The Pharmaceutical Industry; Challenges in the New Century - FINAL

Topics: Pharmaceutical industry, Generic drug, Pharmacology Pages: 21 (8024 words) Published: January 6, 2014
The following are the major Political, Economic, Social and Technological trends outlined in the case, The Pharmaceutical Industry: Challenges in the New Century that affect the US Pharmaceutical industry: Political

The growth of generics had been fuelled by the 1984 Waxman-Hatch Act, which reduced the barriers to generic entry by accelerating the approval process for the drugs. Instead of forcing generic drug makers to conduct their own lengthy and costly clinical trials, Waxman-Hatch mandated they show only that their drugs were chemically and biologically equivalent to the original patented versions. Medicare Prescription Drug Improvement and Modernisation Act – it would create Medicare approved drug discount cards beginning in May 2004 that would enable participants to save between 10% and 25% on some prescriptions drugs. Participants with incomes below $12,567 (single) and $16,862 (married) would receive a $600 per year credit. The discount cards were a temporary measure that expired in 2006. Beginning in 2006, Medicare participants would chose to participate in privately run drug coverage plans. Participants would pay a monthly premium of $35 and the first $250 in yearly drug costs. Beyond $250, participants paid 25% of the drug costs up to $2,250, 100% of drug costs between $2,250 and $3,600, and 5% of remaining drug costs. 1 The drug development process was monitored carefully by the U.S. Food and Drug Administration (FDA) and comparable institutions around the world. Any delays or a rejection in an application had a monetary impact. The FDA required drug companies to monitor drugs after they reached the market and report on any safety issues. Problems that were not evident during the approval phase could arise after a drug was used by a larger number of people. The FDA occasionally pulled such drugs from the market or asked their manufacturers to voluntarily pull them. In addition to reviewing drugs, the FDA also monitored the drug-manufacturing process and could fine companies and / or close plants that did not meet manufacturing regulations. The FDA Modernization Act of 1997 sought to reduce the review time by requiring drug companies to pay fees totalling approximately $700 million between 1997 and 2002 so that the FDA could hire more personnel and upgrade its systems. In 1997, the FDA made a significant change that greatly increased the importance of advertising to consumers. Under the new regulation, marketers of pharmaceuticals were allowed to name a prescription drug and the illness it treated in direct-to-consume television advertisements. This regulatory change also impacted how technology was used in marketing i.e. the use of television advertisements. The 1994 European Community decision to grant Pan-European product approval for prescription drugs were making it easier for the biotechnology companies to take their innovations to market. Economic

Parallel trade, the reselling of drugs across borders, was a growing market factor U.S. residents living near the border often went to Canada to buy their medications to reap the savings. Residents in other parts of the country were beginning to buy from Canadian mail-order and Internet pharmacies. Free Rider Concerns. Because drug prices in the U.S. generally were the most expensive in the world, there was a sense that U.S. consumers paid the high cost of drug development to the benefit of consumers worldwide. Downward pressure on prices coincided with a growing complexity in drug development and approval cycles, which drove up R&D and capital expenditures. The high risk and research intensiveness of the pharmaceutical industry made drug development costly. Intense competition and price pressures in global pharmaceutical markets had fuelled on-going merger and acquisitions activities that were consolidating the industry. In the mid-1990s, no company held a 5% market share, while in 2003 the top three companies exceeded this mark. Through mergers and...

References: 1.“The Facts about Upcoming New Benefits in Medicare,” U.S. Department of Health and Human Services, Medicare web site, www.medicare.gov/Publications/Pub/pdf/11054.pdf (accessed March 31, 2004).
4. Michelle Maisto, “An Rx for Pharmaceutical Companies,” Pharmaceutical Executive, October 1, 2002
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16. HSE.(2013)Welcome to Medicines Management Programme. Available at http://www.hse.ie/your –medicines Accessed 4 November 2013
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18. Nolan, A. (2013) IRELAND: Punching above its Weight. Andrey Muntayn, Ireland Pharma report. Focus Report. IDA Ireland June 2013. Available at http;//issuu.com/focus reports/docs/Ireland_phex_2013_1
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34. Pharmaceutical Technology Europe, ‘New Technologies lead to new challenges’ Volume 24, Issue 12, Dec 1st 2012, ISSN: 1753-7967 ( Last accessed November 6th 2013)
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36. Hunter, Niall ‘One-in-seven have bought medicines online’, Irish Health.com, Available at: www.irishhealth.com ( last accessed Nov 19th 2013)
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40. Department Of Health, eHealth Week, (May 10th 2013), Department of Health. Available at: http://www.dohc.ie/issues/eHealth/ ( last accessed October 31st)
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