Industry Trends

Topics and Trends Report, Q1 2010

RISING COSTS LEAD INSURERS TO FOCUS ON PREVENTION

The country’s top life insurers are boosting coverage of preventative care as the population’s aging threatens to hike costs for the industry.

The goal is to be able to intervene before the issue becomes severe and expensive, by prodding the person to take action that could manage or prevent the disease all together. These initiatives usually are well intentioned but fall apart when the discussion who pays is raised..

INCENTIVE PAYMENTS OFFERED TO CANADIAN DOCTOR

I was mildly surprised to see that we have a ―bonus‖ system for doctors in several Provinces in this socialised health care delivery in Canada. Here are a few examples:

British Columbia:
$125 for each diabetes or congestive heart failure patient managed according to guidelines

Ontario:
1. $500 bonus per year for signing up 15-49 patients on provincial diabetes registry, additional $500 for 50 or more.

2. $350 for taking on to practice an unattached mother within two weeks of birth, and also caring for newborn.

3. $2,000 annual bonus for making at least 24 house calls to six or more patients.

Nova Scotia:
1. $40 bonus for each diabetic patient managed according to diabetes care guidelines.
2. $2,000 for continuing education on adopting electronic health records

The concept is strong as it rewards success and is centered on implementation of approved practice guidelines as well as moving the electronic records initiative forward.


US GOVERNMENT ACCOUNTABILITY OFFICE (GAO) FINDS EXTRAORDINARY PRICE INCREASES IN US FOR SOME DRUGS

According to a report released by the Government Accountability Office (GAO), prices for 416 brand-name drug products increased more than 100 percent in the US from 2000 to 2008, and investigators said the number of these "extraordinary" drug price increases in 2008 more than doubled compared with 2000. Senator Charles Schumer, who requested the report, commented that "it is hard to find a good-faith explanation for why drug prices could go up this much. This
report will lead to a strong demand for action by Congress."

A bipartisan group of more than two dozen senators had sought to allow drug imports from Canada and other countries -- where drugs often sell at a much lower cost than in the United States. But they saw their proposal, which needed 60 votes to pass in the 100-member Senate, fall short by a vote of 51-48.

In an $80 billion, 10-year deal reached earlier this year with the White House and some Democratic senators, the industry agreed to help fund the proposed healthcare reforms through higher taxes and certain price agreements.

This loss in Pharmaceutical corporate profits will continue to force Industry restructuring and downsizing.

PROVINCES COMTINUE TO CUT PRICES OF GENERIC DRUGS

CBC news reported on January 27 that in Alberta the price "for generic drugs will be reduced from 75 percent to 45 percent of the brand-name drug price as of April 1." According to pharmacists, the plan "could mean the end of small town drugstores," but the "provincial government estimates [the cuts] will save $100 million a year." In addition, "Alberta Health has already set up a transition plan that includes a three-year, $5-million fund to help rural and remote pharmacies." Subsequent to this announcement, the Province of Alberta has announced that they will only move to 56% of existing listed generics.

At least Alberta is trying to assist in the restructuring of pharmacist fees and putting in a transition plan.

Quebec is now looking at the price they are paying and New Brunswick is now pushing back through the Medavie Blue Cross negotiations with retail pharmacies. We still await the Ontario announcement. Ontario talks have resumed and there is no warm feeling between retail, generics and the government. Look out!

It is interesting to see the massive lobbying campaigns both in Alberta as well as Ontario by community Pharmacists. Expect this to get a lot noisier once Ontario announces.

These upcoming changes will be horrific for the bottom line of pharmacies with a reduction of generic pricing and potentially the end of Professional Allowances rebates.


EVIDENCE OF GMP COMPLIANCE NOW REQUIRED AT THE TIME OF SUBMISSION

The Health Products and Food Branch Inspectorate (HPFBI) published a notice announcing that evidence of GMP compliance is now required at the time of filing for pre-market approval of drug submissions. This new requirement should improve the efficiency of the drug submission review process. This new requirement will be applicable to all New Drug Submissions (NDS), Abbreviated New Drug Submissions (ANDS), Supplemental New Drug Submissions (SNDS), Supplemental Abbreviated New Drug Submissions (SANDS), and Notifiable Changes (NC) submitted for review by TPD. Evidence of GMP compliance includes a valid Establishment Licence or a current GMP compliance rating issued by HPFBI.

OHA AND PHARMA TRUST JOIN FORCES

The Ontario Hospital Association is collaborating with PharmaTrust to install prescription- dispensing kiosks in Ontario hospitals in order to provide improved patient access to needed medications and enhanced medication management support.

Patients at the participating hospitals will have the option to have their prescriptions filled on site via kiosk or through the traditional pharmacy. Every time a medication is dispensed, the MedCentre will send a record to the prescribing physician. Patients will also get reminder notices to refill prescriptions.

"We have a far larger list of potential locations [for kiosks]—measuring in the dozens—waiting on the change of pharmacy regulations," says Peter Suma, chief operating officer and co-founder of PharmaTrust. "We’re getting a lot of calls from independent pharmacists now too because they say it’s the way for them to become the most accessible healthcare providers and be everywhere."

HEALTH SPENDING: OUT OF CONTROL

The Harper Government has delivered a federal budget that aims to wrestle big deficits back to zero by about 2015 by scaling back spending .

It will be extremely difficult, given the following growth in healthcare expenditure:
1978 – 28% of overall spending
1988 – 33% of overall spending
1998 – 34% of overall spending
2008 – 39% of overall spending

Consider these numbers. In 1998, when governments started increasing health care spending again after a couple of years of restraint, the annual public health tab was $59.2 billion a year. It’s now $128.6 billion.

The Liberal Opposition is also dusting off the issue. No kidding.

PHARMACEUTICAL COMPANIES SHOULD ‘EXTERNALISE’ DRUG DEVELOPMENT PROGRAMMES

According to a report from Morgan Stanley, European pharmaceutical companies should"externalise" their drug development programmes by working with biotechnology companies to reduce the costs of early-stage development.
This recommendation has been evolving over the past 10 years.

BILL 67 IN QUEBEC

Bill 67 is about merging two existing healthcare advisory bodies, the CDM (Conseil du médicament) whose core responsibility is drugs in Quebec and the AETMIS (Agence d’évaluation des technologies et modes d’interventions en santé) whose core focus is the assessment of technology and social services and best healthcare practices, into one advisory body whose name is INESSS (Institut National en Excellence en Santé et Services Sociaux). Bill 67 will be adjusted and will go through the legislative process in 2010 and possibly be approved by year end. The road ahead for its creation and functioning will not be a smooth ride internally but also for Pharma who will have to adapt new product submissions to new guidelines from INESSS and may have a reality check on current listed drugs, which can be good or bad. So, what is the real
agenda behind INESSS? Simply cost containment? It really is unfortunate when governments try and fix something that does not need fixing.


OSOS (OPEN SOURCE ORDER SETS)

The OSOS is a collaborative network dedicated to improving healthcare in Canada through the use of evidence-based order sets. Its goal is to create a national order set network where all Canadian clinicians can benefit from experience across the country. OSOS boasts over 400 best practice order sets and clinical protocols that are comprehensive, interdisciplinary and that incorporate feedback from many years of clinical experience.

OSOS is a web-enabled collaborative network of over 90 hospitals in four provinces.

OSOS and OHA entered into a formal agreement January 2010. There are already 60 OHA member hospitals. Formalizing the relationship will bring more members on board thereby enhancing value, patient safety and cost savings.
Another stakeholder impacting product selection?

FDA INCREASED SCRUTINY OF TV ADVERTISING

The FDA’s division of drug advertising, marketing and communications, has increased the number of staff monitoring drugmakers’ advertising by 50% to 60% over the last five years. As such, there has been increased diligence by manufacturers by revising commercials to more prominently feature the side effects of prescription drugs and disclose key information.

NAPRA POSITION ON SALE OF NON APPROVED MARKETED HEALTH PRODUCTS

All marketed health products for sale in Canada require a market authorization or product licence from Health Canada. This condition applies to drugs per the regulatory requirements outlined in the Food and Drug Regulations. This same condition applies to natural health products (NHPs) and homeopathic products per the regulatory requirements of the Natural Health Products Regulations (NHPR) established by the federal government six years ago.

In January, the National Association of Pharmacy Regulatory Authorities (NAPRA) took the position that pharmacists should not sell a marketed health product without a Drug Identification Number (DIN), Natural Product Number (NPN) or Drug Identification Number for Homeopathic Medicine (DIN-HM).

This follows an extensive "grandfather clause" period. Finally we will have products on the shelf that are reviewed, approved and we can be assured that the ingredients actually match the label.

For more information, please call Joe Knott at 416-516-3524
Email: jknott@pangaea-consultants.com
www.pangaea-consultants.com