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HDA UK MEDIA AND POLITICAL BULLETIN – 7 July 2017

MEDIA SUMMARY 

Brexit must not disrupt drug R&D, say pharma chiefs
Financial Times, Sarah Neville, 6 July 2017

Senior pharmaceutical executives have published an open letter to Theresa May warning that Brexit must not be allowed to disrupt development of new drugs. They went on to say that the current pan-European standards and regulations must be maintained. Massive lobbying efforts by the industry have been ongoing since the June 23 vote in 2016. More than 200 hours of meetings have occurred in the last 12 months. Their efforts culminated in a joint letter signed by Jeremy Hunt and Greg Clark calling for continued cooperation on drug regulation. Industry leaders said they were “heartened” by the letter.

Industry pays further £94 million to PPRS in Q1 of 2017
ABPI, 7 July 2017 

The Department of Health has published Q1 data showing that the pharmaceutical inudstry has paid £94 million during the first quarter of 2017 under the 2014 Pharmaceutical Price Regulation Scheme (PPRS). So far, the industry has contributed £1.87 billion to the scheme, which helps support the NHS employ branded medicines. The total PPRS payment in 2016 amounted to £620 million, lower than the £845 million in 2015. The scheme attempts to cap the growth of branded medicines to 1.1% and “provides predictability for the pharmaceutical industry and the NHS” the ABPI said in a statement.

Market competition a predictor of changes in generic drug prices, concludes US study
The Pharmaceutical Journal, Julia Robinson, 5 July 2017

A retrospective cohort study in the United States presents strong evidence that a decrease in market competition is correlated with a strong price increase for generic drugs. With over 1,120 generic drugs studied between 2008 and 2013, prescribed to over 57.3 million patients, the study examined changes in prices and consistent price differences over the 5 year period. Over half of generic drugs had competition levels representing duopoly. Drugs with high levels of competition were associated with a price drop of 31.7%, while those with low levels of competition were associated with a 47.4% price increase. In Britain, the vast majority of medicines are controlled by stricter competition and regulation laws. This study clearly presents evidence that market competition in pharmaceuticals are a good thing for consumers.

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Industry pays further £94 million to PPRS in Q1 of 2017
ABPI, ABPI Press Office, 7 July 2017 

The Department of Health has today [6 July] published the Q1 2017 PPRS data showing that the pharmaceutical industry has paid £94 million during the first quarter (Q1) of 2017 under the 2014 Pharmaceutical Price Regulation Scheme (PPRS).
​​​So far, industry has contributed £1.87 billion in PPRS payments to underwrite the growth in branded medicines covered by the scheme.

Click here to read the announcement.

PPRS payments help support the use of branded medicines by the NHS and the latest data shows a 4.18% growth in ‘Measured Spend’ 12 months to March 2017 vs. 12 months to March 2016, and a 5.08% growth rate for the latest 6 months (Q4 2016 + Q1 2017 vs. Q4 2015 + Q1 2016).

The total PPRS payment over 2016 amounted to £620 million, lower than the £845 million paid in 2015, reflecting the 2016 payment rate of 7.8% versus the 10.36% rate in 2015.

David Watson, Director of Pricing and PPRS for the ABPI said:

“Through the voluntary 2014 PPRS, industry has agreed to cap the growth in branded medicines in the scheme to an average of 1.1% per year over 5 years. The PPRS scheme provides predictability for the pharmaceutical industry and for the Department of Health.”​

Market competition a predictor of changes in generic drug prices, concludes US study
The Pharmaceutical Journal, Julia Robinson, 5 July 2017

A decrease in market competition is strongly associated with an increase in the price of generic drugs, adversely affecting the patients who rely on them, according to research published in the Annals of Internal Medicine[1] (4 July 2017).

In the US-based retrospective cohort study, prescription claims from commercial health plans between 2008 and 2013 were collected and the data divided into 11 six-month periods. From 1.08 billion prescriptions claimed by 57.3 million patients, a total of 1,120 generic drugs were identified.

In one of the first investigations of its kind, researchers used the Herfindahl-Hirschman Index (HHI), calculated by adding up the squares of individual manufacturers’ market shares, with higher values indicating a less competitive market, to estimate the average drug prices for the generic drugs in each six-month period.

Nearly half the generic drugs studied were found to have competition levels resembling a duopoly, that is, a competition level where only two manufacturers produce a drug.

It was also found that generic drugs with a HHI value of 2,500, which indicates high levels of competition, were associated with a price drop of 31.7% (95% confidence interval [CI], -34.4% to -28.9%), whereas those with a HHI value of 10,000, which indicates low levels of competition, were associated with a 47.4% price increase (95% CI, 25.4% to 73.2%).

Finally, the researchers found that low market competition levels have a more pronounced correlation with drug prices in lower-priced generic drugs, compared with their higher-priced counterparts.

“The connection this study establishes between market competition levels and generic drug prices should be an eye-opener for regulators responsible for the generic drug market,” says Chintan Dave, lead author of the study. “In recent years, some generic manufacturers have sought to consolidate their market power by merging with rivals, but these mergers risk decreasing competition levels in parts of an already uncompetitive US generic drug market.”

The researchers say that this could be explained by the fact that manufacturers that produce generic drugs to serve such markets, particularly those with multiple-drug portfolios, may have more leeway in raising drug prices, perhaps to offset lower profits in more competitive markets. They also suggested that the three-year review time required to gain regulatory approval for a generic drug could be another factor underlying generic drug price increases.

Warwick Smith, director general of the British Generic Manufacturers Association, says the results are unsurprising. “In the UK, the vast majority of generic medicines’ prices are controlled by competition. They vary, often significantly, according to the law of supply and demand. This is a dynamic market: high prices encourage new entrants to the market, leading to price reductions. If prices become unsustainably low, manufacturers will leave the market, reducing supply, leading to higher prices. And so the cycle continues.”

Warwick Smith, director general of the British Generic Manufacturers Association, says that in the UK, the vast majority of generic medicines’ prices are controlled by competition

The researchers acknowledge that the study is limited by the fact that the findings may not be applicable to drugs that became generic after 2008 as different mechanisms may now play a role in increasing drug prices.

However, they conclude that understanding the link between competition and price may be helpful in identifying older prescription drugs at higher risk of price changes in future.

“This study is vitally important in identifying factors that influence a change in drug price, to keep generic drugs affordable for consumers,” says Dave.

“My concern is that unless policies are enacted by the regulatory agencies to stabilise generic drug markets in response to a decrease in competition, we will continue to see cases of generic drugs subject to large price increases,” he adds.

HDA UK MEDIA AND POLITICAL BULLETIN – 7 July 2017

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