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Diffusion of pharmaceuticals: cross-country evidence of anti-TNF drugs

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Abstract

This article studies the diffusion of biopharmaceuticals across European countries, focusing on anti-TNF drugs, which are used to treat autoimmune diseases (e.g., rheumatism, psoriasis). We use detailed sales information on the three brands Remicade, Enbrel and Humira for nine European countries covering the period from the first launch in 2000 until becoming blockbusters in 2009. Descriptive statistics reveal large variations across countries in per-capita consumption and price levels both overall and at the brand level. We explore potential sources for the cross-country consumption differences by estimating several multivariate regression models. Our results show that large parts of the cross-country variation are explained by time-invariant country-specific factors (e.g., disease prevalence, demographics, health care system). We also find that differences in income [gross domestic product (GDP) per capita] and health spending (share of GDP) explain the cross-country variation in consumption, while relative price differences seem to have limited impact.

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Notes

  1. There are a few recent exceptions, e.g., Jönsson et al. [19], Berndt et al. [2], Desiraju et al. [17], and Frech and Miller [18]. We return to these studies below.

  2. These figures are collected from the annual reports of Abbott, Merck, Amgen and Pfizer for 2011, which are publicly available on the companies’ webpages.

  3. We also control for time-invariant product-specific factors (e.g., treatment effects, side effects, administration form, etc.) that are likely to explain differences in consumption across the anti-TNF brands, as well as time trends in consumption.

  4. The empirical literature on cross-country differences in the prices of pharmaceuticals is much larger, see, e.g., Danzon [12], Danzon and Chao [13], Danzon and Furukawa [14], and Brekke et al. [6].

  5. There are some studies on diffusion of pharmaceuticals within countries, see, e.g., Berndt et al. [3] and Chintagunta et al. [8].

  6. There is also a study by Dalen et al. [11] on the anti-TNF drug market using Norwegian data. They find that changing the funding of anti-TNF drugs from the central government (social insurance agency) to the public hospital enterprises has a significant effect on pricing and market shares of the three anti-TNF brands.

  7. Berndt et al. [2] also study the role of promotion on the overall consumption and the relative share of old and new medicines within a therapeutic class. They find that promotion has a strong market share effect within therapeutic class, while the effect on overall consumption is weaker.

  8. There is also a study by Frech and Miller [18] that analyzes the cross-national differences in the utilization of pharmaceuticals. However, this study is mainly concerned with the impact of cross-national consumption differences on quality of life and obesity.

  9. There are now more anti-TNF drugs on the market. Cimzia (certolizumab pegol) got marketing authorization for rheumatoid arthritis in October 2009 by the EMA (but was refused for Crohn’s disease). Simponi (golimumab) was also introduced in October 2009, and is approved for rheumatoid arthritis, ankylosing spondylitis and psoriatic arthritis.

  10. These figures were collected from the annual reports of Abbott, Merck, Amgen and Pfizer for 2011.

  11. The study by Dalen et al. [11] on the reimbursement of anti-TNF drugs in Norway shows that the choice of funding body (central government or public hospitals) has a significant effect on the pricing and market shares of the anti-TNF brands.

  12. See, for instance, Danzon and Ketcham [15], Pavcnik [21], Brekke et al. [4, 5] and Dalen et al. [10] for studies of reference pricing and its effects on pricing and pharmaceutical expenditures.

  13. According to, for instance, Chandran and Raychaudhuri [7], the prevalence of psoriasis in Europe varies between 0.6 to 6.5 %. Alamanos and Drosos [1] report similar differences for rheumatoid arthritis.

  14. IMS Health is a US-based market-research company that provides pharmaceutical and health care information globally.

  15. Defined daily dose (DDD) is a dosage measure developed by the World Health Organization. This measure is based on the assumed average daily maintenance dose for its main indication use in adults. The DDDs are 3.75 mg for Remicade, 7 mg for Enbrel and 2.9 mg for Humira.

  16. Note that the first marketing approval of Humira by the EMA was in September 2003. The reason we observe sales of Humira before that date in Norway is due to the fact that hospitals may start using these drugs before the actual approval date.

  17. See, for instance, the studies by Danzon et al. [16] and Kyle [20], which find that countries with strict price control have fewer launches of new drugs and that pharmaceutical companies tend to delay launch into price-controlled markets.

  18. The study by Desiraju et al. [17] shows that the diffusion speed is lower in countries with high prices. However, we may also expect that high price levels imply quicker launch (less delay) of new products, as found by Kyle [20].

  19. All variables are measured at a monthly basis except for gross domestic product \(\left( GDP\right)\) and health expenditures \(\left( HE\right)\) which are measured on a yearly basis.

  20. Product characteristics that vary over time and are correlated with our explanatory variables can generate an endogeneity problem and lead to biased estimates. For instance, marketing effort may affect perceived product quality, which is likely to affect sales and prices in most markets. However, prices of anti-TNF drugs are regulated in most European countries, which implies that this kind of endogenity problem is less severe in our study.

  21. A recent study by Dalen et al. [11] finds that a change in the financing of anti-TNF drugs from central government (social insurance agency) to public hospital enterprises induced a shift in the consumption from the higher priced Enbrel to the lower priced Remicade. They argue this is due to the funding being based on a fixed hospital budget rather than regular social insurance payments with no expenditure caps.

  22. The anti-TNF drug expenditures are of course a part of the overall health expenditures, but the share is negible, so including health expenditures as an explanatory variable should not involve any endogeneity problems.

  23. See Table 1 for which diseases the three anti-TNF drugs are approved for at what time.

  24. The reason we have 2,744 observations over 120 months (and not 3,240) is that all three anti-TNF brands are not present in every period in every country, as can be seen from Table 3.

  25. This estimate is perhaps somewhat high compared to more recent studies. For instance, Contoyannis et al. [9], who use a policy experiment in Canada, report price elasticities in the range of −0.12 to −0.16. However, these studies estimate the effect of patients’ copayment (and not the full price) on consumption.

  26. See, for instance, Dalen et al. [11], who offer some empirical evidence on this issue.

  27. Unfortunately, we do not have information on (changes in) funding schemes over time within a country. This information would have made it possible to test the importance of funding schemes for the diffusion of anti-TNF drugs.

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Acknowledgments

We are grateful for funding by the Norwegian Research Council.

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Authors and Affiliations

  1. Department of Economics, Norwegian School of Economics, Helleveien 30, 5045, Bergen, Norway

    Kurt Richard Brekke

  2. Department of Economics, Norwegian Business School, Nydalsveien 37, 00484, Oslo, Norway

    Dag Morten Dalen

  3. UNI Rokkan Centre, Nygårdsgaten 5, 5015, Bergen, Norway

    Tor Helge Holmås

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  1. Kurt Richard Brekke
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  2. Dag Morten Dalen
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Correspondence to Kurt Richard Brekke.

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The article has benefited from comments and suggestions by two anonymous referees, as well as participants at the Norwegian Health Economics conference in Bergen, 2012, and the Health Economics Workshop in Turin, 2012.

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Brekke, K.R., Dalen, D.M. & Holmås, T.H. Diffusion of pharmaceuticals: cross-country evidence of anti-TNF drugs. Eur J Health Econ 15, 937–951 (2014). https://doi.org/10.1007/s10198-013-0536-6

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