[Pharm-policy] New OECD Paper attached, FYI

[Finkelstein & Associates]

I provide focussed  internet search services on specific topics, for =
various clients.
Concerning the pharmaceutical sector, PHARM-POLICY LIST members might =
find the attached info' helpful;

*  OECD Labour Market and Social Policy Occasional Papers  (april =
18th,2000)
Title; OECD study on pharmaceutical policy -=20
LABOUR MARKET AND SOCIAL POLICY - OCCASIONAL PAPERS No. 40
PHARMACEUTICAL POLICIES IN OECD COUNTRIES: RECONCILING SOCIAL AND =
INDUSTRIAL GOALS
Keywords; pharmaceuticals and price, controls, reference pricing, =
substitution, patent, advertising, etc
Excerpt;
SUMMARY
Regulation of the pharmaceutical sector needs to reconcile private and =
social objectives. Public intervention pursues multiple goals which =
relate to both health and industry policy. Many OECD Governments are =
also heavily involved as buyers of pharmaceuticals in publicly-financed =
health care systems. This paper describes recent trends in =
pharmaceutical expenditure and financing in a first chapter.=20
A second chapter discusses the economics of pharmaceutical markets. A =
third chapter provides a review of national policies and their attempts =
to balance public and private objectives. Pharmaceutical expenditure has =
been rising steadily as a share of GDP since 1970. However, total health =
expenditure has also risen. As a result, pharmaceutical expenditure has, =
on average, maintained its share of total health expenditure in the =
OECD, close to 15 %. Across countries, pharmaceutical expenditure per =
capita depends on relative incomes but is also influenced by =
institutional features. The pharmaceutical share of health expenditure =
tends to be higher in low-income countries than in high-income =
countries.
A brief economic survey suggests that consumers' demand for drugs tends =
to be sensitive to price, but the sensitivity varies across different =
groups of patients. However, physicians' prescribing behaviour seems to =
show little sensitivity to economic factors. The structure of the =
industry is driven by Research and Development (R&D), leading to =
patented products, marketing and competition. Research and Development, =
linked with the patent system, is a key economic factor, which =
determines the competitive strength of companies. Rising costs of R&D =
and market pressures have encouraged a series of international mergers =
among companies to secure economies of scale. Also, the increased =
competition from generic drugs has recently had an impact on several =
large markets. As a result, distribution systems have changed, =
particularly in the United States. European Union regulation has also =
been an important factor in Europe.
Pharmaceuticals are usually covered by public health insurance, except =
in North America. Most countries define formularies and impose =
co-payments for drugs, usually with exemptions for groups such as the =
poor and chronically sick. In a majority of OECD countries, more than =
three-quarters of pharmaceutical expenditure is reimbursed in some way. =
Coverage has decreased in some countries facing fiscal consolidation. =
Many countries negotiate prices product-by-product but a few regulate =
the profits of pharmaceutical companies. Product-by-product price fixing =
has been chosen when prescription pharmaceuticals are provided by a =
universal health-care system, or to avoid deterring patient access for =
financial reasons, and when public funds are limited. Product-by-product =
price fixing may involve distortions and it is difficult to assess since =
it can bias statistical instruments such as price indices. In addition, =
the need to control health
expenditure has led governments to control volumes of consumption =
through global budgets. When countries have faced fiscal constraints, =
particularly in Europe, attempts to stabilise expenditure have involved =
price cuts, de-listing, or lower reimbursements. This may result in =
short-term savings but has generally left the underlying rate of growth =
of expenditure on pharmaceuticals unchanged. Reforms of pharmaceutical =
policies need to foster efficiency and preserve equity. This can be =
realised through increased market pressure to obtain competitive prices =
for non-patented drugs while allowing
higher prices for those still on patent. Recent experience from OECD =
countries points to some success in this direction. The reference =
pricing system is now used in several countries for non-patented =
products and the use of generics has been increased in many countries. A =
few countries have introduced a test of cost-effectiveness before new =
drugs will be accepted for reimbursement under the public scheme. =
Innovative management methods derived from managed care settings and =
tools to improve the cost-effectiveness of prescribing are also =
important measures to obtain the best value for money. Using the power =
that governments have to regulate drug prices, or pharmaceutical =
expenditure, presents
something of a dilemma. If prices for patented and branded products are =
set too low, the incentives for further innovation will be diminished. =
This dilemma is complicated by the fact that the market for important =
pharmaceuticals is a global market. Successful innovation has some of =
the characteristics of a public good. Therefore, the costs of R&D also =
need to be shared at the international level. As pharmaceuticals =
represent a significant cost driver in the health care systems of OECD =
countries, further work will be needed to identify for an increasingly =
global economy the appropriate mix of public policy in this field.

File link attached;
http://www.olis.oecd.org/OLIS/2000DOC.NSF/LINKTO/DEELSA-ELSA-WD(2000)1


* ICC - Int'l Chamber of Commerce
Title; "ICC Raises News Issues of Intellectual Property Protection" =
(Feb.17/00)
Keywords; I.P. , protection, counterfeit goods, enforcement
Excerpt;
International Chamber of Commerce (ICC) News - Feb.17/00 The =
international scale on which companies operate in today's global economy =
and the spread of electronic commerce have raised new issues of =
intellectual property protection, including how to overcome limitations =
arising from the territorial nature of most legislation. These and other =
new intellectual property issues, commercial, ethical and technical, are =
presently analyzed in an ICC roadmap for business and policy makers, =
published in full on the ICC website under the title: "Current and =
emerging intellectual property issues for business." The ICC analysis of =
how business is tackling intellectual property issue in today's global =
business environment, and its recommendations for government action, was =
assembled by a group of intellectual property experts from major =
companies. The study says: "The expansion of businesses into a growing =
number of markets has made it prohibitively expensive, and often =
impossible in practice, to obtain and enforce intellectual property =
rights in all the countries where infringing or counterfeit goods may be =
manufactured and widely sold." The main reason for the high costs was =
the territorial nature of intellectual property law, requiring =
protection to be obtained and enforcement
proceedings to be instituted in each territory, ICC said. Online at;=20

File link attached;
http://www.iccwbo.org/home/news_archives/2000/patent_rights_in_global_eco=
nomy.asp

Regards,

Michael J. Finkelstein, Director
Finkelstein & Associates
POB 23016,  437 Spadina Road, Toronto, Ontario M5P 2W3  Canada
Tel: (416) 487-2353  Fax: (416) 487-1245
e-mail: consult@inforamp.net   WWW: home.istar.ca/~mjf
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