Projected impact of demographic change on the demand for pharmaceuticals in Ireland


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Presentation delivered by Dr Kathleen Bennett, Department of Pharmacology and Therapeutics, Trinity Centre for Health Sciences, St James’s Hospital at the Irish Pharmaceutical Healthcare Association Meeting 2009.

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  • Here drug expenditure refers to all schemes (incl High tech, etc) and payment to wholesalers under HT to fit in with the graphs that follow.
  • The year-on-year increase in drug expenditure under the Community Drug Schemes is amongst the highest in Europe.
  • The number of eligible GMS patients has fallen by ~10% over the last decade, from 1.28 million in 1994 to 1.16 million in 2005. However, the 37.43 million items prescribed on the GMS scheme in 2005 represent an 96% increase over the 10 year period. 18.88 million items prescribed in 2005. Fall in GSM eligibility as the income threshold for means testing has increased in line with inflation but have lagged behind growth in average incomes.
  • Out of the 140,000 people who currently hold non-means tested cards, about 15,000 are expected to be under this threshold and qualify for full medical cards; another 35,000 will get GP-only cards and 70,000 will get a new €400 a year Health Support Payment.
  • 55 million prescript items in 2006 had risen to 60 million in 2007. We will focus on the first 3 schemes here. The equivalent Total exp in 2007 was 1.48billion
  • IPHA agreement 2006
  • Total number of items by 2021 estimated at 110 million items. 40 million GMS in 2006, 2mill LTI, 12 mill DPS=54 mill
  • Total ingredient cost 2.4 billion in 2020 from 1.1 billion in 2006. Total expenditure figures similar trends 3.8billion by 2021. – likely to be an over-estimate now given recent changes to mark-up.
  • Greatest increase expected in GMS scheme – but depends on assuming no changes in eligibility which may not be correct. By 2020, 76% of items within GMS scheme, 18.5% DP and 5.5% LTI
  • 100k-121k for projected)
  • . (2.2bn to 2.64bn for projected)
  • PEA for high cost medicines and those with a significant budget impact Governs the supply terms, conditions and prices of medicines. First Agreement: 1993. The idea is that the post-patent price cuts will release resources to pay for new and innovative therapies in the future . There will be a 35% reduction in the price of post-patent medicines where a substitute is available. This will take place in two steps: the first of 20% and the second of 15%. It will also apply to hospital purchases and hospital-only products. Duration of 2006 Agreement: 4 years.
  • Conservative estimates, likely to be greater increases.
  • Projected impact of demographic change on the demand for pharmaceuticals in Ireland

    1. 1. Projected impact of demographic change on the demand for pharmaceuticals in Ireland Kathleen Bennett Department of Pharmacology & Therapeutics, Trinity College, National Centre for Pharmacoeconomics Dublin
    2. 2. Pharmaceuticals <ul><li>Prescribing of medicines is one of the most common healthcare interactions </li></ul><ul><li>Majority of pharmaceutical expenditure in primary care (86%) </li></ul><ul><li>In 2006, total ingredient cost €1.1 bn, in 2007, had risen to €1.26bn </li></ul>
    3. 5. <ul><li>Product Mix: </li></ul><ul><li>Prescribing of newer more expensive medications: </li></ul><ul><li>Omeprazole </li></ul><ul><li>Lansoprazole </li></ul><ul><li>Esomeprazole </li></ul><ul><li>Pantoprazole </li></ul><ul><li>Rabeprazole </li></ul><ul><li>Atorvastatin </li></ul><ul><ul><ul><li>Pravastatin </li></ul></ul></ul><ul><li>Simvastatin </li></ul><ul><li>Volume effect: Growth in the number of prescription items </li></ul><ul><ul><ul><li>Number of eligible GMS persons  ~10% over last decade. </li></ul></ul></ul><ul><ul><ul><li>Number of items prescribed almost doubled between 1995-2005 </li></ul></ul></ul><ul><ul><ul><li>Increased evidence based prescribing (e.g. statins) </li></ul></ul></ul><ul><ul><li>Changes in terms of eligibility criteria. Increase in elderly population </li></ul></ul>9.91% of GMS expenditure 2006 (€75 million) 10.1% of GMS expenditure 2006 (€76 million) The main reasons driving such growth in pharmaceutical expenditure include:
    4. 6. Four major community schemes <ul><li>General Medical Services (GMS) </li></ul><ul><li>Drug Payment Scheme (DPS) </li></ul><ul><li>Long Term illness (LTI) </li></ul><ul><li>High tech drug (HTD) </li></ul>
    5. 7. Community Drugs Schemes Approximately 85% of total drug expenditure is through the Community Drugs Schemes. Three schemes cover 2.9 million (67%) of population. Ingredient cost was €1.1 billion in 2006 for first 3 schemes. % taken from HSE – PCRS 2006 annual report 14% 0.46% - High Tech Drug (HTD) 7.4% 3.9% 2.51% Long Term Illness (LTI) 18% 21.5% 36.03% Drugs Payment (DP) 60% 73.4% 28.85% General Medical Services (GMS) % expenditure % prescriptions (55 million items) % population Scheme
    6. 8. General Medical Services <ul><li>GMS scheme (as of Sept 2008) </li></ul><ul><ul><li>Available to all over 70 years of age (from July ’01); now no longer available to all over 70 years </li></ul></ul><ul><ul><li>Means tested for those under 70 years </li></ul></ul><ul><li>Important implications for the likely future costs </li></ul><ul><ul><li>Population over 70 years is growing relatively rapidly in both absolute and relative terms. </li></ul></ul><ul><li>Rapid increase in uptake and expenditure of medicines in Ireland over recent years. </li></ul>
    7. 9. Number of GMS eligible patients by age (2006)
    8. 10. Average cost (ingredient) per year by age and gender (2006)
    9. 11. Average number of items per year by age and gender (2006)
    10. 12. Average ingredient cost/item and items/form 2000-2007
    11. 13. Methodology for projections <ul><li>2006 used as the base year; projections from 2007-2021 </li></ul><ul><li>Age-sex population projections from Morgenroth </li></ul><ul><li>Projected use model </li></ul><ul><ul><li>Applied adjusted trends from 2002-2006 in age-sex specific GMS prescribing rates and costs/patient to project future trends 2007-2021 </li></ul></ul><ul><ul><li>Assumes increasing trend will continue over time. </li></ul></ul>
    12. 14. Projected use model - Assumptions <ul><li>For LTI and DPS scheme – age/sex specific data not available. Applied overall prescribing and cost data per patient. </li></ul><ul><li>Assumed the same proportion of patients in GMS/DPS/LTI schemes in 2006 applied throughout. </li></ul><ul><li>Assumption that 20% of scripts off patent drugs and applied 20% reduction in costs (IPHA 2006). </li></ul>
    13. 15. Projected use model
    14. 16. Total projected prescription items - GMS, DPS and LTI scheme 110 million items
    15. 17. Total projected ingredient costs – GMS, DPS and LTI schemes € 2.4 bn in 2021
    16. 18. Total prescription items by scheme – projected use model 76% GMS; 18.5% DP; 5.5% LTI scheme for distribution of items in 2021 67% GMS; 24.5% DP; 8.8% LTI scheme for distribution Ing costs in 2021
    17. 19. Sensitivity analysis for predicted prescription items
    18. 20. Sensitivity analysis for predicted ingredient cost
    19. 21. Limitations <ul><li>Assumptions made </li></ul><ul><li>Recent changes to schemes not factored in </li></ul><ul><ul><li>Changes to eligibility in over 70 year olds </li></ul></ul><ul><ul><li>IPHA agreement further 15% reduction post-patent (from Jan ’09) and future changes to IPHA </li></ul></ul><ul><li>Only public spending </li></ul><ul><li>No Pharmacy fee or VAT included, only ingredient costs. No High tech scheme data. </li></ul><ul><li>New treatments, changing expectations, changing disease epidemiology not possible to predict </li></ul>
    20. 22. Key Changes to the Pricing and Reimbursement System <ul><li>1. P rice of new medicines linked to average European price . </li></ul><ul><li>2. Regular monitoring and revision of prices . </li></ul><ul><li>3. Price reductions for off - patent medicines (e.g. IPHA agreement 2006) </li></ul><ul><li>4. Pharmaco e conomic assessment . </li></ul>
    21. 23. Conclusions <ul><li>Prescription items and costs are likely to continue to increase, particularly within the GMS scheme and with the increasing elderly population. </li></ul><ul><li>Estimated numbers of prescription items will increase from 54 million in 2006 to approx. 110 million in 2021. </li></ul><ul><li>Estimated drug ingredient costs are likely to increase from €1.1bn in 2006 to approx. €2.4bn by 2021. </li></ul>
    22. 24. Acknowledgements <ul><li>Dr Lesley Tilson, Dr Michael Barry – National Centre for Pharmacoeconomics </li></ul><ul><li>HSE-PCRS for supply of data on which the study is based </li></ul><ul><li>HRB for funding </li></ul>