Cost appears to be the major concern across the world, including Asia, when it comes to drugs. The US President Donald Trump recently expressed concern over the prices of prescription drugs going “out of control”. His statement in the cabinet meeting resulted in stocks of pharma companies dropping slightly.
The concerns are similar and equally deep and serious in the Asian region too. A recent Business Monitor International’s report ‘Pharma and Healthcare Insight, Asia – Industry Trend Analysis’ also touches the subject of drug prices and their affordability in the Asian region. “Governments across the Asia Pacific (APAC) region will face challenges in ensuring the population’s access to medicines in a cost effective manner,” the report says.
The demand and consumption of drugs is rapidly rising in the APAC region. Aging population and growing burden of chronic diseases are fueling the growth in demand. Pharmaceutical market of APAC was about $ 304 billion the previous year. It is expected to grow to $ 375 billion by 2021 with 6% CAGR. While various research reports published in the near past are forecasting rapid growth in the pharma market in APAC region, they also have expressed growing concerns of the respective governments over the rising healthcare cost caused in one way by high drug prices and the measures announced or taken by them to meet the challenge to make treatments affordable to the people.
However, according to one study in US, prescription medicines including retail pharmacy sales are only 14% of the overall healthcare spending and hospitals comprise the largest share of about 30%. Physicians and clinical services are about 20%. However, no matter how low may be the percentage of prescription medicines and pharmacy sales in overall healthcare expenditure, when it actually comes to paying the price of drugs by individual patients that low percentage does not matter and what counts is the actual price of the drug and if it is high it becomes unaffordable to many.
In order to overcome this problem increasingly aggressive pricing controls have been implemented by the authorities. They include value based pricing, annual price revision and capping of medicine prices. This has been pointed out by the industry trend report quoting examples from Japan where almost half price reduction is introduced in case of a drug. Japan has also proposed creating a more structured cost-effectiveness assessment scheme. In China, price reduction of some drugs is reimbursed to the drug company from national health insurance.
Another report by E & Y has mentioned that Indonesia is allowing import of lowerpriced copies of patented products, while Malaysia is adopting measures to control the rise in healthcare costs. A consumers’ association in Malaysia has urged the government to introduce national drug pricing control system. Along with the price control by authorities, one more solution being considered by them to reduce the prices is promoting generic drugs and biosimilars. In its report, Frost & Sullivan expects the pricing environment in APAC to become more dynamic, which would drive generics and biosimilar market as substitution to expensive products.
BMI’s industry trend report has mentioned that Malaysia is trying to increase the use of generics and biosimilars. Australia has stated to promote lower value generic medicines to reduce pharma expenditure. Japan unveiled its plan of boosting use of generic drugs from 56% to 80% by 2020. The Philippines FDA has supported the formation of a committee on generic drugs development to encourage investment in generic drug production with higher quality and more affordability.
Thus, affordability of the drugs is going to be the main focus of the governments to provide relief to the citizens. For that, the measures adopted by the governments will be forceful pricing pressure and focus on generic substitution in addition to boosting domestic drug production, the report has predicted. This, of course, will pose a challenge to the pharma companies, particularly the multinationals.