Predictability of drug expenditures: An application using morbidity data

The growth of pharmaceutical expenditure and its prediction is a major concern for policy makers and health care managers. This paper explores different predictive models to estimate future drug expenses, using demographic and morbidity individual information from an integrated healthcare delivery organization in Catalonia for years 2002 and 2003. The morbidity information consists of codified health encounters grouped through the Clinical Risk Groups (CRGs). We estimate pharmaceutical costs using several model specifications, and CRGs as risk adjusters, providing an alternative way of obtaining high predictive power comparable to other estimations of drug expenditures in the literature. These results have clear implications for the use of risk adjustment and CRGs in setting the premiums for pharmaceutical benefits.

Generic entry into a regulated pharmaceutical market

The aim of this paper is to analyse empirically entry decisions by generic firms intomarkets with tough regulation. Generic drugs might be a key driver of competitionand cost containment in pharmaceutical markets. The dynamics of reforms ofpatents and pricing across drug markets in Spain are useful to identify the impact ofregulations on generic entry. Estimates from a count data model using a panel of 86active ingredients during the 1999 2005 period show that the drivers of genericentry in markets with price regulations are similar to less regulated markets: genericfirms entries are positively affected by the market size and time trend, and negativelyaffected by the number of incumbent laboratories and the number of substitutesactive ingredients. We also find that contrary to what policy makers expected, thesystem of reference pricing restrains considerably the generic entry. Short run brandname drug price reductions are obtained by governments at the cost of long runbenefits from fostering generic entry and post-patent competition into the markets.

Demand for pharmaceutical drugs: A choice modelling experiment

Despite the importance of supplier inducement and brand loyalty inthe drug purchasing process, little empirical evidence is to be foundwith regard to the influence that these factors exert on patients decisions. Under the new scenario of easier access to information,patients are becoming more demanding and even go as far asquestioning their physicians prescription. Furthermore, newregulation also encourages patients to adopt an active role in thedecision between brand-name and generic drugs. Using a statedpreference model based on a choice survey, I have found evidenceof how significant physicians prescription and pharmacists recommendation become throughout the drug purchase process and,to what extent, brand loyalty influences the final decision. Asfar as we are aware, this paper is the first to explicitlytake consumers preferences into account rather than focusingon the behavior of health professionals.

Hybrid risk adjustment for pharmaceutical benefits

This paper analyses the application of hybrid risk adjustment versus either prospective orconcurrent risk adjustment formulae in the context of funding pharmaceutical benefits for thepopulation of an integrated healthcare delivery organization in Catalonia during years 2002 and2003. We apply a mixed formula and find that a hybrid risk adjustment model increasesincentives for efficiency in the provision of low risk individuals at health organizations not only asa whole but also at each internal department compared to only prospective models by reducingwithin-group variation of drug expenditures.

Drug price differentials caused by de-listing and price cap policies

This paper analyses the behaviour of pharmaceutical companies that face the threat of having their drugs excluded from reimbursement and the markets characterised also by price caps. We conclude that price elasticity of demand and cost differentials cause the price discounts which drug firms offer to health care organisations. Additionally, we conclude that price cap regulations affect the time path of prices, resulting in higher prices for new products and lower prices for old products.

Comparative sensitivity of tumor and non-tumor cell lines as reliable approach for in vitro cytotoxicity screening of lysine-based surfactants with potential pharmaceutical applications

Surfactants are used as additives in topical pharmaceuticals and drug delivery systems. The biocompatibility of amino acid-based surfactants makes them highly suitable for use in these fields, but tests are needed to evaluate their potential toxicity. Here we addressed the sensitivity of tumor (HeLa, MCF-7) and non-tumor (3T3, 3T6, HaCaT, NCTC 2544) cell lines to the toxic effects of lysine-based surfactants by means of two in vitro endpoints (MTT and NRU). This comparative assay may serve as a reliable approach for predictive toxicity screening of chemicals prior to pharmaceutical applications. After 24-h of cell exposure to surfactants, differing toxic responses were observed. NCTC 2544 and 3T6 cell lines were the most sensitive, while both tumor cells and 3T3 fibroblasts were more resistant to the cytotoxic effects of surfactants. IC50-values revealed that cytotoxicity was detected earlier by MTT assay than by NRU assay, regardless of the compound or cell line. The overall results showed that surfactants with organic counterions were less cytotoxic than those with inorganic counterions. Our findings highlight the relevance of the correct choice and combination of cell lines and bioassays in toxicity studies for a safe and reliable screen of chemicals with potential interest in pharmaceutical industry.

Drug price differentials caused by de-listing and price cap policies

This paper analyses the behaviour of pharmaceutical companies that face the threat of having their drugs excluded from reimbursement and the markets characterised also by price caps. We conclude that price elasticity of demand and cost differentials cause the price discounts which drug firms offer to health care organisations. Additionally, we conclude that price cap regulations affect the time path of prices, resulting in higher prices for new products and lower prices for old products.

Automatic filtering and substantiation of drug safety signals

Drug safety issues pose serious health threats to the population and constitute a major cause of mortality worldwide. Due to the prominent implications to both public health and the pharmaceutical industry, it is of great importance to unravel the molecular mechanisms by which an adverse drug reaction can be potentially elicited. These mechanisms can be investigated by placing the pharmaco-epidemiologically detected adverse drug reaction in an information-rich context and by exploiting all currently available biomedical knowledge to substantiate it. We present a computational framework for the biological annotation of potential adverse drug reactions. First, the proposed framework investigates previous evidences on the drug-event association in the context of biomedical literature (signal filtering). Then, it seeks to provide a biological explanation (signal substantiation) by exploring mechanistic connections that might explain why a drug produces a specific adverse reaction. The mechanistic connections include the activity of the drug, related compounds and drug metabolites on protein targets, the association of protein targets to clinical events, and the annotation of proteins (both protein targets and proteins associated with clinical events) to biological pathways. Hence, the workflows for signal filtering and substantiation integrate modules for literature and database mining, in silico drug-target profiling, and analyses based on gene-disease networks and biological pathways. Application examples of these workflows carried out on selected cases of drug safety signals are discussed. The methodology and workflows presented offer a novel approach to explore the molecular mechanisms underlying adverse drug reactions

Degree of hermeticity of a multicompartment compliance aid: Implications for the quality of professional pharmaceutical services

A multicompartment compliance aid (MCA) is a blister-type repackaging system that aims to facilitate drug administration and thereby increase patient adherence. One of the characteristics of the MCA that should be taken into account is the moisture permeability, since this atmospheric condition is one of the most important factors that can modify the stability of medicines. In the current paper we report the moisture permeability tests performed on a MCA according to the US Pharmacopeia. This information on the suitability of the device will help pharmacists implement a high-quality professional service.

Reference prices: the spanish way

The aim of this paper is to analyse the effects of recent regulatory reforms that Spanish Health Authorities have implemented in the pharmaceutical market: the introduction of a reference price system together with the promotion of generic drugs. The main objectives of these two reforms are to increase price competition and, ultimately, reduce pharmaceutical costs. Before the introduction of reference prices, consumers had to pay a fixed copayment of the price of whatever drug purchased. With the introduction of such system, the situation differs in the following way: if (s)he buys the more expensive branded drug, then (s)he pays a sum of two elements: the copayment associated to the reference price plus the difference between the price of this good and the reference price. However, if the consumer decides to buy the generic alternative, with price lower than the reference price, then (s)he has to pay the same copayment as before. We show that the introduction of a reference price system together with the promotion of generic drugs increase price competition and lower pharmaceutical costs only if the reference price is set in a certain interval. Also profits for the duopolists might be reduced. These results are due to the opposing effects that reference prices have on branded and generic producers respectively.

Multimarket contact in pharmaceutical markets

The purpose of this paper is to analyze the effect of multimarket contact on the behavior of pharmaceutical firms controlling for different levels of regulatory constraints using IMS MIDAS database. Theoretically, firms that meet in several markets are expected to be capable of sustaining implicitly more profitable out- comes, even if perfect monitoring is not possible. Firms may find it profitable to redistribute their market power among markets where they are operating. We present evidence for nine OECD countries with different degrees of regulation and show that regulation affects the importance of economic forces on firms' price setting behavior. Furthermore, our results confirms the presence of the predictions of the multimarket theory for more market friendly countries (U.S. and Canada) and less regulated ones (U.K., Germany, Netherlands), in contrast, for highly regulated countries (Japan, France, Italy and Spain) the results are less clear with some countries being

Trials, tricks and transparency: how disclosure rules affect clinical knowledge

Scandals of selective reporting of clinical trial results by pharmaceutical firms have underlined the need for more transparency in clinical trials. We provide a theoretical framework which reproduces incentives for selective reporting and yields three key implications concerning regulation. First, a compulsory clinical trial registry complemented through a voluntary clinical trial results database can implement full transparency (the existence of all trials as well as their results is known). Second, full transparency comes at a price. It has a deterrence effect on the incentives to conduct clinical trials, as it reduces the firms'gains from trials. Third, in principle, a voluntary clinical trial results database without a compulsory registry is a superior regulatory tool; but we provide some qualified support for additional compulsory registries when medical decision-makers cannot anticipate correctly the drug companies' decisions whether to conduct trials. Keywords: pharmaceutical firms, strategic information transmission, clinical trials, registries, results databases, scientific knowledge JEL classification: D72, I18, L15

What if there was a stronger pharmaceutical price competition in Spain? When regulation has a similar effect to collusion

This paper examines statins competition in the Spanish pharmaceutical market, where prices are highly regulated, and simulates a situation in which there is unrestricted price competition. A nested logit demand model is estimated with a panel of monthly data for pharmaceuticals prescribed from 1997 to 2005. The simulation indicates that the regulation of prices is similar in its effects to cooperation among producers, since the regulated prices are close to those that would be observed in a scenario of perfect collusion. Freedom to set prices and a regulatory framework with appropriate incentives would result in a general reduction in prices and may make the current veiled competition in the form of discounts to pharmacists become more visible. The decrease in prices would be partially offset by an increase in consumption but the net effect would be an overall decrease in expenditure. The counterfactual set-up would also lead to important changes in the market shares of both manufacturers and active ingredients, and a reversal of generic drugs. Therefore, pro-competitive regulation would be welfare-enhancing but would imply winners and losers.