Pricing and paying for medicines

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Pricing and paying for medicines

• Ad Antonisse
• AstraZeneca BV
• April 2005

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Content

• The Netherlands compared to other EU countries
• What is the issue with medicines?
• How does the Dutch system work
• G10, OECD, WHO and US
• How to solve the problem

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Costs of medicines( total healthcare - OECD)
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Consumption of medicines(/inh. - OECD)
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Consumption of healthcare( GDP - OECD)
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Consumption of medicines( GDP - OECD)
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Consultations with prescription( - OECD)
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Delivery of medicines (SFK)
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Price index medicines(1996 100)
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Whats the issue?

• Low prescription of medicines
• Low consumption of medicines
• High generic substitution
• Average prices with decreasing trend
• Increasing amount of regulations
• KNMG (March 2005)
• Often VWS proposes new regulations and policies
  in medicines on cost containment and safety,
  which are not always in line with each other

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The Dutch system

• GVS list 1A
• Clustering based on broad population/indication
• Price based on / DDD
• Product form not of importance
• GVS list 1B
• Therapeutic added value for broad population
  against golden standard
• Free pricing based on FE

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This is the issue!

• All products priced on 1A limit
• No incentive for innovation in product form
• No incentive for innovation for sub group
• No incentive for incremental innovation
• Long negotiations for 1B products

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Incremental innovation
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Recommendations G10(May 2002)

• Rec 2 improve the introduction to the market,
  in particular for innovative medicines.
• Rec 3 improving time taken between granting of
  MA and pricing and reimbursement decisions.
• Rec 4 Competitive generic market
• Rec 6 Price regulation only for those products
  purchased by or reimbursed by the State
• Rec 7 Development of HTA including cost
  effectiveness
• Rec 10 Information to patients

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OECD - Health Project(2004)

• Pag 105 Socially optimally prices need to take
  into account not only the value of the specific
  medicine, but also the costs of research and
  development, if future innovation is to be
  sustained.
• Pag 106 such (reference pricing) systems may
  reduce incentives for innovation.

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OECD - Health Project(2004)

• Facilitating availability and use of generic
  alternatives can avert these negative effects by
  fostering price competition at the level of the
  molecule, rather than the therapeutic class.
• Employ pharmaceutical pricing systems and other
  policies that reward cost-effective choices among
  similar medications and encourage truly novel
  innovation in the pharmaceutical sector.

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WHO priority medicines(November 2004)

• Pharmaceutical innovation in Europe could be
  improved through reforms of regulatory and
  pricing policies
• Therapeutics can be improved through the
  development of improved pharmaceutical delivery
  mechanisms
• Pharmaceutical innovation should also encompass
  special interest groups of patients

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U.S. Department of Commerce (December 2004)

• As OECD countries individually seek to reduce
  spending on drugs through price controls, their
  collective actions reduce RD that would provide
  substantial health benefits to all.
• Relaxation of foreign price controls, if coupled
  with appropriate reform of foreign generic
  markets, could potentially bring about much of
  these gains from the flow of new drugs, even
  without foreign spending on prescription drugs.
• the increased revenues from decontrolling drug
  prices in OECD countries would, all things being
  equal, yield on average 2.7 to 4.1 new drugs per
  year.

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How to maintain integrated care

• See medicines as part of total health care
• See medicines (and health care) as investment and
  not as costs
• Value innovation in healthcare, also incremental
  and also in product form or sub group
• Use HTA to value healthcare and the components
• Make market access fast and without unneeded
  administration

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If you think healthcare is expensive, try
disease