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Pharma Pricing and Reimbursement Outlook: Optimizing Price and Market Access in a Recessionary Climate
Business Insights, Nov 2009, Pages: 145
Pharmaceutical pricing and reimbursement is highly complex involving a range of market-level policies and interaction with a broad range of regulatory, commercial and healthcare bodies. Local pricing and reimbursement frameworks are constantly evolving in order to balance access to effective medicines against finite budgets. For biopharmaceutical manufacturers, a drug’s pricing and market access strategy is the essential mechanism through which commercial returns on investment will be delivered. They must also coordinate a global pricing strategy to account for the cross-national inter-dependencies that exist in pharmaceutical pricing.
Increased healthcare cost-containment, the fall in pharmaceutical productivity levels and the rising impact of generics have amplified the importance of delivering an optimal pricing and market access strategy. With a back drop of macro-level recession beginning to negatively impact both the supply and demand for pharmaceutical drugs, the challenges facing the pharmaceutical industry have never been greater. Only those companies able to consistently deliver well planned, coordinated and responsive pricing and market access strategies will succeed in generating optimal returns from their R&D investments.
Determining the correct pricing and reimbursement strategy for a new product is an essential component of gaining maximum return on investment. This report gives an up to date and comprehensive review of the pricing and reimbursement environment in the seven major pharmaceutical markets and also the four high-growth emerging markets, as well as providing analysis of the most likely future scenarios in these markets’ pricing and reimbursement environments. The report also provides strategic guidance on approaches that can be taken to ensure that a product achieves the most favorable pricing and reimbursement positioning.
Key Findings
- President Obama’s healthcare reform package will likely lead to some form of delayed and/or incremental move towards universal healthcare. As has already been agreed, Medicare Part D funding and future Medicaid rebate increases will form part of the funding behind the reforms.
- Risk sharing agreements will continue to provide market access for high-priced innovative therapies in the UK and Italy, while been used more sparingly in France and
- Germany. Decentralization in Italy and Spain will continue to provide a complex set of regional cost containment measures that compromise market access strategies for new and marketed drugs.
- Out-of-pocket expenditure is the predominant healthcare payment model in high growth emerging pharmaceutical markets, such as Brazil, Russia, India and China. Markets are currently characterized by local generics producers and weak patent law. While government initiatives to broaden healthcare insurance coverage will result in expanded access for drugs, this will be at the cost of greater intervention on pricing.
- Germany and the UK do not employ a formalized external reference price system. However, they act as important benchmark countries for several other major European markets, thereby increasing the importance of price setting in these relatively free-pricing markets. In addition, the recent devaluation of the UK currency has seen the UK market switch from a major destination country to a source market for cheap parallel exports heading to Ireland and the Netherlands.
Use this report to...
- Identify the key drivers of change impacting on pharmaceutical pricing in order to fully appreciate the importance of effective pricing and market access strategies
- Understand the different pricing and reimbursement systems operating across the seven major markets (US, Japan, France, Germany, Italy, Spain and the UK)
- Evaluate current trends in order to identify future pricing and reimbursement opportunities and challenges across the seven major markets (US, Japan, EU5)
- Establish new market opportunities for new and existing drugs based on a detailed review of pricing and reimbursement trends in the four major high growth pharmaceutical markets (Brazil, Russia, India and China)
- Successfully formulate and implement global pricing strategies in order to deliver local optimization and global coordination
- Deliver effective pricing planning through a detailed practical understanding of major pharmaceutical pricing research and modelling techniques, as well as insight into the role of the pricing function across the drug development and marketing lifecycle
Key issues...
- Economic recession: Economic recession is having a significant impact on healthcare budgeting, and as result pharmaceutical pricing and reimbursement mechanisms will be impacted by significant short-term cost containment, with a possibility of longer term structural changes in the US resulting from payer consolidation.
- US healthcare reform: The Obama administration is committed to healthcare reform which is likely to include a move towards universal healthcare coverage, a closure of the Medicare part D ‘coverage gap’ and reforms of several generic defense mechanisms (such as ‘evergreening’ and ‘pay for delay’).
- Risk-sharing agreements: The new PPRS scheme in the UK and the increasing use of health technology assessments to drive the reimbursement status for high-priced drugs will lead to an increased use of risk-sharing agreements between drug manufacturers and payers.
- Global pricing strategy: International reference pricing and parallel trade presents the case for launching key drugs with a common international price, or with a narrow pricing corridor. However, given local market conditions, optimizing the launch sequence with varying prices is currently a preferred strategy.
Discover
- What are the major drivers of change for pharmaceutical pricing and reimbursement?
- How will proposed health care reforms in the US impact pricing and reimbursement in the context of a recessionary economic climate?
- How will decentralized healthcare reforms in Spain and Italy translate into the need for a regional pricing and market access strategy for Europe?
- How will proposed reforms in the pricing of innovative new drugs translate into actual reforms of the biennial price cut-based pricing system in Japan?
- What are the current pricing and reimbursement regulations and associated issues in the major pharma markets?
- What are the likely future developments in pricing in the major pharma markets (including the US, Japan and Europe)?
- How will pricing and reimbursement trends in the major high growth markets (Brazil, Russia, India and China) effect opportunities in these emerging markets
- What can be done to maximize returns through applying global pricing strategies across the drug lifecycle?
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