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Pharmaceutical Pricing, Reimbursement, and Prescribing News in the First Quarter of 2005
Decision Resources, Inc., June 2005, Pages: 22
The first quarter of 2005 was relatively quiet in the pricing, reimbursement, and prescribing environments of the worlds major pharmaceutical markets. The United States continued the implementation of the Medicare Modernization Act; the acts new prescription drug benefit is expected to give a substantial boost to pharmaceutical sales. At the same time, some members of Congress, state governments, and large employers pursued measures to reduce prescription drug prices in the United States. Several leading pharmaceutical companies responded to growing criticism of their prices by launching a new drug discount card. In Europe, governments sought ways to refine their well-established cost-containment strategies. Reference pricing provoked controversy in France and Germany, and the relatively underdeveloped generics markets of Southern Europe continued to grow. In Japan, industry observers saw signs of increasing pressure for reform of the pricing and reimbursement system.
Business Implications
- The new Medicare prescription drug benefit is scheduled to begin operation on January 1, 2006. Prescription drug plans (PDPs) will be required to cover at least two drugs in each therapeutic category and pharmacological class. However, if a given category or class contains only two drugs, the PDP may limit coverage to a single agent within that category or class. Plans will not be obliged to cover off-label prescribing, and they will be permitted to use mechanisms such as prior authorization, step therapy protocols, generics substitution, and quantity limits to restrict access to certain drugs. PDPs will have to promote the use of generics by requiring the display of information on less expensive generic versions of a drug (if available) at the point of sale.
- The pressure to legalize drug importation in the United States may become irresistible in the coming months. Two drug importation bills have been revived in Congress. A sponsor of one of the bills predicted that legislation to legalize drug importation will be passed by a margin of 75-25 votes, a majority that would make it difficult for the Bush administration to maintain its opposition. The pharmaceutical industry’s best hope of avoiding massive drug importation in the United States may be that Canada will act to ban this trade and that other potential parallel export markets will follow suit to protect their pharmaceutical supply systems.
- The European Commission recently reaffirmed its resolve to implement the recommendations of the G10 Medicines Group. If the commission keeps its word, manufacturers can look forward to faster registration and market access for innovative drugs, streamlined pricing and reimbursement decisions at the member-state level, free pricing for drugs that are not purchased or reimbursed by member states, easier Rx-to-OTC switching and the freedom to continue using the same trademark for drugs switched to nonprescription status, the abolition of restrictions on the advertising of nonprescription medicines, and the introduction of measures to limit parallel imports from new member states in Central and Eastern Europe.
- The impact of Germany’s expanded and more aggressive reference pricing system will be studied with interest not just in that country but throughout Europe. Many governments have followed the lead that Germany set in 1989 by introducing reference pricing, but none have been as bold as the pioneer of this approach to cost containment. Pfizer and other companies that have taken legal action against reference pricing decisions will anxiously wait to see the outcome of their lawsuits in Germany. The pharmaceutical industry as a whole will anxiously wait to see if other European governments decide to extend reference pricing to patent-protected drugs.
Also available
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