[Ip-health] Forthcoming OECD study examines pharmaceutical pricing policies, pricing data, and innovation

[Mike Palmedo]

http://www.wcl.american.edu/pijip/go/blog-post/notes-on-forthcoming-oecd-st=
udy-on-pharmaceutical-pricing-policies-pricing-data-and-innovation

Forthcoming OECD study examines pharmaceutical pricing policies, pricing
data, and innovation

Mike Palmedo
PIJIP Blogs
April 18, 2008

Elizabeth Docteur, Deputy Head of the OECD Health Division, spoke on at
an AARP-sponsored meeting on April 16. She discussed the findings of an
OECD study she conducted with Val=E9rie Paris, Pierre Mo=EFse, and Lihan We=
i
on the effect that national pricing policies have on prices elsewhere,
and on pharmaceutical innovation. The full study will be released in
June or July of this year. Her presentation of its findings are
available at the AARP website for "Healthcare '08 - Global Trends and
Practices."
http://www.aarpinternational.org/conference/conference_show.htm?doc_id=3D61=
2871


The OECD study notes the greater availability of pricing information.
Not long ago, it was very difficult for policymakers to obtain timely,
reliable data on what others were paying for drugs. Now, greater access
to information has assisted external reference pricing. This has led to
an observable relative convergence of prices among OECD countries
(excluding the US), which has impacted the strategies of drug firms. The
industry used to try to segment markets, but now they are more included
to launch first where they can get the highest price, in order to set
the global reference prices high. Sometimes they are willing to accept
confidential rebates from governments in lieu of lower list prices, in
order to keep the converging prices moving upward. Obviously, this is
bad for countries with lower incomes than others in the OECD.

The study also compares the effects of different pricing policies on
pharmaceutical innovation. Policies that set the price (or reimbursement
level) of a new drug at the same level as the price of its lowest
therapeutically equivalent competitor discourage investment in me too
drugs. These policies should drive pharmaceutical research towards more
innovative new products.

Since drug companies game the system when reference pricing compares
prices across borders; and since pricing policies that seek to reward
products with extra clinical benefit can lead to more innovated new
medicines, the OECD study recommends the latter.


--
Mike Palmedo
Research Coordinator
Program on Information Justice and Intellectual Property
American University, Washington College of Law
4910 Massachutsetts Ave., NW Washington, DC 20016
T - 202-274-4442 | F 202-274-0659
mpalmedo@wcl.american.edu