11

NeedNeed WantWant UNLIMITEDUNLIMITED

Buying PowerBuying Power

DemandDemandPRICEPRICE

SupplySupply OperationOperation

ResourceResource ProductionProduction

RARERARE

HEALTH ECONOMICS

HEALTH ECONOMICS

PHARMACOECONOMICS

Pharmaceuticals are the mostPharmaceuticals are the most

• cost-effective, cost-effective,

• value-added, value-added,

• least-invasive least-invasive part of the health-care part of the health-care

system.system.

Alan Holmer, President of the Alan Holmer, President of the Pharmaceutical Pharmaceutical

Research and Manufacturers of America Research and Manufacturers of America

(PhRMA), 1998(PhRMA), 1998

Pharmacoeconomics is a Pharmacoeconomics is a

branch of health economics branch of health economics

primarily concerned with primarily concerned with

assessing assessing

the cost-effectiveness the cost-effectiveness

of drug therapies.of drug therapies.

Growing importance of Growing importance of

PHARMACOECONOMICSPHARMACOECONOMICS•Pressure on healthcare Pressure on healthcare

budgetbudget

• Interest in economic Interest in economic data from government, data from government, insurers, formulary insurers, formulary committeescommittees

•Formal requirement Formal requirement for economic data in for economic data in some jurisdictions some jurisdictions (eg. Australia, (eg. Australia, Canada etc.)Canada etc.)

MAJOR TRENDS IN THE MAJOR TRENDS IN THE PHARMACEUTICAL PHARMACEUTICAL INDUSTRYINDUSTRY• Rising expenditures on drugs Rising expenditures on drugs

(though drugs still a relatively (though drugs still a relatively small % of overall health small % of overall health spending)spending)

• Aging populationAging population• High and rising costs of drug High and rising costs of drug

developmentdevelopment• Innovative products (though Innovative products (though

slowing?)slowing?)• Competition -- from generics Competition -- from generics

and other brand-namesand other brand-names• Pressures from payers Pressures from payers

(managed care, government)(managed care, government)• Drug industry responseDrug industry response• Rising spending on R&DRising spending on R&D• Rising spending on marketing: Rising spending on marketing:

OTC, etc.OTC, etc.• Drugs promoted as a cost-Drugs promoted as a cost-

effective strategyeffective strategy

Year

1960 $141

1970 $341

1980 $1,052

1990 $2,689

1998 $4,094

US Healthcare Spending Per Person

Country

USA $2,689Switzerland $2,412Germany $2,222Luxemburg $2,206Canada $2,002Indonesia < $ 10 (?)

Healthcare Spending Per

Person Per Year

DRUG EXPENDITURE PER CAPITA (USD)DRUG EXPENDITURE PER CAPITA (USD)

COUNTRYCOUNTRYPER CAPITA PER PER CAPITA PER YEAR YEAR

USAUSA $756.20$756.20   40%40%

JAPANJAPAN $463.30$463.30   

GERMANYGERMANY $319.70$319.70   

TAIWANTAIWAN $119.50$119.50   

KOREAKOREA $104.50$104.50   

SINGAPORESINGAPORE $58.50$58.50   

HONG KONGHONG KONG $53.40$53.40   

THAILAND THAILAND $16.20$16.20   

MALAYSIAMALAYSIA $15.80$15.80   

PHILIPPINESPHILIPPINES $14.10$14.10   

INDONESIAINDONESIA $7.70$7.70   15%15%

CHINACHINA $5.80$5.80   

VIETNAMVIETNAM $5.40$5.40   

What will be What will be covered?covered?

• Rx drug industry and Rx drug industry and the FDAthe FDA

• Regulation of drugs and Regulation of drugs and promotional claimspromotional claims

• Reimbursement and Reimbursement and pricing issuespricing issues

• Case studies in Case studies in pharmacoeconomicspharmacoeconomics

• Alzheimer’s diseaseAlzheimer’s disease

• Thrombolytic therapyThrombolytic therapy

• ““Lifestyle” drugsLifestyle” drugs

• OthersOthers

• ““The real world”The real world”

Why Pharmacoeconomics ?

• Pharmacoeconomic information is being widely disseminated;

• The information can help payers, managers, consumers, physicians, regulators, analysts make better decisions;

• There is (legitimate) concern about the quality of analyses;

• There is great demand for skilled practitioners.

• Decision theoryDecision theory

• Decision analysis for health and Decision analysis for health and medical practicemedical practice

• Decision analysis in clinical researchDecision analysis in clinical research

• Methods for decision analysis in health Methods for decision analysis in health care technology assessmentcare technology assessment

• Cost-effectiveness and cost-benefit Cost-effectiveness and cost-benefit analysis for health program evaluationanalysis for health program evaluation

• EconomicsEconomics

OCCUPATIONAL RANKING IN TERM OCCUPATIONAL RANKING IN TERM OF HONESTY AND ETHICAL OF HONESTY AND ETHICAL

STANDARDSTANDARDGALLUP POLL 1985GALLUP POLL 1985GALLUP POLL 1993GALLUP POLL 1993

OCCUPATION OCCUPATION PROFESSIONPROFESSION

1985 1985 SCORSCOR

EE

1985 1985 RANRAN

KK

1993 1993 SCORESCORE

1993 1993 RANRAN

KKCLERGYMANCLERGYMAN 67 1 5353 22

PHARMACISTPHARMACIST 65 2 6565 11

MEDICAL MEDICAL DOCTORDOCTOR

58 3 5151 44

DENTISTDENTIST 56 4 5050 66

COLLEGE COLLEGE TEACHERTEACHER

54 5 5252 33

ENGINEERENGINEER 53 6 4949 77

POLICEMANPOLICEMAN 47 7 5050 55

BANKERBANKER 37 8 2828 1010

TV REPORTER / TV REPORTER / COMMENTATORCOMMENTATOR

33 9 2828 99

JOURNALISTJOURNALIST 31 10 2626 1111

NEWSPAPER NEWSPAPER REPORTERREPORTER

29 11 2222 1212

LAWYERLAWYER 27 12 1616 1717

BUSINESS BUSINESS EXECUTIVEEXECUTIVE

23 13 2020 1313

FUNERAL FUNERAL DIRECTORDIRECTOR

-- - 3434 88

BUILDING BUILDING CONTRACTORCONTRACTOR

-- - 2020 1414

1985 1985 SCORESCORE

1985 1985 RANKRANK

1993 1993 SCORESCORE

1993 1993 RANKRANK

LOCAL OFFICE LOCAL OFFICE HOLDERSHOLDERS

- - 1919 1515

US SENATORSUS SENATORS - - 1818 1616

TV TALK SHOW TV TALK SHOW HOSTSHOSTS

- - 1616 1818

REAL ESTATE REAL ESTATE AGENTSAGENTS

- - 1515 1919

LABOR UNION LABOR UNION LEADERSLEADERS

- - 1414 2020

CONGRESSMECONGRESSMENN

- - 1414 2121

STATE OFFICE STATE OFFICE HOLDERSHOLDERS

- - 1414 2222

STOCKBROKERSTOCKBROKERSS

- - 1313 2323

INSURANCE INSURANCE SALESMENSALESMEN

- - 1010 2424

ADVERTISING ADVERTISING PRACTITIONERPRACTITIONER

SS

- - 88 2525

CAR CAR SALESMENSALESMEN

- - 66 2626

OCCUPATIONAL RANKING IN TERM OF OCCUPATIONAL RANKING IN TERM OF HONESTY AND ETHICAL STANDARDHONESTY AND ETHICAL STANDARD

GALLUP POLL 1985GALLUP POLL 1985GALLUP POLL 1993GALLUP POLL 1993

Generic Sales Generic Sales DevelopmentDevelopment2000 – 20042000 – 2004

0

200

400

600

800

1000

1200

1400

1600

1800

2000

2200

2400

1999 2000 2001 2002 2003 2004

NPanel

IHPA

IDA

IPA

Generic Sales Development Generic Sales Development by sectorby sector

2000 – 20042000 – 2004

2000 2001 2002 2003 2004 Total Market 1,140 1,574 1,732 1,860 2,187

Panel Market 439 537 577 640 756

IPA 176 226 247 273 335

IDA 128 154 149 162 182

IHPA 135 157 181 205 239

Non-Panel Mkt 701 1,037 1,155 1,220 1,431

Total Pharma MarketTotal Pharma Market2004/20032004/2003

0

5,000

10,000

15,000

20,000

25,000

IPA IDA IHPA NP Eth NPOTC

TOTAL

Market Sector

Rp b

n 20032004

Total Pharma MarketTotal Pharma Market2004/20032004/2003

Value Rp bn 2004 2003 + % TOTAL MARKET ( ITMA ) 20,873 17,458 19.6 PANEL MARKET 9,509 8,650 9.9 IPA 4,662 4,233 10.1 IDA 2,517 2,379 5.8 IHPA 2,330 2,038 14.3

NON-PANEL MARKET 11,363 8,808 29.0 Ethical (clinic, doctor etc) 5,693 4,541 25.4 OTC (S.Market, Warung etc) 5,670 4,267 32.9

Generic Market Share by Generic Market Share by sectorsector

2000 – 2004 (%)2000 – 2004 (%) 2000 2001 2002 2003 2004

Total Market

11.5 12.4 11.1 10.7 10.5 Panel Market

7.3 7.9 7.6 7.4 7.9 IPA 5.9 6.8 6.5 6.4 7.2 IDA 7.0 7.8 7.5 6.8 7.2 IHPA 11.4 10.5 10.3 10.0 10.3 Non-Panel Market

17.6 17.7 14.3 13.9 12.6

OCCUPATIONAL RANKING OCCUPATIONAL RANKING IN TERM OF HONESTY AND ETHICAL IN TERM OF HONESTY AND ETHICAL

STANDARDSTANDARDUS GALLUP POLL 1985 / 1993US GALLUP POLL 1985 / 1993

Occupation / Occupation / 1985 1985 1985 1985 1993 1993 1993 1993 Profession Profession SCORE RANK SCORE RANK SCORE RANK SCORE RANKREAL ESTATE AGENTSREAL ESTATE AGENTS - - -- 15 19 15 19

LABOR UNION LEADERSLABOR UNION LEADERS - - -- 14 20 14 20

CONGRESSMENCONGRESSMEN - - - - 14 21 14 21

STATE OFFICE HOLDERSSTATE OFFICE HOLDERS - - -- 14 22 14 22

STOCKBROKERSSTOCKBROKERS - - - - 13 23 13 23

INSURANCE SALESMENINSURANCE SALESMEN - - -- 10 24 10 24

ADVERTISING ADVERTISING

PRACTITIONERS -PRACTITIONERS - -- 8 25 8 25

CAR SALESMEN -CAR SALESMEN - -- 6 26 6 26

Generic Market Share by Generic Market Share by sectorsector

2000 – 2004 (%)2000 – 2004 (%)

2000 2001 2002 2003 2004

Total Market

11.5 12.4 11.1 10.7 10.5 Panel Market

7.3 7.9 7.6 7.4 7.9 IPA 5.9 6.8 6.5 6.4 7.2 IDA 7.0 7.8 7.5 6.8 7.2 IHPA 11.4 10.5 10.3 10.0 10.3 Non-Panel Market

17.6 17.7 14.3 13.9 12.6

Year

1960 $141

1970 $341

1980 $1,052

1990 $2,689

1998 $4,094

US Healthcare Spending Per Person

DRUG EXPENDITURE DRUG EXPENDITURE ( USD ) ( USD ) 2003 - 20042003 - 2004 CCOUNTRYOUNTRY PER CAPITA PER YEARPER CAPITA PER YEAR

USAUSA $ $  756.20 756.20       40%40% JAPAN JAPAN $ $  463.30 463.30 GENERIKGENERIK  

GERMANY GERMANY $ $  319.70 319.70    TAIWAN TAIWAN $$ 119.50 119.50    KOREA KOREA $ $  104.50 104.50    SINGAPORESINGAPORE   $$ 58.50 58.50    HONG KONGHONG KONG $$ 53.40 53.40    THAILAND THAILAND $ $  16.20 16.20    MALAYSIA MALAYSIA $ $  15.80 15.80    PHILIPPINES PHILIPPINES $$ 14.10 14.10    INDONESIAINDONESIA $$ 7.70 7.70                          15%15% CHINA CHINA $$ 5.80 5.80 GENERIKGENERIK

VIETNAMVIETNAM $ $  5.40 5.40   

NeedNeed Want Want UnlimitedUnlimited

Buying Buying PowerPower

DemandDemand

PRICEPRICE SupplySupply

OperationOperation RareRare

ResourceResource

ProductionProduction

Country

USA $2,689Switzerland $2,412Germany $2,222Luxemburg $2,206Canada $2,002Indonesia < $ 10 (?)

Healthcare Spending Per

Person Per Year

OCCUPATIONAL RANKINGOCCUPATIONAL RANKING IN TERM OF HONESTY AND ETHICAL IN TERM OF HONESTY AND ETHICAL

STANDARD STANDARDUS GALLUP POLL 1985 / 1993US GALLUP POLL 1985 / 1993

Occupation / Occupation / 1985 1985 1985 1985 1993 1993 1993 1993 Profession SCORE Profession SCORE RANK SCORE RANK RANK SCORE RANKCLERGYMANCLERGYMAN 67 67 1 1 5353 2 2

PHARMACISTPHARMACIST 65 65 2 2 6565 1 1

MEDICAL DOCTORMEDICAL DOCTOR 5858 3 3 5151 4 4

DENTISTDENTIST 56 56 4 4 5050 6 6

COLLEGE TEACHER 54COLLEGE TEACHER 54 5 5 52 52 3 3

ENGINEERENGINEER 53 53 6 6 4949 7 7

POLICEMAN 47POLICEMAN 47 7 7 50 50 5 5

BANKERBANKER 37 37 8 8 2828 10 10

TV REPORTER / TV REPORTER /

COMMENTATORCOMMENTATOR 33 33 9 9 2828 9 9

Total Pharma MarketTotal Pharma Market2004/20032004/2003

Value Rp bn 2004 2003 + % TOTAL MARKET ( ITMA ) 20,873 17,458 19.6 PANEL MARKET 9,509 8,650 9.9 IPA 4,662 4,233 10.1 IDA 2,517 2,379 5.8 IHPA 2,330 2,038 14.3

NON-PANEL MARKET 11,363 8,808 29.0 Ethical (clinic, doctor etc) 5,693 4,541 25.4 OTC (S.Market, Warung etc) 5,670 4,267 32.9

Total Pharma MarketTotal Pharma Market2004/20032004/2003

0

5,000

10,000

15,000

20,000

25,000

IPA IDA IHPA NP Eth NPOTC

TOTAL

Market Sector

Rp bn

20032004

Generic Sales Development Generic Sales Development by sectorby sector

2000 – 20042000 – 2004

2000 2001 2002 2003 2004 Total Market 1,140 1,574 1,732 1,860 2,187

Panel Market 439 537 577 640 756

IPA 176 226 247 273 335

IDA 128 154 149 162 182

IHPA 135 157 181 205 239

Non-Panel Mkt 701 1,037 1,155 1,220 1,431

Generic Sales Generic Sales DevelopmentDevelopment

2000 – 20042000 – 2004

0

200

400

600

800

1000

1200

1400

1600

1800

2000

2200

2400

1999 2000 2001 2002 2003 2004

NPanel

IHPA

IDA

IPA

NeedNeed Want Want UnlimitedUnlimited

Buying Buying PowerPower

DemandDemand

PRICEPRICE SupplySupply

OperationOperation RareRare

ResourceResource

ProductionProduction

Country

USA $2,689Switzerland $2,412Germany $2,222Luxemburg $2,206Canada $2,002Indonesia < $ 10 (?)

Healthcare Spending Per

Person Per Year

Year

1960 $141

1970 $341

1980 $1,052

1990 $2,689

1998 $4,094

US Healthcare Spending Per Person

DRUG DRUG EXPENDITURE EXPENDITURE ( USD ) ( USD ) 2003 - 2003 - 20042004 CCOUNTRYOUNTRY PER CAPITA PER YEARPER CAPITA PER YEAR USAUSA $ $  756.20 756.20       40%40% JAPAN JAPAN $ $  463.30 463.30

GENERIKGENERIK  

GERMANY GERMANY $ $  319.70 319.70  

TAIWAN TAIWAN $$ 119.50 119.50  

KOREA KOREA $ $  104.50 104.50  

SINGAPORESINGAPORE   $$ 58.50 58.50  

HONG KONGHONG KONG $$ 53.40 53.40  

THAILAND THAILAND $ $  16.20 16.20  

MALAYSIA MALAYSIA $ $  15.80 15.80  

PHILIPPINES PHILIPPINES $$ 14.10 14.10  

INDONESIAINDONESIA $$ 7.70 7.70                          15%15% CHINA CHINA $$ 5.80 5.80 GENERIKGENERIK

VIETNAMVIETNAM $ $  5.40 5.40  

Generic Market Share by Generic Market Share by sectorsector

2000 – 2004 (%)2000 – 2004 (%)

2000 2001 2002 2003 2004

Total Market

11.5 12.4 11.1 10.7 10.5 Panel Market

7.3 7.9 7.6 7.4 7.9 IPA 5.9 6.8 6.5 6.4 7.2 IDA 7.0 7.8 7.5 6.8 7.2 IHPA 11.4 10.5 10.3 10.0 10.3 Non-Panel Market

17.6 17.7 14.3 13.9 12.6

OCCUPATIONAL RANKINGOCCUPATIONAL RANKING IN TERM OF HONESTY AND ETHICAL IN TERM OF HONESTY AND ETHICAL

STANDARD STANDARDUS GALLUP POLL 1985 / 1993US GALLUP POLL 1985 / 1993

Occupation / Occupation / 1985 1985 1985 1993 1993 1985 1993 1993 Profession Profession SCORE RANK SCORE SCORE RANK SCORE RANK RANKCLERGYMANCLERGYMAN 67 67 1 1 53 53 2 2

PHARMACISTPHARMACIST 65 65 2 2 65 65 1 1

MEDICAL DOCTORMEDICAL DOCTOR 5858 3 3 51 51 4 4

DENTISTDENTIST 56 56 4 4 50 50 6 6

COLLEGE TEACHER 54COLLEGE TEACHER 54 5 5 52 52 3 3

ENGINEERENGINEER 53 53 6 6 49 49 7 7

POLICEMAN 47POLICEMAN 47 7 7 50 50 5 5

BANKERBANKER 37 37 8 8 28 28 10 10

TV REPORTER / TV REPORTER /

COMMENTATORCOMMENTATOR 33 33 9 9 28 28 9 9

OCCUPATIONAL OCCUPATIONAL RANKING RANKING

IN TERM OF HONESTY AND IN TERM OF HONESTY AND ETHICAL STANDARDETHICAL STANDARD

US GALLUP POLL 1985 / 1993US GALLUP POLL 1985 / 1993

Occupation / Occupation / 1985 1985 1985 1993 1993 1985 1993 1993 Profession Profession SCORE RANK SCORE RANK SCORE RANKSCORE RANKJOURNALISTJOURNALIST 31 31 10 10 26 11 26 11

NEWSPAPER REPORTERNEWSPAPER REPORTER 29 29 11 11 22 12 22 12

LAWYERLAWYER 27 27 12 12 16 17 16 17

BUSINESS EXECUTIVEBUSINESS EXECUTIVE 23 23 13 13 20 13 20 13

FUNERAL DIRECTORFUNERAL DIRECTOR - - - - 34 8 34 8

BUILDING CONTRACTOR -BUILDING CONTRACTOR - -- 20 14 20 14

LOCAL OFFICE HOLDERS -LOCAL OFFICE HOLDERS - - - 19 15 19 15

US SENATORS -US SENATORS - - - 18 16 18 16

TV TALK SHOW HOSTSTV TALK SHOW HOSTS - - - - 16 18 16 18

OCCUPATIONAL OCCUPATIONAL RANKING RANKING

IN TERM OF HONESTY AND IN TERM OF HONESTY AND ETHICAL STANDARDETHICAL STANDARD

US GALLUP POLL 1985 / 1993US GALLUP POLL 1985 / 1993

Occupation / Occupation / 1985 1985 1985 1993 1993 1985 1993 1993 Profession SCORE Profession SCORE RANK SCORE RANK RANK SCORE RANKREAL ESTATE AGENTSREAL ESTATE AGENTS - - - - 15 19 15 19

LABOR UNION LEADERSLABOR UNION LEADERS - - - - 14 20 14 20

CONGRESSMENCONGRESSMEN - - - - 14 14

21 21

STATE OFFICE HOLDERSSTATE OFFICE HOLDERS - - - - 14 22 14 22

STOCKBROKERSSTOCKBROKERS - - - - 13 23 13 23

INSURANCE SALESMENINSURANCE SALESMEN - - - - 10 24 10 24

ADVERTISING ADVERTISING

PRACTITIONERS -PRACTITIONERS - - - 8 25 8 25

CAR SALESMEN -CAR SALESMEN - - - 6 26 6 26

20002000 20012001 20022002 20032003 20042004

11.511.5 12.412.4 11.111.1 10.710.7 10.510.5

OCCUPATIONAL OCCUPATIONAL RANKING RANKING

IN TERM OF HONESTY AND IN TERM OF HONESTY AND ETHICAL STANDARDETHICAL STANDARD

US GALLUP POLL 1985 / 1993US GALLUP POLL 1985 / 1993

Occupation / Occupation / 1985 1985 1985 1985 1993 1993 1993 1993 Profession Profession SCORE RANK SCORE RANKSCORE RANK SCORE RANKJOURNALISTJOURNALIST 31 31 10 10

26 11 26 11

NEWSPAPER REPORTERNEWSPAPER REPORTER 29 29 11 11 22 12 22 12

LAWYERLAWYER 27 27 12 12 16 17 16 17

BUSINESS EXECUTIVEBUSINESS EXECUTIVE 23 23 13 13 20 13 20 13

FUNERAL DIRECTORFUNERAL DIRECTOR - - - - 34 8 34 8

BUILDING CONTRACTOR -BUILDING CONTRACTOR - - - 20 14 20 14

LOCAL OFFICE HOLDERS -LOCAL OFFICE HOLDERS - - - 19 15 19 15

US SENATORS -US SENATORS - - - 18 16 18 16

TV TALK SHOW HOSTSTV TALK SHOW HOSTS - - - - 16 18 16 18