Pharmacy Services in the United States

1
Pharmacy Services in the United States

• Brenda Waning
• January 2002

2
OUTLINE

• Overview /Description
• Drug Development
• Drug Production
• Drug Repacking
• Drug Distribution (wholesalers)
• Drug Prescribing
• Drug Dispensing
• Human Resources
• Drug Use
• Drug Regulation

3
Market-Based System

• Supply and demand
• Arguments for (PhRMA)
• Promotes competition, innovation, and highest
  quality of patient care in a cost-effective
  manner
• Price controls limit choice. Lower quality of
  care, increase overall health costs, and
  discourage innovation
• Arguments against
• Cracks / gaps in coverage
• Business vs. Social Welfare

4
Drug manufacturers

• Hundreds of companies
• Explosion of biotech companies
• 1990-2000 significant merging and consolidation
  into MEGA companies

5
Drug Development- Regulated by FDA

• Preclinical research
• Investigational NDA filed
• Clinical testing
• Phase 1
• Phase 2
• Phase 3
• Review and Approval
• PMS

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Average Time from synthesis of a new drug to
approval

• 1960s 8 years
• 1990s 14.2 years
• Tufts University Center for the Study of Drug
  Development

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1999 FDA activity

• Approved 35 molecular entities
• 5 biological products
• Approval time fastest ever (12 months)
• Manufacturer-based drug development 104 months
• 75 NDAs

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PhRma Web Site

• Over 1,000 drugs currently in development
• gt100 AIDS
• gt350 Cancer
• 176 Neurological diseases
• 26 Alzheimers disease
• 122 heart disease and stroke
• 25 diabetes
• gt200 children
• www.phrma.org/publications/publications/primer01
  accessed 1/12/02

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1995 Drugs Used 1st Developed in US

• 32 of new chemical entities currently being used
  in the US were first developed and approved in
  the US
• Hartzema and Mullins, 1995

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PhRMA facts and figures

• Of every 5,000 medicines tested, on average, only
  5 are tested in CT and only 1 of those is
  approved for patient use
• 1990 Average cost to bring drug to market 500
  million (current estimates 500-600 million)
• Cost of demonstrating bioequivalence of a product
  is 1 million
• 12-15 years to discover and develop a new
  medicine
• 3 of 10 prescription drugs available to treat
  Americans generate revenues that meet or exceed
  RD costs
• www.phrma.org/publications/publications/brochure/q
  uestions/whycostmuch.phtml accessed 1/12/02

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1998

• Pharmaceutical Sales in the US 125 billion
• Investments in research and development 22.5
  billion

12
PhRMA figures onAdvertising and Promotion

• Direct-to-Consumer Advertising is legal
• 2000 15.7 billion on promotion (1/2 of which is
  free samples of meds), 25.7 billion on RD
  reported by IMS Health
• Marketing leads to more RD
• In 2001, 18.5 sales reinvested into RD (11.4
  in 1970)
• www.phrma.org/publications/documents/backgrounder
  s//2001-06-06.231.phtml
• PhRMA , Annual Survey, 2001

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Regulation of Advertising and Promotion

• FDA approves new drug products both Rx and OTC
• FDA regulates advertising and promotion of Rx
  drugs
• Federal Trade Commission regulates labeling and
  advertising of OTCs

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cost structure of pharm. of expenditures 1994

• Research Development 20-30
• Manufacture / Distribute 25-35
• Marketing 20-25
• Administration 15-20

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Drug wholesalers

• Small number of regional wholesalers and
  distributors
• 1990s significant consolidationd with drug
  companies

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FDA Regulation

• Regulation of drug products is the federal
  governments responsibility
• FDA regulates
• Manufacturing according to GMP
• Pre-market drug approval based on purity, safety,
  effectiveness
• labeling and advertising of prescription products
• bioequivalence standards
• Post-marketing surveillance
• Recalls of unacceptable products
• Regulation of pharmaceutical practice and
  professionals occurs mostly at the state level

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Drug Prescribing

• Primarily physicians
• Physician Assistants
• Nurse Practitioners
• Limited Pharmacist prescribing in states
• Determination made by FDA Rx vs. OTC
• Schedules I-VI according to safety and abuse
  potential

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Drug Dispensing

• Primarily Pharmacists in pharmacies
• Register with state board of pharmacy
• Community (chain, independent, grocery, mass
  merchandiser, HMO)
• Hospital (public private)
• Govt. (jail)
• Mail Order
• Some physicians

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Regulation of Prescribing and Dispensing

• State Level
• Boards of Medicine and Pharmacy
• Appointed by governor
• At least 1 community member

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Pharmacy Market (Rx sales)

• Chain 49.8 billion 41
• Independent 29.9 billion or 25
• Mail order 16.6 billion 14
• Grocery-based 13.4 billion 11
• Mass merchandiser 12 billion 10

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Pharmacy / Drug Store Sales

• 50 prescription drugs
• 20 OTC drugs

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Human Resources185,000 Pharmacists in US

• 73 full time
• Workplace
• 25 Hospital 11 Independent
• 49 Chain 15 Mail Order Other
• 56 male
• 15 part-time
• National Pharmacist Workforce Survey, 2000

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Pharmaceutical Education

• 83 colleges
• 33,090 students
• register as interns in 3rd year
• 6 year program leading to PharmD degree
• 5,500 graduates per year
• CVS needs 3,000 per year
• 64.4 female

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Pharmacy Technicians

• Unknown number of technicians
• Movement to certify and register with Boards of
  Pharmacy
• Can help with pharmacist shortage
• Unwillingness of colleges to train

25
PharmacistSupport staff Ratio

• Determined by board of pharmacy
• Based on safety
• 13

26
1998 Drug Use in U.S.

• 2.8 billion prescriptions (2004 projection 4
  billion)
• 1.5 billion new prescriptions
• 1.3 billion refill prescriptions

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Generic vs. Brand Use in US

• 1998
• 45 generic use by volume (24 by dollar)
• 55 single source/brand name (76 by dollar
• Pharmaceutical Products Press, HCFA, 2000

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Source of Drugs for Consumers

• Prescription drugs purchased at pharmacies
• OTCs purchased at a variety of sources
• 34 pharmacies
• 36 discount stores
• 26 supermarkets
• Pietrobono 2000b

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Self Medication in the US

• Overhead
• Montagne Steere 2000

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Use of Alternative Therapies on Increase in US

• Consumers view OTC and herbals as safer, easier
  to use, and less expensive
• Eisenberg 1998

31
US Health Expenditures 2000 (population
280million)
http//www.hcfa.gov/stats/nhe-oact/tables/t1.htm
32
US Health Expenditures per capita 2000
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PhRMA figures onHealth care expenditures

• GDP allocate to health care spending increasing
  higher than other OECD countries
• Pharmaceuticals share is about average
• Each 1 health care dollar
• 0.32 hospital care
• 0.22 physician and clinical services
• 0.08 prescription drugs
• 0.07 nursing home care

34
Health Care dollars spent on drugs in Europe

• European countries spend 12-17 of health care
  dollars on drugs
• Switzerland 8
• Portugal and Greece 30

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Out of Pocket Spending

• 1999 Americans spent 28.8 billion OTC drugs
• 1997 more out of pocket money spent on
  alternative services and therapies (34 billion)
  than MD services (29 billion)
• 1998 Eisenberg found that 18 of prescription
  drug users used herbal or nutraceuticals
  concurrently
• Eisenberg, 1998

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PhRMA out of pocket
37
Drug Regulation as a Whole

• FDA regulated production warehousing
• Standards and drug problem reporting
• Federal and state enforcement of FDA regs
• State regulates PRACTICE
• Registration of professionals and facilities
• Prescribing practices
• Dispensing practices
• Investigation of reports corrective action
• Third party contract compliance
• Joint Commission on Accreditation of Healthcare
  Organizations