Pharmaceutical Pricing and Reimbursement Strategies for market access across the US, Europe, Japan and other key geographies

Executive Summary 10
An introduction to price optimization 10
Pricing and reimbursement in North America 11
Pricing and reimbursement in Europe 12
Pricing and reimbursement in Japan and the rest of the world 13
Global pricing strategies 14
Lifecycle pricing strategies 15

Chapter 1 An introduction to price optimization 18
Summary 18
Introduction 19
Delivering a return on investment 19
Sustained R&D productivity shortfall 19
Impending blockbuster patent expiries 23
Healthcare cost containment 24
Cost-containment initiatives 26
Pharmaceutical spend cost containment 27
Key issues impacting on pricing 29
Pharmaceutical price optimization 29
Pricing and reimbursement regulations 30
Reference pricing 34
Pharmacoeconomic evaluations 34
Parallel imports and reimportation 35
Generic substitution 37
Global versus lifecycle pricing 38

Chapter 2 Pricing and reimbursement in North America 42
Summary 42
Introduction 43
US pricing regulations 43
Medicare 44
Medicaid 46
Private healthcare 47
Pharmacoeconomics 48
Generic substitution 50
Recent developments in the US 51
Medicare Part B revisions 51
Medicare Part D – one year on 52
Average manufacturer price 53
Re-importation in decline 54
Follow-on biologics 55
Reverse payments to generic companies 56
Future pricing scenarios in the US 58
Best case pricing scenario 58
Worst case pricing scenario 59
Most likely pricing scenario 60
Canadian pricing regulations 60
Federal measures 61
Provincial measures 62
Common drug review expansion 64
Patented Medicine Price Review Board progress 65
 

Chapter 3 Pricing and reimbursement in Europe 68
Summary 68
Introduction 69
European pricing regulations 69
French pricing regulations 70
State of the industry 71
Recent developments in France 72
Parallel trade 72
Generic substitution 72
German pricing regulations 73
State of the industry 74
Recent developments in Germany 74
The Statutory Health Insurance Competition Enhancement law 74
Italian pricing regulations 75
State of the industry 77
Recent developments in Italy 77
Regional cost-containment 77
2007 Finance Law 78
Spanish pricing regulations 78
State of the industry 80
Recent developments in Spain 81
Regional cost-containment 81
Modified reference price system 82
Anti-parallel trade strategies 82
UK pricing regulations 83
Recent developments in the UK 84
The future of the PPRS 84
Risk sharing schemes 85
Declining parallel trade 86
Expanding the NICE remit 86
Future pricing scenarios in Europe 87
Best case pricing scenario 87
Worst case pricing scenario 88
Most likely pricing scenario 89
 

Chapter 4 Pricing and reimbursement in Japan and the rest of the world 92
Summary 92
Introduction 93
Japanese pricing regulations 93
Recent developments in Japan 95
Biennial price cut 95
Generic substitution introduced 97
Future pricing scenarios in Japan 97
Best case pricing scenario 98
Worst case pricing scenario 99
Most likely pricing scenario 100
Australian pricing regulations 101
Benchmark pricing 102
Cost plus method 102
Average monthly treatment cost 103
Prices for new items 103
Recent developments in Australia 104
Pharmaceutical Benefits Scheme reform 104
Chinese pricing regulations 104
Recent developments in China 105
New drug pricing procedures 105
Price cuts 106
Generic prescribing 106
 

Chapter 5 Global pricing strategies 108
Summary 108
Introduction 109
Local optimization 109
Market access and reimbursement 109
Free price markets 110
Orphan drugs 111
Pharmacoeconomic evaluations 111
Global coordination 113
Launch sequence 113
EU launch order 114
Optimal price differentials 115
Implementing global pricing strategies 119

Chapter 6 Lifecycle pricing strategies 122
Summary 122
Introduction 123
Launch phase pricing considerations 123
Submission dossiers 123
Identifying key decision makers 125
Failure to secure reimbursement 126
Working with decision makers 126
Applying pressure through lobbying 127
Brokering deals 127
Patent protected phase pricing considerations 128
Case study: the respiratory market 128
Innovative pricing strategies 131
Patent expiry phase pricing considerations 132
Price changes 132
US patent expiry 133
European patent expiry 134
Case study: generic simvastatin 135
Biosimilar pricing 136
Implementing lifecycle pricing strategies 137

Chapter 7 Appendix 140
Glossary 140
Sources 142

List of Figures
Figure 1.1: Declining trend in number of NDA and NME approvals, 1997-2006 21
Figure 1.2: Rise in the cost of drug development, 1975-2001 23
Figure 1.3: US patent expiries for top ten selling drugs, 2006-2011 24
Figure 1.4: Trends in healthcare spending as a proportion of GDP, 1970-2005 26
Figure 1.5: Pharmaceutical expenditure as a share of total healthcare expenditure in 2005 27
Figure 2.6: Source of prescription drug expenditures, 2005-2006 53
Figure 2.7: Canadian cross border internet pharmacy sales, 2002-2006 55
Figure 2.8: Compensatory final settlements (reverse payments), 2004-2006 57
Figure 3.9: Average ex-factory drug prices in key European markets, 2005 81
Figure 4.10: NHI price cuts by therapeutic class, 2006 96
Figure 5.11: Market share for new products launched in last five years, 2005 110
Figure 5.12: External reference pricing in Europe, 2007 117
Figure 5.13: Global pricing and the interaction between countries 118
Figure 5.14: Global pricing strategies 120
Figure 6.15: Leading respiratory drugs by global sales, 2006 129
Figure 6.16: Lifecycle pricing strategies 138

List of Tables
Table 1.1: Number of NDA and NME approvals by the FDA, 1990-2006 20
Table 1.2: R&D expenditure within the US and abroad by PhRMA members, 1980-2006 22
Table 1.3: Trends in healthcare spending as a proportion of GDP, 1970-2005 (%) 25
Table 2.4: Future pricing scenarios in the US 58
Table 3.5: Future pricing scenarios in Europe 87
Table 4.6: Co-payments for drugs/services in Japan 94
Table 4.7: Classification for price premium (Japanese healthcare system) 95
Table 4.8: Future pricing scenarios in Japan 98