versus

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versus

• Regionalization

• Harmonization

• Fernando Royo
• 3rd Pharma Pricing Strategies Conference
• Rome, 16/01/08

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The newly enlarged EU
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The newly enlarged EU

• Approx. 500 Mio. Inhabitants

• Combined GDP gt 12 Trillion
  (12,172,536,000,000)

• Healthcare Spending approx 8.7 of
  GDP (1,059 Billion)

• A harmonized economic regulatory framework

but
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with much larger differences between MS
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with much larger differences between MS
Is this new environment really harmonic/sustaina
ble?
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It further complicates an already complex PR
scenario
While in consumer goods true Free Market
rules apply
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In pharmaceuticals, weve always had
and last, but not LEAST
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Now, with a new twist Regionalization
e.g., Spains 17 Regions (Autonomous
Communities) hold increasingly broad political
and administrative powers. Among them, the
management of Healthcare
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What are the consequences for PR?
Pricing has remained centralized (led by MoH) but

• The new Spanish Drug Law (29/07/2006) establishes
  that, before setting the price, a network of
  external experts, designated by the Autonomous
  Comunities will counsel the Spanish Drug Agency
  in order to evaluate the therapeutic usefulness
  of each new drug.
• Regions can (and often do) apply additional
  reimbursement restrictions, in the form of
• Positive/negative lists (linked to
  cost/discounts)
• Inclusion/exclusion in computarized
  prescription systems
• Administrative validation (visa) of
  prescriptions
• The final result is a highly heterogeneous
  environment, with economic inneficiencies, and
  substantial differences in terms of patients
  access to innovative/expensive therapies.
• Trans-regional prescription filling is already
  happening

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Regionalization of Healthcare is also
increasingly relevant in other European countries
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Pricing of Orphan Drugs
General Pharma Pricing OutlineIrrespective of
chemistry, indication, etc., all therapies share
a common economic ratio...
Unit Price
TOTAL INVESTMENT
?
OF DOSES SOLD
Avrg. Doses/Year/Patient
x of Treated Patients
x Years of Sales
Why is this so dramatic in the case of orphan
drugs?
Because, as the of patients goes down,
so does the of doses sold
hence the unit price must increase
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and, what about the future?
Unit Price
Advanced therapies (Magic Bullets
single-dose cures,conceivable with gen or celular
ones)could make this ratio even worse
TOTAL INVESTMENT
?
OF DOSES SOLD
Avrg. Doses/Year/Patient
x of Treated Patients
x Years of Sales
If a single dose would cure
of doses sold of treated patients
bringing the unit price to unacceptable levels
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What are the possible strategies for a
sustainable PR of ultraorphan/advanced drugs?

• Better assesment of TOTAL disease-related costs
  disability, family social impact on
  integration, productivity, quality of life
• Convergence on budgetary parameters
• If healthcare managers receive administer
  funds on a per capita, per annum basis, why
  should PR of therapies remain based on
  traditional pharmaceutical units?
• Reducing the uncertainty risk financial costs
  through public/private partnership initiatives

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• Thank you
• for your
• attention