As we head closer towards mid-2019, many national and international trends have made themselves known in the global pharmaceutical industry. The US remains – by quite a large percentage – the world’s largest market for over-the-counter and prescription medication: it is a territory where companies can make huge profits due to the lack of regulation regarding pricing and market access when compared to other countries that have more stringent pricing regulations. Here are some of the biggest 2019 pharma industry trends to look out for.
A Potential Decrease in Certain Drug Costs
Recently, President Trump proposed changes to Medicare costs that look eerily similar to external reference pricing that is employed by more socialized healthcare systems around the world. Germany introduced this pricing system in 1989 and it quickly spread to other marketplaces around the world. This pricing methodology is a system where the patient’s coinsurance depends on the price of the drug itself, as well as the price of alternative medications or therapies. Generally, the rate is set once the difference between the brand-name drug’s retail price and the generic – or “reference” product – is calculated. So, if drug A costs $1000 and drug B costs $200, and the patient’s coinsurance rate is 10% of any cost larger than the reference price, the patient would end up paying $80 a month. [($1000-$200) x.1] 24 out of the 32 countries that belong to the EU use reference pricing in combination with other pricing regulations or by itself.
Pharma Sales Growth is on the Decline
With the huge amount of competition and saturation in the marketplace of well-developed markets such as the United States and Europe, pharmaceutical sales growth has experienced a slower increase when compared to previous years; however, emerging markets that demonstrate a need for unmet healthcare necessities (India, Brazil, China, etc.) have experienced a growth surge in pharma sales. These fast-industrializing emerging markets are experiences an average drug spending growth rate of 12.8% per period, more than twice the rate of average global growth.
The Rise of Biosimilars
When a patent expires on a costly brand-name drug, other companies can copy said drug and sell it for a significantly reduced rate as a generic. Biosimilars are different from generics in the sense that they are not identical copies of the brand name drug; rather, there may be slight differences in certain sugar molecules that lie on the surface of large protein molecule drugs. Therefore, Biosimilars may have the same clinical effect as a brand-name drug, but differ slightly in chemical composition. Generics have identical chemical compositions to brand-name drugs.
Currently, the FDA has approved 13 biosimilar products, while the European Medicines Agency has approved around 50. Biosimilars eliminate a large percentage of clinical trials, as drug processors already know the toxicity profile and biological activity of the drug.
Biosimilars have the potential to significantly reduce the financial burden that many brand-name drugs place on insurance entities and consumers. However, many brand-name patents (such as the blockbuster drug Humira) protect against biosimilar intrusions for financially competitive reasons. Despite opposition from many pharmaceutical companies, biosimilars are beginning to emerge as a powerful future entity in the world of biologics.
A Change in Research and Development
R&D for the pharmaceutical industry is moving towards a more value-based, less is more model. Rather than search for marginal improvements to safety or drug efficacy, market competition is forcing companies to take a new approach to their R&D departments. This may include immunotherapies, gene therapies, and other innovative treatments for a slew of intractable diseases. Meaningful and powerful healthcare transformation is what pharmaceutical companies are now striving for, as innovation can entail a reduction in expensive hospital stays and an improvement in the therapeutic benefits and cost offsets of western medicine.
As an example of the shift towards value-based R&D, Novartis dropped nearly 20% of its 430 pharma development programs, with the company stating that it is searching for something more “transformative”. Less is more for research and development departments if pharmaceutical companies wish to stay competitive.
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