The economics of prescription drugs
This presentation is the property of its rightful owner.
Sponsored Links
1 / 38

The Economics of Prescription Drugs PowerPoint PPT Presentation


  • 130 Views
  • Uploaded on
  • Presentation posted in: General

The Economics of Prescription Drugs. Bio-Pharmaceuticals. New Chemical Entities (NCEs). Importance of Pharmaceuticals. Market Structure. Industry Concentration. Competition at Product Level. Within patent competition Generics after patent expiration

Download Presentation

The Economics of Prescription Drugs

An Image/Link below is provided (as is) to download presentation

Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author.While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server.


- - - - - - - - - - - - - - - - - - - - - - - - - - E N D - - - - - - - - - - - - - - - - - - - - - - - - - -

Presentation Transcript


The economics of prescription drugs

The Economics of Prescription Drugs


Bio pharmaceuticals

Bio-Pharmaceuticals

  • New Chemical Entities (NCEs)


Importance of pharmaceuticals

Importance of Pharmaceuticals


Market structure

Market Structure

  • Industry Concentration


Competition at product level

Competition at Product Level

  • Within patent competition

    • Generics after patent expiration

    • On patent competition from non patent friendly countries

  • Between patent competition

    • Me Too drugs and the “Gold mine” problem


The case of adhd drugs

The Case of ADHD Drugs


Firm size effect

Firm Size Effect


Government regulation

Government Regulation

  • Regulation by the Food and Drug Administration (FDA)


Stages for a nce

Stages for a NCE

  • Discovery

  • Preclinical animal testing

  • File application for human testing

  • Phase I

  • Phase II

  • Long-term animal studies

  • Phase III

  • New drug approval


Liberalization of fda process

Liberalization of FDA Process

  • Generics

  • Orphan Drugs

  • Compassionate Use

  • User fee act of 1992

  • Requirement of Prescriptions (Rx)

  • Liberalization of Rx Req.


Cost benefit analysis of regulation

Cost Benefit Analysis of Regulation

  • Issues of agency, and who suffers the costs and benefits.


Cost benefit analysis of regulation1

Cost Benefit Analysis of Regulation

  • Effects of regulation on pharmaceuticals success in world markets


Demand for pharmaceuticals

Demand for Pharmaceuticals

  • Effects of increased insurance coverage for prescription drugs

  • Effects of direct marketing


Trends in promotional spending for prescription drugs 1996 2007

Trends in Promotional Spending for Prescription Drugs, 1996-2007

Promotional Spending ($ in billions)

NA

NA

NA

Total Spending:

$9.2

$11.0

$12.5

$13.9

$16.6

$19.1

$21.1

$24.2

$27.7

$11.4

$12.0

$10.4

Note: NA = Not Available. Numbers may not total due to rounding. Sampling is the value of samples left at sales visits to office-based physicians; the samples are valued at the prices at which they would be sold in retail pharmacies. Sampling data were not available for 2005 and 2006, so Total Spending numbers exclude amounts for Sampling. Detailing is expenses for the sales activities of pharmaceutical company representatives directed to office-based and hospital-based physicians and hospital directors of pharmacies; approximately 85% of detailing is for office-based sales visits. Direct-to-Consumer Advertising is expenses for advertising to consumers through television, magazines and newspapers, radio, and outdoors. Professional Journal Advertising is expenses for advertising appearing in medical journals.

Source: The Kaiser Family Foundation and the Sonderegger Research Center, Prescription Drug Trends, A Chartbook Update, November 2001, Exhibit 17, at http://www.kff.org/insurance/3161-index.cfm, updated by the Kaiser Family Foundation with data from the IMS Health website at http://www.imshealth.com (About Us, Press Room, 2007 Top-Line Industry Data, U.S.).


The economics of prescription drugs

Talking to Doctors as a Result of Prescription Drug Ads, 2008

As a result of seeing an ad for an Rx drug, have you ever talked with a doctor about the specific medicine you saw or heard advertised, or not?

Among the 32% who have talked to a doctor as a result of seeing an Rx drug ad: Percent who said the doctor did one or more of the following…

Recommended you make lifestyle/ behavior changes

Recommended a different prescription

Gave you the prescription for the drug you asked about

No

Yes

Recommended an over the counter drug

Recommended any prescription drug

SOURCE: USA Today/Kaiser Family Foundation/Harvard School of Public Health: The Public On Prescription Drugs and Pharmaceutical Companies (conducted Jan. 3-23, 2008)


Pricing issues

Pricing Issues

  • Pricing Differentials between brand name and generic drugs

  • Discounts to third party payers

  • Pharmacy benefits management firms

  • Price differences between countrues


Profitability of us pharma

Profitability of US Pharma


The economics of prescription drugs

Profitability of Pharmaceutical Manufacturers Compared to Other Industries, 1995-2006

Note: Percent is the median percent net profit after taxes as a percent of firm revenues for all firms in the industry.

Source: Kaiser Family Foundation and Sonderegger Research Center, Prescription Drug Trends: A Chartbook Update, November 2001, Exhibit 4.11, at http://www.kff.org/insurance/3161-index.cfm, updated with data from Fortune, Fortune 500 Industry Rankings: April 14, 2003, Vol. 147, No. 7, p. F-26; April 5, 2004, Vol. 149, No. 7, p. F-26; April 18, 2005, Vol. 151, No. 8, p. F-28; April 17, 2006, Vol. 153, No. 7, p. F-26; April 30, 2007, Vol. 155, No. 8, p. F-32.


International trade

International Trade

  • TRIPS (Trade Related Aspects of Intellectual Property Rights 1994)


The economics of prescription drugs

American Public’s Views About Prescription Drugs

Upside

Downside

Do you think Rx drugs developed over the past 20 years have generally made the lives of people in the U.S…?

In general, do you think the price of Rx drugs is reasonable or unreasonable?

Better

Unreasonable

DK

Haven’t made much difference/DK

Worse

Reasonable

SOURCE: USA Today/Kaiser Family Foundation/Harvard School of Public Health: The Public On Prescription Drugs and Pharmaceutical Companies (conducted Jan. 3-23, 2008)


The economics of prescription drugs

Serious Problems Paying, Not Filling Prescriptions and Skipping Rx Drug Doses Because of Cost, 2008

In past two years, have ever NOT filled a prescription because of the cost

In past two years, have skipped doses or cut pills in half to make Rx last longer

Say it is a serious problem for self/family to pay for Rx drugs you need

Percent who say yes to at least one of the above

SOURCE: USA Today/Kaiser Family Foundation/Harvard School of Public Health: The Public On Prescription Drugs and Pharmaceutical Companies (conducted Jan. 3-23, 2008)


Medicaid in the health system 2006

Medicaid in the Health System, 2006

Medicaid as a share of national health care spending:

Total

National Spending

(billions)

$2,106

$648

$660

$125

$217

NOTE: Does not include spending on SCHIP

SOURCE: Kaiser Commission on Medicaid and the Uninsured, based on A Catlin et al, “National Health Spending in 2006: A Year of Change for Prescription Drugs,” Health Affairs 27(1)14-29, January/February 2008. Based on National Health Care Expenditure Data, CMS, Office of the Actuary.


The economics of prescription drugs

Problems Paying for Prescription Drugs, 2008

How much of a problem is it for you or your family to pay for prescription medicines that you need?

A serious problem

Not much of a problem

41%

A problem, but not serious

Source: USA Today/Kaiser Family Foundation/Harvard School of Public Health: The Public On Prescription Drugs and Pharmaceutical Companies (conducted Jan. 3-23, 2008).


The economics of prescription drugs

Price (Manufacturer Price Increases)

19%

Price (Manufacturer Price Increases)

25%

Utilization

(# of Prescriptions Dispensed)

42%

Utilization

(# of Prescriptions Dispensed)

47%

Types of Prescription Drugs Used

34%

Types of Prescription Drugs Used

34%

Relative Contributions of Utilization, Types of Prescription Drugs Used, and Price to Rising Prescription Drug Expenditures, 1993-1997 vs. 1997-2002

1993-1997

1997-2002

Source: Kaiser Family Foundation and Sonderegger Research Center analysis using National Health Expenditures data for prescription drugs from the Centers for Medicare and Medicaid Services, Office of the Actuary, National Health Statistics Group, at http://www.cms.gov/statistics/nhe/historical/, Table 2; price data from IMS Health, Pharmaceutical Pricing UPDATE, various years; and utilization data from IMS Health, National Prescription Audit Plus, various years, updated with data from the IMS Health web site at http://www.imshealth.com.


The economics of prescription drugs

Percent of Seniors Who Did Not Fill or Delayed Filling

Prescriptions Due to Cost, by Source of Drug Coverage, 2006

(Among Non-Institutionalized Seniors Taking 1 or More Rx)

NOTES: Did not fill or delayed filling prescriptions due to cost refers to within the past twelve months. VA is Department of Veterans Affairs. Reference group for statistical significance is Part D coverage (*p<0.05).

SOURCE: Kaiser/Commonwealth/Tufts-New England Medical Center National Survey of Seniors and Prescription Drugs, 2006.


6 drugs of the future

6 Drugs of the future


The economics of prescription drugs

Cancer Vaccine


The economics of prescription drugs

Male Birth Control Pill


The economics of prescription drugs

Anti-Addiction Pill


The economics of prescription drugs

Exercise Pill


Anti aging pill

Anti-Aging Pill


The economics of prescription drugs

Smart Pill


Pharma ads

Pharma Ads


  • Login