A86030 Economics and management of the pharmaceutical industry: drug prices and the cost of lives

This is a course in the economics of health policy. The issues related to the pharmaceutical market and the role of public decision makers are investigated through case studies, showing the main challenges and problems to provide access to cures for all citizens at a reasonable cost preserving the equity and the efficiency of the healthcare system. The focus is mainly on the European systems, but some insights will be provided about the U.S. system as well.

Course Objectives

This course provides an overview of economic and policy issues facing the pharmaceutical industry, at the same time the issues which any healthcare system is facing in order to provide better cures at sustainable costs. The course perspective is global, with emphasis on the European systems, the second largest and profitable market in the world.

We focus on issues that differentiate this industry from most others, including:

·       An R&D-intensive cost structure and rapid technological change; the role of biotechnology, genomics etc. in transforming the industry structure;

·       Continually evolving M&A strategies, including mergers, joint ventures, options-based deals and alliances;

·       Global products and multinational firms, with growing tension between the needs and ability to pay in different market segments;

·        A complex global market place in which customers include governments and third party payers, as well as physicians, pharmacists and individual consumers;

·       Government regulation of every dimension of the business, including market access (safety and efficacy), pricing, manufacturing, and promotion.

·       Case studies: 1) Cancer drugs; 2) Hepatitis C drugs.

Students will develop generalized skills in economic evaluation analysis (cost-effectiveness techniques), assessment of a specific market structure and performance (pharma industry), and understanding of the major issues related to the government decisions in healthcare resource allocation.

Course format

• Lecture/presentation by instructor
• Final exam 

Readings

All course readings and class presentations are required for the exam. The main concepts/takeaways from readings will be discussed in class and are fair game for exam questions. You are not expected to remember details of specific dates, companies, minor statistics etc. Class presentation will be posted after each lecture on the Course website.

Course reading:

1.      Arrow KJ. Uncertainty and welfare economics of medical care. The American Economic Review, 1963,Vol. 53:941-973.

2.      Baldi A. Pharmacoeconomics: Principles, Methods and Economic Evaluation of Drug Therapies. PhTechMed, 2013, Vol. 2:362-369.

3.      Economics for pharmaceutical management. Management sciences for health 2012, Chapter 10, pag 1-14.

4.      Pharmaceutical pricing policies. Management sciences for health 2012, Chapter 9, pag. 1-22.

Students seating for the exam after the June/July sessions will be considered as non attending.

Extra reading for non attending students: Getzen Thomas E. Health Economics and Financing, 5^th edition, Wiley and Sons, 2013, Chapters 1,2,3,11,15,16. 

Student evaluation

Students will be valuated with a written exam. More details on the exam will be discussed in class.