Pharmaceutical �Industry Pricing and Regulation

Steven Kushnerick

Yeny Romero

Melisa A. Rivera

Key Terms  �

• R&D: Research and Development
• Active Pharmaceutical Ingredients (APIs)
•  These are the raw materials used to manufacture drugs. Generally these materials require special environmental conditions.
• Generic drugs: Off-patented, cost-effective drugs at low prices using no specific brand name in order to serve the public. 
• Examples: Abbott Laboratories (ABT), Actavis plc (ACT) 
• Patented drugs: developed through in-house research or licenses from other firms and then manufacture the drugs under licenses from patent holders. Patented drugs have high profit margins
• Examples: Pfizer Inc., Merck & Co. (MRK), Sanofi, GlaxoSmithKline, Teva Pharmaceutials (TEVA)

�

History

• Earliest roots of the pharmaceutical industry
• Post WWII economy helped the pharmaceutical industry
• More regulation becomes necessary
• New advancements in products begin to make money
• Blockbuster Drugs emerge 

​

​

​

What does “Big Pharma” Do today ?

“Big Pharma”  is the healthcare sector that deals with medications production

• Create drugs that prevent infections
• Drugs that maintain health
• Creates Drugs that attempt to cure diseases. 

​

Top 10 Pharmaceutical Companies in 2017

Source: Pharmaceutical Executive, www.pharmexec.com

Who Regulates this Industry?

Because this industry directly affects the global population a number of international regulatory bodies monitor things like drug safety, patents, quality, and pricing

• World Health Organization (or WHO)
• US Food and Drug Administration (or FDA)
• Medicines and Healthcare Products Regulatory Agency (or MHRA)

​

Research Development  

•  It takes 10–15 years to develop a medicine or vaccine. 
•  The research-based pharmaceutical industry currently spends over USD 149.8 billion on R&D per year.  
• In 2015, 56 new pharmaceuticals were launched, out of more than 7,000 compounds in development. 
•  In 2011-2015, the number of new chemical or biological entities launched on the world market increased to 226 from 146 a decade earlier. 
• In 2014, 5 of the 11 leading global R&D firms were pharmaceutical companies.

Why Careful Development is Important  

11/2017

https://www.ifpma.org/wp-content/uploads/2017/02/IFPMA-Facts-And-Figures-2017.pdf

9

R&D Costs in the U.S 2014

11/2017

https://www.ifpma.org/wp-content/uploads/2017/02/IFPMA-Facts-And-Figures-2017.pdf

10

Current Regulations

• Regulation was first needed due to concerns over adulterated patent medicines. 
• The Food, Drug, and Cosmetic Act was passed in 1938 
• The FDC Act was amended in 1962
• Medicare Modernization Act was passed in 2003

Martin Shkreli

• Came to fame in 2015 when he raised the price of a drug 5000% 
• He claims the price hike will fund a new better version of the drug
• Do patients need a better version of the drug?

​

Price Hikes

• Drug manufacturers in the U.S. set their own prices, and that’s not the norm elsewhere in the world.
• We also allow “government-protected monopolies” for certain drugs, preventing generics from coming to market to reduce prices.
• Sometimes, state laws and other “well-intentioned” federal policies limit generics’ abilities to keep costs down.

​

The Pharmaceutical Market 

• The global pharmaceutical market will reach nearly USD 1,430 billion by 2020.
• Pharmerging countries will account for 25% of global spending on pharmaceuticals by 2020, compared to 23% in 2015.
• The United States share of the global market will increase from 40.3% in 2015 to 41% in 2020, while Europe’s share will fall from 13.5% in 2015 to 13.1% in 2020.

15

Real-Life Circumstances

• Patients with Cancer 
• Minority Groups
• Comorbidity 
• Elderly Population

​

​

References 

• Alpern, J. D., Song, J., and Stauffer, W. M. (2016, May 19). Essential Medicines in the United States — Why Access Is Diminishing. New England Journal of Medicine (374) 1904- 1907. DOI: 10.1056/NEJMp1601559
• AARP. (2017, May 01). Why prescription drugs cost so much. Retrieved November 25, 2017, from https://www.aarp.org/health/drugs-supplements/info-2017/rx-prescription-drug-pricing.html.
• Christel, M. (2017, June 28). Pharm Exec's Top 50 Companies 2017. Pharmaceutical Executives, (37)6. Retrieved from http://www.pharmexec.com/pharm-execs-top-50-companies-2017
• Cohen, R.A. and Villarroel, M. A. (2015). Strategies used by adults to reduce their prescription drug costs: United States, 2013. NCHS data brief (184). Hyattsville, MD: 
• Emergence of Pharmaceutical Science and Industry: 1870-1930. (2005). 
• International Federation of Pharmaceutical Manufacturers and Associations. (2017). The Phamaceutical Industry and Global Helath: Facts and Figures 2017. Retrieved from https://www.ifpma.org/wp-content/uploads/2017/02/IFPMA-Facts-And-Figures-2017.pdfMcDonald, D. (2017, June 03). The Martin Shkreli Controversy.
• Morgan, S. and Kennedy, J. (2010). Prescription Drug Accessibility and Affordability in the United States and Abroad. Commonwealth Fund (89) 1-12 Retrieved November 25, 2017, form http://www.commonwealthfund.org/~/media/Files/Publications/Issue%20Brief/2010/Jun/1408_Morgan_Prescription_drug_accessibility_US_intl_ib.pdf
• “Patent”. Wipo.int. Retrieved November 26, 2017, from Wipo.int. website: http://www.wipo.int/patents/en/#basics
• Pharmaceuticals: Facts, Policies, and NSCL Resources. (2017, July 1) 
• Pharmaceutical Industry. (2015). In Opposing Viewpoints Online Collection. Detroit: Gale. Retrieved from http://0-               link.galegroup.com.alvin.iii.com/apps/doc/PC3010999131/OVIC?u=pl1855&xid=7f07c8f0
• Silverstein, S. (2017, June 23). This is why your drug prescriptions cost so damn much.
• Walsh, R. (2017, February 16). A history of the pharmaceutical industry.
• YouTube. (2016). "Here's why drug prices in the U.S. are so high."  Bloomberg. Retrieved from https://www.youtube.com/watch?v=jMmaIXqw9aY

​

​

​