Drug Pricing in Asia Pacific Countries

High economic growth countries in the Asia-Pacific region are of increasing interest to the pharmaceutical industry. However, a report by Datamonitor shows that a number of Pricing and Reimbursement (P&R) developments are set to change the healthcare environment in this region.

With cost containment and healthcare coverage ranking as key concerns for payers, companies need to be aware of the implications that these issues have on market accessibility and return on investment. While some markets offer major advantages, others still have some way to go before multinationals can compete effectively against domestic players.

While healthcare spending in the US outstrips Australia, China and Singapore, the country’s health outcomes are modest. Australia, for example, spends less than half compared to the US, but has a life expectancy that is four years longer.

In contrast, China has both a low healthcare expenditure and poor health outcomes. “Low health expenditure and the market’s domination by domestic generic products make China an unattractive target for launching expensive branded drugs,” says Maura Musciacco, Datamonitor healthcare analyst.

Singapore appears to have struck the right balance with good health outcomes and a low healthcare expenditure of 3.5 percent of Gross Domestic Product (GDP) compared to Australia’s 8.8 percent of GDP.

Australia’s P&R Negotiations Can be Tough

Like most industrialized countries, Australia uses drug price controls to manage healthcare expenditure, which is achieved through universal insurance via the Pharmaceutical Benefits Scheme (PBS). Pharmaceutical companies are keen to have their drugs listed on the PBS as this will promote the uptake of their brand.

“It is getting more challenging to get a drug reimbursed on the PBS, especially for novel high-priced products. Delays in reimbursement are usually due to the government’s request to prove cost-effectiveness and subsequent pricing negotiations,” states Musciacco.

China Steps up Pricing Controls for Foreign Companies

In China, imported and innovative drugs have enjoyed a relatively free and independent pricing system. However, Chinese pricing authorities have been taking steps to reduce drug prices in order to increase universal healthcare coverage.

Although this may hamper sales for foreign multinationals in the short term, the need to keep drug prices under control is high. “A majority of the Chinese population cannot afford medical care, which means that the pharmaceutical market in China cannot reach its full potential”, comments Miss Musciacco.

Singapore Takes a Western Approach

Singapore has adopted a market-oriented approach to healthcare P&R by recognizing and valuing innovative products. Although the government provides universal healthcare, individuals have to share in the costs of the services they consume. “Despite offering opportunities for investment, high product prices mean that low-income and retired citizens are often unable to afford their drugs. Patients who need regular medication travel to Malaysia to buy drugs at a fraction of the price in Singapore”. In the long run, this translates into lost sales for Singapore’s pharmaceutical market,” concludes Musciacco.