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versus

Regionalization. versus. Harmonization. Fernando Royo 3rd Pharma Pricing Strategies Conference Rome, 16/01/08. The newly enlarged EU. The newly enlarged EU. Approx. 500 Mio. Inhabitants. Combined GDP > € 12 Trillion (€ 12,172,536,000,000).

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versus

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  1. Regionalization versus Harmonization Fernando Royo 3rd Pharma Pricing Strategies Conference Rome, 16/01/08

  2. The newly enlarged EU

  3. The newly enlarged EU Approx. 500 Mio. Inhabitants Combined GDP > € 12 Trillion (€12,172,536,000,000) Healthcare Spending = approx 8.7 % of GDP (€1,059 Billion) A harmonized economic & regulatory framework but…

  4. Δ x7 !! Source: Eurostat with much larger differences between MS

  5. with much larger differences between MS Is this new environment really “harmonic”/sustainable?

  6. Sellers (offer) Buyers (demand) It further complicates an already complex P&R scenario While in consumer goods true “Free Market” rules apply

  7. the patients (users) the prescribers the suppliers (industry + distribution) THE PAYORS the regulatory authorities In pharmaceuticals, we’ve always had… …and last, but not LEAST

  8. Now, with a new “twist”: Regionalization e.g., Spain’s 17 Regions (“Autonomous Communities”) hold increasingly broad political and administrative powers. Among them, the management of Healthcare

  9. What are the consequences for P&R? 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 patient’s access to innovative/expensive therapies. Trans-regional “prescription filling” is already happening

  10. Regionalization of Healthcare is also increasingly relevant in other European countries

  11. = R&D Production SG&A Costs Pricing of Orphan Drugs General Pharma Pricing Outline:Irrespective 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

  12. = R&D Production SG&A Costs …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

  13. What are the possible strategies for a sustainable P&R 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 P&R of therapies remain based on traditional pharmaceutical “units”? Reducing the “uncertainty risk” financial costs through public/private partnership initiatives

  14. Thank you for your attention

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