GDP,
                                                           Australia, 2001–2010.................................................................................................................... 60
                                              Table 28:    Pharmaceutical Pricing and Reimbursement, and Government Expenditure on Healthcare as a
                                                           Percentage of Total Healthcare Expenditure, Australia, 2001–2010 ............................................ 61
                                              Table 29:    Pharmaceutical Pricing and Reimbursement, Pharmacy Mark-up Chart Comparison, Australia,
                                                           2012.............................................................................................................................................. 63


                                              1.2      List of Figures
                                              Figure 1:    Pharmaceutical Pricing and Reimbursement, Trend Analysis of Healthcare Expenditure Per
                                                           Capita, ($), 2008–2010 ................................................................................................................. 12
                                              Figure 2:    Pharmaceutical Pricing and Reimbursement, Public Healthcare Expenditure as a Percentage of
                                                           Total Healthcare Expenditure, 2008–2010 ................................................................................... 13
                                              Figure 3:    Pharmaceutical Pricing and Reimbursement, Out-of-Pocket Healthcare Expenditure as a
                                                           Percentage of Private Expenditure on Healthcare, 2008–2010 ................................................... 15
                                              Figure 4:    Pharmaceutical Pricing and Reimbursement, Healthy Life Years beyond the Age of 65 for Males
                                                           and Females, 2010........................................................................................................................ 16
                                              Figure 5:    Pharmaceutical Pricing and Reimbursement, PEST Analysis, The US, 2012 ................................. 20
                                              Figure 6:    Pharmaceutical Pricing and Reimbursement, Healthcare Expenditure as a Percentage of GDP,
                                                           The US, 2001–2010....................................................................................................................... 21
                                              Figure 7:    Pharmaceutical Pricing and Reimbursement, Private and Government Expenditure on
                                                           Healthcare as a Percentage of Total Healthcare Expenditure, The US, 2001–2010 ..................... 22
                                              Figure 8:    Pharmaceutical Pricing and Reimbursement, PEST Analysis, The UK, 2012 ................................. 25
                                              Figure 9:    Pharmaceutical Pricing and Reimbursement, Tota
								
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