Pharmaceutical Pricing - Global Perspectives

Chapter 1: Pricing and the Pharmaceutical Market

• The definition of price
• The functions of price
• The marketing mix
• The product
• Case study: Lilly’s proactive strategy for patent expiry
• The place
• The rise of the Internet as a sales channel 8
• The price Promotion
• The effect of price on the other elements of the marketing mix: the product
• Therapeutic efficacy
• Therapeutic enhancements
• Case study: drug delivery system strategies
• The brand
• Pricing objectives
• Target return on investment
• Market share
• Meeting competition
• Profit maximisation
• Stabilisation of prices
• Pricing strategies to meet objectives
• Skimming
• Prestige pricing
• Penetration pricing
• Extinction pricing
• Case study: Losec price reduction in Denmark
• List prices and contract prices
• Case study: US states launch innovative pooled drug purchasing programme
• Pricing freedom
• Pricing and external issues
• Pricing and government policy shifts
• Case study: changes to Russian taxation system impact on pharmaceutical industry profits
• Case study: Philippines government pharmaceutical policy affects industr
• revenues
• Currency fluctuations
• Case study: Indian pharmaceutical companies deal with falls in the US dollar
• The EU
• EU expansion and the pharmaceutical market
• The euro
• The euro and the pharmaceutical industry
• The rise of the euro
• Parallel importation
• The euro and parallel trade
• Case study: a single European pricing scheme for Crixivan
• EU expansion and pharmaceutical pricing
• The European Economic Area (EEA)
• EU enlargement and the EEA
• Pricing issues in the US
• Pricing issues in Europe and Japan
• Pharmacoeconomics
• The rise of pharmacoeconomics and health economics
• Case study: treatments for congestive heart failure
• Case study: Neoral and Sandimmun
• Case study: cheaper diagnostic test for HIV
• The economic costs of disease
• Case study: the impact of ageing on healthcare resource allocation
• Case study: pharmacoeconomics and drug prescribing for children in Italy
• Case study: the financial consequences of inappropriate antibiotic prescribing
• Case study: rising drug costs restrict uptake of malaria therapies in developing countries

Chapter 2: Pricing through the Pharmaceutical Product Life Cycle

• The life cycle of a pharmaceutical
• The classical pharmaceutical life cycle
• Changes to the classic pharmaceutical product life cycle
• Case study: Viagra
• Case study: Levitra
• Case study: Cialis
• Brand development
• Rx-to-OTC switching
• Case study: the UK’s smoking cessation market
• Time to market
• Cost of R&D
• Global roll-out
• New product pricing
• Customers
• The company
• Competitors 46
• Case study: Biogen’s Avonex 46
• The decline of exclusivity for ‘pioneerEpharmaceutical products 47
• Manufacturing costs of a product 48
• Case study: Genzyme’s Ceredase and Cerezyme

Chapter 3: Parallel Trade

• The view of pharmaceutical manufacturers
• The view of parallel traders
• Legalities of parallel trade
• Case study: Ferring v. Eurim-Pharm
• Case study: Leo Pharma v. Orifarm
• Repackaging and re-labelling of products
• Case study: Upjohn sale of Dalacin in Denmark
• International parallel trade
• Case study: parallel trade in Kenya
• Protection of products from parallel importation
• European hospitals and parallel importers
• Governments and other purchasers
• Competitors
• Pricing differentials
• Differentials created by price discounts
• Price differentials resulting from variations in pricing regulations
• Creation of post-patent price differentials
• Pricing within a single price band

Chapter 4: Rx-to-OTC Switching and Pricing

• The marketing mix for switched drugs
• Product
• Place
• Price
• Promotion
• Case study: Claritin pricing
• The implications of OTC status
• Strong branding
• Effects of patent expiry

Chapter 5: Generic Drugs

• The popularity of generics
• Encouraging the use of generics
• Wholesalers in the EU
• The potential for biogenerics
• Obstacles to biogenerics
• Facing up to generic competition
• Case study: Augmentin loses US patent
• Case study: Viagra patent legal battle
• Future patent battles
• Case study: biogeneric competition to Epogen
• Case study: patent fears overshadow Sanofi-Synthélabo and Aventis tie-up
• Strategies to extend effective patent life
• Case study: 6-month exclusivity for Diflucan
• New formulations

Chapter 6: Company and Customer Interactions

• Clinicians
• Case study: resistance to OTC Zocor in the UK
• Patients
• Case study: patient protests at halting of clinical trials for an anti-viral
• compound
• The traditional supplier–customer framework
• Clinician pressure
• Case study: US doctors prescribe expensive high blood pressure
• medications
• Case study: poor awareness of drug prices in Canada
• Company strategies
• Disease management packages
• Case study: Novo Nordisk and diabetes treatments
• Collaborations with healthcare providers
• Case study: the development of new antibiotics
• ‘BundlingE
• Internet mail order
• Case study: Internet trade in the US
• Tendering
• Case study: cancer trials
• Consumer views on pricing
• Case study: international consumer survey on pharmaceutical prices
• Case study: AIDS drug price increase angers US patient group
• Case study: Public Citizen group advocacy in the US
• Price fixing
• Case study: Lupron price-fixing allegations in the US
• Case study: generic antibiotic price fixing in the UK
• EU vitamin price-fixing scandal
• Case study: generic anti-anxiety drug price fixing in the US
• Hospital negotiation of pharmaceutical prices
• Price analysis
• Case study: parallel importation by Belgian hospitals
• Case study: parallel trade of anti-retroviral drugs
• Government
• Direct price controls
• Positive lists
• Negative lists
• Reference pricing
• Reimbursement levels
• Dealing with wholesalers and retailers
• Government interventions in the pharmaceutical market and the view of the industry
• Case study: German pharmaceutical industry resists government cost containment
• policies
• Intellectual property
• Patent piracy
• Case study: IP and the Chinese pharmaceutical market
• Case study: IP and the Latin American pharmaceutical market
• Case study: the Indian pharmaceutical industry
• Price controls in various countries
• Buyers in the US
• Pricing/volume agreements
• Profit control in the UK

Chapter 7: Pharmaceutical Pricing in North America

• The US
• The US healthcare system
• The US pharmaceutical market
• US drug spending
• International price comparisons
• The reaction of the industry
• Determination of drug prices by manufacturers
• Average wholesale price and average sales price
• Case study: Medicare reform and oncology drug reimbursement
• Cost containment
• Generics
• A move towards pricing control measures?
• Canada
• The Patented Medicine Prices Review Board
• Case study: the FDA and industry resist cross-border trade in pharmaceuticals

Chapter 8: Phamaceutical Pricing in Japan

• Cost containment
• Drug pricing in Japan

Chapter 9: Pharmaceutical Spending Controls in Europe

• The UK
• The Pharmaceutical Price Regulation Scheme (PPRS)
• The National Institute for Clinical Excellence (NICE)
• The prospects for ‘Euro-NICEE
• France
• Healthcare spending
• Revisions to the pricing system
• Germany
• Healthcare reforms
• Fixed pricing schemes
• Viewpoint of the pharmaceutical industry
• Case study: cross-border purchase of pharmaceuticals in Poland
• Spain
• Pricing
• Pharmaceutical demand
• Government incentives to industry
• Italy
• Pricing system
• Case study: investigation of price fixing in Italy

Chapter 10: Pharmaceutical Pricing and the Developing World

• Case study: adverse UK media coverage of the pharmaceutical industry
• The concept of compulsory licensing
• The grounds for using a compulsory licence
• Case study: compulsory licensing in North America
• Africa and the AIDS crisis
• South Africa and HIV drug pricing
• Brazil and HIV drug pricing
• The future of compulsory licensing
• Case study: diversion of anti-retroviral drugs destined for Africa
• Anti-diversion tactics
• Funding for AIDS drugs in the developing world
• The Médecins Sans Frontières campaign for access to essential medicines
• References

List of Figures

• Figure 1.1 Breakdown of retail medicine price in Europe 6
• Figure 1.2 Internet usage statistics (2004) 9
• Figure 1.3 Online Canadian pharmacy cost for Prozac and generic fluoxetine (10 mg ×100) in 2004 10
• Figure 1.4 Clinical development projects employing drug delivery technologies 12
• Figure 1.5 Periods of market exclusivity between the launch of an innovative medicineand competitor products 16
• Figure 1.6 Currency fluctuations: monthly exchange rate of Japanese yen to US$1during 2003 20
• Figure 1.7 Currency fluctuation; monthly exchange rate for US$ to €1 during 2003
• Figure 1.8 Composition of international reserves
• Figure 1.9 Spend on medicines as a percentage of GDP in various countries 28
• Figure 1.10 Neoral costs (1998)
• Figure 1.11 Annual economic burden of major diseases in the US
• Figure 1.12 European hospital costs for osteoporosis-related hip fracture
• Figure 1.13 Population estimates and projections (1990 and 2020): percentage of the population aged 65 years or over
• Figure 2.1 Online unit cost for Viagra 100 mg tablets in North American pharmacies (2004)
• Figure 2.2 Online US pharmacy cost for Levitra 20 mg (2004)
• Figure 2.3 Online US pharmacy cost for Cialis 10 mg (2004)
• Figure 3.1 Financial effect on the German pharmaceutical industry of government intervention since 1999
• Figure 3.2 UK versus Europe: HIV drug prices (1999) 56
• Figure 3.3 Bilateral comparisons of ex-manufacturer prices for France, Spain and Italy versus the UK 58
• Figure 3.4 Bilateral comparisons of ex-manufacturer prices for the US versus the UK(UK = 100%)
• Figure 4.1 Online unit cost for Claritin 10 mg tablets in North American pharmacies (2004)
• Figure 5.1 Development of the French generics market (by value)
• Figure 5.2 Breakdown of sales by distribution channel in France (2002)
• Figure 5.3 Sales of Viagra
• Figure 5.4 Worldwide sales of Epogen
• Figure 5.5 Sales of Diflucan
• Figure 6.1 Number of Internet users in Europe (2004)
• Figure 6.2 Online unit cost for Celebrex 200 mg in North American pharmacies (2004)
• Figure 6.3 Public Citizen cost estimates of a 30-day supply of selected CNS drugs
• Figure 6.4 Public Citizen estimates of long-term ‘excess costsEfor CNS drugs in the US compared with the average cost in other countries
• Figure 6.5 Parallel importation: Zerit
• Figure 6.6 Parallel importation: Inverase
• Figure 7.1 Online unit cost for Prozac 10 mg tablets in US pharmacies (2004)
• Figure 7.2 Average country prescription drug prices as a proportion of corresponding US prices
• Figure 7.3 Average annual percentage change, patented drug prices (1996E001)
• Figure 8.1 Population projections for 2000 and 2020 Eproportion of the population aged 65 years or over
• Figure 8.2 Number of NHI-listed pharmaceuticals in Japan
• Figure 9.1 R&D expenditure by pharmaceutical companies in the US and Europe
• Figure 9.2 UK family expenditure survey: daily expenditure (2000/01)
• Figure 9.3 Estimated UK healthcare savings for selected diseases through reduced use of hospital beds since 1957
• Figure 9.4 Estimated UK healthcare savings for selected diseases through reduced use of hospital beds since 1957
• Figure 9.5 Sales of pharmaceuticals in France (2002)
• Figure 9.6 The financing of statutory health insurance in Germany
• Figure 10.1 Global status of the HIV/AIDS epidemic
• Figure 10.2 National HIV prevalence rates in Africa (2003)

List of Tables

• Table 1.1 Expansion of the EU
• Table 1.2 Some parallel import options offered to European hospitals in 1997
• Table 1.3 The core features of a pharmaceutical
• Table 1.4 Evaluating the costs of disease
• Table 2.1 Summary of pharmaceutical company options to counter parallel importing
• Table 4.1 Useful attributes for OTC drugs
• Table 4.2 Potential audiences for OTC promotion
• Table 10.1 Key points of the TRIPS agreement
• Table 10.2 International approaches to compulsory licensing (as of 2004)
• Table 10.3 Overview of MSF proposals to improve access to medicines in developing regions