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Health Care & Pharma challenges in Europe;
a view from the Netherlands
Einte Elsinga Ph D,
MSD the Netherlands, Manager External Affairs
Bucharest, Romania, September 24th
einte.elsinga@merck.com
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Agenda
►Health Care in Europe
►Health care in the Netherlands
►Challenges in pharmaceutical care
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Is it worth all that money ???
Euro’s vs Life expectancy and patient satisfaction
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The rising costs of care in Europe: a challenge everywhere !!
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2000 2005 20100
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4
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USAthe NetherlandsUKHungary
% G
DP
NL
Hun
USA is by far the World champion in HC costs!
year
USA
UK
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Money alone does not extend lives….
http://ucatlas.ucsc.edu/spend.php
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Consumer satisfaction on health care
Euro Health Consumer Index 2012 Report
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Healthcare Expenditure Per Capita Grew Stronger Than Pharmaceutical Expenditure
Expenditure on Health and Pharmaceuticals in US$/ capita (USPPP; 24 OECD Countries)
0
500
1000
1500
2000
2500
3000
3500
4000
1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
US
$
Total expenditure on health, /capita, US$ purchasing power parity
Total expenditure on pharmaceuticals and other medical non-durables, /capita, US$ purchasing power parity
Source: OECD Health Data 2011
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The Netherlands
• 16,7 mln inhabitants• Strong economy (15th of the
world, 6th of Europe))• Large export industry (transit)• Political: new cabinet in
formation, Social democrats + Liberals?
• € since 2002• Economic recession
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Health Insurance system: public regulation, private organization
Social insurance scheme• Curative care (hospitals, GP,
pharmacy, mental care• Obligatory• Premium: Income related and
flat rate (50/50)• Open enrollment• Risk equalization model
Additional insurance• Dental care (>18 y), • Optional• No obligation to accept
Exceptional Medical Expenses ActCare for the elderly & disabled
cure care
Since 2006 one basic insurance scheme for the whole population
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The Dutch health care system
Government
Health care insurance companies
Insured parties/patients
SuppliersCare
market: supply
Care market:
insurance
Care market:
procurement
A regulated market: competing HC insurers (private) and providers (private) within regulated setting.
• Accessibility• Affordability• quality
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Key issues of almost every HC system
• Level of coverage: social insurance/NHS
• Waiting times
• Cost level• Payments: % or
flat
• Lack of transparancy
• inefficiencies
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Issues today
► Do health care insurers succeed in playing a countervailing force to hc providers?
► Payment systems for hc providers contain production incentives. Need for outcome measurement and payment structure
► Free rider behavior of the patient
► Inefficiencies in organization of health care
Pharmaceutical care
22Bron: Nefarma, Pharma facts, 2012
23source: Nefarma, Pharma facts, 2012
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MC Kinsey: “the good days for pharmaceutical industry are gone forever”
challenges
1. Growth in generics vs branded
2. Price pressures (Govt, HC insurers, tenders)
3. More complicated procedures for Market Access
4. Biosimilars upcoming
answers
► More focus on added value, pharmaco-economic approach
► New business models: from product orientation to client/market orientation
► Providing services, expertise
Source: MC Kinsey Quarterly, december 2011
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1. Share of generics is rapidly increasing
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Volume: 60% generic in the Dutch market,Costs: >70% branded, innovative products
Volume 2010
Costs 2010
The Netherlands
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Loss of exclusivity causes major decrease in revenues
Bron: rapport IBM, Fade or Flourish? 2012
28Bron: Nefarma, Pharma facts, 2012
Long period before entry to the market leading to lower effective patent period
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From an Investment Perspective„Sunk costs“: In economics and business decision-making, sunk costs are retrospective (past) costs that have already been incurred and cannot be recovered.
Source: Wikipedia (2010), „Sunk costs“, www.wikipedia.org; OECD (2008), Pharmaceutical Pricing in a Global Market
$1.3bn, ~12 years
30Source: ENVI (2011), Differences in Costs of and Access to Medicines in Europe
2. Government interventions can be classified in three major groups:
– Supply-side interventions: methods to determine the prices of pharmaceuticals (in particular those in patent)
– Supply-side interventions through pharmaceutical reimbursement policies
– Demand-side actions, including policies affecting physicians, pharmacies and patients
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Estonia
Greece
France
UK
SloveniaHungary
Netherlands
Italy
Germany
Latvia
Lithuania
Portugal
Denmark
Sweden
Poland
Romania
Malta
Croatia
Bulgaria
Switzerland
Czech Republic
Ireland
Finland
Austria
Belgium
Serbia
Cyprus
Slovakia
Spain
External Reference PricingWeaker form of ERP
No External Reference Pricing
Luxembourg
Austria: EU 25
Norway
Bulgaria: Lowest of 8 countries
Croatia: Avg of wholesale price of 3 countries minus 10%
24 of 27 EU Member States Apply External Reference Pricing – Rules Differ
Finland: Median of 17 countries
Hungary: Lowest of 13 countries, incl. ES, SK, PL*
Spain: lowest of 9 countries
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Tendering In The Hospital Sector: Nearly In All Member States
Source: Vogler (2011), Pharmaceutical pricing and reimbursement in Europe, PPRI WHO Conference 2011, Vienna
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New customers are increasingly influencing the pharmaceutical buying process, while traditional core customers are losing relevance
Customer GroupsRelatively Low Importance
Relatively High Importance
Source: Accenture Research 2010; Global summary of results; *relative importance per country can differ
Importance of the stakeholder 2009
Importance of the stakeholders 2014
Change to stakeholder importance
Patient Associations
Individual Patients
Payers and Wholesalers
Specialist Prescribers (Hospital and Retail)
Pharmacies
Trad
itio
nal
Ph
arm
a C
ust
om
ers
General Practitioners
Pharmacy Chains
Health Technology Assessment Institutions
Purchasing Organizations/TendersN
ew P
har
ma
Cu
sto
mer
s
.
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Growing role of HC insurers in health care(the Netherlands)
:– Procurement (contracting health care providers)– Cost containment pressure– Quality of care, measurement outcomes, added value, cost effectiveness of
care– Pricing of care, pharmaceuticals– Reimbursement levels– Access and free choice of provider, of drugs– Guidelines, prescriptions rules towards medical doctors– Etc. etc...
Entry to the
marketEntry to the social
Insurance scheme
Entry to
delivery
registration entitlement Access for the patient
Registration authority Coverage authority Insurance company
37Bron: Nefarma, Pharma facts, 2012
Effective cost reduction measures in NL by Government and HC insurers
Preference policy HC insurers for generic products:Price reductions up to 80%!
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Upcoming: new models for managed entry schemes
Source: article Adrian Towse, in Pharmacoeconomics 2010; 28 (2): 93-102
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Pharma: from Product- to Market-orientation
From selling a product to contributing in health care solutions
Partnership with other HC providers and with patient organizations, HC insurers
Stimulating appropriate use instead of maximum use of the medicine
Providing evidence in real life (phase 4), patient registries, monitoring
Showing added value/value for money (business cases)
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New times also means: new opportunities!
May it sometimes feel like…
… the challenge for the Pharmaceutical industry is to contribute to:
• affordable health care
• added value in health care
• appropriate use of medicine
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