The Pharmaceutical Industry: Costs, Regulations, and Trends, Exams of Medicine

Download The Pharmaceutical Industry: Costs, Regulations, and Trends and more Exams Medicine in PDF only on Docsity! Pharmaceuticals examination test with correct answers What is the evidence behind the benefits of pharmaceuticals? - Correct Answer Pharmaceuticals associated with 40% of the two-year increase of life expectancy achieved in 52 countries (1986-2000) Doubling of pharmaceutical expenditures associated with ~ 1 year increase in life expectancy (depending on countries age distribution) Pharmaceuticals are the ____ largest share of the NHE. - Correct Answer Third What was the historic trend for drug spending in the US? - Correct Answer Drugs used to be a much smaller part of the NHE Sharply rising prescription drug expenditure growth nationwide in the mid- to late 1990s caused noticeable growth in prescription drugs as a share of total health spending. What is the trend for rate of growth in pharmaceutical spending? - Correct Answer Prescription drugs had the largest rate of growth for spending in the NHE, especially in the 80s and 90s. Spending increases have been abating more recently. How much has Rx spending grown since the 90s? - Correct Answer 71% increase in Rx purchasing (1994-2005, only 9% population growth) Retail prescriptions per capita increased from 7.9 to 12.3 What are the factors driving Rx spending growth? - Correct Answer Aging 35-44 2.9 scripts/year 65-74 9.1 scripts/year More insurance for drugs New innovative drugs increase things we treat with drugs Ex. Hyperlipidemia (high cholesterol) Price Retail price* has increased an average of 8.3%—not good Avg. inflation rate was 2.5% Negative welfare effects if purely price Volume increase greater than price increase Types of Drugs Used (extensive and intensive changes) Patented to Generic (Spending decrease, intensive, positive welfare) New Drug replaces old drug or new treatment (Spending Increase, Substitution effect, ambiguous welfare) Competition, substitution New Drug in competitive class (could decrease, likely positive welfare) Completely new drug very likely welfare enhancing Why are drug prices in the US so high? - Correct Answer Research and development (R&D) costs are high (Supply) Process of finding a needle in a haystack, and then making sure that needle won't hurt anyone Patent protection to help drug companies recoup investment Marketing costs are high (Demand) Twice as high as R&D US pays more for branded drugs and has 3/5 of all drug patents How much should we subsidize other countries drug prices vs. tradeoff money for innovation? The US does more to facilitate research and development Researched in US Funded in part by US government Should we be investing for the world's benefit? What are the two main types of products produced by the pharmaceutical industry? - Correct Answer Pharmaceutical drug - a chemical substance intended for use in medical diagnosis, cure, treatment or prevention of disease Biologics or biopharmaceuticals - a medicinal product that is created through a biologic process for use in medical diagnosis, cure, treatment or prevention of disease Monoclonal antibodies, vaccines Name and describe the three types of suppliers. - Correct Answer -Innovator Pharmaceutical Companies Large multi-national companies that traditionally focused on discovery of novel pharmaceutical drugs Patent protected sales Exited generic production in late 1990's Entering follow-on biologic markets -Generic Pharmaceutical Companies Focus on sale of generic/off-patent pharmaceutical drugs Some small entry into discovery -Biopharmaceutical companies Typically focus on innovation in biologic drug development Historically smaller and funded by venture capital Very very risky (smaller company, venture capital) What is the compound success rate by stage? - Correct Answer 5000-10000 screened 250 enter preclinical testing 5 enter clinical testing 1 approved by the FDA Limited to approved indications (can only be marketed for condition it is meant to treat) Must give "fair balance" of risks and benefits 1997 FDA relaxed requirements for direct to consumer advertising (DTC) over broadcast media DTC for individual drugs is common only in US and New Zealand What is the trend for out-of-pocket spending for prescriptions? - Correct Answer Prescriptions used to be a very very large portion of out of pocket spending -Insurance now covering more-Medicare part D What are the regulations on direct consumer advertising and the types of ads? - Correct Answer Permitted to help patients take more control of their own health Law requires advertisements to include "information in brief summary" about product's risks and benefits Types of Ads: See your doctor: No mention of product Reminder Ads: Names products but no claims but no claims/representations beyond dosage form and packaging, price information Product Ads: -Product claims-if you mention claims, must have risk disclosure -Fair and balanced - risk disclosure -Can't omit material facts -FDA regulation When is DTC most effective? - Correct Answer DTC does not work for all products: higher return if Potential consumer awareness of condition Drug is best in class (doesn't pay off if you're the competitor, doc recommends the best in class anyway) High volume Chronic vs. acute medications (take drug for a long time) Effect of promotion -Class effects with more products (promotion increases entire class -sales and less brand specific sales) -Promotion increases class inelasticity (easier to sell high price drugs) -Generic entry reduces advertising What are the criticisms of DTC? - Correct Answer A little information can be dangerous -We can't and shouldn't expect patients to access and understand all medical knowledge necessary to evaluate diagnoses and treatments -Making wrong decisions can be a matter of life or death (not true for most consumer decisions) Raises already high marketing and advertising costs What is the breakdown of promotion spending on prescription drugs? - Correct Answer 64% samples (lost retail value) 23% physicians 13% DTC What is the impact of increased co-payments on drug utilization? - Correct Answer $1 increase in pharmaceutical co-payments results in an overall reduction in pharmaceutical spending: However, this leads to increased costs in outpatient