1 / 22

The Economic Impact of Pharmaceutical Parallel Trade: A Stakeholder Analysis

The Economic Impact of Pharmaceutical Parallel Trade: A Stakeholder Analysis. Panos Kanavos, PhD London School of Economics, UK AcademyHealth, San Diego, 8 June 2004. Agenda. Drug pricing and financing in Europe The issue of parallel trade Data and methods Results

zulema
Download Presentation

The Economic Impact of Pharmaceutical Parallel Trade: A Stakeholder Analysis

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. Content is provided to you AS IS for your information and personal use only. Download presentation by click this link. While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server. During download, if you can't get a presentation, the file might be deleted by the publisher.

E N D

Presentation Transcript

  1. The Economic Impact of Pharmaceutical Parallel Trade:A Stakeholder Analysis Panos Kanavos, PhD London School of Economics, UK AcademyHealth, San Diego, 8 June 2004

  2. Agenda • Drug pricing and financing in Europe • The issue of parallel trade • Data and methods • Results • Conclusions and policy implications

  3. Approaches to drug regulation in the EU

  4. Price differences per unit in EU countries, DDD-adjusted, in €, 2002

  5. Prices of most common presentation, in €, 2002

  6. Parallel trade in the EU • Regional exhaustion of rights • Considerable jurisprudence by the ECJ • Significant uptake: 1998 – 2002 • Actively encouraged by some member-states

  7. Market share of parallel imports, 1997-2002

  8. United Kingdom 1. Discounts to pharmacy 2. Clawback Germany 1. Quota to pharmacies for PI dispensing 2. Penalties for not adhering to quota Denmark 1. Information on PI use 2. Mandatory substitution The Netherlands 1. 1/3 of price difference accrues to pharmacy 2. Clawback encouraging pharmacies to procure more cost-effectively Sweden 1. Information and PI substitution 2. Aggregate payment to pharmacy for work on generics and PI drugs Incentives encouraging the use of PI medicines in Europe

  9. The Research Agenda Quantify economic impact of parallel trade in six major destination countries Focus on 6 widely used product classes* accounting for 22% of branded retail market (15-28% depending on country); account for some of the most highly PT products Apportion static benefits to individual stakeholders Research Endpoints Examine direct effects, arising from price differences between locally sourced and PI drugs (list prices and discounts) Competition effects in destination countries and price convergence Competition effects across countries – does arbitrage work? Research agenda and endpoints * Statins, ACE I and ACE II inhibitors, PPIs, SSRIs, and Atypical antipsychotics

  10. Table 1. CBT market shares of selected drugs products 2002 Market shares of PI products, 2002 Norway Germany Sweden Denmark UK Netherlands Atorvastatin 2% 0% 17% 5% 54% 12% Pravastatin 14% 1% 19% 0% 38% 7% Simvastatin 36% 10% 0% 56% 65% 51% Captopril 3% 1% 0% 7% 2% 0% Enalapril 24% 0% 19% 5% 4% 1% Quinalapril 0% 8% 0% 39% 8% 17% Ramipril 0% 3% 18% 19% 0% 21% Losartan 0% 0% 0% 0% 72% 0% Valsartan 0% 5% 0% 0% 23% 20% Clozapine 58% 0% 74% 13% 0% 10% Olanzapine 11% 63% 24% 0% 47% 8% Risperidone 42% 62% 32% 25% 45% 33% Lansoprazole 0% 42% 0% 0% 31% 14% Omeprazole 4% 0% 16% 0% 19% 11% Pantoprazole 0% 6% 0% 0% 32% 18% Citalopram 6% 17% 21% 19% 25% 15% Fluoxetine 1% 5% 20% 17% 10% 34% Paroxetine 9% 19% 47% 43% 18% 6% Sertraline 0% 9% 8% 25% 23% 14%

  11. A. Direct effects • Health Insurance • Pharmacy • Patients • Parallel importers • Industry

  12. Allocation of benefits (1)

  13. Allocation of benefits (2)

  14. Costs of parallel importers in destination countries

  15. Distribution of benefits: comparative presentation by stakeholder (3)

  16. B. Competition effectsin destination countries

  17. Competition effects within countries- Germany

  18. C. Competition effects across countries

  19. Price convergence with lowest price country, 1997-2002

  20. Impact on industry • Ø Pharmaceutical manufacturers incur a significant loss of business in destination countries from the conduct of parallel trade. • Ø The conduct of parallel trade reduces manufacturers’ overall profitability (loss of producer surplus), without necessarily increasing societal welfare. • Ø Reduced overall profitability may lead to downsizing in source countries over the medium term. • Ø Threatens European industry competitiveness

  21. Concluding remarks – the European experience • Modest savings to health insurance organisations through direct (price) effects • Zero or, at best, marginal benefits to patients • Little evidence of intra- or inter-country competition effects and price convergence • Some benefits to pharmacies • Most pecuniary benefits accrue to parallel distributors and the overall distribution chain • Transfer from industry (producer) surplus mostly to the distribution chain and less so to health insurance and patients • Evidence of product shortages in source countries

  22. Concluding remarks - Lessons for the USA • 1. Safety concerns • 2. Exhaustion of rights • 3. Savings to stakeholders • Insurance • Patients • Wholesalers • 4. Supply issue • 5. Competition and Pricing

More Related