[Regulation of drug prices in nineteenth-century Bazilian pharmacy]

On November 5th, 1808, D. João de Bragança issued a license about the practice of druggists and the price of drugs and ordered the creation of a regulation to tax the cost of medicines marketed in Brazil. First published on 1809, the Regimento dos preços dos medicamentos... gained new editions in the following years and became an indispensable working tool for those involved in the making and trading of drugs at this time. This paper situates historically and sheds light on a document briefly explored by the researchers of the history of the Brazilian pharmacy, taking into account that it was one of the first initiatives of the Luso-Brazilian government in line with the pharmaceutical activity in Brazil in the nineteenth century.

Changes in List Prices, Net Prices, and Discounts for Branded Drugs in the US, 2007-2018

IMPORTANCE

Most studies that have examined drug prices have focused on list prices, without accounting for manufacturer rebates and other discounts, which have substantially increased in the last decade.

OBJECTIVE

To describe changes in list prices, net prices, and discounts for branded pharmaceutical products for which US sales are reported by publicly traded companies, and to determine the extent to which list price increases were offset by increases in discounts.

DESIGN, SETTING, AND PARTICIPANTS

Retrospective descriptive study using 2007-2018 pricing data from the investment firm SSR Health for branded products available before January 2007 with US sales reported by publicly traded companies (n = 602 drugs). Net prices were estimated by compiling company-reported sales for each product and number of units sold in the US.

EXPOSURES

Calendar year.

MAIN OUTCOMES AND MEASURES

Outcomes included list and net prices and discounts in Medicaid and other payers. List prices represent manufacturers' price to wholesalers or direct purchasers but do not account for discounts. Net prices represent revenue per unit of the product after all manufacturer concessions are accounted for (including rebates, coupon cards, and any other discount). Means of outcomes were calculated each year for the overall sample and 6 therapeutic classes, weighting each product by utilization and adjusting for inflation.

RESULTS

From 2007 to 2018, list prices increased by 159% (95% CI, 137%-181%), or 9.1% per year, while net prices increased by 60% (95% CI, 36%-84%), or 4.5% per year, with stable net prices between 2015 and 2018. Discounts increased from 40% to 76% in Medicaid and from 23% to 51% for other payers. Increases in discounts offset 62% of list price increases. There was large variability across classes. Multiple sclerosis treatments (n = 4) had the greatest increases in list (439%) and net (157%) prices. List prices of lipid-lowering agents (n = 11) increased by 278% and net prices by 95%. List prices of tumor necrosis factor inhibitors (n = 3) increased by 166% and net prices by 73%. List prices of insulins (n = 7) increased by 262%, and net prices by 51%. List prices of noninsulin antidiabetic agents (n = 10) increased by 165%, and net prices decreased by 1%. List price increases were lowest (59%) for antineoplastic agents (n = 44), but discounts only offset 41% of list price increases, leading to 35% increase in net prices.

CONCLUSIONS AND RELEVANCE

In this analysis of branded drugs in the US from 2007 to 2018, mean increases in list and net prices were substantial, although discounts offset an estimated 62% of list price increases with substantial variation across classes.

States as Activists

Empowered to play a larger role in the delivery and administration of health care, a number of states are attempting to solve the pharmaceutical pricing crisis in creative and varied ways. This essay summarizes three particular states' more activist approaches, including states that have sought to empower their Medicaid programs to limit coverage of certain drugs based on price, attempted to use leverage to impose cost-efficiency requirements, and, in the most dramatic example, relied on new usage of "gouging" laws to bring down the costs of prescription drugs. Although all three approaches have met substantial resistance, they illustrate a new era of state experimentation in an effort to bring down the cost of prescription drugs.

Higher Drug Prices from Anticompetitive Conduct: Three Case Studies

U.S. consumers pay high drug prices. Brand-name drug companies claim that these prices are justified by pathbreaking research and development. But, sometimes the prices result from anticompetitive conduct. This article offers three case studies of how such behavior can increase price based on wakefulness drug Provigil, the allergic-reaction-treating EpiPen, and infection-treating Daraprim. The article contends that behavior that makes no sense other than by harming a competitor, that undercuts a regulatory regime, or that involves collusive conduct should not be protected. In targeting this behavior, antitrust scrutiny promises to lower drug prices.

If PBMs Guard Access to Drugs, Then Quis Custodiet Ipsos Custodies? (Who Will Guard the Guardians?)

Insulin prices in the United States have risen dramatically in recent years, yet pharmacies cannot provide a stable price for a given insulin due to factors that are not widely understood. This commentary discusses the complex and obscure factors that drive today's insulin prices with a discussion of the other players, besides the insulin manufacturer, who benefit from higher prices. An open discussion is critical regarding this drug and others that are essential to the lives of millions of people with diabetes. We'll also explore whether the market introduction of biosimilar insulin will impact insulin prices.

The Parity Paradigm: Can Legislation Help Reduce the Cost Burden of Oral Anticancer Medications?

Over the last decade, there has been increased development and use of oral anticancer medications, which sometimes leads to high cost sharing for patients. Drug parity laws require insurance plans to cover oral anticancer medications with the same cost sharing as intravenous/injected chemotherapy or have a capped limit on out-of-pocket costs. There are currently 36 enacted state laws (plus the District of Columbia) addressing drug parity, but no federal laws. In this policy perspective piece, we discuss the history, opportunities, and limitations of drug parity laws in oncology. We also discuss the implications of provisions of the Affordable Care Act and other proposed policy reforms on financing oral chemotherapy.

A Case Study of Pharmaceutical Pricing in China: Setting the Price for Off-Patent Originators

This article aims to define a value-based approach to pricing and reimbursement for off-patent originators using a multiple criteria decision analysis (MCDA) approach centered on a systematic analysis of current pricing and reimbursement policies in China. A drug price policy review was combined with a quantitative analysis of China's drug purchasing database. Policy preferences were identified through a MCDA performed by interviewing well-known academic experts and industry stakeholders. The study findings indicate that the current Chinese price policy includes cost-based pricing and the establishment of maximum retail prices and premiums for off-patent originators, whereas reference pricing may be adopted in the future. The literature review revealed significant differences in the dissolution profiles between originators and generics; therefore, dissolution profiles need to be improved. Market data analysis showed that the overall price ratio of generics and off-patent originators was around 0.54-0.59 in 2002-2011, with a 40% price difference, on average. Ten differentiating value attributes were identified and MCDA was applied to test the impact of three pricing policy scenarios. With the condition of implementing quality consistency regulations and controls, a reduction in the price gap between high-quality off-patent products (including originator and generics) seemed to be the preferred policy. Patents of many drugs will expire within the next 10 years; thus, pricing will be an issue of importance for off-patent originators and generic alternatives.

Pharmaceutical cost-containment policies and sustainability: recent Irish experience

OBJECTIVE

Our objective is to review and assess the main pharmaceutical cost-containment policies used in Ireland in recent years, and to highlight how a policy that improved fiscal sustainability but worsened economic sustainability could have improved both if an option-based approach was implemented.

METHOD

The main public pharmaceutical cost-containment policy measures including reducing the ex-factory price of drugs, pharmacy dispensing fees and community drug scheme coverage, and increasing patient copayments are outlined along with the resulting savings. We quantify the cost implications of a new policy that restricts the entitlement to free prescription drugs of persons older than 70 years and propose an alternative option-based policy that reduces the total cost to both the state and the patient.

RESULTS

This set of policy measures reduced public spending on community drugs by an estimated €380m in 2011. The policy restricting free prescription drugs for persons older than 70 years, though effective in reducing public cost, increased the total cost of the drugs supplied. The policy-induced cost increase stems from a fees anomaly between the two main community drugs schemes which is circumvented by our alternative option-based policy.

CONCLUSIONS

Our findings highlight the need for policymakers, even when absorbed with reducing cost, to design cost-containment policies that are both fiscally and economically sustainable.

Financial effects of pharmaceutical price regulation on R&D spending by EU versus US firms

EU countries closely regulate pharmaceutical prices, whereas the US does not. This paper shows how price constraints affect the profitability, stock returns and R&D spending of EU and US firms. Compared with EU firms, US firms are more profitable, earn higher stock returns and spend more on R&D. We tested the relationship between price regulation and R&D spending, and estimated the costs of tight EU price regulation. Although results show that EU consumers enjoyed much lower pharmaceutical price inflation, we estimated that price controls cost EU firms 46 fewer new medicines and 1680 fewer research jobs during our 19-year sample period. Had the US used controls similar to those used in the EU, we estimate it would have led to 117 fewer new medicines and 4368 fewer research jobs in the US.

Recent developments in health law

In May of 2006, the Abigail Alliance for Better Access to Development Drugs (Abigail) appeared to have won a victory when a divided panel of the Court of Appeals for the District of Columbia Circuit (D.C. Circuit) ruled that “terminally ill, mentally competent adult patients” had a constitutionally protected right to access investigational medications. This victory was short lived, however. On August 7, 2007, the D.C. Circuit sitting en banc reversed this earlier decision, marking a setback in Abigail's campaign for removal of the regulatory barriers that currently prevent terminally ill patients from gaining early access to investigational drugs (i.e., experimental drugs). This loss represents a big blow for Abigail's cause, because there is no guarantee that they will have another day in court, and attaining their goal through other branches of the government remains uncertain.

Pricing and reimbursement of pharmaceuticals in the Czech Republic and Sweden

OBJECTIVES

To describe and compare price regulation and reimbursement in the Czech Republic and Sweden.

METHODS

Legal documents, government reports, statutory information, annual reports and scientific articles were searched using the keywords: pharmaceutical market regulation, drug policy, drug pricing, drug reimbursement and patients' participation in costs concerning both countries. Approaches to regulation and regulatory steps concerning prices were compared between the countries.

MAIN OUTCOME MEASURE

(i) Institutional responsibilities in pricing and reimbursement of pharmaceuticals; (ii) principles of patients' participation in costs on pharmaceuticals.

RESULTS

Substantial differences were found in terms of pricing. In the Czech Republic, the Ministry of Finance sets maximal prices for pharmaceuticals whereas in Sweden there is a process of price regulation combined with reimbursement decisions taken by the Pharmaceutical Benefits Board. Together with a system of state-owned pharmacies, this ensures that drug prices in Sweden are fixed at the same level throughout the country. In the Czech Republic, prices may differ, since only maximal price levels are set. In both countries, decisions about reimbursement are taken at the national or state level whereas insurance funds or county councils are responsible for covering costs. The private share of pharmaceutical expenditures is substantially lower in the Czech Republic, even though there is no maximal level for patient's co-payment, as there is in Sweden.

CONCLUSION

Differences in price setting and some other regulations of the pharmaceutical market were found. Both systems are designed to promote rational use of pharmaceuticals; and are based on social solidarity.

Re-examining ‘professionalism’ in pharmacy: A South African perspective

Although defining itself as a patient-centred profession, private sector (community and private hospital) pharmacy often appears to be that of a product-for-profit centred occupation. This perception has been at the core of the medical profession's attempts to reduce the professional autonomy of pharmacy, and has appeared at the forefront of the South African Department of Health's positioning of private sector pharmacy. Using as a starting point the debate surrounding attempts by the South African Minister of Health to regulate the price of medicines, I propose that the present negative positioning of private sector pharmacy in South Africa could be ameliorated by pharmacy practice that evidences a redefined understanding of professionalism.

Prescription or proscription? The general failure of attempts to litigate and legislate against PBMS as "fiduciaries," and the role of market forces allowing PBMS to contain private-sector prescription drug prices

Pharmacy benefit managers (PBMs), which generally administer prescription drug benefits as one component of an employer's or other sponsor's health insurance plan, have come under fire in recent years for turning profits at a time when consumer advocates and employers are struggling to contain the costs of health insurance and prescription drugs. Lawsuits alleging that PBMs are breaching certain fiduciary duties to the health plans they serve, however, have failed for the most part on grounds that PBMs are not "fiduciaries" under the Employee Retirement Income Security Act (ERISA). Moreover, states' attempts to regulate PBMs through legislation imposing fiduciary obligations and other related requirements have also generally failed for many different reasons. This Article examines the PBM industry, recent legal developments concerning PBMs' status as ERISA "fiduciaries", the arguments being made for and against stricter regulation of PBMs' business practices, and why litigation and legislation attempting to impose fiduciary obligations upon PBMs have generally failed. The authors conclude that it is market forces and competition, rather than litigation or legislation, that will effectively motivate PBMs to play a role in the cost containment of prescription drugs in the years ahead.

The impact of reference pricing of nonsteroidal anti-inflammatory agents on the use and costs of analgesic drugs

OBJECTIVE

To estimate the effect of reference pricing (RP) of nonsteroidal anti-inflammatory drugs (NSAIDs) on drug subsidy program and beneficiary expenditures on analgesic drugs.

DATA SOURCES/STUDY SETTING

Monthly claims data from Pharmacare, the public drug subsidy program for seniors in British Columbia, Canada, over the period of February 1993 to June 2001.

STUDY DESIGN

RP limits drug plan reimbursement of interchangeable medicines to a reference price, which is typically equal to the price of the lowest cost interchangeable drug; any cost above that is borne by the patient. Pharmacare introduced two different forms of RP to the NSAIDs, Type 1 in April 1994 and Type 2 in November 1995. Under Type 1 RP, generic and brand versions of the same NSAID are considered interchangeable, whereas under Type 2 RP different NSAIDs are considered interchangeable. We extrapolated average reimbursement per day of NSAID therapy over the months before RP to estimate what expenditures would have been without the policies. These counterfactual predictions were compared with actual values to estimate the impact of the policies; the estimated impacts on reimbursement rates were multiplied by the postpolicy volume of NSAIDS dispensed, which appeared unaffected by the policies, to estimate expenditure changes.

PRINCIPAL FINDINGS

After Type 2 RP, program expenditures declined by $22.7 million (CAN), or $4 million (CAN), annually cutting expenditure by about half. Most savings accrued from the substitution of low-cost NSAIDs for more costly alternatives. About 20 percent of savings represented expenditures by seniors who elected to pay for partially reimbursed drugs. Type 1 RP produced one-quarter the savings of type 2 RP.

CONCLUSIONS

Type 2 RP of NSAIDs achieved its goal of reducing drug expenditures and was more effective than Type 1 RP. The effects of RP on patient health and associated health care costs remain to be investigated.

Pharmaceutical policy in Italy: towards a structural change?

Italian pharmaceutical policy has recently moved towards a "two lanes" approach, with regulation differing according to a drug's patent status. This study analyses the Italian regulatory framework, focusing on policies related to "off-patent" drugs. Three main regulatory innovations have been examined: (i) generics, introduced in Italy for the first time in 1996; (ii) the reference pricing (RP) scheme, under which consumers pay part of the cost of high-priced products; (iii) pharmacists' right of substitution, supported by a regressive margins system. The recent reforms are already producing some worthwhile results, at least in terms of competitive pressure on the (few) substances that run out of patent protection. However, further intervention could be required to achieve long-term sustainability.

Pharmaceutical pricing, price controls, and their effects on pharmaceutical sales and research and development expenditures in the European Union

BACKGROUND

Each country in the European Union (EU) currently employs direct price controls or permutations of direct price controls, such as reference pricing or limitations on returns to capital. Some countries also use volume controls. A new proposal that is being discussed would have all of the countries in the EU adopt uniform pricing for each pharmaceutical.

OBJECTIVE

This paper analyzes the economic effects of free-market pricing individual-country price controls, and uniform EU price controls.

METHODS

Microeconomic and mathematical models were used to simulate and predict probable economic outcomes in a comparative static setting.

RESULTS

Price controls may be in the form of price ceilings or price floors. Both forms of price control generate deadweight economic losses in the short run and long run. A uniform EU price for each pharmaceutical sold there would have elements of a price ceiling in some of the countries and of a price floor in other countries. The deadweight loss incurred would be a function of the level at which the uniform price was set by the EU and the price elasticity of demand for each pharmaceutical in each country.

CONCLUSIONS

Economic efficiency is maximized in both the short run and long run when prices are set in freely competitive markets. An additional important dimension of Ramsey pricing within a competitive context is that it generates funds for investment in pharmaceutical research and development, which enhances economic efficiency in the long run.

Average wholesale price for prescription drugs: is there a more appropriate pricing mechanism?

This paper defines the average wholesale price (AWP), which has become an important benchmark for prescription drug pricing and reimbursement.The paper briefly explains the AWP's various uses in the pricing of prescription drugs, highlights some of the problems that have emerged as a result of the way it is reported and used, and explores some of the possibilities for reform. The paper also contains a glossary of commonly used terms, as well as an appendix that lists the state Medicaid reimbursement formulas.

Department of Veterans Affairs. Copayments for medications. Final rule

This document amends VA's medical regulations to set forth copayment requirements for medications. This is necessary to implement provisions of the Veterans Millennium Health Care and Benefits Act.

Pharmaceutical price controls and patient welfare

Price controls could have a substantial negative effect on pharmaceutical research and development. Extensive research is required before the development costs of a new drug or its benefits are known; most new drug development projects fail, sometimes after substantial financial and time costs. These conditions pose intractable practical problems for the operation of price controls, which cannot rest on objective, predictable standards such as the benefits or costs of individual drugs. In the absence of objective standards, pressure from health care providers and others would create powerful incentives for price regulators to decrease drug prices toward marginal costs of production and distribution, well below levels sufficient to reward innovative research. This downwardly biased price-setting mechanism would apply with particular force to the few successful projects that yield innovative drugs, whose prices would not be set by regulatory authorities until after research expenditures have been incurred and the new drugs are ready to enter the market. Manufacturers will expect price controls to reduce the potential payoffs from breakthrough drugs. This expectation would substantially reduce the incentives to pursue innovative research, as is evident in advanced economies in which price controls are now in force. Once established, price controls for pharmaceuticals, like those for medical services in the Medicare system, would also tend toward complexity and entrenchment of vested interests and could easily become permanent regardless of the harm they cause to patients.