Drug pricing and reimbursement concerns

In 2019, drug pric­ing pres­sure from reg­u­la­tors, patients, politi­cians and pay­ers will remain and aggres­sive nego­ti­a­tion tac­tics to dri­ve down drug prices are expect­ed, says Glob­al­Da­ta, a lead­ing data and ana­lyt­ics company.

The company’s lat­est annu­al out­look report, ‘The State of the Bio­phar­ma­ceu­ti­cal Indus­try – 2019’, reveals that 51% of glob­al indus­try respon­dents believe that drug pric­ing and reim­burse­ment con­straints will have the great­est neg­a­tive impact on the phar­ma­ceu­ti­cal indus­try in 2019.

Accord­ing to Bon­nie Bain, PhD, Glob­al Head of Phar­ma at Glob­al­Da­ta, this response is not sur­pris­ing, espe­cial­ly giv­en that increased pres­sure from the Trump admin­is­tra­tion led to price freezes in 2018.

Even though Brex­it and US polit­i­cal uncer­tain­ty were high pro­file news sto­ries in 2018, the respon­dents viewed them as a dis­tant sec­ond at 11% each. Con­trast­ing­ly, respon­dents were mixed on the fac­tors that would have the great­est pos­i­tive impact. The Rise of Chi­na, ver­ti­cal inte­gra­tion and patent expiry of bio­log­ics are expect­ed to have an equal impact at 20% each.

Despite con­cerns about a trade war between the US and Chi­na, it is not a sur­prise that Chi­na is still viewed as a huge mar­ket oppor­tu­ni­ty for the phar­ma­ceu­ti­cal industry.

The health­care indus­try saw sev­er­al big ver­ti­cal inte­gra­tions in 2018 such as Aetna/CVS and Cigna/Express Scripts. These deals are tout­ed as oppor­tu­ni­ties to gain effi­cien­cy and low­er cost of care, but it is still too ear­ly to deter­mine their long-term impact. The one thing that is cer­tain is that this trend will like­ly con­tin­ue in 2019, as the indus­try looks for new ways to con­trol costs and increase margins.

While 30% of respon­dents believe that patent expiry of bio­log­ics will have a major impact in 2019, Glob­al­Da­ta antic­i­pates that the imme­di­ate impact will be less than expect­ed, par­tic­u­lar­ly in the US. Although sev­er­al biosim­i­lars are now approved in the US, the pace of their sub­se­quent launch and mar­ket growth remains slow and most biosim­i­lars still face stiff legal bat­tles. On aver­age, the price dif­fer­en­tial between biosim­i­lars and their brand­ed coun­ter­parts is only about 30% which is sig­nif­i­cant­ly less than the cost sav­ings seen with the aver­age gener­ic drug.