Question no.1: The UK Govt is planning to introduce a Value based pricing scheme for brand medicines.

What is VBP and what are the potential consequences for pharmaceutical companies doing business in UK? What is VBP? There are wide array of pricing strategies available to companies. Value based pricing (VBP) is one of them. This approach proposes that organization set their product price according to the value it creates for customer . VBP attaches valueadded features and services to differentiate a market offering and support higher prices, rather than cutting prices to match competitors. The focus is to keep the customers loyal by offering services not available elsewhere and not mainly boost annual sales. This is a profitable way to price your products. Let us say that if your company is producing a product which saves lot of costs for your consumer then you can price them accordingly. Customer is willing to pay the price as it creates value which is far greater than price. Through this approach company make pricing as part of value. VBP has reverse approach as compared to cost based pricing. Pricing has a big impact on companys profits. Literature indicates that VBP is now recognized as superior to all other pricing strategies (Ingenbleek et al., 2003). For example, Monroe (2002, p. 36) observes that: the profit potential for having a value-oriented pricing strategy that works is far greater than with any other pricing approach. Similarly, Cannon and Morgan (1990) recommend value pricing if profit maximisation is the objective, and Docters et al. (2004, p. 16) refer to value-based pricing as one of the best pricing methods. This strategy has some advantages and disadvantages. The big advantage is that it takes customer prespective when you are setting price and disadvantage is that relevant data is rare and bit complex to understand. VBP versions in health sector are already used in Canada , Australia, Germany, Sweden and Italy .

UK Govt consultation on VBP for branded medicines: Prices for drugs in UK are currently governed by the Pharmaceutical price Regulation Scheme (PPRS). The PPRS is renewed every 5 years and is expiring at the end of 2013 when the coalition Governments Dept of Health has proposed to introduce a new VB approach to pricing of branded medicines. Governments perspective: Why do we need VBP? PPRS does not promote innovation.VBP aims to recognize and reward innovation. VBP will ensure that patients have access to most effective medicine by giving more power to clinicians to take treat patients with their own collaboration. Under current PPRS, NHS either has to pay high prices not justified by benefits or has to restrict access. VBP will ensure value for money and best use of NHS resources: prices will be negotiated with companies on the basis of scientific assessment of the drugs clinical value. VBP will provide transparency and stability giving clear signals about the focus to be diverted to priority areas/unmet needs for research. Role of NICE: NICE provides recommendation to NHS on use of new and existing medicine whether it is clinically and cost effective, assessed through HTA. NICE will set out authoritative standards and indicators for patient pathways in VBP approach. Industrys perspective: Value is one of ABPIs four strategic imperatives. ABPI agrees with Government that new standards should be set for quality of health care with the introduction of GP led commissioning and NICEs remit to promote clinical best practice than a pharmacoeconomic evaluation only focusing on overtly narrow cost effectiveness But ABPI is cautious on new VBP scheme, looking to maintain the stability of

current PPRS agreement. ABPI however wants VBP to be integrated with an evolved PPRS for existing products and combine the two systems together to create a new pricing system.

Potential consequences: Pharmaceutical companies will be offered two options: choose a high price and the drug would be limited to restricted group of patients or choose lower price so that it is more widely available. Hence the industry might feel that the prices offered are not adequate to reward the development of new drugs. Britain may be perceived as unfriendly to innovation with the threat that the industry might move research elsewhere. VBP will impact on R&D decisions if companies want to access to UK market. Companies not only need approvals for their medicines by the regulatory agencies; they will also need to prove their value. As a result of VBP approach, pharmaceutical companies can charge any price for their medicines provided it proves its value. Value will be another factor in decision of further development by pharma companies. Pharma companies will move away from me too products as VBP focuses on innovation. VBP might mean narrower pipelines for companies Companies will requires more clinical trial data than is needed in current system requiring more funding. Time factor: Despite various flaws in PPRS, it allows companies to set prices of brand medicines when they are launched, however it regulates

the profits on sales. This freedom is viewed as a major advantage and is taken positively by industry as it allows companies to price new products without having to wait for the outcomes of negotiations that can potentially delay marketing for months or years. Launching in UK can be delayed in order to preserve prices elsewhere. HTA will be presented with significant new challenges Thousand of existing drugs will need re-pricing if PPRs is scrapped and VBP introduced in 2014. Success is dependent on: Appropriate recognition of the value of medicine: not only cost effectiveness but factors such as unmet need, severity of disease, use in children or socially disadvantaged population and personalized medicines. Appropriate access as without access, value is relatively meaningless. Determination of an independent and transparent body Value regulator: to determine drug value. NICE and industry work in collaboration to see how best to deliver new concepts in VBP. NICE measures value by measuring aspects of quality and quantity of life provided by medicines but other more effective and wider methods are to be taken into account if value based pricing is to work effectively. The introduction of VBP in UK requires formulating clear objectives of this strategy and then should have clear implementing and operating model. It is thoroughly logical but may not prove to be a magic bullet resulting in definite savings for NHS. .Merely focusing on VBP will not bring the desired results. There is need of reform in overall scientific and commercial environment of pharmaceutical companies. This model should have detailed explanation about this strategy. The key question is that how the VBP strategy will be implemented. How do they value

innovation and how do they create link between additional health benefits and additional cost of technology for bringing these benefits. There is a need of evidence based management that recognizes how VBP approach is better for overall society. The manufacturers may conduct evaluative research before and after launch of VBP strategy to understand the related incentives with this scheme.

Question No.2: Promotion of medicines and value of self regulatory codes of practice Regulations are rules or directives made and maintained by authorities. The code of practice is a set of guidelines issued by a professional or service organization to which members agree to comply with. Regulations are set of laws which are legally enforceable while codes are not. Codes of practice can be global, regional or national and provide advice on how to meet regulatory requirements and can be used in courts as evidence that legal requirements have or have not been met. Advertising in UK is controlled by both regulations enforced by MHRA and also by self regulatory codes of practice administered by trade administrations. The regulations are a combination of European legislation (commonly known as European Directive) and UK legislation. The relevant EU directive for advertising of medicines is Title VII of EU Directive 2001/83/EC as amended by Directive 2004/27 EC. The UK Medicines Act 1968, section 92 contains the relevant legislation about advertising. There have been several amendments to the Regulations and the most recent is The Medicines (Advertising Amendments) Regulations 2005-SI No. 2787. The system of self regulation in UK is under pinned by statutory powers of MHRA and supported by a number of regulatory bodies, the majority of which operate their own codes of practice. ABPI (The Association of British Pharmaceutical Industry) established its first code in 1958 .The code has since been updated and reviewed regularly .In 1993, the PMCPA (Pharmaceutical Medicine Code of Practice Authority) was established to operate the code for the industry independent of ABPI. There are over 75 members of ABPI and over 60 non member companies have given formal agreement to abide by PMPCA jurisdiction. It is responsible for providing training and guidance on the Code. The PAGB (Proprietary Association of Great Britain) is the largest trade association and self regulatory body for OTC medicines. The two PAGB codes

(Consumer Code and Professional Code) are written after consultation with many bodies including MHRA and ASA. The ASA is responsible for ensuring that all advertising is honest and respectful. Local codes also have to comply with a number of international codes.

VALUE OF CODE:

Pharmaceuticals are special industry as the products involved are complicated, there is a potential for harm, patients as end users are regarded vulnerable and money is funded by taxpayer. We need self regulatory codes to demonstrate industrys commitment of transparency.

Commercial pressures are huge and fine balance needs to be maintained between financial incentives and patient care. Legislation only provides bare bones and self regulatory codes provide the support. The codes primarily control the promotion and advertising of medicines in both POM and OTC health care sectors. ABPI code of practice exists to protect patients, prescribers and industry. It has strong support from industry and companies ensure compliance to the code by providing adequate resources. The companies need to appoint a senior employee responsible for ensuring that the company is adherent to its provisions.

The code ensures that the signatories of promotional material take this responsibility seriously and are held accountable under the law. The industry has every legitimate right of advertising and promotion of medicines but it is the ABPI code which ensures that this is done within a robust framework to support high quality patient care in a highly professional, efficient and responsible way .

The Code defines the standards for the conduct and training of company staff.

Its compliance is not only limited to the members of health profession (doctors, pharmacists) but also to administrative staff. It is applicable to promotional materials distributed at meetings both inside and outside UK.

The definition of promotion is very broad in the code and encompasses any activities related to promotion of prescription, supply or sale of medicines in accordance with product license and SPC. It must be accurate and fair and based on latest evaluation of evidence. Promotion must recognise the special value of medicines.

The ideology behind self-regulation by industry is that prevention is better than cure. The PMPCA has a complaints procedure to provide a mechanism for dealing with breaches of the Codes of Practice after they have occurred but the Codes and other self-regulatory mechanisms have an equally, if not more, important role in encouraging the implementation and monitoring of improved standards for marketing practices in order to prevent the errors from occurring.

The complaint procedures regarding the promotional material are first dealt with the PMCPA panel which consists of members of PMPCA and also independent advisers .The appeals are then dealt with Code of Practice Appeal Board (CPAB). This has representatives not only from the industry but also outside the industry. This will have dual role of appeal body and supervisory body by independent group of people. MHRA is only involved in complaints received directly or when where complaint is not dealt with in designated time frame. MHRA may also refer to self regulatory body if a potential breach has been found.

The complaints against the Codes are taken very seriously by the companies and industry as a whole. Sanctions are applied against companies ruled in breach of the Code. The sanction of adverse publicity is one of the powerful deterrents against breaches of Good Marketing Practices. Under the Codes of Practice, complaints are referred to the highest level of management. Summary details of breaches of the Codes are published each year. The pharmaceutical companies can be

reprimanded by ABPI and details can be published. It can also order PMPCA to undertake an audit of company procedures. The company is asked to publish an apology or corrective statement and in extreme cases, can expel and suspend members from ABPI. With regards to non member companies, it can remove company from list of non members and will advise MHRA that responsibility of that company is not accepted under code any more. Companies are encouraged by PMPCA to have intercompany dialogue rather than launching formal complaint procedure. The PMPCA can provide informal guidance on Code and can seek advice from CPAB.

In previous experience , it has been evident that legislative course takes longer than action taken through self-regulatory codes .Legal matters are always more expensive than actions through self regulation.

The Codes of Practice, which have been agreed and adopted by all member companies of the ABPI act not only as a model for the adoption of self-regulatory codes at company level, but they are also operational Codes with a well tried and tested procedure for dealing with allegations of poor marketing practices.

These codes should be reflected in the procedures and policies of pharmaceutical companies. The detailed provisions in the codes are to ensure that the pharmaceutical companies operate in a responsible, ethical and professional way. The pharmaceutical companies have to ensure that they comply with all applicable codes, laws and regulations.

Question no.3: A good medicine sells itself-there is no need for sales or marketing. Discuss

Adapted from an African proverb; A good product sells itself, a bad one advertises itself, this topic for discussion is quite interesting. Lets define good medicine first. A good medicine is safe, effective and good for value, and in some cases, novel and fulfilling the unmet need. It should be considered as useful and cost effective by consumers who in this case are patients, GPs, hospital specialists, NICE and NHS. If we assume that a good medicine should sell itself without needing any marketing, then the consumer should somehow find a Good Medicine and buy it and hence there is no need to spend on promotional activities like marketing, advertising and launching. Lets now ascertain how practical this can be. The medicine is marketed after the regulatory and NICE approvals. It is now available to be prescribed to the patients. But for this the consumers need to know that an excellent product/medicine is available in the market to treat a medical need. The medical community and the public need to become aware of it and this awareness can only happen with marketing and sales promotion campaign. Marketing will bridge the gap between the consumer and the product. If there is no marketing campaign for a good product, it will take considerable time to become known and popular. Who knows at this time if the product is good or bad! As the new medicine is launched and used by the patients, time will determine its worth. If the product is found to be a success in its initial use and develops a good reputation, it will still require to be promoted through a marketing plan for a period considered to be appropriate and in accordance with the sales results along with its success ratio through a research study. Marketing is, therefore, inevitable and unavoidable for any medicine, good or bad, more so

for good medicine for raising its sales volume and consequently the profits of the company for a certain period of time. There is no rational to delay its sales promotion campaign and have a reduced level of the companys and income volume. Lets see what marketing can do. Marketing is defined as the process by which companies create value for customers and build strong customer relationships in order to capture value from customer in return. Marketing will:

build value in the products and services for the consumer. help build customer relationships. establish a brand image. The aims and objectives of the plan and how to achieve them Customer needs bearing in mind that the customer may be cost conscious Expected behaviour changes ,either in the prescriber or in the consumer Best medium to deliver the message and how.

The marketing plan identifies:

It is not only important to know what prescriber is thinking but also track competition. Market research and market intelligence are crucially important. Marketing mix and the three stage approach of STP (segmentation, targeting and positioning) will determine marketing strategy. Promotion would start at early developmental stage and this should be established well before the launch via Public Relationing (PR) programme. The companies should present the product to the financial press at a time appropriate to the benefit and shareholder value to the company. Novelty is in demand and has definite financial repercussions. The PR media campaign helps to create awareness about the product with prescribing physicians. In order to increase the awareness of the potential benefits and novelty of the product to the consumer , abstracts and articles can be published in the journals and be disseminated to the health community and the marketing arena . Another way would be to arrange scientific symposia to increase the exposure of new therapeutic agent to prescribers. It is highly attractive if these symposia are

of not just a means of advertising and promotion but are of highest scientific standards The launching date is critically important and plans need to be in place for journals advertising and detailing of the product to doctors by sales representatives. Our business is operating in a highly competitive environment and a new medicine is required to be available to the patients as and when formulated and approved. Marketing is one of the most important components of business growth. Lack of resources should not kinder to start of campaign for sales promotion because this investment will pay for itself over and over again. For GPs and specialists, information may be via advertising, sales reps or mailings whereas for NHS staff it needs to be more focused on cost and effectiveness and service provision. Disease awareness programmes may illustrate the value of the new product to the disease entity. In the UK , the main customer is GP, with the discretion of prescribing. GPs will get information from variety of sources including their peers and hospital colleagues. Adverts in medical journals are important in creating awareness but may not be the common basis to start prescribing a new compound. Hospital specialists also prescribe bits and usually they tend to use the new products within their area of specialisation. These specialists have powerful influences on the GP colleagues, and then on the local pharmacists and prescribing nurse practitioner. GPs may start new products but they are guided by the local hospital policies, NICE recommendations, peer/focus groups and cost effectiveness. Main bulk of prescribing occurs with GPs although this is influenced greatly by the external factors like NICE, SMC, and AWMSG. In UK ,patients do not have much control over this although the trend is changing as with the advent of internet and now patients are becoming increasing more aware of the advantages and disadvantages of products pertinent to them. It is absolutely critical that the company builds relationship with all the stakeholders in the prescribing process and keep updating the information.

Clever, creative and flexible marketing will unlock huge potential not only for new good medicine quickly but also for the company itself in the long term and for its future good products to be introduced in the market. Marketing helps build sales faster and enables potential customers to know the products quite quickly. It will provide valuable information to the patients and the medical community which enhances the chances of its purchase. Ultimately marketing plan will better ensure sales of a new medicine growth and this will most likely pay off the cost of advertisement and sales promotion in a short period of time. I think we need a good marketing campaign even to sell a good medicine in any case. Marketing will help to sell the medicine initially and after this a product must then be good enough to take off. Almost all medicines would require marketing and the brand imaging whether good or bad. The fact is that although sales promotion is an important part of a companys marketing strategy, it cannot be a cure for bad products. Clearly a good product can sell itself through good marketing whereas a bad product will never sell!