How the United Kingdom Controls Pharmaceutical Prices and Spending: Learning From Its Experience

Negotiating Medicare Drug Prices: A New Attempt to Control Purchase Prices

The Inflation Reduction Act (IRA) creates a new process to cap Medicare Part D branded drug prices. It prohibits Medicare from paying more than a specified discount from average private market prices and requires that CMS negotiate with manufacturers to agree on a maximum fair price that Medicare will pay that is lower than the specified discount. This article analyzes the cause of high drug prices and how negotiations to set the maximum fair price might unfold. It compares Medicare's new pricing process to the way drug prices are set in Medicaid, the Veterans Administration, U.S. private insurers, and European nations. It analyzes how negotiations to set the maximum fair price might unfold in light of negotiation theory and the practices to negotiate prices employed in Europe. It draws inferences from the initial published data on the first round of negotiated prices.

New Drug Expenditure by Therapeutic Area in South Korea: International Comparison and Policy Implications

Background: Pharmaceutical expenditures serve as key indicators of healthcare system efficiency, innovation, and sustainability. South Korea has implemented policies such as the economic evaluation exemption (EEE) and risk-sharing agreements (RSAs) to balance cost control and access to innovative therapies. However, discrepancies persist in the distribution of expenditures across therapeutic areas, raising concerns about alignment with public health needs. Methods: This retrospective observational study analyzed pharmaceutical expenditures in South Korea from 2007 to 2022, focusing on new chemical entities (NCEs). Data sources included the IQVIA MIDAS Global Database, the WHO Global Burden of Disease (GBD) database, and South Korea's national health insurance records. Expenditure patterns were benchmarked against OECD and A8 countries using disability-adjusted life years (DALYs) and other healthcare metrics to assess the relationship between spending and disease burden. Results: By 2022, South Korea had introduced 276 NCEs, demonstrating progress, but still lagging the OECD average. NCE expenditure increased from 10.0% to 16.0% of total pharmaceutical spending between 2017 and 2022, whereas A8 countries' share rose from 26.2% to 48.1%. While oncology expenditures were proportionate to disease burden, spending on chronic diseases such as musculoskeletal and cardiovascular conditions remained relatively low compared to their DALY contributions. Conclusions: Although South Korea has strengthened its investment in pharmaceutical innovation, disparities in expenditure distribution persist. Refining policies to enhance resource allocation for chronic diseases and expanding the RSA framework beyond oncology could improve equity and sustainability. Adopting international best practices-such as indication-based pricing and funding mechanisms for high-cost therapies-may further support optimal pharmaceutical expenditure management.

A Comparative Analysis of International Drug Price Negotiation Frameworks: An Interview Study of Key Stakeholders

Policy Points Health care systems around the world rely on a range of methods to ensure the affordability of prescription drugs, including negotiating prices soon after drug approval and relying on formal clinical assessments that compare newly approved therapies with existing alternatives. The negotiation framework established under the Inflation Reduction Act is far more limited than other frameworks explored in this study. Adding elements from these frameworks could lead to more effective price negotiation in the United States.

CONTEXT

In 2022, Congress passed the Inflation Reduction Act, which allowed Medicare, for the first time, to begin negotiating the prices for certain high-cost brand-name prescription drugs. Many other industrialized countries negotiate drug prices, and we sought to compare and contrast key features of the negotiation process across several health systems. We focused, in particular, on the criteria for selecting drugs for price negotiation, procedures for negotiation, factors that influence negotiated prices, and how prices are implemented.

METHODS

We included four G7 countries in our analysis (Canada, France, Germany, and the United Kingdom [England]), two Benelux countries (Belgium and the Netherlands), and one Scandinavian country (Norway) with long-established frameworks for drug price negotiation. We also analyzed the Veterans Affairs Health System in the United States. For each system, we gathered relevant legislation, government publications, and guidelines to understand negotiation frameworks, and we reached out to key drug price negotiators in each system to conduct semistructured interviews. All interviews were recorded, transcribed, and coded, and data were analyzed based on an internal assessment tool that we developed.

FINDINGS

All eight systems negotiate the prices of brand-name prescription drugs soon after approval and rely on formal clinical assessments that compare newly approved drugs with existing therapies. Systems in our study differed on characteristics such as whether the body performing clinical assessments is separate from the negotiating authority, how added health benefit is assessed, whether explicit willingness-to-pay thresholds are employed, and how specific approaches for priority disease areas are taken.

CONCLUSIONS

High-income countries around the world adopt different approaches to conducting price negotiations on brand-name drugs but coalesce around a set of practices that will largely be absent from the current Medicare negotiation framework. US policymakers might consider adding some of these characteristics in the future to improve negotiation outcomes.

Critical analysis of the prescription and evaluation of protein kinase inhibitors for oncology in Germany

The prices of oncology drugs have been rising progressively in recent years. Despite accounting for only a small share of prescriptions, oncology drugs are the most expensive drugs on the market. However, the association between drug price and clinical benefit often remains questionable. Therefore, we set out to analyze the development of prescription and benefit assessment of protein kinase inhibitors. We identified 20 protein kinase inhibitors with oncological indications that were newly approved by the European Medicines Agency (EMA) between 2015 and 2019, based on the Arzneiverordnungsreport (AVR, Drug Prescription Report). For these 20 drugs, the number of prescriptions, sales, defined daily dose (DDD), and DDD costs were identified for the year of approval and for 2020, respectively, based on data from the Wissenschaftliches Institut der Ortskrankenkassen (WIdO, Scientific Institute of the General Local Health Insurance Fund, AOK). Moreover, the additional benefit assessments by the Gemeinsamer Bundesausschuss (GBA, Federal Joint Committee) were considered for each drug. It is shown that the share of a drug in prescriptions, sales, and DDD does not correlate with the clinical benefit of the drug as measured by the additional benefit assessment by the GBA. Lastly, the advertisement pattern of protein kinase inhibitors in a representative oncology journal does not correlate with drug benefit. In conclusion, the immense costs of oncology drugs are therefore largely caused by drugs for which no additional benefit has been proven by the GBA. In order to ensure the long-term stability of health care systems, price-regulation measures are urgently needed, especially for drugs whose additional benefit has not been proven.

Across-Country Variations of Real-World Data and Evidence for Drugs: A 5-European-Country Study

OBJECTIVES

This study aimed to describe the role of real-world data (RWD) and real-world evidence (RWE) in health technology assessment (HTA) in 5 European countries and to identify the hurdles to the acceptance of RWE and suggest directions toward its more effective use.

METHODS

Authors from France, Germany, Italy, and Sweden used a common template to extract evidence. For England, the Cancer Drugs Fund was described and analyzed as a particular model for the use of RWD to provide evidence for coverage decisions and managed entry agreements.

RESULTS

In all countries except Germany, HTA bodies acknowledged the relevance of RWD/RWE to address postlaunch uncertainties. In Germany, evidence from randomized controlled trials remains the gold standard, and evidence based on RWD is generally rejected. Multiple sources of RWD exist, but the quality, the immediate relevance of existing sources, and their interoperability limit their adaptation to the specifics of a given drug. This leads to skepticism about the validity of the evidence. Timing is also a key issue: the production of evidence may not be synchronized with the HTA and pricing bodies' agendas. The Cancer Drugs Fund case emphasizes that a strong partnership among all stakeholders and a pragmatic use of existing data, alongside clinical evidence provided by companies, are key success factors.

CONCLUSIONS

A continuous investment in national health information systems is a key issue for providing valid RWE. Processes and aids to guide the acceptability and usage of RWE derived from pairing between sources and questions are essential.

Getting the Price Right: Lessons for Medicare Price Negotiation from Peer Countries

The USA pays more for brand-name prescription drugs than any other country and new legislation from August 2022 gives Medicare the authority to directly negotiate certain drug prices with manufacturers starting in 2026-something the federal insurer had been prohibited from doing for its prior history. As the USA prepares for negotiations, we therefore surveyed how comparable industrialized countries use statutory requirements and procedures to negotiate brand-name drug prices. Guidance documents, regulations, government and academic publications were reviewed to identify the process of negotiating drug prices in peer countries that have been cited as potential examples for US payment reform: Australia, Canada, France, Germany, and the UK. Processes for arriving at a final price for a drug generally fall under three approaches: statutory rebates, setting a maximum price, and arbitration between national (public) insurers and manufacturers. Each approach to price negotiation could be adopted by Medicare and reduce spending even if Medicare does not adopt an exclusionary or closed formulary. Much remains to be determined about how the new price negotiation authority in the USA will be implemented, and policymakers can learn from comparator countries' statutory and regulatory strategies for price negotiation.

Assessing US Pharmaceutical Policy and Pricing Reform Legislation in Light of European Price and Cost Control Strategies

This article compares the pharmaceutical pricing policies employed by public and private insurers in the United States with seven price and spending control strategies employed in the United Kingdom, France, and Germany. Differences between American and European policies explain why American pharmaceutical prices and per capita spending are higher than in European nations. The article then analyzes two recent bills as examples of significant American reform ideas-H.R. 3, the Elijah E. Cummings Lower Drug Costs Now Act (introduced in 2019) and the Build Back Better Act (BBBA, introduced in 2021)-and compares them with European cost control strategies. Key drug price provisions of the BBBA were incorporated into the recently enacted Inflation Reduction Act (IRA). H.R. 3 would have used an international (mostly European) price index to cap U.S. prices; the BBBA would cap Medicare prices at a discount from average U.S. market prices. Neither bill would employ the key cost control strategies that European nations do. Both bills would have significantly less impact on prices than legislation that employs European-style cost controls. This article proposes steps that Congress could take in line with European strategies to lower purchase prices and costs for patients. These measures would have to overcome political obstacles that currently stymie reform.

Experts' views on how to design a tobacco control fund in the UK

OBJECTIVE

To explore expert views on the potential value, and approaches to establishing and administering a tobacco control fund in the UK.

DESIGN

Semistructured interviews and follow-up discussion groups.

SUBJECTS

Twenty-four UK and international experts on tobacco control regulation, public health, economics or law from the academic, public, private and third sector.

METHODS

Participants considered the relative merit of (1) general excise tax on retail tobacco sales; (2) ring-fenced hypothecation of excise taxes on retail tobacco sales; and (3) a direct levy on tobacco manufacturers. Preliminary synthesis of interview findings was deliberated on in two follow-up discussion groups to identify key considerations for policy design.

RESULT

Most experts agreed that a ring-fenced tobacco control fund would be a valuable method of raising predictable and reliable funds from tobacco producers either using either companies' sales volume or market share as a way to establish the proportion they should pay. Experts predominantly recommended that a fund in the UK should be administered by a government body with devolved nation input and with an independent advisory group. They typically indicated that funding should be allocated yearly with a distribution at local, regional and national levels to support smoking prevention and cessation rather than treatment activities with priority given to measures that tackle smoking-related inequalities.

CONCLUSION

There was overwhelming agreement by experts on the need to establish a tobacco control fund to help meet the proposed government tobacco-free targets to reduce adult smoking prevalence to 5% by 2030 (England) and 2034 (Scotland).

The impacts of the “4+7” pilot policy on the volume, expenditures, and daily cost of Serotonin-Specific Reuptake Inhibitors (SSRIs) antidepressants: A quasi-experimental study

Objectives: The purpose of this study was to quantitatively evaluate the impacts of the”4 + 7” pilot policy on purchase volume, purchase expenditures, and daily cost and to find the changes in the use of SSRIs.

Methods: Data was collected covering 31 months, before, during, and after the “4 + 7” pilot policy was implemented in Shenzhen. Interrupted time-series (ITS) analysis was used to examine whether there had been a significant effect with the onset of the “4 + 7” pilot policy in March 2019.

Findings: The daily cost of policy-related drugs had a substantial drop of 2.93 yuan under the “4 + 7” pilot policy. The result has shown a 76.70% increase in volume and a 3.39% decrease in the expenditure on policy-related drugs. This study found that the “4 + 7” pilot policy increased the proportion of purchasing winning drugs, with an increment of 85.60 percent. After the implementation of the “4 + 7” pilot policy, policy-related drugs decreased by 443.55thousand Chinese yuan. The study indicated that volume of winning products significantly increased as shown in the regression with a level coefficient (β₂) of -224.17 (p < 0.001) and trend coefficient (β₃) of 15.74 (p < 0.001). The result revealed that both volume and expenditures on branded products showed a significant decrease in the regression in the post-intervention period (level coefficient of volume: β₂ = -57.65, p < 0.01, trend coefficient of volume: β₃ = -3.44, p < 0.01; level coefficient of expenditure: β₂ = -712.98, p < 0.01, trend coefficient of expenditure: β₃ = -40.10, p < 0.01).

Conclusion: The volume-based procurement has successfully led to price reductions and improved the affordability of medicines, especially for those with chronic diseases. The volume-based procurement has demonstrated initial success in reshaping the composition of the Chinese pharmaceutical market in favor of generics with high quality and low prices.

Adoption of new therapies in the treatment of Hepatitis: a verification of the accuracy of budget impact analysis to guide investment decisions

OBJECTIVES

While there are good Budget Impact Analysis (BIA) guidelines, studies still register potential bias. To do this, we compared the results between theoretical and real-world evidence (RWE) expenditures for medicines for Hepatitis C: boceprevir (BOC) and telaprevir (TVR). While both are not currently recommended in treatment guidelines following recent developments, this is an emblematic case because for 4 years these medicines consumed considerable resources.

METHODS

Theoretical results and RWE expenditures were compared regarding the incorporation of BOC and TVR in 2013-2014 into the Brazilian Public Health System. Theoretical values were extracted from Commission for Technology Incorporation Report and RWE expenditures were extracted from the administrative data records using deterministic-probabilistic linkage.

RESULTS

The estimated number of patients treated (BOC+TVR) was 13,012 versus 7,641 (real). The estimated purchase price for BOC was US$6.20 versus US$11.07 (real) and for TVR was US$42.21 versus US$84.09 (average/real). The estimated budget impact was US$285.16 million versus US$128.58 million (real).

CONCLUSION

This study demonstrates appreciable divergence (US$156.58 million) between the theoretical budget impact and RWE expenditures due to underestimated purchase prices and overestimated populations. The greater the degree of accuracy the more reliable and usable BIAs become for decision-making.

Has the Volume-Based Drug Purchasing Approach Achieved Equilibrium among Various Stakeholders? Evidence from China

Volume-based drug purchasing by China’s health insurance system currently represents the largest group purchasing organization worldwide. After exchanging the market that accounted for nearly half of the volume of the healthcare system for the ultra-low-price supply of limited drugs, what are the effects on patient and funding burdens, drug accessibility, and clinical efficacy? We aimed to verify the effectiveness of the policy, explore the reasons behind the problem and identify regulatory priorities and collaborative measures. We used literature and reported data from 2019 to 2021 to conduct a stakeholder analysis and health impact assessment, presenting the benefit and risk share for various dimensions. The analysis method was a multidimensional scaling model, which visualized problematic associations. Seventy-nine papers (61 publications and 18 other resources) were included in the study, with 22 effects and 36 problems identified. The results indicated favorable affordability and poor accessibility of drugs, as well as high risk of reduced drug quality and drug-use rationality. The drug-use demand of patients was guaranteed; the prescription rights of doctors regarding clinical drug use were limited; unreasonable evaluation indicators limited the transformation of public hospitals to value- and service-oriented organizations; the sustainability of health insurance funds and policy promotion were at risk; and innovation by pharmaceutical companies was accelerated. The problems associated with high co-occurrence frequencies were divided into the following clusters: cost control, drug accessibility, system rationality, policy fairness, drug quality, and moral hazards. These findings suggested that China has achieved short-term success in reducing the burden on patients and reducing fund expenditure. However, there were still deficiencies in guaranteed supply, quality control, and efficacy tracking. The study offers critical lessons for China and other low- and middle-income countries.

German Pharmaceutical Pricing: Lessons for the United States

To control pharmaceutical spending and improve access, the United States could adopt strategies similar to those introduced in Germany by the 2011 German Pharmaceutical Market Reorganization Act. In Germany, manufacturers sell new drugs immediately upon receiving marketing approval. During the first year, the German Federal Joint Committee assesses new drugs to determine their added medical benefit. It assigns them a score indicating their added benefit. New drugs comparable to drugs in a reference price group are assigned to that group and receive the same reimbursement, unless they are therapeutically superior. The National Association of Statutory Health Insurance Funds then negotiates with manufacturers the maximum reimbursement starting the 13th month, consistent with the drug's added benefit assessment and price caps in other European countries. In the absence of agreement, an arbitration board sets the price. Manufacturers accept the price resolution or exit the market. Thereafter, prices generally are not increased, even for inflation. US public and private insurers control prices in diverse ways, but typically obtain discounts by designating certain drugs as preferred and by restricting patient access or charging high copayment for nonpreferred drugs. This article draws 10 lessons for drug pricing reform in US federal programs and private insurance.

Knowledge, perceptions and practices of pharmacists regarding generic substitution in China: a cross-sectional study

OBJECTIVE

To evaluate pharmacists' knowledge, perceptions and practices towards generic substitution in the 11 pilot locations in China.

DESIGN

An online cross-sectional survey using questionnaires was conducted. A convenience sampling technique was implemented to recruit pharmacists.

SETTING AND PARTICIPANTS

The study took place in medical institutions of 11 pilot locations that participated in the pilot national centralised procurement programme in 2019. Two thousand two hundred and ninety-one pharmacists including hospital pharmacists or community pharmacists based on health-systems or clinics participated in the study.

RESULTS

Most of the participants had the good knowledge of requirements for evaluating the quality and efficacy of generic drugs (n=2118; 92.4%), and the definition of generic drugs (n=2078; 90.7%). In terms of perceptions, 67.3% of respondents were of the opinion that generic drugs are equally as effective as the brand-name drugs, and 69.0% of respondents were of the opinion that generic drugs are as safe as brand equivalents. A high percentage of participants supported the policy of generic substitution (n=1634; 71.4%). A significant positive correlation was demonstrated between total knowledge score and total perception score (ρ=0.267; p<0.001). Efficacy, safety and the direction of national policies and hospital regulations were the main factors affecting pharmacists' willingness to dispense generic drugs.

CONCLUSIONS

The study identified gaps in respondents' knowledge and perceptions of generic substitution. Pharmacists who are more knowledgeable in generic drugs tend to hold a more supportive attitude towards generic substitution. Although it appeared that pharmacists in China have largely accepted generic substitution, they still have concerns regarding the reliability and quality of generic drugs. The current issues need to be addressed for the realisation of the true value of generic drugs as part of the country's healthcare cost-containment strategy as well as the implementation of generic substitution policy in China.