Creating Win-Win Solutions from the Ongoing Drug Cost and Price Debate

Table of Contents

• Executive Summary
  • Strategic Considerations
  • Stakeholder Implications
• Today' s Drug Cost/Price Battlefi eld
• Price Criticism in a Nutshell
• Entrenched Customer Cost Positions
  • Factors Driving Health Care Costs
    • Original Expectations
    • Inescapable Paradox
    • Health Care Demographics
    • Health Care Services Defy Centralization
    • Intractable Ineffi ciencies
    • Temporary Relief from Expenditure Controls
    • Economy Fluctuations
    • Impact of Demand-Side Controls
  • Factors Driving Drug Costs
    • Price and Profi t Controls
    • Value-for-Money Emphasis
    • Evidence-Based Medicine
• Entrenched Industry Price Positions
  • Impact of Customer Activism
  • Need for Product Differentiation
• Current Cost/Price Stratagems
  • Customers as Active Managers of Health Care Cost
    • Reference Pricing
    • Drug Legislation and Regulation
    • Rationing as a Way of Life
    • Health Technology Assessment
  • Supplier Price Stratagems
    • What Price Will the Market Bear?
    • Pricing Orphan Drugs
    • Increasing Prices
    • Thwarting Parallel Imports
    • Staving Off Generics
    • Promoting Directly to the Customer
• Value-Price Concessions
  • Value Proposition Pricing
  • The Value of Time
  • Purchaser/Supplier Risk Sharing
    • Johnson & Johnson' s Velcade
    • Pfi zer' s Sutent
    • GlaxoSmithKline' s Phase IV Proposal
• Key Guiding Principles for Creating Win-Win Solutions
• Future Dynamics Between Health Care Customer and Pharmaceutical Industries

Figures

• 1. Share of U.S. Prescription Drug Cost by Payer, 1990-2006
• 2. Factors Driving Health Care and Drug Costs and Customer Concerns over Ability to Pay
• 3. Complex Prescribing Decision-Making Process-The New Primacy of Monetary Issues
• 4. Setting Prices in a Complex and Multilevel Environment
• 5. Using Regulatory Hurdles to Force Pharma Companies to Respond to Customer Concerns
• 6. Thousands Denied Sight-Saving Drugs in England
• 7. The New Value Proposition Equation

Sidebars

• National Institute for Health and Clinical Excellence--A History of Criticism and Controversy

Tables

• 1. Pharmaceutical Cost-Containment Measures: Demand-Side Controls
• 2. Pharmaceutical Cost-Containment Measures: Supply-Side Controls on Manufacturers
• 3. Projected Impact of Key Brand Patent Expiry on Leading Big Pharma Companies
• 4. Drugs Approved by the Scottish Medicines Consortium