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Price Cuts Drive Down Healthcare Costs

By R&D Editors | June 5, 2012

Pharmacoeconomic evaluations examining the cost of a drug in relation to its medical benefits are allowing reimbursement agencies to literally put a price on patient health, according to a new report by healthcare experts GBI Research.

The new report examines the new Pharmaceutical Price Regulation Scheme (PPRS), which includes flexible pricing arrangements, enabling pharmaceutical companies to supply drugs to the National Health Service (NHS) at lower initial prices, with the option of an increase based upon future positive medical evidence. It has been argued that the initial launch indication of a medicine may not fully reflect its longer-term value to patients, so this new scheme allows manufacturers to set initial prices for medicines that reflect value at launch, while retaining the freedom to alter this in light of later evidence.

Appraisals are provided by the National Institute of Health and Clinical Excellence (NICE), who reviews revised prices for medicines, and decides whether they provide value for money for the NHS. In some European countries such as France, Italy and Spain, expenditure on pharmaceuticals showed a decreasing trend during 2007-2009 due to the prevailing financial crisis in Europe, encouraging governments to more recently introduce measures to reduce the prices of generics and patented products. Increasing pressure from reimbursement groups during the recession have made it essential for pharmaceutical companies to prove the worth of their products.

Pharmacoeconomic evaluations help companies to rationalize premium pricing and provide substantial data to influence prescribers, while at the same time the evaluations provide a basis for reimbursement agencies to make decisions on whether the drug is good enough to be reimbursed or not.

Internationally, the use of pharmacoeconomics and research into drug outcomes is promoted by International Society for Pharmacoeconomics and Outcomes Research (ISPOR), which has 4,500 members from 89 countries, including those from pharmaceutical, biotech, medical device companies and academia. ISPOR has provided universal guidelines for pharmacoeconomic assessment, to give a comprehensive understanding of the different processes involved in evaluation, and to assist in the decision-making process for the financing and management of a pharmaceutical product within a national healthcare system.

However, as the report demonstrates, generalization in pharmacoeconomic evaluations is low, as each country sets their own specific guidelines reflecting country-specific issues. Strict adherence to such guidelines would lead to a better assessment of the drug in context.

Date: May 29, 2012
Source: GBI Research

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