Search results

Purpose – Pharmaceutical expenditures have an important role in Europe. The attempts to control expenditure have used a wide range of policy measures. We reviewed the main measures adopted by the European Union countries, especially in countries where governments are the largest third-party payers.

Methodology – To complement a literature review on the topic, data was gathered from national reviews of health systems and direct inquiries to several government bodies.

Findings – Almost all countries regulate prices of pharmaceutical products. Popular policy measures include international referencing to set prices (using as benchmark countries that have set lower prices), internal reference pricing systems to promote price competition in domestic markets, and positive lists for reimbursement to promote consumption of generics (including in some cases substitution by pharmacists of drugs prescribed by physicians). Despite the wide range of policy measures, it is not possible to identify a “silver bullet” to control pharmaceutical expenditures. We also identified two main policy challenges: policy coordination among countries within the European Union to maintain incentives for R&D at the global level, and the development of new relationships with the pharmaceutical industry; namely, the so-called risk-sharing agreements between the pharmaceutical industry and governments/regulators (or large third-party payers).

Through an analysis of the HIV-Tainted-Blood Affair in Japan, this paper explores why pharmaceutical companies act in a socially irresponsible manner. The paper suggests encouraging members of these corporations to become more conscious of their responsibility to society by developing themselves as professionals. The analysis shows that drug disasters are not caused only by a particular “special villain,” but by the structural conflict between medical professional ethics and the profit making motivation of pharmaceutical companies. In other words, the behaviors of pharmaceutical companies fall into the interstices of professional ethics.

The World Health Organization estimated that in 1999 roughly one-third of the world's population lacked access to essential medicines that would have saved or improved their lives. Our analysis focuses on how pharmaceutical product patents restrict access to essential medicines in developing countries. It is well established that pharmaceutical product patents provide little incentive for pharmaceutical companies to develop new medicines designed to treat diseases prevalent in developing countries or to market in developing countries those patented medicines developed to treat diseases prevalent in developed countries. Economists have developed theoretical models showing that these incentives could be changed if (1) developing countries provided intellectual property protection for new pharmaceutical innovations and (2) an international regulatory framework were established to facilitate pharmaceutical companies setting lower prices in developing countries and higher prices in developed countries for patented medicines. We develop an index of property rights in pharmaceutical innovations covering 129 countries from 1960 to 2005. It shows that in 1960 only a handful of countries provided significant protection for pharmaceutical innovations, but by 2005 over 95 percent of countries in our sample provided significant statutory protections. However, an international framework to allow pharmaceutical companies to price discriminate has not been put in place. We conclude that international price discrimination mechanisms, compulsory patent licenses, and regional patent buyouts are not viable mechanisms for providing access to essential medicines to patients in developing countries. Global patent buyouts are more likely to achieve this goal, as they are not founded on an impractical separation of pharmaceutical markets in developing and developed countries and they provide critical incentives to develop new essential medicines.

Using the pharmaceutical sector as a microcosm of the health sector, we highlight the most prevalent structural and policy issues that make this sector susceptible to corruption and ways in which these vulnerabilities can be addressed. We conducted a literature review of publications from 2004 to 2015 that included books, peer-reviewed literature, as well as gray literature such as working papers, reports published by international organizations and donor agencies, and newspaper articles discussing this topic. We found that vulnerabilities to corruption in the pharmaceutical sector occur due to a lack of good governance, accountability, transparency, and proper oversight in each of the decision points of the pharmaceutical supply chain. What works best to limit corruption is context specific and linked to the complexity of the sector. At a global level, tackling corruption involves hard and soft international laws and the creation of international standards and guidelines for national governments and the pharmaceutical industry. At a national level, including civil society in decision-making and monitoring is also often cited as a positive mechanism against corruption. Anticorruption measures tend to be specific to the particular “site” of the pharmaceutical system and include improving institutional checks and balances like stronger and better implemented regulations and better oversight and protection for “whistle blowers,” financial incentives to refrain from engaging in corrupt behavior, and increasing the use of technology in processes to minimize human discretion. This chapter was adapted from a discussion piece published by Transparency International UK entitled Corruption in the Pharmaceutical Sector: Diagnosing the Challenges.

Research sponsored by entities in developed countries, but conducted in developing countries, has recently been the focus of academic debate, international declarations and media controversy. Much of this attention has focused on whether the trials are exploitative and if so what should be done to avoid exploitation. This chapter takes Alan Wertheimer's principles of mutually advantageous transactions and applies them to the question of exploitation in international research. In this chapter, I develop an analysis of exploitation and apply this to the hypothesis that some pharmaceutical companies who run drug trials in developing countries wrongfully exploit the trial participants.

In this chapter, we analyzed the effects of internationalization on innovation, productivity, and firm performance among multinational pharmaceutical companies as representatives of a global knowledge-based industry. The empirical analysis used multiple stepwise regressions based on a sample of 149 firms headquartered in Europe and the US. The results indicate that innovation outcomes are positively correlated to the number of foreign subsidiaries (scope internationalization), whereas surprisingly, formal research and development (R&D) does not seem to directly influence innovation. This suggests that the firms benefit from local overseas subsidiaries to create and implement new innovative offerings. The number of foreign subsidiaries has a U-shaped relationship to patent productivity suggesting that firms can gain advantages by locating cost-intensive activities in low-cost countries and critical tasks in advanced market locations. Firm performance has a U-shaped relationship to sales abroad (scale internationalization) and the relationship is further enhanced by a high focus on R&D. This suggests that sales abroad enable scale economies, where R&D improves quality and relevance of products and thereby boosts performance. Finally, to validate the findings we conducted two semi-structured interviews with representative industry experts and gained further insights for an extended interpretation of results.

This chapter, against studies on success history, puts its attention on the firm's behaviour facing a critical socio-political problem. The specific question is how the relationship between business and socio-political actors in an emerging market under a scandal develops and how these actors manage such a situation. To reach this aim the study concerns with the Roche Scandal in Turkey and discusses the reactions of business and socio-political actors before and after the scandal, and further, how Roche subsequently managed these relationships. The theoretical framework for analysis of the Roche Turkey Scandal is constructed on relationship elements of trust, legitimacy and learning. The analysis provides some answers to the question of how Roche Turkey in the face of reactions given by the network actors managed the aftermath of the scandal and how the legitimacy loss was recovered by learning and adaptation. Conclusions enhance our knowledge on the behaviour of firms under critical condition.

This chapter addresses the general process of determining the value of a particular company, with additional detail on how valuation processes might be adapted to produce credible value conclusions of emerging technology ventures. There are three primary approaches to business valuation. There is the income approach, which indicates that value is a product of expected future cash flows – cash flows that are discounted to equate them to dollars in-hand (present value). There is the market approach, which attempts to draw conclusions of value based on the market prices of similar companies in the public and/or private markets. Finally, there is the asset approach, which indicates that the value of a company is equal to the sum of the values of its net assets. Specific adjustments are appropriate with respect to each of these approaches where the value of an emerging technology company is concerned. Professional valuation standards require that all of these approaches be considered in the valuation, even if the available information does not permit their credible application. Often, multiple approaches and techniques can be applied. The results of applying multiple techniques often do not overlap, and it is the analyst’s very important task to reconcile differing valuation results, or to decide which result or results should be discarded.

This paper empirically investigates the profit impact of externally sourcing technology through acquisition. Specifically, it questions whether biopharmaceutical acquirers benefit from taking over technologies which are pre-marketed more than those that have already been approved for market. This paper utilizes the resource-based view to determine that the decision depends on the relative value chains of the acquirer and target. We assert that companies with lower research and development (R&D) intensity than their targets benefit from acquisitions of pre-marketed drugs more than they would with marketed drugs because of a complementary combination of competitive assets. Estimations from the U.S. biopharmaceutical sector in the 1990s show that acquirers that take over pre-marketed drugs from targets with higher R&D intensity than themselves have post-acquisition returns between 2% and 11% higher than if they took over marketed drugs.

Brand-name pharmaceutical companies have engaged in a variety of business conduct that has increased price. One of these activities involves “product hopping,” or brand switches from one version of a drug to another. The antitrust analysis of product hopping implicates antitrust law, patent law, the Hatch–Waxman Act, and state drug product selection laws, as well as uniquely complicated markets characterized by buyers different from decision makers. As a result, courts have offered inconsistent approaches to product hopping.

In this chapter, we offer a framework that courts and government enforcers can employ to analyze product hopping. The framework is the first to incorporate the characteristics of the pharmaceutical industry. It defines a “product hop” to include instances in which the manufacturer (1) reformulates the product to make the generic nonsubstitutable and (2) encourages doctors to write prescriptions for the reformulated rather than the original product.

When the conduct meets both requirements, our framework offers two stages of analysis. First, we propose two safe harbors to ensure that the vast majority of reformulations will not face antitrust review. Second, the framework examines whether the hop passes the “no-economic-sense” test, determining if the behavior would make economic sense if the hop did not have the effect of impairing generic competition. Showing just how far the courts have veered from justified economic analysis, the test would recommend a different analysis than that used in each of the five product-hopping cases that have been litigated to date, and a different outcome in two of them.