Biomedical Engineering Reference
In-Depth Information
1.2.3
Price Pressure Increases Even for Drugs Under
Patent Protection
Even for new drugs that still enjoy life years under patent protection, price pressure
is increasing. The main reason for this is that payers—be it insurers or govern-
ments—are increasingly under pressure from ageing. Older patients typically bear
higher costs than young patients because a great number of older patients suffer
from chronic diseases (e.g., diabetes), neurodegenerative diseases (e.g., Alzheimer,
Parkinson), rheumatic diseases or cancer. Thus, in developed countries where much
of the population is ageing (such as in the USA and Europe), the payers in these
countries are increasingly pressured to attempt to lower healthcare expenses. Drug
costs are an ideal target for such efforts since saving on drug prices seems to hurt
only large multinational pharmaceutical fi rms, which typically does not concern the
public at large. Attempts to lower prices for drugs that are under patent protection
take many forms.
Many countries have a system in which prices are regulated, i.e., the government
fi rst needs to approve the price that a pharmaceutical fi rm will charge before the
latter is granted market access. Often governments examine the prices of the same
drug in reference countries and determine that local prices cannot rise above those
reference prices. Alternatively, governments may determine a therapeutic reference,
for instance drugs that bring similar benefi ts, and demand that prices should be
comparable to that of therapeutic equivalents. Drugs that according to payers
demand too high a price may be “punished” by several methods: they may be put in
a lower prescription tier, thus depressing sales volumes; they may be excluded from
the reimbursement system; or they may even be denied market access altogether.
Price pressure has signifi cantly complicated the task of pharmaceutical fi rms.
The elaborate use of cross-country reference pricing systems has led to a very com-
plicated optimization problem for fi rms: they need to decide which countries to
enter fi rst and at what price, and which countries they should possibly not enter so
as not to spoil global pricing levels. Pricing models have shifted, so fi rms need to
develop competences with very new pricing models. For instance, pay-for-
performance models, in which fi rms only receive payment if certain health out-
comes are achieved in the target population, are becoming increasingly popular.
Tendering has also become more popular, even for branded molecules, if multiple
options exist within a category.
1.2.4
The Pharmaceutical Industry Has Experienced a Serious
Deterioration in its Corporate Image
The corporate image of the pharmaceutical industry has deteriorated. Global fi rms,
such as those from the tobacco, fi nance, energy and pharmaceutical industries, are
increasingly under societal pressure. In the case of pharmaceutical fi rms, the
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