international drug pricing



Vizient, corporation released its January 2018 Drug Price Forecast and estimated that for pharmaceutical purchases made from July 1, 2018 to June 30, 2019, health systems may be expected to increase by 7.35 %

Furthermore, according to the Kaiser Family Foundation CMS projections suggests moderate growth in per capita drug spending until 2025.

Moreover, CMS projects drug spending will continue to represent an increased portion of overall health spending over time.

In 2016, per capita retail prescription drug spending increased at a low rate (0.6%), when compared to the proceeding 2 years

In 2015, pharmaceutical spending grew 8.1% on a per capita basis while in 2014 costs had increased 11.5%.

Additionally while out-of-pocket spending for prescription drugs remained flat in 2016, the out-of-pocket spending on physician services increased.

Per capita out-of-pocket spending on prescription medications is expected to increase in coming years, it has however fallen as a share of total drug spending and this trend is expected to continue into future years.

Medicare is anticipated to represent a growing proportion of drug spending over the next decade.

Recent increases in drug spending have been predominantly driven because of new brands, high prices for existing drugs coupled with fewer patent expiries.

IQVIA analysis found that net spending on medications in 2016 was driven mainly by the introduction of new brands and price increases for existing drugs still under patent protection.

Furthermore, expensive new speciality drugs were a major driver of a recent spike in health spending.

Diabetes drug spending was more than twice that of the next leading category being medications for pain and inflammation.

With regard to speciality drug spending in 2016, medications for inflammatory conditions and multiple sclerosis where the most expensive.

Interestingly, generic drug prices have fallen while branded drug prices have nearly doubled in price during the period from 2008-2016 while Medicare has become a major payer for prescription drugs.


Drug Pricing Reforms

Chinese authorities have pursuing the twin goals of making a less centralised, more market-driven drug pricing system, as well as contending with monopolies and ensuring that new,branded drugs are made available at reasonable prices.

Currently, the National Development and Reform Committee has conventionally set drug pricing policy and has the final authorization on the national product price list, while provincial committees assemble a list of reimbursable products for different regions.

Hospitals purchase medications direct from wholesalers, and use expert councils to assess the safety, efficacy and cost-effectiveness of medications before purchasing them through tender processes.

The Drug Price Policy implemented by the government in June 2015 is aimed to gradually evolve from a centralised, double government-controlled system to a more indirect, incentive-driven market.

New mechanisms introduced included reimbursement standards for drugs included in the Health Insurance Formulary and a move towards greater reliance on tendering processes with local buyers.

The latest policy has been criticised by some as rather confused.

"Some aspects of the reform seem not to be well aligned or even conflicting, like introduction of the reimbursement standard and maintaining the tendering system," wrote the authors of a 2016 Pfizer-sponsored study into the reforms.

"This shows that, given complexity of the market, foreign pricing policies cannot be transferred to China without being properly attuned to local healthcare specificities."

As the country transitions from moving away from centralised drug price regulation, the government has confirmed its willingness to negotiate aggressively with companies, leveraging the magnitude of state health insurance schemes (and its larger pharmaceutical market) to lower prices downward.

In early 2018, China lowered the costs of 36 drugs, mainly branded drugs developed by multinational pharma companies, by an average of 44% as a requirement of being made reimbursable under government health insurance.


Japan Finalizers Drug Pricing Reforms

Japan's Central Social Insurance Medical Council (Chuikyo) has finalized drug pricing improvements set to take effect at the start of FY18 on April 1.

Chuikyo is given the role of setting drug prices in Japan.

Very recently, the body presented its reforms, which are generally in line with those the Ministry of Health, Labour and Welfare (MHLW) presented on the 22 November 2017

The reforms redefine which drugs will be qualified for the country’s price maintenance premium, which exempts drugs from compulsory repricing.

With the change, this designation would be limited to first-in-class therapies and the two next-in-class therapies launched within 3 years of the listing of the first-in-class drug.

Other drugs entitled to the premium include Orphan drugs, and drugs developed at MHLW's request or that eliminate a drug lag.

MHLW will confine the number of companies and therapies that receive the full premium based on the number of clinical trials performed in Japan, the number of new products launched in Japan within the past 5 years, the number of new products advanced in response to open requests from MHLW and the number of products with a Sakigake designation.

Previously, medications drugs were exempt from mandatory repricing if they have been marketed for less than 15 years and there were no generics present.

The sponsor also had to have drug candidates advanced “that could truly contribute to the enhancement of medical care quality,” according to the Japan Pharmaceutical Manufacturers Association (JPMA).

Under the previous definition around one-third of drugs in Japan received the price maintenance designation; however, the changes are expected to narrow this pool by about 35%, according to the Pharmaceutical Research and Manufacturers of America (PhRMA).

Beginning in FY21, select drugs will be subject to yearly price reductions, instead of the current every-two-year cuts.

MHLW will conduct drug pricing surveys over the next 3 years to determine which drugs will be targeted for more frequent repricing.

Additionally, the U.S. will be continue to remain among the 4 countries included in Japan's foreign reference pricing basket.

Previously the MHLW told BioCentury last April that they were considering removing the U.S. from the basket.

Under these reforms, MHLW will use federally reported prices, including Medicare and Medicaid average sales prices, rather than average wholesale price, which had been used previously.

In a joint statement in November after MHLW presented the proposed reforms to Chuikyo, the European Federation of Pharmaceutical Industries Associations and PhRMA said they were "disappointed" with these changes.

They stated that incentives to develop new products in the country will be so eroded that timely patient access to new medicines will be seriously endangered.


How Does Cost Sharing Influence Drug Prices in Germany?

Health insurance companies restrict price-insensitive behavior and the moral hazard of insureds by means of cost-sharing, like tiered co-payments or reference pricing in drug markets.

The same co-payment scheme applies to all those who are publicly insured and the prices are uniform across all pharmacies.

Pharmacists typically receive a reimbursement directly from the health insurance companies that is usually a fixed fee per package plus a percentage of the drugs price (3%).

Generally, drug co-payments in Germany occur at a rate of 10 percent of the pharmacy’s selling price (or the reference price if it lies above this figure).

There is a minimum of 5 Euros and a maximum of 10 Euro’s plus the difference between that and the reference price, if applicable.

Co-payment exemption levels affect demand for pharmaceuticals and they are a set price below which patients do not have to pay a co-payment for these pharmaceuticals.

Co-payment exemption levels depend on the reference price which is set at the 30th percentile of the previous year’s prices for drugs with in a specific therapeutic basket.

The majority of generics (99%) and brands (77%) are set below this reference price.

Introduction of tiered co-payments have led to decreasing drug prices along with market segmentation in the German reference price.

The policy has resulted in a 5% reduction for generic prices while brand name drug prices increased by 4 % due to the new regulation.


Drug prices in the U.K., are among the lowest in the developed world but can fall even further.

The British public-health system has approved new limits on how much it spends on certain medicines, prompting pharmaceutical companies to sue in an attempt to stop the initiative.

Drug price are low in the U.K. because:

1) The taxpayer-funded National Health Service, provides free health care to over 64 million people and is the main buyer of pharmaceutical products in the U.K.

That means it can use its purchasing power to negotiate with drug companies to get lower prices.

2) A government agency called the National Institute for Health and Care Excellence (NICE) evaluates new drugs, or drugs that may have a significant effect on patients, to determine whether they are cost-effective. They makes a recommendation to the NHS system in England. (Local public health systems in Wales, Scotland and Northern Ireland make their own decisions.)

To secure NICE’s support, pharmaceutical companies sometimes may offer undisclosed discounts on the list prices for their more expensive branded drugs, reducing the cost to taxpayers.

If NICE approves a drug, NHS in England must make it available to patients with valid prescriptions within 90 days.

3) NICE uses a metric known as "quality adjusted life-years" to assess the value of medicines in extending and improving patients' lives.

The agency usually only approves drugs that cost less than 30,000 pounds ($39,000) per quality adjusted life-year, which is equal to a year of life in perfect health.

4) If NICE decides a drug is too expensive, its maker can try to reach a separate deal with the U.K.’s Department of Health through special arrangements known as patient access schemes.

If that fails, patients will get access to the drug only if their doctor makes an individual funding request and establishes exceptional circumstances.

5) The U.K. Department of Health negotiates with drug makers a 5 year voluntary agreement called the Pharmaceutical Price Regulation Scheme, or PPRS, to regulate the cost of brand-name medicines.

Under the accord that took effect January 2014, the bill for branded medicines was to stay flat for 2 years and then to rise by about 1.8 percent annually in 2016 and 2017 and 1.9 percent in 2018. Government expenditure on drugs in excess of these levels is to be reimbursed by the drug companies.

6).Pharmaceutical companies complain the low prices leave them with less money for research and development, stifling their ability to invest in expensive, high-risk research projects for new medicines.

NICE’s cost-effectiveness test relies on a cost-per-patient approach that puts treatments for very rare illnesses or complex personalized medicines at a disadvantage, drug makers say.

Some say NICE takes too long to decide and can slow down the entry of new drugs into the market, meaning patients don’t get access to life-saving medicines as quickly as in other countries.

The result is that when companies fail to win NICE’s backing despite discounts, patients’ access to life-saving drugs is curtailed.


Drugs are covered by prescription health insurance issued by a doctor, a midwife, a dental surgeon, a director or assistant director of an analysis laboratory, within the limits of their professional practice.

Some externally used topical can also be covered when prescribed by a podiatrist.

For reimbursement of the drug, the prescription must be made within the framework of the therapeutic indications giving right to the assumption of responsibility, and the drugs must appear on the "List of reimbursable medicines to the Social Security", fixed by ministerial decree.

Each prescribed drug must include the dosage and duration of treatment or the number of packaging units (box or vial).

There are 4 drug reimbursement rates:

• 100% for medications that are recognized as irreplaceable and expensive.

• 65% for major medical benefits

• 30% for moderate -benefit medications, homeopathic medicines and certain magistrals preparations

• 15% for drugs with low medical service

The reimbursement rates apply on the basis of the selling price (statutory sales limit fixed price) or on the basis of a flat rate of liability (TFR)

The TFR is a reference rate for reimbursement of certain types of drugs that today typically accounts for 2,600 specialties out of over 14,000 refundable specialities.

It is planned to support, on the basis of a single tariff, equivalent products in terms of efficacy (generic and brand-name medicines)

The TFR is calculated from the cost of the cheapest generic drugs.

If you accept a generic drug, you will receive the appropriate refund.

However, if you choose a brand drug, you will be reimbursed only on the basis of TFR


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