Pharmaceutical pricing and Market Access (GW4575M)
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Erasmus Universiteit Rotterdam (EUR)
Literature review to answer the working groups.
All compulsory papers (ALL WEEKS) have been summarised and the most important pictures are included in the summaries.
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Pharmaceutical pricing and Market Access (GW4575M)
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Literature Summary Pharmaceutical Pricing and Market Access
Week 1:
• Hansen (Chp 3) – The LifeCycle of a Pharmaceutical Brand
The characteristics of product life cycles vary between industries. There are a number of specific features of the pharmaceutical
industry that affect product lifecycles.
The four fundamental features that influence lifecycle management strategies (LCM) are:
1. Drugs are easy to make
2. Patents prevent copy products
3. Consumers don’t pay for drugs (and if they do, there is value creation through commercials)
4. Governments set prices and support generics
Lifecycle curve of pharmaceuticals:
Slow rate of Growth during the Growth Phase:
1
, because physicians are reluctant to move patients to a new drug until it has proven its worth. In addition, companies
are limited regarding how much they can promote a new drug until it has been approved, there is not much pre-
marketing.
Food and Drug Administration (FDA) and other health authorities have become more and more cautious about
letting new drugs be introduced.
Additional factor: more and more biologics are being developed in place of small molecules.
Lack of a True Maturity Phase:
No real plateauing is reached in terms of sales, often because the drugs are still in their “growth
phase” when they are cut short by patent expiry, generic competition. Increasingly, it is not even
needed that the patent of the brand expires to trigger the start of the Decline Phase — due to “me too” drugs on the
market.
Precipitous Decline Phase:
Linked to falling off a cliff. At patent expiry, cheap generic flood the market. Because of the entry
barriers after patent expiry are low, brand sales are quickly lost.
Factors Affecting Rate of Conversion to Generics:
• government policy – some governments are more aggressive in promoting generics to enter the
market than others… in the US they have the 180-days co-exclusivity with the originator
following patent expiry. This causes an erosion up to 95% of original drugs before the entry
of generics.
• disease – there are some diseases for which physicians have little hesitation in making a switch from
one original drug to a generic. It depends on the severity of the illness, a doctor who has to
deal with a transplantation will be more cautious about switching from original drugs to
generics.
• size of brand – the larger the brand, the more generic companies are likely to enter the market at
patent expiry.
• hospital vs. non hospital drug usage
• active substance and other barriers to entry – hard to obtain subtances or biologics.
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