Pricing and Reimbursement in Key Asia Pacific Markets

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.

Report 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.
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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
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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
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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