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Pharmaceutical Pricing and Reimbursement - Adoption of Health Technology Assessments (HTA) Optimizes Drug Pricing and Accelerates Reimbursement Decision-Making

Executive Summary

US Healthcare Expenditure Expected to Far Outpace GDP

Although already the world's number one healthcare spender in terms of percentage of Gross Domestic Product (GDP) and per capita, US health expenditure is set to grow to unprecedented levels following the implementation of the recently passed Affordable Care Act (ACA), states a new report by GBI Research.

The business intelligence firm's latest study* says that the United States spent $8,300 per person on healthcare in 2010, but is expected to outlay as much as $12,500 for each citizen by 2020.

Growth in healthcare expenditure is expected to be modest until 2014, when the addition of 19.6 million people to the Medicare program is expected to increase Medicaid spending by 18% and private sector spending by 7.9%.

A study conducted by the Congressional Budget Office (CBO) in the US estimated that the government could spend more than $1.8 trillion a year on Medicare and Medicaid by the end of the decade, climbing from the $1.1 trillion allocated for 2012.

However, while the richest country in the world's healthcare system continues to expand, it is emerging nations such as China, India and Brazil that will exhibit the most substantial growth as these governments aim to make basic healthcare more affordable to a wider demographic.

Unlike these developing nations and the US, healthcare spending in the European Union (EU) has fallen consistently since the economic downturn of 2008, with the UK, Italy and Spain cutting back at Compound Annual Growth Rates (CAGRs) of -4%, -3.3% and -4%, respectively during the period 2008-2010.

Pharmaceutical Pricing and Reimbursement - Adoption of Health Technology Assessments (HTA) Optimizes Drug Pricing and Accelerates Reimbursement Decision-Making

This report provides a comprehensive overview of the healthcare system and pricing and reimbursement process in the US, top five countries of Europe (the UK, Germany, France, Spain and Italy), Japan, Australia and China, with a detailed analysis of the different regulatory mechanisms used in these countries.

This report was built using data and information sourced from proprietary databases, primary and secondary research, and in-house analysis conducted by GBI Research's team of industry experts.

Abstract

Pharmaceutical Pricing and Reimbursement - Adoption of Health Technology Assessments (HTA) Optimizes Drug Pricing and Accelerates Reimbursement Decision-Making

Summary

GBI Research, leading business intelligence provider has released its latest research report, entitled "Pharmaceutical Pricing and Reimbursement - Adoption of Health Technology Assessments (HTA) Optimizes Drug Pricing and Accelerates Reimbursement Decision-Making". The report provides a comprehensive overview of the healthcare system and pricing and reimbursement process in the US, top five countries of Europe (the UK, Germany, France, Spain and Italy), Japan, Australia and China, with a detailed analysis of the different regulatory mechanisms used in these countries. The report closely scrutinizes the major changes in pharmaceutical pricing and reimbursement in these nations in the recent past and their impact in the near future.

Pricing and reimbursement issues are geography-specific and mostly depend upon the economic conditions of the country in question. Governments in the different countries of Europe have been adopting various measures to bring uniformity to the prices of pharmaceuticals by introducing measures such as international price referencing, pharmacoeconomic evaluations, value-based pricing, internal price referencing, price capping, risk sharing models, and positive and negative price lists. The Value Based Pricing System (VBPS), which is in the process of being adopted by the UK, will only reimburse drugs that provide value to patients. In addition, there are issues with respect to orphan drugs since there are no specific regulations governing their pricing, and pharmaceutical companies are exploiting patients by aggressively pricing these therapeutics. Pricing and reimbursement affects many players in the economic environment such as political parties, pharmaceutical companies, regulatory authorities, and patients. This report analyzes the impact of pricing and reimbursement issues on the concerned stakeholders. The report provides information on the economic situation of different countries with statistical graphs and graphs that represent the expenditure made by respective governments with respect to GDP. The report also provides information on the different pricing and reimbursement mechanisms that are being used in the current environment.

Scope

  • A detailed study of the healthcare systems and roles of the key players in the respective pharmaceutical systems in the US, top five countries of Europe (the UK, Germany, France, Spain and Italy), Japan, Australia and China.
  • Analysis of the major pricing and reimbursement mechanisms in each country.
  • Key trends that have emerged from the recent changes brought about in pricing and reimbursement mechanisms.
  • Possible major challenges brought about by the enactment of changes in the pricing and reimbursement scenes in the countries covered.

Reasons to buy

  • Build an understanding of the key pricing and reimbursement mechanisms for pharmaceuticals in the key markets of Europe.
  • Optimize your investment through the identification and understanding of the changes in the regulatory mechanisms for pharmaceuticals in the economies covered.
  • Develop effective business strategies related to new drug launches through the analytical insight gained from key trends in the pricing and reimbursement scene for the countries covered.

TOC

1 Table of Contents

1 Table of Contents 5

  • 1.1 List of Tables 7
  • 1.2 List of Figures 8

2 Pharmaceutical Pricing and Reimbursement - Introduction 10

3 Pharmaceutical Pricing and Reimbursement - Global Economic Issues 11

  • 3.1 Trend in Global Pricing and Reimbursement Regime 11
  • 3.2 Trend Analysis of Healthcare Expenditure Per Capita 12
  • 3.3 Public Health Expenditure as a Percentage of Total Health Expenditure 13
  • 3.4 Out-of-Pocket Health Expenditure as a Percentage of Private Expenditure on Health 15
  • 3.5 Healthy Life Years beyond the Age of 65 16

4 Pharmaceutical Pricing and Reimbursement - Global Issues 17

  • 4.1 Reference Prices 17
  • 4.2 International Price Referencing Adopted to Contain Healthcare Expenditure 17
  • 4.3 Pharmaceutical Price Capping to Encourage the Use of Generic Drugs 17
  • 4.4 Positive and Negative Price Formulary to Provide More Clarity on Drugs Covered by Health Insurance 17
  • 4.5 Value-Based Pricing Systems and Risk-Sharing Models Evaluate Drugs Based on Value and Not Cost 18
  • 4.6 Single Pricing Strategy in the European Union is a Debatable Issue 19
  • 4.7 Faster Pricing and Reimbursement Decisions Ensure Quicker Medicine Access and Return on Investments 19
  • 4.8 Issues in Pricing and Reimbursement in Orphan Drugs 19
  • 4.9 Difficulty in Economic Evaluation of Orphan Drugs 19

5 Pharmaceutical Pricing and Reimbursement - Pricing and Reimbursement by Geography 20

  • 5.1 The US 20
    • 5.1.1 Macroeconomic Factors (PEST Analysis) 20
    • 5.1.2 Healthcare System in the Country 20
    • 5.1.3 Healthcare Expenditure as a Percentage of GDP 21
    • 5.1.4 Private and Government Expenditure on Healthcare as a Percentage of Total Healthcare Expenditure 22
    • 5.1.5 Drug Pricing and Reimbursement Authorities 23
    • 5.1.6 Issues in Pricing and Reimbursement 23

6 Top Five Countries of Europe 25

  • 6.1 Proposal to Speed Up Pricing and Reimbursement Decisions in Europe 25
  • 6.2 The UK 25
    • 6.2.1 Macroeconomic Factors (PEST Analysis) 25
    • 6.2.2 Healthcare System in the Country 26
    • 6.2.3 Healthcare Expenditure as a Percentage of GDP 27
    • 6.2.4 Private and Government Expenditure on Healthcare as a Percentage of Total Healthcare Expenditure 28
    • 6.2.5 Drug Pricing and Reimbursement Authorities 29
    • 6.2.6 Trends in Pricing and Reimbursement 29
  • 6.3 France 31
    • 6.3.1 Macroeconomic Factors (PEST Analysis) 31
    • 6.3.2 Healthcare System in the Country 32
    • 6.3.3 Total Expenditure on Healthcare as a Percentage of GDP 33
    • 6.3.4 Private Expenditure and General Government Expenditure on Healthcare as a Percentage of Total Healthcare Expenditure 34
    • 6.3.5 Drug Pricing and Reimbursement Authorities 35
    • 6.3.6 Trends in Pricing and Reimbursement 36
  • 6.4 Germany 37
    • 6.4.1 Macroeconomic Factors (PEST Analysis) 37
    • 6.4.2 Healthcare System in the Country 38
    • 6.4.3 Total Expenditure on Healthcare as a Percentage of GDP 39
    • 6.4.4 Private and Government Expenditure on Healthcare as a Percentage of Total Healthcare Expenditure 40
    • 6.4.5 Drug Pricing and Reimbursement Authorities 41
    • 6.4.6 Trends in Pricing and Reimbursement 41
  • 6.5 Spain 42
    • 6.5.1 Macroeconomic Factors (PEST Analysis) 42
    • 6.5.2 Healthcare System in the Country 43
    • 6.5.3 Total Expenditure on Healthcare as a Percentage of GDP 43
    • 6.5.4 Private and Government Expenditure on Healthcare as a Percentage of Total Healthcare Expenditure 44
    • 6.5.5 Drug Pricing and Reimbursement Authorities 45
    • 6.5.6 Trends in Pricing and Reimbursement 45
  • 6.6 Italy 46
    • 6.6.1 Macroeconomic Factors (PEST Analysis) 46
    • 6.6.2 Healthcare System in the Country 47
    • 6.6.3 Total Expenditure on Healthcare as a percentage of GDP 47
    • 6.6.4 Private and Government Expenditure on Healthcare as a Percentage of Total Healthcare Expenditure 48
    • 6.6.5 Drug Pricing and Reimbursement Authorities and Procedures 49
    • 6.6.6 Trends in Pricing and Reimbursement 49

7 Pharmaceutical Pricing and Reimbursement - Asia-Pacific 51

  • 7.1 China 51
    • 7.1.1 Macroeconomic Factors (PEST Analysis) 51
    • 7.1.2 Healthcare System in China 51
    • 7.1.3 Total Expenditure on Healthcare as a Percentage of GDP 52
    • 7.1.4 Private and Government Expenditure on Healthcare as a Percentage of Total Healthcare Expenditure 53
    • 7.1.5 Pricing and Reimbursement Approval Process 54
  • 7.2 Japan 55
    • 7.2.1 Macroeconomic Factors (PEST Analysis) 55
    • 7.2.2 Healthcare System in the Country 55
    • 7.2.3 Total Expenditure on Healthcare as a Percentage of GDP 56
    • 7.2.4 Private and Government Expenditure on Healthcare as a Percentage of Total Healthcare Expenditure 57
    • 7.2.5 Revisions to the National Health Insurance Drug Price List 58
    • 7.2.6 Trends in Pricing and Reimbursement 58

8 Pharmaceutical Pricing and Reimbursement - Australia 59

  • 8.1 Macroeconomic Factors (PEST Analysis) 59
  • 8.2 Healthcare System in the Country 60
    • 8.2.1 Expenditure on Healthcare as a Percentage of GDP 60
    • 8.2.2 Private and Government Expenditure on Healthcare as a Percentage of Total Healthcare Expenditure 61
  • 8.3 Flow Chart for Flow of Funds in Australia 62
  • 8.4 Trends in Pricing and Reimbursement 62
    • 8.4.1 Remuneration Issues of Section 94 Private Hospitals 62
    • 8.4.2 Pharmacy Mark-Up Charts 63

9 Pharmaceutical Pricing and Reimbursement - Appendix 64

  • 9.1 Market Definitions 64
  • 9.2 Abbreviations 64
  • 9.3 Bibliography 65
  • 9.4 Research Methodology 67
  • 9.5 Healthcare System 67
  • 9.6 Pricing and Reimbursement Process 67
  • 9.7 Key Trends 67
  • 9.8 Contact Us 68
  • 9.9 Disclaimer 68

List of Tables

1.1 List of Tables

  • Table 1: Pharmaceutical Pricing and Reimbursement, Trend Analysis of Healthcare Expenditure Per Capita, ($), 2008-2010 12
  • Table 2: Pharmaceutical Pricing and Reimbursement, Public Health Expenditure as a Percentage of Total Health Expenditure, 2008-2010 14
  • Table 3: Pharmaceutical Pricing and Reimbursement, Out-of-Pocket Expenditure as a Percentage of Private Expenditure on Health, 2008-2010 15
  • Table 4: Pharmaceutical Pricing and Reimbursement, Healthy Life Years beyond the Age of 65 for Males and Females, 2010 16
  • Table 5: Pharmaceutical Pricing and Reimbursement, Healthcare Expenditure as a Percentage of GDP, The US, 2001-2010 21
  • Table 6: Pharmaceutical Pricing and Reimbursement, Private and Government Expenditure on Healthcare as a Percentage of Total Healthcare Expenditure, The US, 2001-2010 22
  • Table 7: Pharmaceutical Pricing and Reimbursement, Total Expenditure on Healthcare as a Percentage of GDP, The UK, 2001-2010 27
  • Table 8: Pharmaceutical Pricing and Reimbursement, Private and Government Expenditure on Healthcare as a Percentage of Total Healthcare Expenditure, The UK, 2001-2010 28
  • Table 9: Pharmaceutical Pricing and Reimbursement, The UK, General Price Changes (%), 2009-2013 29
  • Table 10: Pharmaceutical Pricing and Reimbursement, The UK, List of Treatments with Approved Patient Access Schemes, Recommended by National Institute for Clinical Excellence for Use in the National Healthcare Service, 2012 30
  • Table 11: Pharmaceutical Pricing and Reimbursement, List of Drugs Not to be Reimbursed from March 1, 2012, France 32
  • Table 12: Pharmaceutical Pricing and Reimbursement, Expenditure on Healthcare as a Percentage of GDP, France , 2001- 2010 33
  • Table 13: Pharmaceutical Pricing and Reimbursement, Private Expenditure and General Government Expenditure on Healthcare as a Percentage of Total Healthcare Expenditure, France, 2001-2010 34
  • Table 14: Pharmaceutical Pricing and Reimbursement, Examples of Drugs Affected by Reimbursement Cuts, France, 2011 35
  • Table 15: Pharmaceutical Pricing and Reimbursement, Expenditure on Healthcare as a Percentage of GDP, Germany, 2001-2010 39
  • Table 16: Pharmaceutical Pricing and Reimbursement, Private and Government Expenditure on Healthcare as a Percentage of Total Healthcare Expenditure, Germany, 2001-2010 40
  • Table 17: Pharmaceutical Pricing and Reimbursement, Expenditure on Healthcare as a Percentage of GDP, Spain, 2001-2010 43
  • Table 18: Pharmaceutical Pricing and Reimbursement, Private and Government Expenditure on Healthcare as a Percentage of Total Healthcare Expenditure, Spain, 2001-2010 44
  • Table 19: Pharmaceutical Pricing and Reimbursement, Changes in Pharmaceutical Expenditure in 2012 from 2011 (%), Spain, 2011-2012 45
  • Table 20: Pharmaceutical Pricing and Reimbursement, Expenditure on Healthcare as a Percentage of GDP, Italy, 2001-2010 47
  • Table 21: Pharmaceutical Pricing and Reimbursement, Private and Government Expenditure on Healthcare as a Percentage of Total Healthcare Expenditure, Italy, 2001-2010 48
  • Table 22: Pharmaceutical Pricing and Reimbursement, List of Innovative Drugs for Regions, AIFA, Italy, 2010 50
  • Table 23: Pharmaceutical Pricing and Reimbursement, Total Expenditure on Healthcare as a Percentage of GDP, China, 2001-2010 52
  • Table 24: Pharmaceutical Pricing and Reimbursement, Private and Government Expenditure on Healthcare as a Percentage of Total Healthcare Expenditure, China, 2001-2010 53
  • Table 25: Pharmaceutical Pricing and Reimbursement, Total Expenditure on Healthcare as a Percentage of GDP, Japan, 2001-2010 56
  • Table 26: Pharmaceutical Pricing and Reimbursement, Private and Government Expenditure on Healthcare as a Percentage of Total Healthcare Expenditure, Japan, 2001-2010 57
  • Table 27: Pharmaceutical Pricing and Reimbursement, Expenditure on Healthcare as a Percentage of GDP, Australia, 2001-2010 60
  • Table 28: Pharmaceutical Pricing and Reimbursement, and Government Expenditure on Healthcare as a Percentage of Total Healthcare Expenditure, Australia, 2001-2010 61
  • Table 29: Pharmaceutical Pricing and Reimbursement, Pharmacy Mark-up Chart Comparison, Australia, 2012 63

List of Figures

1.2 List of Figures

  • Figure 1: Pharmaceutical Pricing and Reimbursement, Trend Analysis of Healthcare Expenditure Per Capita, ($), 2008-2010 12
  • Figure 2: Pharmaceutical Pricing and Reimbursement, Public Healthcare Expenditure as a Percentage of Total Healthcare Expenditure, 2008-2010 13
  • Figure 3: Pharmaceutical Pricing and Reimbursement, Out-of-Pocket Healthcare Expenditure as a Percentage of Private Expenditure on Healthcare, 2008-2010 15
  • Figure 4: Pharmaceutical Pricing and Reimbursement, Healthy Life Years beyond the Age of 65 for Males and Females, 2010 16
  • Figure 5: Pharmaceutical Pricing and Reimbursement, PEST Analysis, The US, 2012 20
  • Figure 6: Pharmaceutical Pricing and Reimbursement, Healthcare Expenditure as a Percentage of GDP, The US, 2001-2010 21
  • Figure 7: Pharmaceutical Pricing and Reimbursement, Private and Government Expenditure on Healthcare as a Percentage of Total Healthcare Expenditure, The US, 2001-2010 22
  • Figure 8: Pharmaceutical Pricing and Reimbursement, PEST Analysis, The UK, 2012 25
  • Figure 9: Pharmaceutical Pricing and Reimbursement, Total Expenditure on Healthcare as a Percentage of GDP, The UK, 2001-2010 27
  • Figure 10: Pharmaceutical Pricing and Reimbursement, Private and Government Expenditure on Healthcare as a Percentage of Total Healthcare Expenditure, The UK, 2001-2010 28
  • Figure 11: Pharmaceutical Pricing and Reimbursement, PEST Analysis, France, 2012 31
  • Figure 12: Pharmaceutical Pricing and Reimbursement, Expenditure on Healthcare as a Percentage of GDP, France, 2001-2010 33
  • Figure 13: Pharmaceutical Pricing and Reimbursement, Private Expenditure and General Government Expenditure on Healthcare as a Percentage of Total Healthcare Expenditure, France, 2001-2010 34
  • Figure 14: Pharmaceutical Pricing and Reimbursement, PEST Analysis, Germany, 2012 37
  • Figure 15: Pharmaceutical Pricing and Reimbursement, Healthcare expenditure, ($) per inhabitant, Germany, 2011 38
  • Figure 16: Pharmaceutical Pricing and Reimbursement, Expenditure on Healthcare as a Percentage of GDP, Germany, 2001-2010 39
  • Figure 17: Pharmaceutical Pricing and Reimbursement, Private and Government Expenditure on Healthcare as a Percentage of Total Healthcare Expenditure, Germany, 2001-2010 40
  • Figure 18: Pharmaceutical Pricing and Reimbursement, PEST Analysis, Spain, 2012 42
  • Figure 19: Pharmaceutical Pricing and Reimbursement, Expenditure on Healthcare as a Percentage of GDP, Spain, 2001-2010 43
  • Figure 20: Pharmaceutical Pricing and Reimbursement, Private and Government Expenditure on Healthcare as a Percentage of Total Healthcare Expenditure, Spain, 2001-2010 44
  • Figure 21: Pharmaceutical Pricing and Reimbursement, PEST Analysis, Italy, 2012 46
  • Figure 22: Pharmaceutical Pricing and Reimbursement, Expenditure on Healthcare as a Percentage of GDP, Italy, 2001-2010 47
  • Figure 23: Pharmaceutical Pricing and Reimbursement, Private and Government Expenditure on Healthcare as a Percentage of Total Healthcare Expenditure, Italy, 2001-2010 48
  • Figure 24: Pharmaceutical Pricing and Reimbursement, PEST Analysis, China, 2012 51
  • Figure 25: Pharmaceutical Pricing and Reimbursement, Total Expenditure on Healthcare as a Percentage of GDP, China, 2001-2010 52
  • Figure 26: Pharmaceutical Pricing and Reimbursement, Private and Government Expenditure on Healthcare as a Percentage of Total Healthcare Expenditure, China, 2001-2010 53
  • Figure 27: Pharmaceutical Pricing and Reimbursement, PEST Analysis, Japan, 2012 55
  • Figure 28: Pharmaceutical Pricing and Reimbursement, Total Expenditure on Healthcare as a Percentage of GDP, Japan, 2001-2010 56
  • Figure 29: Pharmaceutical Pricing and Reimbursement, Private and Government Expenditure on Healthcare as a Percentage of Total Healthcare Expenditure, Japan, 2001-2010 57
  • Figure 30: Pharmaceutical Pricing and Reimbursement, Formula To Calculate New Drug Price, Japan, 2012 58
  • Figure 31: Pharmaceutical Pricing and Reimbursement, PEST Analysis, Australia, 2012 59
  • Figure 32: Pharmaceutical Pricing and Reimbursement, Expenditure on Healthcare as a Percentage of GDP, Australia, 2001-2010 60
  • Figure 33: Pharmaceutical Pricing and Reimbursement, Private and Government Expenditure on Healthcare as a Percentage of Total Healthcare Expenditure, Australia, 2001-2010 61
  • Figure 34: Pharmaceutical Pricing and Reimbursement, Flow of Funds, Australia, 2012 62
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