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Evolution of the global regulatory scenario

Role of regulation and regulatory authorities:

The entire healthcare ecosystem, from research to sales, is stringently regulated by governing authorities. These authorities include a number of local government regulatory agencies which ensure compliance in various legal and regulatory aspects of a drug. These agencies issue guidelines and enforce the rules and regulation pertaining to drug development, registration, manufacturing, labeling and marketing by pharmaceutical companies in their respective countries. Additionally, there are global agencies such as World Health Organization (WHO), Pan American Health Organization (PAHO), World Trade Organization (WTO), International Conference on Harmonization (ICH), World Intellectual Property Organization (WIPO), which act at an international level and ensure co-operation among the various local agencies. The regulatory authorities strive to provide access to medicines that are high quality, safe, effective while being cost-efficient at the same time.

Impact of new regulations:

Though aimed at improving the quality of health care provided to the public, the rules and regulations may not always be conducive to the growth of the pharmaceutical industry. Introduction of new regulations means that pharma companies need to reformulate their strategies and incur expenses to meet the bar set by the authorities. While it might be a streamlined process in developed countries, it is more often a maze of myriad departments that the companies must spend considerable time and efforts to navigate.

For example, in the European Union, the Marketing Authorization documents submitted by a drug manufacturer are first evaluated by the European Medicines Agency (EMA) and then a decision on approval is taken by the European Commission based on the EMA evaluation. Once approved, the drug manufacturer has access to all the European Union markets. However, each member state has a National Competent Authority (NCA) that is responsible for the regulation of human and veterinary medicines. These authorities take the decisions about price and reimbursement at the level of each Member State. Since national health care has a vast coverage, it is imperative for drug manufacturers to have their drugs listed on the national formulary list of each country. Thus, despite a central approval process, there is considerable time lag between approval and launch of the new product.

Such hurdles could, at times, cause inadvertent delays and extend the time-to-market for a drug product. Therefore, a company stands to lose considerable market gains if it is unprepared for market regulations.

In the current scenario, the severity of regulations is ever tightening to protect the health and rights of patients, not only by flag bearer regions like USA (FDA) and EU (EMA) but also by emerging countries like Mexico, Brazil and South Korea. Additionally, with more countries launching government healthcare coverage schemes, there is a push to control the rising drug prices to eventually reduce healthcare spending.

Key trends:

On analyzing the policies implemented or under draft for near future implementation, the following four trends emerge as the drivers of regulatory policies across the globe:

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Trend 1: Universal public healthcare

Providing universal healthcare coverage is a goal that has been set by almost every government. Along with the top 5 European countries, Japan, Brazil, Russia, China, Mexico, South Korea and Turkey have made tremendous progress on covering their populations, where >90% population is covered by public healthcare. Surprisingly, in contrast, only ~67% of USA population is covered by employer-provided private health insurance.

Impact:

Higher the coverage proportion of the population, more is buyer pressure on the market as the government becomes the single largest buyer in the pharmaceutical market.

Trend 2: Focus on generics

Generics have traditionally been viewed as an option for low income countries with lower access rates to innovative drugs. With increasing ageing population  and rising drug prices, government budgets everywhere are burdened with additional expenses in healthcare. Hence, there is a shift in focus towards promoting generics and supporting generics manufacturers to develop and manufacture high quality products in developed markets.

Impact:

Increased generic penetration lowers the prices and eventually reduces the size of market by value though there is a significant increase in the volume size. For governments, it tilts the scale in their favour as lower prices of generics results in cost savings in healthcare expenditure. These savings can then be used to improve access to medicines for a wider population.

Trend 3: Price cuts and value-based pricing

Price cuts or pricing control strategies have become a norm across the globe as a response to ever increasing drug pricing by pharmaceutical manufacturers.

In USA, the American Patients First Blueprint aims to make drug pricing transparent by making price disclosure compulsory in pharmaceutical advertisements. Also, there is a significant push from payers like Centers for Medicare & Medicaid Services (CMS) to implement value-based pricing contracts which allow patients to receive drugs that are otherwise expensive with uncertain outcomes.

In Japan, the government has increased the frequency of the drug price revisions to annually from biennially (once in two years) and quarterly for the expensive drugs.

Impact:

With payers as well as governments of large economies turning price sensitive, the incentives for innovative research may seem less lucrative to the pharmaceutical companies. The innovators would now need to prove their products’ value through independent analysis such as Health economics and outcomes research (HEOR) or incremental cost-effectiveness ratio (ICER). Organizations such as NICE in UK and the Institute for Clinical and Economic Review (ICER) are already undertaking such analysis on behalf of patients.

Trend 4: Digitization of healthcare

The developing regions of the world are now focusing on digital records as well as making digital healthcare accessible to their citizens.Telemedicine is on the rise across the globe with governments permitting prescription of drugs via telemedicine in markets like Japan and BRIC.This is especially helpful where access to medical facilities is not always possible or convenient to patients as populations are spread across large geographical areas or across isolated areas.

Impact:

Improved access will open new markets and patient pools for the pharmaceutical industry.

Other trends:

Additionally, there is a shift from the past leniency of the developing countries’ regulatory authorities like India, China, Mexico and Brazil towards a streamlined regulatory process that is at par with the international standards. Their authorities aim to fine tune the quality of drugs manufactured in their respective countries to meet the stringent requirements of an ever-growing global market.

About PharmaACE:

PharmaACE Analytics is a USA headquartered pharma analytics and consultancy firm focused on delivering customized solutions. We cater to a diverse clientele including top pharma companies, market leaders in the drug delivery device industry and radio pharmaceutical companies, among others. We provide end-to-end holistic solutions encompassing Market Research, Competitive Intelligence, Data Management, Reporting and Analytics, Market Assessment, Forecasting, Technology-enabled solutions, Online Forecasting Platforms, App Developments and other custom solutions. We are a diverse multi-disciplinary team of physicians, pharmacists, biotechnologists, ​life-science and management professionals, statisticians and digital engineers with experience across verticals and markets of the healthcare industry such as sales, analytics, project management.

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