Dr Giampiero Favato Henley Business School University of
Dr. Giampiero Favato Henley Business School University of Reading SEFAP University of Milan Long term sustainability of SSN pharmace A twenty year outlook (2005 -2025) © Henley Business School 2008
Long term sustainability of current SSN level of pharmaceutical coverage ? Source: OSMED data 2007 2
Key determinants of demand for pharma in public healthcare systems* • Ageing • Price • • – Increase Rx volume – Generic substitution – Shift to more expensive alternatives – Shift in demand Morbidity Mortality Chronic illness rate Physicians’ prescribing behaviour Disposable income Education Access to healthcare Source: OSMED data 2007 * Majeed A, Malcom I (1999) 3
Study objective • To determine the long term impact of age and generic substitution on the Italian public pharmaceutical spending. • Key assumptions: – – – Base year: 2005 Fundamental level of SSN pharmaceutical coverage unchanged No drastic shifts in pharmaceutical demand All other determinants unchanged Generics price = 40% of branded off-patent 4
Quantifying the impact of ageing: the ASSET study (2007) 5
ASSET outcomes • Patient and cost data were obtained directly from computerised prescription records for a two year period, from January 2004 to December 2005. • The ASSET sample totalled 3, 175, 691 residents. • The ASSET mean costs were applied to the Istat projections of the Italian population (intermediate scenario) * Favato G, Mariani P, Mills RW, Capone A, Pelagatti M, et al (2007) ASSET 6
Impact of ageing on demand: +24% over twenty years (2005 -2025) 124 100 7
Goodness of fit Polynomial regression model: y = -0. 0055 x 2 + 1. 2906 x + 98. 759 R 2 = 0. 9999 8
Quantifying the impact of generics • Population: ISTAT projections 2005 -2025 (intermediate scenario) at year end. • Impact of generic substitution: 40% price reduction, calculated at year end for each molecule going off patent on its average cost by age group (source: ASSET) • The calculated reduction is then carried forward to the following year. 9
Time distribution of patent expiration 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 10
Expected impact of patent expiration by ATC class 2006 -2017* * Patent expiration dates provided by AIFA 11
Top ten molecules off patent by 2017 12
Generic substitution to offset the impact of ageing population 100 124 101 13
Goodness of fit Polynomial regression model: y = 0. 0846 x 2 – 1. 6324 x + 100. 19 R 2 = 0. 8854 14
Sensitivity to generics’ price 124 112 101 83 No generics 15
The actual trend 2005 -2008 E* seems to confirm the ageing generic model * 2008 estimates based on Jan-Jun (-1. 4% vs. 2007). Source: Il Sole 24 Ore 16
Net effect of generic substitution: 2001 -2004 equilibrium • ATC 4 class growing: – 32. 6% of drugs off-patent – 18. 6% of drugs off-patent UP DOWN leaders shift UP DOWN low impact shift • ATC 4 class declining – 13. 9% of drugs off-patent – 34. 5% of drugs off-patent sustainable cost reduction potential cost increase (therapy shift) 17
Conclusions • Ageing and price are key determinants of pharmaceutical demand in a state funded, open access social healthcare system like the Italian SSN. • All else equal, by 2025 the expected ageing of the Italian population would increase the cost of the current public pharmaceutical coverage by 24%. • Generic substitution could offset the upward trend driven by ageing. • Cholesterol inhibitors and anti hypertensive agents could reduce the total cost of cardiovascular treatments by 25%. • Due to time to patent expiration, the next couple of years would provide critical indications about the sustainability of the current pharmaceutical coverage provided by the SSN in Fascia A. 18
All else equal… a major limitation of the age/generic substitution model CHANGE POLICY IMPLICATIONS • Shift in pharmaceutical demand • Redefine levels of SSN coverage • Accelerated shift to more expensive treatment options • Outcome based prescribing guidelines • Physicians behaviour • Reduce moral hazard: • Patients behaviour • Rationale prescribing – Link reimbursement to compliance – Education: health as capital 19
- Slides: 19