Introduction to Market Access for Pharmaceuticals

Mondher Toumi, Mondher Toumi

• Publisher: CRC Press
• Year: 2017
• ISBN:
  9781315314587
• Edition: 1
• Topic: Medicine
• Subtopic: Pharmacology

Market access is the fourth hurdle in the drug development process and the primary driver for global income of any new drug. Without a strategy in place for pricing, showing value for effectiveness and an understanding of the target purchasers' needs, the drug will fail to reach its intended market value. Introduction to Market Access for Pharmaceuticals is based on an accredited course in this area, taken from the European Market Access University Diploma (EMAUD), and is affiliated with Aix Marseille University.

Key Features:

• The first guide to market access for pharmaceuticals based on tested teaching materials
• Addresses both pharmaceutical and vaccine products
• Includes case studies and scenarios
• Covers market access consdierations for Western Europe, the USA, Japan and China
• Explains the impact the changing healthcare market will have on your product

1	Health as a Good

1.1 WELFARE ECONOMICS AND HEALTH

The health care market has been expanding globally for the past few decades. The demand of the population for better health is increasing steadily, and to face this challenge, health producers have to adapt and include economic perspective as a key component of the health care environment.

But can health be considered from an economic point of view? The foundations of the French medicine, for example, are based on the obligation of the practitioners to involve each and every resource necessary for the well-being of a patient.¹ Is this concept really compatible with an economic control of the health consumption? One can strive to achieve maximization of the utility of a population, but is it consistent with minimization of expenditures that needs to be taken into account due to economic constraints?

If we define health consumption as a set of health care products that can be used by the population, then several notions have to be determined in order to understand the specifics of health goods, compared to other goods and services of an optimal market as defined by Pareto (1906).²

Pareto defined the optimality of a market as an economic state where resources are allocated in such a way that it is impossible to make any one individual better off without making at least one individual worse off.

This implies the following two theorems of welfare economics³:

• Any competitive equilibrium leads to a Pareto efficient allocation of resources.

• Any Pareto efficient allocation can be achieved through competition given an appropriate initial allocation of resources.

We would like to introduce a few elementary notions concerning health and health care in order to make sure that terms and concepts will be understood properly.

Health itself cannot be bought, what actually is purchasable is the health care as a proxy of health. As Grossman introduced in 1972, buying health care will allow an individual to invest in his health capital that will decrease over time.⁴ Thus, the buyer’s concern will be the amount of health production which their investment will contribute to their health capital, and it is important to note that this capital can neither be shared nor traded with others. Indeed, it is possible to give advice on consequences of risky behaviors or dispense health care, but one cannot pretend to give a part of his/her health directly to another.

In Sections 1.2 through 1.6, we will demonstrate the particularities of the health care market and why this market cannot tend by itself to optimality/efficiency as described by Pareto in 1906.

1.2 HEALTH CARE: A MIXED AND COLLECTIVE GOOD

The health care products cannot be considered like any other goods because, first of all, they have the particularity to be mixed and collective. Indeed, they cannot be defined as rival or excludable (like private goods are), but some congestive effects can appear: patients can consume the same medical goods or services at the same time (nonrival), nonpaying consumers can have an access to it (nonexcludable), but if too many patients are using the same health care product, its production might not be sufficient to be consumed by every patient (congestive).

For example, the introduction of a preventive strategy to avoid the diffusion of an infectious disease (such as a vaccine or an educational program) concerns the patient at an individual level (his protection), but also as a part of a community. In the vaccine example, different patients could be able to receive it and people who have not got the injection will still get “protected” by the others, but the number of available vaccines can be restricted and so not everyone would be able to get an injection.

There is also the possibility for those particular goods to induce externalities. Externalities are a consequence of an activity on a party who have not decided to generate this activity.⁵ A good example of a positive externality would be the benefit of a healthy worker on the results of a company.

Health care can also be considered as public good, because, just like education or public transport, it is a part of the public services provided (at a certain level depending on the country) by the state. Potential consequences of the public aspect could be an equal access to the continuity of care as well as, for certain countries, a universal access.

Key points:

1. Health care is a mixed and collective good

2. Health care can induce externalities

3. Consequence of a health care as a public good: universal access and continuity of care

1.3 EQUITY, HEALTH, AND HEALTH CARE

The fact that health is essential to human life creates a need to obtain or sustain the health irrespective of the resources involved. However, people do not have the same resources to invest in their health capital (time or money), which makes them unequal in front of the health risk and need. This situation is unacceptable in a fair society. This is why mechanisms have been implemented to ensure that everyone is able to receive the necessary health care for their condition, such as programs that provide insurance for the lowest income population or services that are free of charge at the point-of-use (emergency and some social services).

Key points:

1. Individuals are unequal in front of the health risk and need

2. Mechanisms have been introduced to insure equity (specific insurances and free services at the point-of-use)

1.4 UNCERTAINTY RELATED TO THE DEMAND AND RESULTS

One particularity of the health care as a good is the fact that the demand for health care is not stable throughout time and it is unpredictable (Arrow 1963). Indeed, the uncertainty related to the occurrence or the gravity of an event disturbs the organization of the health care, with potential terrible consequences, in terms of human and economic losses. To illustrate this, we would consider the example of Ebola virus outbreak in 2014 that caused a massive human loss in Africa, but also required a substantial budget to fight against the epidemic.

It is noteworthy that there is often an uncertainty around the expected outcome when using health care. For example, for the treatment of cancer, there is always a risk that a patient will not recover from sickness and also the diagnostic tests are not 100 percent specific or sensitive.

These two aspects of the uncertainty tend to demonstrate that goods and services related to health are risky and could be incredibly costly.

Key points:

1. Occurrence or gravity of a disease is unpredictable

2. Uncertainty surrounds the expected health production related to health care

3. Goods and services related to health are risky and costly

1.5 PHYSICIAN’S EXPECTED BEHAVIOR

Another source of uncertainty concerns the relation between physicians and the patients. The patients are not fully able to judge the quality and quantity of a health care good or a service. In contrast to other products such as food, consumers are less able to assess the results from the consumption of a medical good or service and to learn from their experiences. Thus, the medical knowledge can be considered a key component of the relationship between physicians and patients: the larger the degree of information asymmetry persists in the relationship, the more uncertain the patients are about the outcome of the health care they receive.

This leads the health care good to be considered as a trust good: the quality of the product is never revealed to the patient and the perception of the good by the patient will only reflect on the trust related to the physician. Health care goods can also be considered as an experience good: when it is difficult to estimate the quality or price of a product, then the experience gained through the consumption will help to better estimate those parameters. It reduces in part the uncertainty about the quality or price, and the reputation or opinion about the physician or a health care product will play an important role in the patient’s future decisions.

This biased relationship could induce some discrepancies in physician’s behavior. As patients are not able to evaluate the precise accuracy of the physician’s actions, the primary objective of the physicians (well-being of the patients, altruism, etc.) could also be altered by their personal motivation. This could significantly impact the consumption of goods.

However, the availability of medical knowledge tends to change this information asymmetry and to impact the patient’s behavior, who sometimes can develop a wider knowledge on specific topics and so, redefine the relationship with the physician.

Key points:

1. Relationship between health care givers and patients is biased by the information asymmetry related to the quality and quantity of care

2. This relation can also be biased by physician’s personal motivation

3. Health care goods are considered as trust goods or experience goods

1.6 SUPPLY CONDITION

The particularity of the medical goods in terms of supply condition lies in the limitation of the offer through licensing restrictions. Indeed, one has to be licensed to offer health care services. The cost of medical education (in some countries), as well as the time and effort spent studying, limits the number of practitioners. However, this allows reducing the risk related to the uncertainty in the patient–physician relationship. Indeed, the education will contribute to ethic, deontology, and quality of care, and so could improve the effectiveness of health care.

The limitation of the offer is also impacted by the high cost related to the installation of physicians and the available quality already existing on a competitive market.

Key points:

1. Offers are limited by licensing restrictions and the high cost of the installation

2. Offers are also limited by the number of practitioners related to the cost of medical education and the technicality of the study

1.7 DISCUSSION

These specific characteristics clearly demonstrate that medical goods and services compose a nonoptimal market without an efficient allocation of resources. The market is not regulated by the demand and supply, and the macroeconomic equilibrium is achieved through three elementary components: the demand of care, the supply of care, and the financing. Thus, this market needs to be coordinated b...

Table of contents

• Cover
• Half Title
• Title Page
• Copyright Page
• Table of Contents
• Foreword
• Acknowledgments
• Author
• Common Abbreviations
• Introduction
• Chapter 1 Health as a Good
• Chapter 2 Decision-Making in Public Health
• Chapter 3 Definitions and Concepts
• Chapter 4 HTA Decision Analysis Framework
• Chapter 5 Early HTA Advice
• Chapter 6 Overview of Market Access Agreements
• Chapter 7 External Reference Pricing
• Chapter 8 Gap between Payers and Regulators
• Chapter 9 Early Access Programs
• Chapter 10 Market Access of Orphan Drugs
• Chapter 11 Market Access of Vaccines in Developed Countries
• Chapter 12 France
• Chapter 13 Germany
• Chapter 14 Italy
• Chapter 15 Spain
• Chapter 16 Sweden
• Chapter 17 United Kingdom
• Chapter 18 Belgium
• Chapter 19 The United States
• Chapter 20 Japan
• Chapter 21 China
• Epilogue
• Index