Presented by To Professor Dr.

Sajid
• We will delve into the factors influencing the
pharmaceutical drug pricing, including
• manufacturing costs,
• research and development expenses
• Market demand
The Biopharmaceutical Industry

Biopharmaceutical Industry: A sector of the pharmaceutical industry that focuses on

developing drugs using biological processes, such as recombinant DNA technology, to
produce therapeutic proteins, antibodies, vaccines, and other medical treatments.
New Chemical Entities (NCEs)

New Chemical Entities (NCEs): Pharmaceutical compounds that have not been
previously approved by regulatory authorities for marketing. NCEs undergo rigorous
testing for safety and efficacy before they can be marketed as new drugs.

Erythropoietin.
Effects of firm size on R&D productivity
Larger firms have larger budgets and having a different number of R&D projects
Example: GSK, J and J, and Pfizer.
Schedule for FDA for the development of NCE
1. Discovery of an NCE
2. Preclinical animal testing
3. File application for the authorization for human testing(3.5 years)
4. Phase 1 clinical testing on a limited number of volunteers test
absorption rate and metabolic effects (15 months)
5. Phase 2 clinical testing larger samples of humans intended to
treat(2 years)
6. Long term animal studies
7. Phase 3 clinical testing for efficacy and side effects (3 years0
8. New drug approval process (2.5 years)
Requirement For Prescription
Regulation required for Prescription

1. Requirement for Prescription:

• Certain medications require a prescription from a licensed healthcare provider for dispensing to patients.
• Prescription drugs are often potent, have a high potential for misuse, or require monitoring by a healthcare
professional.
Requirement For Prescription
Regulation required for Prescription

2. Regulation Required for Prescription:

• Regulatory bodies, such as the FDA in the United States or the EMA in Europe, oversee the approval and
regulation of prescription drugs.
• Regulations ensure that prescription drugs are safe, effective, and manufactured according to quality
standards.
• Prescription drug regulations also include requirements for labeling, packaging, and advertising to ensure
proper use and minimize risks to patients.
Requirement For Prescription
Regulation required for Prescription

3. Impact of Regulations:
• Regulations help prevent the distribution of counterfeit or substandard drugs.
• They also promote responsible prescribing practices and help minimize the risk of adverse drug reactions.
• Regulations can vary between countries and regions, leading to differences in access to prescription
medications and healthcare outcomes.
Effects of Direct Marketing of Pharmaceuticals for Consumers
1.Increased Consumer Awareness:
- Direct marketing exposes consumers to information about pharmaceutical products, including their benefits
and potential risks.
- Consumers become more aware of available treatment options and may be more informed when discussing
healthcare with their providers.

5. Regulatory Oversight:
Many countries have regulations in place to ensure that direct marketing of pharmaceuticals is accurate and
does not mislead consumers.
Regulatory bodies monitor marketing practices to protect consumers from false or misleading information.
3. Impact on Healthcare Costs:
- Direct-to-consumer advertising can lead to increased demand for certain medications, potentially
driving up healthcare costs.
Consumers may request brand-name medications over generic alternatives, which are often more
expensive.
2. Potential for Misinformation:
- Direct marketing can sometimes oversimplify complex medical information or exaggerate the
benefits of a medication while downplaying its risks.
- Consumers may be influenced to request medications that are not appropriate for their condition or
may not be the best treatment option
4. Patient Empowerment and Engagement:
Direct marketing can empower patients to take a more active role in their healthcare decisions.
It can encourage patients to discuss treatment options with their healthcare providers and advocate
for their own health needs.
Price differentiation between Brand name and Generic name

Brand name: Medications are developed and marketed by pharmaceutical companies and are sold under a
specific brand or trade name.

Generic name : Medications contain the same active ingredients as their brand name counterparts but are
typically sold at a lower price and under their chemical or generic name.
Cost Factors:
• Brand name medications often cost more due to the research, development, and marketing expenses incurred by
pharmaceutical companies.
• Generic medications are usually less expensive because they do not require the same level of investment in
research and marketing.
Regulatory Approval:
Brand name medications are granted patent protection, which gives the manufacturer exclusive rights to sell the drug
for a certain period, typically 20 years.
Once the patent expires, other companies can produce generic versions, leading to competition and lower prices.
Accessibility and Affordability:
Generic medications increase accessibility to essential drugs by offering a more affordable alternative to brand name
medications.
Price differentiation allows patients to access medications that they may not be able to afford otherwise, improving
overall healthcare outcomes.
Quality and Efficacy:
Generic medications are required to meet the same quality and efficacy standards as brand name medications.
Regulatory agencies, such as the FDA in the United States, ensure that generic medications are bioequivalent to
their brand name counterparts.
Patient and Physician Preferences:
Some patients and physicians may prefer brand name medications due to perceived differences in quality or
consistency.
Others may opt for generic medications to save costs, especially when the efficacy is equivalent.
Price Differentiation Among Different Countries
Price differentiation refers to the variation in prices of pharmaceutical products among
different countries or regions.

Factors Influencing Price Variation:

• Economic factors, such as the country's GDP per capita and healthcare
expenditure, can impact drug pricing.
• Regulatory differences, including pricing regulations and patent protection laws, also
contribute to price variation.
Purchasing Power Disparity:
• Countries with higher purchasing power may negotiate lower prices for medications
due to their ability to buy in bulk or negotiate discounts.
Healthcare System Variations:
• Differences in healthcare systems, such as public vs. private healthcare, can lead to
varying approaches to pricing and reimbursement.