OECD Health Policy Studies

ISSN :
2074-319X (online)
ISSN :
2074-3181 (print)
DOI :
10.1787/2074319x
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This series of publications analyses the organisation and performance of health systems, and factors explaining performance variations. Studies are conducted on such topics as co-ordination of care, pharmaceutical pricing, long-term care and disability, health workforce and international migration of health workers, information and communications technologies in health care, and the economics of prevention. 
Also available in: French
 
Pharmaceutical Pricing Policies in a Global Market

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Author(s):
OECD
Publication Date :
24 Sep 2008
Pages :
216
ISBN :
9789264044159 (PDF) ; 9789264044142 (print)
DOI :
10.1787/9789264044159-en

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Pharmaceutical policy making raises particular challenges in reconciling key objectives for health policy, such as ensuring affordable access to the latest effective drugs, with other important policy considerations, such as providing support to a valuable national industry. Unusually among health policy issues, it also raises international considerations that further complicate decision making, particularly as the nature and extent of such considerations are not well understood.

This report assesses how pharmaceutical pricing and reimbursement policies have contributed to the achievement of certain health policy objectives. It examines the national and transnational effects of these policies, in particular, their implications for the availability of medicines in other countries, the prices of these medicines, and innovation in the pharmaceutical sector.

This publication presents an analysis of comparative price levels, making use of a unique dataset to construct the most comprehensive pan-OECD pharmaceutical price index to date. It also draws upon original case studies of pharmaceutical pricing and reimbursement policies in six OECD countries to provide specific examples of the impacts of policies on health system performance.

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    Key Characteristics of the Pharmaceutical Sector in OECD Economies
    This chapter serves to provide context for the analysis of pharmaceutical pricing policy presented in later chapters of this report. It provides an overview of the pharmaceutical sector in OECD countries, identifying key cross-country differences and similarities. The chapter begins by describing pharmaceutical expenditure levels and cross-country differences in the value of consumption and in retail prices paid. It then assesses the role of the pharmaceutical industry in OECD economies, in terms of the levels of production, R&D and trade.
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    The Pharmaceutical Industry and its Activities
    This chapter provides an overview of the key characteristics and activities of the global pharmaceutical industry. Its aim in so doing is to provide context for the subsequent analysis of the role of pharmaceutical pricing and reimbursement policy as determinants of key outcomes. It begins with an overview of the pharmaceutical industry and continues with discussions on trends in R&D, output and sales. A final section provides an overview of the product life-cycle management activities used by manufacturers in efforts to maximise profits.
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    Pharmaceutical Pricing and Reimbursement and the Broader Pharmaceutical Policy Environment
    The pricing and reimbursement policies used in OECD countries are described and analysed in this chapter. It begins with a description of the coverage schemes that serve to pool risks and defray the pharmaceutical costs borne by individuals. It continues by describing the pharmaceutical pricing schemes employed in OECD countries, including the methods used to limit pharmaceutical prices and define reimbursement price levels. A concluding section provides an overview of aspects of intellectual property rights and marketing authorisation policies that are most important in defining the pharmaceutical policy environment.
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    The Impact of Pharmaceutical Pricing Policies on Performance in Meeting Health Policy Goals
    This chapter reviews OECD countries’ efforts to achieve prompt access to, and appropriate use of, effective medicines, to control pharmaceutical expenditure and to increase value for money in public pharmaceutical expenditures. It begins with an assessment of the role of pharmaceutical pricing and reimbursement policies in promoting public health. Analysis of the impact of pricing and reimbursement policies on pharmaceutical price levels follows. In the subsequent section, the means by which these policies are used to contain costs is examined. The final section looks at how successful pharmaceutical pricing and reimbursement policies are in getting good value for money in pharmaceutical spending
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    The Impact of National Pricing and Reimbursement Practices on Prices and Availability of Medicines in Other Countries
    This chapter examines the transnational impact of national pricing and reimbursement policies. Pharmaceutical pricing policies, and their impacts on prices and availability of medicines, are becoming more exportable in a globalised market. This chapter documents these and assesses the extent of their transnational effects. The various strategies that manufacturers in a globalised pharmaceutical market use in response to national pricing policies are also examined. Finally, the extent to which pricing policies and manufacturers’ strategies have led to convergence among countries in pharmaceutical prices is assessed.
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    The Impact of Pharmaceutical Pricing Policies on Pharmaceutical Innovation
    This chapter describes the determinants of R&D in the pharmaceutical sector and the key factors that contribute to R&D decisions. It next considers the role played by pharmaceutical pricing and reimbursement policies in influencing the level and type of innovation. It evaluates the incentives and disincentives for investment in R&D that may be created by pricing and reimbursement policies, and considers the extent to which these policies also influence the level of financing available for investment.
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    Conclusions
    The OECD project on pharmaceutical pricing policy has taken a close look at the evolving market for pharmaceutical products and the ways in which pricing policies serve to shape that market, yielding a number of conclusions. As tools for meeting a range of pharmaceutical policy objectives, the approaches most widely used in OECD countries to arrive at prices for pharmaceuticals – external and internal price referencing – are problematic in a number of respects. International price benchmarking (or external referencing) is readily gameable by the pharmaceutical industry and – by reducing firms’ willingness to price to market – contributes to access and affordability problems in the lower-income OECD countries, some of which spend close to a third of their health-care resources on pharmaceuticals.
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