SPI Infoamtion

Table of Contents

1. Executive Summary
1.1 Overview of Pricing and Reimbursement in 2010
1.2 Aims, Scope and Format of the Report
1.3 Research & Analysis Methods

2. Introduction to Pricing and Reimbursement: The Increasing Control by Governments
2.1 Price is the Key (I)
2.2 Reimbursement: Who Pays?
2.3 Price is the Key (II)
2.4 The Reimbursement System Described
2.5 Different Reimbursement Systems, Different Drug Prices
2.6 The Different Systems of Reimbursement
2.6.1 International Reference Pricing
2.6.2 Therapeutic Class Reference Pricing
2.6.3 Profit Controls
2.6.4 Doctors' Budgets
2.6.5 Direct Price Controls
2.6.6 Price-Volume Limitations
2.6.7 Rebate Requirements
2.6.8 Reimbursement Restrictions
2.6.9 Fourth Hurdle Requirements/Cost-Effectiveness Reviews
2.6.10 Positive/Negative Lists
2.7 The Influence of Parallel Trade on Drug Pricing
2.8 Marketing Approval is Necessary Prior to Reimbursement
2.9 Pricing Approval Comes After Marketing Approval
2.10 The High Costs of Bringing a Drug to Market
2.11 Drug Purchase Decisions by Doctors Are All-Important in Drug Sales
2.12 The Price Inelasticity of a Doctor’s Decision over Drug Prescription
2.13 Governmental Influence on Doctors' Prescribing Choices Lowers Drug Costs
2.14 Healthcare Costs Throughout the Developed World are Increasing
2.15 Drivers of Drug Expenditure
2.16 Restraints on Drug Expenditure
2.17 In Proportion to its GDP the US Spent the Most on Healthcare
2.18 All Governments Want to Cut Drug Expenditure: Drug Price Control is a Powerful Budgetary Measure
2.19 The Market and Company Factors that Influence Drug Pricing
2.20 OTC Drugs are Not Price Controlled
2.21 Generic Drugs Lower Healthcare Costs
2.22 Increasing Use of Generic Drugs Will Create Savings for Healthcare Systems
2.23 Price Controls May Affect Drug Launches
2.24 Cost Containment Methods have had Limited Effects?
2.25 The Future of Global Pricing and Reimbursement

3. Pricing and Reimbursement in the US: The Advent of Price Controls?
3.1 An Overview
3.2 US and European Drug Pricing Models Compared
3.3 The US Healthcare System
3.4 Pharmacy Benefit Managers (PBMs): The Middlemen
3.5 The Development of Present-Day Managed Care in the US
3.6 The Cost of Private Health Insurance Premiums
3.7 Private Health Insurance and State Organised Healthcare
3.8 The US Managed Healthcare System
3.9 What are HMOs?
3.10 PPO Plans
3.11 POS Plans
3.12 Different MCOs Compared
3.13 Employers and the US Healthcare System: The Rise of PPO Health Plans
3.14 Health Insurance Options for the Unemployed: COBRA
3.15 The Uninsured Patient in the US
3.16 Medicaid: Overview
3.17 Medicare: Overview
3.18 Drug Reimbursement, MCOs and Medicare/Medicaid
3.18.1 Medicare/Medicaid
3.18.2 Private Insurers
3.18.3 HMOs
3.19 The US Spends Nearly 14% of its GDP on Healthcare
3.20 Private Insurance Pays for Over 35% of US Healthcare Needs
3.21 In 2008 US Prescription Drug Costs Constituted 10% of Healthcare Spending
3.22 US Healthcare Spending Increased by over 10% in 2008
3.23 US Pricing and Federal Discounts
3.24 US Drug Prices are the Highest in the World
3.25 Prices for the Same Drug Can Vary
3.26 Medicare Prescription Drug Improvement and Modernization Act, 2003
3.27 The Patient Protection and Affordable Care Act of 2010
3.27.1 A Brief Overview
3.27.2 Reforms in the New Insurance Marketplace
3.27.3 Reforms Medicare Advantage (MA)
3.27.4 Reforms Part D Coverage Gap: "Donut Hole" Coverage
3.27.5 Reforms in the Retiree Drug Plans

4. Pricing and Reimbursement in Europe: Change in What Ways?
4.1 Reference Pricing is a Common P&R Mechanism in Europe
4.2 Reference Pricing Causes Drugs to be Priced Below the Market Level
4.3 Price Differentials in the EU
4.4 Generic Prescribing and Substitution Varies Throughout Europe
4.5 Generic Use Varies in Europe
4.6 EU Accession Will Encourage Price Differentials and Generic Usage
4.7 A Single European Price for Pharmaceuticals is Unlikely
4.8 European Hospital Drug Prices
4.9 Parallel Trade is Used as a Cost Containment Method
4.10 The Impact of the Euro on Drug Prices
4.11 Different Forms of EU Healthcare Financing
4.12 Single Payer
4.13 Social Insurance – Sickness Funds
4.14 Private Insurance
4.15 The Payment of European Pharmacists
4.16 The Future of Drug Pricing and the Market for Drugs in Europe

5. Pricing and Reimbursement in Germany
5.1 An Overview
5.2 The German Pharmaceutical Market in 2010
5.3 German Healthcare System Recovering from Financial Shortfall
5.4 The German Response to its Healthcare System Shortfall
5.5 The Effect of Reunification on the German National Health System
5.6 Germany has Fastest Drug Approvals Process in Europe
5.7 German Drug Prices are Higher than the European Average
5.8 The German Reference Price System Now Includes Patented Drugs
5.9 Reference Pricing
5.10 Criteria for Reimbursement and Negative Lists
5.11 The Limits on Co-Pay
5.12 Germany Endorses Generic Substitution
5.13 Budgets Imposed on Doctors in an Attempt to Cut Drug Costs
5.14 Healthcare Reform in 2007
5.15 Compulsory Health Insurance for Everyone Living in Germany
5.16 German Pricing and Reimbursement Systems Have Become More Strict

6. Pricing and Reimbursement in France
6.1 An Overview
6.2 The Price of Drugs in France Matches the European Average
6.3 The French Healthcare System
6.4 Healthcare Coverage
6.5 The French Healthcare System
6.6 Voluntary Health Insurance (VHI)
6.7 Out-of-Pocket Payments
6.8 French Drug Pricing is Tightly Regulated
6.9 An Informal Reference Pricing System Exists in France
6.10 Wholesale and Pharmacy Prices
6.11 The Criteria for Reimbursement
6.12 The Size of Reimbursement
6.13 The Nature of the Drug Price Agreements Between the Pharmaceutical Industry and the CEPS
6.14 Generic Substitution as an Attempt to Reduce Drug Costs
6.15 French Health System Reform – How Successful?

7. Pricing and Reimbursement in Italy
7.1 An Overview
7.2 The Italian Healthcare System
7.3 Drug Reimbursement System
7.4 Authorities for Reimbursement Decision Making
7.5 The AIFE: Setting the Drug Price
7.6 Italian Pharmacies
7.7 Changes in Distribution Margins
7.8 Italian Pharmaceutical Law
7.9 The Introduction of Generics
7.10 The Effect of Drug Pricing Strategies on Italian Drug Spending
7.11 The New System

8. Pricing and Reimbursement in Spain
8.1 An Overview
8.2 The Spanish National Health System (SNS)
8.3 Reimbursement Levels
8.4 The Criteria for Reimbursement and Negative Lists
8.5 Drug Authorisations and Other Bodies
8.6 The Pricing of Drugs in Spain
8.7 Reference Pricing System in Spain
8.8 The Penetration of Generics is Low in Spain
8.9 Spanish Parallel Trade and Dual Pricing
8.10 The Price of Drugs in Spain
8.11 Spain Practises Generic Substitution
8.12 The Distribution of Drugs
8.13 Cost Containment and Prescribers’ Budgets
8.14 New "Health Pact" in Spain, 2010
8.15 Spain Uses Price Freezing as a Cost-Saving Procedure

9. Pricing and Reimbursement in the UK
9.1 An Overview
9.2 Drug Approval Process
9.3 Healthcare Coverage
9.4 Patient Co-Payment
9.5 The Pharmaceutical Price Regulation Scheme
9.6 New PPRS Regulations in 2009
9.7 Pharmaceutical Companies and the Monitoring of Drug Profits
9.8 National Institute of Clinical Effectiveness (NICE) – How Effective in Reducing Drug Costs?
9.9 Pharmacy Payments
9.10 The Criteria for Reimbursement
9.11 The Size of Reimbursement
9.12 Prescribers’ Budgets are Unpopular with Some Doctors But Reduce Drug Expenditure
9.13 Generic Use is Increasing
9.14 Drug Prices Have Been Reduced in the UK Market
9.15 Prescribers’ Budgets – the Most Successful Aspect of UK's Pricing and Reimbursement System?

10. Pricing and Reimbursement in Japan
10.1 An Overview
10.2 The Japanese Healthcare System
10.3 Revisions to the Health Insurance Law Caused an Increase in Co-Pay
10.4 Japanese Drug Pricing
10.5 The Japanese Reference System
10.6 The Re-examination and Re-evaluation Drug Systems are Used to Predict Drug Safety
10.7 Japan Has Reduced Healthcare Spending Including that on Drugs
10.8 Generic Drug Prices Are Relatively High
10.9 Japan Promotes Generic Substitution to Reduce Costs
10.10 The Japanese Wholesale Market in Consolidation
10.11 Bungyo: the Separation of Dispensing and Prescribing is Rapidly Increasing
10.12 Bungyo Separation Has Dramatic Effect on Retail Pharmacies
10.13 New Developments: Contract Manufacturing Will Increase
10.14 New Drug Approval and Licensing System Will Cut Drug Approval Time
10.15 Faster Approval Times Will Facilitate Entry into the Japanese Pharmaceutical Market
10.16 The Japanese Government Directly Controls Drug Prices through Price Cuts

11. Expert Views on Pricing and Reimbursement
11.1 Dr Sanjay Bajpai, MS, MABA, PhD, President, Institute of Pharmaceutical Management, New York, USA
11.1.1 Key Issues in US Pricing & Reimbursement
11.1.2 The Current State of Affairs in the US
11.1.3 Insurance Coverage and the Uninsured
11.1.4 Key Changes in US Healthcare Reforms
11.1.5 US and the European Healthcare Systems
11.1.6 Generic Medicines
11.2 Dr Cyrus A. Chowdhury, Vice President, Global Market Access, Insight Strategy Advisors, New York, USA
11.2.1 On Emerging Markets
11.2.2 On BRIC Nations and CEE
11.2.3 On Latin America, Middle East and Africa
11.2.4 Factors Affecting Market Development
11.2.5 On Disease Prevalence in Developing Countries
11.2.6 Long Term Success in Emerging Markets
11.2.7 Cost Burden of New Therapeutic Products

12. Conclusions
12.1 Drug Pricing Controls Will Become More Stringent
12.2 Developments in the US Pharma Market Sector
12.3 Concluding Thoughts

List of Tables
Table 2.1 Comparative Drug Prices in Selected Developed Countries, 2010
Table 2.2 Percentage Excess in Drug Prices in the US Compared to Selected Countries, 2003
Table 2.3 Drug Purchase Decision Making, 2010
Table 2.4 Healthcare Spending by Country, 2007
Table 2.5 Total Health Spending and Drug Expenditure per Patient, 2007
Table 2.6 The Top Five Countries by Out-of-Pocket (OOP) Expenditure on Health, 2007
Table 2.7 The Top Five Countries by Total Expenditure on Health, 2007
Table 2.8 The Top Five Countries by Total Expenditure on Drugs as Percentage of Total Expenditure on Health, 2007
Table 2.9 Top Five Countries by Total Health Spending per Capita, 2007
Table 2.10 Factors that Influence Drug Prices, 2010
Table 2.11 Current Practices in the Development of Increased Generic Use, 2010
Table 3.1 Annual Growth in Private Health Insurance Premiums, 1989-2004
Table 3.2 A Comparison in Average Plan Costs Between Several Californian HMOs, 2004
Table 3.3 Monthly Insurance Premiums: Single and Family Enrolled in Group Health Plans, 2004
Table 3.4 US Spending on Healthcare in Comparison with Other Countries, 2007
Table 3.5 Sources of US Healthcare Payments, 2007
Table 3.6 US Healthcare Spending by Category, 2008
Table 3.7 Annual Growth Rates by US Healthcare Spending Categories, 2008
Table 3.8 US Healthcare Spending, 2000-2005
Table 3.9 The Relative Contributions of Price, Usage and Drug Type to Increases in Pharmaceutical Prices, 1997-2002
Table 3.10 A Comparison of Prescription Drug Prices For a 30-day supply: US and Europe, 2010
Table 3.11 Timeline of Key Elements for the PPACA, 2010-2012
Table 3.12 Timeline of Key Elements for the PPACA, 2013-2020
Table 4.1 Price Control or Drug Supply Control Mechanisms as Part of P&R Systems, 2010
Table 4.2 Pricing and Reimbursement Systems of Selected European Countries, 2005
Table 4.3 The Two Broad P&R Systems in Europe, 2010
Table 4.4 EU Countries and Reference Pricing, 2005
Table 4.5 Generic Use in Europe, 2004
Table 4.6 The Advantages and Disadvantages of a Single European Price for All Drugs, 2010
Table 5.1 Aspects of German Healthcare Spending, 2007
Table 5.2 Examples of Drug Reforms in Germany, 2004-2010
Table 6.1 Aspects of French Healthcare Spending, 2009
Table 7.1 Healthcare Statistics for the Italian Market, 2007
Table 7.2 Reimbursement Classes of Drugs in the Italian Market, 2010
Table 8.1 Aspects of Spanish Healthcare Spending, 2007
Table 8.2 Reimbursement Categories in the SNS, 2010
Table 9.1 Aspects of UK Healthcare Spending, 2007
Table 9.2 Pharmaceutical Companies Participating in the PPRS, 2009
Table 9.3 Prescription Charges in the UK, 2010
Table 9.4 People Entitled to Free Prescriptions in UK, 2010
Table 9.5 How a 'QALY' is Calculated by NICE, 2010
Table 9.6 UK Department of Health Classes of Generic Drugs, 2010
Table 10.1 Aspects of Japanese Healthcare Spending, 2007
Table 10.2 Classification and Rate of Japanese Drug Pricing Premiums, 2010

List of Figures
Figure 2.1 Leading Generic Drug Markets: Market Shares, 2008
Figure 3.1 US Healthcare System, 2010
Figure 3.2 US Health Insurance Status, 2007