Parallel Imports of Pharmaceuticals: Evidence from Scandinavia and Policy Proposals for Switzerland

158 Pages·2008·1.221 MB·English

by  Cédric Julien Poget (auth.)

Parallel Imports of Pharmaceuticals
Evidence from Scandinavia and Policy
Proposals for Switzerland
by Cédric Julien Poget
Birkhäuser
Basel · Boston · Berlin
Cédric Julien Poget
WWZ
Basel University
Petersgraben 51
CH-4003 Basel
Library of Congress Control Number: 2007935341
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Contents
Tables .................................................................. IX
Figures ................................................................. XII
Acknowledgements ....................................................... XIII
1 Introductiontoparalleltrade ........................................ 1
2 ParalleltradeofpharmaceuticalsinNorway . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
2.1 Summary .......................................................... 3
2.2 TheNorwegianhealthcaresystem ..................................... 3
2.2.1 Organization ....................................................... 3
2.2.2 Reimbursementofpharmaceuticals .................................... 4
2.2.3 Thepricesettingprocessforpharmaceuticals ........................... 5
2.2.4 ThedistributionchainofpharmaceuticalsinNorway .................... 6
2.3 HowdoesNorwayencourageparalleltradedsubstitutionandcompetition? 9
2.3.1 Removingtechnicaltradebarriers ..................................... 9
2.3.2 Offeringcompensationpaymentstopharmacistswhoselllowerpriced
products ........................................................... 10
2.4 Stakeholderbehaviouralanalysis ...................................... 10
2.4.1 Patientbehaviour ................................................... 11
2.4.2 Behaviourofindependentpharmacies ................................. 11
2.4.3 Behaviourofwholesalers(withrespecttoanon-affiliatedpharmacy) ....... 11
2.4.4 Behaviourofwholesalers(withrespecttoanaffiliatedpharmacy) ......... 12
2.4.5 Behaviourofparalleltraders .......................................... 12
2.4.6 Behaviourofpharmaceuticalcompanies ............................... 12
2.4.7 CommentsonthebehaviourofindustrystakeholdersinNorway .......... 14
2.5 ParalleltradeinNorwayanempiricalview ............................. 15
2.5.1 Tradevolumes ...................................................... 15
2.5.2 Priceadvantagesofparallelimporteddrugs ............................. 16
2.6 Summaryandproposalsforpolicyreforms ............................. 20
3 ParalleltradeofpharmaceuticaldrugsinDenmark ..................... 23
3.1 Summary .......................................................... 23
3.2 TheDanishHealthcareSystem ........................................ 23
3.2.1 Organization ....................................................... 23
3.2.2 Reimbursementofpharmaceuticals .................................... 24
3.2.3 Thepricesettingprocessforpharmaceuticals ........................... 25
3.2.4 ThedistributionchainofpharmaceuticalsinDenmark ................... 26
3.3 HowdoesDenmarkencourageparalleltradedsubstitution
andcompetition? ................................................... 27
VI Contents
3.3.1 Removingtechnicaltradebarriers ..................................... 27
3.3.2 Providingfinancialincentivestopatientstobuylowerpricedproducts ..... 29
3.3.3 Givingdirectivestopharmaciststodispenselowerpricedproducts ........ 29
3.3.4 MonitoringbymunicipalauthoritiesandtheMinistryofHealth ........... 29
3.3.5 TheDanishmedia ................................................... 30
3.4 Stakeholderbehaviouranalysis ........................................ 30
3.4.1 Patientbehaviour ................................................... 30
3.4.2 Pharmacistsbehaviour ............................................... 30
3.4.3 Wholesalers’behaviour .............................................. 31
3.4.4 Behaviourofparalleltraders .......................................... 32
3.4.5 Behaviourofpharmaceuticalcompanies ............................... 33
3.5 ThehistoryofparalleltradeinDenmark ............................... 33
3.6 ParalleltradeinDenmark:anempiricalview ........................... 35
3.6.1 Tradevolumes ...................................................... 35
3.6.2 Informationonthecompetitivesituation
andtherevenuesofselectedproducts .................................. 36
3.6.3 Pricingandsavingsfromparallelimportedproducts ..................... 38
3.6.4 Averagepriceadvantagesandsavingsfromparalleltrade,totalmarket ..... 41
3.7 Theimpactofcompetitiononthepricingbehaviourofparalleltraders ..... 42
3.8 Theimpactofgenericandparalleltradedcompetitiononthepricing
behaviourofdrugmanufacturers ...................................... 47
3.9 Theimpactofcompetitiononthepricingbehaviourofparalleltraders ..... 52
3.10 Specialfocus ....................................................... 53
3.11 Conclusionsandproposalsforfuturepolicyreforms ..................... 57
4 ParallelimportsofpharmaceuticaldrugsintoSweden .................. 59
4.1 Summary .......................................................... 59
4.2 TheSwedishhealthcaresystem ........................................ 59
4.2.1 Organization ....................................................... 59
4.2.2 Reimbursementofpharmaceuticals ................................... 60
4.2.3 Thepricesettingprocessforpharmaceuticals ........................... 61
4.2.4 ThedistributionchainofpharmaceuticalsinSweden ..................... 61
4.3 HowdoesSwedenencourageparalleltradedsubstitutionandcompetition? 62
4.3.1 Removingtechnicaltradebarriers ..................................... 62
4.3.2 Providingfinancialincentivestopatientstobuylowerpricedproducts ..... 64
4.3.3 Givingdirectivestopharmaciststodispenselowerpricedproducts ........ 64
4.4 Stakeholderbehaviouranalysis ........................................ 65
4.4.1 Patientbehaviour ................................................... 65
4.4.2 Pharmacists’behaviour .............................................. 65
4.4.3 Wholesalers’behaviour .............................................. 66
4.4.4 Behaviourofparalleltraders .......................................... 66
4.4.5 Behaviourofpharmaceuticalcompanies ............................... 67
4.5 ParalleltradeinSweden:anempiricalview ............................. 67
4.5.1 Tradevolumes ...................................................... 67
4.5.2 Descriptionofthedataset ............................................ 68
4.5.3 Averagepriceadvantages ............................................ 70
Contents VII
4.5.4 Estimatesontotalsavingsfromparalleltrade .......................... 71
4.5.5 Theimpactofcompetitiononthepricingbehaviourofindividualtraders .. 71
4.5.6 Theimpactofgenericandparalleltradedcompetitiononthepricing
behaviourofdrugmanufacturers ..................................... 76
4.6 ConclusionsforSweden ............................................. 82
5 Increasingpayersbenefitsfromparalleltrade:
ObservationsfromScandinaviaandpolicyproposalsforEurope ........ 85
6 Whydopricesnotconverge?Atheoreticalassessment ................. 89
6.1 Discussionbackground ............................................. 89
6.2 Modellingtherealitiesinpharmaceuticalmarkets ...................... 89
6.3 Implications ....................................................... 97
6.4 Summary ......................................................... 99
7 Welfareeffectsofparalleltrade ...................................... 101
7.1 Discussionbackground ............................................. 101
7.2 Asummaryofpastresearch ......................................... 101
7.3 AssertingthewelfareeffectsofparalleltradeinSwedenandDenmark ..... 104
7.4 ThesituationinDenmark ........................................... 105
7.5 ThesituationinSweden ............................................. 109
7.6 Pricedifferentiationstrategiesbyparalleltraders ....................... 111
7.7 Outlook .......................................................... 112
8 HowshouldSwitzerlandproceedwithitslegislationontheexhaustion
ofpatentrights? ................................................... 115
8.1 Summary ......................................................... 115
8.2 TheSwisshealthcaresystem ......................................... 115
8.2.1 Organization ...................................................... 115
8.2.2 Reimbursementofpharmaceuticals ................................... 117
8.2.3 Thepricesettingprocessforpharmaceuticals .......................... 118
8.2.4 ThedistributionchainofpharmaceuticalsinSwitzerland ................ 119
8.3 HowwelldoesSwitzerlandencourageparalleltradedsubstitution
andcompetition? .................................................. 121
8.3.1 Asimplifiedauthorisationprocedure ................................. 121
8.3.2 Directivetomakeallformulationsofaproductavailable ................ 122
8.3.3 Lackofincentivestothemiddlemenandpatients ....................... 122
8.4 EmpiricalevidenceinSwitzerland:thegenericmarket .................. 123
8.4.1 Summary ......................................................... 123
8.4.2 Genericsales ...................................................... 124
8.4.3 Savingsfromgenericsubstitution .................................... 124
8.5 Reformingthewholesaler/pharmacycompensationsystem
andthereimbursementlaw .......................................... 125
8.5.1 Decouplingdistributionmark-upsfromex-factoryprices ............... 125
8.5.2 Providingincentivestopatientstoswitchtothecheapest,rather
thantoanygeneric(orparalleltradedproduct) ........................ 126
VIII Contents
8.5.3 Givingdirectivestopharmacistsandwholesalerstodispensethecheapest,
ratherthananygeneric(orparalleltradedproduct) ..................... 126
8.5.4 Summary ......................................................... 127
8.6 Assessingthelegaloptionstothecurrentpolicyontheexhaustion
ofintellectualpropertyrightsinSwitzerland ........................... 127
8.6.1 ThecurrentsituationinSwitzerlandandotherindustrialisedcountries .... 127
8.6.2 TheTRIPSagreementontheexhaustionofintellectualpropertyrights .... 129
8.7 Modellingtheeconomicimpactofgivingupinternationalexhaustion
ontrademarksandcopyrights ...................................... 130
8.7.1 TheSwedishexperience ............................................ 130
8.7.2 ImplicationsforSwitzerland ........................................ 131
8.8 Modellingapolicymovetowardsinternationalexhaustionofpatents ...... 134
8.8.1 Totalturnovergeneratedbypatentedproducts ......................... 134
8.8.2 Economicimpactofapolicymovetowardsinternationalexhaustion
ofpatentrightsaccordingtoPLAUT .................................. 135
8.8.3 AssessingtheassumptionsusedintheeconomicmodelusedbyPLAUT ... 136
8.9 Modellingapolicymovetowardsregionalexhaustionofpatents .......... 139
8.10 ConclusionsandpolicyproposalsforSwitzerland ...................... 144
9 References ........................................................ 147
9.1 Bibliography ...................................................... 147
9.2 Interviews ........................................................ 150
9.3 Statisticaldatabases ................................................ 150
Tables
Table2.1 SalesoflocallysourcedandparalleltradedpharmaceuticalsinNorway
(pharmacydistributionprices) .................................... 16
Table2.2 Informationonthecompetitivesituationandrevenues
ofthe26productsselectedforNorway ............................. 18
Table2.3 SavingsfromparalleltradeinNorway .............................. 19
Table2.4 PriceadvantagesandsavingsfromparalleltradeinNorway,
numbersatmillionNOK ......................................... 20
Table3.1 Pharmacydistributionmark-upsforlocallysourcedandparallel
tradeddrugsinDenmark . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
Table3.2 Salesoflocallysourcedandparalleltradedpharmaceuticals
inDenmarkatpharmacypurchasingprices ......................... 35
Table3.3 Informationonrevenuesofthe47productsselectedforDenmark ...... 36
Table3.4 Informationonthecompetitivesituationofthe47productsselected
forDenmark .................................................... 37
Table3.5 Datasamplewithsalesinformationonlocallysourcedandparallel
tradedFungizoneinDenmark .................................... 39
Table3.6 Datasampleforthecalculationoftheaveragepricespreadbetween
locallysourcedandparalleltradedpharmaceuticalsinDenmark ....... 40
Table3.7 SalesofandsavingsfromparalleltradeinDenmarkinmillionDKK:
datasample ..................................................... 41
Table3.8 BenefitsfrompharmaceuticalparalleltradeinDenmark
(totalmarketatretailprices) ...................................... 42
Table3.9 Savingsfromparalleltradedgoodswhichareorarenotexposed
togenericcompetition ............................................ 43
Table3.10 Averagepriceadvantageofparalleltradedgoodsdependingon
competition ..................................................... 44
Table3.11 Groupstatistics:Priceadvantagesofproductsmarketed
byoneparalleltradercomparedtopriceadvantagesofproducts
marketedbytwo(Denmark,2003) ................................. 45
Table3.12 Independentsampletest:Priceadvantagesofproductsmarketed
byoneparalleltradercomparedtopriceadvantagesofproducts
marketedbytwo(Denmark,2003) ................................. 45
Table3.13 Groupstatistics:Priceadvantagesofproductsmarketedbytwoparallel
traderscomparedtopriceadvantagesofproductsmarketedbythree
ormore(Denmark,2003) ........................................ 46
Table3.14 Independentsampletest:Priceadvantagesofproductsmarketed
bytwoparalleltraderscomparedtopriceadvantagesofproducts
marketedbythreeormore(Denmark,2003) ........................ 46
Table3.15 Groupstatistics:Priceadvantagesofproductsmarketedbyparallel
tradersonlycomparedtopriceadvantagesofparalleltradeddrugs
whichareexposedtogenericcompetitiontoo(Denmark,2003) ........ 46
X Tables
Table3.16 Independentsampletest:Priceadvantagesofproductswhichare
marketedbyparalleltradersonlycomparedtopriceadvantages
ofparalleltradeddrugswhichareexposedtogenericcompetition
too(Denmark,2003) ............................................. 47
Table3.17 Groupstatistics:Pricechangesoflocallysourcedproductsexposed
tonocompetitioncomparedtopricechangesofproductsexposed
toparalleltradedcompetitiononly(Denmark2002–2004) ............ 49
Table3.18 Independentsampletest:Pricechangesoflocallysourcedproducts
exposedtonocompetitioncomparedtopricechangesofproducts
exposedtoparalleltradedcompetitiononly(Denmark,2002–2004) .... 49
Table3.19 Independentsampletest:Pricechangesoflocallysourcedproducts
exposedtonocompetitioncomparedtopricechangesofproducts
exposedtogeneric(andparalleltraded)competition
(Denmark,2002–2004) ........................................... 50
Table3.20 Independentsampletest:Pricechangesoflocallysourcedproducts
exposedtonocompetitioncomparedtopricechangesofproducts
exposedtogeneric(andparalleltraded)competition
(Denmark,2002–2004) ........................................... 50
Table3.21 Pricedifferencesbetweenparalleltradedpacksofthesameproduct .... 52
Table4.1 SalesoflocallysourcedandparalleltradedpharmaceuticalsinSweden
atpharmacypurchasingprices1997–2004 .......................... 68
Table4.2 Informationonsalesandthecompetitivesituationofthe26products
selectedforSweden .............................................. 69
Table4.3 PriceadvantagesofandsavingsfromparalleltradedgoodsinSweden
(sample) ........................................................ 70
Table4.4 BenefitsfrompharmaceuticalparalleltradeinSweden
(totalmarketatretailpricesinmSEK) .............................. 72
Table4.6 Groupstatistics:Priceadvantagesofproductsmarketed
byoneparalleltradercomparedtopriceadvantagesofproducts
marketedbytwo(Sweden,2003/2004) ............................. 73
Table4.5 AveragepriceadvantageofparalleltradedgoodsinSweden,
dependingoncompetition ........................................ 73
Table4.7 Independentsampletest:Priceadvantagesofproductsmarketed
byoneparalleltradercomparedtopriceadvantagesofproducts
marketedbytwo(Sweden,2003/2004) .............................. 74
Table4.8 Groupstatistics:Priceadvantagesofproductsmarketed
bytwoparalleltraderscomparedtopriceadvantagesofproducts
marketedbythree(Sweden,2003/2004) ............................ 74
Table4.9 Independentsampletest:Priceadvantagesofproductsmarketed
bytwoparalleltraderscomparedtopriceadvantagesofproducts
marketedbythree(Sweden,2003/2004) ............................. 74
Table4.10 Groupstatistics:Priceadvantagesofproductsmarketedbythreeparallel
traderscomparedtopriceadvantagesofproductsmarketedbyfour
andmore(Sweden,2003/2004) .................................... 75