Introduction to price optimization
Pricing and reimbursement in the US
Pricing and reimbursement in Japan
Pricing and reimbursement in Europe
Key drivers of price
Global pricing strategy

Summary
Introduction
Definitions
Price optimization
Cost containment
Reimbursement regulations
Reference pricing
Pharmacoeconomics
Parallel importing
Generic substitution
Key issues
The aims of price optimization
The drivers of cost containment
A proliferation of reimbursement regulations
The complexities of reference pricing
The utilization of pharmacoeconomic evaluations
The impact of parallel importing
The effects of generic substitution
Key contexts
Niche market therapy
Breakthrough blockbuster therapy
‘Me-too’ specialty therapy
‘Me-too’ blockbuster therapy

Summary
Introduction
Healthcare system
Medicare
Proposals for Medicare drug benefits
Medicaid
Private health coverage
Pharmacy benefit managers
Pricing regulations
A tradition of free pricing
Moves towards price controls in Maine?
Medicare drug benefit plan
Florida’s Medicaid drug rebates
Price-fixing
Impact of pharmacoeconomics
The use of pharmacoeconomics by public healthcare funding bodies
The use of pharmacoeconomics by private healthcare providers
The future use of pharmacoeconomics in the US
Impact of parallel importing
Potential source markets of parallel imports to the US
Impact of generic substitution
The Waxman-Hatch Act
Pediatric exclusivity
Anti-competition legislation
Delaying tactics and 180-day generic drug exclusivity
Possible future changes
Future pricing scenarios
Best case pricing scenario
Worst case pricing scenario
Most likely pricing scenario

Summary
Introduction
Healthcare system
Pricing regulations
Reforming
Future reforms
Impact of pharmacoeconomics
Impact of parallel importing
Impact of generic substitution
Future pricing scenarios
Best case pricing scenario
Worst case pricing scenario
Most likely pricing scenario

Summary
Introduction
Healthcare systems

France
Germany
Italy
Spain
The UK

Pricing regulations in Europe

France
Germany
Italy
Spain
The UK

Impact of pharmacoeconomics

France
Germany
Italy
Spain
UK

Impact of parallel importing
Price differentials
Exchange rates
Initiatives to encourage use of parallel imports
Ability to obtain a license to import products
Future developments
Regulations and key legal decisions

Merck & Co. vs. Stephar
Bayer (Adalat)
Bristol-Myers Squibb vs. Paranova
The Silhouette case
The Maglite case
The Davidoff case

Impact of generic substitution
The mutual recognition procedure
Future changes in European generics legislation
Future pricing scenarios
Best case pricing scenario
Worst case pricing scenario
Most likely pricing scenario

Summary
Introduction
Reimbursement and pricing
Patient coverage versus average price levels
Reimbursement levels across different therapy areas
Summary of reimbursement trends
Reference pricing
Innovative products
Effective products with many competitors
Me-too drugs
Summary of reference pricing trends
Modeling the drivers of pricing
Modeling price drivers
Price sensitivity
Reimbursement and contracting
Optimal pricing strategy
Global price optimization

Summary
Introduction
Reimbursement and pricing
Reference pricing
R&D strategy
Choosing a comparator and target profile

Case study: Seretide/Advair
Case study: Geodon
Case Study: HER-2 DNA AutoVac

Pharmacoeconomics
Portfolio management
Negotiation efforts
Marketing strategy
Launch order
Launching outside reimbursement
Case Study: Aricept
Full reimbursement versus price cuts/use restrictions
Not launching
Promotional efforts
DTC advertising
Patient access
Physician detailing

Case studies
Taxol (paclitaxel)
Aricept (donepezil)
Protease inhibitors
Imigran (sumatriptan)
Second-generation statins
ACE inhibitors
Canesten (clotrimazole)
Amoxil (amoxicillin)
Primary research methodology
Glossary
Sources
Index

Figure 1.1: Total health expenditure as a proportion of GDP in the seven major pharmaceutical
markets, 1991-2008 25
Figure 1.2: Total expenditure on pharmaceuticals and other medical non-durables as a proportion
of total health expenditure, 1991-2008 27
Figure 1.3: European drug index – ex-factory prices, 1986–1999 35
Figure 1.4: Drivers and resistors of pharmacoeconomics 39
Figure 1.5: Pharmaceutical product differentiation versus patient base matrix 45
Figure 2.6: Drivers and resistors of parallel importing into the US 72
Figure 4.7: External reference pricing in Europe, 2008 112
Figure 4.8: The NICE appraisal cycle 126
Figure 5.9: Comparative summary of reimbursement and average price levels in the seven major
markets, 2008 147
Figure 5.10: Average reimbursement levels of drugs for major diseases across six major markets,
2001 151
Figure 5.11: Price demand and response curves 160
Figure 5.12: Market share and revenue impact of reimbursement and formulary status 162
Figure 5.13: Global pricing and the interaction between country markets 165
Figure 6.14: Strategic pricing and marketing options for pharmaceutical companies in different
pricing and reimbursement scenarios 170
8
Figure 6.15: Strategies to maximize revenues and profits in a reference pricing environment 171
Figure 6.16: Improving pricing negotiations through R&D 172
Figure 6.17: The pricing pill - improving pricing negotiating through demonstrating product value
173
Figure 6.18: Cost-benefit analysis of different strategies to maximize revenue in a reference pricing
environment 181
Figure 6.19: Maximizing returns through European launch order in a reference pricing environment
183
Figure 7.20: Case studies by product differentiation versus patient base 191
Figure 7.21: Relationship between price, prescription rates and sales of Taxol (paclitaxel), 2008 194
Figure 7.22: Relationship between price, prescription rates and sales of Aricept (donepezil), 2008
198
Figure 7.23: Relationship between price, prescription rates and sales of Imigran (somatriptan), 2008
203
Figure 7.24: Relationship between price, prescription rates and sales of Zocor (simvastatin), 2008
209
Figure 7.25: Relationship between price, prescription rates and sales of Lipitor (atorvastatin), 2008
210
Figure 7.26: Relationship between price, prescription rates and sales of Canesten (clotrimazole),
2008 215
Figure 7.27: Relationship between price, prescription rates and sales of Amoxil (amoxicillin), 2008
219
List of Tables
Table 1.1: Total health expenditure as a proportion of GDP in the seven major pharmaceutical
markets, 1991-2008 26
Table 1.2: Total expenditure on pharmaceuticals and other medical non-durables as a proportion
of total health expenditure, 1991-2008 28
Table 2.3: Future pricing scenarios in the US 81
Table 3.4: Co-payments for drugs/services in Japan, 2008 88
Table 3.5: Future pricing scenarios in Japan 97
Table 4.6: European cost containment measures, 2008 105
Table 4.7: Future pricing scenarios in Europe 140
Table 5.8: Reimbursement levels of drugs for major diseases in six major markets, 2008 149
Table 7.9: Relative reimbursement status, price, prescription rates and sales of Taxol (paclitaxel),
2008 193
Table 7.10: Relative reimbursement status, price, prescription rates and sales of Aricept
(donepezil), 2008 197
Table 7.11: Relative reimbursement status, price, prescription rates and sales of Imigran
(somatriptan), 2008 203
Table 7.12: Relative reimbursement status, price, prescription rates and sales of Zocor
(simvastatin), 2008 208
Table 7.13: Relative reimbursement status, price, prescription rates and sales of Lipitor
(atorvastatin), 2008 210
Table 7.14: Relative reimbursement status, price, prescription rates and sales of Canesten
(clotrimazole), 2008 215
Table 7.15: Relative reimbursement status, price, prescription rates and sales of Amoxil
(amoxicillin), 2008 218