Lecture6DrugcommercializationprocurementcopayrebateformularyportfoliotendersubsidiaryreimbursementblockbusterrevenueTFTFFTTFPepsiCo.manufacturesthesodaandsendsittoaretailer,whosellsittoacustomer.ThecustomerpaystheretailerandtheretailerpaysPepsiCo.developadrugandsetapriceknownasthelistpricetransportthedrugsandsellthemtothepharmaciespaysthecopaysendsoutabillthatgetspaidbytheinsurancecompanyworkforinsurancecompanies,bigemployersandgovernmentagencies.Andabigpartoftheirjobistobringdownthecostofdrugsfortheiremployersnegotiatingwithpharmaceuticalcompaniesforrebates.ThePBMssometimespocketaportionandpassesanotherportionontotheinsurancecompanyoremployerthattheinsurancecompanycovers,andit’sgroupedintiersrepresentswhatportionofthelistpricethepatientpaysandwhatportionofthelistpricetheinsurancecompanypaysahighertierintheformularymeansalowercopayforthepatientandhighersalesforthepharmaceuticalcompanymarketaccesscompetitiveadvocacysaturatedmarketlaunchbrandnamedifferentiationmodificationrepositionedlifecyclemanagement1.Whydoweneedhealtheconomicevaluations?Wecanuseeffectiveandworthwhilehealthinterventionsorprogramstoimprovethehealthofapopulation.Evaluationsanddecisionsontheseinterventionshavetobemadetoensurethelimitedamountofmoneyisspenttoachievethemostbenefit.2.Whataredirectcostsandindirectcosts?Pleasegivesomeexamples.Directcostsarecoststhataredirectlyassociatedwithintervention.Forexample,thecostofmedicinesandthecostofequipmentlikeX-raymachines.Indirectcostsarecostsassociatedwithreducedproductivityduetotheillnessoritstreatment.Anexampleismissedwagesbecauseofnotworkingduetotheillness.3.Whatisacostminimizationanalysis?Thistypeofanalysisisusedwhentheproductoroutcomeisthesame.Wecansimplycomparethecoststoevaluatedifferentdrugproductsorinterventions.Thistypeofanalysisisusedforcomparingdifferentinterventionsthathaveacommonhealthoutcome.Itcomparesthecostpernaturalunitsfordifferentinterventions.4.Whatisacosteffectivenessanalysis?1.IntheexampleofAstraZeneca’sswitchfromPrilosectonextgenerationNexium,whatdoyouthinkarethekeyfactorsforasuccessfulimplementationofevergreeningstrategy?----TimingofDrugLaunch:AstraZenecalaunchedNexiumbeforethepatentexpirationofPrilosec,ensuringthatthenewdrugwasavailableinthemarketatthecrucialtime.Thisminimizedthemarketsharelosstogenericcompetitors.----EfficacyandImprovement:NexiumofferedanewandbetterbenefitthanPrilosec,provingmoreeffectiveintreatingpatients.Thiswasacriticalfactorinconvincingpatientsanddoctorstoswitchtothenewdrug.----BrandContinuity:AstraZenecamaintainedacertaindegreeofcommonalitybetweenNexiumandthepopularandtrustedoriginalbrandPrilosec,suchasmakingNexiumpurpleandgivingitasimilarappearance.Thishelpedinretainingconsumertrustandloyalty.2.Howdoesflankingstrategyworktoprolongthelifecycleofaninnovatordrug?Andwhatarethethreeoptionstoexecuteflankingstrategy?Theflankingstrategyworkstoprolongthelifecycleofaninnovatordrugbyenteringthegenericsmarketoncethepatentexpires.Whenthepatentprotectionforaninnovatordruglapses,genericversionsofthedrugtypicallyenterthemarket,attractingnewpatientsandcausingthebrandedcompanytoloseasignificantnumberofitspatientbasetothesecheaperalternatives.Bylaunchingitsowngenericversionofthedrugatacompetitiveprice,thebrandedcompanycanretainthosepatientswhoarehesitanttoswitchtoagenericduetobrandloyaltyorperceivedqualitydifferences.Additionally,thecompanycancaptureasmuchmarketshareaspossiblefrompatientswhohavechosentoswitchtoagenericproduct.Therearethreeoptionstoexecutetheflankingstrategy:----SelltheGenericDrugThroughtheCompanyItselforThroughItsGenericArm:Thebrandedcompanycandevelopandmarketitsowngenericversionofthedrugthroughitsexistingstructureorthroughadedicatedgenericarm.Thisallowsthecompanytomaintaincontroloverthebrandingandmarketingofitsgenericproduct.----SelltheDrugtoaThirdParty:Thebrandedcompanycanselltherightstomarketitsgenericversionofthedrugtoathird-partygenericplayer.Thisthirdpartywillthenmarketthedrugunderitsownbrandname.Thisoptionallowsthebrandedcompanytobenefitfromthegenericmarketwithouthavingtodirectlycompetewithitsownbrand.----AuthorizeaGenericCompanytoManufactureandMarketItsOwnVersion:Thebrandedcompanycanauthorizeagenericcompanytomanufactureandmarketitsownversionofthedrug.Inthisscenario,thebrandedcompanylicensesitsintellectualpropertytothegenericcompany,allowingittoproduceandsellagenericversionoftheinnovatordrug.Thisoptioncanprovidethebrandedcompanywithadditionalrevenuestreamsandhelpitmaintainapresenceinthemarketafterpatentexpiration.3.Doyouknowotherexamplesofsuccessfulimplementationofthosestrategiesmentionedinthevideoorotherstrategiestoprolongthelifecycleofpharmaceuticals?AbbViehasemployedthepatentevergreeningstrategytoextendthelifecycleofitsblockbusterdrugHumira.Bycontinuouslyfilingnewpatentsonvariousaspectsofthedrug,suchasnewformulations,dosingregimens,andmethodsoftreatment,AbbViehasbeenabletodelaytheentryofbiosimilarcompetitorsintothemarket.TTFTTTF1.Whyshouldthedomesticorinternationalcompaniesmanagetheirportfolioverycarefully?----DomesticandinternationalcompaniesshouldmanagetheirportfolioverycarefullybecauseoftheongoinghealthcarereforminChinaandtheshiftinglandscapeofdrugpricingandreimbursement.Withthegovernmentpushingforatransitionfromolder,low-efficacydrugstoinnovativenewdrugs,companiesneedtoensurethattheirportfolioalignswiththisnewdirection.----Managingtheportfoliocarefullyallowscompaniestoanticipateandadapttochangesindrugpricing,reimbursementpolicies,andmarketdemands.Itenablesthemtoprioritizethedevelopmentandintroductionofinnovativedrugsthatmeettheneedsofpatientsandaremorelikelytoreceivegovernmentreimbursement,therebyensuringsustainedrevenuegrowth.----Asthegovernmentopenstendersandupdatesthenationalreimbursementdruglist,companieswithawell-managedportfoliowillbebetterpositionedtoparticipateintheseprocessesandbenefitfrompotentialpricecutsandincreasedmarketaccess.2.Accordingtotheinterview,howdidtheChinesegovernmentmanagetomakedrugpricescomedown?Doyouknowothergovernmentaleffortsforthesamepurpose?----Implementinganewprocurementscheme:Inthisscheme,thegovernmentputsvolumeonthetablefordrugcompaniestobid,butthecompaniesmustbequalifiedbypassingthequalityconsistencyevaluation.Thisapproachencouragescompetitionamongqualifiedcompanies,leadingtopricereductions.----Promotinghealthcarereform:Thisreformaimstoshiftspendingfromolderandlow-efficacydrugstoinnovativenewdrugs.Thisincludesimprovingtheapprovalprocessfornewdrugsandacceleratingthereimbursementprocess.Bydoingso,thegovernmentaimstoincentivizethedevelopmentandintroductionofnewandmoreeffectivetreatmentsintothemarket.----Updatingthenationalreimbursementdruglist.Thislistincludesdrugsthatarecoveredbypublichealthcareinsurance,andbyincludingmoreinnovativedrugsonthelist,thegovernmentcanfurtherpromotetheiruseandreducethefinancialburdenonpatients.3.WhatwillbeHeShan’sinvestmenttheme?Bigpharmaorbiotech?HeShan'sinvestmentthemegoesbeyondsimplybigpharmaorbiotech.Instead,herthemefortheChinahealthindustryistheconversionfromindividualdrugcompaniesdoingR&DtoanentireecosystemfocusedonR