International Drug Pricing

United States

According to IMS Institute for Healthcare Informatics, total drug spending reached $373.9 billion in 2014.This is an increase of 13.1% which is the highest level since 2001.
Branded products rose at an average rate of 13.5% last year on an invoice basis, but that was reduced to 7-8% when taking into account off-invoice discounts and rebates which offset most of the increases.
New medicines accounted for $20.3 billion of this growth in 2014 that includes $11.3 billion for spending on four new hepatitis C treatments.
This was an increase of almost ten times as many patients that were treated in 2014 compared to the previous year.
In 2014, 15.7 million people gained health insurance coverage due to the ACA’s Medicaid expansion. This is the first full year of enrolment for expanded Medicaid and exchanges under the ACA. Patients with Medicaid in states that expanded eligibility filled prescriptions 25.4% more than the previous year, and 2.8% more than in non-expansion states. Patients in Health Insurance Exchanges (HIX) who were newly covered obtained slightly lower levels of increase. Furthermore the groups of other commercially insured patients had reduced usage, either because they had become Medicaid or HIX insured or because of the impact of rising co-pays and deductibles.
There was a total decline in doctor office visits and hospitalizations last year despite some types of hospital admissions being increased.
When we examine insurance types, usage of hospital services shifted from emergency services to outpatient in general.
Although Medicaid patients had an increase overall in ER visits the increase was relatively modest when we consider the size of the newly enrolled population.
More hospital networks have continued to pursue an integrated care delivery model.
The corporate entities and their hospitals, group practices and other aligned service providers now account for over a quarter of all prescriptions dispensed in the U.S.
There has been an increase in the number of medicines reaching patients in the last few years with 42 New Active Substances launched in 2014 up from 36 the previous year.
The drug R&D; drug pipeline has shifted to specialty medicines over the past ten years with 42% of the late stage pipeline now specialty compared to 33% ten years ago.
There were ten Breakthrough Therapies launched in 2014 after the 2012 FDASIA Act that granted new approval authorities to the FDA.
The FDA also has a range of new incentive programs including efforts to support drug development for antibacterial resistance.
Furthermore, the number of orphan drugs launched peaked again with 18 in 2014 and overall it was 61 in the last five years.
Cancer still remain the most common orphan category, and increasingly very rare “ultra-orphan” drugs, for populations fewer than 10,000, is being developed.
Regarding innovation, the most anticipated innovations were “generic” versions of biologic drugs called biosimilars.
The filing for review of biosimilars by the FDA began in 2014 with approvals commencing in 2015.

Japan

According to FiercePharmaAsia, the government of Japan plans to cut medical treatment fees by 0.84% in its fiscal 2016 budget as the country tries to trim social spending, which has become a huge problem as Japan's population continues to age and incur high healthcare costs. The country's medical fees are revised every two years and include fees paid to doctors and pharmacists as well as covering prices for drugs. The country will raise medical service fees by 0.49%, which will go to doctors, pharmacists and other medical workers and will cut official drug prices by 1.33%, according to a report by the Japan News. The government plans to cut ¥170 billion ($1.4 billion) from the expected increase in national social security expenditures. The 0.84% cuts in medical fees are expected to save about ¥90 billion, the report said, with another ¥20 billion in cuts to government subsidies planned for the country's Health Insurance Association.
Furthermore, the Ministry of Health, Labour and Welfare (MHLW) plans to promote development of innovative drugs and medical devices and also paves the way for compassionate clinical trial approvals.
The effort will receive ¥82.5 billion ($690 million) for the fiscal year starting April 1, according to a ministry spokesman, as part of other spending outlines that included ¥126.5 billion, up by 1.3%, for the Japan Agency for Medical Research and Development related to overall R&D; in healthcare.
Genomic work is a key focus of the spending on innovative medicine with plans to pool data from medical research hospitals with a focus on cancer and refractory diseases.
Drugmakers will be eligible for a reduction in clinical trial consultation fees of as much as 90% for compassionate use cases approved by the Pharmaceutical and Medical Devices Agency (PMDA).
On specific oncology-related spending, an increase of 10% to ¥35.6 billion is slated to promote screening and research.
Japan had moved to spur drug innovation in October last year with the MHLW naming 6 drugs in its first announcement on the new "sakigake" fast-track review system, a pilot project outside of the full-review process. Any products considered must display a novel mechanism of action, be scalable commercially, show high efficacy and be developed and planned for approval in Japan ahead of the rest of the world, PMDA said in April.
However, cuts to reimbursement for widely prescribed drugs are slated by Japan's Central Social Insurance Medical Council, known as Chuikyo, that could see some innovative drugs get a price cut of as much as half.
Chuikyo looks at sales volumes and pricing as part of a formula set against forecast targets of demand.

China

Health care spending in China is expected to near $890 billion a year by 2017, growing by an average rate of 13.8 percent annually in local currency terms from 2013-2017.
Total spending is forecast to reach the equivalent of 5.9 percent of GDP by 2017, up from an estimated 5.3 percent in 2012.
Reform program aims to establish a universal healthcare system by 2020.
The primary system will act as a gatekeeper mechanism between community centres and large hospitals.
Establishment of a national Essential Drugs List (EDL) will contain products essential to meet medical needs that are also included in the National Reimbursement Drugs List (NRDL).
Price control was established for all products on the EDL and the NRDL.
Rationalisation of price differentials between generics and off patent originals was also tabled.

Germany

Germany’s total health care spending is expected to rise by an average of 2.8 percent a year from 2013-2017 to $461 billion.
German legislators have recently voted to continue until the end of 2017 the price freeze on reimbursed drugs although products covered by internal reference pricing (IRP) are to be exempted.
The Bundestag also voted to end the practice of basing patient co-payments and wholesaler and pharmacy margins on the list prices of products, which are set by the manufacturers.
These will now be set according to products’ negotiated (discounted) prices, which are generally considerably lower than the list prices.
The Bundestag also voted in favour of reducing the mandatory discount required from manufacturers of reimbursable drugs to 7% from 16%.

United Kingdom

Total health care spending in the United Kingdom (U.K.) was an estimated $235 billion in 2012 and is expected to rise to $292 billion by 2017.
A new ‘Pharmaceutical Price Regulation Scheme’ is agreed every five years by the Department of Health and the Association of the British Pharmaceutical Industry (ABPI).
As part of the new scheme which started in 2014 the industry has agreed to keep the current £12 billion spending on branded medicines in the UK’s National Health Service (NHS) flat for two years. Increases will be limited to less than 2% in the following three years. If the NHS drug bill does go higher than these agreed amounts, the industry will pay back the difference.
Generally if a treatment costs more than £30,000 per quality-adjusted life years (QALY), it would not be recommended as cost-effective by NICE.

France

There is a two step system currently in place for drugs seeking reimbursement in France.
Evaluation: An assessment is made by the High Authority for Health (HAS)’s Transparency Commission (CT) which determines the drugs medical benefit (SMR) rating and improvement in medical benefit rating (ASMR).
Pricing negotiations are then conducted by the Pricing Committee (CEPS)
In October 2013 there was the introduction of the health economic (HE) evaluation of certain medicines for pricing purposes.
The manufacturer is seeking an ASMR rating of l, ‖ or ‖l AND
The product is expected to make a significant impact for health insurers.
Data submitted is assessed by the Commission for Economic and Public Health Evaluation (CEESP)
No major changes to the two –step (evaluation-negotiation) model expected before 2016 at the earliest.

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