Table of Contents

Pricing and Reimbursement in Key Asia Pacific Markets - This report focuses on the latest developments in P&R in key Asia Pacific markets (Australia, Singapore, China and Hong Kong) providing analysis of P&R controls and identifies key trends shaping overall market evolution and implications for Pharma

Product Code: dmhc2478

Publication Date: 20-Jan-2009

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Overview

Introduction

With the Asia-Pacific markets growing rapidly, they are becoming increasingly attractive for Pharma to enter. However, a number of key P&R developments and reforms are set to change the healthcare environment in the next few years, as healthcare is made more accessible to the poor and elderly.

Scope

· Insight into pricing and reimbursement strategies in Australia, Singapore, China and Hong Kong

· Analysis of drivers and barriers for entering Australia, Singapore, China and Hong Kong

· Overview of healthcare systems in Australia, Singapore, China and Hong Kong

· Identification of trends shaping national P&R strategies and their impact on branded Pharma

Highlights

In Australia, a high level of evidence is needed to show clinical and cost effectiveness, thus clearly pointing to a barrier for entering the Australian market. It is essential that a new medicine is cost effective against the standard of care, therefore solid head-to-head clinical trial data must be presented to have a successful listing.

Recent changes by the Chinese National Development and Reform Commission (NDRC) means that the financial rewards for the multinationals will be jeopardized. The pricing authority has planned another round of price reductions, but for the first time, this will also affect imported drugs.

Singapore's affluent population translates into high per capita spending on healthcare and a preference for branded drugs. Its healthcare financing system based on co-payments discourages excessive consumption and acts as a measure of cost-containment.

Reasons to Purchase

· Understand the recent changes in the P&R environment in the key Asia-Pacific markets

· Analyze recent trends in healthcare in Asia-Pacific and the impact on branded pharma

· In-depth and up to date information on P&R regulations through interviewing local industry executives

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CHAPTER 1 EXECUTIVE SUMMARY	4
Scope of the report	4
Interviewed pricing and reimbursement executives	4
Key findings	4
CHAPTER 2 OVERVIEW OF ASIA PACIFIC P&R	9
Pricing and reimbursement strategies in Australia, Singapore, China and Hong Kong	10
Health insurance in Australia, Singapore, China and Hong Kong	10
Comparing efficiency across healthcare systems	12
Reimbursement in Asia-Pacific region	13
Patient co-pays	14
Formulary positive/negative lists	14
Volume limitations	15
Pharmacoeconomics	15
Risk-sharing	15
Pharmacist substitution	16
Pricing strategies in Asia-Pacific	16
Drivers and resistors for pharma companies entering the Australia, China and Singapore branded pharmaceutical markets	17
Australia - becoming more appealing for Big Pharma	18
China - enter with caution	19
Singapore - a thriving environment for foreign investment	21
CHAPTER 3 AUSTRALIA-SPECIFIC P&R MEASURES	23
Healthcare system in Australia	24
Healthcare expenditure in Australia has remained stable	24
Healthcare reforms aim at improving hospitals and health outcomes	25
Access to healthcare needs to be improved in rural areas	26
Poor access to healthcare in rural communities	26
Healthcare discrimination against Indigenous people needs to be addressed	27
Physician shortages in rural areas is an obstacle to access to healthcare	27
Health insurance is dominated by the public sector although this is likely to change	28
Public health insurance in Australia	30
Private health insurance in Australia	31
Pricing and reimbursement in Australia	33
Prices for prescription drugs are low	33
Determining drug cost-effectiveness	34
Reference pricing is based on stringent pharmacoeconomics	35
New drug price reforms reward innovation	36
Reimbursement in Australia is extensive	38
CHAPTER 4 CHINA-SPECIFIC P&R MEASURES	41
Healthcare system in China	42
Healthcare expenditure has grown significantly	43
Healthcare reforms are aiming for universal healthcare coverage	44
Access to healthcare services is difficult for the poor and the rural population	45
Health insurance coverage is rising in both urban and rural areas but is insufficient	47
The urban employee Basic Medical Insurance system has improved healthcare coverage in cities	48
Despite rising coverage, the benefits of rural health insurance are questionable	48
Urban Residence Insurance Scheme offers basic health insurance to the unemployed	49
Pricing and reimbursement in China	50
Price cuts threaten to reduce manufacturers' profit margins	50
Heavy price cuts have been a common strategy in the past to reduce healthcare costs	51
Prices of drugs sold in hospitals are over inflated	52
Reimbursement is negotiated at local level	53
Healthcare system in Hong Kong	54
Healthcare expenditure in Hong Kong	55
Healthcare reforms must be updated to keep up with the evolving needs of the population	55
The Harvard Report aimed at improving healthcare equity and efficiency	56
Recent reforms aim to further improve efficiency and contain costs	57
Pricing and reimbursement in Hong Kong	58
Reimbursement does not cover novel expensive drugs	58
High drug prices results in abuse of free pricing system	60
CHAPTER 5 SINGAPORE-SPECIFIC P&R MEASURES	61
Healthcare system in Singapore	62
Healthcare expenditure is low but sufficient	62
Health insurance	63
Medisave provides universal coverage	64
MediShield offers protection against catastrophic events	64
Medifund operates as a safety net	65
ElderShield covers against severe disability	65
Can the successful 3M framework be replicated?	66
Pricing and reimbursement in Singapore	68
Pricing system in Singapore rewards innovation	68
Reimbursement is dependent on the level of care	69
CHAPTER 6 BIBLIOGRAPHY	71
Publications and online articles	71
Conference literature	76
Datamonitor resources	76
APPENDIX	77
List of Tables
Table 1: Key healthcare expenditure indicators for Australia and the US, 2005	25
Table 2: Coverage of public health insurance in Australia	29
Table 3: Coverage of private health insurance in Australia	30
Table 4: Examples of drugs in the new PBS formularies, as of September 11, 2007	37
Table 5: Several ministerial-level agencies have varying degrees of authority over healthcare in China	42
Table 6: Key healthcare expenditure indicators for China and the US, 2005	44
Table 7: Key healthcare expenditure indicators for Singapore and the US, 2005	63
Table 8: Medical savings account schemes in Shanghai and Singapore	67
Table 9: Exchange rates, December 2008	77
List of Figures
Figure 1: Differences in public-private healthcare expenditures in Australia, China, Singapore and the US, 2005	11
Figure 2: Which country has the most successful and cost-effective healthcare system?	12
Figure 3: Drivers and resistors for branded Pharma entering the Australia, China and Singapore markets, 2009	17
Figure 4: The decision-making process for listing a drug on the PBS	33
Figure 5: Several cost containment measures exist in Australia	40
Figure 6: Equity must be addressed to ensure equitable access to healthcare in China, 2008	46
Figure 7: Insurance reforms in China, 1993-2007	47
Figure 8: Reimbursement Drug List defines the coverage level for drug insurance in China	53
Figure 9: Healthcare in Hong Kong is provided through primary, secondary or tertiary care	54
Figure 10: Drug subsidy levels in Singapore	70

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