dentify the population of the study. Identify the sample of the study. Was the s
ID: 3296089 • Letter: D
Question
dentify the population of the study. Identify the sample of the study. Was the study observational or experimental? Explain. Did you find the article interesting? Why or why not? What type of data was analyzed: qualitative or quantitative? Explain. How did the author choose to present the analysis (type of graphs/tables, etc.)? Was the table or graph appropriate for the type of data used? Explain. Is the presentation of the study clear and concise? Why or why not? Using all of the data, summarize the final conclusions that were made. With the data and information provided, can you make any predictions or informed decisions? If not, why? If so, what are your predictions or decisions? What are the practical implications for the results of this article? Explain. Which statistical concepts could you identify from the concepts discussed so far in class? List the words/concepts used in the article please answer question with article below. There is a widespread view that prices for drugs in the United States are much higher than elsewhere. Is this true?Panos Kanavos and Sotiris Vandoros find that much depends on what you look at: you have to compare like with like. Studying pharmaceutical markets is not easy. One problem is third-party payers: many drugs are not paid for by the people who use them. Instead, national health authorities or health insurance schemes foot the bill. Low levels of price elasticity do not help: if we need medication, we need it. Demand for a drug does not necessarily go down if its price goes up in industrialised countries. Pricing policies and patent protection are special features that contribute to significant price differences between countries but that also make comparing prices between countries a complex task. To date there has been a widespread impression that US pharmaceutical prices are much higher than prices in other OECD countries. Is this impression justified? Previous evidence has been conflicting at times. The mix of products used, the methods applied to compare their prices and the time period chosen have all affected their results. A study focusing mainly on manufacturer prices showed that European prices were 6–33% lower than US prices1. Another study has shown that key innovative drug prices in Australia do not differ significantly from those paid under key US programmes2. According to a UK report, prices in the United Kingdom and other European countries are significantly lower than those in the US, although results may be subject to exchange rate fluctuations3. Overall, price comparisons, particularly between the USA and other countries, may be biased by unrepresentative samples and unweighted indexes4. Our ongoing study at the London School of Economics and Political Science uses empirical data from 15 OECD countries to study cross-country price differences using weighted price indexes and econometric methods to try to come up with a definitive answer. Methodological issues Important methodological issues arise when attempting cross-country pharmaceutical price comparisons. For instance, the obvious first place to look in the US is at list prices. But these are not the actual price paid by health insurers. Insurers buy in bulk and can negotiate discounts; the discounts distort prices and the sizes of the discounts are confidential and are not publicly available. Previous studies have used data from the IMS-MIDAS database that do not reflect what is actually paid by health insurance. In this study we use data from publicly available sources. In particular, national price data were used for all countries in the study, which were validated by payers. In the case of US retail prices, prices from the Federal Supply Schedule (FSS) are used. The FSS is a multiple-award, multi-year federal contract that is available for use by any federal government agency and satisfies all federal contract laws and regulations. Pricing is negotiated based on how vendors do business with their commercial customers; therefore, FSS prices reflect the discounting practices that exist elsewhere in the system. Different methods give different results. Which prices should we choose to compare? Another issue when performing cross-country price comparisons is whether to look at ex-factory prices or public (retail, or over-the-counter) prices. In most countries wholesaler and pharmacist profit margins are regulated, while in others (USA, UK and Mexico in our sample) margins are free and depend on competition and market power. In any case, there are important differences across countries, which create asymmetric changes in prices when changing from the ex-factory to the public price level. VAT (sales tax in the US) is another factor that leads to significant variations in the difference between ex-factory and retail prices. For these reasons, the choice of whether to compare ex-factory or retail prices can heavily influence the results. In order to provide a holistic approach, we have considered both ex-factory and public prices. The US features lower wholesaler and pharmacy margins because of its liberal supply chain; European countries (excluding the UK) are, in contrast, much more regulated. As a result of all the above factors, while ex-factory prices in the US are much higher than in other OECD countries, for public prices the gap appears to be much smaller. An important aspect of performing cross-country price comparisons relates to the choice of the weightings we assign to different products. Different consumption patterns apply across countries, therefore applying the weightings of one country to another may be misleading. For example, some cheap antibiotics are widely-used and widely sold; our weighted price index therefore is more influenced by their prices than by the price of a rare and hardly-used drug. The influence is weighted according to the drug's market share, and this will differ from country to country. Thus some oncology drugs may be high-selling in some countries and not in others; if they are more expensive in the countries where they are hardly used this need not be representative of drug prices there as a whole. For this reason, we have used different weights in the internal market for each country, depending on the volume-based relative market share of each drug included in the sample. Finally, the product mix is of great importance in order to reach a conclusion that can generally hold for all countries in question. The sample must include a good number of products from various therapeutic classes and must concern high-selling products that cover a very large part of the pharmaceutical market. If not, results are simply limited to the products included in the sample and cannot be used to reach general conclusions. Data and methods The sample includes data from 15 OECD countries, namely the US, Japan, France, Germany, Italy, Spain, UK, Australia, Mexico, Austria, Portugal, Sweden, Greece, Slovakia and Belgium. The countries cover a broad geographical area, and their markets account for more than 80% of global pharmaceutical sales. The country mix also provides information about different regulatory regimes. The countries we considered have different pricing and reimbursement policies, while differences also occur at the supply chain level. The wholesaler acquisition cost (WAC) and Federal Supply Schedule were taken into account for the US for wholesale and public prices, respectively. For other countries ex-factory and public prices are obtained from national official sources. The prices in this study reflect prices actually paid by health insurers, although it is not possible to capture any rebates given to public insurance bodies on an ex post basis. As we are studying originator brand (“own brand”) prices only, it is thought that the effect of such rebates on prices is small and that where they exist they predominantly affect generic products. The 50 top-selling prescription outpatient pharmaceutical products from 19 therapeutic classes for 2004 and 2007 were selected for this study. Overall these products accounted for over 82% of the global pharmaceutical market, so the results can be assumed to be representative. The product mixes in 2004 and 2007 are different, as the top 50 selling products changed over this period. Thirty-two molecules were common for both years, while 18 that were present in the 2004 sample were substituted by other products in 2007 because they were no longer part of the top 50 selling products. Prices were adjusted for defined daily dose (DDD), as defined by the World Health Organization in 2008. Prices studied reflect the products’ dispensing cost, regardless of whether health insurance covers the entire cost or the patient has to pay a co-payment. Ex-factory prices in the US were more than double those in Europe Both a price index approach and econometric methods were used to estimate cross-country price differences. Price indexes, as we have seen, considered market share volume-weighted prices. Different weights are used for each internal market, in order to reflect what is paid on average for pharmaceuticals. Country indexes were then compared in order to reach a conclusion on cross-country price differences. The econometric approach estimated ex-factory and public price differences controlling for various factors, such as a product's age, the regulatory environment, possible presence of generic competitors and exchange rates. However, observations included in the econometric model were not volume-adjusted, as every product entered as a separate observation. Therefore market shares and relative volumes did not play any role in the econometric analysis. The use of these two different methods would provide a holistic approach to the issue in question and valuable cross-checking. How much higher are US pharmaceutical prices? When we looked at ex-factory prices we found a large difference between the European Union (EU) G5 countries (France, Germany, Italy, Spain, UK) and the US for both study years (Figure 1) – prices in the US were more than double. When we looked at public prices we found that US prices are still much higher – but the difference is dramatically smaller. While in 2007 ex-factory prices differed by 206%, the difference for public prices was 24% in 2004 and 63% in 2007. Price differences appear to be higher in 2007 than in 2004. The analysis also shows that prices increased more rapidly between 2004 and 2007 in the US than in the EU. 180 160 350 300 250 200 150 100 50 140124 257 106 120 100 80 60 40 20 100 97 97 92 114 107 100 92 92 86 USAG5 Germany ItalySpain UK France (FSS) USA G5 UK Germany France Italy Spain Public price, 2004 Ex-factory price, 2004 180 163 350 300 250 200 150 100 50 160 140 120 100 80 60 40 20 306 125 100 95 96 89 94 100 105 97 86 85 France G5 Germany Italy Spain UK USA (FSS) G5 UK Germany France Italy Spain USA Public price, 2007 Ex-factory price, 2007 Figure 1. Open in figure viewer Download Powerpoint slide Comparison of price levels in the US and EU G5: ex-factory and public prices at current exchange rates, 2004 and 2007, price indices. For US ex-factory prices, the wholesaler acquisition cost is taken into account Findings vary across countries when considering off-patent originator products – “brand name” products – that face generic competitors. Price differences between the US and EU G5 are even higher for off-patent markets than for in-patent ones. This reflects the different regulatory approach of off-patent markets. While in the US generic uptake is higher than in EU countries, in the latter prices are regulated, often creating downward pressure on originator prices. In the free US market, generic competition may lead to a decrease in generic prices, but originator prices may remain unaffected. Also, in-patent originator prices in Japan are higher than US prices and in-patent drug prices in Mexico in 2007 appear to be higher than in the US. Australian prices are close to the lower end of EU G5 prices. VAT and the distribution chain clearly play a very important role in pharmaceutical prices. This can be seen by simply comparing cross-country differences in ex-factory and public prices. This reflects different VAT rates (e.g. 0% in the UK and US and 19% in Germany) and different wholesaler and pharmacist profit margins (whether regulated or not). In addition, our findings suggest that the age of the therapeutic class and the product both influence drug price differences. Age seems to have a positive effect on price differences – newer drugs have lower price differences – as there seems to be some price convergence over time. This applies both for the therapeutic class age and the product age. Econometric results demonstrate similar findings to that of the price indexes analysis. US public prices appear to be higher by up to 29% on average when controlling for age, generic presence, exchange rates and therapeutic class (statistically significant at = 0.01). However, this difference becomes insignificant when controlling for policy interventions, such as the use of Health Technology Assessment, free pricing, reference pricing and external price referencing. This shows that US public prices are higher because of the absence of price regulation as is used in the EU, Japan and Australia. Results change dramatically when studying ex-factory prices. Depending on the model specification, US prices appear to be higher by between 72% and 99%. Therefore the econometric results confirm what the price index approach showed, suggesting that price differences are much lower for public prices compared to ex-factory prices, which is likely to reflect differences in the distribution system. Findings and implications When conducting cross-country price comparisons, the methodology employed is of great importance for policy implications. The choice between ex-factory and public prices is critical, and what health insurance pays is the public price. This means that when considering pharmaceutical expenditure it is comparisons at this level that are the more important. List prices are often confused with public prices; the two coincide in Europe, but not in the US. It is very important to make clear that cross-country price comparisons are only meaningful if the right prices are compared in each case. Therefore, different studies may show different results, if prices and product weights across countries are not selected carefully. The sample also has to be representative, by choosing the right product mix covering a large part of the market. Another important aspect is the impact of VAT and the distribution chain on public prices. VAT levels vary significantly across countries and are reflected directly in pharmaceutical prices. The distribution chain also captures a significant part of pharmaceutical prices, particularly in European countries that have regulated margins. As both these components vary across countries, it is reasonable that price comparisons at the ex-factory price level give different results than at the public price level. Overall, both approaches employed in this study suggest that US prices are indeed higher than EU and Australian prices; the common perception is justified. But US prices are not the highest: in-patent products in Japan and Mexico appear to be still more expensive However, price differences are much lower at the public price level, which is what is paid by health insurers. Also, price differences appear to be higher for off-patent originators, where generic alternatives are also available, giving health insurance the alternative of a cheaper product of the same chemical substance anyway, so higher prices for the brand names may not be that relevant for pharmaceutical expenditure. Prices appear to converge over time, as the price gap between countries decreases over time. This concerns newer products as well as newer therapeutic classes. In general, our findings suggest that price differences between the US and other OECD countries have been exaggerated. US prices are higher than European prices, but not to the extent that is usually perceived. In particular, a very important aspect is that comparison of ex-factory price differences between the US and Europe can be meaningless, as they do not reflect what health insurers pay in the US. This study is subject to limitations, as the choice of weights always leaves room for debate.
Explanation / Answer
Summarize the author's primary goal in conducting this research
The author's primary goal in conducting this research, is to accept/reject the widespread view that prices for drugs in the United States are much higher than elsewhere.
What type of data was analyzed( qualitative or quantitative? )
Quantitative data was analysed; but independent evaluators ensure qualitative analysis too.
How did the author choose to present the analysis (type of graphs/tables, etc.) ?
The analysis was presented as varied tables
Was the study an observational study or an experiment?
This was an observational study.
Did you find the article interesting?
Yes. And enlighteneing too :)
Summarize the final conclusion of that were made.
The factors account for differences of prices between different countries :
1. Wholesaler and pharmacist profit margins bieng regulated by govt., v/s margins being free and depend on competition and market power.
2. VAT (sales tax in the US)
3. whether to compare ex-factory or retail prices can heavily influence the results.
4. The US features lower wholesaler and pharmacy margins because of its liberal supply chain; European countries (excluding the UK) are, in contrast, much more regulated.
5. Choice of the weightings we assign to different products. Different consumption patterns apply across countries, therefore applying the weightings of one country to another may be misleading.
I hope it was Helpful :)
Related Questions
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.