The SAGE Handbook of Healthcare
Publication Year: 2008
With escalating healthcare costs, changes to the regulatory control on pharmaceutical industries and the inevitable adjustments made in policies and investment in healthcare there is enormous interest in the commercial as well as the scientific aspects of today's healthcare industry.
The SAGE Handbook of Healthcare provides an authoritative analysis of the current (and anticipated) developments in the global healthcare industries. Providing a unique perspective that interfaces between the science and business aspects, it combines information on the latest scientific developments with applied, commercial business data from the global marketplace.
The Handbook focuses on the aspects of paramount importance in the healthcare sector: Pharmacoeconomics; Pharmacogenomics; Therapeutics; Diagnostics
Areas covered include: The role of nanotechnology, genomics and cell therapy in medicine; Diagnostics; Biomarkers and technological advances; Case studies in oncology ...
- Front Matter
- Subject Index
- Chapter 1: Medicare Part D: An Outlook
- Chapter 2: Changes in US Oncology Drug Reimbursement: Medicare Sets the Pace
- Chapter 3: Prospective Payment Systems: Opportunities and Threats for the Pharmaceutical Industry
- Chapter 4: Off-label Prescribing: Overcoming the Reimbursement Barrier
- Chapter 5: Pricing and Reimbursement Issues in Neurology
- Chapter 6: Authorized Generics: Look before You Leap
- Chapter 7: Pharmaceutical Pricing and Reimbursement in Canada
- Chapter 8: Contrasting European and US Patent Laws: Issues for the Pharmaceutical Industry
- Chapter 9: The Changing Face of European Drug Registration
- Chapter 10: The Impact of Reference Pricing in Europe
- Chapter 11: Pharmaceutical Pricing, Reimbursement, and Prescribing in the United Kingdom
- Chapter 12: Pharmaceutical Pricing, Reimbursement, and Prescribing in Italy
- Chapter 13: Pharmaceutical Pricing, Reimbursement, and Prescribing in Spain
- Chapter 14: The Impact of German Reference Pricing on Statins
- Chapter 15: Opportunities and Challenges in the Japanese Market for Cancer Therapies
- Chapter 16: Cancer Therapies Face Increasing Reimbursement Pressures in Europe and Japan
- Chapter 17: The Pharmaceutical Pricing and Reimbursement Environment in China
- Chapter 18: Will Point of Care Come of Age by 2010?
- Chapter 19: Has Genomics Failed to Deliver?
- Chapter 20: The Role of Pharmacogenomics in Personalized Medicine
- Chapter 21: Cell Therapy: A Decade of Opportunity
- Chapter 22: Nanotechnology in Medicine: Its Time Has Come
- Chapter 23: Clinical Proteomics: An Engine for In vitro Diagnostics Growth?
- Chapter 24: Novel Strategies in Oncology Clinical Trials: The Use of Biological and Imaging Biomarkers
- Chapter 25: Antitumor Biologies: Strategies for Success in an Expanding Market
- Chapter 26: Outlook for Cancer Vaccine Development
- Chapter 27: Advances Imminent in Antiangiogenesis Therapeutics
- Chapter 28: Discoveries and Challenges in Early-stage Apoptosis Drug Development
- Chapter 29: Chronic Lymphocytic Leukemia: Monoclonal Antibodies Will Drive Steady Growth
- Chapter 30: Opportunities in the Pharmacotherapy of Addiction
- Chapter 31: Prevention of Organ Transplant Rejection: Current Therapies and Novel Strategies
- Chapter 32: Cardiovascular Drugs and Devices Market: Some Successes and Setbacks in Recent Years
- Chapter 33: Renin Inhibitors: A Novel Approach to Hypertension
- Chapter 34: Future of VLA-4 Antagonist Drugs and Implications for the Regulatory Process
- Chapter 35: Impact of Inhaled Insulin on the Insulin Market
- Chapter 36: Impact of the PROactive Study on the Treatment of Type 2 Diabetes
- Chapter 37: Integrating Diagnostics and Therapeutics for Targeted Therapies – Part 1: Optimizing the Comarketing Plan
- Chapter 38: Integrating Diagnostics and Therapeutics for Targeted Therapies – Part 2: The Importance of Calculating the Return on Investment
- Chapter 39: Emerging Diagnostic Markers in Alzheimer's Disease
- Chapter 40: How Are Translational Medicine Biomarkers Impacting Industry?
- Chapter 41: Unlocking the Potential of Biomarkers in Targeted Oncology
- Chapter 42: From Bioterrorism to Predictive Medicine: New Applications of Salivary Diagnostics
© Decision Resources Inc 2008
Preface © Richard G. Frank 2008
Foreword © Gerard J. Wedig 2008
First published 2008
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Preface[Page ix]Professor of Health Economics, Department of Health Care Policy, Harvard University.andIntroduction
Healthcare spending in the United States was over $2 trillion in 2006 and accounts for roughly 16% of gross domestic product (GDP). In addition, the health sector directly employs nearly 14 million Americans. Many of these people are among the most educated and skilled people in U.S. society. While the United States spends more on healthcare than most other OECD (Organization for Economic Cooperation and Development) nations, other advanced economies spend between 8% and 12% of their GDP on healthcare. Growth in healthcare spending in the United States over the past 50 years has exceeded GDP growth by an average of about 2.5 percentage points. In Europe over the period 1995-2005 increases in healthcare spending have outpaced growth in GDP in nearly every nation. Accompanying these increases in the share of income devoted to healthcare are increases in longevity and declines in age-specific disability. Thus all advanced economies are struggling with the problem of how to control healthcare spending while continuing to enjoy the gains conferred by advances in modern medicine.
As nations try to craft policies that balance a desire to limit the claims that healthcare makes on national income and public budgets, each part of the health sector is scrutinized and determinations are made about the value of the activities taking place in the various subsectors. Making such judgments requires understanding science, the economic dynamics of the sector, and epidemiology and delivery of healthcare. The Sage Handbook of Healthcare offers up-to-date focused analysis of a number of key segments of the health sector in the United States and globally. The Handbook concentrates on the markets for pharmaceuticals and medical devices and addresses key developments in these areas in considerable depth.Technology and Healthcare
Advances in medical technology have been blamed for cost growth and hailed for advancing the health and longevity of much of the world's population. Spending on biomedical research in the United States has grown steadily. Total research and development in healthcare grew from $37 billion in 1994 to about [Page x]$94 billion in 2003. The products of this research have frequently been dramatic and include vaccines, prescription drugs, diagnostic instruments, and treatment devices that have saved millions of lives. Some have claimed that advances in medicine have improved welfare more than the sum of all other productivity improvements.
The manner in which medical technology is put to work has been pointed to as the most important driver of growth in healthcare spending.1 For example, US healthcare spending growth has been decomposed into various underlying components. These include economy-wide growth in prices, rises in medical prices, changes in the size and composition of the population, and changes in “intensity.” Intensity is widely interpreted as representing changes in technology, know-how, and capability of medical care. For the period 1960-2003, 32% of the growth in healthcare spending was attributed to changes in intensity. Moreover, if one considers the most recent part of that 44-year period, 2000-3, the portion of growth attributable to changes in intensity is 40%2.
As noted above drugs and devices are key elements of medical technology. Within those areas there have been important developments in the areas of bio-pharmaceuticals that now account for about 25% of new drugs, genomic tests, nanotechnologies, and new methods of diagnostic imaging.The Market and Healthcare Technology
All OECD nations rely on markets to bring new medical products to doctors and patients. Private firms in the pharmaceutical industry, device manufacturers, and biotechnology enterprises make use of basic science (often conducted under government sponsorship), private capital, product development expertise, clinical research, and marketing know-how to bring new treatments to the medical market place. For the most part development of new drugs and devices is a long, costly, and risky process. Thus, the firms in this industry make investments in uncertain projects today that will frequently not begin to pay off until 8-10 years later. These industries, which account for over $260 billion dollars in spending in the United States alone, are important both for the products they create and for the benefits they confer on their communities. These features serve to complicate both the economics and politics of policymaking towards this part of the healthcare sector.
Because healthcare is expensive, complicated, and so important to the lives and well-being of each nation's citizens, all countries regulate markets for healthcare products and their delivery. As the role of drugs and devices has expanded, the policy attention given to this subsector has intensified. While each nation uses a somewhat different array of policy mechanisms to regulate markets for healthcare technology, there are several sets of policy tools most countries have in common. These include law governing intellectual property (e.g., patent law); regulation of market entry based on safety, efficacy, and [Page xi]sometimes cost-effectiveness; pricing (and purchasing arrangements); the regulation of product promotion and distribution channels (wholesaling, retail); and the role of public investments in each area.
The application of these policy levers results in a common set of policy debates. These focus on the tension between what economists refer to as static and dynamic efficiency. In the context of medical technology markets this means that there is a trade-off between getting “good deals” (low prices) today and a flow of new and innovative new treatments tomorrow. Getting low prices today means today's clients benefit from lower claims on their budgets and more money to devote to satisfying wants beyond healthcare. It also means that the returns to investment in innovative technology are reduced, which may mean a reduced flow of innovative medical products in the future. Achieving balance in this policy arena is complicated by the fact that the politics of public budgets tend to make policymakers myopic about long-run gains from maintaining strong incentives to innovate. At the same time assessing the “true” economic costs and hence the economic return to investment in pharmaceutical R&D is very difficult. Hence industry interests, knowing the tendency of policymakers to be myopic, will frequently offset those claims by suggesting that any attempts to rein in prices will drive investment in R&D to levels that are too low.
The Handbook covers a tremendous amount of ground aimed at informing these difficult policy debates. It touches on the science; policy toward intellectual property in the United States and Europe; payment policy in the United States, Canada, Europe, and Japan; the R&D process for specific clinical areas and the regulation of market entry in the United States, Europe, and Japan; and finally issues related to the delivery of care. The Handbook addresses long-standing debates such as the impact of reference pricing for prescription drugs. It also introduces a relatively new set of policy challenges related to the economics of personalized medicine, and the development of policy towards price competition for “generic” or “follow-on” biologies. These are emerging as hotly debated policy issues that may profoundly shape the cost of care and the flow of new treatments. The authors of the Handbook have performed a valuable service by gathering such a comprehensive and informative set of materials in one place. For policymakers and researchers seeking to “get smart” about what is going on in the science, regulations, and economics of the healthcare technology this book represents an ideal starting place.Notes
1. Newhouse, J.P. An iconoclastic view of health cost containment. Health Affairs, 1993;12:1524-31
Foreword[Page xii]Graduate School of Business, Administration, University of Rochester.Associate Professor,Introduction
For every person involved in the business of healthcare, one of the most important challenges is the access to information. How does one gain a working knowledge of both the scientific and business sides of the industry? The problem is even more acute in the cases of the pharmaceutical and biotechnology industries, where the science and business models are arguably more complex. Many scientists, who understand the technical possibilities of new therapeutic approaches, still need to understand business models in order to gauge what innovations may be brought to fruition. Conversely, many individuals with business training still need to understand the current trends in medical technology, if only at a basic level.
The present volume lays out both the scientific and technology issues in a manner that enables the reader to gain insights into the industry's future. Each chapter in this book provides either a business or a scientific insight, and in many cases, both. For those with a technical orientation, the book provides a complementary business discussion of issues, including pricing and regulation. For those with primarily a business background, the book provides an effective overview in technical areas that include genomics, oncology, cardiovascular, and other therapeutic areas as well as emerging trends in diagnostics.Pharmacoeconomics
One foundation for understanding what technologies will become commercially feasible is a firm grounding in pharmacoeconomics. Pharmacoeconomics is the study of the cost-benefit ratios of drugs with other therapies or with similar drugs, where costs include both financial and quality-of-life measures. It is a vitally important area of study because in many cases it forms the foundation of what third-party payers will pay for drugs. Third-party payment policy, in turn, is a key “driver” of which drugs will make it to the market and what the future “landscape” of the industry will look like.
[Page xiii]The first section of this volume focuses generically on pharmacoeconomics, with a special focus on international pricing and regulatory climates. Pharmaceutical pricing and reimbursement policy show a great deal of variability, worldwide. Most of these differences are driven by government policy. It is well-known, for example, that most governments in Europe use their own novel approaches to control drug costs, by regulating both the price and entry of drugs into the market place. In some cases, drugs that cannot demonstrate adequate efficacy are not covered at all. In cases where the drug is covered, a host of reimbursement mechanisms may be used, including the rate-of-return regulation, reference pricing, strict cost plus reimbursement, plus other approaches. The result is that reimbursement levels vary a great deal.
One result of this is that European drug prices are (on average) only 50% of the price levels achieved in the United States. Furthermore, some analysts estimate that if US pharmaceutical companies were able to receive the same prices abroad as they receive in the United States, they would be able to increase their annual profitability by anywhere from $18 to $27 billion. For this reason alone, it is important to understand the international differences in pricing and reimbursement. It is also well-known that in European countries, much of the profit from a drug must be made upon the drug's introduction. Thereafter, government policy frequently dictates that discounts must be granted. This contrasts with the United States, where, until recently, it has been normal for patented drugs' prices to enjoy year-over-year markups.
There are of course exceptions to these general findings. Drugs in certain areas that qualify as “niche” indications are one example. In the case of niche drugs, European prices are frequently closer to the US levels. For example, Roche indicated that the drug Avastin was introduced in Europe with only a 20% discount relative to US prices.
Of course, differences in international drug prices also have implications for the practice of parallel importation or drug reimportation, which represents the practice of arbitraging drug prices between two countries. The issue has been contentious in the United States, as some individuals have secured drugs from Canada. Moreover, pharmaceutical companies are generally concerned about the same practice originating from Europe, although recent legislative sentiment has been against this.Pharmacogenomics
Part 2 of this book focuses on pharmacogenomics. Genomics is the study of gene location, structure, regulation, and function. As a business enterprise it provides opportunities in at least two areas: (1) the discovery and marketing of new products and therapies; (2) the development of enabling platforms that consist of new technologies (e.g., equipment), information (e.g., mapping data [Page xiv]bases) as well as research capabilities. This section of the volume provides several useful chapters on this topic, which range from discussions of genomics more generally, to specific discussions of pharmacogenomics (e.g., efforts to improve individual responses to drugs), as well as proteomics and nanotech-nology.
Genomics lies at the heart of the biotechnology industry. The completion of the human genome project, which provides a complete mapping of the human genome, provides a great opportunity for the development of new targets and clinical therapies. Most analysts, however, expect that the process of developing actual therapies will take a number of years. This is because disease processes and their relation to genes and gene expression is an enormously complex topic. For example, to date only a small percentage of diseases have actually been linked to genes. Still, the opportunities are tremendous. If the more than 1,000 hypothesized “disease genes” can be identified, the potential exists for the development of 5,000-10,000 new disease “targets,” representing the proteins expressed by these genes.
Pharmacogenomics uses genomics to study individual responses to drag therapies, based upon individual genetic differences and backgrounds. This increases the potential for the development of personalized medicine, which may increase both drug efficacy and guard against adverse events. Genomics-based “point of care” medicine aims to use genomics to make instant diagnoses of patient-specific immunities and other biological conditions to optimize treatments. One application is in the area of infectious disease. Although this approach has not been made operational, it may be so in the foreseeable future.
Proteomics studies the specific proteins that are expressed by genes. The proteins in turn are implicated in actual diseases and other abnormalities. Ultimately, proteomics allows scientists to understand how individual genes affect basic cellular processes that are at the heart of a disease. Clinical proteomics is the application of proteomics to clinical applications. Thus, it provides a new approach to the diagnosis and treatment of a disease.
The various chapters in this section of the volume offer scientific discussions of developments in these areas, while simultaneously outlining the business opportunities and products that may follow from the scientific developments.Therapeutics: Case StudiesOncology
Prior to this century, in the period from 1950-99, virtually all approved cancer drags could be classified as chemotherapeutic agents. A major drawback of chemotherapy is the associated side effects and toxicity of drugs used. Modern cancer treatments provide the promise of therapies that are more targeted to cancer cells and also less toxic. They do this by being more selective of targets [Page xv]that are located relating to cancer cells. The chapters in this section of the book describe a wide range of clinical and business opportunities in this area, ranging from cancer-vaccine development to antiangiogenesis treatments as typified in the drug Avastin.
There are many cancer treatments in development that target the biological mechanisms underlying the disease. An important class of these is kinase inhibitors. Kinase inhibitors account for the majority of new cancer drugs in development. They work by impeding growth mechanisms in cancer cells, that is by inhibiting kinase, an important protein implicated in cell reproduction.
Another important class of drugs consists of monoclonal antibodies. Monoclonal antibody technology works through the design of antibodies that bind to cancer cells. Once the antibodies bind to cancer cells they effectively kill the cancer cells through a variety of mechanisms. Finally, cancer vaccines hold out the promise of preventing the occurrence or reoccurrence of cancers. They work by stimulating the body's immune system to identify and remove cancers, using cells and antigens.
This section of the book provides many insights into these developments. It also provides updates on reimbursements for cancer treatments as well as updates on novel ways to conduct clinical trials of these developments, through the development and tracking of biomarkers.Cardiovascular and Other Therapies
This section of the book also includes several chapters that discuss new developments in the therapies for cardiovascular disease, diabetes, hypertension, and inflammatory diseases. Cardiovascular diseases are one of the leading causes of mortality and morbidity. One important treatment for cardiovascular disease is the use of stents and, more recently, drug-eluting stents. Recent years have witnessed significant advances in the technology of this market, with multiple competitors “leapfrogging” one another with their own version of a drug-eluting stent. In addition, there have been great strides in the development of new drugs that address cardiovascular disease, many of which are discussed here.
VLA-4 antagonist drugs are designed to treat inflammatory diseases, such as multiple sclerosis, Crohn's disease, and asthma. A key mechanism in these diseases is the body's inflammatory response. VLA-4 plays an important role in this response and hence presents an intriguing drug target that may be the basis of new therapies. For example, it may be possible to design monoclonal antibodies for this target. Recently, concerns have been raised about the safety of such drugs. These concerns and their likely impact on the treatment of various inflammatory diseases are also discussed in this section of the volume.
Type 2 diabetes is a chronic and progressive disease associated with several morbidities. The incidence of type 2 diabetes has been increasing worldwide as [Page xvi]it is associated with the growing incidence of obesity, among other factors. A recent study, referred to as the PROactive study, shows that certain antidiabetic drugs may have favorable effects on the risk of cardiovascular events that are frequently associated with type 2 diabetes. Another recent development in the treatment of diabetes is the development of inhalable insulin. Inhaled insulin eliminates the need for painful injection as a delivery mechanism.
Recent developments in this delivery option are also described in this section.Diagnostics
The emergence of genomics offers a new opportunity to combine diagnostics and treatments. Genomic tests may identify individuals who may best benefit from treatments. The same technology that forms the basis of treatment may also form the basis of an effective diagnostic test. Moreover, as it becomes important to personalize treatments, it may eventually be necessary to link diagnostics with treatment. This requires comarketing of diagnostics and therapy. The first two chapters of the final section of this volume describe the challenges of comarketing diagnostics and therapies. For example, the traditional marketing channels for marketing therapies and diagnostics are quite different. It will be important to develop new business models for the challenges associated with comarketing diagnostics and therapies.
The final section of this volume also discusses diagnostic markers for the detection of Alzheimer's disease. To administer effective treatments to Alzheimer's patients in a timely fashion, patients must be diagnosed before severe, cognitive symptoms are evident. Several Alzheimer's markers are in development. The chapters under this section review these potential markers.
List of Entries
- Medicare Part D: An Outlook
- Changes in US Oncology Drug Reimbursement: Medicare Sets the Pace
- Prospective Payment Systems: Opportunities and Threats for the Pharmaceutical Industry
- Off-label Prescribing: Overcoming the Reimbursement Barrier
- Pricing and Reimbursement Issues in Neurology
- Authorized Generics: Look before You Leap
- Pharmaceutical Pricing and Reimbursement in Canada
- Contrasting European and US Patent Laws: Issues for the Pharmaceutical Industry
- The Changing Face of European Drug Registration
- The Impact of Reference Pricing in Europe
- Pharmaceutical Pricing, Reimbursement, and Prescribing in the United Kingdom
- Pharmaceutical Pricing, Reimbursement, and Prescribing in Italy
- Pharmaceutical Pricing, Reimbursement, and Prescribing in Spain
- The Impact of German Reference Pricing on Statins
- Opportunities and Challenges in the Japanese Market for Cancer Therapies
- Cancer Therapies Face Increasing Reimbursement Pressures in Europe and Japan
- The Pharmaceutical Pricing and Reimbursement Environment in China
- Will Point of Care Come of Age by 2010?
- Has Genomics Failed to Deliver?
- The Role of Pharmacogenomics in Personalized Medicine
- Cell Therapy: A Decade of Opportunity
- Nanotechnology in Medicine: Its Time Has Come
- Clinical Proteomics: An Engine for In vitro Diagnostics Growth?
Therapeutics - Section A: Oncology
- Novel Strategies in Oncology Clinical Trials: The Use of Biological and Imaging Biomarkers
- Antitumor Biologies: Strategies for Success in an Expanding Market
- Outlook for Cancer Vaccine Development
- Advances Imminent in Antiangiogenesis Therapeutics
- Discoveries and Challenges in Early-stage Apoptosis Drug Development
- Chronic Lymphocytic Leukemia: Monoclonal Antibodies Will Drive Steady Growth
Therapeutics - Section B: CNS
- Opportunities in the Pharmacotherapy of Addiction
Therapeutics - Section C: Immunology
- Prevention of Organ Transplant Rejection: Current Therapies and Novel Strategies
Therapeutics - Section D: Cardiovascular
- Cardiovascular Drugs and Devices Market: Some Successes and Setbacks in Recent Years
- Renin Inhibitors: A Novel Approach to Hypertension
- Future of VLA-4 Antagonist Drugs and Implications for the Regulatory Process
- Impact of Inhaled Insulin on the Insulin Market
- Impact of the PROactive Study on the Treatment of Type 2 Diabetes
- Integrating Diagnostics and Therapeutics for Targeted Therapies – Part 1: Optimizing the Comarketing Plan
- Integrating Diagnostics and Therapeutics for Targeted Therapies – Part 2: The Importance of Calculating the Return on Investment
- Emerging Diagnostic Markers in Alzheimer's Disease
- How Are Translational Medicine Biomarkers Impacting Industry?
- Unlocking the Potential of Biomarkers in Targeted Oncology
- From Bioterrorism to Predictive Medicine: New Applications of Salivary Diagnostics
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