Book Review: The Price of Global Health: Drug Pricing Strategies to Balance Patient Access and the Funding of Innovation
By: Ed Schoonveld. MPG Books Group, UK, 2011.
Review by Carla L. Kuesten
This book encompasses four parts that form the backbone of this complicated journey into understanding drug pricing on a global basis: A-Drug Pricing and Market Access Basics, B-Structured Pricing and Market Access Approaches, C-Developing an Integrated Global Strategy, and D-Key Healthcare Systems. Schoonveld informs about administrations, agencies, alliances, departments, entities, organizations, schedules, companies, diseases, classifications, and advertising/market/marketing, medical and drug-speak. It offers an appreciation of the real complexities of healthcare on a global basis. The book offers forthright discussion on sensitive moral and ethical controversies surrounding healthcare concerns and direct, sometimes blunt, accounting of realities.
Global drug pricing is complex with government controls and international trade. The healthcare industry cost structure and humanistic considerations bring emotional reactions to trade-off decisions forcing “a value to be placed on improvements of human life” (p. 19). Schoonveld uses the analogy of “dinner for three”, referring to physician, patient, and payer (chooser-chooses/prescribes the drug, consumer-takes the drug and insurance agent-pays for the drug )—each with their own interests in quality and cost for the “meal”.
From a payer’s perspective, there are a number of payer systems, decision-making bodies and key budget holders in the process and cost controls and decision-making processes. Decision making is formed by the
questions asked: medical need, effectiveness, evidence, economical impact, ability to control and political importance. NIH provides definitions for health outcomes, health economics and pharmaco-economics (page 72). Health outcomes are expressed as long-term patient outcomes and patient quality of life measures (very vague from many payers’ perspectives).
The value placed on drugs is cast in the context of features, benefits, price and importance for key stakeholders (physicians, patients and payers) and is summarized in the context of the payer benefit pyramid; product attributes and functional consequences forming the base foundation of the pyramid and benefits (clinical, humanistic, economic, public health) shaping the top of the pyramid (p. 84).
Drug development is described as “expensive, time consuming, and very risky” (p. 97) with full development sequenced as: pre-clinical, through multiple stages of development, registration, launch and life cycle management. Phases include: asset shaping, evidence building and implementation and adjustment, each phase requiring different activities to support development.
Four types of global payer segments are described. The BEST PRICE framework helps to explore potential , pricing and market access for a drug.Payer segments (4) were analyzed: 1) Competitive Insurance-Based System (US), 2) Therapeutic Reference Systems (France, Germany and Japan), 3) Health Economics-Driven Markets (United Kingdom and Canada), and 4) Emerging Cash Markets (Brazil, Russia, India, China-BRIC).
Pharmaceutical companies are organized very differently for global pricing and market access functions. Strategies involve trade-offs between markets—launching with higher pricing than optimal in some markets to avoid price decline in another. The supplied definition of market access is: “Market access is the discipline that addresses any financially based consideration or hurdle to drug prescribing and use, whether imposed by public or private third-party payers, or experienced as a consequence of patient affordability.” (p. 181)
Pricing research is used to understand payer, physician, and patient decision making. Schoonveld emphasizes the need to avoid the bias of overstated importance of price in decision making. The Van Westendrop research methodology is highlighted—as it is frequently used for pharmaceuticals (Van Westendorp, 1976) (p. 241). Another methodology, Gabor-Granger, is also illustrated (Gabor, 1961) (p. 246).
The final part of this book covers key global healthcare systems and key processes and driving factors and organizations involved in the various pricing and market access approval steps. Real–life issues and practical aspects for approval are discussed within each system—pricing, market access, health insurance, pharmaceuticals, Medicare/Medicaid, reimbursement, hospital drugs, formularies, health economics, healthcare reform, etc.
Schoonveld guides and educates the reader about drug innovation and pricing by providing clear definitions for the terms and practices used by the pharmaceutical industries, those at “dinner”, and involved others though out his book. Even an outsider can follow and grasp an appreciation of the emotional and ethical considerations and decision making for healthcare within the context of this inter-tangled, complex, highly evolved international market.
Gabor, A. 1961. “On the price consciousness of consumers”, Applied Statistics, 10, 170-88.
Van Westendorp, P. 1976. NSS-Price Sensitivity Meter (PSM): A New Approach to Study Consumer Perception of Prices. Proceedings of the 29th ESOMAR Congress, Amsterdam, 139-67.