Pharmaceutical Price Regulation Research Articles

Do No Harm? Unintended Consequences of Pharmaceutical Price Regulation in India

The Drugs (Prices Control) Order of 2013 in India regulated the prices of certain essential and life-saving drugs to ensure their affordability and availability, expecting an increase in sales of those drugs. The authors study the effects of the regulation on sales volumes of each regulated drug using a synthetic control approach with sales data from a comparable country that did not experience a regulatory change. They assess the robustness of the results via multiple empirical approaches to triangulate the findings. Contrary to the order's objectives, they find that sales volumes declined for regulated drugs. Since the order placed restrictions on production levels and on drugs exiting the market, the lowered margins of regulated drugs could have pushed pharmaceutical firms to reduce their marketing expenditures on them. The authors provide evidence of such a reduction using detailing data from a large pharmaceutical firm. The findings illustrate that this shift in detailing adversely affected prescriptions from physicians without formal medical degrees who treat poor and disadvantaged people in India—patients that the order was intended to help the most. A survey the authors conducted shows that these physicians rely on detailing more than medically trained doctors. Taken together, the results provide insights into the strategic actions of firms when faced with regulations, and highlight their unintended consequences. The generalizable nature of the study's findings across a broad set of medications has implications for governmental agencies in terms of the need to account for the entire ecosystem when implementing such regulations.

What condition leads to an unreasonable pharmaceutical price? Impact research on the effect of medical service provision on pharmaceutical price regulation based on fuss-set QCA.

Given that the pharmaceutical market has experienced severe market failures, it is necessary that we regulate pharmaceutical prices for many countries. Toward ensuring that pharmaceutical price regulation is efficient, this study investigated the antecedents that lead to an unreasonable pharmaceutical price. Based on 33 case-study countries, this study utilized QCA to analyze the conditional configuration of unreasonable pharmaceutical prices from the perspective of medical service provision. The results showed that the causes of unreasonable pharmaceutical prices are configured by medical service provision, especially cost compensation systems and payment mechanism. This study's conclusions contribute to the research on pharmaceutical price regulation and the institution of medical service provision.

Do No Harm? Unintended Consequences of Pharmaceutical Price Regulation in India

Do No Harm? Unintended Consequences of Pharmaceutical Price Regulation in India

Price of medicines in a small market country: a comparative approach

Abstract Objectives Affordability and availability of medicinal products depend on governmental policies, healthcare budgets and pricing. Pharmaceutical price regulation can improve the accessibility and affordability of essential medicinal products. In Europe, medicinal product prices are assigned individually by each country. The study aimed to compare prices of medicinal products indicated for cardiovascular (n = 18) and respiratory disease (n = 9) available for retail in community pharmacies in five European countries. Methods Unit dose medicinal product prices in North Macedonia, Malta, Slovenia, Greece and the UK were compared. Key findings Malta had the highest unit dose prices for the majority (n = 11) of medicinal products used for cardiovascular disease and the majority (n = 8) of the medicinal products indicated for respiratory disease. Conclusion Variation in prices of commonly dispensed medicinal products exists. Having a more thorough knowledge about the prices of medicines in different countries can contribute to making policies that will ultimately make medicines more affordable and accessible to patients.

Why healthcare market needs government intervention to improve access to essential medicines and healthcare efficiency: a scoping review from pharmaceutical price regulation perspective

AbstractBackgroundAccess to quality essential medicines at affordable price to patients in the healthcare market is one of the main goals of universal health coverage and health-related sustainable development goals. Healthcare market is imperfect, and the government cannot ensure access to essential medicines if the market is left to operate under invisible hand control. This scoping review was conducted with intention to provide the clear picture on impact of pharmaceutical price regulation on access to essential medicines, drug innovation and launching.MethodsWe searched articles written in the English language since January 2000 from PubMed, Embase, Scopus, Ovid/Medline and Google scholar with systematic search query.ResultsAccess to essential medicines, which is defined in terms of availability, affordability, accessibility, acceptability and quality of drugs, can be improved by pharmaceutical price regulation. Countries can use different price regulation strategies based on their healthcare objectives and priority healthcare needs. Country-specific pharmaceutical price regulation could not significantly affect drug innovation and launching. However, supportive strategies such as open public funding for drug innovation research, providing innovation awards and strong patent rights can counterbalance the effect of price regulation on innovation and drug development research in developed countries.ConclusionRegulating pharmaceutical pricing system is one of the key strategies to ensure access to essential medicines. Countries that have implemented pharmaceutical price regulation system (Germany, the UK, Canada and Iran) have achieved better access to essential medicines. However, the US and Ethiopian health systems that are unregulated concerning pharmaceutical pricing had a great challenge of affordability of essential medicines. Therefore, setting country-specific pharmaceutical price regulation system along with additional strategies to improve drug innovation is critical to ensure access to essential medicines.

Influence of Government Price Regulation on the Price, Volume and Spending of Antibiotics in China: A Controlled Interrupted Time Series Study.

Background: Chinese government established maximum retail prices for antibiotics listed in China’s National Reimbursement List in February 2013. This study aimed to analyze the impact of pharmaceutical price regulation on the price, volume and spending of antibiotics in China. Methods: An interrupted time series design with comparison series was used to examine impacts of the policy changes on average daily cost, monthly hospital purchase volume and spending of the 11 price-regulated antibiotics and 40 priceunregulated antibiotics in 699 hospitals. One intervention point was applied to assess the impact of policy. Results: After government price regulation, compared to price-unregulated antibiotics, the average daily cost of the price-regulated group declined rapidly (β=-5.68, P<.001). The average hospital monthly purchase spending of priceregulated antibiotics also decreased rapidly (β=-0.49, P <.010) and a positive trend change (β=0.04, P<.001) in average hospital spending of price-unregulated antibiotics was found. Conclusion: Government regulation can reduce the prices and spending of price-regulated antibiotics. To control increasing expenditure, besides price caps regulation, factors determining drug utilization also need to be considered in policy designing.

Identifying Industry Margins with Price Constraints: Structural Estimation on Pharmaceuticals

We develop a structural model to investigate the effects of pharmaceutical price regulation on demand and on manufacturers’ price-setting behavior in France. We estimate price-cost margins in a regulated market with price constraints and infer whether these constraints are binding, exploiting cost restrictions across drugs, which come from observing the same drugs in potentially price-constrained markets (France) and in markets where prices are unregulated (United States and Germany). Our counterfactual simulations suggest that price constraints generated modest savings for anti-ulcer drugs in 2003–2013 (2 percent of total expenses), relative to a free pricing scenario, and shifted consumption from generic to branded drugs. (JEL C51, D24, I18, L13, L51, L65)

PCP10 - PATIENT ACCESS TO NEW MEDICINES; THE CHANGING LANDSCAPE

The market access landscape has changed substantially since the introduction of the National Institute for Health and Care Excellence (NICE) in 1999 and the Pharmaceutical Price Regulation Scheme (PPRS) in 2009 (updated in 2014). Increasingly formalised pricing mechanisms were introduced in the 2009 PPRS to allow a range of options to industry, including Patient Access Schemes (PAS). These PAS have since evolved; currently simple discount (confidential upon request), and complex schemes are available. However, the introduction of NHS England also brought Commercial Access Agreements (CAAs) and Market Access Arrangements (MAAs), and the range of options in the future may be even more innovative, albeit with simplicity at their core, relative to complex PAS. A key driver for more innovative approaches comes from ground-breaking new regenerative therapies, such as CAR T-cell therapy in oncology. CAR T-cell therapy is administered once, and patients who remain in remission for over 5 years are considered cured. The University of York and NICE assessed various pricing models and considered a leasing payment model for CAR T-cell therapy worthy of further exploration. This model would spread the cost of providing patient treatment over time; however, there are potential barriers, including the standing operating protocol and standing financial flows within the NHS. While CAR T-cell therapy is likely to be provided by only a small number of specialist centres, this would not be the case for less-specialised treatments that follow a similar model of high upfront costs for long-term benefits. Other solutions may be required for routinely commissioned treatments that are approved through the NICE Technology Appraisal process. This provides the potential for industry and the NHS to collaborate to identify strategies that while innovative are both acceptable and implementable. These concepts will be explored further and summarised.

OP20 When Are Nationally Available Discounts Introduced In NICE Appraisals

Introduction:Offering a nationally available discount has become common to increase the chance of being recommended by the National Institute of Health and Care Excellence (NICE). This study reviewed all NICE technology appraisals (TAs) since October 2007 to determine whether a national available discount was submitted, and explore when these discounts were introduced.Methods:All TAs between October 2007 and August 2017 were reviewed. The timing of the nationally available discount submission was allocated into one of four categories: initially submitted; initially submitted but changed; introduced after submission; or, other discount. An analysis was conducted to examine whether there was a temporal pattern in the introduction of nationally available discounts before or after January 2014, when the current Pharmaceutical Price Regulation Scheme (PPRS) came into effect.Results:Before 1 January 2014, a nationally available discount was only used in the minority of cases across recommended (22 percent of cases) and not recommended (19 percent) technologies. In the period since 1 January 2014, use of a nationally available discount increased overall, but to a greater degree in technologies ultimately receiving a positive recommendation from NICE (not recommended: 19 percent to 39 percent; recommended: 22 percent to 59 percent). In the period since 1 January 2014, the proportion of technologies with a positive recommendation where implicit price flexibility during the appraisal was revealed increased (from 20/186) to 40/182.Conclusions:With the current PPRS, the majority of technologies have offered a nationally available discount, most commonly at the time of submission; however, there is increasing evidence of implicit price flexibility during the appraisal process to achieve a positive recommendation.

No Patient or Illness to be Treated? The Hazards of Investigations Carried Out Under Article 102 TFEU for Price-Related Conduct (The Netherlands)

This article discusses the decision of the netherlands competition authority in the AstraZeneca case and puts this in a broader perspective of regulation in the pharmaceutical market, price regulation and responses to market failures.

UK Value-Based Assessment: Will Scotland's Smc Approach It In The Same Way?

In May 2010 the UK government set out its intentions to reform the current method of pricing branded medicines and introduced a new system of value-based pricing (VBP). This was to replace the Pharmaceutical Price Regulation Scheme (PPRS) which expired at the end of 2013. With discussion still ongoing, and the PPRS renewed up until end of 2018, it has been indicated that VBP will no longer relate to medicines’ pricing, but instead will be a reshaping of the Health Technology Assessment (HTA) model employed by the UK in its appraisal of new medicines, and renamed Value Based Assessment (VBA). As medicine assessment is devolved in the UK, performed by NICE in England and the SMC in Scotland, we seek to understand whether the SMC will adopt the same approach to VBA as NICE The research was conducted through in-depth secondary research and interviews with stakeholders, including payers and KOLs, in UK Both NICE and the SMC have indicated they will continue to use QALY as a measurement of clinical and cost effectiveness while also incorporating issues such as burden of illness and wider societal impact in their assessment. However, their approach to conducting such assessments may differ with the SMC suggesting using a new system of patient and clinician engagement (PACE), currently in use for the appraisal of medicines for end of life or rare conditions (orphans), as a wider process to determine Scotland’s requirement for a value based approach to assess all new medicines Manufacturers would be encouraged to closely follow the outcomes from the new PACE system, incorporated into the SMC assessment for end of life and orphan therapies, to ensure readiness for the introduction of VBA in Scotland.

Effects of pharmaceutical price regulation: China's evidence between 1997 and 2008

This study uses a macro-level data during the period between 1997 and 2008 to evaluate the effects of China's pharmaceutical price regulations. We find that the regulations exert short-run effects on pharmaceutical price indexes, reducing them by less than 0.5 percentage points. The effects can be slightly reinforced if the price regulations were to be applied to more medicines. The price regulations fail to reduce household health expenditures and the average profitability of the pharmaceutical industry. Moreover, firms on the break-even point are worse off after the implementation. Finally, although these regulations have no significant effects on the prices of medicinal substitutes or complements, they increase the importation of expensive medicines. These findings are also consistent with consumer perceptions of the pharmaceutical policies, based on the household survey data conducted in 2008.

How the Assessment of Burden of Illness might change NICE Decisions: A Retrospective Analysis under Value-Based Pricing

Background: Value based price (VBP) is the price that reflects the value to patients, carers, society and the economy which delivers health benefits that exceed the health predicted to be displaced both elsewhere in the NHS and in the welfare economy, due to their additional cost. VBP is constituted of the the burden of illness (BoI), the cost of illness due to its severity and unmet need. It will replace the existing PPRS in September 2014. Objective: To address the question of how moving to a VBP system from the current Pharmaceutical Price Regulation Scheme (PPRS) might change selected old non-recommended and optimised NICE appraisal decisions dependent on the BoI, which considered to be a key driver of VBP. Methodology: Two classification measures were identified and used in order to categorise the selected diseases into higher, medium and lower burden. After a categorisation matrix was constructed, information about the BoI assessment along with the cost and clinical effectiveness of each disease were applied to the analysis so as to make recommendations of how NICE decisions might have changed under VBP and the BoI assessment. Results: A categorisation of the diseases into higher, medium, and lower burden was attempted and it was evident that the decisions differed with respect to the different measurement tool that were used. In some cases BoI played a trivial role into the assessment of NICE decisions due to the fact that clinical effectiveness was considered a more important factor. In other cases, where the ICER was bounded into the recommended range of £20,000 and £30,000, the nonrecommended or optimised decisions might change under VBP.

Health-Related Productivity Loss: NICE to Recognize Soon, Good to Discuss Now

The National Institute for Health and Care Excellence (NICE) will soon consider the societal benefit of drugs, including their impact on productivity. Chief Executive Sir Andrew Dillon says NICE was asked by the Department of Health ‘‘to take account of wider societal benefit. For example, if we have a condition that significantly reduces our ability to undertake the daily activities that most of us would regard as normal, such as paid employment or caring for children or relatives’’ [1]. Until now, NICE has upheld that only health sector costs may be incorporated in cost-effectiveness analyses, not the ‘indirect’ costs such as productivity loss [2, 3]. Numerous reasons were given for this position, e.g., productivity costs were outside the budget purview or incorporating them would discriminate against non-working populations, including the elderly [4]. Critics of NICE retorted that ignoring productivity was tantamount to discrimination against the young, to valuing marginal gains in labor output at zero [4]. Time and again, NICE put these arguments aside. Why the sudden change of heart? It calls to mind the UK’s recent attempt to replace its Pharmaceutical Price Regulation Scheme (PPRS), a voluntary agreement between the Association of the British Pharmaceutical Industry and the government and set to expire in December 2013, by a system of ‘value-based pricing’ (VBP). In light of criticism that the costeffectiveness-based threshold set by NICE was too high, VBP was promoted as a new way to link the price of medications to their value to patients and society. Talks around VBP brought together various lobbies, who agreed that VBP should take the ‘societal perspective’ and account for productivity loss. Although the VBP policy initiative died on the table (the PPRS of old is still in effect [5], albeit with caps on overall pharmaceutical spending growth over the next few years), the beneficiary of this round of politicking is the societal perspective. This is indeed good news for the welfarists. There are, however, issues around the measurement and valuation of productivity loss that have been given short shrift. Our aim is to highlight some of these issues, as cost-effectiveness studies incorporating productivity are likely to advance quickly in the wake of NICE’s decision. The inclusion of productivity losses in cost-effectiveness analyses has always provoked concerns over measurement and valuation, including problems around double-counting, equity, and perspective [6, 7]. Despite these concerns, decision making will be best informed if studies of new drugs explicitly include all societal costs related to the disease being treated. By clearly presenting all cost components separately alongside methodological assumptions, decision makers will be permitted to assess the impact of different assumptions on the final study results. This has been supported by the recent reporting guideline, Consolidated Health Economic Evaluation Reporting Standards [8, 9]. So what components of productivity loss should be considered? People may lose their paid employment because of their health problems (job loss or early retirement). For people maintaining paid employment, some will reduce their routine work time, or experience periodic absences because of their poor health. While people are W. Zhang A. H. Anis (&) Centre for Health Evaluation and Outcome Sciences, St Paul’s Hospital, 588-1081 Burrard Street, Vancouver, BC V6Z 1Y6, Canada e-mail: aslam.anis@ubc.ca

Determining the price for pharmaceuticals in Germany: comparing a shortcut for IQWiG's efficiency frontier method with the price set by the manufacturer for ticagrelor

Under the recently enacted pharmaceutical price and reimbursement regulation in Germany, manufacturers and payers negotiate an appropriate reimbursement price for new products. If one of the parties involved wishes so, a formal evaluation of costs and benefits will be conducted by the Institute for Quality and Efficiency in Health Care (IQWiG). IQWiG makes recommendations for a reimbursement price based on the ‘efficiency frontier’ in a therapeutic area. The analysis requires, when applicable, to calculate savings in other areas of the healthcare system (cost offsets) and healthcare costs during the years of life gained (i.e., downstream costs). A recent paper described the conditions under which calculation of downstream costs is not required. The purpose of this study is to use the drug ticagrelor as an example to demonstrate this shortcut for the efficiency frontier method. The analysis shows that applying the IQWiG approach would result in substantial savings.

A theoretical and empirical investigation into the willingness-to-pay function for new innovative drugs by Germany’s health technology assessment agency (IQWiG)

Under the recently enacted pharmaceutical price and reimbursement regulation in Germany, new drugs are subject to a rapid assessment to determine whether there is sufficient evidence of added clinical benefits compared with the existing standard of treatment. If such added benefits are confirmed, manufacturers and representatives of the Statutory Health Insurance (SHI) are expected to negotiate an appropriate reimbursement price. If parties fail to reach an agreement, a final decision on the reimbursement price will be made by an arbitration body. If one of the parties involved wishes so, then the Institute for Quality and Efficiency in Health Care (Institut für Qualität und Wirtschaftlichkeit im Gesundheitswesen, IQWiG) will be commissioned with a formal evaluation of costs and benefits of the product in question. IQWiG will make a recommendation for a reimbursement price based on the 'efficiency frontier' in a therapeutic area. The purpose of the assessments is to provide support for decision-making bodies that act on behalf of the SHI insurants. To determine the willingness to pay for new drugs, IQWiG uses the following decision rule: the incremental cost-effectiveness ratio of a new drug compared with the next effective intervention should not be higher than that of the next effective intervention compared with its comparator. The purpose of this paper was to investigate the theoretical and empirical relationship between the willingness to pay for drugs and their health benefits. The analysis shows that across disease areas IQWiG has a curvilinear relationship between willingness to pay and health benefits. Future research may address the validity of the willingness-to-pay function from the viewpoint of the individual SHI insurants.

PHP145 - A Regression Analysis Of The Impact Of Patient Access Schemes

Patient Access Schemes (PASs) are part of the UK Pharmaceutical Price Regulation Scheme (2009). PASs enable patients to receive drugs, and allow pharmaceutical companies to collect cost-effectiveness and efficacy data, even if the payer classified the drug as outside the cost-effectiveness threshold. This project analysed the effect of PASs on patient access (PA) (defined by total sales in volume/prevalence of the particular disease group). A literature search of Medline and online resources was carried out to capture relevant data on PASs, however no suitable publications on the relationship between PA and PASs were obtained. Multiple regression was used to test if a relationship exists between the dependent variable, (change in PA) and the independent variable (existence of a PAS) and other factors that may affect change in PA. The other factors were: type of PAS, country, number of competitors, list price, how long the drug has been marketed for, and the orphan drug designation. Five drugs with approved PASs in the UK were analysed. These included: lenalidomide, erlotinib, bortezomib, sunitinib, and cetuximab. These were analysed in France, Germany, Italy, Spain and the UK, between 2010 and 2011 using IMS sales data and the Globocan Project 2008 prevalence data. The results of the regression analysis showed the existence of a PAS does not seem to have an effect on the change in PA. Therefore, this model cannot support a relationship between these two variables. The R442 is 0.6119, however the only variable which was statistically different from 0 is the number of competitors, with a p-value of 0.014; which means it is the only variable which had a significant effect on the change in PA. Further research needs to be conducted for a detailed analysis on this relationship.

PHP102 - Cost-Effectiveness Analysis In German Pharmaceutical Price Regulation

Germany’s pharmaceutical market is the fourth largest worldwide and an important reference market for pharmaceutical reimbursement decisions in many countries. We analyze the present, past and future role of cost-effectiveness analysis (CEA) in German pharmaceutical pricing regulation. After a series of arbitrary one-time measures for cost containment in pharmaceutical spending, the German legislator introduced CEA in 2007. Efficiency frontiers were selected as a method to determine maximum reimbursable prices for members of the Statutory Health Insurance funds. Due to the complexity of the method, no CEA was finished by 2011 and the Pharmaceutical Market Reorganization Act (AMNOG) was introduced. AMNOG marginalized the role of CEA. All new drugs in the German market undergo early benefit assessments. Based on these assessments, manufacturers and sickness funds negotiate binding rebate agreements for new drugs. No CEA is involved in the process and cost calculations are limited to the budget impact of direct medical costs associated with the administration of new drugs. CEA is an optional step after rebate negotiations. Choosing Hepatitis C virus infection as an example, we show that CEA could potentially lead to higher prices due to the rather restrictive nature of early benefit assessments and the subsequent negotiations. !

Straight talk with... Mark Sculpher

By 2014, the UK will be changing the way it regulates the price it pays for medicines. Currently the country's National Health Service (NHS) uses the Pharmaceutical Price Regulation Scheme (PPRS), which controls the maximum profit a drug manufacturer can make on the basis of capital investments the manufacturer has made. A review of this system, carried out by the UK Office of Fair Trading in 2007, recommended that, instead, medicines should be priced according to the therapeutic benefits they offer to patients-an idea known as value-based pricing (VBP) that has similarities to systems already used in smaller countries such as Australia and Canada. This pricing scheme has been embraced by the UK government, and negotiations on how the system will work are due to begin this month. A British switch to VBP could have ripple effects throughout the global pharmaceutical industry. Even though the UK's share of the world drug market is relatively small-just 3%-drug prices in the country are important because a quarter of national governments reference British values to determine their own sticker prices. One of the most influential thinkers on the UK's proposed system is health economist Mark Sculpher, director of the Programme on Economic Evaluation and Health Technology Assessment at the University of York. As a regular advisor to the UK National Institute for Health and Clinical Excellence (NICE) and former chair of a task force on methods guidance for economic evaluation at the agency, Sculpher has had an instrumental role in guiding value-based decision-making in the country's healthcare system. Kate Ravilious met with Sculpher at his office in York to discuss the value of VBP.

Faster access to Cancer Drugs Fund

Access to England’s Cancer Drugs Fund will be sped up to ensure that patients are off ered drugs within days of applying, the Department of Health has announced. Introduced by the coalition government in 2010, the Fund aims to improve patient access to cancer drugs before the expected reform of arrangements for branded drug pricing. The current Pharmaceutical Price Regulation Scheme expires at the end of 2013. However, some doctors and charities have raised concerns that it can take several weeks for patients to access cancer drugs through the Fund. Pharmafocus magazine recently reported an underspend of around £60 million on the Fund last year by the Strategic Health Authorities (SHAs) accountable for the Fund. New guidance to the UK National Health Service (NHS) will speed up applications for cancer drugs, which will no longer need to go through the primary care trust (PCT) funding processes. Each SHA should ensure there is a transparent, published process for allocating the funding, and “more challenging timescales” for decision making should be adopted. The present 31-day treatment standard should be seen as an absolute maximum. The guidance came into force on April 23, 2012, and does not apply retrospectively. It will be kept under review and updated as appropri ate during 2012–13. An audit of the Fund will also be undertaken to provide evidence from drugs funded through the Fund for the benefi t of wider NHS practice. Andrew Wilson, from the Rarer Cancers Foundation (Canterbury, UK), said, “We welcome the measures aimed at speeding up applications for drugs by bypassing PCT funding processes prior to applying to the Fund. This will help patients to get the fastest possible access to the drugs recommended by their doctors”. Heather Walker from Cancer Re search UK (London, UK) agreed. “Cancer Research UK welcomes anything that helps patients get the treatments they need faster. But it’s still unclear what will happen to the Fund when we move to value-based pricing in 2014. We would like to see detailed plans from the government to reassure us that cancer patients won’t be left in limbo”, Walker said.