The following general insights were provided by Ivy Teh when interviewed for a recent press release.
1. Is there a general way to characterize the difference between Asia-Pacific-style pricing and reimbursement policies as compared to US?
Firstly, one must understand that the Asia Pacific region is a highly diverse one. There are countries ranging from highly developed and affluent nations (eg. Japan, South Korea, Taiwan, Australia and Singapore) to emerging economic giants (ie. China and India) to developing mostly rural nations (eg. Vietnam, Indonesiaetc.). For the developing nations, there is a serious lack of funds to sustain universal healthcare coverage, thus most healthcare spend is made out of pocket at patient’s cost or is partially subsidized by a combination of public and private insurance programs.
Countries with reimbursement policies are limited to the affluent developed nations namely Japan, South Korea, Taiwan, Australia as well as China. These Asian nations are however facing severe resource constraints and most of their efforts are put on improving efficiencies on available resources by controlling pharmaceutical expenditures. Each of these nations has employed different measures to contain costs.
Japan continues to implement biennial reimbursement policies of price reductions with the aim of aligning tariff levels with actual discounted levels. This results in a bureacratic controlled deflationary trend that is aimed at reducing the national drug bill. Japan also has a severe “drug lag” problem which is caused by an extremely complex reimbursement system.
China on the other hand, is implementing a major healthcare reform that is set to boost demand by introducing universal basic medical insurance together with a national essential drug list. These reforms are expected to benefit generics initially but will eventually benefit patented medicines also as more patients are referred to hospitals for treatment.
Currently, Australia and South Korea are the only two nations in the region to regulate the use of pharmacoeconomic evidence in drug reimbursement decisions. It will probably take a while before such policies can be fully implemented in all markets in the region, however, due to the varying policy culture, healthcare systems, expertise, government commitment and public support in each country.
Therefore it cannot be said that there is a “universal” Asia-Pacific style pricing and reimbursement approach across the region , but it can be said that none of the countries has a healthcare system truly analogous with the US system. It is these fundamental differences that make it difficult for many international companies to access such markets without the support of local distributors, or market access experts such as Clearstate.
2. Are there any particular issues on this subject that are especially troublesome for companies trying to enter the Asia-Pacific markets?
Any companies interested in entering the Asia Pacific market must first invest in gaining a strong understanding of the respective countries’ policy culture. It is important not to assume that a “global” strategy can be easily applied across all countries. Japan and China have the most complex pricing and reimbursement policies in the region and stringent regulatory controls that will take a new drug 2 to 3 years to access the market. On the other hand, Australia, South Korea, Singapore have clear guidelines and simplistic processes that allows for relatively fast market access (within 6 months to 1 year).
Another key issue is the sub-national processes for securing market access and formulary listing. In complex markets such as China, regional and local stakeholders play a major role as gatekeepers for healthcare technology and this, together with often complex tendering procedures, requires the use of teams familiar with dealing with the various agencies and stakeholders in such markets.
Ivy Teh,
Managing Director
Clearstate