Pricing Pharmaceuticals: Has Public Policy

Delivered?Paul K Gorecki

ESRI & TCD Irish Economic Policy Conference 2014:

Economic Policy After the BailoutInstitute of Bankers, IFC, Dublin

31 January 2014

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STRUCTURE OF PRESENTATION

2010: What was the problem?2013: Towards a successful

resolution?Two Observations on 2010-2013Future Policy: What Remains to be

Done?

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Ireland High & Rising Pharma Expenditure:2010

Ireland’s Ranking in PharmaceuticalExpenditure Per Head CpOther OECD Countries:

2000 – 20th highest of 27 OECD countries2005 – 9/312010 – 3/25

US PharmaceuticalExpenditure Per HeadSet = 100, then Irelandwould be as follows:

2000 – 462005 – 582010 - 70

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High Input & Mediocre Outcome:2010“In 2010, per capita expenditure spending on pharmaceuticals in Ireland was the highest inthe EU, 34% above the average, while healthoutcomes are not better than the average forEU countries over a range of high-levelindicators.” European Commission, EconomicAdjustment Programme for Ireland, Autumn2012.

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Pharmaceutical Prices: 2010 Generic pharmaceuticals:

Low generic usage cp other MS High generic prices cp to other MS

New pharmaceuticals: Consistently high prices cp to other MS Germany only MS consistently higher prices

Framework for Pricing Decisions: Voluntary DoH/HSE & industry agreements No legal basis for generic substitution

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Pharmaceutical Pricing: 2013

Framework for Price Setting Health (Pricing & Supply of Medical Goods) Act 2013

Generic Pharmaceuticals (28% expenditure) Generic substitution permitted IMB certified 13 active substances (statins, ACE inhibitors) HSE has set reference price for two drugs (atorvastatin,

esomeprazole), large decline in price New Pharmaceuticals (72% expenditure)

Stock -HSE rolling assessment as per the Act (pregabalin) Flow – default status quo or use of Act’s powers?

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Two Observations on Pharmaceutical Pricing: 2010-2013

DoH/HSE strategy since 2009 to reduce pharmaceutical expenditure through eg reductions in wholesale & pharmacy margins.

2010 – 2013 favourable conditions for reform of pharmaceutical pricing Agreement on problem/solution Austerity – greater emphasis on VFM EU-IMF Programme for Reform for Ireland

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Future Policy: What Remains to be Done?

Building on the Health (Pricing & Supply of Medical Goods) Act 201 What is DoH/HSE policy towards pricing of new

drugs? Release on a monthly basis PCRS data

Quality Adjusted Life Year (QALY) Is €45,000 threshold the right price? If so, under what conditions, if any, should the

threshold be exceeded?

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Further reading

P. Gorecki, A. Nolan, A. Brick & S Lyons (2012) Delivery of Pharmaceuticals in Ireland. Getting a Bigger Bang for the Buck. RS 24. Dublin: ESRI.

A. Brick, P. Gorecki & A. Nolan (2013) Ireland: Pharmaceutical Prices, Prescribing Practices and Usage of Generics in a Comparative Context. RS 32. Dublin: ESRI.