Turkey - What are the future prospects for the Turkish pharmaceutical market?

The Turkish pharmaceutical market continues to exhibit strong growth.

Turkey is a key emerging market which is continuing to grow strongly, despite the government’s ongoing healthcare reforms and recent economic crisis. Due to its large population and GDP, Turkey accounts for around 40% the total Middle Eastern pharmaceutical market. The Turkish pharmaceutical market is expected to grow by a relatively high CAGR between 2010 and 2015, driven by import growth; the value of imports grew by 23.7% in 2008. Turkey carries out most of its trade with the EU and USA.

Around a third of the pharmaceutical market is represented by generic drugs, in value terms. As Turkey recovers from the economic downturn, generics may become a more popular alternative to expensive branded pharmaceuticals. This will be helped by the fact that generic substitution is legal in Turkey; the pharmacist is obliged to inform the patient of the substitution, but this may be declined. The ageing population and associated increase in health spending may also force the government to look into the possibility of using generics to cut costs.

Further reading - A detailed review of the Turkish pharmaceutical market is available from Espicom: The Pharmaceutical Market: Turkey (published May 2010)

USA - What are the US healthcare reform options after the Democrats have lost the supermajority in the Congress?

Options exist but it is not clear that a stripped-down healthcare reform bill can be approved soon.

A key aspect of President Obama’s policies has been to overhaul the healthcare system. In January 2010, the Democrats lost the Senate’s seat in Massachusetts to the Republican candidate Scott Brown. For decades, this seat had been held by Ted Kennedy who had pushed the healthcare reform bill. The loss brought an end to the Democrats’ 60-seat supermajority in the Senate. This is a blow to Barack Obama’s agenda and the healthcare reform is now in doubt. Mr Brown has already expressed his opposition to the healthcare reform bill. Ironically, he has supported a similar bill in Massachusetts.

There are several options left for passing the healthcare reform bill, but none of them are clear. One option would be for Democrats to press the House to pass the Senate’s version of the healthcare reform; the Senate’s version was approved on 24th December 2009, without any support from the Republicans, whilst the House bill was approved on 7th November 2009 with one Republican’s backing. However, House Speaker Nancy Pelosi has said that she does not think that this version could pass the House without changes, particularly regarding the tax on high-insurance plans and the less-restrictive use of federal funds to cover abortions.

Another option would be to put together a scaled-back healthcare bill and take it through the reconciliation process, but such a move seems unlikely too. This would require a 51-vote majority in the Senate but is limited to issues with a budgetary impact. Both options would require more time just when Democrats need to address other major issues, especially the overhaul of banking regulations, an energy bill for limiting emissions of greenhouse gases and the immigration reform that would regularise the status of illegal immigrants. President Obama has indicated that he might be willing to scale back his proposed healthcare overhaul in order to attract bipartisan support but it is not clear that a stripped-down bill can be approved soon.

Further reading - A detailed analysis of the US pharmaceutical market is available from Espicom: The Pharmaceutical Market: USA (published January 2010)

USA - Senate Approves Health Reform Bill

The US Senate Finance Committee approved the health reform bill with a 14-9 majority on 13th October 2009.

The bill, drawn up by chairman Senator Max Baucus, proposes a ten-year US$829 billion plan to reduce health costs and provide affordable health insurance, but does not include a government-run, universal health insurance scheme.

The bill will now go through a compromise process with the bill approved by the Senate Health, Education, Labour and Pensions (HELP) Committee in July 2009, before receiving a full vote on the Senate floor.

The Finance panel is the last of five Congressional committees to put forward health reform proposals.

Further reading - An in-depth analysis of the US pharmaceutical market, including some background information on the healthcare system and reform plans, is available from Espicom: The Pharmaceutical Market: USA (published September 2009)

China - 2,300 Drug Prices to be cut in October 2009

The price of more than 2,300 medicines are to be cut by an average of 12%, the National Development and Reform Commission (NDRC) announced on 2nd October 2009.

Prices will be cut for around 45% of the essential drugs list. The prices of 49% of medicines on the list will stay the same, while the remaining 6% will have their prices increased to encourage production, as they are currently in short supply. The price changes will come into effect on 22nd October 2009.

The price cuts are being implemented to help people afford essential drugs, and this is part of China’s three-year US$124 billion healthcare reform plan, which aims to provide access to essential healthcare for the entire population by 2010.

The NDRC also announced that state-run basic medical and healthcare facilities will no longer be able to sell medicines at a 15% mark-up, which will reduce prices even more.

The essential medicines list was published in September 2009 (See China - Essential Medicines List Published as Part of Health Reforms).

Further reading - An in-depth analysis of the Chinese pharmaceutical market, including more detailed information on health reforms, is available from Espicom: The Pharmaceutical Market: China (published September 2009)

China - Essential Medicines List Published as Part of Health Reforms

The Chinese government has released a list of essential medicines, which will be sold at controlled prices from September 2009, as part of reforms to make healthcare more affordable.

The 307 drugs on the list account for around 25% of national drug spending, and are used to treat around 80% of the most common diseases in China.

The list has been put together as part of the country’s 850 billion yuan (US$124.5 billion) health service reform, which is aiming to provide basic healthcare cover for at least 90% of the population by 2011.

The price-controlled medicines will be sold at 30% of the community medical facilities, and by 2020 they will be the first-choice medicines at all state-run health institutions. The government will regulate the cost of the drugs and they will be purchased by provincial governments through procurement auctions. Guideline prices will be published every year, and the list will be updated every three years according to changes in demand.

The drugs on the list, which include both Western and traditional Chinese medicines, will be eligible for state subsidies of up to 100%, making them more affordable for the population of 1.3 billion.

China’s Health Ministry said the list would create competition among manufacturers to get drugs approved, and could lead to more mergers and acquisitions in the pharmaceutical industry.

Further reading - For more information see related article: China - Essential Medicines System May Lead to Market Expansion. An in-depth analysis of the Chinese pharmaceutical market, including some background information on healthcare reforms, is available from Espicom: The Pharmaceutical Market: China (published July 2009)

China - Essential Medicines System May Lead to Market Expansion

China’s pharmaceutical market looks set to grow even further in the short-term, with the establishment of an Essential Medicines System during the 2009-2011 period. The plan calls for an estimated 300-400 essential medicines to be made available at all public facilities, starting at the grassroots level.

The system is modelled after the WHO List of Essential Medicines, and its establishment is designed to widen access to medicines to all citizens, as part of its plans to create universal healthcare for all by 2020. The system is part of China’s mammoth healthcare reform plan, for which it has allocated US$124 billion (850 billion yuan) to be spent over three years.

In China, pharmaceuticals are sold in hospitals and drugstores, and the healthcare reform plan will inevitably see access to pharmaceuticals increase, as it will also involve the construction of around 2,000 county level hospitals, so that each county will have at least one such facility, the construction of 29,000 township hospitals and upgrading of another 5,000. The government will also fund the construction of village clinics in remote areas so that every village will have at least one unit by the end of the three-year period. The plan also calls for 3,700 community health centres and 11,000 community health stations to be established or upgraded in cities.

The Essential Medicines System is part of the country’s return to its socialist roots, which saw the adoption of market driven policies since the 1980s. This led to an expansion of the Chinese economy, but also saw the rich-poor gap divide grow. Over 700 million people (55.1% of the total population in 2007) were classed as rural in China, and per capita income levels remain some of the world’s lowest.

Further reading - An in-depth review of the Chinese pharmaceutical market, including more detailed information on the healthcare reform plan, is available from Espicom: The Pharmaceutical Market: China (published July 2009)

USA - Hospitals to Contribute US$155 billion to Healthcare Reform

Three major hospital associations have agreed to contribute US$155 billion over ten years to the healthcare reform, it was announced on 8th July 2009.

Vice President Joe Biden did not provide specific details, but said the savings would come from delivery system reforms and trimming the annual inflationary adjustments to hospital reimbursement payments from two government health programmes.

It is expected that around US$100 billion will come from lower Medicare and Medicaid payments to hospitals, while a further US$40 billion will be saved by reducing the subsidies paid to hospitals to care for the uninsured.

The three hospital associations participating in the deal are the American Hospital Association, the Hospital Corporation of America and the Catholic Health Association of the United States.

The deal is similar to the agreement made with the pharmaceutical industry in June 2009, under which drug companies agreed to contribute US$80 billion over ten years towards the costs of the healthcare reform. However, both deals are contingent on the healthcare reform legislation being passed.

Further reading - An in-depth review of the US pharmaceutical market, including some background information on the healthcare system, is available from Espicom: The Pharmaceutical Market: USA (published March 2009)

USA - US$80 billion Deal Reached Between the US Government and Drug Companies

Drug companies have pledged to save the US healthcare system US$80 billion over the next decade, primarily in the form of discounts on branded pharmaceuticals, in a deal agreed on 20th June 2009.

The agreement has been welcomed by President Obama, who called it a “significant breakthrough on the road to healthcare reform”.

The pharmaceutical companies have agreed to a provide a discount of at least 50 per cent to elderly and disabled patients, who face a gap in Medicare insurance coverage when their drug costs reach a certain level, known as the ‘doughnut hole’; no reimbursement is provided for payments between US$2,700 and US$6,154.

The manufacturers’ aim is to fill the ‘doughnut hole’ while subsequently boosting incremental sales. According to a study by the Kaiser Foundation in 2008, about 500,000 Medicare beneficiaries, or 15 per cent, stop using their prescription drugs when in the ‘doughnut hole’. Therefore, the discounts will encourage patients to continue to take their medicines and could, in effect, generate additional sales volume.

The figure of US$80 billion reflects the total projected savings to the healthcare system, from the drug discounts in the Medicare coverage gap, in addition to other concessions which are yet to be specified. There is speculation that there could be additional savings for those on low incomes, but discussions are still taking place between industry officials before the precise details are finalised. The US$80 billion figure translates into around 2 to 3 per cent of US drug spending, according to Deutsche Bank, and the savings will go towards funding President Obama’s proposed overhaul of the healthcare system.

The agreement was made between the Pharmaceutical Research and Manufacturers of the America Industry Association and the Senate Finance Committee Chairman, Max Baucus. Assuming that the drug overhaul legislation becomes law, the agreement is likely to take effect in July 2010.

Further reading - An in-depth review of the US pharmaceutical market, including some background information on the healthcare system, is available from Espicom: The Pharmaceutical Market: USA (published March 2009)