1 Table of Contents
1 Table of Contents 3
1.1 List of Tables 5
1.2 List of Figures 6
2 Pricing and Reimbursement in the US - Introduction 7
2.1 GBI Research Report Guidance 8
3 Healthcare System in the US - Overview 9
3.1 Healthcare Expenditure 9
3.1.1 Healthcare Expenditure and GDP 9
3.1.2 Healthcare Expenditure by Category 13
3.2 Healthcare Infrastructure 19
3.2.1 Hospitals 19
3.2.2 Hospital Beds 20
3.2.3 Healthcare Professionals 20
3.3 Health Insurance 21
3.3.1 Health Insurance Coverage 21
3.3.2 Health Insurance Providers 22
3.4 Demographic Trends Affecting Healthcare 26
3.4.1 Population Demography 26
4 Pharmaceutical Regulations in the US - Overview 28
4.1 Pharmaceutical Industry in the US 28
4.1.1 PEST Analysis 28
4.2 Healthcare Regulation 30
4.2.1 Highlights of the Budget 2011-2012 31
5 Pricing of Pharmaceutical Drugs in the US 33
5.1 Pricing Overview 33
5.1.1 Regulatory Bodies 34
5.1.2 Pricing Control 34
5.1.3 340B Drug Pricing Program 35
5.2 Key Trends 35
5.2.1 Brand Name Drug Prices Increase in the Face of Generic Competition 35
5.2.2 Significant Decrease in Average Price of Generic Drugs 36
5.2.3 PPACA Introduced by the US President to Tackle Soaring Prescription Drug Prices 37
5.2.4 Generic Price War at Retail Sector 39
5.3 Major Challenges 40
5.3.1 Reducing Wastage in Healthcare Spending 40
5.3.2 Government’s Cost Rationalization Efforts will make Future Tough for Big Pharmaceutical Companies 40
5.3.3 Medicaid Pricing for Dual Eligibles of Medicare Part - D 41
5.3.4 New ICD-10 (International Classification of Diseases) Coding System 41
5.3.5 Medicare Part B Drug Pricing Does Not Reflect Market Price Accurately 43
6 Reimbursement of Pharmaceutical Drugs in the US 44
6.1 Regulatory Bodies 45
6.2 Prescription Drugs 45
6.3 Biologics 46
6.4 Preferred Drug List (PDL) 47
6.5 Reimbursement by Health Insurance Companies 48
6.5.1 UnitedHealth Group 49
6.5.2 WellPoint, Inc. 49
6.5.3 Kaiser Foundation Group 49
6.5.4 Humana Group 50
6.5.5 Aetna Group 50
6.6 Pharmacy Benefit Managers (PBMs) 51
6.7 Reimbursement Programs in the US 52
6.7.1 Case Studies 53
6.8 Key Trends 55
6.8.1 Rebate Reforms and Healthcare Cuts to Reduce Federal Deficit 55
6.8.2 Medicare Part D Changes in Standard Benefit Parameters 57
6.8.3 Reimbursement of Brand Name Drugs 59
6.8.4 Reimbursement of Generic Drugs 60
6.8.5 CMS Finalizes Medicare Hospital Outpatient Payment Rates for 2012 61
6.9 Major Challenges 61
6.9.1 New Nationwide Database to Set Healthcare Reimbursement Rates 61
6.9.2 First DataBank/Medi-Span Settlement and the Impact on AWP 62
6.9.3 Renewal of Medicaid Drug Payment Policy 63
6.9.4 Proposed Cuts in Medicare Part B Reimbursement 63
6.9.5 New Trend in Free Trade Agreements Could Affect Healthcare Programs 63
7 Pricing and Reimbursement in the US - Major Therapy Areas 64
7.1 Pricing and Reimbursement in Major Therapy Areas 65
7.1.1 Heart Diseases 65
7.1.2 Cancer 65
7.1.3 Respiratory Diseases 65
7.1.4 Cerebrovascular Diseases 65
7.1.5 Other Major Therapy Areas 66
7.2 Case Studies 68
7.2.1 Provenge under Medicare Coverage 68
7.2.2 AstraZeneca Ensures Reimbursement of Brilinta 68
7.2.3 Financial Assistance for Orphan Drug Letairis 69
7.2.4 Coverage for Biologic Product Enbrel 69
8 Pricing and Reimbursement in the US - Appendix 70
8.1 Market Definitions 70
8.2 Abbreviations 70
8.3 Research Methodology 72
8.3.1 Healthcare System 73
8.3.2 Pharmaceutical Regulations 73
8.3.3 Pricing of Pharmaceutical Drugs 73
8.3.4 Reimbursement of Pharmaceutical Drugs 73
8.3.5 Pricing and Reimbursement in Major Therapy Areas 74
8.4 Contact Us 74
8.5 Disclaimer 74
8.6 Sources 74
1.1 List of Tables
Table 1: Pricing and Reimbursement in the US, Healthcare Expenditure as % of GDP versus Life Expectancy at Birth in Years, 1995-2009 9
Table 2: Pricing and Reimbursement in the US, Comparison of Per Capita GDP and Per Capita Total Expenditure on Health ($ PPP), 2000-2009 10
Table 3: Pricing and Reimbursement in the US, Per Capita Total Expenditure on Health ($ PPP), The US versus Top Five Countries of Europe, 2009 11
Table 4: Pricing and Reimbursement in the US, Total Expenditure on Health as % of GDP, The US versus Top Five Countries of Europe, 2009 12
Table 5: Pricing and Reimbursement in the US, National Healthcare Expenditure ($bn), By Category, 2009 13
Table 6: Pricing and Reimbursement in the US, Per Capita National Healthcare Expenditure ($ PPP), By Type, 2009 15
Table 7: Pricing and Reimbursement in the US, Out-of-Pocket Expenditure on Health (% of Total Healthcare Expenditure), The US versus Top Five Countries of Europe, 2009 17
Table 8: Pricing and Reimbursement in the US, National Healthcare Expenditure (%), Type of Sponsor, 2009 18
Table 9: Pricing and Reimbursement in the US, Type and Number of Hospitals, 2011 19
Table 10: Pricing and Reimbursement in the US, Healthcare Professionals, 2010 20
Table 11: Pricing and Reimbursement in the US, Health Insurance Coverage, Population (in million), 2009 21
Table 12: Pricing and Reimbursement in the US, Public and Private Health Insurance Coverage (% of Population), 2007-2009 25
Table 13: Pricing and Reimbursement in the US, Population Demography (Million), 2000-2010 26
Table 14: Pricing and Reimbursement in the US, Health Indicators, 2000-2010 26
Table 15: Pricing and Reimbursement in the US, Annual Retail Price Index Change in Brand Name Drugs and Generic Drugs (%), 2008-2010 36
Table 16: Pricing and Reimbursement in the US, Annual Price Index Change in Prescription Drugs (%), 2008-2010 37
Table 17: Pricing and Reimbursement in the US, Average Retail Coinsurance Rates (%), By Tier, 2009 45
Table 18: Pricing and Reimbursement in the US, Top Health Insurance Companies, Revenue ($bn), 2010 48
Table 19: Pricing and Reimbursement in the US, Reimbursement Programs, 2011 52
Table 20: Pricing and Reimbursement in the US, State Discount Programs, 2011 54
Table 21: Pricing and Reimbursement in the US, Medicare Part D Changes in Standard Benefit Parameters ($), 2008-2012 58
Table 22: Pricing and Reimbursement in the US, Brand Name Drug Cost-Sharing (%), 2011-2020 59
Table 23: Pricing and Reimbursement in the US, Generic Drug Cost-Sharing (%), 2011-2020 60
Table 24: Pricing and Reimbursement in the US, Major Therapy Areas by Mortality (%), 2009 64
1.2 List of Figures
Figure 1: Pricing and Reimbursement in the US, Healthcare Expenditure as % of GDP versus Life Expectancy at Birth in Years, 1995-2009 9
Figure 2: Pricing and Reimbursement in the US, Comparison of Per Capita GDP and Per Capita Total Expenditure on Health ($ PPP), 2000-2009 10
Figure 3: Pricing and Reimbursement in the US, Per Capita Total Expenditure on Health ($ PPP), The US versus Top Five Countries of Europe, 2009 11
Figure 4: Pricing and Reimbursement in the US, Total Expenditure on Health as % of GDP, The US versus Top Five Countries of Europe, 2009 12
Figure 5: Pricing and Reimbursement in the US, National Healthcare Expenditure (%), By Category, 2009 13
Figure 6: Pricing and Reimbursement in the US, National Healthcare Expenditure (% of Total Health Expenditure), By Type, 2009 15
Figure 7: Pricing and Reimbursement in the US, National Healthcare Expenditure (%), By Payer, 2009 16
Figure 8: Pricing and Reimbursement in the US, Out-of-Pocket Expenditure on Health (% of Total Healthcare Expenditure), The US versus Top Five Countries of Europe, 2009 17
Figure 9: Pricing and Reimbursement in the US, National Healthcare Expenditure (%), Type of Sponsor, 2009 18
Figure 10: Pricing and Reimbursement in the US, Total Hospital Beds per 1,000 patients, 2000-2009 20
Figure 11: Pricing and Reimbursement in the US, Health Insurance Coverage (% of Population), 2009 21
Figure 12: Pricing and Reimbursement in the US, Public Health Insurance Coverage (% of Population), 2009 22
Figure 13: Pricing and Reimbursement in the US, Private Health Insurance Coverage (% of Population), 2009 23
Figure 14: Pricing and Reimbursement in the US, Other Private and Government Insurance, 2011 24
Figure 15: Pricing and Reimbursement in the US, Public and Private Health Insurance Coverage (% of Population), 2007-2009 25
Figure 16: Pricing and Reimbursement in the US, Population by Age (Million), 2000-2010 26
Figure 17: Pricing and Reimbursement in the US, Pharmaceutical Industry, PEST Analysis, 2011 28
Figure 18: Pricing and Reimbursement in the US, Healthcare Regulation, Operating Divisions and their Functions, 2009 30
Figure 19: Pricing and Reimbursement in the US, Distribution Channel Logistics and Pricing, 2011 33
Figure 20: Pricing and Reimbursement in the US, Annual Retail Price Index Change in Brand Name Drugs and Generic Drugs (%), 2008-2010 36
Figure 21: Pricing and Reimbursement in the US, Annual Price Index Change in Prescription Drugs (%), 2008-2010 37
Figure 22: Pricing and Reimbursement in the US, ICD-10 Coding System; Features and Benefits 42
Figure 23: Pricing and Reimbursement in the US, Comparison Between Fee for Service, HMO and PPO, 2011 44
Figure 24: Pricing and Reimbursement in the US, Top Health Insurance Companies, Revenue ($bn), 2010 48
Figure 25: Pricing and Reimbursement in the US, Standard Medicare Part D Benefit, 2011-2020 57
Figure 26: Pricing and Reimbursement in the US, Brand Name Drug Cost-Sharing (%), 2011-2020 59
Figure 27: Pricing and Reimbursement in the US, Generic Drug Cost-Sharing (%), 2011-2020 60
Figure 28: Pricing and Reimbursement in the US, Major Therapy Areas by Mortality (%), 2009 64
